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Prepaid expenses and other current assets

3,292

2,616

7,148

3,806

Total current assets

421,328

178,665

Long-term investments

55,817

83,600

Long-term restricted cash and investments

4,150

2,650

Property and equipment, net

1,737

1,434

Goodwill

63,684

Other long-term assets

1,774

2,309

Total assets

548,490

332,342

Current liabilities:

Accounts payable

3,965

6,401

Accrued collaboration liability

18,710

10,938

Accrued compensation and benefits

15,986

3,629

Accrued clinical trial liabilities

14,887

18,071

Current portion of convertible notes

29,365

Current portion of term loan payable

80,000

Current portion of deferred revenue

18,939

Other accrued liabilities

19,791

13,212

Total current liabilities

201,643

52,251

Long-term portion of convertible notes

81,493

337,937

Long-term portion of term loan payable

80,000

Long-term portion of deferred revenue

232,573

Other long-term liabilities

759

2,960

Total liabilities

516,468

473,148

Commitments

Stockholders’ equity (deficit):

Preferred stock

Common stock, $0.001 par value; 400,000,000 shares authorized; issued and outstanding: 286,123,166 and 227,960,943 shares at September 30, 2016 and December 31, 2015, respectively

286

228

Additional paid-in capital

2,050,086

1,772,123

Accumulated other comprehensive loss

(80)

(232)

Accumulated deficit

(2,018,270)

(1,912,925)

Total stockholders’ equity (deficit)

32,022

(140,806)

Total liabilities and stockholders’ equity (deficit)

$ 548,490

$ 332,342

[1]	The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value, in dollars per share	$ 0.001	$ 0.001
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	286,123,166	227,960,943
Common stock, shares outstanding	286,123,166	227,960,943

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:
Net product revenues	$ 42,742	$ 6,854	$ 83,459	$ 24,234
Royalty, license and contract revenues	19,452	3,000	30,414	3,000
Total revenues	62,194	9,854	113,873	27,234
Operating expenses:
Cost of goods sold	2,455	1,420	4,700	2,872
Research and development	20,256	26,091	72,166	72,879
Selling, general and administrative	32,463	17,842	103,143	40,162
Restructuring (recovery) charge	(244)	282	871	1,142
Total operating expenses	54,930	45,635	180,880	117,055
Income (loss) from operations	7,264	(35,781)	(67,007)	(89,821)
Other income (expense), net:
Interest income and other, net	3,059	276	4,010	146
Interest expense	(7,834)	(10,037)	(28,575)	(30,501)
Loss on extinguishment of debt	(13,773)	0	(13,773)	0
Total other income (expense), net	(18,548)	(9,761)	(38,338)	(30,355)
Net loss	$ (11,284)	$ (45,542)	$ (105,345)	$ (120,176)
Net loss per share, basic and diluted, in dollars per share	$ (0.04)	$ (0.21)	$ (0.44)	$ (0.59)
Shares used in computing basic and diluted net loss per share, in shares	256,319	217,587	238,024	203,153

Condensed Consolidated Statements of Comprehensive Loss - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Statement of Comprehensive Income [Abstract]

Other comprehensive income (loss)

$ (11,284)

$ (45,542)

$ (105,345)

$ (120,176)

^[1]

(209)

133

152

Comprehensive loss

$ (11,493)

$ (45,409)

$ (105,193)

$ (120,096)

[1]

Other comprehensive income (loss) consisted solely of unrealized gains or losses, net on available for sale securities arising during the periods presented. There were no reclassification adjustments to net loss resulting from realized gains or losses on the sale of securities and there was no income tax expense related to other comprehensive income during those periods.

Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

$ (105,345)

$ (120,176)

Depreciation and amortization

754

1,063

Stock-based compensation expense

18,346

15,420

Accretion of debt discount and debt issuance costs

8,295

14,274

Accrual of interest paid in kind

5,939

1,890

Gain on sale of equity investment

(2,494)

(95)

Loss on extinguishment of debt

13,773

Change in the fair value of warrants

549

Other

(1,381)

1,338

Changes in assets and liabilities:

Trade and other receivables

(85,923)

1,034

Prepaid expenses and other current assets

(676)

259

(3,342)

(1,940)

Other long term assets

535

1,832

Accounts payable, accrued compensation and benefits, and other accrued liabilities

18,816

(14,293)

Accrued collaboration liability

7,772

8,400

Clinical trial liabilities

(3,184)

(11,757)

Deferred revenue

251,512

(2,583)

Other long-term liabilities

(815)

(1,367)

Net cash provided by (used in) operating activities

122,582

(106,152)

Cash flows from investing activities:

Purchases of property and equipment

(1,116)

(114)

Proceeds from sale of property and equipment

1,300

Proceeds from sale of equity investments

2,494

Proceeds from maturities of restricted cash and investments

2,650

16,754

Purchase of restricted cash and investments

(4,150)

(2,616)

Proceeds from sale of investments

2,266

Proceeds from maturities of investments

100,635

130,341

Purchases of investments

(258,509)

(119,692)

Net cash (used in) provided by investing activities

(155,638)

26,068

Cash flows from financing activities:

Proceeds from issuance of common stock, net

145,651

Proceeds from exercise of stock options

9,296

3,787

Proceeds from employee stock purchase plan

479

274

Principal payments on debt

(4,381)

Payments on conversion of convertible notes

(7,134)

Net cash provided by financing activities

2,641

145,331

Net (decrease) increase in cash and cash equivalents

(30,415)

65,247

Cash and cash equivalents at beginning of period

141,634

^[1]

80,395

Cash and cash equivalents at end of period

111,219

145,642

Supplemental cash flow disclosure - non-cash financing activity:

Issuance of common stock in settlement of convertible notes

$ 285,308

$ 0

[1]	The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date.

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Exelixis, Inc. (“Exelixis,” “we,” “our” or “us”) is a biopharmaceutical company committed to the discovery, development and commercialization of new medicines that will improve care and outcomes for people with cancer. Since its founding in 1994, three products discovered at Exelixis have progressed through clinical development, received regulatory approval, and entered the commercial marketplace. This portfolio includes two products derived from cabozantinib, an inhibitor of multiple tyrosine kinases including MET, AXL, and VEGF receptors. They are CABOMETYX™ tablets for the treatment of advanced kidney cancer and COMETRIQ^® capsules for the treatment of certain forms of thyroid cancer, each approved both in the United States and European Union. The third product is COTELLIC^®, a product derived from cobimetinib, a selective inhibitor of MEK, marketed under a collaboration with Roche and Genentech (a member of the Roche Group) that has been approved in combination with ZELBORAF^® (vemurafenib) to treat advanced melanoma in several major territories, including the United States and European Union.

Basis of Consolidation

The condensed consolidated financial statements include the accounts of Exelixis and those of our wholly-owned subsidiaries. These entities’ functional currency is the U.S. dollar. All intercompany balances and transactions have been eliminated.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

We adopted a 52- or 53-week fiscal year that generally ends on the Friday closest to December 31^st. Fiscal year 2016 will end on December 30, 2016, and fiscal year 2015, ended on January 1, 2016. For convenience, references in this report as of and for the fiscal periods ended September 30, 2016, and October 2, 2015, and as of and for the fiscal years ended December 30, 2016 and January 1, 2016, are indicated as being as of and for the periods ended September 30, 2016, September 30, 2015, and the years ended December 31, 2016, and December 31, 2015, respectively.

Operating results for the nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any future period. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2015, included in our Annual Report on Form 10-K filed with the SEC on February 29, 2016.

Correction of an Immaterial Error

During the third quarter of 2016, we identified errors in the Consolidated Balance Sheets and Consolidated Statements of Operations, Comprehensive Loss and Cash Flows for 2015, 2014, 2013, and 2012, and in the unaudited interim Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations, Comprehensive Loss and Cash Flows for all prior interim fiscal periods from September 30, 2012 through June 30, 2016. Specifically, in 2012 we incorrectly calculated 1) the allocation between Additional paid-in capital and Convertible notes of the $287.5 million aggregate principal amount from our 4.25% Convertible Subordinated Notes due 2019 (“2019 Notes”); and 2) the amortization of the debt discount associated with the 2019 Notes during 2012 and all subsequent periods.

Having evaluated the materiality of these errors from a quantitative and qualitative perspective, management has concluded that although the accumulation of these errors was significant to the three and nine months ended September 30, 2016, the correction of these errors would not be material to any individual prior period, and did not have an effect on the trend of financial results, taking into account the requirements of the SEC Staff Accounting Bulletin No. 99, Materiality and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Because management has concluded that these errors are not material, we will correct them prospectively when the consolidated balance sheets, statements of operations, comprehensive loss and cash flows for such periods are included in future filings.

Following are the amounts (in thousands, except per share amounts) that should have been reported for the affected line items of the statements of operations, statements of comprehensive loss and statements of cash flows:



	Three months ended September 30, 2015			Nine months ended September 30, 2015			Year ended December 31,
	Three months ended September 30, 2015			Nine months ended September 30, 2015			2015			2014			2013			2012
Statements of Operations:
Interest expense, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(10,037	)	$	(30,501	)	$	(40,680	)	$	(41,362	)	$	(38,779	)	$	(24,778	)
Total other income (expense), net, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(9,761	)	$	(30,355	)	$	(40,268	)	$	(37,021	)	$	(37,556	)	$	(22,792	)
Net loss, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(45,542	)	$	(120,176	)	$	(161,744	)	$	(261,297	)	$	(238,192	)	$	(145,335	)
Net loss per share, basic and diluted, overstated by $0.01, $0.03, $0.04, $0.04, $0.04, $0.01 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(0.21	)	$	(0.59	)	$	(0.77	)	$	(1.34	)	$	(1.29	)	$	(0.91	)
Statements of Comprehensive Loss:
Comprehensive loss, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(45,409	)	$	(120,096	)	$	(161,855	)	$	(261,564	)	$	(237,954	)	$	(145,289	)
Statements of Cash Flows⁽¹⁾:
Net loss, overstated by $5,920, $7,993, $7,245, $6,568, $2,310 for the nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	Not reported			$	(120,176	)	$	(161,744	)	$	(261,297	)	$	(238,192	)	$	(145,335	)
Accretion of debt discount and debt issuance costs, overstated by $5,920, $7,993, $7,245, $6,568, $2,310 for the nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	Not reported			$	14,274		$	17,041		$	22,289		$	19,722		$	12,442


(1)	The error did not impact our net cash provided by or used in operating activities, financing activities or investing activities for any of the periods presented.

Following are the amounts (in thousands) that should have been reported for the affected line items of the balance sheets and statements of stockholders’ (deficit) equity:



	December 31,
	2015			2014			2013			2012
Balance Sheets:
Long-term portion of convertible notes, understated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	337,937		$	223,629		$	301,550		$	291,828
Liabilities, understated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	473,148		$	482,592		$	483,452		$	476,015
Additional paid-in capital, overstated by $60,618 as of all dates presented	$	1,772,123		$	1,591,782		$	1,504,052		$	1,489,727
Accumulated deficit, overstated by $24,116, $16,124, $8,879, $2,310 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(1,912,925	)	$	(1,751,180	)	$	(1,489,883	)	$	(1,251,692	)
Stockholders’ (deficit) equity, misstated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(140,806	)	$	(159,323	)	$	14,499		$	238,127
Statements of Stockholders’ (Deficit) Equity:
Net loss, overstated by $7,993, $7,245, $6,568, $2,310 for the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(161,744	)	$	(261,297	)	$	(238,192	)	$	(145,335	)
Additional paid-in capital, overstated by $60,618 as of all dates presented	$	1,772,123		$	1,591,782		$	1,504,052		$	1,489,727
Accumulated deficit, overstated by $24,116, $16,124, $8,879, $2,310 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(1,912,925	)	$	(1,751,180	)	$	(1,489,883	)	$	(1,251,692	)
Stockholders’ (deficit) equity, misstated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(140,806	)	$	(159,323	)	$	14,499		$	238,127

These errors did not affect any other caption or total in our unaudited condensed or annual consolidated financial statements.

Segment Information

We operate as a single reportable segment.

Use of Estimates

The preparation of our consolidated financial statements is in conformity with accounting principles generally accepted in the United States that requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates including, but not limited to, those related to revenue recognition, including for deductions from revenues (such as rebates, chargebacks, sales returns and sales allowances) and the period of performance, identification of deliverables and evaluation of milestones with respect to our collaborations, recoverability of inventory, certain accrued liabilities including clinical trial and collaboration liability accruals, the valuation of the debt and equity components of our convertible debt and share-based compensation. We base our estimates on historical experience and on various other market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.

Limited Sources of Revenues and the Need to Raise Additional Capital

We have incurred net losses since inception through September 30, 2016, with the exception of the 2011 fiscal year. For the nine months ended September 30, 2016, we incurred a net loss of $105.3 million and as of September 30, 2016, we had an accumulated deficit of $2.0 billion. These losses have had an adverse effect on our stockholders’ equity and working capital. Because of the numerous risks and uncertainties associated with developing drugs, we are unable to predict the extent of any future losses or when we will become profitable. Excluding fiscal 2011, our research and development expenditures and selling, general and administrative expenses have exceeded our revenues for each fiscal year, and we expect to spend significant additional amounts to fund the continued development and commercialization of cabozantinib. In addition, we are evaluating the expansion of our pipeline through drug discovery and corporate development activities. As a result, we expect to continue to incur substantial operating expenses and, consequently, we will need to generate significant additional revenues to achieve future profitability.

Other than sales of CABOMETYX and COMETRIQ, which have totaled $157.7 million in net product revenues since the first commercial launch in January 2013, we have derived substantially all of our revenues since inception from collaborative research and development agreements, which depend on royalties, license fees, the achievement of milestones, and research funding we earn from any products developed from the collaborative research.

The amount of our net losses will depend, in part, on: the level of sales of CABOMETYX and COMETRIQ in the United States; achievement of clinical, regulatory and commercial milestones and the amount of royalties, if any, from sales of CABOMETYX and COMETRIQ under our collaboration with Ipsen Pharma SAS (“Ipsen”); our share of the net profits and losses for the commercialization of COTELLIC in the U.S. under our collaboration with Genentech (a member of the Roche group); the amount of royalties from COTELLIC sales outside the U.S. under our collaboration with Genentech; other license and contract revenues; and, the level of our expenses, including commercialization activities for cabozantinib and any pipeline expansion efforts.

As of September 30, 2016, we had $379.6 million in cash and investments, which included $293.8 million available for operations, $81.6 million of compensating balance investments that we are required to maintain on deposit with Silicon Valley Bank, and $4.2 million of long-term restricted investments. We anticipate that our current cash and cash equivalents, and short-term investments available for operations, and product revenues, will enable us to maintain our operations for a period of at least 12 months following the filing date of this report. Our capital requirements will depend on many factors, and we may need to use available capital resources and raise additional capital significantly earlier than we currently anticipate.

Revenue Recognition

We recognize revenue from product sales and from license fees, milestones, contingent payments and royalties earned on research, collaboration and license arrangements.

See “Note 1 - Organization and Summary of Significant Accounting Policies” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a description of our revenue recognition policies for product sales discounts and allowances, license and contract revenues under our collaboration agreement with Genentech and our Patient Assistance Program.

Net Product Revenues

We recognize revenue when it is both realized or realizable and earned, meaning persuasive evidence of an arrangement exists, delivery has occurred, title has transferred, the price is fixed or determinable, there are no remaining customer acceptance requirements, and collectability of the resulting receivable is reasonably assured. For product sales in the United States, this generally occurs upon delivery of the product to a specialty pharmacy or distributor. For product sales to our distribution partner, Swedish Orphan Biovitrum (“Sobi”), this generally occurs when Sobi has accepted the product. For product sales to our collaboration partner Ipsen, this generally occurs upon delivery.

In the United States, we sell our products, CABOMETYX and COMETRIQ, to specialty pharmacies and distributors that benefit from customer incentives and have a right of return under certain circumstances. Prior to 2015, COMETRIQ had limited sales history and we could not reliably estimate expected future returns, discounts and rebates of the product at the time the product was sold to a single specialty pharmacy, therefore we recognized revenue when the specialty pharmacy provided the product to a patient based on the fulfillment of a prescription. This is frequently referred to as the “sell-through” revenue recognition model. In January 2015, we established that we had sufficient historical experience and data to reasonably estimate expected future returns of COMETRIQ and the discounts and rebates due to payors at the time of shipment to the specialty pharmacy. Accordingly, beginning in January 2015 we began to recognize revenue upon delivery to the specialty pharmacy. This approach is frequently referred to as the “sell-in” revenue recognition model. In connection with the change in the timing of recognition of U.S. COMETRIQ sales, we recorded a one-time adjustment to recognize revenue that had previously been deferred under the “sell-through” revenue recognition model, resulting in the additional recognition of gross product revenues of $2.6 million for the nine months ended September 30, 2015; there were no such additional amounts recorded during the comparable period in 2016.

In determining discounts and allowances for the initial launch and sale of CABOMETYX, in addition to using payer data received from the specialty pharmacies and distributors that sell CABOMETYX and historical data for COMETRIQ, we also utilized claims data from third party sources for competitor products for the treatment of advanced renal cell carcinoma (“RCC”). Based in part on the availability of this third party data, we made the determination that we had sufficient experience and data to reasonably estimate expected future returns and the discounts and allowances due to payers at the time of shipment to the specialty pharmacy or distributor, and therefore record revenue for the product using the “sell-in” revenue recognition model. Net product revenues during the nine months ended September 30, 2016 were impacted by the build of channel inventory related to the initial launch period for CABOMETYX.

We also utilize the “sell-in” revenue recognition model for product sales to Sobi for all periods presented. Once Sobi has accepted the product, the product is generally no longer subject to return; therefore, we record revenue at the time Sobi has accepted the product. As described further in “Note 2 - Research and Collaboration Agreements”, under the terms of our collaboration and license agreement with Ipsen for the commercialization and further development of cabozantinib, we provided Sobi with a notice of termination of our commercialization agreement for COMETRIQ which will become effective November 1, 2016. We expect to repurchase the remaining product on hand from Sobi following the termination. As of September 30, 2016, we recorded allowances for expected future returns totaling $0.4 million; there were no such allowances recorded as of December 31, 2015 or September 30, 2015.

For product sales to Ipsen, which began during the three months ended September 30, 2016, we utilize the “sell-in” revenue recognition model. Once title has transferred to Ipsen, the product is generally no longer subject to return; therefore, we record revenue at the time product is delivered.

Royalty, License and Contract Revenues

We enter into corporate collaboration and license agreements under which we may obtain upfront license fees, research funding, and contingent, milestone and royalty payments. These arrangements have multiple elements and our deliverables may include intellectual property rights, distribution rights, delivery of manufactured product, and participation on joint steering, commercial and development committees. In order to account for these arrangements, we identify the deliverables and evaluate whether the delivered elements have value to our collaboration partner on a stand-alone basis and represent separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver future goods or services, a right or license to use an asset, or another performance obligation. If we determine that multiple deliverables exist, the consideration is allocated to one or more units of accounting based upon the best estimate of the selling price of each deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement shall be combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue then shall be determined for those combined deliverables as a single unit of accounting. For a combined unit of accounting, non-refundable upfront fees are recognized in a manner consistent with the final deliverable, which has generally been ratably over the period of continued involvement. Amounts received in advance of performance are recorded as deferred revenue. Upfront fees are classified as license revenues in our consolidated statements of operations.

We consider sales-based contingent payments to be royalty revenue which is generally recognized at the date the contingency is achieved. Royalties are recorded based on sales amounts reported to us for the preceding quarter.

For certain contingent payments under collaboration and license arrangements, we recognize revenue using the milestone method. Under the milestone method a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is an event: (i) that can be achieved based in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to us. The determination that a milestone is substantive requires estimation and judgment and is made at the inception of the arrangement. Milestones are considered substantive when the consideration earned from the achievement of the milestone is: (i) commensurate with either our performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from our performance to achieve the milestone, (ii) relates solely to past performance and (iii) reasonable relative to all deliverables and payment terms in the arrangement. In making the determination as to whether a milestone is substantive or not, we consider all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whether any portion of the milestone consideration is related to future performance or deliverables.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2014-09, Revenue from Contracts with Customers, (“ASU 2014-09”). ASU 2014-09 will replace most existing revenue recognition guidance when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued an update to defer the effective date of this update by one year. ASU 2014-09, as amended, becomes effective for us in the first quarter of fiscal year 2018, but allows us to adopt the standard one year earlier if we so choose. We currently plan to adopt this accounting standard in the first quarter of fiscal year 2018. We have not yet selected a transition method and are evaluating the effect that ASU 2014-09 will have on our Consolidated Financial Statements and related disclosures.

In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, (“ASU 2015-05”). ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 was effective for all interim and annual reporting periods beginning after December 15, 2015 and therefore we adopted ASU 2015-05 in the three months ended March 31, 2016 on a prospective basis. The adoption of ASU 2015-05 did not have a material impact on our Condensed Consolidated Statements of Operations during the period of adoption and is not expected to have a material effect on our Consolidated Financial Statements in future periods.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory (“ASU No. 2015-11”). ASU No. 2015-11 requires inventory measurement at the lower of cost and net realizable value. ASU No. 2015-11 are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted by all entities as of the beginning of an interim or annual reporting period. We are in the process of assessing the impact, if any, of ASU No. 2015-11 on our condensed consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”). ASU 2016-09 is aimed at the simplification of several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted. We do not expect the adoption of ASU 2016-09 to have a material impact on our Consolidated Financial Statements.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing and contingent consideration payments made after a business combination. We do not expect the adoption of ASU 2016-15 to have a material impact on our Consolidated Statements of Cash Flows.

Research and Collaboration Agreements	9 Months Ended
Research and Collaboration Agreements	Sep. 30, 2016
Research And Collaboration Agreements [Abstract]
Research and Collaboration Agreements	RESEARCH AND COLLABORATION AGREEMENTS Ipsen Collaboration On February 29, 2016, we entered into a collaboration and license agreement (the “Agreement”) with Ipsen for the commercialization and further development of cabozantinib. Pursuant to the terms of the Agreement, Ipsen will have exclusive commercialization rights for current and potential future cabozantinib indications outside of the United States, Canada and Japan. We have also agreed to collaborate with Ipsen on the development of cabozantinib for current and potential future indications. In consideration for the exclusive license and other rights contained in the Agreement, Ipsen paid us an upfront nonrefundable payment of $200.0 million in March 2016. As a result of the approval of cabozantinib by the European Medicines Agency (“EMA”) in second-line RCC in September 2016, we achieved a $60.0 million milestone which we expect to receive in November 2016. We will be eligible to receive additional development and regulatory milestones, totaling up to $240.0 million, including milestone payments of $10.0 million and $40.0 million upon the filing and the approval of cabozantinib in second-line hepatocellular carcinoma, and additional milestones for other future indications. We will also be eligible to receive two $10.0 million milestone payments upon the launch of the product in the first two of the following countries: Germany, France, Italy, Spain and the United Kingdom. The Agreement also provides that we will be eligible to receive contingent payments of up to $525.0 million associated with the achievement of specified levels of Ipsen sales to end users. We will also receive royalties on net sales of cabozantinib outside of the United States, Canada and Japan. We will receive a 2% royalty on the initial $50.0 million of net sales, and a 12% royalty on the next $100.0 million of net sales. After the initial $150.0 million of sales, we will receive a tiered royalty of 22% to 26% on annual net sales; these tiers will reset each calendar year. We are primarily responsible for funding cabozantinib related development costs for existing trials; global development costs for potential future trials will be shared between the parties, with Ipsen to reimburse us for 35% of such costs. Pursuant to the terms of the Agreement, we will remain responsible for the manufacture and supply of cabozantinib for all development and commercialization activities under the Agreement. As part of the Agreement, we entered into a supply agreement which provides that through the end of the second quarter of 2018, we will supply finished, labeled product to Ipsen for distribution in the territories outside of the United States, Canada and Japan. From the end of the second quarter of 2018 forward, we will continue to manufacture CABOMETYX tablets, while Ipsen will be responsible for packaging and labeling the product in territories where it has been approved outside of the United States, Canada and Japan, as applicable. The Agreement contains multiple elements, and the deliverables under the Agreement consist of intellectual property licenses, delivery of products and/or materials containing cabozantinib to Ipsen for all development and commercial activities, research and development services, and participation on the joint steering and development committees (as defined in the Agreement) with Ipsen. These deliverables are non-contingent in nature. The Company determined that these deliverables do not have stand-alone value, because each one of them has value only if the Company meets its obligation to provide Ipsen with cabozantinib, which the Company deems to be the predominant deliverable under the Agreement. The Company also determined that the level of effort required of the Company to meet its obligations under the Agreement is not expected to vary significantly over the life of the Agreement. Accordingly, the Company combined these deliverables into a single unit of accounting and allocated the entire arrangement consideration to that combined unit of accounting. As a result, the upfront payment of $200.0 million, received in the first quarter of 2016 is being recognized ratably over the effective term of the Agreement, which continues through early 2030, the current estimated patent expiration of cabozantinib in the European Union. At the time we entered into the agreement, we also determined that the $60.0 million milestone we achieved upon the approval of cabozantinib by the EMA in second-line RCC was not substantive due to the relatively low degree of uncertainty and relatively low amount of effort required on our part to achieve the milestone as of the date of the Agreement; the $60.0 million was deferred as of the date of the EMA’s approval of cabozantinib in second-line RCC in September 2016, which we expect to receive in November 2016, and is being recognized ratably over the remaining term of the Agreement. We determined that the remaining development and regulatory milestones are substantive and will be recognized as revenue in the periods in which they are achieved. We consider the contingent payments due to us upon the achievement of specified sales volumes to be similar to royalty payments. Subsequent to February 29, 2016, we transferred the intellectual property rights to Ipsen, and participated in s regulatory filing activities and planning for the production, delivery and distribution of manufactured product. As a result of these activities, we began to recognize of the upfront payment under the Agreement. During the three and nine months ended September 30, 2016, we have recognized $3.8 million and $8.6 million, respectively, in license revenue under the Agreement. As of September 30, 2016, short-term and long-term deferred revenue relating to the Agreement was $18.9 million and $232.6 million, respectively. In connection with the establishment of the Agreement with Ipsen, we provided Sobi with a notice of termination of our distribution and commercialization agreement for COMETRIQ. Effective November 1, 2016, Ipsen will become responsible for the distribution and commercialization of COMETRIQ for the approved medullary thyroid cancer indication in territories previously supported by Sobi. Pursuant to our commercialization agreement with Sobi we are required to pay a termination fee. As of September 30, 2016, we had a $2.7 million accrual for the estimated termination fee to be paid to Sobi and the related expense, which was recorded during the three months ended March 31, 2016, is included in Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016. Additionally, pursuant to our commercialization agreement with Sobi, we expect to repurchase unsold product from Sobi and have recorded a returns allowance of $0.4 million as of September 30, 2016, the related charge for which is included as a reduction to Net product revenues in the accompanying Condensed Consolidated Statements of Operations. Genentech Collaboration In December 2006, we out-licensed the development and commercialization of cobimetinib to Genentech (a member of the Roche group) pursuant to a worldwide collaboration agreement. We discovered cobimetinib internally and advanced the compound to investigational new drug (“IND”) status. Genentech paid upfront and milestone payments of $25.0 million in December 2006 and $15.0 million in January 2007 upon signing of the collaboration agreement and with the submission of the IND application for cobimetinib. Under the terms of the agreement, we were responsible for developing cobimetinib through the determination of the maximum-tolerated dose in a phase 1 clinical trial, and Genentech had the option to co-develop cobimetinib, which Genentech could exercise after receipt of certain phase 1 data from us. In March 2008, Genentech exercised its option to co-develop cobimetinib. In March 2009, we granted to Genentech an exclusive worldwide revenue-bearing license to cobimetinib, at which point Genentech became responsible for completing the phase 1 clinical trial and subsequent clinical development. The U.S. Food and Drug Administration (“FDA”) approved cobimetinib in the United States under the brand name COTELLIC on November 10, 2015. It is indicated in combination with vemurafenib as a treatment for patients with BRAF V600E or V600K mutation-positive advanced melanoma. COTELLIC in combination with vemurafenib has also been approved in multiple other territories including the European Union and Canada. Under the terms of our collaboration agreement with Genentech for cobimetinib, we are entitled to a share of U.S. profits and losses in connection with the commercialization of cobimetinib. The profit and loss share has multiple tiers: we are entitled to 50% of profits and losses from the first $200.0 million of U.S. actual sales, decreasing to 30% of profits and losses from U.S. actual sales in excess of $400.0 million. We are entitled to low double-digit royalties on ex-U.S. net sales. In November 2013, we exercised an option under the collaboration agreement to co-promote in the United States. Following the approval of COTELLIC in the United States in November 2015, we began fielding 25% of the sales force promoting COTELLIC in combination with vemurafenib as a treatment for patients with BRAF V600E or V600K mutation-positive advanced melanoma. We recorded net losses of $2.9 million and $14.8 million under the collaboration agreement during the three and nine months ended September 30, 2016, respectively, as compared to $4.3 million and $11.8 million for the comparable periods in 2015; those costs are included in Selling, general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations. A majority of the liability for those costs which consists of commercialization expenses that Genentech has allocated to the collaboration, but are in dispute, is identified as Accrued collaboration liability on the accompanying Condensed Consolidated Balance Sheets. On June 3, 2016, we filed a Demand for Arbitration before JAMS in San Francisco, California asserting claims against Genentech related to its clinical development, pricing and commercialization of COTELLIC, and cost and revenue allocations in connection with COTELLIC’s commercialization in the United States. Our arbitration demand asserts that Genentech has breached the parties’ contract for, amongst other breaches, failing to meet its diligence and good faith obligations. The demand seeks various forms of declaratory, monetary, and equitable relief, including without limitation that the cost and revenue allocations for COTELLIC be shared equitably consistent with the collaboration agreement’s terms, along with attorneys’ fees and costs of the arbitration. Genentech has asserted a counterclaim for breach of contract, which seeks monetary damages and interest related to the cost allocations under the collaboration agreement. We also recognized license revenues of $0.7 million and $1.8 million for royalties on ex-U.S. net sales of COTELLIC during the three and nine months ended September 30, 2016, respectively, based on sales amounts reported by Genentech for the preceding quarter. We recognized no such royalties during the comparable periods in 2015. Other Collaborations During the three and nine months ended September 30, 2016, we recognized $15.0 million in contract revenues from a milestone payment earned from Daiichi Sankyo related to its worldwide license of our compounds that modulate mineralocorticoid receptor (“MR”), including CS-3150 (an isomer of XL550). During the nine months ended September 30, 2016 and the three and nine months ended September 30, 2015, we recognized $5.0 million, $3.0 million and $3.0 million, respectively, in contract revenues from milestone payments earned from Merck related to its worldwide license of our phosphoinositide-3 kinase-delta program. See “Note 2 - Research and Collaboration Agreements” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a description of our existing collaboration agreements.

Restructurings

9 Months Ended

Sep. 30, 2016

Restructuring Charges [Abstract]

Restructurings

RESTRUCTURINGS

Between March 2010 and May 2013, we implemented five restructurings (which we refer to collectively as the “2010 Restructurings”) to manage costs and as a consequence of our decision in 2010 to focus our proprietary resources and development efforts on the development and commercialization of cabozantinib. In September 2014, as a consequence of the failure of COMET-1, one of our two phase 3 pivotal trials of cabozantinib in metastatic castration-resistant prostate cancer, we initiated a restructuring (which we refer to as the “2014 Restructuring”) to enable us to focus our financial resources on the phase 3 pivotal trials of cabozantinib in advanced RCC and advanced hepatocellular carcinoma. See “Note 3 - Restructurings” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for additional information about the restructurings.

For the nine months ended September 30, 2016 and 2015, we recorded a restructuring charge of $0.9 million and $1.1 million, respectively, for the restructurings. Both periods included the effect of the passage of time on our discounted cash flow computations (“accretion expense”) for the exit, in prior periods, of certain of our South San Francisco buildings. During the nine months ended September 30, 2016, the restructuring charge included $0.8 million in charges related to a tenant’s default on an existing sublease which was partially offset by a $0.1 million recovery related to a new sublease executed in July 2016. The restructuring charge for the nine months ended September 30, 2015 included $1.5 million in additional charges due to the partial termination of one of our building leases and additional facility-related charges related to the decommissioning and exit of certain buildings which was partially offset by $0.9 million in recoveries recorded in connection with the sale of excess equipment and other assets.

The total outstanding restructuring liability is included in the current and long-term portion of restructuring on the accompanying Condensed Consolidated Balance Sheets. The changes of these liabilities during the nine months ended September 30, 2016, which related primarily to facilities, are summarized in the following table (in thousands):



	2010 Restructurings			2014 Restructuring			Total
Restructuring liability as of December 31, 2015	$	4,087		$	503		$	4,590
Restructuring charge	862			9			871
Proceeds from sale of assets	—			34			34
Cash payments, net	(3,774		)	(437		)	(4,211		)
Other items	975			(34		)	941
Restructuring liability as of September 30, 2016	$	2,150		$	75		$	2,225

We expect to pay accrued facility charges of $2.2 million, net of cash received from our subtenants, through the end of the lease terms of the buildings, all of which end in May 2017. We expect to incur additional restructuring charges of approximately $0.1 million relating to the effect of accretion expense through to the end of the lease terms of the buildings.

Cash and Investments

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Cash and Investments

CASH AND INVESTMENTS

All of our cash equivalents and investments are classified as available-for-sale. The following tables summarize cash and cash equivalents, investments, and restricted cash and investments by balance sheet line item as of September 30, 2016 and December 31, 2015 (in thousands):



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	111,219	$	—	$	—		$	111,219
Short-term investments	208,412		70		(20		)	208,462
Long-term investments	55,840		28		(51		)	55,817
Long-term restricted cash and investments	4,150		—		—			4,150
Total cash and investments	$	379,621	$	98	$	(71	)	$	379,648



	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	141,634	$	—	$	—		$	141,634
Short-term investments	25,484		5		(63		)	25,426
Long-term investments	83,665		2		(67		)	83,600
Long-term restricted cash and investments	2,650		—		—			2,650
Total cash and investments	$	253,433	$	7	$	(130	)	$	253,310

Under our loan and security agreement with Silicon Valley Bank, we are required to maintain compensating balances on deposit in one or more investment accounts with Silicon Valley Bank or one of its affiliates. The total collateral balances were $81.6 million as of both September 30, 2016 and December 31, 2015 and are reflected in our Condensed Consolidated Balance Sheets in short-term investments as of September 30, 2016 and long-term investments as of December 31, 2015; the change in classification from long-term to short-term was the result of a corresponding change in the classification for our term loan payable to Silicon Valley Bank which matures in May 2017. See “Note 7 - Debt” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, for more information regarding the collateral balance requirements under our Silicon Valley Bank loan and security agreement.

The following tables summarize our cash equivalents and investments by security type as of September 30, 2016 and December 31, 2015. The amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	47,148	$	—	$	—		$	47,148
Commercial paper	133,309		—		—			133,309
Corporate bonds	124,346		44		(67		)	124,323
U.S. Treasury and government sponsored enterprises	61,228		54		(4		)	61,278
Total investments	$	366,031	$	98	$	(71	)	$	366,058



	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	72,000	$	—	$	—		$	72,000
Commercial paper	78,155		—		—			78,155
Corporate bonds	72,205		4		(118		)	72,091
U.S. Treasury and government sponsored enterprises	28,434		1		(12		)	28,423
Marketable equity security	16		2		—			18
Total investments	$	250,810	$	7	$	(130	)	$	250,687

All of our investments are subject to a quarterly impairment review. During the nine months ended September 30, 2016 and 2015, we did not record any other-than-temporary impairment charges on our available-for-sale securities. As of September 30, 2016, there were 37 investments in an unrealized loss position with gross unrealized losses of $71,000 and an aggregate fair value of $67.3 million. The investments in an unrealized loss position comprise corporate and government sponsored enterprise bonds. The unrealized losses were not attributed to credit risk, but rather associated with the changes in interest rates. Based on the scheduled maturities of our investments, we concluded that the unrealized losses in our investment securities are not other-than-temporary, as it is more likely than not that we will hold these investments for a period of time sufficient for a recovery of our cost basis.

The following table summarizes the fair value of securities classified as available-for-sale by contractual maturity as of September 30, 2016 (in thousands):



	Mature within One Year		After One Year through Two Years		Fair Value
Money market funds	$	47,148	$	—	$	47,148
Commercial paper	133,309		—		133,309
Corporate bonds	74,661		49,662		124,323
U.S. Treasury and government sponsored enterprises	55,123		6,155		61,278
Total investments	$	310,241	$	55,817	$	366,058

Cash is excluded from the table above.

Inventory

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Concentrations of Credit Risk

INVENTORY

Inventory consists of the following (in thousands):



	September 30, 2016			December 31, 2015
Raw materials	$	890		$	1,037
Work in process	2,540			2,251
Finished goods	582			583
Total	4,012			3,871
Less: non-current portion included in Other assets	(720		)	(1,255		)
Inventory	$	3,292		$	2,616

We generally relieve inventory on a first-expiry, first-out basis. A portion of the manufacturing costs for inventory was incurred prior to regulatory approval of CABOMETYX and COMETRIQ and, therefore, were expensed as research and development costs when those costs were incurred, rather than capitalized as inventory. Write-downs related to excess and expiring inventory are charged to cost of goods sold. Such write-downs were $0.4 million for both the three and nine months ended September 30, 2016 as compared to $1.1 million and $0.9 million for the comparable periods in 2015. The non-current portion of inventory recorded as other assets consists of raw materials and a portion of the active pharmaceutical ingredient which is included in work in process.

Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt

DEBT

The amortized carrying amount of our debt consists of the following (in thousands):



	September 30, 2016			December 31, 2015
Convertible Senior Subordinated Notes due 2019 (“2019 Notes”)	$	1,865		$	235,210
Secured Convertible Notes due 2018 (“Deerfield Notes”)	108,993			102,727
Term loan payable	80,000			80,000
Total debt	190,858			417,937
Less: current portion	(109,365		)	—
Long-term debt	$	81,493		$	417,937

Prior period balances in this Note reflect revisions due to a correction of an immaterial error with regards to the 2019 Notes. The immaterial error resulted in an overstatement of the discount on the 2019 Notes and therefore understated the amortized carrying amount of the 2019 Notes and overstated the related interest expense. See “Note 1 - Organization and Summary of Significant Accounting Policies - Correction of an Immaterial Error” for additional information on the correction of the immaterial error.

See “Note 7 - Debt” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, for additional information on the terms of our debt, including a description of the conversion features of the 2019 Notes and the Deerfield Notes.

2019 Notes

In August 2012, we issued and sold $287.5 million aggregate principal amount of the 2019 Notes, for net proceeds of $277.7 million, all of which remained outstanding at December 31, 2015. The 2019 Notes bear interest at a rate of 4.25% per annum, payable semi-annually in arrears on February 15 and August 15 of each year. On August 9, 2016 and August 19, 2016 we entered into separate, privately negotiated exchange agreements with certain holders of the 2019 Notes. Under the terms of the exchange agreements, the holders agreed to convert an aggregate principal amount of $239.4 million of 2019 Notes held by them in exchange for an aggregate of 45,064,456 shares of the Company’s common stock. In addition, the holders received inducements of $6.0 million which included an aggregate cash payment of $2.4 million and the forgiveness of the repayment of interest payments of $3.6 million. Further, under the terms of the indenture for the 2019 Notes, upon conversion the holders that entered into exchange agreements on August 9, 2016 were required to repay $3.6 million in interest payments that the holders of record on August 1, 2016 received on or about August 15, 2016. Under the terms of the exchange agreements, we forgave the repayment of such interest. We have included those interest payments as financing activities in our Condensed Consolidated Statement of Cash Flows. Inducements are included in the loss on extinguishment of debt.

Following the completion of the exchange transactions, on August 24, 2016, we provided public notice of the redemption of $48.1 million of the 2019 Notes, representing all remaining notes outstanding. Following a required redemption period, which ended on November 2, 2016, holders of the 2019 Notes had the option to convert their notes into shares of our common stock, plus cash in lieu of any fractional share, at a conversion rate of 188.2353 shares of common stock per $1,000 principal amount of the remaining 2019 Notes at any time before close of business on October 31, 2016. Subsequent to the announcement of the redemption of all remaining 2019 Notes outstanding, on various dates in August and September of 2016, $45.9 million of additional aggregate principal amount of 2019 Notes were converted by the holders into an aggregate of 8,640,455 shares of the Company’s common stock.

The combined issuance of 53,704,911 shares of the Company’s common stock pursuant to the conversions resulted in an increase to common stock and additional paid-in capital of $589.2 million. We recognized an additional loss on extinguishment of debt of $7.3 million, representing the difference between the total settlement consideration transferred to the holders that was attributed to the liability component of the 2019 Notes, based on the fair value of that component at the time of conversion, and the net carrying value of the liability. The remaining settlement consideration transferred was allocated to the reacquisition of the embedded conversion option and recognized as a $340.5 million reduction of additional paid-in capital. Transaction costs incurred with third parties related to the settlement of the 2019 Notes were allocated between the liability and equity components and resulted in an additional $0.5 million of loss on extinguishment of debt and a $0.7 million reduction of additional paid-in capital.

As of September 30, 2016, $2.2 million aggregate principal amount the 2019 Notes remained outstanding. Unless converted earlier, those notes will be redeemed on November 2, 2016 in cash for 100% of the principal amount thereof, plus accrued and unpaid interest.

The following is a summary of the liability component of the 2019 Notes (in thousands):



	September 30, 2016		December 31, 2015
Net carrying amount of the liability component	$	1,865	$	235,210
Unamortized discount of the liability component	327		52,290
Face amount of the 2019 Notes	$	2,192	$	287,500

The following is a summary of the interest expense for the 2019 Notes (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stated coupon interest	$	1,683	$	3,054	$	7,793	$	9,164
Amortization of debt discount and debt issuance costs	1,763		2,929		7,968		8,585
Total interest expense	$	3,446	$	5,983	$	15,761	$	17,749

The balance of unamortized fees and costs was $26,000 and $4.2 million as of September 30, 2016 and December 31, 2015, respectively, which is recorded as a reduction of the carrying amount of the 2019 Notes on the accompanying Condensed Consolidated Balance Sheets.

Deerfield Notes

As of September 30, 2016 and December 31, 2015, the outstanding principal balance on the Deerfield Notes was $109.8 million and $103.8 million, respectively, which, subject to certain limitations, is payable in cash or in stock at our discretion. Beginning on July 2, 2015, the outstanding principal amount of the Deerfield Notes bears interest at the rate of 7.5% per annum to be paid in cash, quarterly in arrears, and 7.5% per annum to be paid in kind, quarterly in arrears, for a total interest rate of 15% per annum. Through July 1, 2015, the outstanding principal amount of the Deerfield Notes bore interest in the annual amount of $6.0 million, payable quarterly in arrears.

The following is a summary of the interest expense for the Deerfield Notes (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stated coupon interest paid in cash	$	2,031	$	1,891	$	5,939	$	4,866
Amortization of debt discount, debt issuance costs and accrual of interest paid in kind	2,152		1,959		6,266		7,279
Total interest expense	$	4,183	$	3,850	$	12,205	$	12,145

The balance of unamortized fees and costs was $0.5 million and $0.7 million as of September 30, 2016 and December 31, 2015, respectively, which is recorded as a reduction of the carrying amount of the Deerfield Notes on the accompanying Condensed Consolidated Balance Sheets. Effective March 4, 2015, upon notification of our election to extend the maturity date to July 1, 2018, we began to amortize the remaining unamortized discount, fees and costs through July 1, 2018 using the effective interest method and an effective interest rate of 15.3%.

We were required to make an additional mandatory prepayment on the Deerfield Notes in January 2015 and 2016 equal to 15% of certain revenues from collaborative arrangements, which we refer to as Development/Commercialization Revenue, received during the prior fiscal year, subject to a maximum prepayment amount of $27.5 million. We made no such mandatory prepayments due to the fact that we received no such revenues during the fiscal year ended December 31, 2014 and Deerfield elected not to receive the mandatory prepayment in January 2016 related to development/commercialization revenue received during the year ended December 31, 2015. As a result of the extension of the maturity date of the Deerfield Notes to July 1, 2018, our obligation to make annual mandatory prepayments equal to 15% of Development/Commercialization Revenue received by us during the prior fiscal year will continue to apply in January 2017 and January 2018. However, we will only be obligated to make any such annual mandatory prepayment if the note holders provide notice to us of their election to receive the prepayment. Pursuant to this requirement, we may be required make a mandatory prepayment of $27.5 million in January 2017 as a result of the upfront payment of $200.0 million upfront nonrefundable payment received in March 2016 in consideration for the exclusive license and other rights contained in the collaboration and license agreement with Ipsen and the $5.0 million milestone payment from Merck we received in the first quarter of 2016 related to its worldwide license of our phosphoinositide-3 kinase-delta program. That portion of the Deerfield Notes is included in current liabilities. The definition of “Development/Commercialization Revenue” expressly excludes any sale or distribution of drug or pharmaceutical products in the ordinary course of our business, and any proceeds from any Intellectual Property Sale, but would include our share of the net profits from the commercialization of cobimetinib in the U.S. and the receipt of royalties from cobimetinib sales outside the U.S., if any.

Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Financial Assets Measured on a Recurring Basis

The following table sets forth the fair value of our financial assets that were measured and recorded on a recurring basis as of September 30, 2016 and December 31, 2015. We did not have any Level 3 investments as of September 30, 2016 or December 31, 2015. The amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	September 30, 2016
	Level 1		Level 2		Total
Money market funds	$	47,148	$	—	$	47,148
Commercial paper	—		133,309		133,309
Corporate bonds	—		124,323		124,323
U.S. Treasury and government sponsored enterprises	—		61,278		61,278
Total financial assets	$	47,148	$	318,910	$	366,058



	December 31, 2015
	Level 1		Level 2		Total
Money market funds	$	72,000	$	—	$	72,000
Commercial paper	—		78,155		78,155
Corporate bonds	—		72,091		72,091
U.S. Treasury and government sponsored enterprises	—		28,423		28,423
Marketable equity securities	18		—		18
Total financial assets	$	72,018	$	178,669	$	250,687

The estimated fair value of our financial instruments that are carried at amortized cost is as follows (in thousands):



	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2019 Notes	$	1,865	$	5,277	$	235,210	$	336,260
Deerfield Notes	$	108,993	$	110,806	$	102,727	$	101,096
Term loan payable	$	80,000	$	79,828	$	80,000	$	79,815

The carrying amounts of cash, trade and other receivables, accounts payable, accrued clinical trial liabilities, accrued compensation and benefits, accrued collaboration liability, and other accrued liabilities approximate their fair values and are excluded from the tables above.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:


•	When available, we value investments based on quoted prices for those financial instruments, which is a Level 1 input. Our remaining investments are valued using third-party pricing sources, which use observable market prices, interest rates and yield curves observable at commonly quoted intervals of similar assets as observable inputs for pricing, which is a Level 2 input.

•

On August 24, 2016, we announced the redemption of $48.1 million of the 2019 Notes, representing all remaining 2019 Notes outstanding. As of September 30, 2016, the 2019 Notes were convertible into shares of our common stock, plus cash in lieu of any fractional share, at a conversion rate of 188.2353 shares of common stock per $1,000 principal amount of the 2019 Notes at any time before close of business on October 31, 2016. Following our issuance of the notice of redemption of the 2019 Notes, the third-party pricing source we historically used to value the 2019 Notes was no longer available. Based on the terms of the redemption and the related conversion feature, we estimated that the value of the shares issuable pursuant to a conversion by the holder approximates the fair value of the 2019 Notes, which represents a Level 3 input.

•

We estimate the fair value of our other debt instruments, where possible, using the net present value of the payments. For the term loan, we use an interest rate that is consistent with money-market rates that would have been earned on our non-interest-bearing compensating balances as our discount rate, which is a Level 2 input. For the Deerfield Notes, we used a discount rate of 15%, which we estimate as our current borrowing rate for similar debt as of September 30, 2016, which is a Level 3 input.

Financial Assets, Liabilities and Equity Measured on a Nonrecurring Basis

In connection with the conversions for our 2019 Note during the three months ended September 30, 2016, we were required to determine the fair value of the settlement consideration received by the holders and the fair value of the liability component of the 2019 Notes, as of the various settlement dates of the conversions. The following methods and assumptions were used to estimate the fair value of those financial instruments:


•	The settlement consideration comprises, in part, shares of our Common Stock. The fair value of our Common Stock was determined based on the closing market price of our Common Stock on the various settlement dates of the conversions, which are level 1 inputs;


•	The carrying value of the remaining settlement consideration, which includes cash and the forgiveness of the repayment of certain prior interest payments, approximates fair value;


•	We estimated the fair value of the liability component of the 2019 Notes using the net present value of estimated future cash flows through maturity. We used a discount rate of 9.50%, which we estimate as our current borrowing rate for straight debt as of September 30, 2016, which is a Level 3 input.

- 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

Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Share-based Compensation [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

We recorded and allocated employee stock-based compensation expense for our equity incentive plans and our 2000 Employee Stock Purchase Plan (“ESPP”) as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Research and development expense	$	1,165	$	6,676	$	7,894	$	8,049
Selling, general and administrative expense	2,438		5,350		10,452		7,371
Total employee stock-based compensation expense	$	3,603	$	12,026	$	18,346	$	15,420

We use the Black-Scholes Merton option pricing model to value our stock options. The weighted average grant-date fair value of our stock options and ESPP purchases was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	8.59	$	3.92	$	4.31	$	2.51
ESPP	$	1.51	$	1.26	$	1.65	$	0.97

The fair value of employee stock option awards and ESPP purchases was estimated using the following assumptions:



	Stock Options
	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	1.07	%	1.18	%	1.09	%	1.20	%
Dividend yield	—	%	—	%	—	%	—	%
Volatility	76	%	88	%	76	%	93	%
Expected life	4.5 years		4.6 years		4.4 years		4.5 years



	Employee Stock Purchase Plan
	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	0.37	%	0.06	%	0.39	%	0.09	%
Dividend yield	—	%	—	%	—	%	—	%
Volatility	63	%	107	%	66	%	101	%
Expected life	6 months		6 months		6 months		6 months

The expected life computation is based on historical exercise patterns and post-vesting termination behavior. We considered implied volatility as well as our historical volatility in developing our estimate of expected volatility.

A summary of all stock option activity for the nine months ended September 30, 2016 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2015	27,425,854		$	4.22
Granted	3,771,250		$	7.35
Exercised	(3,360,248	)	$	2.81
Forfeited	(307,601	)	$	4.67
Expired	(80,516	)	$	10.49
Options outstanding at September 30, 2016	27,448,739		$	4.80	4.58 years	$	221,332
Exercisable at September 30, 2016	20,042,258		$	4.19	4.02 years	$	172,458

As of September 30, 2016, a total of 574,885 shares were available for grant under our stock option plans.

As of September 30, 2016, we had $22.9 million of unrecognized compensation expense related to employee stock options that is expected to be recognized over a weighted-average period of 3.01 years.

On March 7, 2016, as a result of the FDA acceptance of our New Drug Application “NDA” submission and on April 28, 2016, as a result of the FDA’s approval of our NDA submission, the Compensation Committee of the Board of Directors of Exelixis convened to determine we had met certain performance objectives related to performance-based stock options granted to employees in 2014 and 2015. As a result of these determinations, 5,870,303 performance-based stock options vested during the nine months ended September 30, 2016 and we recorded an additional $4.1 million in stock-based compensation expense during the period related to those options. During 2015, we recorded $3.3 million in employee stock-based compensation expense related to those options.

A summary of all restricted stock unit (“RSU”) activity for the nine months ended September 30, 2016 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Awards outstanding at December 31, 2015	1,002,188		$	5.16
Awarded	3,038,386		$	7.38
Vested and released	(1,390,654	)	$	5.55
Forfeited	(30,309	)	$	4.77
Awards outstanding at September 30, 2016	2,619,611		$	8.21	1.97 years	$	33,505

As of September 30, 2016, we had $13.9 million of unrecognized compensation expense related to employee RSUs that is expected to be recognized over a weighted-average period of 3.30 years.

During the nine months ended September 30, 2016, we made a bonus payment to our employees in the form of 1,072,833 shares of fully-vested restricted stock units which had a grant date fair value of $4.5 million.

- Definition

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

+ References + Details

Net Loss Per Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Net Loss Per Share

NET LOSS PER SHARE

The following table sets forth a reconciliation of basic and diluted net loss per share (in thousands, except per share amounts):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Numerator:
Net loss	$	(11,284	)	$	(45,542	)	$	(105,345	)	$	(120,176	)
Denominator:
Shares used in computing basic and diluted net loss per share	256,319			217,587			238,024			203,153
Net loss per share, basic and diluted	$	(0.04	)	$	(0.21	)	$	(0.44	)	$	(0.59	)

The following table sets forth potentially dilutive shares of common stock that are not included in the computation of diluted net loss per share because to do so would be anti-dilutive (in thousands):



	September 30
	2016	2015
Convertible Senior Subordinated Notes due 2019	413	54,118
Secured Convertible Notes due 2018	33,890	33,890
Outstanding stock options, unvested RSUs and ESPP contributions	30,474	31,331
Warrants	1,000	1,000
Total potentially dilutive shares	65,777	120,339

The warrants are participating securities and the warrant holders do not have a contractual obligation to share in our losses.

Concentrations of Credit Risk

9 Months Ended

Sep. 30, 2016

Risks and Uncertainties [Abstract]

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject us to concentrations of credit risk are primarily trade and other receivables and investments. Investments consist of money market funds, taxable commercial paper, corporate bonds with high credit quality, U.S. Treasury and government sponsored enterprises, and municipal bonds. All investments are maintained with financial institutions that management believes are creditworthy.

Trade and other receivables are unsecured and are concentrated in the pharmaceutical and biotechnology industries. Accordingly, we may be exposed to credit risk generally associated with pharmaceutical and biotechnology companies. We have incurred no bad debt expense since inception. As of September 30, 2016, 38%, 17%, 12% and 10% of our trade receivables are with Diplomat Specialty Pharmacy, Caremark L.L.C., Accredo Health, Incorporated and affiliates of McKesson Corporation, respectively. All of these customers pay promptly. As of September 30, 2016, we had also had other receivables for milestone payments totaling $60.0 million due from Ipsen and $15.0 million due from Daiichi Sankyo. We received the full amount due from Daiichi Sankyo subsequent to September 30, 2016 and expect to receive the payment from Ipsen in mid-November 2016 in accordance with the terms of our collaboration and license agreement with Ipsen.

All of our long-lived assets are located in the United States.

We have operations primarily in the United States, while some of our collaboration partners have headquarters outside of the United States and some of our clinical trials for cabozantinib are also conducted outside of the United States. The following table shows the percentage of revenues earned in the United States and Europe:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Percentage of revenues earned in the United States	98	%	96	%	98	%	90	%
Percentage of revenues earned in Europe	2	%	4	%	2	%	10	%

The following table sets forth the percentage of revenues recognized by customer that represent 10% or more of total revenues:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Product sales:
Diplomat Specialty Pharmacy	31	%	66	%	41	%	79	%
Sobi	2	%	4	%	2	%	10	%
Collaboration agreements:
Merck	—	%	30	%	4	%	11	%
Daiichi Sankyo	24	%	—	%	13	%	—	%

Organization and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	Organization Exelixis, Inc. (“Exelixis,” “we,” “our” or “us”) is a biopharmaceutical company committed to the discovery, development and commercialization of new medicines that will improve care and outcomes for people with cancer. Since its founding in 1994, three products discovered at Exelixis have progressed through clinical development, received regulatory approval, and entered the commercial marketplace. This portfolio includes two products derived from cabozantinib, an inhibitor of multiple tyrosine kinases including MET, AXL, and VEGF receptors. They are CABOMETYX™ tablets for the treatment of advanced kidney cancer and COMETRIQ^® capsules for the treatment of certain forms of thyroid cancer, each approved both in the United States and European Union. The third product is COTELLIC^®, a product derived from cobimetinib, a selective inhibitor of MEK, marketed under a collaboration with Roche and Genentech (a member of the Roche Group) that has been approved in combination with ZELBORAF^® (vemurafenib) to treat advanced melanoma in several major territories, including the United States and European Union.
Basis of Consolidation	Basis of Consolidation The condensed consolidated financial statements include the accounts of Exelixis and those of our wholly-owned subsidiaries. These entities’ functional currency is the U.S. dollar. All intercompany balances and transactions have been eliminated.
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.
Fiscal Period	We adopted a 52- or 53-week fiscal year that generally ends on the Friday closest to December 31^st. Fiscal year 2016 will end on December 30, 2016, and fiscal year 2015, ended on January 1, 2016. For convenience, references in this report as of and for the fiscal periods ended September 30, 2016, and October 2, 2015, and as of and for the fiscal years ended December 30, 2016 and January 1, 2016, are indicated as being as of and for the periods ended September 30, 2016, September 30, 2015, and the years ended December 31, 2016, and December 31, 2015, respectively.
Segment Information	Segment Information We operate as a single reportable segment.
Use of Estimates	Use of Estimates The preparation of our consolidated financial statements is in conformity with accounting principles generally accepted in the United States that requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates including, but not limited to, those related to revenue recognition, including for deductions from revenues (such as rebates, chargebacks, sales returns and sales allowances) and the period of performance, identification of deliverables and evaluation of milestones with respect to our collaborations, recoverability of inventory, certain accrued liabilities including clinical trial and collaboration liability accruals, the valuation of the debt and equity components of our convertible debt and share-based compensation. We base our estimates on historical experience and on various other market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.
Revenue Recognition	Revenue Recognition We recognize revenue from product sales and from license fees, milestones, contingent payments and royalties earned on research, collaboration and license arrangements. See “Note 1 - Organization and Summary of Significant Accounting Policies” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a description of our revenue recognition policies for product sales discounts and allowances, license and contract revenues under our collaboration agreement with Genentech and our Patient Assistance Program. Net Product Revenues We recognize revenue when it is both realized or realizable and earned, meaning persuasive evidence of an arrangement exists, delivery has occurred, title has transferred, the price is fixed or determinable, there are no remaining customer acceptance requirements, and collectability of the resulting receivable is reasonably assured. For product sales in the United States, this generally occurs upon delivery of the product to a specialty pharmacy or distributor. For product sales to our distribution partner, Swedish Orphan Biovitrum (“Sobi”), this generally occurs when Sobi has accepted the product. For product sales to our collaboration partner Ipsen, this generally occurs upon delivery. In the United States, we sell our products, CABOMETYX and COMETRIQ, to specialty pharmacies and distributors that benefit from customer incentives and have a right of return under certain circumstances. Prior to 2015, COMETRIQ had limited sales history and we could not reliably estimate expected future returns, discounts and rebates of the product at the time the product was sold to a single specialty pharmacy, therefore we recognized revenue when the specialty pharmacy provided the product to a patient based on the fulfillment of a prescription. This is frequently referred to as the “sell-through” revenue recognition model. In January 2015, we established that we had sufficient historical experience and data to reasonably estimate expected future returns of COMETRIQ and the discounts and rebates due to payors at the time of shipment to the specialty pharmacy. Accordingly, beginning in January 2015 we began to recognize revenue upon delivery to the specialty pharmacy. This approach is frequently referred to as the “sell-in” revenue recognition model. In connection with the change in the timing of recognition of U.S. COMETRIQ sales, we recorded a one-time adjustment to recognize revenue that had previously been deferred under the “sell-through” revenue recognition model, resulting in the additional recognition of gross product revenues of $2.6 million for the nine months ended September 30, 2015; there were no such additional amounts recorded during the comparable period in 2016. In determining discounts and allowances for the initial launch and sale of CABOMETYX, in addition to using payer data received from the specialty pharmacies and distributors that sell CABOMETYX and historical data for COMETRIQ, we also utilized claims data from third party sources for competitor products for the treatment of advanced renal cell carcinoma (“RCC”). Based in part on the availability of this third party data, we made the determination that we had sufficient experience and data to reasonably estimate expected future returns and the discounts and allowances due to payers at the time of shipment to the specialty pharmacy or distributor, and therefore record revenue for the product using the “sell-in” revenue recognition model. Net product revenues during the nine months ended September 30, 2016 were impacted by the build of channel inventory related to the initial launch period for CABOMETYX. We also utilize the “sell-in” revenue recognition model for product sales to Sobi for all periods presented. Once Sobi has accepted the product, the product is generally no longer subject to return; therefore, we record revenue at the time Sobi has accepted the product. As described further in “Note 2 - Research and Collaboration Agreements”, under the terms of our collaboration and license agreement with Ipsen for the commercialization and further development of cabozantinib, we provided Sobi with a notice of termination of our commercialization agreement for COMETRIQ which will become effective November 1, 2016. We expect to repurchase the remaining product on hand from Sobi following the termination. As of September 30, 2016, we recorded allowances for expected future returns totaling $0.4 million; there were no such allowances recorded as of December 31, 2015 or September 30, 2015. For product sales to Ipsen, which began during the three months ended September 30, 2016, we utilize the “sell-in” revenue recognition model. Once title has transferred to Ipsen, the product is generally no longer subject to return; therefore, we record revenue at the time product is delivered. Royalty, License and Contract Revenues We enter into corporate collaboration and license agreements under which we may obtain upfront license fees, research funding, and contingent, milestone and royalty payments. These arrangements have multiple elements and our deliverables may include intellectual property rights, distribution rights, delivery of manufactured product, and participation on joint steering, commercial and development committees. In order to account for these arrangements, we identify the deliverables and evaluate whether the delivered elements have value to our collaboration partner on a stand-alone basis and represent separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver future goods or services, a right or license to use an asset, or another performance obligation. If we determine that multiple deliverables exist, the consideration is allocated to one or more units of accounting based upon the best estimate of the selling price of each deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement shall be combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue then shall be determined for those combined deliverables as a single unit of accounting. For a combined unit of accounting, non-refundable upfront fees are recognized in a manner consistent with the final deliverable, which has generally been ratably over the period of continued involvement. Amounts received in advance of performance are recorded as deferred revenue. Upfront fees are classified as license revenues in our consolidated statements of operations. We consider sales-based contingent payments to be royalty revenue which is generally recognized at the date the contingency is achieved. Royalties are recorded based on sales amounts reported to us for the preceding quarter. For certain contingent payments under collaboration and license arrangements, we recognize revenue using the milestone method. Under the milestone method a payment that is contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is an event: (i) that can be achieved based in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to us. The determination that a milestone is substantive requires estimation and judgment and is made at the inception of the arrangement. Milestones are considered substantive when the consideration earned from the achievement of the milestone is: (i) commensurate with either our performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome resulting from our performance to achieve the milestone, (ii) relates solely to past performance and (iii) reasonable relative to all deliverables and payment terms in the arrangement. In making the determination as to whether a milestone is substantive or not, we consider all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whether any portion of the milestone consideration is related to future performance or deliverables.
Recently Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2014-09, Revenue from Contracts with Customers, (“ASU 2014-09”). ASU 2014-09 will replace most existing revenue recognition guidance when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued an update to defer the effective date of this update by one year. ASU 2014-09, as amended, becomes effective for us in the first quarter of fiscal year 2018, but allows us to adopt the standard one year earlier if we so choose. We currently plan to adopt this accounting standard in the first quarter of fiscal year 2018. We have not yet selected a transition method and are evaluating the effect that ASU 2014-09 will have on our Consolidated Financial Statements and related disclosures. In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, (“ASU 2015-05”). ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 was effective for all interim and annual reporting periods beginning after December 15, 2015 and therefore we adopted ASU 2015-05 in the three months ended March 31, 2016 on a prospective basis. The adoption of ASU 2015-05 did not have a material impact on our Condensed Consolidated Statements of Operations during the period of adoption and is not expected to have a material effect on our Consolidated Financial Statements in future periods. In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory (“ASU No. 2015-11”). ASU No. 2015-11 requires inventory measurement at the lower of cost and net realizable value. ASU No. 2015-11 are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted by all entities as of the beginning of an interim or annual reporting period. We are in the process of assessing the impact, if any, of ASU No. 2015-11 on our condensed consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”). ASU 2016-09 is aimed at the simplification of several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted. We do not expect the adoption of ASU 2016-09 to have a material impact on our Consolidated Financial Statements. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing and contingent consideration payments made after a business combination. We do not expect the adoption of ASU 2016-15 to have a material impact on our Consolidated Statements of Cash Flows.

Organization and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Error Corrections and Prior Period Adjustments



	Three months ended September 30, 2015			Nine months ended September 30, 2015			Year ended December 31,
	Three months ended September 30, 2015			Nine months ended September 30, 2015			2015			2014			2013			2012
Statements of Operations:
Interest expense, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(10,037	)	$	(30,501	)	$	(40,680	)	$	(41,362	)	$	(38,779	)	$	(24,778	)
Total other income (expense), net, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(9,761	)	$	(30,355	)	$	(40,268	)	$	(37,021	)	$	(37,556	)	$	(22,792	)
Net loss, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(45,542	)	$	(120,176	)	$	(161,744	)	$	(261,297	)	$	(238,192	)	$	(145,335	)
Net loss per share, basic and diluted, overstated by $0.01, $0.03, $0.04, $0.04, $0.04, $0.01 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(0.21	)	$	(0.59	)	$	(0.77	)	$	(1.34	)	$	(1.29	)	$	(0.91	)
Statements of Comprehensive Loss:
Comprehensive loss, overstated by $2,022, $5,920, $7,993, $7,245, $6,568, $2,310 for the three and nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(45,409	)	$	(120,096	)	$	(161,855	)	$	(261,564	)	$	(237,954	)	$	(145,289	)
Statements of Cash Flows⁽¹⁾:
Net loss, overstated by $5,920, $7,993, $7,245, $6,568, $2,310 for the nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	Not reported			$	(120,176	)	$	(161,744	)	$	(261,297	)	$	(238,192	)	$	(145,335	)
Accretion of debt discount and debt issuance costs, overstated by $5,920, $7,993, $7,245, $6,568, $2,310 for the nine months ended September 30, 2015 and the years ended December 31, 2015, 2014, 2013 and 2012, respectively	Not reported			$	14,274		$	17,041		$	22,289		$	19,722		$	12,442


(1)	The error did not impact our net cash provided by or used in operating activities, financing activities or investing activities for any of the periods presented.

Following are the amounts (in thousands) that should have been reported for the affected line items of the balance sheets and statements of stockholders’ (deficit) equity:



	December 31,
	2015			2014			2013			2012
Balance Sheets:
Long-term portion of convertible notes, understated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	337,937		$	223,629		$	301,550		$	291,828
Liabilities, understated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	473,148		$	482,592		$	483,452		$	476,015
Additional paid-in capital, overstated by $60,618 as of all dates presented	$	1,772,123		$	1,591,782		$	1,504,052		$	1,489,727
Accumulated deficit, overstated by $24,116, $16,124, $8,879, $2,310 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(1,912,925	)	$	(1,751,180	)	$	(1,489,883	)	$	(1,251,692	)
Stockholders’ (deficit) equity, misstated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(140,806	)	$	(159,323	)	$	14,499		$	238,127
Statements of Stockholders’ (Deficit) Equity:
Net loss, overstated by $7,993, $7,245, $6,568, $2,310 for the years ended December 31, 2015, 2014, 2013 and 2012, respectively	$	(161,744	)	$	(261,297	)	$	(238,192	)	$	(145,335	)
Additional paid-in capital, overstated by $60,618 as of all dates presented	$	1,772,123		$	1,591,782		$	1,504,052		$	1,489,727
Accumulated deficit, overstated by $24,116, $16,124, $8,879, $2,310 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(1,912,925	)	$	(1,751,180	)	$	(1,489,883	)	$	(1,251,692	)
Stockholders’ (deficit) equity, misstated by $36,502, $44,494, $51,739, $58,307 as of December 31, 2015, 2014, 2013 and 2012, respectively	$	(140,806	)	$	(159,323	)	$	14,499		$	238,127

Restructurings (Tables)

9 Months Ended

Sep. 30, 2016

Restructuring Charges [Abstract]

Summary Of Components Of Restructuring Liability

The changes of these liabilities during the nine months ended September 30, 2016, which related primarily to facilities, are summarized in the following table (in thousands):



	2010 Restructurings			2014 Restructuring			Total
Restructuring liability as of December 31, 2015	$	4,087		$	503		$	4,590
Restructuring charge	862			9			871
Proceeds from sale of assets	—			34			34
Cash payments, net	(3,774		)	(437		)	(4,211		)
Other items	975			(34		)	941
Restructuring liability as of September 30, 2016	$	2,150		$	75		$	2,225

Cash and Investments (Tables)

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-Sale Securities

The following tables summarize cash and cash equivalents, investments, and restricted cash and investments by balance sheet line item as of September 30, 2016 and December 31, 2015 (in thousands):



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	111,219	$	—	$	—		$	111,219
Short-term investments	208,412		70		(20		)	208,462
Long-term investments	55,840		28		(51		)	55,817
Long-term restricted cash and investments	4,150		—		—			4,150
Total cash and investments	$	379,621	$	98	$	(71	)	$	379,648



	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	141,634	$	—	$	—		$	141,634
Short-term investments	25,484		5		(63		)	25,426
Long-term investments	83,665		2		(67		)	83,600
Long-term restricted cash and investments	2,650		—		—			2,650
Total cash and investments	$	253,433	$	7	$	(130	)	$	253,310

Summary of Cash and Investments by Security Type

The amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	47,148	$	—	$	—		$	47,148
Commercial paper	133,309		—		—			133,309
Corporate bonds	124,346		44		(67		)	124,323
U.S. Treasury and government sponsored enterprises	61,228		54		(4		)	61,278
Total investments	$	366,031	$	98	$	(71	)	$	366,058



	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	72,000	$	—	$	—		$	72,000
Commercial paper	78,155		—		—			78,155
Corporate bonds	72,205		4		(118		)	72,091
U.S. Treasury and government sponsored enterprises	28,434		1		(12		)	28,423
Marketable equity security	16		2		—			18
Total investments	$	250,810	$	7	$	(130	)	$	250,687

Summary of Available-for-Sale Securities by Contractual Maturity

The following table summarizes the fair value of securities classified as available-for-sale by contractual maturity as of September 30, 2016 (in thousands):



	Mature within One Year		After One Year through Two Years		Fair Value
Money market funds	$	47,148	$	—	$	47,148
Commercial paper	133,309		—		133,309
Corporate bonds	74,661		49,662		124,323
U.S. Treasury and government sponsored enterprises	55,123		6,155		61,278
Total investments	$	310,241	$	55,817	$	366,058

Inventory (Tables)

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consists of the following (in thousands):



	September 30, 2016			December 31, 2015
Raw materials	$	890		$	1,037
Work in process	2,540			2,251
Finished goods	582			583
Total	4,012			3,871
Less: non-current portion included in Other assets	(720		)	(1,255		)
Inventory	$	3,292		$	2,616

Debt (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Schedule Of Debt

The amortized carrying amount of our debt consists of the following (in thousands):



	September 30, 2016			December 31, 2015
Convertible Senior Subordinated Notes due 2019 (“2019 Notes”)	$	1,865		$	235,210
Secured Convertible Notes due 2018 (“Deerfield Notes”)	108,993			102,727
Term loan payable	80,000			80,000
Total debt	190,858			417,937
Less: current portion	(109,365		)	—
Long-term debt	$	81,493		$	417,937

Summary Of The Liability Component Notes

The following is a summary of the liability component of the 2019 Notes (in thousands):



	September 30, 2016		December 31, 2015
Net carrying amount of the liability component	$	1,865	$	235,210
Unamortized discount of the liability component	327		52,290
Face amount of the 2019 Notes	$	2,192	$	287,500

The following is a summary of the interest expense for the 2019 Notes (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stated coupon interest	$	1,683	$	3,054	$	7,793	$	9,164
Amortization of debt discount and debt issuance costs	1,763		2,929		7,968		8,585
Total interest expense	$	3,446	$	5,983	$	15,761	$	17,749

The following is a summary of the interest expense for the Deerfield Notes (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stated coupon interest paid in cash	$	2,031	$	1,891	$	5,939	$	4,866
Amortization of debt discount, debt issuance costs and accrual of interest paid in kind	2,152		1,959		6,266		7,279
Total interest expense	$	4,183	$	3,850	$	12,205	$	12,145

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21521-112644

+ Details

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Schedule Of Fair Value Of Financial Assets Measured On A Recurring Basis

The amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	September 30, 2016
	Level 1		Level 2		Total
Money market funds	$	47,148	$	—	$	47,148
Commercial paper	—		133,309		133,309
Corporate bonds	—		124,323		124,323
U.S. Treasury and government sponsored enterprises	—		61,278		61,278
Total financial assets	$	47,148	$	318,910	$	366,058



	December 31, 2015
	Level 1		Level 2		Total
Money market funds	$	72,000	$	—	$	72,000
Commercial paper	—		78,155		78,155
Corporate bonds	—		72,091		72,091
U.S. Treasury and government sponsored enterprises	—		28,423		28,423
Marketable equity securities	18		—		18
Total financial assets	$	72,018	$	178,669	$	250,687

Schedule Of Estimated Fair Value Of Outstanding Debt

The estimated fair value of our financial instruments that are carried at amortized cost is as follows (in thousands):



	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2019 Notes	$	1,865	$	5,277	$	235,210	$	336,260
Deerfield Notes	$	108,993	$	110,806	$	102,727	$	101,096
Term loan payable	$	80,000	$	79,828	$	80,000	$	79,815

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Share-based Compensation [Abstract]

Schedule Of Allocated Employee Stock-Based Compensation Expenses

We recorded and allocated employee stock-based compensation expense for our equity incentive plans and our 2000 Employee Stock Purchase Plan (“ESPP”) as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Research and development expense	$	1,165	$	6,676	$	7,894	$	8,049
Selling, general and administrative expense	2,438		5,350		10,452		7,371
Total employee stock-based compensation expense	$	3,603	$	12,026	$	18,346	$	15,420

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

We use the Black-Scholes Merton option pricing model to value our stock options. The weighted average grant-date fair value of our stock options and ESPP purchases was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Stock options	$	8.59	$	3.92	$	4.31	$	2.51
ESPP	$	1.51	$	1.26	$	1.65	$	0.97

Schedule Of Fair Value Of Employee Share-Based Payments Awards Estimated Using The Assumptions And Weighted Average Fair Values

The fair value of employee stock option awards and ESPP purchases was estimated using the following assumptions:



	Stock Options
	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	1.07	%	1.18	%	1.09	%	1.20	%
Dividend yield	—	%	—	%	—	%	—	%
Volatility	76	%	88	%	76	%	93	%
Expected life	4.5 years		4.6 years		4.4 years		4.5 years



	Employee Stock Purchase Plan
	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	0.37	%	0.06	%	0.39	%	0.09	%
Dividend yield	—	%	—	%	—	%	—	%
Volatility	63	%	107	%	66	%	101	%
Expected life	6 months		6 months		6 months		6 months

Summary Of All Stock Option Activity

A summary of all stock option activity for the nine months ended September 30, 2016 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2015	27,425,854		$	4.22
Granted	3,771,250		$	7.35
Exercised	(3,360,248	)	$	2.81
Forfeited	(307,601	)	$	4.67
Expired	(80,516	)	$	10.49
Options outstanding at September 30, 2016	27,448,739		$	4.80	4.58 years	$	221,332
Exercisable at September 30, 2016	20,042,258		$	4.19	4.02 years	$	172,458

Summary Of All RSU Activity

A summary of all restricted stock unit (“RSU”) activity for the nine months ended September 30, 2016 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Awards outstanding at December 31, 2015	1,002,188		$	5.16
Awarded	3,038,386		$	7.38
Vested and released	(1,390,654	)	$	5.55
Forfeited	(30,309	)	$	4.77
Awards outstanding at September 30, 2016	2,619,611		$	8.21	1.97 years	$	33,505

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Schedule Of Reconciliation Of Basic And Diluted Net Income (Loss) Per Share

The following table sets forth a reconciliation of basic and diluted net loss per share (in thousands, except per share amounts):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Numerator:
Net loss	$	(11,284	)	$	(45,542	)	$	(105,345	)	$	(120,176	)
Denominator:
Shares used in computing basic and diluted net loss per share	256,319			217,587			238,024			203,153
Net loss per share, basic and diluted	$	(0.04	)	$	(0.21	)	$	(0.44	)	$	(0.59	)

Schedule Of Potential Shares Of Common Stock Not Included In Computation Of Diluted Net Loss Per Share



	September 30
	2016	2015
Convertible Senior Subordinated Notes due 2019	413	54,118
Secured Convertible Notes due 2018	33,890	33,890
Outstanding stock options, unvested RSUs and ESPP contributions	30,474	31,331
Warrants	1,000	1,000
Total potentially dilutive shares	65,777	120,339

Concentrations of Credit Risk (Tables)

9 Months Ended

Sep. 30, 2016

Risks and Uncertainties [Abstract]

Schedules of concentration risk

The following table sets forth the percentage of revenues recognized by customer that represent 10% or more of total revenues:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Product sales:
Diplomat Specialty Pharmacy	31	%	66	%	41	%	79	%
Sobi	2	%	4	%	2	%	10	%
Collaboration agreements:
Merck	—	%	30	%	4	%	11	%
Daiichi Sankyo	24	%	—	%	13	%	—	%

The following table shows the percentage of revenues earned in the United States and Europe:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Percentage of revenues earned in the United States	98	%	96	%	98	%	90	%
Percentage of revenues earned in Europe	2	%	4	%	2	%	10	%

Organization and Summary of Significant Accounting Policies (Details)

3 Months Ended

9 Months Ended

12 Months Ended

45 Months Ended

Apr. 25, 2016

Sep. 30, 2016

USD ($)

Sep. 30, 2015

USD ($)

Sep. 30, 2016

USD ($)

segment

Sep. 30, 2015

USD ($)

Dec. 31, 2015

USD ($)

Dec. 31, 2014

USD ($)

Dec. 31, 2013

USD ($)

Dec. 31, 2012

USD ($)

Sep. 30, 2016

USD ($)

Aug. 31, 2012

USD ($)

Operations [Line Items]

Number of operating segments | segment

Net income (loss)

$ (11,284,000)

$ (45,542,000)

$ (105,345,000)

$ (120,176,000)

$ (161,744,000)

$ (261,297,000)

$ (238,192,000)

$ (145,335,000)

Retained earnings (accumulated deficit)

(2,018,270,000)

(1,912,925,000)

^[1]

$ (1,751,180,000)

$ (1,489,883,000)

$ (1,251,692,000)

$ (2,018,270,000)

Net product revenues

42,742,000

6,854,000

83,459,000

24,234,000

157,700,000

Shipping period for newly approved product, upon initial approval

3 days

Cash and investments

379,648,000

253,310,000

379,648,000

Cash and investments available for operations

293,800,000

Compensating balance investments

81,600,000

Long-term restricted cash and investments

4,150,000

2,650,000

^[1]

4,150,000

Reserve for returns and repurchase of unsold product

400,000

“Sell-In” Revenue Recognition Model [Member]

Operations [Line Items]

Net product revenues

$ 0

$ 2,600,000

Senior Subordinated Notes [Member] | Convertible Senior Subordinated Notes due 2019 [Member]

Operations [Line Items]

Debt, principal amount

$ 2,192,000

$ 287,500,000

$ 2,192,000

$ 287,500,000.0

Debt, interest rate (as a percent)

4.25%

[1]	The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date.

Organization and Summary of Significant Accounting Policies (Correction of Immaterial Error Impact on Comprehensive Income) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Interest expense	$ (7,834)	$ (10,037)	$ (28,575)	$ (30,501)	$ (40,680)	$ (41,362)	$ (38,779)	$ (24,778)
Total other income (expense), net	(18,548)	(9,761)	(38,338)	(30,355)	(40,268)	(37,021)	(37,556)	(22,792)
Net loss	$ (11,284)	$ (45,542)	$ (105,345)	$ (120,176)	$ (161,744)	$ (261,297)	$ (238,192)	$ (145,335)
Net loss per share, basic and diluted, in dollars per share	$ (0.04)	$ (0.21)	$ (0.44)	$ (0.59)	$ (0.77)	$ (1.34)	$ (1.29)	$ (0.91)
Comprehensive loss	$ (11,493)	$ (45,409)	$ (105,193)	$ (120,096)	$ (161,855)	$ (261,564)	$ (237,954)	$ (145,289)
Accretion of debt discount and debt issuance costs			$ 8,295	14,274	17,041	22,289	19,722	12,442
Revision Adjustment [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Interest expense		2,022		5,920	7,993	7,245	6,568	2,310
Total other income (expense), net		2,022		5,920	7,993	7,245	6,568	2,310
Net loss		$ 2,022		$ 5,920	$ 7,993	$ 7,245	$ 6,568	$ 2,310
Net loss per share, basic and diluted, in dollars per share		$ 0.01		$ 0.03	$ 0.04	$ 0.04	$ 0.04	$ 0.01
Comprehensive loss		$ 2,022		$ 5,920	$ 7,993	$ 7,245	$ 6,568	$ 2,310
Accretion of debt discount and debt issuance costs				$ (5,920)	$ (7,993)	$ (7,245)	$ (6,568)	$ (2,310)

Organization and Summary of Significant Accounting Policies (Correction of Immaterial Error Impact on Balance Sheet and Stockholders' Equity) (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2012

Error Corrections and Prior Period Adjustments Restatement [Line Items]

Long-term portion of convertible notes

$ 81,493

$ 337,937

^[1]

$ 223,629

$ 301,550

$ 291,828

Liabilities

516,468

473,148

^[1]

482,592

483,452

476,015

Additional paid-in capital

2,050,086

1,772,123

^[1]

1,591,782

1,504,052

1,489,727

Accumulated deficit

(2,018,270)

(1,912,925)

^[1]

(1,751,180)

(1,489,883)

(1,251,692)

Stockholders' (deficit) equity

32,022

(140,806)

^[1]

(159,323)

14,499

238,127

Revision Adjustment [Member]

$ (11,284)

$ (45,542)

$ (105,345)

$ (120,176)

(161,744)

(261,297)

(238,192)

(145,335)

Error Corrections and Prior Period Adjustments Restatement [Line Items]

Long-term portion of convertible notes

36,502

44,494

51,739

58,307

Liabilities

36,502

44,494

51,739

58,307

Additional paid-in capital

(60,618)

Accumulated deficit

24,116

16,124

8,879

2,310

Stockholders' (deficit) equity

(36,502)

(44,494)

(51,739)

(58,307)

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

$ 2,022

$ 5,920

$ 7,993

$ 7,245

$ 6,568

$ 2,310

[1]	The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date.

Research and Collaboration Agreements (Ipsen Collaboration) (Details)

1 Months Ended

3 Months Ended

9 Months Ended

Feb. 29, 2016

USD ($)

payment

country

Mar. 31, 2016

USD ($)

Sep. 30, 2016

USD ($)

Sep. 30, 2016

USD ($)

Dec. 31, 2015

USD ($)

Sep. 30, 2015

USD ($)

Current portion of deferred revenue

$ 18,939,000

$ 0

^[1]

Long-term portion of deferred revenue

232,573,000

^[1]

Reserve for returns and repurchase of unsold product

400,000

$ 0

Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Upfront and milestone payments

$ 200,000,000

Eligible payment from collaboration for development and regulatory milestone achievement Under Collaborations Agreement

$ 240,000,000

Maximum amount eligible for commercial milestones under collaborations agreement

$ 525,000,000

Research and development arrangement performed for others, reimbursement for costs incurred (as a percent)

35.00%

License and contract revenue

3,800,000

8,600,000

Current portion of deferred revenue

18,900,000

Long-term portion of deferred revenue

232,600,000

RCC [Member] | Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Eligible payment from collaboration for development and regulatory milestone achievement Under Collaborations Agreement

$ 60,000,000

HCC Filing [Member] | Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Eligible payment from collaboration for development and regulatory milestone achievement Under Collaborations Agreement

10,000,000

HCC Acceptance [Member] | Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Eligible payment from collaboration for development and regulatory milestone achievement Under Collaborations Agreement

$ 40,000,000

EU Country Launch [Member] | Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Number of payments to be received upon milestone achievement | payment

Maximum amount eligible for commercial milestones under collaborations agreement

$ 10,000,000

Number of countries in which entity launches product | country

Initial [Member] | Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Second [Member] | Ipsen [Member]

2.00%

Royalty tier

$ 50,000,000

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Initial and second [Member] | Ipsen [Member]

12.00%

Royalty tier

$ 100,000,000

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Royalty tier

$ 150,000,000.0

Minimum [Member] | Ipsen [Member]

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Maximum [Member] | Ipsen [Member]

22.00%

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Swedish Orphan Biovitrum [Member]

26.00%

Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]

Termination fee

2,700,000

Reserve for returns and repurchase of unsold product

$ 400,000

[1]	The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements as of that date.

Research and Collaboration Agreements (Genetech and Other Collaborations) (Details) - USD ($)	1 Months Ended			3 Months Ended		9 Months Ended
	Nov. 30, 2015	Jan. 31, 2007	Dec. 31, 2006	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Genentech [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront and milestone payments		$ 15,000,000.0	$ 25,000,000
Profit sharing agreement, percent of total sales force	25.00%
License and contract revenue				$ 700,000	$ 0	$ 1,800,000	$ 0
Profit Sharing Tier One [Member] \| Genentech [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Profit sharing agreement (as a percent of profits)						50.00%
Profit sharing agreement, profit threshold						$ 200,000,000
Profit Sharing Tier Two [Member] \| Genentech [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Profit sharing agreement (as a percent of profits)						30.00%
Profit sharing agreement, profit threshold						$ 400,000,000
Selling, general and administrative expense [Member] \| Genentech [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative arrangement, income (loss) from agreement				(2,900,000)	(4,300,000)	(14,800,000)	(11,800,000)
Daiichi Sankyo [Member] \| Other Collaborative Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contract revenues from contingent payments earned				$ 15,000,000		15,000,000
Merck [Member] \| Other Collaborative Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contract revenues from contingent payments earned					$ 3,000,000	$ 5,000,000	$ 3,000,000

Restructurings (Narrative) (Details) $ in Thousands	3 Months Ended		9 Months Ended		39 Months Ended
Restructurings (Narrative) (Details) $ in Thousands	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	May 31, 2013 restructuring	Dec. 31, 2015 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring (recovery) charge	$ (244)	$ 282	$ 871	$ 1,142
Restructuring reserve	2,225		2,225			$ 4,590
Expected additional restructuring costs to be incurred	100		100
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring (recovery) charge			800	1,500
Recovery related to sublease			(100)
Recoveries related to sale of buildings				$ (900)
2010 Restructurings [Member]
Restructuring Cost and Reserve [Line Items]
Number of restructurings implemented \| restructuring					5
Restructuring (recovery) charge			862
Restructuring reserve	$ 2,150		$ 2,150			$ 4,087

Restructurings (Summary of Components of Restructuring Liability) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Restructuring Reserve [Roll Forward]
Restructuring liability, beginning balance			$ 4,590
Restructuring charge	$ (244)	$ 282	871	$ 1,142
Proceeds from sale of assets			34
Cash payments, net			(4,211)
Other items			941
Restructuring liability, ending balance	2,225		2,225
2010 Restructurings [Member]
Restructuring Reserve [Roll Forward]
Restructuring liability, beginning balance			4,087
Restructuring charge			862
Proceeds from sale of assets			0
Cash payments, net			(3,774)
Other items			975
Restructuring liability, ending balance	2,150		2,150
2014 Restructuring [Member]
Restructuring Reserve [Roll Forward]
Restructuring liability, beginning balance			503
Restructuring charge			9
Proceeds from sale of assets			34
Cash payments, net			(437)
Other items			(34)
Restructuring liability, ending balance	$ 75		$ 75

Cash and Investments (Details)	9 Months Ended
Cash and Investments (Details)	Sep. 30, 2016 USD ($) account investment affiliate	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 379,621,000		$ 253,433,000
Gross Unrealized Gains	98,000		7,000
Gross Unrealized Losses	(71,000)		(130,000)
Fair Value	$ 379,648,000		253,310,000
Debt collateral, number of required investment accounts \| account	1
Debt collateral, number of affiliate banks \| affiliate	1
Amortized Cost	$ 366,031,000		250,810,000
Gross Unrealized Gains	98,000		7,000
Gross Unrealized Losses	(71,000)		(130,000)
Fair Value	366,058,000		250,687,000
Other than temporary impairment losses, available-for-sale securities	$ 0	$ 0
Number of investments in an unrealized loss position, less than 1 year \| investment	37
Unrealized loss position, less than 1 year	$ (71,000)
Unrealized loss position, less than 1 year, fair value	67,300,000
Mature within One Year	310,241,000
After One Year through Two Years	55,817,000
Fair Value	366,058,000		250,687,000
Money market funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	47,148,000		72,000,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Fair Value	47,148,000		72,000,000
Mature within One Year	47,148,000
After One Year through Two Years	0
Fair Value	47,148,000		72,000,000
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	133,309,000		78,155,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Fair Value	133,309,000		78,155,000
Mature within One Year	133,309,000
After One Year through Two Years	0
Fair Value	133,309,000		78,155,000
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	124,346,000		72,205,000
Gross Unrealized Gains	44,000		4,000
Gross Unrealized Losses	(67,000)		(118,000)
Fair Value	124,323,000		72,091,000
Mature within One Year	74,661,000
After One Year through Two Years	49,662,000
Fair Value	124,323,000		72,091,000
U.S. Treasury and government sponsored enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	61,228,000		28,434,000
Gross Unrealized Gains	54,000		1,000
Gross Unrealized Losses	(4,000)		(12,000)
Fair Value	61,278,000		28,423,000
Mature within One Year	55,123,000
After One Year through Two Years	6,155,000
Fair Value	61,278,000		28,423,000
Marketable equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost			16,000
Gross Unrealized Gains			2,000
Gross Unrealized Losses			0
Fair Value			18,000
Fair Value			18,000
Silicon Valley Bank Loan And Security Agreement [Member]
Schedule of Available-for-sale Securities [Line Items]
Collateral balance	81,600,000		81,600,000
Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	111,219,000		141,634,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Fair Value	111,219,000		141,634,000
Short-term investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	208,412,000		25,484,000
Gross Unrealized Gains	70,000		5,000
Gross Unrealized Losses	(20,000)		(63,000)
Fair Value	208,462,000		25,426,000
Long-term investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	55,840,000		83,665,000
Gross Unrealized Gains	28,000		2,000
Gross Unrealized Losses	(51,000)		(67,000)
Fair Value	55,817,000		83,600,000
Long-term restricted cash and investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,150,000		2,650,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Fair Value	$ 4,150,000		$ 2,650,000

Inventory (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Dec. 31, 2015

Inventory Disclosure [Abstract]

Raw materials

$ 890

$ 1,037

Work in process

2,540

2,251

Finished goods

582

583

Total

4,012

3,871

Less: non-current portion included in Other assets

(720)

(1,255)