View Filing Data

Other current liabilities

31,377

19,665

Convertible notes

109,122

Term loan payable

80,000

26,356

16,923

Total current liabilities

108,953

268,786

Other long-term liabilities

246,092

237,094

16,012

541

Total liabilities

371,057

506,421

Commitments

Stockholders’ equity

Preferred stock, $0.001 par value, 10,000,000 shares authorized and no shares issued

Common stock, $0.001 par value; 400,000,000 shares authorized; issued and outstanding: 295,700,576 and 289,923,798 at September 30, 2017 and December 31, 2016, respectively

296

290

Additional paid-in capital

2,106,132

2,072,591

Accumulated other comprehensive loss

(52)

(416)

Accumulated deficit

(1,867,661)

(1,983,147)

Total stockholders’ equity

238,715

89,318

Total liabilities and stockholders’ equity

$ 609,772

$ 595,739

[1]	The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements as of that date.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
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	295,700,576	289,923,798
Common stock, shares outstanding	295,700,576	289,923,798

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Net product revenues	$ 96,416	$ 42,742	$ 253,297	$ 83,459
Collaboration revenues	56,094	19,452	79,108	30,414
Total revenues	152,510	62,194	332,405	113,873
Operating expenses:
Cost of goods sold	4,658	2,455	10,875	4,700
Research and development	28,543	20,256	79,967	72,166
Selling, general and administrative	38,129	32,463	113,116	103,143
Restructuring (recovery) charge	0	(244)	(32)	871
Total operating expenses	71,330	54,930	203,926	180,880
Income (loss) from operations	81,180	7,264	128,479	(67,007)
Other income (expense), net:
Interest income and other, net	3,408	3,059	6,098	4,010
Interest expense	0	(7,834)	(8,679)	(28,575)
Loss on extinguishment of debt	0	(13,773)	(6,239)	(13,773)
Total other income (expense), net	3,408	(18,548)	(8,820)	(38,338)
Income (loss) before income taxes	84,588	(11,284)	119,659	(105,345)
Income tax expense	3,206	0	3,921	0
Net income (loss)	$ 81,382	$ (11,284)	$ 115,738	$ (105,345)
Net income (loss) per share, basic (in dollars per share)	$ 0.28	$ (0.04)	$ 0.39	$ (0.44)
Net income (loss) per share, diluted (in dollars per share)	$ 0.26	$ (0.04)	$ 0.37	$ (0.44)
Shares used in computing net income (loss) per share, basic (in shares)	294,269	256,319	292,776	238,024
Shares used in computing net income (loss) per share, diluted (in shares)	312,940	256,319	311,555	238,024

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

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Statement of Comprehensive Income [Abstract]

Net income (loss)

$ 81,382

$ (11,284)

$ 115,738

$ (105,345)

Other comprehensive income (loss)

^[1]

(209)

364

152

Comprehensive income (loss)

$ 81,449

$ (11,493)

$ 116,102

$ (105,193)

[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 nominal or no reclassification adjustments to net income (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 Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Reclassification adjustments to net income (loss) resulting from realized gains or losses on sale of securities	$ 0	$ 0	$ 0	$ 0
Other comprehensive income, tax	$ 0	$ 0	$ 0	$ 0

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

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Statement of Cash Flows [Abstract]

Net income (loss)

$ 115,738

$ (105,345)

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

Depreciation and amortization

842

754

Stock-based compensation expense

15,029

18,346

Loss on extinguishment of debt

6,239

13,773

Amortization of debt discounts and debt issuance costs

182

8,295

Interest paid in kind

(11,825)

5,939

Gain on other equity investments

(2,980)

(2,494)

Other

1,530

1,332

Changes in assets and liabilities:

Trade and other receivables

(49,241)

(85,026)

Inventory, net

(2,468)

(676)

Prepaid expenses and other current assets

(2,530)

(3,342)

Other long-term assets

689

535

Accounts payable

(577)

(2,436)

Accrued compensation and benefits

(420)

12,357

Accrued clinical trial liabilities

2,050

(3,184)

Accrued collaboration liabilities

7,091

7,772

Deferred revenue

20,710

251,512

Other current and long-term liabilities

12,199

7,183

Net cash provided by operating activities

112,258

125,295

Cash flows from investing activities:

Purchases of property and equipment

(3,449)

(1,116)

Proceeds from sale of property and equipment

Purchases of investments

(248,046)

(258,509)

Proceeds from maturities of investments

266,335

100,635

Proceeds from sale of investments

37,294

2,266

Purchase of restricted cash and investments

(11,150)

(4,150)

Proceeds from maturities of restricted cash and investments

10,650

2,650

Proceeds from other equity investments

2,980

2,494

Net cash provided by (used in) investing activities

54,628

(155,638)

Cash flows from financing activities:

Repayment of convertible notes and term loan payable

(185,788)

Payment on conversion of convertible notes

(7,134)

Proceeds from exercise of stock options

16,532

9,296

Proceeds from employee stock purchase plan

3,053

479

(3,012)

(2,713)

Net cash used in financing activities

(169,215)

(72)

Net decrease in cash and cash equivalents

(2,329)

(30,415)

Cash and cash equivalents at beginning of period

151,686

^[1]

141,634

Cash and cash equivalents at end of period

149,357

111,219

Supplemental cash flow disclosure - non-cash investing and financing activity:

CIP deemed acquired in Build-to-Suit Lease

14,530

Issuance of common stock in settlement of convertible notes

$ 0

$ 285,308

[1]	The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements as of that date.

Organization and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
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 biotechnology company committed to the discovery, development and commercialization of new medicines to improve care and outcomes for people with cancer. Since our founding in 1994, three products discovered at Exelixis have progressed through clinical development, received regulatory approval, and entered the marketplace. Two are derived from cabozantinib, an inhibitor of multiple tyrosine kinases including VEGF, MET, AXL and RET receptors: CABOMETYX® (cabozantinib) tablets approved for previously treated advanced renal cell carcinoma (“RCC”) and COMETRIQ® (cabozantinib) capsules approved for progressive, metastatic medullary thyroid cancer. The third product, COTELLIC® (cobimetinib) tablets, is a reversible inhibitor of MEK, marketed under a collaboration with Genentech (a member of the Roche Group), and is approved as part of a combination regimen to treat advanced melanoma. 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 United States (“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 U.S. 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 have adopted a 52- or 53-week fiscal year policy that generally ends on the Friday closest to December 31^st. Fiscal year 2017 will end on December 29, 2017 and fiscal year 2016 ended on December 30, 2016. For convenience, references in this report as of and for the fiscal periods ended September 29, 2017 and September 30, 2016, and as of and for the fiscal years ended December 29, 2017 and December 30, 2016, are indicated as being as of and for the periods ended September 30, 2017 and September 30, 2016, and the years ended December 31, 2017 and December 31, 2016, respectively. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 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, 2016, included in our Annual Report on Form 10-K filed with the SEC on February 27, 2017. Use of Estimates The preparation of our condensed consolidated financial statements conforms to accounting principles generally accepted in the U.S. which 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 deductions from revenues (such as rebates, chargebacks, sales returns and sales allowances), the period of performance, identification of deliverables and evaluation of milestones with respect to our collaborations, the amounts of revenues and expenses under our profit and loss sharing agreement, recoverability of inventory, certain accrued liabilities including accrued clinical trial liability, and stock-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. Reclassifications Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to current period presentation. We reclassified $1.8 million in payable to our customers from Other current liabilities to Trade and other receivables in the accompanying December 31, 2016 Condensed Consolidated Balance Sheet. We have also reclassified the related balances between line items in Changes in assets and liabilities in the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 to conform the presentation of those line items to the corresponding presentation of assets and liabilities in our accompanying Condensed Consolidated Balance Sheets. Segment Information We operate as a single reportable segment. Stock-Based Compensation In January 2017, we adopted Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation (Topic 718): 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 accounting for forfeitures, income tax consequences and classification on the statement of cash flows. Pursuant to the adoption of ASU 2016-09, we have made an election to record forfeitures when they occur. Previously, stock-based compensation was based on the number of awards expected to vest after considering estimated forfeitures. The change in accounting principle with regards to forfeitures was adopted using a modified retrospective approach, with a cumulative adjustment of $0.3 million to accumulated deficit and additional paid-in-capital as of January 1, 2017. No prior periods were restated as a result of this change in accounting principle. As a result of the adoption of ASU 2016-09, as of January 1, 2017 we also recorded an increase to the federal and state net operating losses of $56.9 million for excess tax benefits previously not included. The resulting increase to the deferred tax assets of approximately $21.2 million was offset by a corresponding increase to the valuation allowance, resulting in a net zero impact to both our income tax expense in our Condensed Consolidated Statements of Operations and our deferred tax assets and liabilities in our Condensed Consolidated Balance Sheets. ASU 2016-09 also requires that cash paid to taxing authorities when directly withholding shares for tax withholding purposes be classified as a financing activity on our Condensed Consolidated Statement of Cash Flows. Previously, we classified such payments as operating cash flows. The change in accounting principle with regards to such cash flows was adopted using a retrospective approach. Accordingly, we recorded a reclassification that resulted in an increase in cash provided by operating activities by $2.7 million along with a corresponding increase in cash used in financing activities in our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended, becomes effective for us in the first quarter of fiscal year 2018, which is when we will adopt the standard. ASU 2014-09 also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We will adopt ASU 2014-09 using the modified retrospective method. The core principle of ASU 2014-09 is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, has created the possibility that more judgment and estimates may be required within the revenue recognition process than required under existing U.S. generally accepted accounting pronouncements. We have substantially completed our analysis on the adoption of ASU 2014-09 and have determined the adoption will not have a material impact on the recognition of revenue from product sales. ASU 2014-09 will impact the timing of recognition of revenue for our collaboration arrangements with Ipsen Pharma SAS (“Ipsen”) and Takeda Pharmaceutical Company Ltd. (“Takeda”). We expect to reclassify deferred revenue to accumulated deficit (a concept known as “lost revenue”) for amounts associated with these collaboration arrangements upon recording our transition adjustment in the first quarter of 2018, primarily due to the timing of recognition of revenue related to intellectual property licenses that we have transferred for development and commercialization of our products. Additionally, for all of our collaboration arrangements, the timing of recognition of certain of our development and regulatory milestones could change as a result of the variable consideration guidance included in ASU 2014-09. ASU 2014-09 will also require additional disclosures regarding our revenue transactions.

Collaboration Agreements

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration Agreements

COLLABORATION AGREEMENTS

Ipsen Collaboration

In February 2016, we entered into a collaboration and license agreement (the “Ipsen Collaboration Agreement”) with Ipsen for the commercialization and further development of cabozantinib. Pursuant to the terms of the Ipsen Collaboration Agreement, Ipsen received exclusive commercialization rights for current and potential future cabozantinib indications outside of the U.S., Canada and Japan (the “Ipsen Territory”). The Ipsen Collaboration Agreement was subsequently amended in December 2016 (the “Amendment”) to include commercialization rights in Canada in the Ipsen Territory. 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 Ipsen Collaboration Agreement, Ipsen paid us an upfront nonrefundable payment of $200.0 million in March 2016. Additionally, as a result of the Amendment, we received a $10.0 million upfront nonrefundable payment from Ipsen in December 2016 and, as a result of the approval of cabozantinib in second-line RCC by the European Commission (“EC”) in September 2016, we received a $60.0 million milestone in November 2016. We are receiving a 2% royalty on the initial $50.0 million of net sales by Ipsen, and are entitled to receive a 12% royalty on the next $100.0 million of net sales by Ipsen. After the initial $150.0 million of sales, we are entitled to receive a tiered royalty of 22% to 26% on annual net sales by Ipsen; these tiers will reset each calendar year. We are primarily responsible for funding cabozantinib-related development costs for those trials in existence at the time we entered into the Ipsen Collaboration Agreement; global development costs for additional trials are shared between the parties, with Ipsen reimbursing us for 35% of such costs, provided Ipsen opts in to participate in such additional trials. Pursuant to the terms of the Ipsen Collaboration Agreement, we will remain responsible for the manufacture and supply of cabozantinib for all development and commercialization activities. As part of the collaboration agreement, we entered into a supply agreement pursuant to which we will supply finished, labeled drug product to Ipsen for distribution in the Ipsen Territories at our cost, as defined in the agreement, which excludes the 3% royalty we are required to pay GlaxoSmithKline (“GSK”) on Ipsen’s Net Sales of any product incorporating cabozantinib.

The Ipsen Collaboration Agreement contains multiple deliverables consisting 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, development and commercialization committees (as defined in the Ipsen Collaboration Agreement). We determined that these deliverables do not have stand-alone value and accordingly, 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 and the $10.0 million upfront payment received in December 2016 in consideration for the development and commercialization rights in Canada are being recognized ratably over the term of the Ipsen Collaboration Agreement, through early 2030, which is the current estimated patent expiration of cabozantinib in the European Union. At the time we entered into the Ipsen Collaboration Agreement, we also determined that the $60.0 million milestone we achieved upon the approval of cabozantinib by the EC 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 collaboration agreement; the $60.0 million was deferred entirely until the date of the European Medicines Agency’s (the “EMA”) approval of cabozantinib in second-line RCC in September 2016 and has been and will continue to be recognized ratably over the remainder of the term of the Ipsen Collaboration Agreement. The two $10.0 million milestones for the first commercial sales of CABOMETYX in Germany and the United Kingdom were determined to be substantive at the time we entered into the Ipsen Collaboration Agreement and were recognized as collaboration revenues in the fourth quarter of 2016. 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. Reimbursements for development costs are classified as revenue as the development services represent our ongoing major or central operations.

During the three months ended March 31, 2017, we reclassified $9.0 million of deferred revenue to Accrued collaboration liabilities and Other long-term liabilities, and accordingly adjusted our amortization of the upfront payment of $200.0 million as a result of a change in operational responsibilities for certain clinical programs in the Ipsen Territory. As of September 30, 2017, we had paid $2.1 million toward the $9.0 million of reimbursements due to Ipsen for these clinical programs.

In September 2017, we recognized two milestones totaling $45.0 million resulting from Ipsen’s receipt of the validation from the EMA for the application for variation to the CABOMETYX marketing authorization for the addition of a new indication in first-line treatment of advanced RCC in adults. The two milestones were determined to be substantive at the time we entered into the Ipsen Collaboration Agreement and were recognized as collaboration revenues in the third quarter of 2017. Payment for the first milestone of $20.0 million is due in the fourth quarter of 2017 and payment for the second milestone of $25.0 million is due in the first quarter of 2018.

See “Note 2 - Collaboration Agreements” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017 for additional description of our collaboration agreement with Ipsen.

During the three and nine months ended September 30, 2017 and 2016, collaboration revenues under the Ipsen Collaboration Agreement were as follows (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Milestones achieved	$	45,000		$	—	$	45,000		$	—
Amortization of upfront payments and deferred milestone	4,742			3,780		13,788			8,570
Royalty revenue	371			—		814			—
Development cost reimbursements	1,123			—		2,322			—
Product supply agreement revenue	1,681			—		3,483			—
Cost of supplied product	(1,681		)	—		(3,483		)	—
Royalty payable to GSK on net sales by Ipsen	(557		)	—		(1,221		)	—
Collaboration revenues under the Ipsen Collaboration Agreement	$	50,679		$	3,780	$	60,703		$	8,570

As of September 30, 2017, short-term and long-term deferred revenue relating to the Ipsen Collaboration Agreement was $19.0 million and $215.0 million, respectively.

Genentech Collaboration

In December 2006, we out-licensed the further development and commercialization of cobimetinib to Genentech pursuant to a worldwide collaboration agreement (the “Genentech Collaboration Agreement”). Under the terms of the Genentech Collaboration Agreement for cobimetinib, we are entitled to a share of profits and losses received in connection with cobimetinib’s commercialization in the U.S. This 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. Separately, we are entitled to low double-digit royalties on net sales outside the U.S. In November 2013, we exercised an option under the Genentech Collaboration Agreement to co-promote COTELLIC in the U.S., which allows for us to provide up to 25% of the total sales force for approved cobimetinib indications in the U.S. In 2015, we began fielding 25% of the sales force promoting COTELLIC in combination with Zelboraf® as a treatment for patients with BRAF mutation-positive advanced melanoma.

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 arising from COTELLIC’s commercialization in the U.S. Our arbitration demand asserted that Genentech breached the Genentech Collaboration Agreement by, amongst other breaches, failing to meet its diligence and good faith obligations.

On July 13, 2016, Genentech asserted a counterclaim for breach of contract seeking monetary damages and interest related to the cost allocations under the Genentech Collaboration Agreement. On December 29, 2016, however, Genentech withdrew its counterclaim against us and stated that it would unilaterally change its approach to the allocation of promotional expenses arising from commercialization of the COTELLIC plus Zelboraf combination therapy, both retrospectively and prospectively. The revised allocation approach substantially reduced our exposure to costs associated with promotion of the COTELLIC plus Zelboraf combination in the U.S. However, other significant issues remained in dispute between the parties. Genentech’s action did not address the claims in our demand for arbitration related to Genentech’s clinical development of cobimetinib, or pricing or promotional costs for COTELLIC in the U.S. and it did not fully resolve claims over revenue allocation. In addition, Genentech’s unilateral action did not clarify how it intended to allocate promotional costs incurred with respect to the promotion of other combination therapies that include COTELLIC for other indications that may be developed or are in development and may be approved. As a result, we continued to press our position before the arbitral panel to obtain a just resolution of these claims.

On June 8, 2017, the parties settled the arbitration, which was dismissed with prejudice. The settlement was memorialized in a settlement agreement dated July 19, 2017, that included a mutual release of all claims arising out of or related in any way to the causes of actions and/or claims that were asserted or could have been asserted based on the facts alleged in the arbitration. The settlement does not provide for payments in settlement of the asserted claims; as part of the settlement, on July 19, 2017, the parties entered into an amendment to the Genentech Collaboration Agreement. Pursuant to the terms of the amendment, we continue to be entitled to a share of U.S. profits and losses received in connection with the commercialization of COTELLIC in accordance with the profit share tiers as originally set forth in the collaboration agreement, which share continues to decrease as sales of COTELLIC increase. However, effective as of July 1, 2017, the revenue for each sale of COTELLIC applied to the profit and loss statement for the collaboration agreement (the “Collaboration P&L”) is being calculated using the average of the quarterly net selling prices of COTELLIC and any additional branded Genentech product(s) prescribed with COTELLIC in such sale. While we also continue to share U.S. commercialization costs for COTELLIC, the amendment expressly sets forth that the amount of commercialization costs Genentech is entitled to allocate to the Collaboration P&L is to be reduced based on the number of Genentech products in any given combination including COTELLIC. In addition, the amendment also sets forth the parties’ confirmation and agreement that we have exercised our co-promotion option and that, as such, we have the option to co-promote current and future Genentech combinations that include COTELLIC in the U.S.

During the three and nine months ended September 30, 2017 and 2016, ex-U.S. royalty revenues and U.S. losses under the Genentech Collaboration Agreement were as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Royalty revenues on ex-U.S. sales of COTELLIC included in Collaboration revenues	$	1,392		$	672		$	5,057		$	1,844
U.S. losses included in Selling, general and administrative expenses⁽¹⁾	$	(891	)	$	(2,922	)	$	(2,298	)	$	(14,845	)

____________________


(1)	A portion of the accrual for losses for the three and nine months ended September 30, 2016 were reversed in December 2016 when we were relieved of our obligation to pay certain disputed costs as a result of Genentech’s unilateral change to its approach to the allocation of promotional expenses arising from commercialization of the COTELLIC plus Zelboraf combination therapy.

The U.S. losses under the Genentech Collaboration Agreement include our share of the net loss from the collaboration, as well as personnel and other costs we have incurred to co-promote COTELLIC plus Zelboraf in the U.S.

Royalty revenues from the Genentech Collaboration Agreement are based on amounts reported to us by Genentech and are recorded when such information becomes available to us. For prior periods, from the launch of COTELLIC through December 31, 2016, such information was not available until the following quarter, meaning that historically we recorded royalty revenues on a one quarter lag. Beginning in 2017, such information became available to us in the current quarter. As a result of this change, during the nine months ended September 30, 2017, in addition to the royalties reported to us for that period we also recorded $1.1 million in royalties for the sales activity related to the three months ended December 31, 2016.

Takeda Collaboration

On January 30, 2017, we entered into a collaboration and license agreement (the “Takeda Collaboration Agreement”) with Takeda for the commercialization and further clinical development of cabozantinib in Japan. Pursuant to the terms of the Takeda Collaboration Agreement, Takeda will have exclusive commercialization rights for current and potential future cabozantinib indications in Japan. The companies have also agreed to collaborate on the clinical development of cabozantinib in Japan. The operation and strategic direction of the parties’ collaboration is governed through a joint executive committee and appropriate subcommittees.

In consideration for the exclusive license and other rights contained in the Takeda Collaboration Agreement, Takeda paid us an upfront nonrefundable payment of $50.0 million in February 2017. We will be eligible to receive development, regulatory and first-sales milestones of up to $95.0 million related to second-line RCC, first-line RCC and second-line hepatocellular carcinoma (“HCC”), as well as additional development, regulatory and first-sale milestone payments for potential future indications. The Takeda Collaboration Agreement also provides that we will be eligible to receive pre-specified payments of up to $83.0 million associated with potential sales milestones. We will also receive royalties on net sales of cabozantinib in Japan at an initial tiered rate of 15% to 24% on net sales for the first $300.0 million of cumulative net sales. Thereafter, the royalty rate will be adjusted to 20% to 30% on annual net sales.

Takeda will be responsible for 20% of the costs associated with the global cabozantinib development plan’s current and future trials, provided Takeda opts to participate in such future trials, and 100% of costs associated with cabozantinib development activities that are exclusively for the benefit of Japan. Pursuant to the terms of the Takeda Collaboration Agreement, we will remain responsible for the manufacture and supply of cabozantinib for all development and commercialization activities under the collaboration. As part of the collaboration, the parties will enter into appropriate supply agreements for the manufacture and supply of cabozantinib for Takeda’s territory.

During the three and nine months ended September 30, 2017, collaboration revenues under the Takeda Collaboration Agreement were as follows (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
Amortization of upfront payment	$	2,830	$	7,547
Development cost reimbursements	1,193		3,301
Collaboration revenues under the Takeda Collaboration Agreement	$	4,023	$	10,848

There was no such revenue during the comparable periods in 2016. As of September 30, 2017, short-term and long-term deferred revenue relating to the Takeda Collaboration Agreement was $11.3 million and $31.1 million, respectively.

The Takeda Collaboration Agreement may be terminated for cause by either party based on uncured material breach by the other party, bankruptcy of the other party or for safety reasons. For clarity, Takeda’s failure to achieve specified levels of commercial performance, based upon sales volume and/or promotional effort, during the first six years following the first commercial sale of cabozantinib in Japan shall constitute a material breach of the Takeda Collaboration Agreement. We may terminate the agreement if Takeda challenges or opposes any patent covered by the Takeda Collaboration Agreement. At any time prior to August 1, 2023, the parties may mutually agree to terminate the Takeda Collaboration Agreement if Japan’s Pharmaceuticals and Medical Devices Agency is unlikely to grant approval of the marketing authorization application in any cancer indication in Japan. After the commercial launch of cabozantinib in Japan, Takeda may terminate the Takeda Collaboration Agreement upon twelve months’ prior written notice following the third anniversary of the first commercial sale of cabozantinib in Japan. Upon termination by either party, all licenses granted by us to Takeda will automatically terminate, and the licenses granted by Takeda to us shall survive such termination and shall automatically become worldwide.

The Takeda Collaboration Agreement contains multiple deliverables consisting of intellectual property licenses, delivery of products and/or materials containing cabozantinib to Takeda for all development and commercial activities, research and development services, and participation on the joint executive, development and commercialization committees (as defined in the Takeda Collaboration Agreement). We determined that these deliverables, other than the commercial supply and joint commercialization committee participation, are non-contingent in nature. The commercial supply deliverable was deemed contingent, primarily due to the fact that there is uncertainty around approval in Japan, which is dependent on successful clinical trial results from a study in Japanese patients. We also determined that the non-contingent deliverables do not have stand-alone value, because each one of them has value only if we meet our obligation as a whole to provide Takeda with research and development services, including clinical supply of cabozantinib under the Takeda Collaboration Agreement. Accordingly, we combined the non-contingent deliverables into a single unit of accounting and allocated the $50.0 million upfront fee to that combined unit of accounting. We also determined that the level of effort required of us to meet our obligations under the Takeda Collaboration Agreement is not expected to vary significantly over the development period of the Takeda Collaboration Agreement. As a result, the upfront payment of $50.0 million, received in the first quarter of 2017, will be recognized ratably over the development period of the Takeda Collaboration Agreement of approximately four years. We determined that the 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. We will record reimbursements for development costs as revenue as the development services represent a part of our ongoing major or central operations.

Bristol-Myers Squibb Collaboration - First-Line Advanced RCC, Bladder Cancer and HCC Combination Studies

In February 2017, we entered into a clinical trial collaboration agreement with Bristol-Myers Squibb Company (the “BMS Collaboration Agreement”) for the purpose of evaluating the combination of cabozantinib and nivolumab with or without ipilimumab in various tumor types, including, in RCC, HCC and bladder cancer. To date, a phase 3 trial in first-line advanced RCC and a phase 2 trial in HCC evaluating these combinations has been initiated. Pursuant to the terms of the BMS Collaboration Agreement, each party will grant to the other a non-exclusive, worldwide (within the collaboration territory as defined in the BMS Collaboration Agreement), non-transferable, royalty-free license to use the other party’s compounds in the conduct of each clinical trial. The parties’ efforts are governed through a joint development committee established to guide and oversee the collaboration’s operation. Each trial will be conducted under a combination Investigational New Drug Application, unless otherwise required by a regulatory authority. Each party will be responsible for supplying drug product for the applicable clinical trial in accordance with the terms of the supply agreement entered into between the parties in April 2017, and costs for each such trial will be shared equally between the parties, unless two Bristol-Myers Squibb Company (“BMS”) compounds will be utilized in such trial, in which case BMS will bear two-thirds of the costs and we will bear one-third of the costs for such study treatment arms. Unless earlier terminated, the BMS Collaboration Agreement will remain in effect until the completion of all clinical trials under the collaboration, all related trial data has been delivered to both parties and the completion of any then agreed upon analysis. Ipsen has opted in to participate in the phase 3 pivotal trial in first-line advanced RCC and will have access to the results to support potential future regulatory submissions. Ipsen may also participate in future studies at its choosing.

The Roche Group Collaboration

In February 2017, we established a clinical trial collaboration with The Roche Group (“Roche”) for the purpose of evaluating the safety and tolerability of cabozantinib in combination with Roche’s atezolizumab in patients with locally advanced or metastatic solid tumors. Each party is responsible for supplying drug product for the applicable clinical trial in accordance with the terms of the clinical supply agreement entered into by the parties in February 2017. Based on the dose-escalation results, the trial has the potential to enroll up to four expansion cohorts, including a cohort of patients with previously untreated advanced clear cell RCC and three cohorts of urothelial carcinoma, namely platinum eligible first-line patients, first or second-line platinum ineligible patients and patients previously treated with platinum-containing chemotherapy. The trial was initiated in June 2017 and is open for enrollment. We are the sponsor of the trial, and Roche is responsible for supplying atezolizumab to us. Ipsen has opted to participate in the study and will have access to the results to support potential future development in its territories.

GlaxoSmithKline Collaboration

In October 2002, we established a collaboration with GSK to discover and develop novel therapeutics in the areas of vascular biology, inflammatory disease and oncology. Under the terms of the product development and commercialization agreement, GSK had the right to choose cabozantinib for further development and commercialization, but notified us in October 2008 that it had waived its right to select the compound for such activities. As a result, we retained the rights to develop, commercialize, and license cabozantinib, subject to payment to GSK of a 3% royalty on net sales of any product incorporating cabozantinib. The product development and commercialization agreement was terminated during 2014, although GSK will continue to be entitled to a 3% royalty on net sales by us or our collaboration partners of any product incorporating cabozantinib, including COMETRIQ and CABOMETYX.

During the three and nine months ended September 30, 2017 and 2016, royalties owed to GSK in connection with the sales of COMETRIQ and CABOMETYX were as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Royalties owed to GSK	$	3,446	$	1,277	$	8,809	$	2,495

Royalties owed to GSK are included in Cost of goods sold for sales by us and as a reduction of Collaboration revenues for sales by Ipsen in the accompanying Condensed Consolidated Statements of Operations.

Other Collaborations

During the nine months ended September 30, 2017, we recognized $2.5 million in contract revenues from a milestone payment received from BMS related to its ROR gamma program.

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 Company, Limited (“Daiichi Sankyo”) related to its worldwide license of our compounds that modulate the mineralocorticoid receptor (“MR”), including CS-3150 (an isomer of XL550). During the nine months ended September 30, 2016, we also recognized $5.0 million in contract revenues from a milestone payment earned from Merck related to its worldwide license of our phosphoinositide-3 kinase-delta program.

See “Note 2 - Collaboration Agreements” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017 for a description of our existing collaboration agreements.

Cash and Investments

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016 (in thousands):



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	149,357	$	—	$	—		$	149,357
Short-term investments	217,805		17		(81		)	217,741
Long-term investments	50,557		41		(29		)	50,569
Long-term restricted cash and investments	4,650		—		—			4,650
Total cash and investments	$	422,369	$	58	$	(110	)	$	422,317



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	151,686	$	—	$	—		$	151,686
Short-term investments	268,234		13		(130		)	268,117
Long-term investments	55,792		1		(192		)	55,601
Long-term restricted cash and investments	4,150		—		—			4,150
Total cash and investments	$	479,862	$	14	$	(322	)	$	479,554

Under our loan and security agreement with Silicon Valley Bank, we were 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 balance of $81.6 million as of December 31, 2016 is reflected in our Condensed Consolidated Balance Sheet in short-term investments; as a result of our repayment of the term loan with Silicon Valley Bank, the compensating balance requirement was terminated as of March 29, 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, 2016 filed with the SEC on February 27, 2017 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, 2017 and December 31, 2016. The amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	42,797	$	—	$	—		$	42,797
Commercial paper	168,738		—		—			168,738
Corporate bonds	187,197		58		(95		)	187,160
U.S. Treasury and government sponsored enterprises	14,659		—		(15		)	14,644
Total investments	$	413,391	$	58	$	(110	)	$	413,339



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	71,457	$	—	$	—		$	71,457
Commercial paper	165,375		—		—			165,375
Corporate bonds	152,712		3		(308		)	152,407
U.S. Treasury and government sponsored enterprises	70,730		11		(14		)	70,727
Total investments	$	460,274	$	14	$	(322	)	$	459,966

Gains and losses on the sales of investments available-for-sale were nominal or zero during the three and nine months ended September 30, 2017 and 2016.

All of our investments are subject to a quarterly impairment review. During the nine months ended September 30, 2017 and 2016 we did not record any other-than-temporary impairment charges on our available-for-sale securities. As of September 30, 2017, there were 84 investments in an unrealized loss position with gross unrealized losses of $0.1 million and an aggregate fair value of $134.9 million. The investments in an unrealized loss position comprise corporate bonds with an aggregate fair value of $124.9 million and securities issued by U.S. Treasury and government sponsored enterprises with an aggregate fair value of $10.0 million. 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, 2017 (in thousands):



	Mature within One Year		After One Year through Five Years		Fair Value
Money market funds	$	42,797	$	—	$	42,797
Commercial paper	168,738		—		168,738
Corporate bonds	136,592		50,568		187,160
U.S. Treasury and government sponsored enterprises	14,644		—		14,644
Total investments	$	362,771	$	50,568	$	413,339

Cash is excluded from the table above. The classification of certain restricted investments is dependent upon the term of the underlying restriction on the asset and not the maturity date of the investment. Therefore, certain long-term restricted cash and investments have contractual maturities within one year.

Inventory

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Inventory

INVENTORY

Inventory consists of the following (in thousands):



	September 30, 2017			December 31, 2016
Raw materials	$	378		$	863
Work in process	2,951			2,343
Finished goods	2,856			738
Total	6,185			3,944
Less: non-current portion included in Other long-term assets	(379		)	(606		)
Inventory, net	$	5,806		$	3,338

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 was 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 either Cost of goods sold or the cost of supplied product included in Collaboration revenues. Such write-downs were $1.2 million for the nine months ended September 30, 2017 and $0.4 million for the comparable period in 2016. The non-current portion of inventory is expected to be used or sold in future periods more than 12 months from the date presented. As of September 30, 2017, the non-current portion of inventory consists of finished goods. As of December 31, 2016, the non-current portion of inventory consists of raw materials and a portion of the active pharmaceutical ingredient that is included in work in process inventories.

Property and Equipment

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):



	September 30, 2017			December 31, 2016
Computer equipment and software	$	14,242		$	13,738
Leasehold improvements	4,715			6,646
Laboratory equipment	5,836			4,310
Furniture and fixtures	1,954			2,240
Construction-in-progress	15,627			19
	42,374			26,953
Less: accumulated depreciation and amortization	(23,118		)	(24,882		)
Property and equipment, net	$	19,256		$	2,071

Depreciation expense was $0.8 million during both the nine months ended September 30, 2017 and 2016.

Build-to-Suit Lease

On May 2, 2017, we entered into a Lease Agreement (the “Lease”) with Ascentris 105, LLC (“Ascentris”), to lease 110,783 square feet of space in office and research facilities located at 1851, 1801, and 1751 Harbor Bay Parkway, Alameda, California (the “Premises”). On October 16, 2017, we executed an amendment to the Lease for 19,778 square feet of additional space located at the Premises with terms consistent with the original Lease. See “Note 12. Commitments” for a description of the Lease.

In connection with the Lease, we received a tenant improvement allowance of $6.7 million from Ascentris, for the costs associated with the design, development and construction of tenant improvements for the Premises. We are obligated to fund all costs incurred in excess of the tenant improvement allowance and to certain indemnification obligations related to the construction activities. We evaluated our involvement during the construction period and determined the scope of the tenant improvements on portions of the Premises including the building shells did not qualify as “normal tenant improvements” under Accounting Standards Codification topic 840, Leases. Accordingly, for accounting purposes, we are the deemed owner of such portions of the Premises during the construction period. As such, we will capitalize the construction costs as a build-to-suit property within property and equipment, net, including the estimated fair value of the building shells that we are deemed to own at the lease inception date, as determined using a third-party appraisal. The capitalized construction costs will also include the estimated tenant improvements incurred by Ascentris. Accordingly, we capitalized $14.5 million of costs related to the Lease in construction-in-progress as of May 2, 2017, with a corresponding build-to-suit lease obligation in Other long-term liabilities. As of September 30, 2017, we have capitalized an additional $0.5 million to construction in progress for improvements to the Premises.

Once the construction is complete, we will consider the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownership have been transferred back to Ascentris, as evidenced by a lack of continuing involvement in the leased property. If the arrangement does not qualify for sale-leaseback accounting treatment, the building assets will remain on our consolidated balance sheets at their historical cost.

Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Debt

DEBT

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



	September 30, 2017		December 31, 2016
Secured Convertible Notes due 2018 (“Deerfield Notes”)	$	—	$	109,122
Term loan payable	—		80,000
Total debt	$	—	$	189,122

See “Note 7 - Debt” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017 for additional information on the terms of our debt, including a description of the material features of the Deerfield Notes.

Deerfield Notes

On June 28, 2017, we repaid all amounts outstanding under the Deerfield Notes. The repayment amount totaled $123.8 million which comprised $113.9 million in principal, including $13.9 million of interest paid in kind paid through the repayment date, a $5.8 million prepayment penalty associated with the early repayment of the notes and $4.2 million in accrued and unpaid interest. As a result of the early repayment, there was a $6.2 million loss on the extinguishment of the debt which comprised the prepayment penalty and the unamortized fees and costs on the date of the repayment.

Prior to our early repayment of the notes, the outstanding principal amount of the Deerfield Notes bore 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. The following is a summary of interest expense for the Deerfield Notes (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Stated coupon interest	$	—	$	2,031	$	4,151	$	5,939
Interest paid in kind	—		2,031		4,151		5,939
Amortization of debt discount and debt issuance costs	—		121		182		327
Total interest expense	$	—	$	4,183	$	8,484	$	12,205

The balance of unamortized fees and costs was $0.4 million as of December 31, 2016, which was recorded as a reduction of the carrying amount of the Deerfield Notes on the accompanying Condensed Consolidated Balance Sheet.

Silicon Valley Bank Loan and Security Agreement

On March 29, 2017, we repaid all amounts outstanding under our term loan with Silicon Valley Bank. The repayment included $80.0 million in principal plus $0.1 million in accrued and unpaid interest. There was no gain or loss on the extinguishment of debt as a result of the repayment of the term loan. Prior to our early repayment of the term loan, the principal amount outstanding under the term loan had accrued interest at 1.0% per annum, which was due and payable monthly.

In accordance with the terms of the loan and security agreement, we were required to maintain an amount equal to at least 100%, but not to exceed 107%, of the outstanding principal balance of the term loan on deposit in one or more investment accounts with Silicon Valley Bank or one of its affiliates as support for our obligations under the loan and security agreement. We were entitled to retain income earned on the amounts maintained in such accounts. The total collateral balance as of December 31, 2016 was $81.6 million and was reflected in our Condensed Consolidated Balance Sheet in Short-term investments as the amounts were not restricted as to withdrawal. As a result of our repayment of the term loan, the compensating balance requirement was terminated as of March 29, 2017.

2014 Warrants 2014 Warrants	9 Months Ended
2014 Warrants 2014 Warrants	Sep. 30, 2017
Equity [Abstract]
2014 Warrants	2014 WARRANTS In connection with an amendment to the note purchase agreement for the Secured Convertible Notes due 2015, (the “Original Deerfield Notes”), in January 2014 we issued two-year warrants to purchase an aggregate of 1,000,000 shares of our common stock at an exercise price of $9.70 per share (the “2014 Warrants”). Subsequent to our March 2015 notification of our election to extend the maturity date of the Deerfield Notes, the exercise price of the 2014 Warrants was reset to $3.445 per share, the term was extended by two years to January 22, 2018, and the 2014 Warrants were transferred to Additional paid-in capital as of that date at their then estimated fair value of $1.5 million as their terms had become fixed. On September 11, 2017, we issued an aggregate of 877,451 shares of common stock pursuant to the cashless exercises of the 2014 Warrants issued to an accredited investor transferee. The number of shares issued upon exercise was net of 122,549 shares withheld to effect the cashless exercise of the 2014 Warrants in accordance with their terms.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [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,
	2017		2016		2017		2016
Research and development expense	$	1,663	$	1,165	$	4,741	$	7,894
Selling, general and administrative expense	3,626		2,438		10,288		10,452
Total stock-based compensation expense	$	5,289	$	3,603	$	15,029	$	18,346

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Stock options	$	11.75	$	8.59	$	10.32	$	4.31
ESPP	$	6.85	$	1.51	$	5.29	$	1.65

The fair value of stock options and ESPP purchases was estimated using the following assumptions:



	Stock Options
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Risk-free interest rate	1.70	%	1.07	%	1.68	%	1.09	%
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	58	%	76	%	61	%	76	%
Expected life	4.0 years		4.5 years		4.1 years		4.4 years



	ESPP
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Risk-free interest rate	1.14	%	0.37	%	0.88	%	0.39	%
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	55	%	63	%	61	%	66	%
Expected life	6 months		6 months		6 months		6 months

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

A summary of stock option activity for the nine months ended September 30, 2017 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2016	24,999,665		$	4.91
Granted	821,260		$	21.60
Exercised	(4,282,847	)	$	3.94
Forfeited	(204,525	)	$	8.14
Options outstanding at September 30, 2017	21,333,553		$	5.72	4.08 years	$	395,212
Exercisable at September 30, 2017	15,961,685		$	4.41	3.59 years	$	316,415

As of September 30, 2017, a total of 24,037,291 shares were available for grant under our stock option plans.

A summary of restricted stock unit (“RSU”) activity for the nine months ended September 30, 2017 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2016	2,469,791		$	8.69
Awarded	331,847		$	22.03
Vested and released	(348,294	)	$	4.63
Forfeited	(111,603	)	$	10.89
RSUs outstanding at September 30, 2017	2,341,741		$	11.08	1.55 years	$	56,740

Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income tax expense consists of the following (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Income tax expense	$	3,206	$	—	$	3,921	$	—

During the nine months ended September 30, 2017, we recorded income tax expense of $3.9 million, which primarily comprises our computed income tax expense of $5.2 million reduced by $1.2 million of excess benefits associated with equity compensation. The income tax expense for the three and nine months ended September 30, 2017 primarily relates to state taxes in jurisdictions outside of California, for which we do not have net operating loss carry-forwards due to a limited operating history.

Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

NET INCOME (LOSS) PER SHARE

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (loss)	$	81,382		$	(11,284	)	$	115,738		$	(105,345	)
Net income allocated to participating securities	(221		)	—			(368		)	—
Net income allocable to common stock for basic net income (loss) per share	81,161			(11,284		)	115,370			(105,345		)
Adjustment to net income allocated to participating securities	14			—			23			—
Net income allocable to common stock for diluted net income (loss) per share	$	81,175		$	(11,284	)	$	115,393		$	(105,345	)

Weighted-average shares of common stock outstanding	294,269			256,319			292,776			238,024
Dilutive securities:
Outstanding stock options, unvested RSUs and ESPP contributions	18,671			—			18,779			—
Weighted-average shares of common stock outstanding and dilutive securities	312,940			256,319			311,555			238,024

Net income (loss) per share, basic	$	0.28		$	(0.04	)	$	0.39		$	(0.44	)
Net income (loss) per share, diluted	$	0.26		$	(0.04	)	$	0.37		$	(0.44	)

The 2014 Warrants were participating securities and the warrant holders did not have a contractual obligation to share in our losses. See “Note 7 - 2014 Warrants” for a description of the 2014 Warrants.

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



	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Outstanding stock options, unvested RSUs and ESPP contributions	583	30,474	1,108	30,474
Deerfield Notes	—	33,890	—	33,890
4.25% convertible senior subordinated notes due 2019 (the “2019 Notes”)	—	413	—	413
2014 Warrants	—	1,000	—	1,000
Total potentially dilutive shares	583	65,777	1,108	65,777

The 2014 Warrants were exercised in September 2017. The Deerfield Notes were repaid in June 2017. The 2019 Notes were converted and redeemed between August and November 2016.

Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The following table sets forth the classification of our financial assets within the fair value hierarchy that were measured and recorded at fair value on a recurring basis as of September 30, 2017 and December 31, 2016. We did not have any financial liabilities measured and recorded at fair value on a recurring basis as of those dates. The amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	September 30, 2017
	Level 1		Level 2		Total
Money market funds	$	42,797	$	—	$	42,797
Commercial paper	—		168,738		168,738
Corporate bonds	—		187,160		187,160
U.S. Treasury and government sponsored enterprises	—		14,644		14,644
Total financial assets	$	42,797	$	370,542	$	413,339



	December 31, 2016
	Level 1		Level 2		Total
Money market funds	$	71,457	$	—	$	71,457
Commercial paper	—		165,375		165,375
Corporate bonds	—		152,407		152,407
U.S. Treasury and government sponsored enterprises	—		70,727		70,727
Total financial assets	$	71,457	$	388,509	$	459,966

We did not have any financial assets or liabilities classified as Level 3 in the fair value hierarchy as of September 30, 2017 or December 31, 2016 and there were no transfers of financial assets or liabilities classified as Level 3 during the nine months ended September 30, 2017 or the year ended December 31, 2016.

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

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 are Level 2 inputs.

- 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

Commitments

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments

COMMITMENTS

Leases

On May 2, 2017, we entered into the Lease with Ascentris for an aggregate of 110,783 square feet of space in office and research facilities located at the Premises in Alameda, California. We also have the right to make certain tenant improvements to the space leased on the Premises. The Lease has an initial term of 10 years with a target commencement date of February 1, 2018, and, subject to a partial twelve-month rent abatement period, rent payments will begin upon the target commencement date. We have two five-year options to extend the Lease and a one-time option to terminate the Lease without cause on the last day of the 8^th year of the initial term. We are obligated to make lease payments totaling $24.1 million over the Lease term. The Lease further provides that we are obligated to pay to Ascentris certain costs, including taxes and operating expenses. We also have a right of first offer to lease certain additional space, in the aggregate of approximately 170,000 square feet of space, as that additional space becomes available over the remainder of the initial term at 1601, 1701, 1751, and 1801 Harbor Bay Parkway, Alameda, California at a market rate determined according to the Lease.

We are deemed, for accounting purposes only, to be the owner of portions of the Premises, including two building shells, even though we are not the legal owner. See “Note 5. Property and Equipment - Build-to-Suit Lease” for a further description of the accounting for that portion of the Premises.

On May 2, 2017, we also entered into an Agreement for Conditional Option to Amend Lease (the “Optional Amendment Agreement”) with Ascentris. Under the terms of the Optional Amendment Agreement, a current tenant (the “Tenant”) occupying approximately 16,343 square feet of the facility located at 1801 Harbor Bay Parkway was given the option to relocate to another building on the premises or terminate their current lease early, requiring them to relocate within six months from the termination date. Under the terms of the Optional Amendment Agreement, we would reimburse Ascentris for the first $1.5 million of costs incurred to induce the Tenant to relocate. In August 2017, the Tenant communicated to Ascentris that they were terminating their lease early. As of September 30, 2017, we have accrued $1.4 million for our anticipated reimbursement of costs to Ascentris for the Tenant’s relocation. On October 16, 2017, we executed an amendment to the Lease for an additional 19,778 square feet of space located on the Premises, which includes the space vacated by the Tenant, with terms consistent with the original Lease.

As of September 30, 2017, the aggregate future minimum lease payments under our leases are as follows (in thousands):



	Operating leases		Other financing obligations⁽¹⁾
Remainder of 2017	$	1,006	$	—
Year Ending December 31,
2018	2,802		566
2019	605		1,477
2020	630		1,685
2021	637		1,745
2022	646		1,814
Thereafter	3,465		10,441
	$	9,791	$	17,728

____________________


(1)	Other financing obligations includes payments related to our build-to-suit lease.

Rent expense and sublease income were as follows for the periods presented (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017			2016
Gross rental expense	$	1,215	$	1,972		$	4,986		$	7,424
less: Sublease income	—		(908		)	(1,225		)	(2,637		)
Net rental expense	$	1,215	$	1,064		$	3,761		$	4,787

Letter of Credit

We obtained a standby letter of credit in May 2017 in the amount of $0.5 million, which may be drawn down by Ascentris in the event we fail to fully and faithfully perform all of our obligations under the Lease and to compensate Ascentris for all losses and damages Ascentris may suffer as a result of the occurrence of any default on our part not cured within the applicable cure period. As of September 30, 2017, none of the standby letter of credit amount has been used.

See “Note 13 - Commitments” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017 for a description of additional letters of credits that were entered into prior to December 31, 2016.

Concentrations of Credit Risk

9 Months Ended

Sep. 30, 2017

Risks and Uncertainties [Abstract]

Concentrations of Credit Risk

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, commercial paper, corporate bonds with high credit quality, and securities issued by the U.S. Treasury and other government sponsored enterprises. 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, 2017, 55% of our trade receivables are with Ipsen, which include the amounts due from two milestones totaling $45.0 million resulting from Ipsen’s receipt of the validation from the EMA for the application for variation to the CABOMETYX marketing authorization for the addition of a new indication in first-line treatment of advanced RCC in adults. Payment for the first milestone of $20.0 million is due in the fourth quarter of 2017 and payment for the second milestone of $25.0 million is due in the first quarter of 2018. Ipsen historically has paid promptly.

The percentage of total revenues recognized by customer that represent 10% or more of total revenues was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Diplomat Specialty Pharmacy	13	%	31	%	19	%	41	%
Ipsen	33	%	6	%	18	%	8	%
Caremark L.L.C.	13	%	9	%	16	%	8	%
Affiliates of McKesson Corporation	10	%	6	%	12	%	5	%
Accredo Health, Incorporated	9	%	9	%	11	%	7	%
Daiichi Sankyo	—	%	24	%	—	%	13	%

All of our long-lived assets are located in the U.S. We have operations solely in the U.S., while some of our collaboration partners have headquarters outside of the U.S. and some of our clinical trials for cabozantinib are also conducted outside of the U.S.

The following table shows the revenues earned by geographic region. Net product revenues are attributed to regions based on the delivery location. Collaboration revenues are attributed to regions based on the location of our collaboration partner's headquarters (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
U.S.	$	97,807	$	41,971	$	260,853	$	87,757
Europe	50,680		5,223		60,704		11,116
Japan	4,023		15,000		10,848		15,000

We recorded losses of $0.2 million relating to foreign exchange fluctuations for both the nine months ended September 30, 2017 and 2016.

Organization and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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 United States (“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 U.S. 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 have adopted a 52- or 53-week fiscal year policy that generally ends on the Friday closest to December 31^st. Fiscal year 2017 will end on December 29, 2017 and fiscal year 2016 ended on December 30, 2016. For convenience, references in this report as of and for the fiscal periods ended September 29, 2017 and September 30, 2016, and as of and for the fiscal years ended December 29, 2017 and December 30, 2016, are indicated as being as of and for the periods ended September 30, 2017 and September 30, 2016, and the years ended December 31, 2017 and December 31, 2016, respectively.
Use of Estimates	Use of Estimates The preparation of our condensed consolidated financial statements conforms to accounting principles generally accepted in the U.S. which 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 deductions from revenues (such as rebates, chargebacks, sales returns and sales allowances), the period of performance, identification of deliverables and evaluation of milestones with respect to our collaborations, the amounts of revenues and expenses under our profit and loss sharing agreement, recoverability of inventory, certain accrued liabilities including accrued clinical trial liability, and stock-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.
Reclassifications	Reclassifications Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to current period presentation. We reclassified $1.8 million in payable to our customers from Other current liabilities to Trade and other receivables in the accompanying December 31, 2016 Condensed Consolidated Balance Sheet. We have also reclassified the related balances between line items in Changes in assets and liabilities in the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 to conform the presentation of those line items to the corresponding presentation of assets and liabilities in our accompanying Condensed Consolidated Balance Sheets.
Segment Information	Segment Information We operate as a single reportable segment.
Stock-Based Compensation	Stock-Based Compensation In January 2017, we adopted Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation (Topic 718): 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 accounting for forfeitures, income tax consequences and classification on the statement of cash flows. Pursuant to the adoption of ASU 2016-09, we have made an election to record forfeitures when they occur. Previously, stock-based compensation was based on the number of awards expected to vest after considering estimated forfeitures. The change in accounting principle with regards to forfeitures was adopted using a modified retrospective approach, with a cumulative adjustment of $0.3 million to accumulated deficit and additional paid-in-capital as of January 1, 2017. No prior periods were restated as a result of this change in accounting principle. As a result of the adoption of ASU 2016-09, as of January 1, 2017 we also recorded an increase to the federal and state net operating losses of $56.9 million for excess tax benefits previously not included. The resulting increase to the deferred tax assets of approximately $21.2 million was offset by a corresponding increase to the valuation allowance, resulting in a net zero impact to both our income tax expense in our Condensed Consolidated Statements of Operations and our deferred tax assets and liabilities in our Condensed Consolidated Balance Sheets. ASU 2016-09 also requires that cash paid to taxing authorities when directly withholding shares for tax withholding purposes be classified as a financing activity on our Condensed Consolidated Statement of Cash Flows. Previously, we classified such payments as operating cash flows. The change in accounting principle with regards to such cash flows was adopted using a retrospective approach. Accordingly, we recorded a reclassification that resulted in an increase in cash provided by operating activities by $2.7 million along with a corresponding increase in cash used in financing activities in our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of ASU 2014-09 by one year. ASU 2014-09, as amended, becomes effective for us in the first quarter of fiscal year 2018, which is when we will adopt the standard. ASU 2014-09 also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We will adopt ASU 2014-09 using the modified retrospective method. The core principle of ASU 2014-09 is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, has created the possibility that more judgment and estimates may be required within the revenue recognition process than required under existing U.S. generally accepted accounting pronouncements. We have substantially completed our analysis on the adoption of ASU 2014-09 and have determined the adoption will not have a material impact on the recognition of revenue from product sales. ASU 2014-09 will impact the timing of recognition of revenue for our collaboration arrangements with Ipsen Pharma SAS (“Ipsen”) and Takeda Pharmaceutical Company Ltd. (“Takeda”). We expect to reclassify deferred revenue to accumulated deficit (a concept known as “lost revenue”) for amounts associated with these collaboration arrangements upon recording our transition adjustment in the first quarter of 2018, primarily due to the timing of recognition of revenue related to intellectual property licenses that we have transferred for development and commercialization of our products. Additionally, for all of our collaboration arrangements, the timing of recognition of certain of our development and regulatory milestones could change as a result of the variable consideration guidance included in ASU 2014-09. ASU 2014-09 will also require additional disclosures regarding our revenue transactions.

Collaboration Agreements (Tables)

9 Months Ended

Sep. 30, 2017

Collaborative arrangement with Ipsen [Member]

Revenue Recognition, Multiple-deliverable Arrangements [Line Items]

Schedule of Collaborative Revenues Under Collaboration Agreement

During the three and nine months ended September 30, 2017 and 2016, collaboration revenues under the Ipsen Collaboration Agreement were as follows (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Milestones achieved	$	45,000		$	—	$	45,000		$	—
Amortization of upfront payments and deferred milestone	4,742			3,780		13,788			8,570
Royalty revenue	371			—		814			—
Development cost reimbursements	1,123			—		2,322			—
Product supply agreement revenue	1,681			—		3,483			—
Cost of supplied product	(1,681		)	—		(3,483		)	—
Royalty payable to GSK on net sales by Ipsen	(557		)	—		(1,221		)	—
Collaboration revenues under the Ipsen Collaboration Agreement	$	50,679		$	3,780	$	60,703		$	8,570

Collaborative arrangement with Genentech [Member]

Revenue Recognition, Multiple-deliverable Arrangements [Line Items]

Schedule of Collaborative Revenues Under Collaboration Agreement

During the three and nine months ended September 30, 2017 and 2016, ex-U.S. royalty revenues and U.S. losses under the Genentech Collaboration Agreement were as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Royalty revenues on ex-U.S. sales of COTELLIC included in Collaboration revenues	$	1,392		$	672		$	5,057		$	1,844
U.S. losses included in Selling, general and administrative expenses⁽¹⁾	$	(891	)	$	(2,922	)	$	(2,298	)	$	(14,845	)

____________________


(1)	A portion of the accrual for losses for the three and nine months ended September 30, 2016 were reversed in December 2016 when we were relieved of our obligation to pay certain disputed costs as a result of Genentech’s unilateral change to its approach to the allocation of promotional expenses arising from commercialization of the COTELLIC plus Zelboraf combination therapy.

Collaborative arrangement with Takeda [Member]

Revenue Recognition, Multiple-deliverable Arrangements [Line Items]

Schedule of Collaborative Revenues Under Collaboration Agreement

During the three and nine months ended September 30, 2017, collaboration revenues under the Takeda Collaboration Agreement were as follows (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
Amortization of upfront payment	$	2,830	$	7,547
Development cost reimbursements	1,193		3,301
Collaboration revenues under the Takeda Collaboration Agreement	$	4,023	$	10,848

Collaborative arrangements with Glaxo Smith Kline [Member]

Revenue Recognition, Multiple-deliverable Arrangements [Line Items]

Schedule of Collaborative Revenues Under Collaboration Agreement

During the three and nine months ended September 30, 2017 and 2016, royalties owed to GSK in connection with the sales of COMETRIQ and CABOMETYX were as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Royalties owed to GSK	$	3,446	$	1,277	$	8,809	$	2,495

Cash and Investments (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016 (in thousands):



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	149,357	$	—	$	—		$	149,357
Short-term investments	217,805		17		(81		)	217,741
Long-term investments	50,557		41		(29		)	50,569
Long-term restricted cash and investments	4,650		—		—			4,650
Total cash and investments	$	422,369	$	58	$	(110	)	$	422,317



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash and cash equivalents	$	151,686	$	—	$	—		$	151,686
Short-term investments	268,234		13		(130		)	268,117
Long-term investments	55,792		1		(192		)	55,601
Long-term restricted cash and investments	4,150		—		—			4,150
Total cash and investments	$	479,862	$	14	$	(322	)	$	479,554

Summary of Cash Equivalents and Investments by Security Type



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	42,797	$	—	$	—		$	42,797
Commercial paper	168,738		—		—			168,738
Corporate bonds	187,197		58		(95		)	187,160
U.S. Treasury and government sponsored enterprises	14,659		—		(15		)	14,644
Total investments	$	413,391	$	58	$	(110	)	$	413,339



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	71,457	$	—	$	—		$	71,457
Commercial paper	165,375		—		—			165,375
Corporate bonds	152,712		3		(308		)	152,407
U.S. Treasury and government sponsored enterprises	70,730		11		(14		)	70,727
Total investments	$	460,274	$	14	$	(322	)	$	459,966

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, 2017 (in thousands):



	Mature within One Year		After One Year through Five Years		Fair Value
Money market funds	$	42,797	$	—	$	42,797
Commercial paper	168,738		—		168,738
Corporate bonds	136,592		50,568		187,160
U.S. Treasury and government sponsored enterprises	14,644		—		14,644
Total investments	$	362,771	$	50,568	$	413,339

Inventory (Tables)

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consists of the following (in thousands):



	September 30, 2017			December 31, 2016
Raw materials	$	378		$	863
Work in process	2,951			2,343
Finished goods	2,856			738
Total	6,185			3,944
Less: non-current portion included in Other long-term assets	(379		)	(606		)
Inventory, net	$	5,806		$	3,338

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consisted of the following (in thousands):



	September 30, 2017			December 31, 2016
Computer equipment and software	$	14,242		$	13,738
Leasehold improvements	4,715			6,646
Laboratory equipment	5,836			4,310
Furniture and fixtures	1,954			2,240
Construction-in-progress	15,627			19
	42,374			26,953
Less: accumulated depreciation and amortization	(23,118		)	(24,882		)
Property and equipment, net	$	19,256		$	2,071

Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Debt

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



	September 30, 2017		December 31, 2016
Secured Convertible Notes due 2018 (“Deerfield Notes”)	$	—	$	109,122
Term loan payable	—		80,000
Total debt	$	—	$	189,122

Summary of Interest Expense on Notes

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Stated coupon interest	$	—	$	2,031	$	4,151	$	5,939
Interest paid in kind	—		2,031		4,151		5,939
Amortization of debt discount and debt issuance costs	—		121		182		327
Total interest expense	$	—	$	4,183	$	8,484	$	12,205

- 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
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-Subparagraph (SX 210.5-02.22)
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Name Accounting Standards Codification
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+ Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [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,
	2017		2016		2017		2016
Research and development expense	$	1,663	$	1,165	$	4,741	$	7,894
Selling, general and administrative expense	3,626		2,438		10,288		10,452
Total stock-based compensation expense	$	5,289	$	3,603	$	15,029	$	18,346

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Stock options	$	11.75	$	8.59	$	10.32	$	4.31
ESPP	$	6.85	$	1.51	$	5.29	$	1.65

Schedule of Fair Value of Employee Share-Based Payments Awards Estimated Using the Assumptions and Weighted Average Fair Values

The fair value of stock options and ESPP purchases was estimated using the following assumptions:



	Stock Options
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Risk-free interest rate	1.70	%	1.07	%	1.68	%	1.09	%
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	58	%	76	%	61	%	76	%
Expected life	4.0 years		4.5 years		4.1 years		4.4 years



	ESPP
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Risk-free interest rate	1.14	%	0.37	%	0.88	%	0.39	%
Dividend yield	—	%	—	%	—	%	—	%
Expected volatility	55	%	63	%	61	%	66	%
Expected life	6 months		6 months		6 months		6 months

Summary of All Stock Option Activity

A summary of stock option activity for the nine months ended September 30, 2017 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2016	24,999,665		$	4.91
Granted	821,260		$	21.60
Exercised	(4,282,847	)	$	3.94
Forfeited	(204,525	)	$	8.14
Options outstanding at September 30, 2017	21,333,553		$	5.72	4.08 years	$	395,212
Exercisable at September 30, 2017	15,961,685		$	4.41	3.59 years	$	316,415

Summary of All RSU Activity

A summary of restricted stock unit (“RSU”) activity for the nine months ended September 30, 2017 is presented below (dollars in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2016	2,469,791		$	8.69
Awarded	331,847		$	22.03
Vested and released	(348,294	)	$	4.63
Forfeited	(111,603	)	$	10.89
RSUs outstanding at September 30, 2017	2,341,741		$	11.08	1.55 years	$	56,740

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense consists of the following (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Income tax expense	$	3,206	$	—	$	3,921	$	—

Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2017

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 income (loss) per share (in thousands, except per share amounts):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (loss)	$	81,382		$	(11,284	)	$	115,738		$	(105,345	)
Net income allocated to participating securities	(221		)	—			(368		)	—
Net income allocable to common stock for basic net income (loss) per share	81,161			(11,284		)	115,370			(105,345		)
Adjustment to net income allocated to participating securities	14			—			23			—
Net income allocable to common stock for diluted net income (loss) per share	$	81,175		$	(11,284	)	$	115,393		$	(105,345	)

Weighted-average shares of common stock outstanding	294,269			256,319			292,776			238,024
Dilutive securities:
Outstanding stock options, unvested RSUs and ESPP contributions	18,671			—			18,779			—
Weighted-average shares of common stock outstanding and dilutive securities	312,940			256,319			311,555			238,024

Net income (loss) per share, basic	$	0.28		$	(0.04	)	$	0.39		$	(0.44	)
Net income (loss) per share, diluted	$	0.26		$	(0.04	)	$	0.37		$	(0.44	)

Schedule of Potential Shares of Common Stock Not Included in Computation of Diluted Net Loss Per Share



	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Outstanding stock options, unvested RSUs and ESPP contributions	583	30,474	1,108	30,474
Deerfield Notes	—	33,890	—	33,890
4.25% convertible senior subordinated notes due 2019 (the “2019 Notes”)	—	413	—	413
2014 Warrants	—	1,000	—	1,000
Total potentially dilutive shares	583	65,777	1,108	65,777

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017
	Level 1		Level 2		Total
Money market funds	$	42,797	$	—	$	42,797
Commercial paper	—		168,738		168,738
Corporate bonds	—		187,160		187,160
U.S. Treasury and government sponsored enterprises	—		14,644		14,644
Total financial assets	$	42,797	$	370,542	$	413,339



	December 31, 2016
	Level 1		Level 2		Total
Money market funds	$	71,457	$	—	$	71,457
Commercial paper	—		165,375		165,375
Corporate bonds	—		152,407		152,407
U.S. Treasury and government sponsored enterprises	—		70,727		70,727
Total financial assets	$	71,457	$	388,509	$	459,966

Commitments (Tables)

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

As of September 30, 2017, the aggregate future minimum lease payments under our leases are as follows (in thousands):



	Operating leases		Other financing obligations⁽¹⁾
Remainder of 2017	$	1,006	$	—
Year Ending December 31,
2018	2,802		566
2019	605		1,477
2020	630		1,685
2021	637		1,745
2022	646		1,814
Thereafter	3,465		10,441
	$	9,791	$	17,728

____________________


(1)	Other financing obligations includes payments related to our build-to-suit lease.

Schedule of Rent Expense

Rent expense and sublease income were as follows for the periods presented (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017			2016
Gross rental expense	$	1,215	$	1,972		$	4,986		$	7,424
less: Sublease income	—		(908		)	(1,225		)	(2,637		)
Net rental expense	$	1,215	$	1,064		$	3,761		$	4,787

Concentrations of Credit Risk (Tables)

9 Months Ended

Sep. 30, 2017

Risks and Uncertainties [Abstract]

Schedules of Concentration Risk



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
U.S.	$	97,807	$	41,971	$	260,853	$	87,757
Europe	50,680		5,223		60,704		11,116
Japan	4,023		15,000		10,848		15,000

The percentage of total revenues recognized by customer that represent 10% or more of total revenues was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Diplomat Specialty Pharmacy	13	%	31	%	19	%	41	%
Ipsen	33	%	6	%	18	%	8	%
Caremark L.L.C.	13	%	9	%	16	%	8	%
Affiliates of McKesson Corporation	10	%	6	%	12	%	5	%
Accredo Health, Incorporated	9	%	9	%	11	%	7	%
Daiichi Sankyo	—	%	24	%	—	%	13	%

Organization and Summary of Significant Accounting Policies (Organization, Narrative) (Details)	9 Months Ended
	Sep. 30, 2017 product
Product Information [Line Items]
Number of products that entered in the commercial marketplace	3
Products derived from Cabozantinib [Member]
Product Information [Line Items]
Number of products that entered in the commercial marketplace	2

Organization and Summary of Significant Accounting Policies (Reclassifications, Narrative) (Details) - Restatement adjustment [Member] $ in Millions	Dec. 31, 2016 USD ($)
Other current liabilities [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accrued product sales discounts, reclassified	$ (1.8)
Trade and Other Receivables [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Accrued product sales discounts, reclassified	$ 1.8

Organization and Summary of Significant Accounting Policies (Segment Information, Narrative) (Details)	9 Months Ended
	Sep. 30, 2017 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	1

Organization and Summary of Significant Accounting Policies (Stock-Based Compensation, Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
New Accounting Pronouncement, Early Adoption [Line Items]
Increase in cash provided by operating activities	$ 112,258,000	$ 125,295,000
Increase in cash used in financing activities	$ 169,215,000	72,000
Accounting Standards Update 2016-09 [Member]
New Accounting Pronouncement, Early Adoption [Line Items]
Increase in federal and state net operating losses			$ 56,900,000
Increase in deferred tax assets			21,200,000
Increase in valuation allowance			21,200,000
Net impact on provision for income taxes			0
Increase in cash provided by operating activities		2,700,000
Increase in cash used in financing activities		$ 2,100,000
Accounting Standards Update 2016-09 [Member] \| Accumulated deficit [Member]
New Accounting Pronouncement, Early Adoption [Line Items]
Cumulative adjustment			$ 300,000

Collaboration Agreements (Ipsen Collaboration, Narrative) (Details)

1 Months Ended

3 Months Ended

9 Months Ended

Sep. 30, 2017

USD ($)

milestone

Dec. 31, 2016

USD ($)

Nov. 30, 2016

USD ($)

Mar. 31, 2016

USD ($)

Mar. 31, 2018

USD ($)

Dec. 31, 2017

USD ($)

Sep. 30, 2017

USD ($)

Dec. 31, 2016

USD ($)

milestone

Sep. 30, 2016

USD ($)

Sep. 30, 2017

USD ($)

Sep. 30, 2016

USD ($)

Mar. 31, 2017

USD ($)

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

Other long-term liabilities

$ 16,012,000

$ 541,000

^[1]

$ 16,012,000

$ 541,000

^[1]

$ 16,012,000

Payments for milestone revenue

(20,710,000)

$ (251,512,000)

31,377,000

19,665,000

^[1]

31,377,000

19,665,000

^[1]

31,377,000

Collaborative arrangement with Ipsen [Member]

246,092,000

237,094,000

^[1]

246,092,000

237,094,000

^[1]

246,092,000

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

Upfront and milestone payments

$ 200,000,000

Research and development arrangement performed for others, reimbursement for costs incurred, percent

10,000,000

45,000,000

$ 0

$ 45,000,000

$ 0

35.00%

Reimbursements of certain clinical programs paid

2,100,000

19,000,000

$ 19,000,000

Collaborative arrangement with Ipsen [Member] | Restatement adjustment [Member]

$ 215,000,000

215,000,000

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

Deferred revenue reclassified

$ 9,000,000

Other long-term liabilities

$ 9,000,000

Collaborative arrangement with Ipsen [Member] | Initial and second [Member]

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

Royalty tier

$ 150,000,000

Collaborative arrangement with Ipsen [Member] | Initial and second [Member] | Minimum [Member]

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

Collaborative arrangement with Ipsen [Member] | Initial and second [Member] | Maximum [Member]

22.00%

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

Collaborative arrangement with Ipsen [Member] | Initial [Member]

26.00%

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

Collaborative arrangement with Ipsen [Member] | Second [Member]

2.00%

Royalty tier

$ 50,000,000

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

Collaborative arrangement with Ipsen [Member] | CABOMETYX [Member]

12.00%

Royalty tier

$ 100,000,000

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

Number of milestones achieved | milestone

Collaborative arrangement with Ipsen [Member] | CABOMETYX [Member] | Scenario, forecast [Member]

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

Payments for milestone revenue

$ 25,000,000

$ 20,000,000

Collaborative arrangement with Ipsen, consideration for commercialization rights [Member]

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

Collaborative arrangement with Ipsen, approval of Cabozantinib by EC in second-line RCC [Member] | CABOMETYX [Member]

$ 10,000,000

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

Collaborative arrangement with Ipsen, first commercial sales of product [Member] | CABOMETYX [Member]

$ 60,000,000

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

Number of milestones achieved | milestone

$ 10,000,000

[1]	The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements as of that date.

Collaboration Agreements (Collaboration Revenues - Ipsen) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Product supply agreement revenue		$ 96,416	$ 42,742	$ 253,297	$ 83,459
Cost of supplied product		(4,658)	(2,455)	(10,875)	(4,700)
Collaboration revenues under the collaboration agreement		56,094	19,452	79,108	30,414
Collaborative arrangement with Ipsen [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestones achieved	$ 10,000	45,000	0	45,000	0
Amortization of upfront payments and deferred milestone		4,742	3,780	13,788	8,570
Royalty revenue		371	0	814	0
Development cost reimbursements		1,123	0	2,322	0
Product supply agreement revenue		1,681	0	3,483	0
Cost of supplied product		(1,681)	0	(3,483)	0
Royalty payable to GSK on net sales by Ipsen		(557)	0	(1,221)	0
Collaboration revenues under the collaboration agreement		$ 50,679	$ 3,780	$ 60,703	$ 8,570

Collaboration Agreements (Genentech Collaboration, Narrative) (Details) - Genentech [Member] - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Nov. 30, 2013	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2015
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of share of the Company in promotions	25.00%					25.00%
Profit sharing tier one [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of profits				50.00%
Profit threshold				$ 200,000
Profit sharing tier three [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of profits				30.00%
Profit threshold				$ 400,000
COTELLIC [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenue		$ 1,392	$ 672	5,057	$ 1,844
COTELLIC [Member] \| Q4 '16 [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenue				$ 1,100

Collaboration Agreements (Collaboration Revenues - Genentech) (Details) - Genentech [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Selling, general and administrative expense [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
U.S. losses included in Selling, general and administrative expenses	$ (891)	$ (2,922)	$ (2,298)	$ (14,845)
COTELLIC [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenues on ex-U.S. sales of COTELLIC included in Collaboration revenues	$ 1,392	$ 672	$ 5,057	$ 1,844

Collaboration Agreements (Takeda Collaboration, Narrative) (Details) - USD ($)

1 Months Ended

9 Months Ended

Feb. 28, 2017

Sep. 30, 2017

Dec. 31, 2016

^[1]

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

$ 31,377,000

$ 19,665,000

Collaborative arrangement with Takeda [Member]

246,092,000

$ 237,094,000

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

Upfront and milestone payments

$ 50,000,000

Maximum amount eligible for development and regulatory milestones

95,000,000

Maximum pre-specified payments

83,000,000

11,300,000

Collaboration period to achieve specified levels of commercial performance

$ 31,100,000

6 years

Deferred revenue, recognition period

4 years

Collaborative arrangement with Takeda [Member] | Takeda [Member]

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

Termination of collaboration agreement, period for written notice

12 months

Collaborative arrangement with Takeda [Member] | Global [Member]

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

Research and development arrangement performed for others, reimbursement for costs incurred, percent

20.00%

Collaborative arrangement with Takeda [Member] | Japan [Member]

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

Research and development arrangement performed for others, reimbursement for costs incurred, percent

100.00%

Initial [Member] | Collaborative arrangement with Takeda [Member]

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

Cumulative net sales

$ 300,000,000.0

Initial [Member] | Collaborative arrangement with Takeda [Member] | Minimum [Member]

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

Initial [Member] | Collaborative arrangement with Takeda [Member] | Maximum [Member]

15.00%

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

Final tier [Member] | Collaborative arrangement with Takeda [Member] | Minimum [Member]

24.00%

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

Final tier [Member] | Collaborative arrangement with Takeda [Member] | Maximum [Member]

20.00%

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

Less: non-current portion included in Other long-term assets

30.00%

[1]	The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements as of that date.

Collaboration Agreements (Collaboration Revenues - Takeda) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenues under the collaboration agreement	$ 56,094	$ 19,452	$ 79,108	$ 30,414
Collaborative arrangement with Takeda [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amortization of upfront payment	2,830		7,547
Development cost reimbursements	1,193		3,301
Collaboration revenues under the collaboration agreement	$ 4,023		$ 10,848

Collaboration Agreements (Bristol-Myers Squibb Collaboration, Narrative) (Details) - Collaborative arrangement, 2 BMS compound utilized [Member]	9 Months Ended
	Sep. 30, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Share in costs, percentage	33.33%
BMS [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Share in costs, percentage	66.67%

Collaboration Agreements (GlaxoSmithKline Collaboration) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Collaborative arrangements with Glaxo Smith Kline [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty expense	$ 3,446	$ 1,277	$ 8,809	$ 2,495
GlaxoSmithKline [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale			3.00%

Collaboration Agreements (Other Collaborations, Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
BMS [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recognized, milestones		$ 2.5
Collaborative arrangements with Daiichi Sankyo [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recognized, milestones	$ 15.0		$ 15.0
Collaborative arrangement with Merck [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Revenue recognized, milestones			$ 5.0

Cash and Investments (Summary by Balance Sheet Line Item) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investment [Line Items]
Amortized Cost	$ 422,369	$ 479,862
Gross Unrealized Gains	58	14
Gross Unrealized Losses	(110)	(322)
Fair Value	422,317	479,554
Cash and cash equivalents [Member]
Investment [Line Items]
Amortized Cost	149,357	151,686
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	149,357	151,686
Short-term investments [Member]
Investment [Line Items]
Amortized Cost	217,805	268,234
Gross Unrealized Gains	17	13
Gross Unrealized Losses	(81)	(130)
Fair Value	217,741	268,117
Long-term investments [Member]
Investment [Line Items]
Amortized Cost	50,557	55,792
Gross Unrealized Gains	41	1
Gross Unrealized Losses	(29)	(192)
Fair Value	50,569	55,601
Long-term restricted cash and investments [Member]
Investment [Line Items]
Amortized Cost	4,650	4,150
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	$ 4,650	$ 4,150

Cash and Investments (Narrative) (Details)	3 Months Ended		9 Months Ended
Cash and Investments (Narrative) (Details)	Sep. 30, 2017 USD ($) investment	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) account investment affiliate	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Investment [Line Items]
Number of required investment accounts \| account			1
Number of affiliate banks \| affiliate			1
Gain (loss) on sale of available-for-sale securities	$ 0	$ 0	$ 0	$ 0
Other-than-temporary impairment charges on available-for-sale securities			$ 0	$ 0
Number of investments in unrealized loss position \| investment	84		84
Gross unrealized losses	$ 110,000		$ 110,000		$ 322,000
Unrealized loss position, aggregate fair value	134,900,000		134,900,000
Corporate bonds [Member]
Investment [Line Items]
Gross unrealized losses	95,000		95,000		308,000
Unrealized loss position, aggregate fair value	124,900,000		124,900,000
U.S. Treasury and government sponsored enterprises [Member]
Investment [Line Items]
Gross unrealized losses	15,000		15,000		14,000
Unrealized loss position, aggregate fair value	$ 10,000,000		$ 10,000,000
Silicon Valley Bank Term Loan and Line of Credit [Member]
Investment [Line Items]
Collateral balance					$ 81,600,000

Cash and Investments (Summary by Security Type) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investment [Line Items]
Amortized Cost	$ 413,391	$ 460,274
Gross Unrealized Gains	58	14
Gross Unrealized Losses	(110)	(322)
Fair Value	413,339	459,966
Money market funds [Member]
Investment [Line Items]
Amortized Cost	42,797	71,457
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	42,797	71,457
Commercial paper [Member]
Investment [Line Items]
Amortized Cost	168,738	165,375
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	168,738	165,375
Corporate bonds [Member]
Investment [Line Items]
Amortized Cost	187,197	152,712
Gross Unrealized Gains	58	3
Gross Unrealized Losses	(95)	(308)
Fair Value	187,160	152,407
U.S. Treasury and government sponsored enterprises [Member]
Investment [Line Items]
Amortized Cost	14,659	70,730
Gross Unrealized Gains	0	11
Gross Unrealized Losses	(15)	(14)
Fair Value	$ 14,644	$ 70,727

Cash and Investments (Available for Sale by Contractual Maturity) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Mature within One Year	$ 362,771
After One Year through Five Years	50,568
Fair Value	413,339	$ 459,966
Money market funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Mature within One Year	42,797
After One Year through Five Years	0
Fair Value	42,797	71,457
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Mature within One Year	168,738
After One Year through Five Years	0
Fair Value	168,738	165,375
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Mature within One Year	136,592
After One Year through Five Years	50,568
Fair Value	187,160	152,407
U.S. Treasury and government sponsored enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Mature within One Year	14,644
After One Year through Five Years	0
Fair Value	$ 14,644	$ 70,727

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

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Dec. 31, 2016

Inventory Disclosure [Abstract]

Raw materials

$ 378

$ 863

Work in process

2,951

2,343

Finished goods

2,856

738

Total

6,185

3,944

(379)

(606)

Inventory, net

5,806

$ 3,338

^[1]

Inventory write-down

$ 1,200

$ 400

[1]	The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements as of that date.

Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($)
$ in Thousands

Sep. 30, 2017

Dec. 31, 2016

Less: accumulated depreciation and amortization

$ 42,374

$ 26,953

(23,118)

(24,882)

Property and equipment, net

19,256

2,071

^[1]

Computer equipment and software [Member]

Leasehold improvements [Member]

14,242

13,738

Laboratory equipment [Member]

4,715

6,646

Furniture and fixtures [Member]

5,836

4,310

Construction-in-progress [Member]

1,954

2,240