View Filing Data

Prepaid expenses and other current assets

31,844

6,850

8,750

Total current assets

565,680

484,874

Long-term investments

96,710

64,255

Long-term restricted cash and investments

1,500

4,646

Property and equipment, net

45,412

25,743

Goodwill

63,684

Other long-term assets

1,929

12,092

Total assets

774,915

655,294

Current liabilities:

Accounts payable

11,078

9,575

Accrued compensation and benefits

20,756

21,073

Accrued clinical trial liabilities

15,351

19,849

Accrued collaboration liabilities

7,974

8,974

Rebates and fees due to customers

11,989

7,565

31,984

Total current liabilities

17,711

16,150

84,859

115,170

Other long-term liabilities

3,177

238,520

17,113

16,643

Total liabilities

105,149

370,333

Commitments (Note 11)

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

297

296

Additional paid-in capital

2,125,166

2,114,184

Accumulated other comprehensive loss

(887)

(347)

Total stockholders’ equity

(1,454,810)

(1,829,172)

669,766

284,961

Total liabilities and stockholders’ equity

$ 774,915

$ 655,294

[1]	The Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the audited financial statements as of that date.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares

Mar. 31, 2018

Dec. 31, 2017

^[1]

Preferred stock

Par value (in dollars per share)

$ 0.001

Shares authorized (in shares)

10,000,000

Shares issued (in shares)

Common stock

Par value (in dollars per share)

$ 0.001

Shares authorized (in shares)

400,000,000

Shares issued (in shares)

296,694,330

296,209,426

Shares outstanding (in shares)

296,694,330

296,209,426

[1]	The Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the audited financial statements as of that date.

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Revenues:
Net product revenues	$ 134,272	$ 68,877
Collaboration revenues	78,074	12,010
Total revenues	212,346	80,887
Operating expenses:
Cost of goods sold	5,639	3,203
Research and development	37,757	23,210
Selling, general and administrative	52,643	34,288
Total operating expenses	96,039	60,701
Income (loss) from operations	116,307	20,186
Other income (expense), net:
Interest income	1,895	1,113
Interest expense	0	(4,420)
Other, net	169	(45)
Total other income (expense), net	2,064	(3,352)
Income (loss) before income taxes	118,371	16,834
Income tax expense	2,514	134
Net income (loss)	$ 115,857	$ 16,700
Net income per share, basic (in dollars per share)	$ 0.39	$ 0.06
Net income per share, diluted (in dollars per share)	$ 0.37	$ 0.05
Shares used in computing net income per share, basic (in shares)	296,421	290,870
Shares used in computing net income per share, diluted (in shares)	313,691	309,535

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

3 Months Ended

Mar. 30, 2018

Mar. 31, 2017

Statement of Comprehensive Income [Abstract]

Net income

$ 115,857

$ 16,700

Other comprehensive income (loss)

^[1]

(540)

Comprehensive income

$ 115,317

$ 16,790

[1]

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

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Reclassification adjustments to net income resulting from realized gains or losses on sale of securities	$ 0	$ 0
Income tax expense related to other comprehensive income	$ 0	$ 0

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Statement of Cash Flows [Abstract]
Net income	$ 115,857	$ 16,700
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	371	281
Stock-based compensation expense	9,305	4,713
Amortization of debt discounts and debt issuance costs	0	89
Interest paid in kind	0	2,068
Gain on other equity investments	(209)	0
Other	1,722	680
Changes in assets and liabilities:
Trade and other receivables	(10,755)	6,541
Inventory, net	(906)	34
Unbilled collaboration revenue	(38,014)	0
Prepaid expenses and other current assets	1,900	(881)
Other long-term assets	(346)	(19)
Accounts payable	(183)	(1,916)
Accrued compensation and benefits	(317)	(5,844)
Accrued clinical trial liabilities	(4,498)	347
Accrued collaboration liabilities	(1,000)	0
Deferred revenue	(2,652)	35,139
Other current and long-term liabilities	1,533	10,926
Net cash provided by operating activities	71,808	68,858
Cash flows from investing activities:
Purchases of property and equipment	(2,947)	(804)
Purchases of investments	(116,537)	(124,494)
Proceeds from maturities of investments	87,504	122,507
Proceeds from sale of investments	6,238	37,294
Proceeds from other equity investments	209	0
Net cash provided by (used in) investing activities	(25,533)	34,503
Cash flows from financing activities:
Repayment of convertible notes and term loan payable	0	(80,000)
Proceeds from exercise of stock options	1,875	9,675
Taxes paid related to net share settlement of equity awards	(2,129)	(1,543)
Net cash used in financing activities	(254)	(71,868)
Net increase in cash, cash equivalents and restricted cash	46,021	31,493
Cash, cash equivalents and restricted cash at beginning of period	188,314	155,836
Cash, cash equivalents and restricted cash at end of period	$ 234,335	$ 187,329

Organization and Summary of Significant Accounting Policies

3 Months Ended

Mar. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 MET, AXL, VEGF receptors, and RET: CABOMETYX® (cabozantinib) tablets approved for advanced renal cell carcinoma (“RCC”); and COMETRIQ® (cabozantinib) capsules approved for progressive, metastatic medullary thyroid cancer. The third product, COTELLIC® (cobimetinib) tablets, is an inhibitor of MEK, marketed under a collaboration agreement with Genentech, Inc. (a member of the Roche Group) (“Genentech”), and is approved as part of a combination regimen to treat advanced melanoma.

Basis of Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of Exelixis and those of our wholly-owned subsidiaries. These entities’ functional currency is the U.S. dollar. All intercompany balances and transactions have been eliminated.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the 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 2018 will end on December 28, 2018 and fiscal year 2017 ended on December 29, 2017. For convenience, references in this report as of and for the fiscal periods ended March 30, 2018 and March 31, 2017, and as of and for the fiscal years ended December 28, 2018 and December 29, 2017, are indicated as being as of and for the periods ended March 31, 2018 and March 31, 2017, and the years ended December 31, 2018 and December 31, 2017, respectively. Similarly, references in this report to the first day of the fiscal year ended December 28, 2018 are indicated as being as of January 1, 2018.

Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or for any future period. These Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended December 31, 2017, included in our Annual Report on Form 10-K filed with the SEC on February 26, 2018.

Segment Information

We operate in one business segment which focuses on discovery, development and commercialization of new medicines to improve care and outcomes for people with cancer. Our Chief Executive Officer, as the chief operating decision-maker, manages and allocates resources to our operations on a total consolidated basis. Consistent with this decision-making process, our Chief Executive Officer uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets.

All of our long-lived assets are located in the U.S. See “Note 2. Revenues” for enterprise-wide disclosures about product sales, revenues from major customers and by geographic region.

Use of Estimates

The preparation of the accompanying 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, equity, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates including, but not limited to: those related to revenue recognition, including determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, and variable consideration such as rebates, chargebacks, sales returns and sales allowances as well as milestones included in collaboration arrangements; the amounts of revenues and expenses under our profit and loss sharing agreement; recoverability of inventory; the accrual for certain liabilities including accrued clinical trial liability; and valuations of awards used to determine 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 on the accompanying Condensed Consolidated Financial Statements have been reclassified to conform to current period presentation.

Restricted Cash

In January 2018, we adopted Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 was adopted using the retrospective transition method in the accompanying Condensed Consolidated Financial Statements.

As a result of the adoption of ASU 2016-18, we no longer include purchases of restricted cash and proceeds from maturities of restricted cash in our cash flows from investing activities. The adoption of ASU 2016-18 did not impact the Net cash provided by investing activities for the three months ended March 31, 2017.

See “Note 4. Cash and Investments - Cash, Cash Equivalents and Restricted Cash” for a reconciliation of cash and cash equivalents presented in our previously published Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and Cash, cash equivalents and restricted cash reported in the accompanying Condensed Consolidated Statements of Cash Flows for the same period.

Revenue

Recently Adopted Accounting Pronouncements

On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606) (“Topic 606”) using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for the three months ended March 31, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under previous revenue recognition guidance, Accounting Standards Codification Topic 605: Revenue Recognition (“Topic 605”).

The adoption of Topic 606 did not have an impact on our recognition of revenue from product sales. We recorded a net reduction of $258.5 million to opening accumulated deficit as of January 1, 2018, due to the cumulative impact of adopting Topic 606, with the impact primarily relating to a change in the recognition of upfront and non-substantive milestone payments received related to our collaboration arrangements with Ipsen Pharma SAS (“Ipsen”) and Takeda Pharmaceutical Company Ltd. (“Takeda”). The impact of the adoption of Topic 606 on contract assets, contract liabilities and accumulated deficit balances as of January 1, 2018 was as follows (in thousands):



	December 31, 2017			Adjustments Due to the Adoption of Topic 606			January 1, 2018
Contract assets: unbilled collaboration revenue, gross:
Current portion	$	—		$	9,588		$	9,588
Long-term portion	$	—		$	12,247		$	12,247
Contract liabilities: deferred revenue, gross:
Current portion	$	31,984		$	(23,591	)	$	8,393
Long-term portion	$	238,520		$	(213,079	)	$	25,441
Accumulated deficit	$	(1,829,172	)	$	258,505		$	(1,570,667	)

The adjustments due to the adoption of Topic 606 primarily related to a reduction in deferred revenue driven by the allocation of the transaction price to our license performance obligations in the Ipsen and Takeda collaborations, which were determined to be functional intellectual property that was transferred at a point in time and as a result, revenue was recorded at a point in time. Previously under Topic 605, revenue related to the upfront payments and one non-substantive milestone payment earned 2016 had been deferred over the estimated period of performance pursuant to the terms of the contract. Contract assets as of January 1, 2018 primarily related to estimated revenue for reimbursements for our continuing research and development services and the $10.0 million milestone from Ipsen’s filing with the European Medicines Agency (“EMA”) for cabozantinib, as a treatment for patients with previously treated advanced hepatocellular carcinoma (“HCC”), that was deemed probable under Topic 606 prior to January 1, 2018. Deferred revenue as of January 1, 2018 is related to the up-front, nonrefundable, fees and milestones earned that were allocated to our research and development services performance obligation which had not been satisfied as of that date. Contract assets and liabilities are netted by collaboration agreement on our Condensed Consolidated Balance Sheets; however, for illustration purposes the above amounts are shown prior to netting.

The impact of the adoption of Topic 606 on our Condensed Consolidated Balance Sheet and Statement of Operations as of and for the period ended March 31, 2018 was as follows (in thousands):



	March 31, 2018
	As Reported			Balances Without the Adoption of Topic 606			Effect of Adoption Higher / (Lower)
Unbilled collaboration revenue	$	31,844		$	—		$	31,844
Current portion of deferred revenue	$	—		$	30,288		$	(30,288	)
Other current liabilities	$	17,711		$	16,820		$	891
Long-term portion of deferred revenue	$	3,177		$	230,948		$	(227,771	)
Accumulated deficit	$	(1,454,810	)	$	(1,743,822	)	$	289,012



	Three Months Ended March 31, 2018
	As Reported		Balances Without the Adoption of Topic 606		Effect of Adoption Higher / (Lower)
Collaboration revenues	$	78,074	$	46,676	$	31,398
Total revenues	$	212,346	$	180,948	$	31,398
Income before income taxes	$	118,371	$	86,973	$	31,398
Provision for income taxes	$	2,514	$	1,623	$	891
Net income	$	115,857	$	85,350	$	30,507
Net income per share, basic	$	0.39	$	0.29	$	0.10
Net income per share, diluted	$	0.37	$	0.27	$	0.10

Collaboration revenues recognized for the three months ended March 31, 2018 in accordance with Topic 606 included $45.8 million in revenue relating to a $50.0 million milestone from Ipsen for the approval of cabozantinib for the first-line treatment of advanced RCC that would not have been recognized under Topic 605. If we had not adopted Topic 606, we would have recognized a $10.0 million milestone during the three months ended March 31, 2018 upon the validation of Ipsen’s filing with the EMA for cabozantinib as a treatment for patients with previously treated advanced HCC that was not recognized under Topic 606. The adoption of Topic 606 also resulted in a reduction of previously deferred revenue that was recorded as part of our adoption transition adjustment as of January 1, 2018.

Topic 606 supersedes all previous revenue recognition requirements in accordance with generally accepted accounting principles. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration to which the entity is entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration it is entitled to in exchange for the goods or services we transfer to the customer.

Net Product Revenues

We sell our products principally to specialty distributors and specialty pharmacy providers, or collectively, our Customers. These Customers subsequently resell our products to health care providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products. Revenues from product sales are recognized when the Customer obtains control of our product, which occurs at a point in time, typically upon delivery to the Customer.

Product Sales Discounts and Allowances

Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between us and our Customers, health care providers, payors and other indirect customers relating to the sales of our products. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecast customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known.

Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, Federal government entities purchasing via the Federal Supply Schedule and Group Purchasing Organizations, and health maintenance organizations, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to us the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the customer. The allowance for chargebacks is based on an estimate of sales to contracted customers.

Discounts for Prompt Payment: Our Customers in the U.S. receive a discount of 2% for prompt payment. We expect our Customers will earn 100% of their prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized.

Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program and other government programs. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory discount rates and expected utilization. Our estimates for the expected utilization of rebates are based on customer and payer data received from the specialty pharmacies and distributors and historical utilization rates. Rebates are generally invoiced by the payer and paid in arrears, such that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s shipments to our customers, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, we may need to adjust our accruals, which would affect net product revenues in the period of adjustment.

Allowances for rebates also include the Medicare Part D Coverage Gap. In the U.S., the Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Our estimates for expected Medicare Part D coverage gap are based on customer and payer data received from specialty pharmacies and distributors and historical utilization rates. Funding of the coverage gap is invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarters’ shipments to patients, plus an accrual balance for known prior quarter’s unpaid claims. If actual future funding varies from estimates, we may need to adjust our accruals, which would affect net product revenues in the period of adjustment.

Co-payment Assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. We accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using customer data provided by the specialty pharmacies and distributors.

Other Customer Credits: We pay fees to our Customers for account management, data management and other administrative services. To the extent the services received are distinct from the sale of products to the Customer, these payments are classified in Selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.

Collaboration Revenues

We enter into collaboration arrangements, under which we license certain rights to our intellectual property to third parties. The terms of these arrangements typically include payment to us for one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for product supply; development cost reimbursements; profit sharing arrangements; and royalties on net sales of licensed products. Except for profit sharing arrangements, each of these payment types are within the scope of Topic 606. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecast revenues, clinical development timelines and costs, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

Up-front License Fees: If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from nonrefundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Milestone Payments: At the inception of each arrangement that includes development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being earned until uncertainty associated with the approvals has been resolved. The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of earning such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect Collaboration revenues and earnings in the period of adjustment.

Product Supply Services: Arrangements that include a promise for future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations.

Development Cost Reimbursements: Our Ipsen and Takeda arrangements include promises of future clinical development and drug safety services, as well as participation on certain joint committees. We have determined that these services collectively are distinct from the license provided to each partner and as such, these promises are accounted for as a separate performance obligation recorded over time. We record revenue for these services as the performance obligations are satisfied, which we estimate using internal development costs incurred and projections through the term of the arrangements.

Profit Sharing Arrangements: Under the terms of our collaboration agreement with Genentech for cobimetinib, we are entitled to a share of U.S. profits and losses received in connection with commercialization of cobimetinib. We are also entitled to low double-digit royalties on ex-U.S. net sales. We account for such arrangements in accordance with Accounting Standards Codification Topic 808, Collaborative Arrangements (“Topic 808”). We have determined that we are an agent under the agreement and therefore revenues are recorded net of costs incurred. We record U.S. profits and losses under the collaboration agreement in the period earned based on our estimate of those amounts. Historically, we have not recognized a profit for any annual period from the commercialization of cobimetinib in the U.S. Until we recognize or expect to recognize an annual profit under the agreement, losses are recognized as Selling, general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, the license is deemed to be the predominant item to which the royalties relate and we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), (“ASU 2016-02”). Under ASU 2016-02, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. ASU 2016-02 will require a right-of-use asset to be recognized on the balance sheet for both types of leases. ASU 2016-02 also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. ASU 2016-02 must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We currently expect to early adopt this standard in the second quarter of 2018. Based on our initial evaluation of the impact of ASU 2016-02 on our build-to-suit lease of office and research facilities located in Alameda, California, we expect that the amount we have capitalized as Property and equipment related to the building shells, will be derecognized upon the adoption of ASU 2016-02. Upon adoption of ASU 2016-02 we will also be required to recognize a right-of-use asset and lease liability related to this lease. The adoption of ASU 2016-02 could also change the nature of future expenses related to the build-to-suit lease, reducing future depreciation and interest expense, which would be offset by an increase in lease expense. We are continuing to assess the impact of ASU No. 2016-02 on our consolidated financial statements.

In January 2018, the FASB issued the exposure document Proposed Accounting Standards Update—Leases (Topic 842): Targeted Improvements. In issuing this exposure draft, the FASB proposes allowing another transition method for ASU 2016-02, which would allow the transition to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. This Proposed Accounting Standards Update, if issued as a final ASU by the FASB, could impact our method of adoption of ASU 2016-02.

Revenues

3 Months Ended

Mar. 30, 2018

Revenue from Contract with Customer [Abstract]

REVENUES

Revenues by disaggregated category were as follows (in thousands):



	Three Months Ended March 31,
	2018			2017
Product revenues:
Gross product revenues	$	159,436		$	77,959
Discounts and allowances	(25,164		)	(9,082		)
Net product revenues	134,272			68,877
Collaboration revenues:
License revenues⁽¹⁾	69,030			11,214
Research and development services revenues⁽²⁾	10,099			1,132
Product supply revenues, net	(1,055		)	(336		)
Total collaboration revenues	78,074			12,010
Total revenues	$	212,346		$	80,887

____________________

(1)

License revenues for the three months ended March 31, 2018 included revenues related to the portion of two milestones that were allocated to the transfer of intellectual property licenses and were fully recognized in the current period and royalty revenue from Ipsen and Genentech. License revenues for the three months ended March 31, 2017 included the recognition of deferred revenues from upfront payments and a non-substantive milestone that were being amortized over various periods, royalty revenues from Ipsen and Genentech and one milestone. Upon the adoption of Topic 606, the allocation of proceeds from our collaboration partners between licenses and research and development services as well as the timing of recognition has changed. Therefore, among other changes, as of January 1, 2018, the portion of proceeds allocated to intellectual property licenses for our Ipsen and Takeda collaboration agreements are recognized immediately and license revenues no longer includes revenues related to the amortization of deferred revenue.

(2)

Research and development services revenues for three months ended March 31, 2018 included the recognition of deferred revenue for the portion of the upfront payments and milestones that were allocated to the research and development services which are being amortized through early 2030, as well as development cost reimbursements earned on our collaboration agreements. As described above, we did not allocate any of our upfront payments or milestones to research and development services prior to the adoption of Topic 606 and therefore research and development services revenues for the three months ended March 31, 2017 included only development cost reimbursements earned on our collaboration agreements.

During the three months ended March 31, 2018, net product revenues and license revenues related to goods transferred at a point in time and research and development services revenues related to services performed over time. Product supply revenues, net, which include the royalty payable to GlaxoSmithKline (“GSK”) on net sales by Ipsen, were recorded in accordance with Topic 808 for all periods presented. Our remaining revenues were recorded in accordance with Topic 606 during 2018 and Topic 605 in prior periods.

Net product revenues disaggregated by product were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
CABOMETYX	$	128,934	$	62,359
COMETRIQ	5,338		6,518
Net product revenues	$	134,272	$	68,877

Total revenues disaggregated by significant customer were as follows (dollars in thousands):



	Three Months Ended March 31,
	2018				2017
	Dollars		Percent of total		Dollars		Percent of total
Ipsen	$	53,809	25	%	$	4,530	6	%
Caremark L.L.C.	$	26,388	12	%	$	13,819	17	%
Affiliates of McKesson Corporation	$	21,331	10	%	$	11,278	14	%
Diplomat Specialty Pharmacy	$	20,147	9	%	$	19,850	25	%
Accredo Health, Incorporated	$	18,286	9	%	$	9,440	12	%

Total revenues disaggregated by geographic region were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
U.S.	$	135,620	$	73,675
Europe	$	53,809	$	4,530
Rest of the world	$	22,917	$	2,682

Net product revenues are attributed to regions based on the ship-to location. Collaboration revenues are attributed to regions based on the location of our collaboration partners’ headquarters.

Product Sales Discounts and Allowances

The activities and ending reserve balances for each significant category of discounts and allowances (which constitute variable consideration) were as follows (in thousands):



	Chargebacks and Discounts for Prompt Payment			Other Customer Credits/Fees and Co-pay Assistance			Rebates			Returns		Total
Balance at December 31, 2017	$	1,928		$	1,795		$	5,770		$	—	$	9,493
Provision related to sales made in:
Current period	14,475			4,197			6,625			—		25,297
Prior periods	(331		)	—			199			—		(132		)
Payments and customer credits issued	(13,556		)	(3,294		)	(3,303		)	—		(20,153		)
Balance at March 31, 2018	$	2,516		$	2,698		$	9,291		$	—	$	14,505

Chargebacks and discounts for prompt payment are recorded as a reduction of trade receivables and the remaining reserve balances are classified as Other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

Contract Assets and Liabilities

We receive payments from our licensees based on billing schedules established in each contract. Amounts are recorded as accounts receivable when our right to consideration is unconditional. Upfront and milestone payments may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements and are recorded as deferred revenue upon receipt or when due. We may also recognize revenue in advance of the contractual billing schedule and such amounts are recorded as unbilled collaboration revenue when recognized. Changes in our contract assets and liabilities under Topic 606 were as follows (in thousands):



	Contract Assets: Unbilled Collaboration Revenue						Contract Liabilities: Deferred Revenue
	Current Portion			Long-term Portion			Current Portion			Long-term Portion
Balance at December 31, 2017	$	—		$	—		$	31,984		$	238,520
Adoption of Topic 606	9,588			12,247			(23,591		)	(213,079		)
Balance at January 1, 2018	9,588			12,247			8,393			25,441
Increases as a result of a change in transaction price and recognition of revenues as services are performed	46,006			1,166			—			—
Transfer to receivables from contract assets recognized at the beginning of the period	(9,159		)	—			—			—
Increases as a result of the deferral of milestones earned in period, excluding amounts recognized as revenue	—			—			173			666
Revenue recognized that was included in the contract liability balance at the beginning of the period	—			—			(3,492		)	—
Other adjustments ⁽¹⁾	(14,591		)	(13,413		)	(5,074		)	(22,930		)
Balance at March 31, 2018	$	31,844		$	—		$	—		$	3,177

____________________


(1)	Includes reclassification of deferred revenue from long-term to current and adjustments made due to netting of contract assets and liabilities by collaboration agreement.

During the three months ended March 31, 2018, we recognized $71.3 million in revenues under Topic 606 for performance obligations satisfied in previous periods. Such revenues primarily related to milestone and royalty payments allocated to our license performance obligations of our collaborations with Ipsen and Daiichi Sankyo Company, Limited (“Daiichi Sankyo”).

Collaboration Agreements

3 Months Ended

Mar. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COLLABORATION AGREEMENTS

From time to time, we enter into collaborative arrangements for the development, manufacture and/or commercialization of products and/or product candidates. These collaborations generally provide for non-refundable up-front license fees, development and commercial performance milestone payments, payments for product supply, development cost reimbursements, royalty payments and/or profit sharing. See “Note 2. Revenues” for information on collaboration revenues recognized during the three months ended March 31, 2018 and 2017.

Ipsen Collaboration

In February 2016, we entered into a collaboration and license agreement with Ipsen for the commercialization and further development of cabozantinib. Pursuant to the terms of the collaboration agreement, Ipsen received exclusive commercialization rights for current and potential future cabozantinib indications outside of the U.S., Canada and Japan. The collaboration agreement was subsequently amended in December 2016 to include commercialization rights in Canada. We have also agreed to collaborate with Ipsen on the development of cabozantinib for current and potential future indications. The parties’ efforts are governed through a joint steering committee and appropriate subcommittees established to guide and oversee the collaboration’s operation and strategic direction; provided, however, that we retain final decision-making authority with respect to cabozantinib’s ongoing development.

In consideration for the exclusive license and other rights contained in the collaboration agreement, including commercialization rights in Canada, Ipsen paid us aggregate upfront payments of $210.0 million. As of December 31, 2017 we had earned various milestones totaling $125.0 million. During the three months ended March 31, 2018 we earned an additional $10.0 million milestone upon Ipsen’s filing with the EMA for cabozantinib as a treatment for patients with previously treated advanced HCC.

We are also eligible to receive future development and regulatory milestone payments, totaling up to an additional $199.0 million, including a $40.0 million milestone upon the EMA’s approval of cabozantinib as a treatment for patients with previously treated advanced HCC, a $50.0 million milestone upon the EMA’s approval of cabozantinib as a first-line treatment of advanced RCC and additional milestone payments for other future indications and/or jurisdictions. The collaboration agreement also provides that we will be eligible to receive contingent payments of up to $545.5 million associated with the achievement of specified levels of Ipsen sales to end users. We will also receive royalties on net sales of cabozantinib by Ipsen outside of the U.S. and Japan. Excluding Ipsen sales in Canada, we received a 2% royalty on the initial $50.0 million of net sales, which was achieved in the fourth quarter of 2017, and are entitled to receive a 12% royalty on the next $100.0 million of net sales, and following this initial $150.0 million of net sales, we are then entitled to receive a tiered royalty of 22% to 26% on annual net sales. These tiers will reset each calendar year. In Canada, we are entitled to receive a tiered royalty of 22% on the first Can$30.0 million of annual net sales and a tiered royalty thereafter, up to 26% on annual net sales; these tiers will also 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 collaboration agreement with Ipsen; global development costs for additional trials are shared between the parties, with Ipsen reimbursing us for 35% of such costs, provided Ipsen chooses to opt into such trials. In accordance with the collaboration agreement, Ipsen has opted into and is co-funding: CheckMate 9ER, the phase 3 pivotal trial evaluating the combination of cabozantinib with nivolumab versus sunitinib in patients with previously untreated, advanced or metastatic RCC being conducted in collaboration with Bristol-Myers Squibb Company (“BMS”); CheckMate 040, the phase 1/2 study evaluating the combination of cabozantinib with nivolumab in patients with both previously treated and previously untreated advanced HCC being conducted in collaboration with BMS (though Ipsen will not be co-funding the triplet arm of the study evaluating cabozantinib with nivolumab and ipilimumab); and the phase 1b trial evaluating cabozantinib in combination with atezolizumab in locally advanced or metastatic solid tumors being conducted in collaboration with the Roche Group.

We remain responsible for the manufacture and supply of cabozantinib for all development and commercialization activities under the collaboration agreement. In connection with the collaboration agreement, we entered into a supply agreement with Ipsen to supply finished, labeled drug product to Ipsen for distribution in the territories outside of the U.S. and Japan for the term of the collaboration agreement. The product will be supplied at our cost, as defined in the agreement, which excludes the 3% royalty we are required to pay GSK on Ipsen’s net sales of any product incorporating cabozantinib.

Unless terminated earlier, the collaboration agreement has a term that continues, on a product-by-product and country-by-country basis, until the latter of (i) the expiration of patent claims related to cabozantinib, (ii) the expiration of regulatory exclusivity covering cabozantinib or (iii) ten years after the first commercial sale of cabozantinib, other than COMETRIQ. The supply agreement will continue in effect until expiration or termination of the collaboration agreement. The collaboration agreement may be terminated for cause by either party based on uncured material breach of either the collaboration agreement or the supply agreement by the other party, bankruptcy of the other party or for safety reasons. We may terminate the collaboration agreement if Ipsen challenges or opposes any patent covered by the collaboration agreement. Ipsen may terminate the collaboration agreement if the U.S. Food and Drug Administration (“FDA”) or EMA orders or requires substantially all cabozantinib clinical trials to be terminated. Ipsen also has the right to terminate the collaboration agreement on a region-by-region basis after the first commercial sale of cabozantinib in advanced RCC in the given region. Upon termination by either party, all licenses granted by us to Ipsen will automatically terminate, and, except in the event of a termination by Ipsen for our material breach, the licenses granted by Ipsen to us shall survive such termination and shall automatically become worldwide, or, if Ipsen terminated only for a particular region, then for the terminated region. Following termination by us for Ipsen’s material breach, or termination by Ipsen without cause or because we undergo a change of control by a party engaged in a competing program, Ipsen is prohibited from competing with us for a period of time.

We identified the following performance obligations under the collaboration agreement with Ipsen: (1) an exclusive license for the commercialization and further development of cabozantinib, as described above; and (2) research and development services which includes certain committed studies for the development of cabozantinib, pharmacovigilance services and participation on the joint steering and development committees (as defined in the collaboration agreement).

We evaluated the collaboration agreement with Ipsen under Topic 606 as of January 1, 2018. Based on the evaluation as of that date, the up-front, nonrefundable fees, the milestones earned and royalties earned as of December 31, 2017, the $10.0 million milestone we expected to earn in the first quarter of 2018 upon Ipsen’s filing with the EMA for cabozantinib as a treatment for patients with previously treated advanced HCC, and the estimated reimbursements for our research and development services performance obligation constituted the amount of the consideration to be included in the transaction price. The transaction price was allocated to the performance obligations identified based on our best estimate of the relative standalone selling price. Other than the $10.0 million HCC filing milestone discussed above, variable consideration related to regulatory and development milestones not previously recognized was constrained due to the fact that it was not probable that a significant reversal of cumulative revenue would not occur, given the inherent uncertainty of success with these milestones. Any variable consideration related to sales based milestones, including royalties, will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license transferred to Ipsen and therefore is recognized at the later of when the performance obligation is satisfied or the related sales occur. We will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Revenues for our research and development services performance obligation are being recognized using the inputs method based on our internal development projected cost estimates through early 2030, which is the current estimated patent expiration of cabozantinib in the European Union. Revenues related to our license performance obligation are recorded immediately as our license represents functional intellectual property that was transferred at a point in time, upon execution of the collaboration agreement. As of March 31, 2018, $54.0 million of the transaction price allocated to our research and development services performance obligation had not been satisfied.

As of March 31, 2018, we determined that we expect to earn a $50.0 million milestone in the second quarter of 2018 for the approval of cabozantinib for the first-line treatment of advanced RCC by the European Commission (“EC”). The determination was made following the Committee for Medicinal Products for Human Use’s (“CHMP”) positive opinion of cabozantinib for the first-line treatment of advanced RCC. The positive CHMP opinion is being reviewed by the EC as part of their approval process. Our determination that we expect to earn that $50.0 million milestone resulted in a change in the overall transaction price of the collaboration agreement, as it was probable that a significant reversal of cumulative revenue would not occur, triggering recognition of $45.8 million in additional collaboration revenues during the three months ended March 31, 2018 which was recorded as Unbilled collaboration revenue as of March 31, 2018. The remaining portion of the milestone will be recorded as we continue to satisfy our research and development services performance obligation and once we have an unconditional right to payment, upon approval of cabozantinib for the first-line treatment of advanced RCC by the EC.

As of March 31, 2018, the net contract asset for the collaboration agreement with Ipsen was $31.8 million, which was included in current Unbilled collaboration revenue on the accompanying Condensed Consolidated Balance Sheets.

Collaboration revenues under the collaboration agreement with Ipsen were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Ipsen collaboration revenues	$	53,809	$	4,530

Takeda Collaboration

In January 2017, we entered into a collaboration and license agreement with Takeda for the commercialization and further clinical development of cabozantinib in Japan. Pursuant to the terms of the collaboration agreement, Takeda has exclusive commercialization rights for current and potential future cabozantinib indications in Japan. The parties have also agreed to collaborate on the future 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 collaboration agreement, we received a $50.0 million upfront nonrefundable payment from Takeda.

We are eligible to receive development, regulatory and first-sale milestone payments of up to $95.0 million related to second-line RCC, first-line RCC and second-line HCC, as well as additional development, regulatory and first-sale milestones payments for potential future indications. The collaboration agreement also provides that we are eligible to receive pre-specified payments of up to $83.0 million associated with potential sales milestones. We consider the contingent payments due to us upon the achievement of specified sales volumes to be similar to royalty payments. We will also receive royalties on net sales of cabozantinib in Japan. We are entitled to receive a tiered royalty of 15% to 24% on the initial $300.0 million of net sales, and after the initial $300.0 million of net sales, we are then entitled to receive a tiered royalty of 20% to 30% on annual net sales. These tiers will reset each calendar year.

Takeda is responsible for 20% of the costs associated with the global cabozantinib development plan’s current and future trials, provided Takeda opts into such trials, and 100% of costs associated with the cabozantinib development activities that are exclusively for the benefit of Japan. In accordance with the collaboration agreement, Takeda has opted into and is co-funding CheckMate 9ER, the phase 3 pivotal trial evaluating the combination of cabozantinib with nivolumab versus sunitinib in patients with previously untreated, advanced or metastatic RCC being conducted in collaboration with BMS.

Pursuant to the terms of the collaboration agreement, we are responsible for the manufacture and supply of cabozantinib for all development and commercialization activities under the collaboration, and consequently, we entered into a clinical supply agreement covering the manufacture and supply of cabozantinib to Takeda, as well as a quality agreement setting forth, in detail, the quality assurance arrangements and procedures for our manufacture of cabozantinib. We will record reimbursements for development costs as revenue as the development services represent a part of our ongoing major or central operations.

Unless earlier terminated, the collaboration agreement has a term that continues, on a product-by-product basis, until the earlier of (i) two years after first generic entry with respect to such product in Japan or (ii) the later of (A) the expiration of patent claims related to cabozantinib and (B) the expiration of regulatory exclusivity covering cabozantinib in Japan. The 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 of the collaboration shall constitute a material breach of the collaboration agreement. We may terminate the agreement if Takeda challenges or opposes any patent covered by the collaboration agreement. At any time prior to August 1, 2023, the parties may mutually agree to terminate the collaboration agreement if Japan’s Pharmaceuticals and Medical Devices Agency is unlikely to grant any approval of the marketing authorization application in any cancer indication in Japan. After the commercial launch of cabozantinib in Japan, Takeda may terminate the 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.

We identified the following performance obligations under the collaboration agreement with Takeda: (1) an exclusive license for the commercialization and further development of cabozantinib, as described above; and (2) research and development services which includes certain committed studies for the development of cabozantinib, pharmacovigilance services and participation on the joint executive and development committees (as defined in the collaboration agreement).

We evaluated the collaboration agreement with Takeda under Topic 606 as of January 1, 2018. Based on the evaluation as of that date, the up-front, nonrefundable fees and the estimated reimbursements for our research and development services performance obligation constituted the amount of the consideration to be included in the transaction price. The transaction price was allocated to the performance obligations identified based on our best estimate of the relative standalone selling price. Variable consideration related to regulatory and development milestones not previously recognized was constrained due to the fact that it was not probable that a significant reversal of cumulative revenue would not occur, given the inherent uncertainty of success with these milestones. Any variable consideration related to sales based milestones, including royalties, will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license transferred to Takeda and therefore is recognized at the later of when the performance obligation is satisfied or the related sales occur. We will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Revenues for our research and development services performance obligation are being recognized using the inputs method based on our internal development projected cost estimates through early 2030, which is the current estimated patent expiration of cabozantinib in Japan. Revenues related to our license performance obligation are recorded immediately as our license represents functional intellectual property that was transferred at a point in time, upon execution of the collaboration agreement. As of March 31, 2018, $28.7 million of the transaction price allocated to our research and development services performance obligation had not been satisfied.

As of March 31, 2018, the net contract liability for the collaboration agreement with Takeda was $3.2 million, which was included in Long-term deferred revenue on the accompanying Condensed Consolidated Balance Sheets.

Collaboration revenues under the collaboration agreement with Takeda were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Takeda collaboration revenues	$	2,917	$	2,682

Genentech Collaboration

Royalty revenues on ex-U.S. sales and our share of the profits and losses recognized in connection with COTELLIC’s commercialization in the U.S. were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Royalty revenues on ex-U.S. sales	$	1,349	$	2,298
Profits and losses on U.S. commercialization	$	1,373	$	(626	)

The royalty revenues on ex-U.S. sales were included in Collaboration revenues. Royalty revenues from the collaboration agreement with Genentech are based on amounts reported to us by our collaboration partner and are recorded when such information becomes available to us; beginning in the first quarter of 2017 such information became available in the current quarter and for 2016 such information was not available until the following quarter, meaning that through December 31, 2016 we recorded royalty revenues on a one quarter lag. As a result of this change, royalty revenues for the three months ended March 31, 2017 included $1.1 million in royalty revenues for sales in the fourth quarter of 2016 and $1.2 million in royalty revenues for sales in the first quarter of 2017.

Profits and losses on the U.S. commercialization of COTELLIC were included in Selling, general and administrative expenses in our Condensed Consolidated Statements of Operations; we are including the profit for the three months ended March 31, 2018 in Selling, general and administrative expenses as we are expecting an overall loss for the year ended December 31, 2018.

GlaxoSmithKline Collaboration

Royalties accruing to GSK in connection with the sales of COMETRIQ and CABOMETYX are included in Cost of goods sold for net sales by us and as a reduction of Collaboration revenues for net sales by Ipsen on the accompanying Condensed Consolidated Statements of Operations. Such royalties were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Royalties accruing to GSK	$	5,125	$	2,737

StemSynergy Collaboration

In January 2018, we entered into an exclusive collaboration and license agreement with StemSynergy Therapeutics, Inc. (“StemSynergy”) for the discovery and development of novel oncology compounds targeting Casein Kinase 1 alpha (“CK1α”) a component of the Wnt signaling pathway implicated in key oncogenic processes. Under the terms of the agreement, we will partner with StemSynergy to conduct preclinical and clinical studies with compounds targeting CK1α. We paid StemSynergy an upfront payment of $3.0 million for initial research and development funding and StemSynergy is eligible to receive up to an additional $3.5 million of such funding. The $3.0 million payment we made during the three months ended March 31, 2018 is included in Research and development expenses in our Condensed Consolidated Statements of Operations. StemSynergy will also be eligible for up to $56.5 million in milestones for the first product to emerge from the collaboration, including preclinical and clinical development and regulatory milestone payments, commercial milestones, as well as single-digit royalties on worldwide sales. We will be solely responsible for the commercialization of products that arise from the collaboration.

Other Collaborations

For a description of our other existing collaboration agreements, 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, 2017 filed with the SEC on February 26, 2018.

We have determined that each of our other existing collaboration agreements have one performance obligation, the delivery of an intellectual property license to each collaboration partner, which was satisfied for all such agreements prior to the adoption of Topic 606. As a result, any consideration earned and received from these collaborations will be recognized immediately as the licenses we provided represent functional intellectual property that was transferred at a point in time prior to the adoption of Topic 606, when the agreements were executed. Potential variable consideration for these collaborations related to regulatory and development milestones was constrained due to the fact that it was not probable that a significant reversal of cumulative revenue would not occur, given the inherent uncertainty of success with these milestones. Any variable consideration related to sales based milestones, including royalties, will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the licenses transferred and therefore are recognized at the later of when the performance obligation is satisfied or the related sales occur.

In February 2018 we earned a $20.0 million milestone, which is included in Collaboration revenues during the three months ended March 31, 2018, upon Daiichi Sankyo’s submission of a regulatory application to the Japanese Pharmaceutical and Medical Devices Agency for esaxerenone as a treatment for patients with essential hypertension.

Cash and Investments

3 Months Ended

Mar. 30, 2018

Investments, Debt and Equity Securities [Abstract]

CASH AND INVESTMENTS

Cash, Cash Equivalents and Restricted Cash

A reconciliation of Cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amount reported within the Condensed Consolidated Statements of Cash Flows was as follows (in thousands):



	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents	$	232,331	$	183,164	$	183,179	$	151,686
Restricted cash included in short-term restricted cash and investments	504		504		—		—
Restricted cash included in long-term restricted cash and investments	1,500		4,646		4,150		4,150
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	$	234,335	$	188,314	$	187,329	$	155,836

Restricted cash includes certificates of deposit used to collateralize letters of credit and, in prior periods, a purchasing card program. See “Note 11. Commitments” for a description of the collateral requirements for our letters of credit and the purchasing card program.

Investments Available-for-sale

Investments by security type were as follows; the amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	55,241	$	—	$	—		$	55,241
Commercial paper	237,067		—		—			237,067
Corporate bonds	191,361		13		(843		)	190,531
U.S. Treasury and government sponsored enterprises	21,490		—		(57		)	21,433
Total	$	505,159	$	13	$	(900	)	$	504,272



	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	45,478	$	—	$	—		$	45,478
Commercial paper	199,647		—		—			199,647
Corporate bonds	179,336		18		(332		)	179,022
U.S. Treasury and government sponsored enterprises	16,295		—		(32		)	16,263
Total	$	440,756	$	18	$	(364	)	$	440,410

Gains and losses on the sales of investments available-for-sale were nominal during both the three months ended March 31, 2018 and 2017.

The fair value of and gross unrealized losses on investments available-for-sale in an unrealized loss position were as follows (in thousands):



	March 31, 2018
	In an Unrealized Loss Position Less than 12 Months					In an Unrealized Loss Position 12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds	$	167,459	$	(822	)	$	9,077	$	(21	)	$	176,536	$	(843	)
U.S. Treasury and government sponsored enterprises	17,000		(52		)	2,655		(5		)	19,655		(57		)
Total	$	184,459	$	(874	)	$	11,732	$	(26	)	$	196,191	$	(900	)



	December 31, 2017
	In an Unrealized Loss Position Less than 12 Months					In an Unrealized Loss Position 12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds	$	140,746	$	(296	)	$	20,047	$	(36	)	$	160,793	$	(332	)
U.S. Treasury and government sponsored enterprises	13,611		(23		)	2,651		(9		)	16,262		(32		)
Total	$	154,357	$	(319	)	$	22,698	$	(45	)	$	177,055	$	(364	)

There were 150 and 134 investments in an unrealized loss position as of March 31, 2018 and December 31, 2017, respectively. During the three months ended March 31, 2018 and 2017 we did not record any other-than-temporary impairment charges on our available-for-sale securities. Based upon our quarterly impairment review, we determined that the unrealized losses were not attributed to credit risk, but were primarily associated with changes in interest rates. Based on the scheduled maturities of our investments and our determination that it was more likely than not that we will hold these investments for a period of time sufficient for a recovery of our cost basis, we concluded that the unrealized losses in our investment securities were not other-than-temporary.

The fair value of cash equivalents and investments by contractual maturity were as follows (in thousands):



	December 31,
	2018		2017
Maturing in one year or less	$	410,062	$	377,155
Maturing after one year through five years	94,210		63,255
Total	$	504,272	$	440,410

Inventory

3 Months Ended

Mar. 30, 2018

Inventory Disclosure [Abstract]

INVENTORY

Inventory consisted of the following (in thousands):



	March 31, 2018		December 31, 2017
Raw materials	$	1,937	$	498
Work in process	3,726		3,997
Finished goods	2,977		2,854
Total	$	8,640	$	7,349

Balance Sheet classification:
Inventory	$	7,563	$	6,657
Other long-term assets	1,077		692
Total	$	8,640	$	7,349

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. As of both March 31, 2018 and December 31, 2017 our inventory includes $0.4 million of materials that were previously expensed.

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 $0.5 million for the three months ended March 31, 2017. There were no such write-downs for the three months ended March 31, 2018.

Inventory expected to be used or sold in periods more than 12 months from the date presented is classified as Other long-term assets on the accompanying Condensed Consolidated Balance Sheets. As of both March 31, 2018 and December 31, 2017, the non-current portion of inventory consisted of finished goods.

Property and Equipment

3 Months Ended

Mar. 30, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

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



	March 31, 2018			December 31, 2017
Computer equipment and software	$	14,772		$	14,146
Laboratory equipment	5,959			5,959
Leasehold improvements	4,715			4,715
Furniture and fixtures	1,609			1,609
Construction in progress	41,528			22,114
	68,583			48,543
Less: accumulated depreciation and amortization	(23,171		)	(22,800		)
Property and equipment, net	$	45,412		$	25,743

Depreciation expense was $0.4 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively.

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. For a description of the Lease, see “Note 12. Commitments” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 26, 2018.

In connection with the Lease, we received a tenant improvement allowance of $7.7 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 to be the 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 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 March 31, 2018, we have capitalized an additional $26.8 million of construction in progress for tenant improvements related to the Premises. As of March 31, 2018 and December 31, 2017, we had also prepaid an additional $0.6 million and $11.1 million, respectively, for future constructions costs which is included in Other long-term assets on the accompanying Condensed Consolidated Balance Sheets.

Stock-Based Compensation

3 Months Ended

Mar. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

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 March 31,
	2018		2017
Research and development	$	3,033	$	1,478
Selling, general and administrative	6,272		3,235
Total stock-based compensation	$	9,305	$	4,713

We have several equity incentive plans under which we have granted stock options and restricted stock units (“RSUs”) to employees, directors and consultants. At March 31, 2018, 19,972,317 shares were available for grant under our equity incentive plans.

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 March 31,
	2018		2017
Stock options	$	11.52	$	9.92
ESPP	$	7.39	$	3.71

The grant-date fair value of employee stock option grants and ESPP purchases was estimated using the following assumptions:



	Three Months Ended March 31,
	2018		2017
Stock options:
Risk-free interest rate	2.40	%	1.62	%
Dividend yield	—	%	—	%
Volatility	54	%	64	%
Expected life	4.0 years		4.0 years
ESPP:
Risk-free interest rate	1.53	%	0.62	%
Dividend yield	—	%	—	%
Volatility	53	%	68	%
Expected life	6 months		6 months

We considered our implied volatility and our historical volatility in developing our estimates of expected volatility. The assumptions for the expected life of stock options were based on historical exercise patterns and post-vesting termination behavior.

The fair value of RSUs was based on the closing price of the underlying common stock on the date of grant.

Stock option activity for the three months ended March 31, 2018 was as follows (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, 2017	22,208,446		$	6.83
Granted	293,580		$	25.72
Exercised	(288,196	)	$	6.69
Forfeited	(18,484	)	$	12.04
Options outstanding at March 31, 2018	22,195,346		$	7.08	3.86 years	$	339,631
Exercisable at March 31, 2018	16,497,014		$	4.66	3.30 years	$	288,535

As of March 31, 2018, $38.8 million of unrecognized compensation expense related to unvested stock options will be recognized over a weighted-average period of 2.47 years.

RSU activity for the three months ended March 31, 2018 was as follows (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, 2017	3,762,990		$	17.76
Awarded	146,790		$	25.72
Vested and released	(197,884	)	$	6.30
Forfeited	(24,494	)	$	17.89
RSUs outstanding at March 31, 2018	3,687,402		$	18.69	1.83 years	$	81,676

As of March 31, 2018, $60.0 million of unrecognized compensation expense related to unvested RSUs will be recognized over a weighted-average period of 3.05 years.

Income Taxes

3 Months Ended

Mar. 30, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

Provision for income taxes was as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Provision for income taxes	$	2,514	$	134

Provision for income taxes for the three months ended March 31, 2018 and 2017 primarily relates to state taxes for which we do not have net operating loss carry-forwards due to a limited operating history. Our historical losses are sufficient to fully offset our federal taxable income.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. The Tax Cuts and Jobs Act contained significant changes to corporate taxation, included among other items, a reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%. Further guidance may be forthcoming from the FASB and the SEC, as well as regulations, interpretations and rulings from federal and state tax agencies, which could result in additional impacts. The Provision for income taxes for the three months ended March 31, 2018 did not reflect any adjustment to the impact of the Tax Cuts and Jobs Act enactment that we recorded during the year ended December 31, 2017.

Net Income (Loss) Per Share

3 Months Ended

Mar. 30, 2018

Earnings Per Share [Abstract]

NET INCOME PER SHARE

The computation of basic and diluted net income per share was as follows (in thousands, except per share amounts):



	Three Months Ended March 31,
	2018		2017
Numerator:
Net income	$	115,857	$	16,700
Net income allocated to participating securities	—		(57		)
Net income allocable to common stock for basic net income per share	115,857		16,643
Adjustment to net income allocated to participating securities	—		3
Net income allocable to common stock for diluted net income per share	$	115,857	$	16,646
Denominator:
Weighted-average shares of common stock outstanding used in computing basic net income per share	296,421		290,870
Dilutive securities:
Outstanding stock options, unvested RSUs and ESPP contributions	17,270		18,665
Weighted-average shares of common stock outstanding and dilutive securities used in computing diluted net income per share	313,691		309,535

Net income per share, basic	$	0.39	$	0.06
Net income per share, diluted	$	0.37	$	0.05

The two-year warrants to purchase an aggregate of 1,000,000 shares of our common stock issued in January 2014 (“2014 Warrants”) were participating securities. The warrant holders did not have a contractual obligation to share in our losses. The 2014 Warrants were fully exercised in September 2017. For a description of the 2014 Warrants, see “Note 7. Common Stock and Warrants” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 26, 2018.

Potentially dilutive shares of common stock not included in the computation of diluted net income per share because to do so would be anti-dilutive were as follows (in thousands):



	Three Months Ended March 31,
	2018	2017
Outstanding stock options, unvested RSUs and ESPP contributions	1,907	1,396
Secured Convertible Notes due 2018 (“Deerfield Notes”)	—	33,890
Total potentially dilutive shares	1,907	35,286

The Deerfield Notes were repaid in June 2017.

Fair Value Measurements

3 Months Ended

Mar. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

The classification of our financial assets within the fair value hierarchy that were measured and recorded at fair value on a recurring basis was as follows; the amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	March 31, 2018
	Level 1		Level 2		Total
Money market funds	$	55,241	$	—	$	55,241
Commercial paper	—		237,067		237,067
Corporate bonds	—		190,531		190,531
U.S. Treasury and government sponsored enterprises	—		21,433		21,433
Total financial assets	$	55,241	$	449,031	$	504,272



	December 31, 2017
	Level 1		Level 2		Total
Money market funds	$	45,478	$	—	$	45,478
Commercial paper	—		199,647		199,647
Corporate bonds	—		179,022		179,022
U.S. Treasury and government sponsored enterprises	—		16,263		16,263
Total financial assets	$	45,478	$	394,932	$	440,410

We did not have any financial liabilities measured and recorded at fair value on a recurring basis as of those dates. We did not have any financial assets or liabilities classified as Level 3 in the fair value hierarchy as of March 31, 2018 or December 31, 2017 and there were no transfers of financial assets or liabilities classified as Level 3 during the three months ended March 31, 2018 or 2017.

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 for similar assets as observable inputs for pricing, which is a Level 2 input.

Our remaining financial assets and liabilities include Cash, Trade and other receivables, Unbilled collaboration revenue, Accounts payable, Accrued compensation and benefits, Accrued clinical trial liabilities, Accrued collaboration liabilities, Rebates and fees due to customers, and other current and long-term liabilities. Those financial assets and liabilities are carried at cost which approximates their fair values.

- Definition

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

+ References + Details

Commitments	3 Months Ended
Commitments	Mar. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS	COMMITMENTS Letters of Credit We obtained a standby letter of credit related to our South San Francisco lease with a credit limit of $0.5 million at both March 31, 2018 and December 31, 2017. We obtained standby letters of credit related to workers compensation insurance policies with a combined credit limit of $0.5 million at March 31, 2018 and $0.6 million at December 31, 2017. We obtained two standby letters of credit related to the Lease with Ascentris for a combined credit limit of $1.0 million at both March 31, 2018 and December 31, 2017. All of the letters of credit were fully collateralized by certificates of deposit. As of March 31, 2018, none of our letters of credit have been drawn upon. As part of a purchasing card program, we were required to provide collateral in the form of certificates of deposit. The collateral requirement at December 31, 2017 was $3.0 million. During the three months ended March 31, 2018 we were notified that we had been released from this collateral requirement. As of both March 31, 2018 and December 31, 2017, the certificate of deposit used to collateralize the standby letter of credit related to our South San Francisco lease was included in short-term restricted cash and investments and the certificates of deposit used to collateralize all other letters of credit and the purchase card program were included in long-term restricted cash and investments.

Subsequent Event	3 Months Ended
Subsequent Event	Mar. 30, 2018
Subsequent Events [Abstract]
SUBSEQUENT EVENT	SUBSEQUENT EVENT On May 2, 2018, we entered into a license and collaboration agreement with Invenra, Inc. (“Invenra”), a privately-held company. Under the terms of the collaboration agreement, the parties will collaborate to discover and develop multispecific antibodies through the use of Invenra’s B-Body™ technology platform. Invenra will be responsible for antibody lead discovery and generation. We will lead Investigational New Drug enabling studies, manufacturing, clinical development in single-agent and combination therapy regimens, as well as future regulatory and commercialization activities. Also under the collaboration agreement, we will receive an exclusive, worldwide license to one preclinical asset (the “lead preclinical asset”), and pursue up to six additional discovery projects directed to three total discovery programs. In consideration for the exclusive worldwide license and other rights contained in the collaboration agreement, we will pay Invenra an upfront payment of $2.0 million. Invenra is eligible to receive payments of up to $131.5 million based on the achievement of specific development and regulatory milestones for a product containing the lead preclinical asset in the first indication. Upon successful commercialization of a product, Invenra is eligible to receive global milestone payments up to $325.0 million if certain sales thresholds are achieved as well as single digit tiered royalties on net sales of the approved product. We also have the right to initiate six additional discovery projects for development subject to an upfront payment of $2.0 million for each project as well as additional global milestone payments and royalties for any products that arise from these discovery efforts. Unless earlier terminated, the collaboration agreement has a term that continues, on a product-by-product and country-by-country basis, until the later of (i) ten years after the first commercial sale of such product in such country or (ii) expiration of patent claims covering the product in such country. We may terminate the collaboration agreement in its entirety or on a project-by-project basis at any time prior to commercialization, for any or no reason, upon thirty days’ written notice to Invenra. The collaboration agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

Organization and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Consolidation	Basis of Consolidation The accompanying Condensed Consolidated Financial Statements include the accounts of Exelixis and those of our wholly-owned subsidiaries. These entities’ functional currency is the U.S. dollar. All intercompany balances and transactions have been eliminated.
Basis of Presentation	Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the 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 2018 will end on December 28, 2018 and fiscal year 2017 ended on December 29, 2017. For convenience, references in this report as of and for the fiscal periods ended March 30, 2018 and March 31, 2017, and as of and for the fiscal years ended December 28, 2018 and December 29, 2017, are indicated as being as of and for the periods ended March 31, 2018 and March 31, 2017, and the years ended December 31, 2018 and December 31, 2017, respectively. Similarly, references in this report to the first day of the fiscal year ended December 28, 2018 are indicated as being as of January 1, 2018.
Segment Information	Segment Information We operate in one business segment which focuses on discovery, development and commercialization of new medicines to improve care and outcomes for people with cancer. Our Chief Executive Officer, as the chief operating decision-maker, manages and allocates resources to our operations on a total consolidated basis. Consistent with this decision-making process, our Chief Executive Officer uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets. All of our long-lived assets are located in the U.S.
Use of Estimates	Use of Estimates The preparation of the accompanying 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, equity, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates including, but not limited to: those related to revenue recognition, including determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, and variable consideration such as rebates, chargebacks, sales returns and sales allowances as well as milestones included in collaboration arrangements; the amounts of revenues and expenses under our profit and loss sharing agreement; recoverability of inventory; the accrual for certain liabilities including accrued clinical trial liability; and valuations of awards used to determine 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 on the accompanying Condensed Consolidated Financial Statements have been reclassified to conform to current period presentation.
Restricted Cash	Restricted Cash In January 2018, we adopted Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 was adopted using the retrospective transition method in the accompanying Condensed Consolidated Financial Statements. As a result of the adoption of ASU 2016-18, we no longer include purchases of restricted cash and proceeds from maturities of restricted cash in our cash flows from investing activities.
Revenue	Topic 606 supersedes all previous revenue recognition requirements in accordance with generally accepted accounting principles. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration to which the entity is entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration it is entitled to in exchange for the goods or services we transfer to the customer. Revenue Recently Adopted Accounting Pronouncements On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606) (“Topic 606”) using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for the three months ended March 31, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under previous revenue recognition guidance, Accounting Standards Codification Topic 605: Revenue Recognition (“Topic 605”). The adjustments due to the adoption of Topic 606 primarily related to a reduction in deferred revenue driven by the allocation of the transaction price to our license performance obligations in the Ipsen and Takeda collaborations, which were determined to be functional intellectual property that was transferred at a point in time and as a result, revenue was recorded at a point in time. Previously under Topic 605, revenue related to the upfront payments and one non-substantive milestone payment earned 2016 had been deferred over the estimated period of performance pursuant to the terms of the contract. Contract assets as of January 1, 2018 primarily related to estimated revenue for reimbursements for our continuing research and development services and the $10.0 million milestone from Ipsen’s filing with the European Medicines Agency (“EMA”) for cabozantinib, as a treatment for patients with previously treated advanced hepatocellular carcinoma (“HCC”), that was deemed probable under Topic 606 prior to January 1, 2018. Deferred revenue as of January 1, 2018 is related to the up-front, nonrefundable, fees and milestones earned that were allocated to our research and development services performance obligation which had not been satisfied as of that date. Contract assets and liabilities are netted by collaboration agreement on our Condensed Consolidated Balance Sheets; however, for illustration purposes the above amounts are shown prior to netting.
Net Product Revenues	Net Product Revenues We sell our products principally to specialty distributors and specialty pharmacy providers, or collectively, our Customers. These Customers subsequently resell our products to health care providers and patients. In addition to distribution agreements with Customers, we enter into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products. Revenues from product sales are recognized when the Customer obtains control of our product, which occurs at a point in time, typically upon delivery to the Customer.
Product Sales Discounts and Allowances	Product Sales Discounts and Allowances Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between us and our Customers, health care providers, payors and other indirect customers relating to the sales of our products. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecast customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known. Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, Federal government entities purchasing via the Federal Supply Schedule and Group Purchasing Organizations, and health maintenance organizations, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to us the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the customer. The allowance for chargebacks is based on an estimate of sales to contracted customers. Discounts for Prompt Payment: Our Customers in the U.S. receive a discount of 2% for prompt payment. We expect our Customers will earn 100% of their prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program and other government programs. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory discount rates and expected utilization. Our estimates for the expected utilization of rebates are based on customer and payer data received from the specialty pharmacies and distributors and historical utilization rates. Rebates are generally invoiced by the payer and paid in arrears, such that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s shipments to our customers, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, we may need to adjust our accruals, which would affect net product revenues in the period of adjustment. Allowances for rebates also include the Medicare Part D Coverage Gap. In the U.S., the Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Our estimates for expected Medicare Part D coverage gap are based on customer and payer data received from specialty pharmacies and distributors and historical utilization rates. Funding of the coverage gap is invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarters’ shipments to patients, plus an accrual balance for known prior quarter’s unpaid claims. If actual future funding varies from estimates, we may need to adjust our accruals, which would affect net product revenues in the period of adjustment. Co-payment Assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. We accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using customer data provided by the specialty pharmacies and distributors. Other Customer Credits: We pay fees to our Customers for account management, data management and other administrative services. To the extent the services received are distinct from the sale of products to the Customer, these payments are classified in Selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.
Collaboration Revenues	Collaboration Revenues We enter into collaboration arrangements, under which we license certain rights to our intellectual property to third parties. The terms of these arrangements typically include payment to us for one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for product supply; development cost reimbursements; profit sharing arrangements; and royalties on net sales of licensed products. Except for profit sharing arrangements, each of these payment types are within the scope of Topic 606. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecast revenues, clinical development timelines and costs, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. Up-front License Fees: If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from nonrefundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. Milestone Payments: At the inception of each arrangement that includes development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being earned until uncertainty associated with the approvals has been resolved. The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of earning such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect Collaboration revenues and earnings in the period of adjustment. Product Supply Services: Arrangements that include a promise for future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. Development Cost Reimbursements: Our Ipsen and Takeda arrangements include promises of future clinical development and drug safety services, as well as participation on certain joint committees. We have determined that these services collectively are distinct from the license provided to each partner and as such, these promises are accounted for as a separate performance obligation recorded over time. We record revenue for these services as the performance obligations are satisfied, which we estimate using internal development costs incurred and projections through the term of the arrangements. Profit Sharing Arrangements: Under the terms of our collaboration agreement with Genentech for cobimetinib, we are entitled to a share of U.S. profits and losses received in connection with commercialization of cobimetinib. We are also entitled to low double-digit royalties on ex-U.S. net sales. We account for such arrangements in accordance with Accounting Standards Codification Topic 808, Collaborative Arrangements (“Topic 808”). We have determined that we are an agent under the agreement and therefore revenues are recorded net of costs incurred. We record U.S. profits and losses under the collaboration agreement in the period earned based on our estimate of those amounts. Historically, we have not recognized a profit for any annual period from the commercialization of cobimetinib in the U.S. Until we recognize or expect to recognize an annual profit under the agreement, losses are recognized as Selling, general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations. Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, the license is deemed to be the predominant item to which the royalties relate and we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Recent Accounting Pronouncements	Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), (“ASU 2016-02”). Under ASU 2016-02, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. ASU 2016-02 will require a right-of-use asset to be recognized on the balance sheet for both types of leases. ASU 2016-02 also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. ASU 2016-02 must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We currently expect to early adopt this standard in the second quarter of 2018. Based on our initial evaluation of the impact of ASU 2016-02 on our build-to-suit lease of office and research facilities located in Alameda, California, we expect that the amount we have capitalized as Property and equipment related to the building shells, will be derecognized upon the adoption of ASU 2016-02. Upon adoption of ASU 2016-02 we will also be required to recognize a right-of-use asset and lease liability related to this lease. The adoption of ASU 2016-02 could also change the nature of future expenses related to the build-to-suit lease, reducing future depreciation and interest expense, which would be offset by an increase in lease expense. We are continuing to assess the impact of ASU No. 2016-02 on our consolidated financial statements. In January 2018, the FASB issued the exposure document Proposed Accounting Standards Update—Leases (Topic 842): Targeted Improvements. In issuing this exposure draft, the FASB proposes allowing another transition method for ASU 2016-02, which would allow the transition to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. This Proposed Accounting Standards Update, if issued as a final ASU by the FASB, could impact our method of adoption of ASU 2016-02.

Organization and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Impact of Adoption of Topic 606

The impact of the adoption of Topic 606 on our Condensed Consolidated Balance Sheet and Statement of Operations as of and for the period ended March 31, 2018 was as follows (in thousands):



	March 31, 2018
	As Reported			Balances Without the Adoption of Topic 606			Effect of Adoption Higher / (Lower)
Unbilled collaboration revenue	$	31,844		$	—		$	31,844
Current portion of deferred revenue	$	—		$	30,288		$	(30,288	)
Other current liabilities	$	17,711		$	16,820		$	891
Long-term portion of deferred revenue	$	3,177		$	230,948		$	(227,771	)
Accumulated deficit	$	(1,454,810	)	$	(1,743,822	)	$	289,012



	Three Months Ended March 31, 2018
	As Reported		Balances Without the Adoption of Topic 606		Effect of Adoption Higher / (Lower)
Collaboration revenues	$	78,074	$	46,676	$	31,398
Total revenues	$	212,346	$	180,948	$	31,398
Income before income taxes	$	118,371	$	86,973	$	31,398
Provision for income taxes	$	2,514	$	1,623	$	891
Net income	$	115,857	$	85,350	$	30,507
Net income per share, basic	$	0.39	$	0.29	$	0.10
Net income per share, diluted	$	0.37	$	0.27	$	0.10

The impact of the adoption of Topic 606 on contract assets, contract liabilities and accumulated deficit balances as of January 1, 2018 was as follows (in thousands):



	December 31, 2017			Adjustments Due to the Adoption of Topic 606			January 1, 2018
Contract assets: unbilled collaboration revenue, gross:
Current portion	$	—		$	9,588		$	9,588
Long-term portion	$	—		$	12,247		$	12,247
Contract liabilities: deferred revenue, gross:
Current portion	$	31,984		$	(23,591	)	$	8,393
Long-term portion	$	238,520		$	(213,079	)	$	25,441
Accumulated deficit	$	(1,829,172	)	$	258,505		$	(1,570,667	)

Revenues (Tables)

3 Months Ended

Mar. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenues

Total revenues disaggregated by significant customer were as follows (dollars in thousands):



	Three Months Ended March 31,
	2018				2017
	Dollars		Percent of total		Dollars		Percent of total
Ipsen	$	53,809	25	%	$	4,530	6	%
Caremark L.L.C.	$	26,388	12	%	$	13,819	17	%
Affiliates of McKesson Corporation	$	21,331	10	%	$	11,278	14	%
Diplomat Specialty Pharmacy	$	20,147	9	%	$	19,850	25	%
Accredo Health, Incorporated	$	18,286	9	%	$	9,440	12	%

Revenues by disaggregated category were as follows (in thousands):



	Three Months Ended March 31,
	2018			2017
Product revenues:
Gross product revenues	$	159,436		$	77,959
Discounts and allowances	(25,164		)	(9,082		)
Net product revenues	134,272			68,877
Collaboration revenues:
License revenues⁽¹⁾	69,030			11,214
Research and development services revenues⁽²⁾	10,099			1,132
Product supply revenues, net	(1,055		)	(336		)
Total collaboration revenues	78,074			12,010
Total revenues	$	212,346		$	80,887

____________________

(1)

(2)

Net product revenues disaggregated by product were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
CABOMETYX	$	128,934	$	62,359
COMETRIQ	5,338		6,518
Net product revenues	$	134,272	$	68,877

Total revenues disaggregated by geographic region were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
U.S.	$	135,620	$	73,675
Europe	$	53,809	$	4,530
Rest of the world	$	22,917	$	2,682

Activities and Ending Reserve Balances for Significant Categories of Discounts and Allowances

The activities and ending reserve balances for each significant category of discounts and allowances (which constitute variable consideration) were as follows (in thousands):



	Chargebacks and Discounts for Prompt Payment			Other Customer Credits/Fees and Co-pay Assistance			Rebates			Returns		Total
Balance at December 31, 2017	$	1,928		$	1,795		$	5,770		$	—	$	9,493
Provision related to sales made in:
Current period	14,475			4,197			6,625			—		25,297
Prior periods	(331		)	—			199			—		(132		)
Payments and customer credits issued	(13,556		)	(3,294		)	(3,303		)	—		(20,153		)
Balance at March 31, 2018	$	2,516		$	2,698		$	9,291		$	—	$	14,505

Contract Assets and Liabilities under Topic 606

Changes in our contract assets and liabilities under Topic 606 were as follows (in thousands):



	Contract Assets: Unbilled Collaboration Revenue						Contract Liabilities: Deferred Revenue
	Current Portion			Long-term Portion			Current Portion			Long-term Portion
Balance at December 31, 2017	$	—		$	—		$	31,984		$	238,520
Adoption of Topic 606	9,588			12,247			(23,591		)	(213,079		)
Balance at January 1, 2018	9,588			12,247			8,393			25,441
Increases as a result of a change in transaction price and recognition of revenues as services are performed	46,006			1,166			—			—
Transfer to receivables from contract assets recognized at the beginning of the period	(9,159		)	—			—			—
Increases as a result of the deferral of milestones earned in period, excluding amounts recognized as revenue	—			—			173			666
Revenue recognized that was included in the contract liability balance at the beginning of the period	—			—			(3,492		)	—
Other adjustments ⁽¹⁾	(14,591		)	(13,413		)	(5,074		)	(22,930		)
Balance at March 31, 2018	$	31,844		$	—		$	—		$	3,177

____________________


(1)	Includes reclassification of deferred revenue from long-term to current and adjustments made due to netting of contract assets and liabilities by collaboration agreement.

Collaboration Agreements (Tables)

3 Months Ended

Mar. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration Revenues and Contract Assets and Liabilities

Collaboration revenues under the collaboration agreement with Ipsen were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Ipsen collaboration revenues	$	53,809	$	4,530

Royalty revenues on ex-U.S. sales and our share of the profits and losses recognized in connection with COTELLIC’s commercialization in the U.S. were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Royalty revenues on ex-U.S. sales	$	1,349	$	2,298
Profits and losses on U.S. commercialization	$	1,373	$	(626	)



	Three Months Ended March 31,
	2018		2017
Royalties accruing to GSK	$	5,125	$	2,737

Collaboration revenues under the collaboration agreement with Takeda were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Takeda collaboration revenues	$	2,917	$	2,682

Cash and Investments (Tables)

3 Months Ended

Mar. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Reconciliation of Cash, Cash Equivalents, and Restricted Cash



	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents	$	232,331	$	183,164	$	183,179	$	151,686
Restricted cash included in short-term restricted cash and investments	504		504		—		—
Restricted cash included in long-term restricted cash and investments	1,500		4,646		4,150		4,150
Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows	$	234,335	$	188,314	$	187,329	$	155,836

Investments by Security Type

Investments by security type were as follows; the amounts presented exclude cash, but include investments classified as cash equivalents (in thousands):



	March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	55,241	$	—	$	—		$	55,241
Commercial paper	237,067		—		—			237,067
Corporate bonds	191,361		13		(843		)	190,531
U.S. Treasury and government sponsored enterprises	21,490		—		(57		)	21,433
Total	$	505,159	$	13	$	(900	)	$	504,272



	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	45,478	$	—	$	—		$	45,478
Commercial paper	199,647		—		—			199,647
Corporate bonds	179,336		18		(332		)	179,022
U.S. Treasury and government sponsored enterprises	16,295		—		(32		)	16,263
Total	$	440,756	$	18	$	(364	)	$	440,410

Fair Value and Gross Unrealized Losses of Investments Available-for-Sale in an Unrealized Loss Position

The fair value of and gross unrealized losses on investments available-for-sale in an unrealized loss position were as follows (in thousands):



	March 31, 2018
	In an Unrealized Loss Position Less than 12 Months					In an Unrealized Loss Position 12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds	$	167,459	$	(822	)	$	9,077	$	(21	)	$	176,536	$	(843	)
U.S. Treasury and government sponsored enterprises	17,000		(52		)	2,655		(5		)	19,655		(57		)
Total	$	184,459	$	(874	)	$	11,732	$	(26	)	$	196,191	$	(900	)



	December 31, 2017
	In an Unrealized Loss Position Less than 12 Months					In an Unrealized Loss Position 12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds	$	140,746	$	(296	)	$	20,047	$	(36	)	$	160,793	$	(332	)
U.S. Treasury and government sponsored enterprises	13,611		(23		)	2,651		(9		)	16,262		(32		)
Total	$	154,357	$	(319	)	$	22,698	$	(45	)	$	177,055	$	(364	)

Fair Value of Cash Equivalents and Investments by Contractual Maturity

The fair value of cash equivalents and investments by contractual maturity were as follows (in thousands):



	December 31,
	2018		2017
Maturing in one year or less	$	410,062	$	377,155
Maturing after one year through five years	94,210		63,255
Total	$	504,272	$	440,410

Inventory (Tables)

3 Months Ended

Mar. 30, 2018

Inventory Disclosure [Abstract]

Inventory

Inventory consisted of the following (in thousands):



	March 31, 2018		December 31, 2017
Raw materials	$	1,937	$	498
Work in process	3,726		3,997
Finished goods	2,977		2,854
Total	$	8,640	$	7,349

Balance Sheet classification:
Inventory	$	7,563	$	6,657
Other long-term assets	1,077		692
Total	$	8,640	$	7,349

Property and Equipment (Tables)

3 Months Ended

Mar. 30, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

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



	March 31, 2018			December 31, 2017
Computer equipment and software	$	14,772		$	14,146
Laboratory equipment	5,959			5,959
Leasehold improvements	4,715			4,715
Furniture and fixtures	1,609			1,609
Construction in progress	41,528			22,114
	68,583			48,543
Less: accumulated depreciation and amortization	(23,171		)	(22,800		)
Property and equipment, net	$	45,412		$	25,743

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Allocated Employee Stock-Based Compensation Expense

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 March 31,
	2018		2017
Research and development	$	3,033	$	1,478
Selling, general and administrative	6,272		3,235
Total stock-based compensation	$	9,305	$	4,713

Weighted Average Grant-Date Fair Value of Stock Options and ESPP Purchases



	Three Months Ended March 31,
	2018		2017
Stock options	$	11.52	$	9.92
ESPP	$	7.39	$	3.71

Valuation Assumptions Used to Estimate Grant-Date Fair Value

The grant-date fair value of employee stock option grants and ESPP purchases was estimated using the following assumptions:



	Three Months Ended March 31,
	2018		2017
Stock options:
Risk-free interest rate	2.40	%	1.62	%
Dividend yield	—	%	—	%
Volatility	54	%	64	%
Expected life	4.0 years		4.0 years
ESPP:
Risk-free interest rate	1.53	%	0.62	%
Dividend yield	—	%	—	%
Volatility	53	%	68	%
Expected life	6 months		6 months

Stock Option Activity

Stock option activity for the three months ended March 31, 2018 was as follows (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, 2017	22,208,446		$	6.83
Granted	293,580		$	25.72
Exercised	(288,196	)	$	6.69
Forfeited	(18,484	)	$	12.04
Options outstanding at March 31, 2018	22,195,346		$	7.08	3.86 years	$	339,631
Exercisable at March 31, 2018	16,497,014		$	4.66	3.30 years	$	288,535

RSU Activity

RSU activity for the three months ended March 31, 2018 was as follows (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, 2017	3,762,990		$	17.76
Awarded	146,790		$	25.72
Vested and released	(197,884	)	$	6.30
Forfeited	(24,494	)	$	17.89
RSUs outstanding at March 31, 2018	3,687,402		$	18.69	1.83 years	$	81,676

Income Taxes (Tables)

3 Months Ended

Mar. 30, 2018

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Provision for income taxes was as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Provision for income taxes	$	2,514	$	134

Net Income (Loss) Per Share (Tables)

3 Months Ended

Mar. 30, 2018

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income Per Share

The computation of basic and diluted net income per share was as follows (in thousands, except per share amounts):



	Three Months Ended March 31,
	2018		2017
Numerator:
Net income	$	115,857	$	16,700
Net income allocated to participating securities	—		(57		)
Net income allocable to common stock for basic net income per share	115,857		16,643
Adjustment to net income allocated to participating securities	—		3
Net income allocable to common stock for diluted net income per share	$	115,857	$	16,646
Denominator:
Weighted-average shares of common stock outstanding used in computing basic net income per share	296,421		290,870
Dilutive securities:
Outstanding stock options, unvested RSUs and ESPP contributions	17,270		18,665
Weighted-average shares of common stock outstanding and dilutive securities used in computing diluted net income per share	313,691		309,535

Net income per share, basic	$	0.39	$	0.06
Net income per share, diluted	$	0.37	$	0.05

Potentially Dilutive Shares of Common Stock

Potentially dilutive shares of common stock not included in the computation of diluted net income per share because to do so would be anti-dilutive were as follows (in thousands):



	Three Months Ended March 31,
	2018	2017
Outstanding stock options, unvested RSUs and ESPP contributions	1,907	1,396
Secured Convertible Notes due 2018 (“Deerfield Notes”)	—	33,890
Total potentially dilutive shares	1,907	35,286

Fair Value Measurements (Tables)

3 Months Ended

Mar. 30, 2018

Fair Value Disclosures [Abstract]

Classification of Financial Assets Measured and Recorded at Fair Value on a Recurring Basis



	March 31, 2018
	Level 1		Level 2		Total
Money market funds	$	55,241	$	—	$	55,241
Commercial paper	—		237,067		237,067
Corporate bonds	—		190,531		190,531
U.S. Treasury and government sponsored enterprises	—		21,433		21,433
Total financial assets	$	55,241	$	449,031	$	504,272



	December 31, 2017
	Level 1		Level 2		Total
Money market funds	$	45,478	$	—	$	45,478
Commercial paper	—		199,647		199,647
Corporate bonds	—		179,022		179,022
U.S. Treasury and government sponsored enterprises	—		16,263		16,263
Total financial assets	$	45,478	$	394,932	$	440,410

Organization and Summary of Significant Accounting Policies - Narrative (Details)
$ in Thousands

3 Months Ended

23 Months Ended

Mar. 30, 2018

USD ($)

segment

product

Dec. 31, 2017

USD ($)

Dec. 29, 2017

USD ($)

Dec. 30, 2017

USD ($)

Feb. 29, 2016

USD ($)

Organization And Summary Of Significant Policies [Line Items]

Number of products that entered in the commercial marketplace | product

Number of business segments | segment

Reduction to accumulated deficit

$ (1,454,810)

$ (1,829,172)

^[1]

$ (1,570,667)

Prompt payment discount rate

2.00%

Percent of total available discounts expected to be earned

100.00%

Products Derived from Cabozantinib

Organization And Summary Of Significant Policies [Line Items]

Number of products that entered in the commercial marketplace | product

Collaborative Arrangement with Ipsen

Organization And Summary Of Significant Policies [Line Items]

Milestone payments earned

$ 125,000

Additional milestone achievement

$ 199,000

Collaborative Arrangement with Ipsen | HCC Filing

Organization And Summary Of Significant Policies [Line Items]

Milestone payments earned

$ 10,000

Collaborative Arrangement with Ipsen | EMA Approval

Organization And Summary Of Significant Policies [Line Items]

Milestone revenue recognized

$ 45,800

Additional milestone achievement

50,000

ASU 2014-09 | Adjustments Due to the Adoption of Topic 606

Organization And Summary Of Significant Policies [Line Items]

Reduction to accumulated deficit

$ 289,012

$ 258,505

[1]	The Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the audited financial statements as of that date.

Organization and Summary of Significant Accounting Policies - Impact of Adoption of Topic 606 on Contract Assets, Contract Liabilities and Accumulated Deficit (Details) - USD ($)
$ in Thousands

Mar. 30, 2018

Dec. 30, 2017

Dec. 29, 2017

Contract assets: unbilled collaboration revenue, gross:

$ 31,844

$ 9,588

Contract liabilities: deferred revenue, gross:

12,247

8,393

3,177

25,441

Balances Without the Adoption of Topic 606

(1,454,810)

(1,570,667)

(1,829,172)

^[1]

Contract assets: unbilled collaboration revenue, gross:

Contract liabilities: deferred revenue, gross:

31,984

238,520

ASU 2014-09 | Adjustments Due to the Adoption of Topic 606

(1,743,822)

(1,829,172)

Contract assets: unbilled collaboration revenue, gross:

9,588

Contract liabilities: deferred revenue, gross:

12,247

(23,591)

$ (213,079)

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

$ 289,012

$ 258,505

[1]	The Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the audited financial statements as of that date.

Organization and Summary of Significant Accounting Policies - Impact of Adoption of Topic 606 on the Consolidated Balance Sheet (Details) - USD ($)
$ in Thousands

Mar. 30, 2018

Dec. 30, 2017

Dec. 29, 2017

$ 31,844

$ 0

^[1]

31,984

^[1]

17,711

16,150

^[1]

3,177

238,520

^[1]

Balances Without the Adoption of Topic 606

(1,454,810)

$ (1,570,667)

(1,829,172)

^[1]

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

30,288

16,820

230,948

ASU 2014-09 | Effect of Adoption Higher / (Lower)

(1,743,822)

$ (1,829,172)

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

31,844

(30,288)

891

(227,771)

Cash and Cash Equivalents [Abstract]

$ 289,012

$ 258,505

[1]	The Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the audited financial statements as of that date.

- Definition

The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.

+ References + Details

- Definition

The noncurrent portion of deferred revenue amount as of balance sheet date. Deferred revenue is a liability related to a revenue producing activity for which revenue has not yet been recognized, and is not expected to be recognized in the next twelve months. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

+ References + Details

Organization and Summary of Significant Accounting Policies - Impact of Adoption of Topic 606 on the Consolidated Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Collaboration revenues	$ 78,074	$ 12,010
Total revenues	212,346	80,887
Income before income taxes	118,371	16,834
Provision for income taxes	2,514	134
Net income	$ 115,857	$ 16,700
Net income per share, basic (in dollars per share)	$ 0.39	$ 0.06
Net income per share, diluted (in dollars per share)	$ 0.37	$ 0.05
Balances Without the Adoption of Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Collaboration revenues	$ 46,676
Total revenues	180,948
Income before income taxes	86,973
Provision for income taxes	1,623
Net income	$ 85,350
Net income per share, basic (in dollars per share)	$ 0.29
Net income per share, diluted (in dollars per share)	$ 0.27
ASU 2014-09 \| Adjustments Due to the Adoption of Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Collaboration revenues	$ 31,398
Total revenues	31,398
Income before income taxes	31,398
Provision for income taxes	891
Net income	$ 30,507
Net income per share, basic (in dollars per share)	$ 0.10
Net income per share, diluted (in dollars per share)	$ 0.10

Revenues - Revenues by Disaggregated Category (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Product revenues:
Gross product revenues	$ 159,436	$ 77,959
Discounts and allowances	(25,164)	(9,082)
Net product revenues	134,272	68,877
Collaboration revenues:
License revenues	69,030	11,214
Research and development services revenues	10,099	1,132
Product supply revenues, net	(1,055)	(336)
Total collaboration revenues	78,074	12,010
Total revenues	$ 212,346	$ 80,887

Revenues - Net Product Revenues Disaggregated by Product (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Disaggregation of Revenue [Line Items]
Net product revenues	$ 212,346	$ 80,887
Product
Disaggregation of Revenue [Line Items]
Net product revenues	134,272	68,877
CABOMETYX
Disaggregation of Revenue [Line Items]
Net product revenues	128,934	62,359
COMETRIQ
Disaggregation of Revenue [Line Items]
Net product revenues	$ 5,338	$ 6,518

Revenues - Revenues Disaggregated by Significant Customer (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 212,346	$ 80,887
Ipsen
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 53,809	$ 4,530
Ipsen \| Revenue \| Customer Concentration Risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total revenues	25.00%	6.00%
Caremark L.L.C.
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 26,388	$ 13,819
Caremark L.L.C. \| Revenue \| Customer Concentration Risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total revenues	12.00%	17.00%
Affiliates of McKesson Corporation
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 21,331	$ 11,278
Affiliates of McKesson Corporation \| Revenue \| Customer Concentration Risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total revenues	10.00%	14.00%
Diplomat Specialty Pharmacy
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 20,147	$ 19,850
Diplomat Specialty Pharmacy \| Revenue \| Customer Concentration Risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total revenues	9.00%	25.00%
Accredo Health, Incorporated
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 18,286	$ 9,440
Accredo Health, Incorporated \| Revenue \| Customer Concentration Risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total revenues	9.00%	12.00%

Revenues - Revenues Disaggregated by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Disaggregation of Revenue [Line Items]
Total revenues	$ 212,346	$ 80,887
U.S.
Disaggregation of Revenue [Line Items]
Total revenues	135,620	73,675
Europe
Disaggregation of Revenue [Line Items]
Total revenues	53,809	4,530
Rest of the world
Disaggregation of Revenue [Line Items]
Total revenues	$ 22,917	$ 2,682

Revenues - Activities and Ending Reserve Balances for Significant Categories of Discounts and Allowances (Details) $ in Thousands	3 Months Ended
	Mar. 30, 2018 USD ($)
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance	$ 9,493
Provision related to sales made in:
Current period	25,297
Prior periods	(132)
Payments and customer credits issued	(20,153)
Balance	14,505
Chargebacks and Discounts for Prompt Payment
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance	1,928
Provision related to sales made in:
Current period	14,475
Prior periods	(331)
Payments and customer credits issued	(13,556)
Balance	2,516
Other Customer Credits/Fees and Co-pay Assistance
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance	1,795
Provision related to sales made in:
Current period	4,197
Prior periods	0
Payments and customer credits issued	(3,294)
Balance	2,698
Rebates
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance	5,770
Provision related to sales made in:
Current period	6,625
Prior periods	199
Payments and customer credits issued	(3,303)
Balance	9,291
Returns
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance	0
Provision related to sales made in:
Current period	0
Prior periods	0
Payments and customer credits issued	0
Balance	$ 0

Revenues - Changes in Contract Assets and Liabilities under Topic 606 (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 30, 2018
Contract Assets - Current Portion
Balance		$ 9,588
Increases as a result of a change in transaction price and recognition of revenues as services are performed		46,006
Transfer to receivables from contract assets recognized at the beginning of the period		(9,159)
Other		(14,591)
Balance		31,844
Contract Assets - Long-term Portion
Balance		12,247
Increases as a result of a change in transaction price and recognition of revenues as services are performed		1,166
Other		(13,413)
Balance		0
Contract Liabilities - Current Portion
Balance		8,393
Increases as a result of the deferral of milestones earned in period, excluding amounts recognized as revenue		173
Revenue recognized that was included in the contract liability balance at the beginning of the period		(3,492)
Other		(5,074)
Balance		0
Contract Liabilities - Long-term Portion
Balance		25,441
Increases as a result of the deferral of milestones earned in period, excluding amounts recognized as revenue		666
Revenue recognized that was included in the contract liability balance at the beginning of the period		0
Other		(22,930)
Balance		3,177
Revenues recognized for performance obligations satisfied in previous periods	$ 71,300
Balances Without the Adoption of Topic 606
Contract Assets - Current Portion
Balance		0
Contract Assets - Long-term Portion
Balance		0
Contract Liabilities - Current Portion
Balance		31,984
Contract Liabilities - Long-term Portion
Balance		238,520
Adjustments Due to the Adoption of Topic 606 \| ASU 2014-09
Contract Assets - Current Portion
Balance		9,588
Contract Assets - Long-term Portion
Balance		12,247
Contract Liabilities - Current Portion
Balance		(23,591)
Contract Liabilities - Long-term Portion
Balance		$ (213,079)

Collaboration Agreements - Ipsen Collaboration (Details) $ in Millions	1 Months Ended	3 Months Ended				23 Months Ended
	Feb. 29, 2016 USD ($)	Mar. 30, 2018 USD ($)	Mar. 30, 2018 CAD ($)	Dec. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 29, 2017 USD ($)	Dec. 30, 2017 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
License revenues		$ 69,030,000			$ 11,214,000
Net contract asset		$ 31,844,000				$ 9,588,000	$ 9,588,000
Collaborative Arrangement with Ipsen
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment(s)	$ 210,000,000
Milestone payments earned						$ 125,000,000
Additional milestone achievement	199,000,000
Contingent cash receipts (up to)	545,500,000
Research and development arrangement performed for others, reimbursement for costs incurred, percent		35.00%	35.00%
Collaboration period to achieve specified levels of commercial performance		10 years	10 years
Remaining performance obligation		$ 54,000,000
Net contract asset		$ 31,800,000
Collaborative Arrangement with Ipsen \| GlaxoSmithKline
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		3.00%	3.00%
Collaborative Arrangement with Ipsen \| Initial and Second
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty tier		$ 150,000,000
Collaborative Arrangement with Ipsen \| Initial and Second \| Minimum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		22.00%	22.00%
Collaborative Arrangement with Ipsen \| Initial and Second \| Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		26.00%	26.00%
Collaborative Arrangement with Ipsen \| Initial
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		2.00%	2.00%
Royalty tier		$ 50,000,000	$ 30.0
Collaborative Arrangement with Ipsen \| Second
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		12.00%	12.00%
Royalty tier		$ 100,000,000
Collaborative Arrangement with Ipsen \| HCC Filing
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone payments earned				$ 10,000,000
Collaborative Arrangement with Ipsen \| HCC Acceptance
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Additional milestone achievement	$ 40,000,000
Collaborative Arrangement with Ipsen \| EMA Approval - 1L RCC [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Additional milestone achievement		50,000,000
License revenues		$ 45,800,000

Collaboration Agreements - Collaboration Revenues under the Collaboration Agreement with Ipsen (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenues	$ 78,074	$ 12,010
Collaborative Arrangement with Ipsen
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenues	$ 53,809	$ 4,530

Collaboration Agreements - Takeda Collaboration (Details) - Collaborative Arrangement with Takeda - USD ($)		3 Months Ended
	Jan. 01, 2017	Mar. 30, 2018	Mar. 31, 2018
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment(s)	$ 50,000,000
Maximum amount eligible for development and regulatory milestones		$ 95,000,000
Maximum pre-specified payments		$ 83,000,000
Sales volume period		6 years
Remaining performance obligation		$ 28,700,000
Net contract liability			$ 3,200,000
Global
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Research and development arrangement performed for others, reimbursement for costs incurred, percent		20.00%
Japan
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Research and development arrangement performed for others, reimbursement for costs incurred, percent		100.00%
Collaboration period to achieve specified levels of commercial performance		2 years
Initial
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Cumulative net sales		$ 300,000,000.0
Initial \| Minimum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		15.00%
Initial \| Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		24.00%
Final \| Minimum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		20.00%
Final \| Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percent of royalty on net sale		30.00%

Collaboration Agreements - Collaboration Revenues under the Collaboration Agreement with Takeda (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenues	$ 78,074	$ 12,010
Collaborative Arrangement with Takeda
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenues	$ 2,917	$ 2,682

Collaboration Agreements - Royalty Revenues under the Collaboration Agreement with Genentech (Details) - Collaborative Arrangement with Genentech - COTELLIC - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenues on ex-U.S. sales	$ 1,349	$ 2,298
Profits and losses on U.S. commercialization	$ 1,373	$ (626)

Collaboration Agreements - Genentech Collaboration (Details) - Collaborative Arrangement with Genentech - COTELLIC - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenue	$ 1,349	$ 2,298
Q4 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenue		1,100
Q1 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenue		$ 1,200

Collaboration Agreements - Royalty Revenues under the Collaboration Agreement with GlaxoSmithKline (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2018	Mar. 31, 2017
Collaboration Agreement with GlaxoSmithKline
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalties accruing to GSK	$ 5,125	$ 2,737

Collaboration Agreements - StemSynergy Collaboration (Details) - Collaborative Arrangement with StemSynergy $ in Millions	1 Months Ended
	Jan. 31, 2018 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payments	$ 3.0
Additional milestone achievement	3.5
First Products to Reach Market
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Additional milestone achievement	$ 56.5

Collaboration Agreements - Other Collaborations (Details) $ in Millions	1 Months Ended
	Feb. 28, 2018 USD ($)
Collaborative arrangements with Daiichi Sankyo
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone revenue recognized	$ 20.0

Cash and Investments - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($)
$ in Thousands

Mar. 30, 2018

Dec. 29, 2017

Mar. 31, 2017

Dec. 30, 2016

Cash and cash equivalents

$ 232,331

$ 183,164

^[1]

$ 183,179

$ 151,686

Restricted cash included in short-term restricted cash and investments

504

^[1]

Restricted cash included in long-term restricted cash and investments

1,500

4,646

^[1]

4,150

Cash, cash equivalents, and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows

$ 234,335

$ 188,314

$ 187,329

$ 155,836

[1]	The Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the audited financial statements as of that date.

Cash and Investments - Investments by Security Type (Details) - USD ($) $ in Thousands	Mar. 30, 2018	Dec. 29, 2017
Investment [Line Items]
Amortized Cost	$ 505,159	$ 440,756
Gross Unrealized Gains	13	18
Gross Unrealized Losses	(900)	(364)
Fair Value	504,272	440,410
Money market funds
Investment [Line Items]
Amortized Cost	55,241	45,478
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	55,241	45,478
Commercial paper
Investment [Line Items]
Amortized Cost	237,067	199,647
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	237,067	199,647
Corporate bonds
Investment [Line Items]
Amortized Cost	191,361	179,336
Gross Unrealized Gains	13	18
Gross Unrealized Losses	(843)	(332)
Fair Value	190,531	179,022
U.S. Treasury and government sponsored enterprises
Investment [Line Items]
Amortized Cost	21,490	16,295
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(57)	(32)
Fair Value	$ 21,433	$ 16,263

Cash and Investments - Fair Value and Gross Unrealized Losses of Investments Available-for-Sale in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 30, 2018	Dec. 29, 2017
Fair Value
In an Unrealized Loss Position Less than 12 Months	$ 184,459	$ 154,357
In an Unrealized Loss Position 12 Months or Greater	11,732	22,698
Total	196,191	177,055
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months	874	319
In an Unrealized Loss Position 12 Months or Greater	26	45
Total	900	364
Corporate bonds
Fair Value
In an Unrealized Loss Position Less than 12 Months	167,459	140,746
In an Unrealized Loss Position 12 Months or Greater	9,077	20,047
Total	176,536	160,793
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months	822	296
In an Unrealized Loss Position 12 Months or Greater	21	36
Total	843	332
U.S. Treasury and government sponsored enterprises
Fair Value
In an Unrealized Loss Position Less than 12 Months	17,000	13,611
In an Unrealized Loss Position 12 Months or Greater	2,655	2,651
Total	19,655	16,262
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months	52	23
In an Unrealized Loss Position 12 Months or Greater	5	9
Total	$ 57	$ 32

Cash and Investments - Narrative (Details)	3 Months Ended
Cash and Investments - Narrative (Details)	Mar. 30, 2018 USD ($) investment	Mar. 31, 2017 USD ($)	Dec. 29, 2017 investment
Investments, Debt and Equity Securities [Abstract]
Number of investments in an unrealized loss position \| investment	150		134
Other-than-temporary impairment charges on available-for-sale securities \| $	$ 0	$ 0

Cash and Investments - Fair Value of Cash Equivalents and Investments by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 30, 2018	Dec. 29, 2017
Investments, Debt and Equity Securities [Abstract]
Maturing in one year or less	$ 410,062	$ 377,155
Maturing after one year through five years	94,210	63,255
Total	$ 504,272	$ 440,410

Inventory (Details) - USD ($) $ in Thousands	3 Months Ended
Inventory (Details) - USD ($) $ in Thousands	Mar. 30, 2018	Mar. 31, 2017	Dec. 29, 2017
Inventory [Line Items]
Raw materials	$ 1,937		$ 498
Work in process	3,726		3,997
Finished goods	2,977		2,854
Total	8,640		7,349
Materials previously expensed included in inventory	400		400
Write-downs on inventory	0	$ 500
Inventory
Inventory [Line Items]
Total	7,563		6,657
Other long-term assets
Inventory [Line Items]
Total	$ 1,077		$ 692

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

Mar. 30, 2018

Dec. 29, 2017

Less: accumulated depreciation and amortization

$ 68,583

$ 48,543

(23,171)

(22,800)

Property and equipment, net

45,412

25,743

^[1]

Computer equipment and software

14,772

14,146

Laboratory equipment

5,959

Leasehold improvements

4,715

Furniture and fixtures

1,609

Construction in progress