0000939767-20-000035 | 10-K | XBRL Viewer

Print Document View Excel Document

Cover Page - USD ($)	12 Months Ended
Cover Page - USD ($)	Jan. 03, 2020	Feb. 18, 2020	Jun. 28, 2019
Cover page.
Document Type	10-K
Document Annual Report	true
Document Period End Date	Jan. 03, 2020
Document Transition Report	false
Entity File Number	000-30235
Entity Registrant Name	EXELIXIS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-3257395
Entity Address, Address Line One	1851 Harbor Bay Parkway
Entity Address, City or Town	Alameda,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94502
City Area Code	650
Local Phone Number	837-7000
Title of 12(b) Security	Common Stock $.001 Par Value per Share
Trading Symbol	EXEL
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 5,731,439,777
Entity Common Stock, Shares Outstanding		305,393,240
Documents Incorporated by Reference	Certain portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than May 4, 2020, in connection with the registrant’s 2020 Annual Meeting of Stockholders are incorporated herein by reference into Part III of this Annual Report on Form 10-K.
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Central Index Key	0000939767
Current Fiscal Year End Date	--01-03

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Current assets:
Cash and cash equivalents	$ 266,501	$ 314,775
Short-term investments	585,742	378,559
Trade receivables, net	119,073	162,771
Inventory, net	12,886	9,838
Prepaid expenses and other current assets	26,988	31,073
Total current assets	1,011,190	897,016
Long-term investments	536,385	158,287
Property and equipment, net	48,892	50,897
Deferred tax assets, net	172,374	244,111
Goodwill	63,684	63,684
Other long-term assets	53,145	8,291
Total assets	1,885,670	1,422,286
Current liabilities:
Accounts payable	11,581	10,901
Accrued compensation and benefits	37,364	32,142
Accrued clinical trial liabilities	38,777	18,231
Rebates and fees due to customers	18,719	14,954
Accrued collaboration liabilities	11,856	7,419
Other current liabilities	24,449	21,825
Total current liabilities	142,746	105,472
Long-term portion of deferred revenue	6,596	15,897
Long-term portion of operating lease liabilities	48,011	12,099
Long-term portion of operating lease liabilities		12,178
Other long-term liabilities	2,347	1,286
Total liabilities	199,700	134,833
Commitments
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares issued	0	0
Common stock, $0.001 par value; 400,000 shares authorized; issued and outstanding: 304,831 and 299,876 at December 31, 2019 and 2018, respectively	305	300
Additional paid-in capital	2,241,947	2,168,217
Accumulated other comprehensive income (loss)	3,069	(701)
Accumulated deficit	(559,351)	(880,363)
Total stockholders’ equity	1,685,970	1,287,453
Total liabilities and stockholders’ equity	$ 1,885,670	$ 1,422,286

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jan. 03, 2020	Dec. 28, 2018
Preferred stock
Par value (in dollars per share)	$ 0.001	$ 0.001
Shares authorized (in shares)	10,000,000	10,000,000
Shares issued (in shares)	0	0
Common stock
Par value (in dollars per share)	$ 0.001	$ 0.001
Shares authorized (in shares)	400,000,000	400,000,000
Shares issued (in shares)	304,831,000	299,876,000
Shares outstanding (in shares)	304,831,000	299,876,000

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Revenues:
Total revenues	$ 967,775	$ 853,826	$ 452,477
Operating expenses:
Cost of goods sold	33,097	26,348	15,066
Research and development	336,964	182,257	112,171
Selling, general and administrative	228,244	206,366	159,330
Total operating expenses	598,305	414,971	286,567
Income from operations	369,470	438,855	165,910
Other income (expense), net:
Interest income	27,959	12,840	4,883
Interest expense	0	0	(8,679)
Other, net	680	397	(3,537)
Total other income (expense), net	28,639	13,237	(7,333)
Income before income taxes	398,109	452,092	158,577
Income tax provision (benefit)	77,097	(237,978)	4,350
Net income	$ 321,012	$ 690,070	$ 154,227
Net income per share:
Basic (in dollars per share)	$ 1.06	$ 2.32	$ 0.52
Diluted (in dollars per share)	$ 1.02	$ 2.21	$ 0.49
Weighted-average common shares outstanding:
Basic (in shares)	302,584	297,892	293,588
Diluted (in shares)	315,009	312,803	312,003
Net product revenues
Revenues:
Total revenues	$ 759,950	$ 619,279	$ 349,008
Collaboration revenues
Revenues:
Total revenues	$ 207,825	$ 234,547	$ 103,469

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 321,012	$ 690,070	$ 154,227
Other comprehensive income (loss):
Net unrealized gains (losses) on available-for-sale securities, net of tax impact of $(1,049), $156, and $0, respectively	3,770	(354)	69
Comprehensive income	$ 324,782	$ 689,716	$ 154,296

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Statement of Comprehensive Income [Abstract]
Unrealized gains or losses on available-for-sale securities, tax impact	$ (1,049)	$ 156	$ 0

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance at beginning of period at Dec. 30, 2016	$ 89,318	$ 290	$ 2,072,591	$ (416)	$ (1,983,147)
Balance at beginning of period (in shares) at Dec. 30, 2016		289,924
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	154,227				154,227
Net unrealized gains (losses) on available-for-sale securities, net of tax impact of $(1,049), $156, and $0, respectively	69			69
Issuance of common stock under equity incentive and stock purchase plans (in shares)		5,408
Issuance of common stock under equity incentive and stock purchase plans	17,409	$ 5	17,404
Issuance of common stock on exercise of warrants (in shares)		877
Issuance of common stock on exercise of warrants	0	$ 1	(1)
Stock-based compensation	23,938		23,938
Balance at end of period (in shares) at Dec. 29, 2017		296,209
Balance at end of period at Dec. 29, 2017	284,961	$ 296	2,114,184	(347)	(1,829,172)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	690,070				690,070
Net unrealized gains (losses) on available-for-sale securities, net of tax impact of $(1,049), $156, and $0, respectively	(354)			(354)
Issuance of common stock under equity incentive and stock purchase plans (in shares)		3,667
Issuance of common stock under equity incentive and stock purchase plans	13,411	$ 4	13,407
Stock-based compensation	$ 40,626		40,626
Balance at end of period (in shares) at Dec. 28, 2018	299,876	299,876
Balance at end of period at Dec. 28, 2018	$ 1,287,453	$ 300	2,168,217	(701)	(880,363)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	321,012				321,012
Net unrealized gains (losses) on available-for-sale securities, net of tax impact of $(1,049), $156, and $0, respectively	3,770			3,770
Issuance of common stock under equity incentive and stock purchase plans (in shares)		4,955
Issuance of common stock under equity incentive and stock purchase plans	17,133	$ 5	17,128
Stock-based compensation	$ 56,602		56,602
Balance at end of period (in shares) at Jan. 03, 2020	304,831	304,831
Balance at end of period at Jan. 03, 2020	$ 1,685,970	$ 305	$ 2,241,947	$ 3,069	$ (559,351)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Cash flows from operating activities:
Net income	$ 321,012	$ 690,070	$ 154,227
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	8,348	4,915	1,187
Stock-based compensation	56,602	40,626	23,938
Non-cash lease expense	2,819	2,854	0
Deferred taxes	71,002	(244,111)	0
Other, net	88	1,129	(6,795)
Changes in operating assets and liabilities:
Trade receivables, net	43,716	(85,471)	(43,299)
Inventory	(5,731)	(3,181)	(3,319)
Prepaid expenses and other assets	(5,723)	(8,525)	(378)
Deferred revenue	(9,301)	271	13,745
Accounts payable and other liabilities	44,124	17,143	26,305
Net cash provided by operating activities	526,956	415,720	165,611
Cash flows from investing activities:
Purchases of property, equipment and other	(12,834)	(33,297)	(21,143)
Proceeds from sale of property and equipment	0	308	164
Purchases of investments	(1,182,682)	(557,832)	(319,090)
Proceeds from sales and maturities of investments	608,269	292,971	376,864
Net cash (used in) provided by investing activities	(587,247)	(297,850)	36,795
Cash flows from financing activities:
Proceeds from issuance of common stock under equity incentive and stock purchase plans	22,499	17,278	22,423
Taxes paid related to net share settlement of equity awards	(9,904)	(7,574)	(6,563)
Principal repayments of debt	0	0	(185,788)
Other, net	(42)	(13)	0
Net cash provided by (used in) financing activities	12,553	9,691	(169,928)
Net (decrease) increase in cash, cash equivalents and restricted cash equivalents	(47,738)	127,561	32,478
Cash, cash equivalents and restricted cash equivalents at beginning of period	315,875	188,314	155,836
Cash, cash equivalents and restricted cash equivalents at end of period	268,137	315,875	188,314
Supplemental cash flow disclosure:
Cash paid for interest	0	0	20,460
Cash paid for taxes	7,873	10,677	538
Non-cash activities:
Right-of-use assets obtained in exchange for lease obligations	29,562	17,180
Property and equipment deemed to have been acquired in build-to-suit lease	0	0	14,530
Unpaid liabilities incurred for purchases of property and equipment	$ 26	$ 802	$ 524

Organization and Summary of Significant Accounting Policies	12 Months Ended
	Jan. 03, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Summary of Significant Accounting Policies	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Exelixis, Inc. (Exelixis, we, our or us) is an oncology-focused biotechnology company that strives to accelerate the discovery, development and commercialization of new medicines for difficult-to-treat cancers. Our drug discovery and development capabilities and commercialization platform are the foundations upon which we intend to bring to market novel, effective and tolerable therapies to provide cancer patients with additional treatment options. Since we were founded in 1994, four products resulting from our discovery efforts have progressed through clinical development, received regulatory approval and established a commercial presence in various geographies around the world. Two are derived from cabozantinib, our flagship molecule, an inhibitor of multiple tyrosine kinases including MET, AXL, VEGF receptors and RET. Our cabozantinib products are: CABOMETYX® (cabozantinib) tablets approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma (HCC); and COMETRIQ® (cabozantinib) capsules approved for progressive, metastatic medullary thyroid cancer. For these types of cancer, cabozantinib has become or is becoming a standard of care. Beyond these approved indications, cabozantinib is currently the focus of a broad clinical development program, and is being investigated both alone and in combination with other therapies in a wide variety of cancers. The other two products resulting from our discovery efforts are: COTELLIC® (cobimetinib), an inhibitor of MEK, approved as part of a combination regimen to treat advanced melanoma and marketed under a collaboration with Genentech, Inc. (a member of the Roche Group) (Genentech); and MINNEBRO® (esaxerenone), an oral, non-steroidal, selective blocker of the mineralocorticoid receptor (MR), approved for the treatment of hypertension in Japan and licensed to Daiichi Sankyo Company, Limited (Daiichi Sankyo). Basis of Presentation The accompanying 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. We have made reclassifications to our prior years’ Consolidated Balance Sheet and Consolidated Statements of Cash Flows to conform to the current year’s presentation. These reclassifications had no effect on total current assets, total assets, total operating cash flows, total investing cash flows or total financing cash flows. We have adopted a 52- or 53-week fiscal year policy that ends on the Friday closest to December 31st. Fiscal year 2019, which was a 53-week fiscal year, ended on January 3, 2020, fiscal year 2018, which was a 52-week fiscal year, ended on December 28, 2018 and fiscal year 2017, which was a 52-week fiscal year, ended on December 29, 2017. For convenience, references in this report as of and for the fiscal years ended January 3, 2020, December 28, 2018 and December 29, 2017 are indicated as being as of and for the years ended December 31, 2019, 2018 and 2017, respectively. Segment Information We operate in one business segment that focuses on the discovery, development and commercialization of new medicines for difficult-to-treat cancers. 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 revenues by geographic region. Use of Estimates The preparation of the accompanying 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, we evaluate our significant estimates. 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. Recently Adopted Accounting Pronouncements In the third quarter of 2019, we adopted ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 requires a customer in a hosting arrangement that is a service contract to follow the guidance in Accounting Standards Codification (ASC) Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 requires capitalized implementation costs to be expensed over the term of the hosting arrangement, which includes reasonably certain renewals. We adopted ASU 2018-15 using the prospective transition method in the accompanying Consolidated Financial Statements. The adoption of ASU 2018-15 did not have a material impact on our Consolidated Financial Statements. In the first quarter of 2019, we adopted ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) (ASU 2018-02). There was no financial impact from the adoption of ASU 2018-02 and we did not make an election to reclassify the income tax effects of the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income (loss) to accumulated deficit. In connection with the adoption of ASU 2018-02, we adopted the individual unit of account approach for releasing income tax effects from accumulated other comprehensive income (loss). In the first quarter of 2019, we also adopted ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20) (ASU 2017-08). ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, ASU 2017-08 requires the premium to be amortized to the earliest call date. ASU 2017-08 does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The adoption of ASU 2017-08 did not have a material impact on our Consolidated Financial Statements. Cash and Investments We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include high-grade, short-term investments in money market funds, certificates of deposit and marketable debt securities which are subject to minimal credit and market risk. We designate all investments in marketable debt securities as available-for-sale and therefore, report such investments at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). For securities sold prior to maturity, the cost of securities sold is based on the specific identification method. We include realized gains and losses on the sale of investments in other income (expense), net in the accompanying Consolidated Statements of Income. We classify those investments that we do not require for use in current operations and that mature in more than 12 months as long-term investments in the accompanying Consolidated Balance Sheets. The classification of restricted cash equivalents as short-term or long-term is dependent upon the longer of the remaining term to maturity of the investment or the remaining term of the related restriction. We subject all of our investments to a quarterly impairment review. We recognize an impairment charge when a decline in the fair value of an investment below its cost basis is judged to be other-than-temporary. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investments fair value has been less than their cost basis, the financial condition and near-term prospects of the issuer, extent of the loss related to credit of the issuer, the expected cash flows from the security, our intent to sell the security and whether or not we will be required to sell the security before we are able to recover our carrying value. Fair Value Measurements We define fair value as the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risks. Accounts Receivable We record trade accounts receivable net of allowances for chargebacks and cash discounts for prompt payment, as described further below. Estimates of our allowance for doubtful accounts are determined based on existing contractual payment terms, historical payment patterns of our customers and individual customer circumstances, an analysis of days sales outstanding by geographic region and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Historically, the amounts of uncollectible accounts receivable that have been written off have been insignificant. Inventory We value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard-cost method, which approximates actual cost based on a first-in, first-out method. We analyze our inventory levels quarterly and write down inventory subject to expiry in excess of expected requirements, or that has a cost basis in excess of its expected net realizable value. These write downs are charged to either cost of goods sold or the cost of supplied product included in collaboration revenues in the accompanying Consolidated Statements of Income. On a quarterly basis, we analyze our estimated production levels for the following twelve-month period, which is our normal operating cycle, and reclassify inventory we expect to use or sell in periods beyond the next twelve months into other long-term assets in the accompanying Consolidated Balance Sheets. Property and Equipment We record property and equipment at cost, net of depreciation. We compute depreciation using the straight-line method based on estimated useful lives of the assets, which ranges up to 15 years and depreciate leasehold improvements over the lesser of their estimated useful lives or the remainder of the lease term. We charge repairs and maintenance costs to expense as incurred. We periodically review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not recognize impairment charges in any of the periods presented. Goodwill We recorded goodwill amounts as the excess purchase price over tangible assets, liabilities and intangible assets acquired based on their estimated fair value. We periodically review the carrying amount of goodwill for impairment (at least annually) and whenever events or changes in circumstance indicate that the carrying value may not be recoverable. Historically, we assessed the recoverability of our goodwill on the last day of our third quarter. Beginning in 2019, we changed the date of our annual goodwill impairment assessment to the first day of our fourth quarter to allow for operational expediency. The change in goodwill impairment testing date does not represent a significant change to our accounting for goodwill. The assessment of recoverability may first consider qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We perform a quantitative assessment if the qualitative assessment results in a more-likely-than-not determination or if a qualitative assessment is not performed. The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the carrying amount of the reporting unit’s goodwill exceeds its fair value. We continue to operate in one segment, which is also considered to be our sole reporting unit and therefore, goodwill is tested for impairment at the enterprise level. We did not recognize any impairment charges in any of the periods presented. Collaboration Agreements We assess whether our collaboration agreements are subject to ASC 808: Collaborative Arrangements (Topic 808) based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of Topic 808, we assess whether the payments between us and our collaboration partner are subject to other accounting literature. If we conclude that payments from the collaboration partner to us represent consideration from a customer, then we account for those payments within the scope of Topic 606. However, if we conclude that our collaboration partner is not a customer for certain activities, such as for certain collaborative research and development activities, we present such payments as a reduction of research and development expense. Revenue In the first quarter of 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts that were not completed as of the adoption date. Results for the years ended December 31, 2019 and 2018 are presented under Topic 606, while results for the year ended December 31, 2017 have not been adjusted and continue to be reported in accordance with our historic accounting under previous revenue recognition guidance, ASC Topic 605: Revenue Recognition (Topic 605). 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 are within the scope of Topic 606, we perform the following five steps: 1) identify the contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) 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 we are 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 We record revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that 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 forecasted 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 our contracts. 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, Federal government entities purchasing via the Federal Supply Schedule, 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 actual chargebacks received and 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, other government programs and commercial contracts. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory or contractual 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 quarters’ 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 amounts related to the Medicare Part D Coverage Gap Discount Program. In the U.S. during 2018 and 2017, the Medicare Part D prescription drug benefit mandated participating manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. This amount increased to 70% in 2019. Our estimates for expected Medicare Part D coverage gap amounts 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 quarter’s shipments to Customer, plus an accrual balance for known prior quarters’ 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 distributor that administers the copay program. 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, we classify these payments in selling, general and administrative expenses in our Consolidated Statements of Income. 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 sales-based milestone payments; product supply services; development cost reimbursements; profit sharing arrangements; and royalties on net sales of licensed products. Except for profit sharing arrangements, payments for product supply services and certain development cost reimbursements, each of these payment types were within the scope of Topic 606 during the years ended December 31, 2019 and 2018. As part of the accounting for these arrangements, we develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecasted 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. Regulatory and Development 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 achieved 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 achieving such development and regulatory 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. 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 collaboration arrangements may include promises of future clinical development and drug safety services, as well as participation on certain joint committees. When such services are provided to a customer, and they are distinct from the licenses provided to our collaboration partners, these promises are accounted for as a separate performance obligation which we estimate using internal development costs incurred and projections through the term of the arrangements. We record revenue for these services as the performance obligations are satisfied over time. 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 account for such arrangements in accordance with 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. We recognized an annual profit under the agreement for the years ending December 31, 2019 and 2018 and accordingly, those profits are recognized as collaboration revenues in the accompanying Consolidated Statements of Income. Prior to 2018, the commercialization of cobimetinib in the U.S. had not been profitable for any annual period and accordingly, losses for periods prior to 2018 were recognized as selling, general and administrative expenses in the accompanying Consolidated Statements of Income. Royalty and Sales-based Milestone Payments: For arrangements that include royalties and sales-based milestone payments, including milestone payments earned for the first commercial sale of a product, the license is deemed to be the predominant item to which such payments relate and we recognize revenue at the later of when the related sales occur or when the performance obligation to which the royalty has been allocated has been satisfied. Cost of Goods Sold Cost of goods sold is related to our product revenues and consists primarily of a 3% royalty we are required to pay GlaxoSmithKline (GSK) on all net sales of any product incorporating cabozantinib, the cost of manufacturing, indirect labor costs, write-downs related to expiring and excess inventory, shipping and other third-party logistics and distribution costs for our product. We consider regulatory approval of product candidates to be uncertain and product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for product candidates incurred prior to regulatory approval were not capitalized as inventory but are expensed as research and development costs. Portions of the manufacturing costs for inventory sold during the years ended December 31, 2018 and 2017 were incurred prior to the regulatory approval of CABOMETYX and COMETRIQ and, therefore, were expensed as research and development costs when incurred, rather than capitalized as inventory. There were no amounts remaining related to previously expensed materials in our inventory balances as of December 31, 2019 or 2018. Research and Development Expenses Research and development costs are expensed as incurred and primarily include: (1) direct and indirect internal costs for drug discovery; (2) upfront license and project initiation fees, license option fees, funded research and milestone payments incurred for our in-licensing arrangements with our collaboration partners; and (3) development costs associated with our clinical trial projects, which include fees paid to Contract Research Organizations (CRO) performing work on our behalf. Our clinical trial projects have been executed with support from third-party CROs, who specialize in conducting and managing global clinical trials. We accrue expenses for clinical trial activities performed by the CROs based upon the estimated amount of work completed on each trial. For clinical trial expenses, the significant factors used in estimating accruals include direct CRO costs, the number of patients enrolled, the number of active clinical sites involved, the duration for which the patients will be enrolled in the trial and patient out of pocket costs. We monitor patient enrollment levels and related activities to the extent possible through CRO meetings and correspondence, internal reviews and review of contractual terms. We base our estimates on the best information available at the time. However, additional information may become available to us which may allow us to make a more accurate estimate in future periods. In this event, we may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain. As described further above, certain payments made to us from our collaboration partners may be presented as a reduction of research and development expense. Development, regulatory or commercial milestone payments to collaboration partners are recorded as research and development costs when we determine such payments become probable. Leases We determine if an arrangement includes a lease at the inception of the agreement. For each of our lease arrangements, we record a right-of-use asset representing our right to use an underlying asset for the lease term and a lease liability representing our obligation to make lease payments. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the net present value of lease payments over the lease term. In determining the weighted average discount rate used to calculate the net present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date. Our leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that we will exercise any such options. Lease expense for our operating leases is recognized on a straight-line basis over the lease term. We have elected not to apply the recognition requirements of Topic 842 for short-term leases. Advertising Advertising expenses were $17.9 million, $14.8 million and $8.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. We expense the costs of advertising, including promotional expenses, as incurred. Advertising expenses are recorded in sales, general and administrative expenses. Stock-Based Compensation We account for stock-based payments to employees, including grants of service-based restricted stock awards, performance-based restricted stock awards (PSUs), service-based stock options, performance-based stock options (PSOs), and purchases under our 2000 Employee Stock Purchase Plan (ESPP) in accordance with ASC 718, Compensation-Stock Compensation, which requires that stock-based payments (to the extent they are compensatory) be recognized in our Consolidated Statements of Income based on their fair values. We account for forfeitures of stock-based awards as they occur. The expense for stock-based compensation is based on the grant date fair value of the award. The grant date fair value of restricted stock units (RSUs) and PSUs are estimated as the value of the underlying shares of our common stock. The grant date fair values are estimated using a Monte Carlo simulation pricing model for PSOs with market vesting conditions and a Black-Scholes Merton option pricing model for other stock options. Both option pricing models require the input of subjective assumptions. These variables include, but are not limited to, the expected volatility of our stock price and the expected term of the awards. We consider both implied and historical volatilities when developing an estimate of expected volatility. We estimate the term using historical data. We recognize compensation expense over the requisite service period on an accelerated basis for awards with a market or performance condition and on a straight-line basis for service-based stock options and awards. Compensation expense relating to PSUs is recognized when we determine that it is probable that the performance goals will be achieved, which we assess on a quarterly basis. Income Taxes Our income tax provision or benefit is computed under the asset and liability method. Significant estimates are required in determining our income tax provision or benefit. Some of these estimates are based on interpretations of existing tax laws or regulations. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (temporary differences) at enacted tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is established for deferred tax assets for which it is more likely than not that some portion or all of the deferred tax assets, including net operating losses and tax credits, will not be realized. We periodically re-assess the need for a valuation allowance against our deferred tax assets based on various factors including our historical earnings experience by taxing jurisdiction, and forecasts of future operating results and utilization of net operating losses and tax credits prior to their expiration. Significant judgment is required in making this assessment and, to the extent that a reversal of any portion of our valuation allowance against our deferred tax assets is deemed appropriate, a tax benefit will be recognized against our income tax provision in the period of such reversal. Prior to 2018, we recorded a valuation allowance that fully offset our deferred tax assets. In the fourth quarter of 2018, based on our evaluation of various factors, including our achievement of a cumulative three-year income position as of December 28, 2018 and forecasts of future operating results, we released substantially all of our valuation allowance against our deferred tax assets and recorded a corresponding income tax benefit as described in “Note 9. Income Taxes”, below. We continue to maintain a valuation allowance against our California state deferred tax assets. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination by the tax authorities based on the technical merits of the position. An adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period. Foreign Currency Translation and Remeasurement Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured using exchange rates in effect at the end of the period and related gains or losses are recorded in other income (expense), net in the accompanying Consolidated Statements of Income. Net foreign currency translational gains and losses were not material for the years ended December 31, 2019, 2018 and 2017. Recent Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740)-Simplifying the Accounting for Income Taxes (ASU 2019-12). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. ASU 2019-12 will be effective for us in the first quarter of 2021 with early adoption permitted. We are currently assessing the impact of ASU 2019-12 on our Consolidated Financial Statements. In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (ASU 2018-18). ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the counterparty is a customer for a distinct good or service (i.e. a unit of account). For units of account that are in the scope of Topic 606, all of the guidance in Topic 606 should be applied, including the guidance on recognition, measurement, presentation and disclosure. ASU 2018-18 also adds a reference in ASC Topic 808, Collaborative Arrangements (Topic 808) to the unit of account guidance in Topic 606 and requires that it be applied only to assess whether transactions in a collaborative arrangement are in the scope of Topic 606. ASU 2018-18 will preclude entities from presenting amounts related to transactions with a counterparty in a collaborative arrangement that is not a customer as revenue from contracts with customers. ASU 2018-18 is effective for us in the first quarter of 2020. We are currently assessing the impact of ASU 2018-18 on our Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 eliminated Step 2 from the goodwill impairment test. Instead, under the amendments in ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for us in the first quarter of 2020. We do not expect the adoption of ASU 2017-04 to have a material impact on our Consolidated Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) (ASU 2016-13). ASU 2016-13 implements an impairment model, known as the current expected credit loss model that is based on expected losses rather than incurred losses. Under the new guidance, an entity will recognize as an allowance its estimate of expected credit losses. ASU 2016-13 is effective for us in the first quarter of 2020. We are currently assessing the impact of ASU 2016-13 on our Consolidated Financial Statements.

Revenues

12 Months Ended

Jan. 03, 2020

Revenue from Contract with Customer [Abstract]

Revenues

REVENUES

Revenues consisted of the following (in thousands):



	Year Ended December 31,
	2019			2018			2017
Product revenues:
Gross product revenues	$	957,621		$	738,529		$	402,569
Discounts and allowances	(197,671		)	(119,250		)	(53,561		)
Net product revenues	759,950			619,279			349,008
Collaboration revenues:
License revenues	161,299			192,188			96,637
Research and development service revenues	49,965			39,501			8,737
Other collaboration revenues	(3,439		)	2,858			(1,905		)
Total collaboration revenues	207,825			234,547			103,469
Total revenues	$	967,775		$	853,826		$	452,477

Net product revenues, license revenues and research and development services revenues were recorded in accordance with Topic 606 during the years ended December 31, 2019 and 2018 and Topic 605 during the year ended December 31, 2017. During the periods presented in accordance with Topic 606, net product revenues and license revenues related to goods and intellectual property licenses transferred at a point in time and research and development services revenues related to services performed over time. License revenues includes the recognition of the portion of upfront payment milestones allocated to the transfer of intellectual property licenses for which it had become probable in the current period that the milestone would be achieved and a significant reversal of revenues would not occur, as well as royalty revenues. Research and development services revenues includes the recognition of deferred revenue for the portion of upfront and milestone payments that have been allocated to research and development services performance obligations, as well as development cost reimbursements earned under our collaboration agreements. Other collaboration revenues were recorded in accordance with Topic 808 for all periods presented and includes product supply revenues, net of product supply costs and the royalties we paid to GSK on sales by Ipsen Pharma SAS (Ipsen) of products containing cabozantinib. Profits on the U.S. commercialization of COTELLIC for the years ended December 31, 2019 and 2018 were also included other collaboration revenues, and losses on the U.S. commercialization of COTELLIC for the year ended December 31, 2017 were included in selling, general and administrative expenses

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



	Year Ended December 31,
	2019		2018		2017
CABOMETYX	$	733,421	$	599,946	$	324,000
COMETRIQ	26,529		19,333		25,008
Net product revenues	$	759,950	$	619,279	$	349,008

The percentage of total revenues by customer who individually accounted for 10% or more of our total revenues were as follows:



	Year Ended December 31,
	2019		2018		2017
Ipsen	16	%	21	%	15	%
Affiliates of CVS Health Corporation	15	%	13	%	16	%
Affiliates of McKesson Corporation	12	%	12	%	11	%
Affiliates of AmerisourceBergen Corporation	10	%	8	%	8	%
Accredo Health, Incorporated	9	%	9	%	11	%
Diplomat Specialty Pharmacy	5	%	9	%	18	%

Revenues by geographic region were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
U.S.	$	770,244	$	632,927	$	367,906
Europe	152,771		182,879		69,792
Japan	44,760		38,020		14,779
Total revenues	$	967,775	$	853,826	$	452,477

Net product revenues are attributed to geographic regions based on the ship-to location. Collaboration revenues are attributed to geographic 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			Total
Balance at December 31, 2017	$	1,928		$	1,795		$	5,770		$	9,493
Provision related to sales made in:
Current period	75,543			13,017			31,040			119,600
Prior periods	(403		)	206			(153		)	(350		)
Payments and customer credits issued	(74,746		)	(11,980		)	(24,741		)	(111,467		)
Balance at December 31, 2018	2,322			3,038			11,916			17,276
Provision related to sales made in:
Current period	129,936			15,605			48,250			193,791
Prior periods	3,989			(111		)	2			3,880
Payments and customer credits issued	(128,733		)	(15,035		)	(44,946		)	(188,714		)
Balance at December 31, 2019	$	7,514		$	3,497		$	15,222		$	26,233

The reserves for chargebacks and discounts for prompt payment are recorded as a reduction of trade receivables, net and the remaining reserves are recorded as rebates and fees due to customers in the accompanying Consolidated Balance Sheets.

Contract Assets and Liabilities

We receive payments from our collaboration partners based on billing schedules established in each contract. Amounts are recorded as accounts receivable when our right to consideration is unconditional. We may also recognize revenue in advance of the contractual billing schedule and such amounts are recorded as a contract asset when recognized. Contract assets were $1.1 million and $0 as of December 31, 2019 and 2018, respectively, and are presented in prepaid expenses and other current assets in the accompanying Consolidated Balance Statements. We may be required to defer recognition of revenue for upfront and milestone payments until we perform our obligations under these arrangements, and such amounts are recorded as deferred revenue upon receipt or when due. Contract liabilities were $6.6 million and $15.9 million as of December 31, 2019 and 2018, respectively, and are presented in long-term portion of deferred revenue in the accompanying Consolidated Balance Sheets. For those contracts that have multiple performance obligations, contract assets and liabilities are reported on a net basis at the contract level. Significant changes in contract assets during the year ended December 31, 2019, as compared to 2018, were a result of the determination that it is probable that we will earn a $10.0 million milestone from Takeda Pharmaceutical Company Limited (Takeda) for the submission of a regulatory application in 2020 for cabozantinib as a treatment for patients with second-line HCC in Japan. This contract asset was recorded in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets, offset by the effect of reporting the Takeda contract asset and liability on a net basis.

During the years ended December 31, 2019 and 2018, we recognized $6.5 million and $8.7 million, respectively, in revenues that were included in the beginning deferred revenue balance for those years.

During the years ended December 31, 2019 and 2018, we recognized $161.2 million and $198.1 million, respectively, in revenues 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, Takeda and Daiichi Sankyo.

As of December 31, 2019, $63.1 million of the transaction price allocated to our performance obligations had not been satisfied. See “Note 3. Collaboration Agreements - Cabozantinib Commercial Collaborations - Performance Obligations and Transaction Prices for our Ipsen and Takeda Collaborations” for additional information about our performance obligations.

Collaboration Agreements

12 Months Ended

Jan. 03, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration Agreements

COLLABORATION AGREEMENTS

We have established multiple collaborations with leading pharmaceutical companies for the commercialization and further development of cabozantinib, as well as with smaller, discovery-focused biotechnology companies to expand our product pipeline. Additionally, in line with our business strategy prior to the commercialization of our first product, COMETRIQ, we entered into other collaborations with leading pharmaceutical companies including Genentech and Daiichi Sankyo for other compounds and programs in our portfolio.

Under these collaborations, we are generally entitled to receive milestone and royalty payments, and for certain collaborations, payments for product supply services, development cost reimbursements, and/or profit sharing payments. See “Note 2. Revenues” for information on the amount of collaboration revenues recognized during the years ended December 31, 2019, 2018 and 2017.

Cabozantinib Commercial Collaborations

Ipsen Collaboration

Description of the 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 on three occasions, including 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.

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 1) the expiration of patent claims related to cabozantinib, 2) the expiration of regulatory exclusivity covering cabozantinib or 3) ten years after the first commercial sale of cabozantinib, other than COMETRIQ. A related 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 European Medicines Agency 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 were to terminate 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.

Consideration under the Collaboration

In consideration for the exclusive license and other rights contained in the collaboration agreement, including commercialization rights in Canada, we received aggregate upfront payments of $210.0 million from Ipsen in 2016. As of December 31, 2019, we have achieved aggregate milestones of $330.0 million related to regulatory, development and sales-based progress by Ipsen since the inception of the collaboration agreement, including $55.0 million and $140.0 million in milestones achieved during the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019, we are eligible to receive additional regulatory and development milestone payments from Ipsen totaling an aggregate of $79.0 million, as well as sales-based milestones, including milestone payments earned for the first commercial sale of a product, of up to $470.4 million. We also receive royalties on the net sales of cabozantinib by Ipsen outside of the U.S. and Japan. During the year ended December 31, 2019 and going forward, we are entitled to receive a tiered royalty of 22% to 26% on annual net sales, with separate tiers for Canada; these royalty tiers reset each calendar year. In Canada, we are entitled to receive a tiered royalty of 22% on the first CAD$30.0 million of annual net sales and a tiered royalty thereafter to 26% on annual net sales; these royalty tiers for Canada also reset each calendar year.

We are required to pay a 3% royalty to GSK on all net sales of any product incorporating cabozantinib, including net sales by Ipsen.

We are 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. Ipsen has opted into and is co-funding: CheckMate 9ER; CheckMate 040 (though Ipsen has opted not to co-fund the triplet arm of the study evaluating cabozantinib with nivolumab and ipilimumab); the dose escalation phase and first 20 expansion cohorts of COSMIC-021; and COSMIC-312.

We remain responsible for manufacturing 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 is supplied at our cost, as defined in the agreement.

Revenues from the Collaboration

Collaboration revenues under the collaboration agreement with Ipsen were $152.8 million, $182.9 million and $69.8 million during the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, $45.0 million of the transaction price allocated to our research and development services performance obligation had not been satisfied. See “—Performance Obligations and Transaction Prices for our Ipsen and Takeda Collaborations”, below, for additional information related to the revenue recognition for this collaboration.

Takeda Collaboration

Description of the Collaboration

In January 2017, we entered into a collaboration and license agreement with Takeda, which was subsequently amended effective March 2018 and May 2019, to, among other things, modify the amount of reimbursements we receive for costs associated with our required pharmacovigilance activities and milestones we are eligible to receive. Pursuant to this collaboration agreement, Takeda has exclusive commercialization rights for current and potential future cabozantinib indications in Japan, and the parties have agreed to collaborate on the clinical development of cabozantinib in Japan. The operation and strategic direction of the parties’ collaboration is governed through a joint executive committee and appropriate subcommittees.

Unless earlier terminated, the collaboration agreement has a term that continues, on a product-by-product basis, until the earlier of 1) two years after first generic entry with respect to such product in Japan or 2) 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 will 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.

Consideration under the Collaboration

In consideration for the exclusive license and other rights contained in the collaboration agreement, we received an upfront payment of $50.0 million from Takeda in 2017. As of December 31, 2019, we have also achieved regulatory and development milestones in the aggregate of $26.0 million since the inception of the collaboration agreement, including $16.0 million and $10.0 million in milestones achieved during the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, we had also determined that it was probable that we will earn a $10.0 million milestone in the first quarter of 2020 for the anticipated January 2020 submission of a regulatory application to the Japanese MHLW for Manufacturing and Marketing Approval of cabozantinib as a treatment for patients in Japan with unresectable HCC who progressed after prior systemic therapy.

Under the collaboration agreement, as amended, as of December 31, 2019, we are eligible to receive regulatory and development milestone payments from Takeda of up to $20.0 million related to first-line RCC and second-line HCC, including the $10.0 million milestone we expect to earn for the submission of a regulatory application in the first quarter of 2020 described above. We are also eligible to receive additional regulatory and development milestone payments, without limit, for additional potential future indications. We are further eligible to receive sales-based milestones, including milestone payments earned for the first commercial sale of a product, of up to $155.0 million. We also receive royalties on the 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 following this initial $300.0 million of net sales, we are then entitled to receive a tiered royalty of 20% to 30% on annual net sales thereafter; these 20% to 30% royalty tiers reset each calendar year.

We are required to pay a 3% royalty to GSK on all net sales of any product incorporating cabozantinib, including net sales by Takeda.

Takeda is responsible for 20% of the costs associated with the 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. Takeda has opted into and is co-funding CheckMate 9ER.

Pursuant to the terms of the collaboration agreement, we are responsible for the manufacturing and supply of cabozantinib for all development and commercialization activities under the collaboration agreement. In connection with the collaboration agreement, we entered into a clinical supply agreement covering the supply of cabozantinib to Takeda for the term of the collaboration agreement, as well as a quality agreement that provides respective quality responsibilities for the aforementioned supply. Furthermore, at the time we entered into the collaboration agreement, the parties also entered into a safety data exchange agreement, which defines each partner’s responsibility for safety reporting. This agreement also requires us to maintain the global safety database for cabozantinib. To meet our obligations to regulatory authorities for the reporting of safety data from Japan from sources other than our sponsored global clinical development trials, we rely on data collected and reported to us by Takeda.

Revenues from the Collaboration

Collaboration revenues under the collaboration agreement with Takeda were $24.6 million, $18.0 million and $14.8 million during the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, $18.1 million of the transaction price allocated to our research and development services performance obligation had not been satisfied.

Performance Obligations and Transaction Prices for our Ipsen and Takeda Collaborations

We identified two performance obligations for both the Ipsen and Takeda collaboration agreements: (1) the transfer of an exclusive license for the commercialization and further development of cabozantinib; and (2) research and development services, which includes certain committed studies for the development of cabozantinib, pharmacovigilance services and participation on various joint committees (as defined in the specific collaboration agreements).

We have allocated the transaction price for each of these collaborations to the identified performance obligations based on our best estimate of their relative standalone selling price. For the licenses, the estimate of the relative standalone selling price was determined using a discounted cash flow valuation utilizing forecasted revenues and costs. For research and development services the estimate of the relative standalone selling price was determined using an adjusted market assessment approach that relies on internal and external costs and market factors.

The portion of the transaction price allocated to our license performance obligation is recorded immediately as our license represents functional intellectual property that was transferred at a point in time. The portion of the transaction price allocated to our research and development services performance obligation is being recognized as revenue using the inputs method based on our internal development projected cost estimates through the current estimated patent expiration of cabozantinib in the European Union for the Ipsen Collaboration and Japan for the Takeda Collaboration, both of which are early 2030.

Based on our evaluation of the collaboration agreements as of the date adoption of Topic 606, we determined that for both agreements, the up-front, nonrefundable payments, the milestones and royalties achieved as of December 31, 2017, and our estimate for the reimbursements of our research and development services performance obligation over the term of each agreement constituted the amount of the consideration to be included in the transaction price as of December 31, 2017. In addition, the transaction price for the Ipsen collaboration agreement included a $10.0 million milestone we expected to achieve during the three months ended March 31, 2018. Other than the $10.0 million milestone, variable consideration for both agreements 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 royalties and sales-based milestones will be recognized when the related sales occur as these amounts have been determined to relate to the relevant transferred license and therefore are recognized as the related sales occur.

We re-evaluate the transaction price for the collaboration agreements in each reporting period as uncertain events are resolved or other changes in circumstances occur and we allocate those changes in the transaction price between our performance obligations. During the years ended December 31, 2019 and 2018, the transaction price increased as a result of the achievement of various milestones. We further updated the transaction price based upon the actual research and development services performed during the period and changes in our estimated reimbursements for our future research and development services. The portion of the increase in transaction price that was allocated to the previously satisfied performance obligations for the transfer of an intellectual property license was recognized during the period and the portion allocated to research and development services will be recognized in future periods as those services are delivered through early 2030. As of December 31, 2019, variable consideration related to the remaining unearned regulatory and development milestones for both agreements remained constrained due to the fact that it was not probable that a significant reversal of cumulative revenue would not occur.

Cabozantinib Development Collaborations

Bristol-Myers Squibb Company (BMS)

In February 2017, we entered into a clinical trial collaboration agreement with BMS for the purpose of exploring the therapeutic potential of cabozantinib in combination with BMS’s immune checkpoint inhibitors (ICIs), nivolumab and/or ipilimumab, to treat a variety of types of cancer. As part of the collaboration, we are evaluating these combinations as treatment options for RCC in the CheckMate 9ER and COSMIC-313 trials and for HCC in the CheckMate 040 trial. Under the terms of the collaboration agreement with BMS, we may also evaluate these combinations in other phase 3 pivotal trials in various other tumor types.

Under the terms of the collaboration agreement with BMS, as subsequently amended effective March 2019, May 2019 and November 2019, each party granted to the other a non-exclusive, worldwide (within the collaboration territory as defined in the collaboration agreement and its supplemental agreements), non-transferable, royalty-free license to use the other party’s compounds in the conduct of each clinical trial. The parties’ efforts are governed through a joint development committee established to guide and oversee the collaboration’s operation. Each trial will be conducted under a combination Investigational New Drug application, unless otherwise required by a regulatory authority. Each party will be responsible for supplying finished drug product for the applicable clinical trial, and we are sponsoring the COSMIC-313 trial and BMS is sponsoring the CheckMate 9ER and CheckMate 040 trials. The responsibility for the payment of costs for any further trials will be determined on a trial-by-trial basis. Unless earlier terminated, the collaboration agreement will remain in effect until the completion of all clinical trials under the collaboration, all related trial data has been delivered to both parties and the

completion of any then agreed upon analysis. 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. Upon termination by either party, the licenses granted to each party to conduct a combined therapy trial will terminate.

F. Hoffmann-La Roche Ltd. (Roche) Collaboration

In February 2017, we entered into a master clinical supply agreement with Roche for the purpose of evaluating cabozantinib and Roche’s ICI, atezolizumab, in locally advanced or metastatic solid tumors. Pursuant to the terms of this agreement with Roche, in June 2017, we initiated COSMIC-021, a phase 1b dose escalation study that is evaluating the safety and tolerability of cabozantinib in combination with Roche’s atezolizumab in patients with locally advanced or metastatic solid tumors, and in December 2018, we initiated COSMIC-312, a multicenter, randomized, controlled phase 3 pivotal trial evaluating cabozantinib in combination with atezolizumab versus sorafenib in previously untreated advanced HCC. We are the sponsor of both trials, and Roche is providing atezolizumab free of charge.

In December 2019, we entered into a joint clinical research agreement with Roche for the purpose of further evaluating the combination of cabozantinib with atezolizumab in patients with locally advanced or metastatic solid tumors, including in three planned phase 3 pivotal trials in advanced non-small cell lung cancer, metastatic castration-resistant prostate cancer and RCC. If a party to the joint clinical research agreement proposes any additional combined therapy trials beyond the initial three planned phase 3 pivotal trials, the joint clinical research agreement provides that such proposing party must notify the other party and that if agreed to, any such additional combined therapy trial will become part of the collaboration, or if not agreed to, the proposing party may conduct such additional combined therapy trial independently, subject to specified restrictions set forth in the joint clinical research agreement.

Pursuant to the terms of the joint clinical research agreement, each party granted to the other a non-exclusive, worldwide (excluding, in our case, territory already the subject of a license by us to Takeda), non-transferable, royalty-free license, with a right to sublicense (subject to limitations), to use the other party’s intellectual property and compounds solely as necessary for the party to perform its obligations under the joint clinical research agreement. The parties’ efforts will be governed through a joint steering committee established to guide and oversee the collaboration and the conduct of the combined therapy trials. Each party will be responsible for providing clinical supply for all combined therapy trials, and the cost of the supply will be borne by such party. The clinical trial expenses for each combined therapy trial agreed to be conducted jointly under the joint clinical research agreement will be shared equally between the parties, and the clinical trial expenses for each additional combined therapy trial not agreed to be conducted jointly under the joint clinical research agreement will be borne by the proposing party, except that the cost of clinical supply for all combined therapy trials will be borne by the party that owns the applicable product.

We determined the contract is within the scope of Topic 808 as it involves joint operating activities where both parties have active participation in the arrangement and are exposed to significant risks and rewards. Payments between us and Roche under this arrangement are not subject to other accounting literature. Payments due to Roche for our share of clinical trial costs incurred by Roche will be recorded as research and development expense and payments due from Roche for their share of clinical trial costs incurred by us will be recorded as a reduction of research and development expense.

Unless earlier terminated, the joint clinical research agreement provides that it will remain in effect until the completion of all combined therapy trials under the collaboration, the delivery of all related trial data to both parties, and the completion of any then agreed-upon additional analyses. The joint clinical research agreement may be terminated for cause by either party based on any uncured material breach by the other party, bankruptcy of the other party or for safety reasons. Upon termination by either party, the licenses granted to each party will terminate upon completion of any ongoing activities under the joint clinical research agreement.

GSK

In October 2002, we established a product development and commercialization collaboration agreement with GSK. Under the terms of the collaboration agreement, GSK had the right to choose cabozantinib for further development and commercialization, but notified us in October 2008 that it had waived its right to select the compound for such activities. Although the collaboration agreement was terminated during 2014, we continue to be required to pay a 3% royalty to GSK on the net sales of any product incorporating cabozantinib by us and our collaboration partners. Royalties earned by GSK in connection with the sales of cabozantinib are included in cost of goods sold for sales by us and as a reduction of other collaboration revenues for sales by our collaboration partners. Such royalties were $31.3 million, $24.0 million and $12.4 million during the years ended December 31, 2019, 2018 and 2017, respectively.

In-Licensing Collaborations

Aurigene Discovery Technologies Limited (Aurigene) Collaboration

In July 2019, we entered into an exclusive collaboration, option and license agreement with Aurigene to in-license as many as six programs to discover and develop small molecules as therapies for cancer. Under the terms of the agreement, we made aggregate upfront payments of $17.5 million for exclusive options to license up to six programs, including three pre-existing programs. We are also responsible for up to $32.6 million in research funding for the discovery and preclinical development work on these programs. During the year ended December 31, 2019, we incurred $4.0 million in expense for the discovery and preclinical development funding commitment.

For each option we decide to exercise, we will be required to pay an exercise fee of either $10.0 million or $12.0 million, depending on the program, and would then assume responsibilities for all subsequent clinical development, manufacturing and commercialization for that program. Aurigene would then become eligible for up to $148.8 million per program in potential development and regulatory milestone payments, $280.0 million per program in potential commercial milestone payments, as well as royalties on potential sales. Under the terms of the agreement, Aurigene retains limited development and commercial rights for India and Russia.

Iconic Therapeutics, Inc. (Iconic) Collaboration

In May 2019, we entered into an exclusive option and license agreement with Iconic to advance an innovative next-generation antibody-drug conjugate (ADC) program for cancer, leveraging Iconic’s expertise in targeting tissue factor in solid tumors. Under the terms of the agreement, we gained an exclusive option to license ICON-2, Iconic’s lead oncology ADC program, in exchange for an upfront payment to Iconic of $7.5 million and a commitment for preclinical development funding. During the year ended December 31, 2019, we incurred $9.8 million in expense for the preclinical development funding commitment. Both the upfront payment and the accrual for the preclinical development funding commitment were included in research and development expenses in the accompanying Consolidated Statements of Income. If we exercise the option, we will be required to make an option exercise fee payment of $20.0 million to Iconic; we would then assume responsibilities for all subsequent clinical development, manufacturing and commercialization activities, and Iconic would become eligible for up to $190.6 million in potential development, regulatory and first-sale milestone payments, $262.5 million in potential commercial milestone payments, as well as royalties on potential sales.

Invenra, Inc. (Invenra) Collaboration

In May 2018, we entered into a collaboration and license agreement with Invenra to discover and develop multispecific antibodies for the treatment of cancer. Invenra is responsible for antibody lead discovery and generation while we will lead IND-enabling studies, manufacturing, clinical development in single-agent and combination therapy regimens, and future regulatory and commercialization activities. The collaboration agreement provides that we will receive an exclusive, worldwide license to one preclinical, multispecific antibody asset, and that we will pursue up to six additional discovery projects during the term of the collaboration, which in total are directed to three discovery programs. In October 2019, we expanded our collaboration to include the development of novel binders against six additional targets, which we can use to generate multispecific antibodies based on Invenra’s B-Body^TM technology platform, or with other platforms and formats at our option. As of December 31, 2019, we have initiated three additional discovery projects and two binder projects, and in total we incurred an aggregate of $7.0 million and $4.0 million in expense during the years ended December 31, 2019 and 2018, respectively, in consideration of the upfront licensing and project initiation fees. Invenra is eligible to receive up to $131.5 million in project initiation fees and milestone payments based on the achievement of specific development and regulatory milestones for a B-Body product in the first indication, or in lieu of such payments, up to $43.4 million in project initiation fees and milestone payments based on the achievement of specific development and regulatory milestones for a non- B-Body product. Upon successful commercialization of a product, Invenra is eligible to receive sales-based milestone payments up to $325.0 million as well as single-digit tiered royalties on net sales of the approved product. We have the right to initiate three additional discovery projects for development subject to an upfront payment of $2.0 million for each B-Body project and four additional binder projects subject to an upfront payment of $1.5 million for each project, as well as additional milestone payments and royalties for any products that arise from these efforts.

StemSynergy Therapeutics, Inc. (StemSynergy) Collaboration

In January 2018, we entered into an exclusive collaboration and license agreement with 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 in initial research and development funding during the year ended December 31, 2018 and provided $1.9 million and $1.2 million in additional research and development funding during the years ended December 31, 2019 and 2018, respectively. StemSynergy is eligible for up to $0.5 million in additional research and development funding on an as needed basis. 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, sales-based 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

Genentech

Profits and losses on U.S. commercialization and royalty revenues on ex-U.S. sales under the collaboration agreement with Genentech were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
Profits and losses on U.S. commercialization	$	4,615	$	8,084	$	(2,140	)
Royalty revenues on ex-U.S. sales	$	5,679	$	5,564	$	6,398

Profits on the U.S. commercialization of COTELLIC for the years ended December 31, 2019 and 2018 were included collaboration revenues and losses on the U.S. commercialization of COTELLIC for the year ended December 31, 2017 were included in selling, general and administrative expenses. The royalty revenues on ex-U.S. sales were included in Collaboration revenues for all periods presented. See “—Performance Obligations and Transaction Prices for our Other Collaborations”, below, for additional information related to revenue recognition for this collaboration.

Cobimetinib Profit Sharing and Royalty Revenues

In December 2006, we out-licensed the development and commercialization of cobimetinib to Genentech pursuant to a worldwide collaboration agreement. In November 2015, the FDA approved cobimetinib, under the brand name COTELLIC, in combination with Genentech’s Zelboraf (vemurafenib) as a treatment for patients with BRAF V600E or V600K mutation-positive advanced melanoma. Under the terms of our collaboration agreement, as amended in July 2017, we share in the profits and losses received or incurred in connection with COTELLIC’s commercialization in the U.S. This profit and loss share has multiple tiers: we receive 50% of profits and losses from the first $200.0 million of U.S. actual sales, decreasing to 30% of profits and losses from U.S. actual sales in excess of $400.0 million. These tiers reset each calendar year. The revenue for each sale of COTELLIC applied to the profit and loss statement for the collaboration agreement (Genentech Collaboration P&L) is calculated using the average of the quarterly net selling prices of COTELLIC and any additional branded Genentech product(s) prescribed with COTELLIC in such sale. U.S. commercialization costs for COTELLIC are then applied to the Genentech Collaboration P&L, subject to reduction based on the number of Genentech products in any given combination including COTELLIC. In addition to our profit share in the U.S., under the terms of the collaboration agreement, we are entitled to low double-digit royalties on net sales of COTELLIC outside the U.S. We are not eligible for any additional milestone payments under the collaboration agreement with Genentech.

Unless earlier terminated, the collaboration agreement has a term that continues until the expiration of the last payment obligation with respect to the licensed products under the collaboration. Genentech has the right to terminate the collaboration agreement without cause at any time. If Genentech terminates the collaboration agreement without cause, all licenses that were granted to Genentech under the agreement terminate and revert to us. Additionally, if Genentech terminates the collaboration agreement without cause, or we terminate the collaboration agreement for cause, we would receive, subject to certain conditions, licenses from Genentech to research, develop and commercialize reverted product candidates. The collaboration agreement may be terminated for cause by either party based on uncured material breach by the other party.

Daiichi Sankyo

In March 2006, we entered into a collaboration agreement with Daiichi Sankyo pursuant to which we granted to Daiichi Sankyo an exclusive, worldwide license to certain intellectual property primarily relating to compounds that

modulate MR, including esaxerenone, an oral, non-steroidal, selective MR antagonist. Daiichi Sankyo was responsible for all further preclinical and clinical development, regulatory, manufacturing and commercialization activities for the compounds.

In January 2019, the Japanese Ministry of Health, Labour and Welfare approved esaxerenone, under the brand name MINNEBRO, as a treatment for patients with hypertension and in May 2019, Daiichi Sankyo had its first commercial sale of MINNEBRO.

We have achieved milestones of $20.0 million each during the years ended December 31, 2019 and 2018 for the approval and first commercial sale of MINNEBRO. We are eligible to receive additional sales-based milestone payments of up to $90.0 million under this collaboration agreement. In addition, we are entitled to receive low double-digit royalties on sales of MINNEBRO. Such revenues were $0.1 million during the year ended December 31, 2019. Daiichi Sankyo may terminate the agreement upon 90 days’ written notice, in which case Daiichi Sankyo’s payment obligations would cease, its license relating to compounds that modulate MR would terminate and revert to us and we would receive, subject to certain terms and conditions, licenses from Daiichi Sankyo to research, develop and commercialize compounds that were discovered under the collaboration.

In addition, pursuant to a license agreement we entered into with Ligand Pharmaceuticals, Inc. (Ligand), we are required to pay a royalty of 0.5% to Ligand on net sales of MINNEBRO.

Collaboration revenues under the collaboration agreement with Daiichi Sankyo were $20.1 million and $20.0 million and zero during the years ended December 31, 2019, 2018 and 2017, respectively.

See “—Performance Obligations and Transaction Prices for our Other Collaborations”, below, for additional information related to revenue recognition for this collaboration.

Performance Obligations and Transaction Prices for our Other Collaborations

We have evaluated our collaborations agreements with Genentech and Daiichi Sankyo and have determined that those collaboration agreements each have one performance obligation: the delivery of intellectual property licenses to the collaboration partner. We have further determined that the licenses we provided represent functional intellectual property that was transferred at a point in time, when the agreements were executed, prior to the adoption of Topic 606. 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 and therefore, any additional consideration earned and received from these collaborations will be fully recognized when the milestone is no longer constrained. Any variable consideration related to royalties and other sales-based milestones 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.

Cash and Investments

12 Months Ended

Jan. 03, 2020

Investments, Debt and Equity Securities [Abstract]

Cash and Investments

CASH AND INVESTMENTS

Cash, Cash Equivalents and Restricted Cash Equivalents

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



	December 31,
	2019		2018		2017
Cash and cash equivalents	$	266,501	$	314,775	$	183,164
Short-term restricted cash equivalents	—		—		504
Restricted cash equivalents included in long-term investments	1,636		1,100		4,646
Cash, cash equivalents, and restricted cash equivalents as reported within the accompanying Consolidated Statements of Cash Flows	$	268,137	$	315,875	$	188,314

Restricted cash equivalents consisted of certificates of deposit with original maturities of 90 days or less used to collateralize letters of credit and, during prior periods, a purchasing card program. The classification of restricted cash

equivalents as short-term or long-term is dependent upon the longer of the remaining term to maturity of the investment or the remaining term of the related restriction.

Cash and Investments

Cash and investments consisted of the following (in thousands):



	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investment securities available-for-sale:
Commercial paper	$	389,573	$	—	$	—		$	389,573
Corporate bonds	752,295		3,934		(3		)	756,226
U.S. Treasury and government sponsored enterprises	166,483		187		(5		)	166,665
Total investment securities available-for-sale	1,308,351		4,121		(8		)	1,312,464
Cash	40,964		—		—			40,964
Money market funds	2,467		—		—			2,467
Certificates of deposit	32,728		5		—			32,733
Total cash and investments	$	1,384,510	$	4,126	$	(8	)	$	1,388,628



	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investment securities available-for-sale:
Commercial paper	$	381,134	$	—	$	(1	)	$	381,133
Corporate bonds	344,741		180		(857		)	344,064
U.S. Treasury and government sponsored enterprises	55,224		2		(25		)	55,201
Total investment securities available-for-sale	781,099		182		(883		)	780,398
Cash	6,883		—		—			6,883
Money market funds	47,744		—		—			47,744
Certificates of deposit	16,596		—		—			16,596
Total cash and investments	$	852,322	$	182	$	(883	)	$	851,621

Gains and losses on the sales of investment securities available-for-sale were insignificant during the years ended December 31, 2019, 2018 and 2017.

We manage credit risk associated with our investment portfolio through our investment policy, which limits purchases to high-quality issuers and limits the amount of our portfolio that can be invested in a single issuer. The fair value and gross unrealized losses on investment securities available-for-sale in an unrealized loss position were as follows (in thousands):



	December 31, 2019
	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	$	14,529	$	(3	)	$	—	$	—	$	14,529	$	(3	)
U.S. Treasury and government sponsored enterprises	2,848		(5		)	—		—		2,848		(5		)
Total	$	17,377	$	(8	)	$	—	$	—	$	17,377	$	(8	)



	December 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	$	236,162	$	(606	)	$	39,627	$	(251	)	$	275,789	$	(857	)
U.S. Treasury and government sponsored enterprises	28,105		(16		)	9,182		(9		)	37,287		(25		)
Commercial paper	7,091		(1		)	—		—			7,091		(1		)
Total	$	271,358	$	(623	)	$	48,809	$	(260	)	$	320,167	$	(883	)

There were 9 and 199 investment securities in an unrealized loss position as of December 31, 2019 and 2018, respectively. During the years ended December 31, 2019, 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, we determined 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.

The fair value of investment securities available-for-sale by contractual maturity were as follows (in thousands):



	December 31,
	2019		2018
Maturing in one year or less	$	789,913	$	626,711
Maturing after one year through five years	522,551		153,687
Total investment securities available-for-sale	$	1,312,464	$	780,398

Fair Value Measurements

12 Months Ended

Jan. 03, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value reflects the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy has the following three levels:


•	Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities;


•	Level 2 - inputs other than level 1 that are observable either directly or indirectly, such as quoted prices in active markets for similar instruments or on industry models using data inputs, such as interest rates and prices that can be directly observed or corroborated in active markets;


•	Level 3 - unobservable inputs that are supported by little or no market activity that are significant to the fair value measurement

The classifications within the fair value hierarchy of our financial assets that were measured and recorded at fair value on a recurring basis were as follows (in thousands):



	December 31, 2019
	Level 1		Level 2		Total
Commercial paper	$	—	$	389,573	$	389,573
Corporate bonds	—		756,226		756,226
U.S. Treasury and government sponsored enterprises	—		166,665		166,665
Total investment securities available-for-sale	—		1,312,464		1,312,464
Money market funds	2,467		—		2,467
Certificates of deposit	—		32,733		32,733
Total financial assets carried at fair value	$	2,467	$	1,345,197	$	1,347,664



	December 31, 2018
	Level 1		Level 2		Total
Commercial paper	$	—	$	381,133	$	381,133
Corporate bonds	—		344,064		344,064
U.S. Treasury and government sponsored enterprises	—		55,201		55,201
Total investment securities available-for-sale	—		780,398		780,398
Money market funds	47,744		—		47,744
Certificates of deposit	—		16,596		16,596
Total financial assets carried at fair value	$	47,744	$	796,994	$	844,738

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.

The carrying amount of our remaining financial assets and liabilities, which include cash and restricted cash, receivables and payables approximate their fair values due to the short-term nature.

- Definition

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

+ References + Details

Inventory

12 Months Ended

Jan. 03, 2020

Inventory Disclosure [Abstract]

Inventory

INVENTORY

Inventory consisted of the following (in thousands):



	December 31,
	2019		2018
Raw materials	$	2,709	$	1,922
Work in process	9,447		6,170
Finished goods	4,367		3,836
Total	$	16,523	$	11,928
Balance Sheet classification:
Current portion included in inventory	$	12,886	$	9,838
Long-term portion included in other long-term assets	3,637		2,090
Total	$	16,523	$	11,928

Write-downs related to excess and expiring inventory were $1.3 million, $1.1 million and $1.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Property and Equipment

12 Months Ended

Jan. 03, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

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



	Estimated Useful Lives	December 31,
	Estimated Useful Lives	2019			2018
Leasehold improvements	up to 15 years	$	33,904		$	33,941
Computer equipment and software	3 years	17,338			15,022
Furniture and fixtures	5 to 7 years	13,053			12,709
Laboratory equipment	5 years	8,904			5,668
Construction in progress		1,253			866
		74,452			68,206
Less: accumulated depreciation		(25,560		)	(17,309		)
Property and equipment, net		$	48,892		$	50,897

Depreciation and amortization expenses were $8.3 million, $4.9 million and $1.2 million during the years ended December 31, 2019, 2018 and 2017, respectively.

Employee Benefit Plans

12 Months Ended

Jan. 03, 2020

Share-based Payment Arrangement [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Equity Incentive Plans and ESPP

We allocated the stock-based compensation expense for our equity incentive plans and our ESPP as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
Research and development	$	19,374	$	13,115	$	7,569
Selling, general and administrative	37,228		27,511		16,369
Total stock-based compensation	$	56,602	$	40,626	$	23,938

We have several equity incentive plans under which we granted stock options and RSUs, including PSOs and PSUs, to employees and directors. At December 31, 2019, 6,258,319 shares were available for grant under our equity incentive plans.

The Board of Directors (the Board) delegated responsibility for administration of our equity incentive plans to the Compensation Committee of the Board, including the authority to determine the term, exercise price and vesting requirements of each grant. Stock options granted to our employees and directors generally have a four-year vesting term and a one-year vesting term, respectively, an exercise price equal to the fair market value on the date of grant, and a seven-year life from the date of grant. Stock options issued prior to May 2011 have a ten-year life from the date of grant. RSUs granted to our employees and directors generally have a four-year vesting term and a one-year vesting term, respectively. PSUs and PSOs granted pursuant to our equity incentive plans vest upon the achievement of a performance target or market condition, respectively.

We have adopted a Change in Control and Severance Benefit Plan for certain executive officers. Eligible Change in Control and Severance Benefit Plan participants include employees with the title of vice president and above. If a participant’s employment is terminated without cause during a period commencing one month before and ending thirteen months following a change in control, as defined in the plan document, then the Change in Control and Severance Benefit Plan participant is entitled to have the vesting of all their outstanding equity awards accelerated and the exercise period for their stock options extended to no more than one year.

We have an ESPP that allows for qualified employees (as defined in the ESPP) to purchase shares of our common stock at a price equal to the lower of 85% of the closing price at the beginning of the offering period or 85% of the closing price at the end of each six month purchase period. Compensation expense related to our ESPP was $2.2 million, $2.2 million, and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had 4,238,999 shares available for issuance under our ESPP. Pursuant to the ESPP, we issued 483,009, 330,492 and 434,523 shares of common stock at an average price per share of $12.60, $15.74 and $11.20 during the years ended December 31, 2019, 2018 and 2017, respectively. Cash received from purchases under the ESPP for the years ended December 31, 2019, 2018 and 2017 was $6.1 million, $5.2 million and $4.9 million, respectively.

We used a Monte Carlo simulation pricing model to value PSOs that include market vesting conditions and a Black-Scholes Merton option pricing model to value other stock options and ESPP purchases. The weighted average grant-date fair value per share of stock options and ESPP purchases were as follows:



	Year Ended December 31,
	2019		2018		2017
Stock options, including PSOs	$	8.19	$	9.07	$	11.42
ESPP	$	4.85	$	6.40	$	6.00

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



	Year Ended December 31,
	2019		2018		2017
Stock options, including PSOs:
Risk-free interest rate	1.77	%	2.81	%	1.98	%
Dividend yield	—	%	—	%	—	%
Volatility	48	%	55	%	59	%
Expected life	4.3 years		4.4 years		4.5 years
ESPP:
Risk-free interest rate	2.16	%	1.93	%	1.09	%
Dividend yield	—	%	—	%	—	%
Volatility	50	%	53	%	58	%
Expected life	6 months		6 months		6 months

We considered both implied and historical volatilities in developing our estimate of expected volatility. The assumption for the expected life of stock options is based on historical exercise patterns and post-vesting termination behavior. The risk-free interest rate is based on U.S. Treasury rates with the same or similar term as the underlying award. Our dividend rate is based on historical experience and our investors’ current expectations.

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

Activity for stock options, including PSOs, during the year ended December 31, 2019 was as follows (in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2018	22,674		$	8.71
Granted	1,311		$	20.08
Exercised	(3,274	)	$	5.01
Forfeited	(217	)	$	16.89
Expired	(51	)	$	22.98
Stock options outstanding at December 31, 2019	20,443		$	9.91	3.2 years	$	169,299
Stock options exercisable at December 31, 2019	16,216		$	7.36	2.6 years	$	167,449

As of December 31, 2019, there was $33.7 million of unrecognized compensation expense related to our unvested stock options, including PSOs. The compensation expense for the unvested stock options will be recognized over a weighted-average period of 2.2 years.

During the year ended December 31, 2018, in connection with our long-term incentive compensation program, we granted 308,365 PSOs to our President and Chief Executive Officer. In addition to the standard service conditions included in our other stock options, these PSOs may not be exercised until, at any time after the grant date, the closing market price of a share of our Common Stock is equal to or greater than 125% of the per share exercise price of the PSO over a period of at least 30 consecutive calendar days. The stock-based compensation expense for the PSO is being recognized on an accelerated basis over the service period of the award, which commenced on the date of grant.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between our closing stock price on the last trading day of fiscal 2019 and the exercise prices, multiplied by the number of in-the-money stock options) that would have been received by the stock option holders had all stock option holders exercised their stock options on December 31, 2019. The total intrinsic value of stock options exercised during the years ended December 31,

2019, 2018 and 2017 was $54.1 million, $39.1 million and $85.2 million, respectively. Cash received from stock option exercises during the years ended December 31, 2019, 2018 and 2017 was $16.4 million, $12.1 million and $17.6 million, respectively. The total estimated fair value of stock options vested and recorded as expense during the years ended December 31, 2019, 2018 and 2017 was $23.4 million, $18.9 million and $13.1 million, respectively.

Activity for RSUs, including PSUs, during the year ended December 31, 2019 was as follows (in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2018	4,857		$	18.42
Awarded	5,842		$	19.46
Vested and released	(1,541	)	$	17.23
Forfeited	(357	)	$	18.66
RSUs outstanding at December 31, 2019	8,801		$	19.31	2.2 years	$	149,701

As of December 31, 2019, there was $158.0 million of unrecognized compensation expense related to our unvested RSUs, including PSUs. The compensation expense for the unvested RSUs will be recognized over a weighted-average period of 2.7 years.

During 2019, in connection with our long-term incentive compensation program, we awarded 1,926,605 PSUs (the target amount) that will vest upon the achievement of a performance target related to a product approval by the FDA (the 2019 PSUs); employees may earn 150% of the target amount, or an additional 963,136 shares relative to the target amount, if the performance target is achieved before December 31, 2020 and may earn 200% of the target amount, or up to an additional 1,926,605 shares relative to the target amount, if we receive a second product approval by December 31, 2021. During 2018 we awarded 693,131 PSUs that will vest upon the achievement of certain product revenue, late-stage clinical development programs and discovery pipeline expansion performance targets (the 2018 PSUs). The 2018 PSUs and 2019 PSUs were designed to drive the performance of our management team and employees toward the achievement of key corporate objectives and will be forfeited if the performance targets are not met by December 31, 2021.

Expense recognition for PSUs commences when it is determined that attainment of the performance target is probable. During the year ended December 31, 2019, we achieved two of the performance targets for 281,238 of the 2018 PSUs and determined that it was probable that we would achieve one additional performance target for 99,281 additional 2018 PSUs. As a result, 141,004 of the 2018 PSUs have vested as of December 31, 2019 and the remainder are expected to vest over various dates through November 2021. We recognized $4.9 million in compensation expense related to those 2018 PSUs during the year ended December 31, 2019; the remaining unrecognized compensation expense for those 2018 PSUs was $2.1 million as of December 31, 2019. The total unrecognized compensation expense for both the 2019 PSUs and the remaining 2018 PSUs for which we have not yet determined that attainment of the performance target is probable was $80.2 million as of December 31, 2019.

Exelixis, Inc. 401(k) Plan (the 401(k) Plan)

We sponsor the 401(k) Plan under which we historically made matching contributions to our employees’ 401(k) accounts in the form of our common stock. We recorded compensation expense related to the stock match of $4.6 million, $3.6 million, and $1.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Beginning in 2020, we will make matching contributions to our employees’ 401(k) accounts in cash.

Income Taxes

12 Months Ended

Jan. 03, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our income before income taxes is derived solely from within the U.S. Our income tax provision (benefit) was as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	—		$	—		$	—
State	6,095			6,133			4,350
Total current tax expense	6,095			6,133			4,350
Deferred:
Federal	71,580			(238,675		)	—
State	(578		)	(5,436		)	—
Total deferred tax expense	71,002			(244,111		)	—
Income tax provision (benefit)	$	77,097		$	(237,978	)	$	4,350

The income tax provision for the year ended December 31, 2019 primarily relates to the utilization of federal net operating loss and state taxes in jurisdictions outside of California, for which we do not have net operating loss carryforwards due to a limited operating history. The income tax benefit for the year ended December 31, 2018 primarily relates to the release of our valuation allowance against significantly all of our deferred tax assets offset by state taxes in jurisdictions outside of California. The income tax provision for the year ended December 31, 2017 primarily related to state taxes in jurisdictions outside of California. Our historical net operating losses were sufficient to fully offset any federal taxable income for the years ended December 31, 2019, 2018 and 2017.

The reconciliation of the U.S. federal income tax provision (benefit) at the statutory federal income tax rates of 21%, 21% and 34% for the years ended December 31, 2019, 2018 and 2017, respectively, to our income tax provision (benefit) was as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
U.S. federal income tax provision at statutory rate	$	83,603		$	94,939		$	53,916
State tax expense	1,148			4,690			8,282
Change in valuation allowance	3,208			(315,394		)	(34,266		)
Research credits	(8,299		)	(18,308		)	—
Stock-based compensation	(9,177		)	(5,998		)	(20,548		)
Non-deductible executive compensation	4,228			1,111			1,239
Non-deductible interest	—			—			1,367
Other	2,386			982			(5,640		)
Income tax provision (benefit)	$	77,097		$	(237,978	)	$	4,350

Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes.

Our deferred tax assets and liabilities were as follows (in thousands):



	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	65,131		$	146,701
Tax credit carryforwards	110,037			98,467
Depreciation and amortization	26,792			29,929
Stock-based compensation	14,966			11,366
Lease liabilities	11,211			3,265
Accruals and reserves not currently deductible	8,248			7,160
Deferred revenue	6,547			5,474
Other assets	345			1,140
Total deferred tax assets	243,277			303,502
Valuation allowance	(61,659		)	(58,112		)
Net deferred tax assets	181,618			245,390
Deferred tax liabilities:
Lease right-of-use assets	(9,244		)	(1,279		)
Total deferred tax liabilities	(9,244		)	(1,279		)
Net deferred taxes	$	172,374		$	244,111

ASC Topic 740: Income Taxes (Topic 740) requires that the tax benefit of net operating losses, temporary differences and credit carry forwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carry forward period. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2019, based on the evaluation and weighting of both positive and negative evidence, including our achievement of a cumulative three-year income position as of December 31, 2019 and forecasts of future operating results, as well as considering the utilization of net operating losses and tax credits prior to their expiration, management determined that there is sufficient positive evidence to conclude that it is more likely than not the deferred tax assets are realizable. As of December 31, 2019 and 2018, we continue to carry a valuation allowance of $61.7 million and $58.1 million, respectively, against our California state deferred tax assets. Prior to December 31, 2018, because of our history of operating losses, management believed that recognition of the deferred tax assets was not more likely than not (as defined in Topic 740) to be realized and, accordingly, had provided a full valuation allowance. The valuation allowance increased by $3.5 million and decreased by $360.8 million during the years ended December 31, 2019 and 2018, respectively.

At December 31, 2019, we had federal net operating loss carryforwards of approximately $225 million, of which approximately $203 million will expire in the years 2035 through 2036, and federal business tax credits of approximately $112 million which expire in the years 2020 through 2039. We also had state net operating loss carryforwards of approximately $450 million, which expire in the years 2020 through 2036, and California research and development tax credits of approximately $38 million, which do not expire.

Under the Internal Revenue Code and similar state provisions, certain substantial changes in our ownership could result in an annual limitation on the amount of net operating loss and credit carryforwards that can be utilized in future years to offset future taxable income. The annual limitation may result in the expiration of net operating losses and credit carryforwards before utilization. We completed a Section 382 analysis through December 31, 2019, and concluded that an ownership change, as defined under Section 382, had not occurred.

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):



	Year Ended December 31,
	2019		2018			2017
Beginning balance	$	76,060	$	79,342		$	61,809
Change relating to prior year provision	589		(4,254		)	247
Change relating to current year provision	2,429		1,083			17,378
Reductions based on the lapse of the applicable statutes of limitations	—		(111		)	(92		)
Ending balance	$	79,078	$	76,060		$	79,342

We do not anticipate that the amount of unrecognized tax benefits existing as of December 31, 2019 will significantly change over the next 12 months. As of December 31, 2019, we had $79.1 million in unrecognized tax benefits, of which $48.1 million would reduce our income tax provision and the effective tax rate, if recognized. Interest and penalties were nominal or zero for all periods presented. We have elected to record interest and penalties in the accompanying Consolidated Statements of Income as a component of income taxes.

We file U.S. and state income tax returns in jurisdictions with varying statues of limitations during which such tax returns may be audited and adjusted by the relevant tax authorities. The 1999 through 2019 tax years generally remain subject to examination by federal and most state tax authorities to the extent net operating losses and credits generated during these periods are being utilized in the open tax periods.

Net Income Per Share

12 Months Ended

Jan. 03, 2020

Earnings Per Share [Abstract]

Net Income Per Share

NET INCOME PER SHARE

Net income per share - basic and diluted, were computed as follows (in thousands, except per share amounts):



	Year Ended December 31,
	2019		2018		2017
Numerator:
Net income	$	321,012	$	690,070	$	154,227
Net income allocated to participating securities	—		—		(367		)
Net income allocable to common stock - basic	321,012		690,070		153,860
Adjustment to net income allocated to participating securities	—		—		22
Net income allocable to common stock - diluted	$	321,012	$	690,070	$	153,882
Denominator:
Weighted-average common shares outstanding - basic	302,584		297,892		293,588
Dilutive effect of employee stock plans	12,425		14,911		18,415
Weighted-average common shares outstanding - diluted	315,009		312,803		312,003
Net income per share - basic	$	1.06	$	2.32	$	0.52
Net income per share - diluted	$	1.02	$	2.21	$	0.49

Participating securities included warrants issued in January 2014 to purchase an aggregate of 1.0 million shares of our common stock that were fully exercised in September 2017.

Dilutive securities included outstanding stock options, unvested RSUs and ESPP contributions. Certain potential common shares were excluded from our calculation of weighted-average common shares outstanding - diluted because either they would have had an anti-dilutive effect on net income per share or they are related to shares from PSOs and PSUs that were contingently issuable and the contingency had not been satisfied. See to “Note 8. Employee Benefit Plans” for a further description of our equity awards. These potential common shares were as follows (in thousands):



	Year Ended December 31,
	2019	2018	2017
Anti-dilutive securities and contingently issuable shares excluded	9,111	3,968	1,645

Commitments

12 Months Ended

Jan. 03, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments

COMMITMENTS

Leases

Headquarters Lease

In May 2017, we entered into a Lease Agreement (the Lease) for our corporate headquarters located in Alameda, California (the Initial Premises). The Lease was subsequently amended in October 2017, June 2018, April 2019 and August 2019, resulting in, among other things, an increase to the amount of space leased and changes to the lease term. Our right-of-use asset, lease liability and the related lease costs reflect the 221,464 square feet of space we have taken possession of as of December 31, 2019 (the Current Premises) under the amended Lease. We expect to take possession of the remainder of the space provided for under the August 2019 amendment on or prior to April 30, 2020, which will increase the space leased to 228,941 square feet.

The term of the Lease continues through October 31, 2031 (the Lease Term). We have two five-year options to extend the Lease; these optional periods have not been considered in the determination of the right-of-use asset or the lease liability for the Lease as we did not consider it reasonably certain that we would exercise any such options.

We have made certain tenant improvements on the Initial Premises, for which we received $8.2 million in reimbursements in January 2019. We were also provided an allowance of up to $1.7 million for tenant improvements to the space we obtained under the April 2019 amendment which is expected to be received in 2020.

The balance sheet classification of our operating lease assets and liabilities were as follows (in thousands):



	December 31,
	2019		2018
Assets:
Right-of-use assets included in other long-term assets	$	41,835	$	5,867
Liabilities:
Current portion included in other current liabilities	$	2,728	$	2,738
Long-term portion of operating lease liabilities	48,011		12,099
Total operating lease liabilities	$	50,739	$	14,837

The components of operating lease costs, which are included in selling, general and administrative expenses in our Consolidated Statements of Income, were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017 ⁽¹⁾
Operating lease cost	$	2,844	$	4,189	$	3,944
Variable lease cost	1,024		1,661		2,216
Sublease income	—		—		(1,225		)
Total operating lease costs	$	3,868	$	5,850	$	4,935

____________________


(1)	The 2017 amounts have not been adjusted for the adoption of Topic 842 and continue to be reported in accordance with the previous lease guidance, ASC Topic 840: Leases.

Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2019 was $2.9 million and was included in net cash provided by operating activities in our Consolidated Statements of Cash Flows.

As of December 31, 2019, the maturities of our operating lease liabilities were as follows (in thousands):



Year Ending December 31,	Amount
2020	$	4,538
2021	4,669
2022	4,820
2023	5,147
2024	5,407
Thereafter	41,585
Total lease payments	66,166
Less:
Imputed interest	(13,685		)
Future tenant improvement reimbursements	(1,742		)
Operating lease liabilities	$	50,739

As of December 31, 2019, the weighted average discount rate used to determine the operating lease liability was 3.9% and the weighted average remaining lease term is 11.8 years.

Build-to-Suit Lease

In October 2019, we entered into a build-to-suit Lease Agreement (the Build-to-Suit Lease) for approximately 220,000 square feet of office space located in Alameda, California (the New Premises), adjacent to the Current Premises.

The term of the Build-to-Suit Lease is for a period of 242 months (the Term), which will begin upon the substantial completion of the building and tenant improvements by the lessor. We currently anticipate that the Term will begin in October 2021 (the Lease Commencement Date). The monthly base rent under the Build-to-Suit Lease will equal a percentage of the total development costs incurred in connection with the development of the New Premises (excluding the cost of the tenant improvements in excess of the allowance provided by the lessor and any development costs we pay) and is currently estimated to be about $0.7 million, subject to an annual increase of 3% during the Term. We will also be responsible for paying operating expenses related to the New Premises. The rent payments will begin sixty days following commencement of the Term. We have been provided a tenant improvement allowance for the New Premises of approximately $16.5 million. To the extent that the total development costs of the New Premises exceeds $525 per square foot, we will also pay 50% of such excess costs prior to the commencement of the Term, and may be required to secure such amount and the cost of the tenant improvements in excess of the allowance by providing a letter of credit or depositing such amounts in an account with the lessor’s lender prior to the start of construction.

The Build-to-Suit Lease includes two five-year options to extend the term of the Build-to-Suit Lease, exercisable under certain conditions and at a market rate determined in accordance with the Build-to-Suit Lease. We have a one-time option to terminate the Build-to-Suit Lease without cause after the 180^th month of the Term, exercisable under certain conditions as described in the Build-to-Suit Lease and subject to a termination payment calculated in accordance with the Build-to-Suit Lease. In addition, we have a right of first offer to purchase the New Premises, subject to certain procedures and exclusions set forth in the Build-to-Suit Lease.

We have determined that, under the guidance provided in Topic 842, we do not have control of the New Premises during the construction period. Therefore, we will not record a right-of-use asset or lease liability for the Build-to-Suit Lease until the Lease Commencement Date. We will evaluate the classification the Build-to-Suit Lease as an operating lease or financing lease at the Lease Commencement Date.

Letters of Credit

We have obtained standby letters of credit related to our lease obligations and certain other obligations with combined credit limits of $1.6 million and $1.1 million as of December 31, 2019 and 2018, respectively. None of our letters of credit have been drawn upon. All of the letters of credit are fully collateralized by certificates of deposit.

Quarterly Financial Data (Unaudited)

12 Months Ended

Jan. 03, 2020

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected unaudited quarterly financial data was as follows (in thousands, except per share data):



	Fiscal 2019 Quarter Ended
	March 31,		June 30,		September 30,		December 31, ⁽⁴⁾
Total revenues⁽¹⁾	$	215,487	$	240,275	$	271,703	$	240,310
Gross profit⁽²⁾	$	172,080	$	186,136	$	184,231	$	184,406
Income from operations	$	84,559	$	91,989	$	115,606	$	77,316
Net income	$	75,775	$	79,042	$	97,452	$	68,743
Net income per share:
Basic	$	0.25	$	0.26	$	0.32	$	0.23
Diluted	$	0.24	$	0.25	$	0.31	$	0.22



	Fiscal 2018 Quarter Ended
	March 31,		June 30,		September 30,		December 31,
Total revenues⁽¹⁾	$	213,719	$	186,108	$	225,397	$	228,602
Gross profit⁽²⁾	$	128,633	$	139,839	$	155,586	$	168,873
Income from operations	$	116,307	$	85,770	$	125,176	$	111,602
Net income⁽³⁾	$	115,857	$	87,494	$	126,630	$	360,089
Net income per share:
Basic	$	0.39	$	0.29	$	0.42	$	1.20
Diluted	$	0.37	$	0.28	$	0.41	$	1.15

____________________

(1)

Total revenues for the quarters ended March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019 included $10.0 million, $20.4 million, $50.6 million and $15.1 million in milestone revenue, respectively, as compared to $66.5 million, $25.8 million, $42.6 million and $29.6 million during the comparable periods in 2018. Due to uncertainties surrounding the timing and achievement of regulatory and development milestones, it is difficult to predict future milestone revenues and such milestones can vary significantly from period to period.


(2)	Gross profit is computed as net product revenues less cost of goods sold.


(3)	Net income for the quarter ended December 31, 2018 included a $244.1 million income tax benefit related to the release of substantially all of the valuation allowance against our deferred tax assets.

(4)

The fiscal quarter ended December 31, 2019 is a 14-week fiscal period. All other quarters presented are 13-week fiscal periods.

Organization and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Jan. 03, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying 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.
Fiscal Period	We have adopted a 52- or 53-week fiscal year policy that ends on the Friday closest to December 31st. Fiscal year 2019, which was a 53-week fiscal year, ended on January 3, 2020, fiscal year 2018, which was a 52-week fiscal year, ended on December 28, 2018 and fiscal year 2017, which was a 52-week fiscal year, ended on December 29, 2017. For convenience, references in this report as of and for the fiscal years ended January 3, 2020, December 28, 2018 and December 29, 2017 are indicated as being as of and for the years ended December 31, 2019, 2018 and 2017, respectively.
Segment Information	Segment Information We operate in one business segment that focuses on the discovery, development and commercialization of new medicines for difficult-to-treat cancers. 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.
Use of Estimates	Use of Estimates The preparation of the accompanying 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, we evaluate our significant estimates. 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.
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Adopted	Recent Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740)-Simplifying the Accounting for Income Taxes (ASU 2019-12). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. ASU 2019-12 will be effective for us in the first quarter of 2021 with early adoption permitted. We are currently assessing the impact of ASU 2019-12 on our Consolidated Financial Statements. In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (ASU 2018-18). ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the counterparty is a customer for a distinct good or service (i.e. a unit of account). For units of account that are in the scope of Topic 606, all of the guidance in Topic 606 should be applied, including the guidance on recognition, measurement, presentation and disclosure. ASU 2018-18 also adds a reference in ASC Topic 808, Collaborative Arrangements (Topic 808) to the unit of account guidance in Topic 606 and requires that it be applied only to assess whether transactions in a collaborative arrangement are in the scope of Topic 606. ASU 2018-18 will preclude entities from presenting amounts related to transactions with a counterparty in a collaborative arrangement that is not a customer as revenue from contracts with customers. ASU 2018-18 is effective for us in the first quarter of 2020. We are currently assessing the impact of ASU 2018-18 on our Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 eliminated Step 2 from the goodwill impairment test. Instead, under the amendments in ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for us in the first quarter of 2020. We do not expect the adoption of ASU 2017-04 to have a material impact on our Consolidated Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) (ASU 2016-13). ASU 2016-13 implements an impairment model, known as the current expected credit loss model that is based on expected losses rather than incurred losses. Under the new guidance, an entity will recognize as an allowance its estimate of expected credit losses. ASU 2016-13 is effective for us in the first quarter of 2020. We are currently assessing the impact of ASU 2016-13 on our Consolidated Financial Statements. Recently Adopted Accounting Pronouncements In the third quarter of 2019, we adopted ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15). ASU 2018-15 requires a customer in a hosting arrangement that is a service contract to follow the guidance in Accounting Standards Codification (ASC) Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 requires capitalized implementation costs to be expensed over the term of the hosting arrangement, which includes reasonably certain renewals. We adopted ASU 2018-15 using the prospective transition method in the accompanying Consolidated Financial Statements. The adoption of ASU 2018-15 did not have a material impact on our Consolidated Financial Statements. In the first quarter of 2019, we adopted ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) (ASU 2018-02). There was no financial impact from the adoption of ASU 2018-02 and we did not make an election to reclassify the income tax effects of the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income (loss) to accumulated deficit. In connection with the adoption of ASU 2018-02, we adopted the individual unit of account approach for releasing income tax effects from accumulated other comprehensive income (loss). In the first quarter of 2019, we also adopted ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20) (ASU 2017-08). ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, ASU 2017-08 requires the premium to be amortized to the earliest call date. ASU 2017-08 does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.
Cash	Cash and Investments We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include high-grade, short-term investments in money market funds, certificates of deposit and marketable debt securities which are subject to minimal credit and market risk.
Investments	We designate all investments in marketable debt securities as available-for-sale and therefore, report such investments at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). For securities sold prior to maturity, the cost of securities sold is based on the specific identification method. We include realized gains and losses on the sale of investments in other income (expense), net in the accompanying Consolidated Statements of Income. We classify those investments that we do not require for use in current operations and that mature in more than 12 months as long-term investments in the accompanying Consolidated Balance Sheets. The classification of restricted cash equivalents as short-term or long-term is dependent upon the longer of the remaining term to maturity of the investment or the remaining term of the related restriction. We subject all of our investments to a quarterly impairment review. We recognize an impairment charge when a decline in the fair value of an investment below its cost basis is judged to be other-than-temporary. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investments fair value has been less than their cost basis, the financial condition and near-term prospects of the issuer, extent of the loss related to credit of the issuer, the expected cash flows from the security, our intent to sell the security and whether or not we will be required to sell the security before we are able to recover our carrying value.
Fair Value Measurements	Fair Value Measurements We define fair value as the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risks.
Accounts Receivable	Accounts Receivable We record trade accounts receivable net of allowances for chargebacks and cash discounts for prompt payment, as described further below. Estimates of our allowance for doubtful accounts are determined based on existing contractual payment terms, historical payment patterns of our customers and individual customer circumstances, an analysis of days sales outstanding by geographic region and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Historically, the amounts of uncollectible accounts receivable that have been written off have been insignificant.
Inventory	Inventory We value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard-cost method, which approximates actual cost based on a first-in, first-out method. We analyze our inventory levels quarterly and write down inventory subject to expiry in excess of expected requirements, or that has a cost basis in excess of its expected net realizable value. These write downs are charged to either cost of goods sold or the cost of supplied product included in collaboration revenues in the accompanying Consolidated Statements of Income. On a quarterly basis, we analyze our estimated production levels for the following twelve-month period, which is our normal operating cycle, and reclassify inventory we expect to use or sell in periods beyond the next twelve months into other long-term assets in the accompanying Consolidated Balance Sheets.
Property and Equipment	Property and Equipment We record property and equipment at cost, net of depreciation. We compute depreciation using the straight-line method based on estimated useful lives of the assets, which ranges up to 15 years and depreciate leasehold improvements over the lesser of their estimated useful lives or the remainder of the lease term. We charge repairs and maintenance costs to expense as incurred. We periodically review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not recognize impairment charges in any of the periods presented.
Goodwill	Goodwill We recorded goodwill amounts as the excess purchase price over tangible assets, liabilities and intangible assets acquired based on their estimated fair value. We periodically review the carrying amount of goodwill for impairment (at least annually) and whenever events or changes in circumstance indicate that the carrying value may not be recoverable. Historically, we assessed the recoverability of our goodwill on the last day of our third quarter. Beginning in 2019, we changed the date of our annual goodwill impairment assessment to the first day of our fourth quarter to allow for operational expediency. The change in goodwill impairment testing date does not represent a significant change to our accounting for goodwill. The assessment of recoverability may first consider qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We perform a quantitative assessment if the qualitative assessment results in a more-likely-than-not determination or if a qualitative assessment is not performed. The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the carrying amount of the reporting unit’s goodwill exceeds its fair value. We continue to operate in one segment, which is also considered to be our sole reporting unit and therefore, goodwill is tested for impairment at the enterprise level.
Collaboration Agreements	Collaboration Agreements We assess whether our collaboration agreements are subject to ASC 808: Collaborative Arrangements (Topic 808) based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of Topic 808, we assess whether the payments between us and our collaboration partner are subject to other accounting literature. If we conclude that payments from the collaboration partner to us represent consideration from a customer, then we account for those payments within the scope of Topic 606. However, if we conclude that our collaboration partner is not a customer for certain activities, such as for certain collaborative research and development activities, we present such payments as a reduction of research and development expense.
Revenue	Revenue In the first quarter of 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts that were not completed as of the adoption date. Results for the years ended December 31, 2019 and 2018 are presented under Topic 606, while results for the year ended December 31, 2017 have not been adjusted and continue to be reported in accordance with our historic accounting under previous revenue recognition guidance, ASC Topic 605: Revenue Recognition (Topic 605). 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 are within the scope of Topic 606, we perform the following five steps: 1) identify the contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) 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 we are 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 We record revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that 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 forecasted 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 our contracts. 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, Federal government entities purchasing via the Federal Supply Schedule, 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 actual chargebacks received and 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, other government programs and commercial contracts. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory or contractual 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 quarters’ 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 amounts related to the Medicare Part D Coverage Gap Discount Program. In the U.S. during 2018 and 2017, the Medicare Part D prescription drug benefit mandated participating manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. This amount increased to 70% in 2019. Our estimates for expected Medicare Part D coverage gap amounts 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 quarter’s shipments to Customer, plus an accrual balance for known prior quarters’ 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 distributor that administers the copay program. 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, we classify these payments in selling, general and administrative expenses in our Consolidated Statements of Income. 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 sales-based milestone payments; product supply services; development cost reimbursements; profit sharing arrangements; and royalties on net sales of licensed products. Except for profit sharing arrangements, payments for product supply services and certain development cost reimbursements, each of these payment types were within the scope of Topic 606 during the years ended December 31, 2019 and 2018. As part of the accounting for these arrangements, we develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key assumptions may include forecasted 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. Regulatory and Development 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 achieved 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 achieving such development and regulatory 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. 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 collaboration arrangements may include promises of future clinical development and drug safety services, as well as participation on certain joint committees. When such services are provided to a customer, and they are distinct from the licenses provided to our collaboration partners, these promises are accounted for as a separate performance obligation which we estimate using internal development costs incurred and projections through the term of the arrangements. We record revenue for these services as the performance obligations are satisfied over time. 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 account for such arrangements in accordance with 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. We recognized an annual profit under the agreement for the years ending December 31, 2019 and 2018 and accordingly, those profits are recognized as collaboration revenues in the accompanying Consolidated Statements of Income. Prior to 2018, the commercialization of cobimetinib in the U.S. had not been profitable for any annual period and accordingly, losses for periods prior to 2018 were recognized as selling, general and administrative expenses in the accompanying Consolidated Statements of Income. Royalty and Sales-based Milestone Payments: For arrangements that include royalties and sales-based milestone payments, including milestone payments earned for the first commercial sale of a product, the license is deemed to be the predominant item to which such payments relate and we recognize revenue at the later of when the related sales occur or when the performance obligation to which the royalty has been allocated has been satisfied. Cost of Goods Sold Cost of goods sold is related to our product revenues and consists primarily of a 3% royalty we are required to pay GlaxoSmithKline (GSK) on all net sales of any product incorporating cabozantinib, the cost of manufacturing, indirect labor costs, write-downs related to expiring and excess inventory, shipping and other third-party logistics and distribution costs for our product. We consider regulatory approval of product candidates to be uncertain and product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for product candidates incurred prior to regulatory approval were not capitalized as inventory but are expensed as research and development costs. Portions of the manufacturing costs for inventory sold during the years ended December 31, 2018 and 2017 were incurred prior to the regulatory approval of CABOMETYX and COMETRIQ and, therefore, were expensed as research and development costs when incurred, rather than capitalized as inventory.
Research and Development Expenses	Research and Development Expenses Research and development costs are expensed as incurred and primarily include: (1) direct and indirect internal costs for drug discovery; (2) upfront license and project initiation fees, license option fees, funded research and milestone payments incurred for our in-licensing arrangements with our collaboration partners; and (3) development costs associated with our clinical trial projects, which include fees paid to Contract Research Organizations (CRO) performing work on our behalf. Our clinical trial projects have been executed with support from third-party CROs, who specialize in conducting and managing global clinical trials. We accrue expenses for clinical trial activities performed by the CROs based upon the estimated amount of work completed on each trial. For clinical trial expenses, the significant factors used in estimating accruals include direct CRO costs, the number of patients enrolled, the number of active clinical sites involved, the duration for which the patients will be enrolled in the trial and patient out of pocket costs. We monitor patient enrollment levels and related activities to the extent possible through CRO meetings and correspondence, internal reviews and review of contractual terms. We base our estimates on the best information available at the time. However, additional information may become available to us which may allow us to make a more accurate estimate in future periods. In this event, we may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain. As described further above, certain payments made to us from our collaboration partners may be presented as a reduction of research and development expense. Development, regulatory or commercial milestone payments to collaboration partners are recorded as research and development costs when we determine such payments become probable.
Leases	Leases We determine if an arrangement includes a lease at the inception of the agreement. For each of our lease arrangements, we record a right-of-use asset representing our right to use an underlying asset for the lease term and a lease liability representing our obligation to make lease payments. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the net present value of lease payments over the lease term. In determining the weighted average discount rate used to calculate the net present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date. Our leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that we will exercise any such options. Lease expense for our operating leases is recognized on a straight-line basis over the lease term. We have elected not to apply the recognition requirements of Topic 842 for short-term leases.
Advertising	Advertising Advertising expenses were $17.9 million, $14.8 million and $8.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. We expense the costs of advertising, including promotional expenses, as incurred. Advertising expenses are recorded in sales, general and administrative expenses.
Stock-Based Compensation	Stock-Based Compensation We account for stock-based payments to employees, including grants of service-based restricted stock awards, performance-based restricted stock awards (PSUs), service-based stock options, performance-based stock options (PSOs), and purchases under our 2000 Employee Stock Purchase Plan (ESPP) in accordance with ASC 718, Compensation-Stock Compensation, which requires that stock-based payments (to the extent they are compensatory) be recognized in our Consolidated Statements of Income based on their fair values. We account for forfeitures of stock-based awards as they occur. The expense for stock-based compensation is based on the grant date fair value of the award. The grant date fair value of restricted stock units (RSUs) and PSUs are estimated as the value of the underlying shares of our common stock. The grant date fair values are estimated using a Monte Carlo simulation pricing model for PSOs with market vesting conditions and a Black-Scholes Merton option pricing model for other stock options. Both option pricing models require the input of subjective assumptions. These variables include, but are not limited to, the expected volatility of our stock price and the expected term of the awards. We consider both implied and historical volatilities when developing an estimate of expected volatility. We estimate the term using historical data. We recognize compensation expense over the requisite service period on an accelerated basis for awards with a market or performance condition and on a straight-line basis for service-based stock options and awards. Compensation expense relating to PSUs is recognized when we determine that it is probable that the performance goals will be achieved, which we assess on a quarterly basis.
Income Taxes	Income Taxes Our income tax provision or benefit is computed under the asset and liability method. Significant estimates are required in determining our income tax provision or benefit. Some of these estimates are based on interpretations of existing tax laws or regulations. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (temporary differences) at enacted tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is established for deferred tax assets for which it is more likely than not that some portion or all of the deferred tax assets, including net operating losses and tax credits, will not be realized. We periodically re-assess the need for a valuation allowance against our deferred tax assets based on various factors including our historical earnings experience by taxing jurisdiction, and forecasts of future operating results and utilization of net operating losses and tax credits prior to their expiration. Significant judgment is required in making this assessment and, to the extent that a reversal of any portion of our valuation allowance against our deferred tax assets is deemed appropriate, a tax benefit will be recognized against our income tax provision in the period of such reversal. Prior to 2018, we recorded a valuation allowance that fully offset our deferred tax assets. In the fourth quarter of 2018, based on our evaluation of various factors, including our achievement of a cumulative three-year income position as of December 28, 2018 and forecasts of future operating results, we released substantially all of our valuation allowance against our deferred tax assets and recorded a corresponding income tax benefit as described in “Note 9. Income Taxes”, below. We continue to maintain a valuation allowance against our California state deferred tax assets. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination by the tax authorities based on the technical merits of the position. An adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period.
Foreign Currency Translation and Remeasurement	Foreign Currency Translation and Remeasurement Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured using exchange rates in effect at the end of the period and related gains or losses are recorded in other income (expense), net in the accompanying Consolidated Statements of Income.

Revenues (Tables)

12 Months Ended

Jan. 03, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Revenues consisted of the following (in thousands):



	Year Ended December 31,
	2019			2018			2017
Product revenues:
Gross product revenues	$	957,621		$	738,529		$	402,569
Discounts and allowances	(197,671		)	(119,250		)	(53,561		)
Net product revenues	759,950			619,279			349,008
Collaboration revenues:
License revenues	161,299			192,188			96,637
Research and development service revenues	49,965			39,501			8,737
Other collaboration revenues	(3,439		)	2,858			(1,905		)
Total collaboration revenues	207,825			234,547			103,469
Total revenues	$	967,775		$	853,826		$	452,477

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



	Year Ended December 31,
	2019		2018		2017
CABOMETYX	$	733,421	$	599,946	$	324,000
COMETRIQ	26,529		19,333		25,008
Net product revenues	$	759,950	$	619,279	$	349,008

Revenues Disaggregated by Significant Customer

The percentage of total revenues by customer who individually accounted for 10% or more of our total revenues were as follows:



	Year Ended December 31,
	2019		2018		2017
Ipsen	16	%	21	%	15	%
Affiliates of CVS Health Corporation	15	%	13	%	16	%
Affiliates of McKesson Corporation	12	%	12	%	11	%
Affiliates of AmerisourceBergen Corporation	10	%	8	%	8	%
Accredo Health, Incorporated	9	%	9	%	11	%
Diplomat Specialty Pharmacy	5	%	9	%	18	%

Revenues Disaggregated by Geographic Region

Revenues by geographic region were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
U.S.	$	770,244	$	632,927	$	367,906
Europe	152,771		182,879		69,792
Japan	44,760		38,020		14,779
Total revenues	$	967,775	$	853,826	$	452,477

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			Total
Balance at December 31, 2017	$	1,928		$	1,795		$	5,770		$	9,493
Provision related to sales made in:
Current period	75,543			13,017			31,040			119,600
Prior periods	(403		)	206			(153		)	(350		)
Payments and customer credits issued	(74,746		)	(11,980		)	(24,741		)	(111,467		)
Balance at December 31, 2018	2,322			3,038			11,916			17,276
Provision related to sales made in:
Current period	129,936			15,605			48,250			193,791
Prior periods	3,989			(111		)	2			3,880
Payments and customer credits issued	(128,733		)	(15,035		)	(44,946		)	(188,714		)
Balance at December 31, 2019	$	7,514		$	3,497		$	15,222		$	26,233

Collaboration Agreements (Tables)

12 Months Ended

Jan. 03, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Collaborative Revenues Under Collaboration Agreement

Profits and losses on U.S. commercialization and royalty revenues on ex-U.S. sales under the collaboration agreement with Genentech were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
Profits and losses on U.S. commercialization	$	4,615	$	8,084	$	(2,140	)
Royalty revenues on ex-U.S. sales	$	5,679	$	5,564	$	6,398

Cash and Investments (Tables)

12 Months Ended

Jan. 03, 2020

Investments, Debt and Equity Securities [Abstract]

Reconciliation of Cash, Cash Equivalents, and Restricted Cash



	December 31,
	2019		2018		2017
Cash and cash equivalents	$	266,501	$	314,775	$	183,164
Short-term restricted cash equivalents	—		—		504
Restricted cash equivalents included in long-term investments	1,636		1,100		4,646
Cash, cash equivalents, and restricted cash equivalents as reported within the accompanying Consolidated Statements of Cash Flows	$	268,137	$	315,875	$	188,314

Reconciliation of Cash, Cash Equivalents, and Restricted Cash



	December 31,
	2019		2018		2017
Cash and cash equivalents	$	266,501	$	314,775	$	183,164
Short-term restricted cash equivalents	—		—		504
Restricted cash equivalents included in long-term investments	1,636		1,100		4,646
Cash, cash equivalents, and restricted cash equivalents as reported within the accompanying Consolidated Statements of Cash Flows	$	268,137	$	315,875	$	188,314

Investments by Security Type

Cash and investments consisted of the following (in thousands):



	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investment securities available-for-sale:
Commercial paper	$	389,573	$	—	$	—		$	389,573
Corporate bonds	752,295		3,934		(3		)	756,226
U.S. Treasury and government sponsored enterprises	166,483		187		(5		)	166,665
Total investment securities available-for-sale	1,308,351		4,121		(8		)	1,312,464
Cash	40,964		—		—			40,964
Money market funds	2,467		—		—			2,467
Certificates of deposit	32,728		5		—			32,733
Total cash and investments	$	1,384,510	$	4,126	$	(8	)	$	1,388,628



	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Investment securities available-for-sale:
Commercial paper	$	381,134	$	—	$	(1	)	$	381,133
Corporate bonds	344,741		180		(857		)	344,064
U.S. Treasury and government sponsored enterprises	55,224		2		(25		)	55,201
Total investment securities available-for-sale	781,099		182		(883		)	780,398
Cash	6,883		—		—			6,883
Money market funds	47,744		—		—			47,744
Certificates of deposit	16,596		—		—			16,596
Total cash and investments	$	852,322	$	182	$	(883	)	$	851,621

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

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



	December 31, 2019
	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	$	14,529	$	(3	)	$	—	$	—	$	14,529	$	(3	)
U.S. Treasury and government sponsored enterprises	2,848		(5		)	—		—		2,848		(5		)
Total	$	17,377	$	(8	)	$	—	$	—	$	17,377	$	(8	)



	December 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	$	236,162	$	(606	)	$	39,627	$	(251	)	$	275,789	$	(857	)
U.S. Treasury and government sponsored enterprises	28,105		(16		)	9,182		(9		)	37,287		(25		)
Commercial paper	7,091		(1		)	—		—			7,091		(1		)
Total	$	271,358	$	(623	)	$	48,809	$	(260	)	$	320,167	$	(883	)

Fair Value of Cash Equivalents and Investments by Contractual Maturity

The fair value of investment securities available-for-sale by contractual maturity were as follows (in thousands):



	December 31,
	2019		2018
Maturing in one year or less	$	789,913	$	626,711
Maturing after one year through five years	522,551		153,687
Total investment securities available-for-sale	$	1,312,464	$	780,398

Fair Value Measurements (Tables)

12 Months Ended

Jan. 03, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Assets Measured on a Recurring Basis

The classifications within the fair value hierarchy of our financial assets that were measured and recorded at fair value on a recurring basis were as follows (in thousands):



	December 31, 2019
	Level 1		Level 2		Total
Commercial paper	$	—	$	389,573	$	389,573
Corporate bonds	—		756,226		756,226
U.S. Treasury and government sponsored enterprises	—		166,665		166,665
Total investment securities available-for-sale	—		1,312,464		1,312,464
Money market funds	2,467		—		2,467
Certificates of deposit	—		32,733		32,733
Total financial assets carried at fair value	$	2,467	$	1,345,197	$	1,347,664



	December 31, 2018
	Level 1		Level 2		Total
Commercial paper	$	—	$	381,133	$	381,133
Corporate bonds	—		344,064		344,064
U.S. Treasury and government sponsored enterprises	—		55,201		55,201
Total investment securities available-for-sale	—		780,398		780,398
Money market funds	47,744		—		47,744
Certificates of deposit	—		16,596		16,596
Total financial assets carried at fair value	$	47,744	$	796,994	$	844,738

Inventory (Tables)

12 Months Ended

Jan. 03, 2020

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consisted of the following (in thousands):



	December 31,
	2019		2018
Raw materials	$	2,709	$	1,922
Work in process	9,447		6,170
Finished goods	4,367		3,836
Total	$	16,523	$	11,928
Balance Sheet classification:
Current portion included in inventory	$	12,886	$	9,838
Long-term portion included in other long-term assets	3,637		2,090
Total	$	16,523	$	11,928

Property and Equipment (Tables)

12 Months Ended

Jan. 03, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

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



	Estimated Useful Lives	December 31,
	Estimated Useful Lives	2019			2018
Leasehold improvements	up to 15 years	$	33,904		$	33,941
Computer equipment and software	3 years	17,338			15,022
Furniture and fixtures	5 to 7 years	13,053			12,709
Laboratory equipment	5 years	8,904			5,668
Construction in progress		1,253			866
		74,452			68,206
Less: accumulated depreciation		(25,560		)	(17,309		)
Property and equipment, net		$	48,892		$	50,897

Employee Benefit Plans (Tables)

12 Months Ended

Jan. 03, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Allocated Employee Stock-Based Compensation Expense

We allocated the stock-based compensation expense for our equity incentive plans and our ESPP as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
Research and development	$	19,374	$	13,115	$	7,569
Selling, general and administrative	37,228		27,511		16,369
Total stock-based compensation	$	56,602	$	40,626	$	23,938

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

The weighted average grant-date fair value per share of stock options and ESPP purchases were as follows:



	Year Ended December 31,
	2019		2018		2017
Stock options, including PSOs	$	8.19	$	9.07	$	11.42
ESPP	$	4.85	$	6.40	$	6.00

Schedule of Fair Value of Employee Share-Based Payments Awards Stock Option Assumptions and Weighted Average Fair Values

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



	Year Ended December 31,
	2019		2018		2017
Stock options, including PSOs:
Risk-free interest rate	1.77	%	2.81	%	1.98	%
Dividend yield	—	%	—	%	—	%
Volatility	48	%	55	%	59	%
Expected life	4.3 years		4.4 years		4.5 years
ESPP:
Risk-free interest rate	2.16	%	1.93	%	1.09	%
Dividend yield	—	%	—	%	—	%
Volatility	50	%	53	%	58	%
Expected life	6 months		6 months		6 months

Schedule of Fair Value of Employee Share-Based Payments Awards ESPP Assumptions and Weighted Average Fair Values

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



	Year Ended December 31,
	2019		2018		2017
Stock options, including PSOs:
Risk-free interest rate	1.77	%	2.81	%	1.98	%
Dividend yield	—	%	—	%	—	%
Volatility	48	%	55	%	59	%
Expected life	4.3 years		4.4 years		4.5 years
ESPP:
Risk-free interest rate	2.16	%	1.93	%	1.09	%
Dividend yield	—	%	—	%	—	%
Volatility	50	%	53	%	58	%
Expected life	6 months		6 months		6 months

Summary of All Stock Option Activity

Activity for stock options, including PSOs, during the year ended December 31, 2019 was as follows (in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Stock options outstanding at December 31, 2018	22,674		$	8.71
Granted	1,311		$	20.08
Exercised	(3,274	)	$	5.01
Forfeited	(217	)	$	16.89
Expired	(51	)	$	22.98
Stock options outstanding at December 31, 2019	20,443		$	9.91	3.2 years	$	169,299
Stock options exercisable at December 31, 2019	16,216		$	7.36	2.6 years	$	167,449

Summary of All RSU Activity

Activity for RSUs, including PSUs, during the year ended December 31, 2019 was as follows (in thousands, except per share amounts):



	Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
RSUs outstanding at December 31, 2018	4,857		$	18.42
Awarded	5,842		$	19.46
Vested and released	(1,541	)	$	17.23
Forfeited	(357	)	$	18.66
RSUs outstanding at December 31, 2019	8,801		$	19.31	2.2 years	$	149,701

Income Taxes (Tables)

12 Months Ended

Jan. 03, 2020

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Our income before income taxes is derived solely from within the U.S. Our income tax provision (benefit) was as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	—		$	—		$	—
State	6,095			6,133			4,350
Total current tax expense	6,095			6,133			4,350
Deferred:
Federal	71,580			(238,675		)	—
State	(578		)	(5,436		)	—
Total deferred tax expense	71,002			(244,111		)	—
Income tax provision (benefit)	$	77,097		$	(237,978	)	$	4,350

Schedule of Reconciliation of Income Taxes At The Statutory Federal Income Tax Rate to Net Income Taxes



	Year Ended December 31,
	2019			2018			2017
U.S. federal income tax provision at statutory rate	$	83,603		$	94,939		$	53,916
State tax expense	1,148			4,690			8,282
Change in valuation allowance	3,208			(315,394		)	(34,266		)
Research credits	(8,299		)	(18,308		)	—
Stock-based compensation	(9,177		)	(5,998		)	(20,548		)
Non-deductible executive compensation	4,228			1,111			1,239
Non-deductible interest	—			—			1,367
Other	2,386			982			(5,640		)
Income tax provision (benefit)	$	77,097		$	(237,978	)	$	4,350

Schedule of Deferred Assets and Liabilities

Our deferred tax assets and liabilities were as follows (in thousands):



	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	65,131		$	146,701
Tax credit carryforwards	110,037			98,467
Depreciation and amortization	26,792			29,929
Stock-based compensation	14,966			11,366
Lease liabilities	11,211			3,265
Accruals and reserves not currently deductible	8,248			7,160
Deferred revenue	6,547			5,474
Other assets	345			1,140
Total deferred tax assets	243,277			303,502
Valuation allowance	(61,659		)	(58,112		)
Net deferred tax assets	181,618			245,390
Deferred tax liabilities:
Lease right-of-use assets	(9,244		)	(1,279		)
Total deferred tax liabilities	(9,244		)	(1,279		)
Net deferred taxes	$	172,374		$	244,111

Schedule of Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):



	Year Ended December 31,
	2019		2018			2017
Beginning balance	$	76,060	$	79,342		$	61,809
Change relating to prior year provision	589		(4,254		)	247
Change relating to current year provision	2,429		1,083			17,378
Reductions based on the lapse of the applicable statutes of limitations	—		(111		)	(92		)
Ending balance	$	79,078	$	76,060		$	79,342

Net Income Per Share (Tables)

12 Months Ended

Jan. 03, 2020

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic and Diluted Net Loss Per Share

Net income per share - basic and diluted, were computed as follows (in thousands, except per share amounts):



	Year Ended December 31,
	2019		2018		2017
Numerator:
Net income	$	321,012	$	690,070	$	154,227
Net income allocated to participating securities	—		—		(367		)
Net income allocable to common stock - basic	321,012		690,070		153,860
Adjustment to net income allocated to participating securities	—		—		22
Net income allocable to common stock - diluted	$	321,012	$	690,070	$	153,882
Denominator:
Weighted-average common shares outstanding - basic	302,584		297,892		293,588
Dilutive effect of employee stock plans	12,425		14,911		18,415
Weighted-average common shares outstanding - diluted	315,009		312,803		312,003
Net income per share - basic	$	1.06	$	2.32	$	0.52
Net income per share - diluted	$	1.02	$	2.21	$	0.49

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

These potential common shares were as follows (in thousands):



	Year Ended December 31,
	2019	2018	2017
Anti-dilutive securities and contingently issuable shares excluded	9,111	3,968	1,645

Commitments (Tables)

12 Months Ended

Jan. 03, 2020

Commitments and Contingencies Disclosure [Abstract]

Balance Sheet Classification of Lease Liabilities

The balance sheet classification of our operating lease assets and liabilities were as follows (in thousands):



	December 31,
	2019		2018
Assets:
Right-of-use assets included in other long-term assets	$	41,835	$	5,867
Liabilities:
Current portion included in other current liabilities	$	2,728	$	2,738
Long-term portion of operating lease liabilities	48,011		12,099
Total operating lease liabilities	$	50,739	$	14,837

Components of Lease Expense

The components of operating lease costs, which are included in selling, general and administrative expenses in our Consolidated Statements of Income, were as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017 ⁽¹⁾
Operating lease cost	$	2,844	$	4,189	$	3,944
Variable lease cost	1,024		1,661		2,216
Sublease income	—		—		(1,225		)
Total operating lease costs	$	3,868	$	5,850	$	4,935

____________________

(1)

The 2017 amounts have not been adjusted for the adoption of Topic 842 and continue to be reported in accordance with the previous lease guidance, ASC Topic 840: Leases.

Maturities of Operating Lease Liabilities

As of December 31, 2019, the maturities of our operating lease liabilities were as follows (in thousands):



Year Ending December 31,	Amount
2020	$	4,538
2021	4,669
2022	4,820
2023	5,147
2024	5,407
Thereafter	41,585
Total lease payments	66,166
Less:
Imputed interest	(13,685		)
Future tenant improvement reimbursements	(1,742		)
Operating lease liabilities	$	50,739

Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Jan. 03, 2020

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Data

Selected unaudited quarterly financial data was as follows (in thousands, except per share data):



	Fiscal 2019 Quarter Ended
	March 31,		June 30,		September 30,		December 31, ⁽⁴⁾
Total revenues⁽¹⁾	$	215,487	$	240,275	$	271,703	$	240,310
Gross profit⁽²⁾	$	172,080	$	186,136	$	184,231	$	184,406
Income from operations	$	84,559	$	91,989	$	115,606	$	77,316
Net income	$	75,775	$	79,042	$	97,452	$	68,743
Net income per share:
Basic	$	0.25	$	0.26	$	0.32	$	0.23
Diluted	$	0.24	$	0.25	$	0.31	$	0.22



	Fiscal 2018 Quarter Ended
	March 31,		June 30,		September 30,		December 31,
Total revenues⁽¹⁾	$	213,719	$	186,108	$	225,397	$	228,602
Gross profit⁽²⁾	$	128,633	$	139,839	$	155,586	$	168,873
Income from operations	$	116,307	$	85,770	$	125,176	$	111,602
Net income⁽³⁾	$	115,857	$	87,494	$	126,630	$	360,089
Net income per share:
Basic	$	0.39	$	0.29	$	0.42	$	1.20
Diluted	$	0.37	$	0.28	$	0.41	$	1.15

____________________

(1)


(2)	Gross profit is computed as net product revenues less cost of goods sold.


(3)	Net income for the quarter ended December 31, 2018 included a $244.1 million income tax benefit related to the release of substantially all of the valuation allowance against our deferred tax assets.


(4)	The fiscal quarter ended December 31, 2019 is a 14-week fiscal period. All other quarters presented are 13-week fiscal periods.

Organization and Summary of Significant Accounting Policies (Details)	3 Months Ended			12 Months Ended
	Mar. 29, 2019	Mar. 31, 2018	Mar. 31, 2017	Jan. 03, 2020 USD ($) segment product	Dec. 28, 2018 USD ($)	Dec. 29, 2017 USD ($)
Organization And Summary Of Significant Policies [Line Items]
Number of operating segments \| segment				1
Impairment charge on goodwill \| $				$ 0
Percent discount for prompt payment				2.00%
Discount expected to be earned				100.00%
Medicare Part D Funding Mandate	70.00%	50.00%	50.00%
Materials in inventory balances \| $				$ 0	$ 0
Advertising expense \| $				$ 17,900,000	$ 14,800,000	$ 8,600,000
Maximum
Organization And Summary Of Significant Policies [Line Items]
Estimated useful lives				15 years
Collaborative Arrangement with GlaxoSmithKline
Organization And Summary Of Significant Policies [Line Items]
Cost of goods sold is related to product				3.00%
Resulting From Discovery Efforts
Organization And Summary Of Significant Policies [Line Items]
Number of products that entered in the commercial marketplace \| product				4
Products Derived from Cabozantinib
Organization And Summary Of Significant Policies [Line Items]
Number of products that entered in the commercial marketplace \| product				2
Products Derived From Other Compounds
Organization And Summary Of Significant Policies [Line Items]
Number of products that entered in the commercial marketplace \| product				2

Revenues (Revenues by Disaggregated Category) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Disaggregation of Revenue [Line Items]
Total revenues	$ 240,310	$ 271,703	$ 240,275	$ 215,487	$ 228,602	$ 225,397	$ 186,108	$ 213,719	$ 967,775	$ 853,826	$ 452,477
Gross product revenues
Disaggregation of Revenue [Line Items]
Total revenues									957,621	738,529	402,569
Discounts and allowances
Disaggregation of Revenue [Line Items]
Total revenues									(197,671)	(119,250)	(53,561)
Net product revenues
Disaggregation of Revenue [Line Items]
Total revenues									759,950	619,279	349,008
License revenues
Disaggregation of Revenue [Line Items]
Total revenues									161,299	192,188	96,637
Research and development service revenues
Disaggregation of Revenue [Line Items]
Total revenues									49,965	39,501	8,737
Other collaboration revenues
Disaggregation of Revenue [Line Items]
Total revenues									(3,439)	2,858	(1,905)
Total collaboration revenues
Disaggregation of Revenue [Line Items]
Total revenues									$ 207,825	$ 234,547	$ 103,469

Revenues (Net Product Revenues Disaggregated by Product) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Disaggregation of Revenue [Line Items]
Net product revenues	$ 240,310	$ 271,703	$ 240,275	$ 215,487	$ 228,602	$ 225,397	$ 186,108	$ 213,719	$ 967,775	$ 853,826	$ 452,477
CABOMETYX
Disaggregation of Revenue [Line Items]
Net product revenues									733,421	599,946	324,000
COMETRIQ
Disaggregation of Revenue [Line Items]
Net product revenues									26,529	19,333	25,008
Net product revenues
Disaggregation of Revenue [Line Items]
Net product revenues									$ 759,950	$ 619,279	$ 349,008

Revenues (Revenues Disaggregated by Significant Customer) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 240,310	$ 271,703	$ 240,275	$ 215,487	$ 228,602	$ 225,397	$ 186,108	$ 213,719	$ 967,775	$ 853,826	$ 452,477
Ipsen \| Sales revenue, net \| Customer concentration risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total									16.00%	21.00%	15.00%
Affiliates of CVS Health Corporation \| Sales revenue, net \| Customer concentration risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total									15.00%	13.00%	16.00%
Affiliates of McKesson Corporation \| Sales revenue, net \| Customer concentration risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total									12.00%	12.00%	11.00%
Affiliates of AmerisourceBergen Corporation \| Sales revenue, net \| Customer concentration risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total									10.00%	8.00%	8.00%
Accredo Health, Incorporated \| Sales revenue, net \| Customer concentration risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total									9.00%	9.00%	11.00%
Diplomat Specialty Pharmacy \| Sales revenue, net \| Customer concentration risk
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percent of total									5.00%	9.00%	18.00%

Revenues (Revenues Disaggregated by Geographic Region) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Disaggregation of Revenue [Line Items]
Total revenues	$ 240,310	$ 271,703	$ 240,275	$ 215,487	$ 228,602	$ 225,397	$ 186,108	$ 213,719	$ 967,775	$ 853,826	$ 452,477
U.S.
Disaggregation of Revenue [Line Items]
Total revenues									770,244	632,927	367,906
Europe
Disaggregation of Revenue [Line Items]
Total revenues									152,771	182,879	69,792
Japan
Disaggregation of Revenue [Line Items]
Total revenues									$ 44,760	$ 38,020	$ 14,779

Revenues (Activities and Ending Reserve Balances for Significant Categories of Discounts and Allowances) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	$ 17,276	$ 9,493
Provision related to sales made in:
Current period	193,791	119,600
Prior periods	3,880	(350)
Payments and customer credits issued	(188,714)	(111,467)
Balance at end of period	26,233	17,276
Chargebacks and Discounts for Prompt Payment
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	2,322	1,928
Provision related to sales made in:
Current period	129,936	75,543
Prior periods	3,989	(403)
Payments and customer credits issued	(128,733)	(74,746)
Balance at end of period	7,514	2,322
Other Customer Credits/Fees and Co-pay Assistance
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	3,038	1,795
Provision related to sales made in:
Current period	15,605	13,017
Prior periods	(111)	206
Payments and customer credits issued	(15,035)	(11,980)
Balance at end of period	3,497	3,038
Rebates
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	11,916	5,770
Provision related to sales made in:
Current period	48,250	31,040
Prior periods	2	(153)
Payments and customer credits issued	(44,946)	(24,741)
Balance at end of period	$ 15,222	$ 11,916

Revenues Revenues (Contract Assets and Liabilities) (Details) - USD ($)	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contract assets	$ 1,100,000	$ 0
Contract liabilities	6,596,000	15,897,000
Amount of revenues recognized included in the beginning contract liability balance	6,500,000	8,700,000
Revenues recognized for performance obligations satisfied in previous periods	161,200,000	$ 198,100,000
Transaction price allocated to our performance obligations	63,100,000
Collaborative arrangement with Takeda
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	10,000,000.0
Transaction price allocated to our performance obligations	$ 18,100,000

Collaboration Agreements (Ipsen Collaboration, Narrative) (Details)	3 Months Ended								12 Months Ended
	Jan. 03, 2020 USD ($)	Sep. 27, 2019 USD ($)	Jun. 28, 2019 USD ($)	Mar. 29, 2019 USD ($)	Dec. 28, 2018 USD ($)	Sep. 29, 2018 USD ($)	Jun. 29, 2018 USD ($)	Mar. 31, 2018 USD ($)	Jan. 03, 2020 USD ($)	Jan. 03, 2020 CAD ($)	Dec. 28, 2018 USD ($)	Dec. 29, 2017 USD ($)	Dec. 30, 2016 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Milestone payments earned	$ 15,100,000	$ 50,600,000	$ 20,400,000	$ 10,000,000.0	$ 29,600,000	$ 42,600,000	$ 25,800,000	$ 66,500,000
Remaining performance obligation	63,100,000								$ 63,100,000
Collaborative Arrangement with GlaxoSmithKline
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration agreement percent of royalty on net sale									3.00%	3.00%
Collaborative arrangement with Ipsen
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration period to achieve specified levels of commercial performance									10 years	10 years
Upfront payments													$ 210,000,000.0
Milestone payments earned to date	330,000,000.0								$ 330,000,000.0
Milestone payments earned									55,000,000.0		$ 140,000,000.0
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	79,000,000.0								79,000,000.0
Maximum amount eligible for commercial milestones under collaborations agreement	470,400,000								$ 470,400,000
Research and development arrangement performed for others, reimbursement for costs incurred, percent									35.00%	35.00%
Net contract liability	152,800,000				182,900,000				$ 152,800,000		182,900,000	$ 69,800,000
Remaining performance obligation	45,000,000.0								$ 45,000,000.0
Collaborative arrangement with Ipsen \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty tier										$ 30,000,000.0
Collaborative arrangement with Ipsen \| Minimum \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									22.00%	22.00%
Collaborative arrangement with Ipsen \| Maximum \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									26.00%	26.00%
Collaborative arrangement with Takeda
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront payments												50,000,000.0
Milestone payments earned to date	26,000,000.0								$ 26,000,000.0
Milestone payments earned									16,000,000.0		10,000,000.0
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	10,000,000.0								10,000,000.0
Maximum amount eligible for commercial milestones under collaborations agreement	155,000,000.0								155,000,000.0
Net contract liability	24,600,000				$ 18,000,000.0				24,600,000		$ 18,000,000.0	$ 14,800,000
Remaining performance obligation	$ 18,100,000								18,100,000
Collaborative arrangement with Takeda \| Initial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty tier									$ 300,000,000.0
Collaborative arrangement with Takeda \| Minimum \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									20.00%	20.00%
Collaborative arrangement with Takeda \| Minimum \| Initial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									15.00%	15.00%
Collaborative arrangement with Takeda \| Maximum \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									30.00%	30.00%
Collaborative arrangement with Takeda \| Maximum \| Initial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									24.00%	24.00%

Collaboration Agreements (Takeda Collaboration, Narrative) (Details) - USD ($)	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Milestone payments earned	$ 15,100,000	$ 50,600,000	$ 20,400,000	$ 10,000,000.0	$ 29,600,000	$ 42,600,000	$ 25,800,000	$ 66,500,000
Remaining performance obligation	63,100,000								$ 63,100,000
Collaborative arrangement with Takeda
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales volume period									6 years
Upfront payments											$ 50,000,000.0
Milestone payments earned to date	26,000,000.0								$ 26,000,000.0
Milestone payments earned									16,000,000.0	$ 10,000,000.0
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	10,000,000.0								10,000,000.0
Maximum amount eligible for development and regulatory milestones	20,000,000.0								20,000,000.0
Maximum amount eligible for commercial milestones under collaborations agreement	155,000,000.0								155,000,000.0
Net contract liability	24,600,000				$ 18,000,000.0				24,600,000	$ 18,000,000.0	$ 14,800,000
Remaining performance obligation	$ 18,100,000								$ 18,100,000
Collaborative arrangement with Takeda \| Global
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development arrangement performed for others, reimbursement for costs incurred, percent									20.00%
Collaborative arrangement with Takeda \| Japan
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration period to achieve specified levels of commercial performance									2 years
Research and development arrangement performed for others, reimbursement for costs incurred, percent									100.00%
Collaborative arrangement with Takeda \| Initial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty tier									$ 300,000,000.0
Collaborative arrangement with Takeda \| Minimum \| Initial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									15.00%
Collaborative arrangement with Takeda \| Minimum \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									20.00%
Collaborative arrangement with Takeda \| Maximum \| Initial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									24.00%
Collaborative arrangement with Takeda \| Maximum \| Final tier
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of royalty on net sale									30.00%
ASU 2014-09 \| Adjustments Due to the Adoption of Topic 606 \| EMA Filing Acceptance - HCC \| Collaborative arrangement with Takeda
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Milestone payments earned								$ 10,000,000.0

Collaboration Agreements (Royalty Revenues under the Collaboration Agreement with GSK) (Details) - USD ($) $ in Millions	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Collaborative Arrangements with Glaxo Smith Kline
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty expense	$ 31.3	$ 24.0	$ 12.4
Collaborative Arrangement with GlaxoSmithKline
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration agreement percent of royalty on net sale	3.00%

Collaboration Agreements Collaboration Agreements (In-Licensing Collaborations) (Details) $ in Millions	1 Months Ended
	Jul. 31, 2019 USD ($) program	May 31, 2019 USD ($)	Jan. 03, 2020 USD ($)
Collaboration Agreement With Aurigene Discovery Technologies Limited Collaboration Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration agreement, number of programs \| program	6
Upfront payments	$ 17.5
Collaboration agreement pre-existing programs \| program	3
Preclinical development work on these programs	$ 32.6
Expense for the discovery and preclinical development funding commitment			$ 4.0
Maximum amount eligible for development and regulatory milestones	148.8
Potential development and regulatory milestone payments	280.0
Collaboration Agreement With Iconic Therapeutics, Inc.
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Expense for the discovery and preclinical development funding commitment			9.8
Collaboration agreement option exercise fee payment, upon exercising option			20.0
Maximum amount eligible for development and regulatory milestones			190.6
Potential development and regulatory milestone payments			$ 262.5
Upfront payment		$ 7.5
Minimum \| Collaboration Agreement With Aurigene Discovery Technologies Limited Collaboration Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration agreement option exercise fee payment, upon exercising option	10.0
Maximum \| Collaboration Agreement With Aurigene Discovery Technologies Limited Collaboration Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration agreement option exercise fee payment, upon exercising option	$ 12.0

Collaboration Agreements (Invenra Collaboration, Narrative) (Details) - Collaborative Arrangement With Invenra - USD ($) $ in Millions	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018
Discovery Project
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Project initiation fee	$ 7.0	$ 4.0
Upfront and milestone payments	2.0
Development and Regulatory Milestone
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	131.5
Additional Development and Regulatory Milestone
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Project initiation fee	43.4
Upfront and milestone payments	1.5
Product Commercialization
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	$ 325.0

Collaboration Agreements (StemSynergy Collaboration, Narrative) (Details) - Collaborative Arrangement With StemSynergy - USD ($) $ in Millions	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Jan. 31, 2018
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront and milestone payments		$ 3.0
Additional upfront and milestone payments	$ 1.9	$ 1.2
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement			$ 0.5
First Product To Reach Market
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	$ 56.5

Collaboration Agreements (Collaboration Revenues - Genentech) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total revenues	$ 240,310	$ 271,703	$ 240,275	$ 215,487	$ 228,602	$ 225,397	$ 186,108	$ 213,719	$ 967,775	$ 853,826	$ 452,477
Collaborative Arrangement with Genentech \| Cotellic
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaborative Arrangement, Income (Loss) From Agreement									4,615	8,084	(2,140)
Total revenues									$ 5,679	$ 5,564	$ 6,398

Collaboration Agreements (Other Collaborations, Narrative) (Details) - USD ($)	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Revenues	$ 240,310,000	$ 271,703,000	$ 240,275,000	$ 215,487,000	$ 228,602,000	$ 225,397,000	$ 186,108,000	$ 213,719,000	$ 967,775,000	$ 853,826,000	$ 452,477,000
Collaborative Arrangement with Daiichi Sankyo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Achieved milestone amount									20,000,000.0	20,000,000
Maximum amount eligible for development and regulatory milestones	$ 90,000,000.0								$ 90,000,000.0
Termination period									90 days
Collaboration Agreement with Daiichi Sankyo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaboration agreement percent of royalty on net sale									0.50%
Revenues									$ 20,100,000	$ 20,000,000.0	$ 0
Profit Sharing Tier One \| Collaborative Arrangement with Genentech
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of profits									50.00%
Profit Sharing Tier Two \| Collaborative Arrangement with Genentech \| Minimum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Profit threshold									$ 200,000,000.0
Profit Sharing Tier Three \| Collaborative Arrangement with Genentech
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percent of profits									30.00%
Profit Sharing Tier Three \| Collaborative Arrangement with Genentech \| Maximum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Profit threshold									$ 400,000,000.0
MINNEBRO \| Collaborative Arrangement with Daiichi Sankyo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Revenues									$ 100,000

Cash and Investments (Reconciliation of Cash, Cash Equivalents, and Restricted Cash) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017	Dec. 30, 2016
Investments, Debt and Equity Securities [Abstract]
Cash and cash equivalents	$ 266,501	$ 314,775	$ 183,164
Short-term restricted cash equivalents	0	0	504
Restricted cash equivalents included in long-term investments	1,636	1,100	4,646
Amortized Cost	$ 268,137	$ 315,875	$ 188,314	$ 155,836

Cash and Investments (Summary by Security Type) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Investment securities available-for-sale:
Amortized Cost	$ 1,308,351	$ 781,099
Gross Unrealized Gains	4,121	182
Gross Unrealized Losses	(8)	(883)
Fair Value	1,312,464	780,398
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Total, Amortized Cost	1,384,510	852,322
Cash, Cash Equivalents, Restricted Cash And Restricted Cash Equivalents And Available For Sale Debt Securities, Accumulated Gross Unrealized Gain, Before Tax	4,126
Cash, Cash Equivalents, Restricted Cash And Restricted Cash Equivalents And Available For Sale, Debt Securities, Accumulated Gross Unrealized Loss, Before Tax	(8)
Total, Fair Value	1,388,628	851,621
Commercial paper
Investment securities available-for-sale:
Amortized Cost	389,573	381,134
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	(1)
Fair Value	389,573	381,133
Corporate bonds
Investment securities available-for-sale:
Amortized Cost	752,295	344,741
Gross Unrealized Gains	3,934	180
Gross Unrealized Losses	(3)	(857)
Fair Value	756,226	344,064
U.S. Treasury and government sponsored enterprises
Investment securities available-for-sale:
Amortized Cost	166,483	55,224
Gross Unrealized Gains	187	2
Gross Unrealized Losses	(5)	(25)
Fair Value	166,665	55,201
Cash
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Amortized Cost	40,964	6,883
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	40,964	6,883
Money market funds
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Amortized Cost	2,467	47,744
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	2,467	47,744
Certificates of deposit
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Amortized Cost	32,728	16,596
Gross Unrealized Gains	5	0
Gross Unrealized Losses	0	0
Fair Value	$ 32,733	$ 16,596

Cash and Investments (Gross Unrealized Losses) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Debt Securities, Available-for-sale [Line Items]
In an Unrealized Loss Position Less than 12 Months, Fair Value	$ 17,377	$ 271,358
In an Unrealized Loss Position 12 Months or Greater, Fair Value	0	48,809
Total, Fair Value	17,377	320,167
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months, Gross Unrealized Losses	(8)	(623)
In an Unrealized Loss Position 12 Months or Greater, Gross Unrealized Losses	0	(260)
Total, Gross Unrealized Losses	(8)	(883)
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
In an Unrealized Loss Position Less than 12 Months, Fair Value	14,529	236,162
In an Unrealized Loss Position 12 Months or Greater, Fair Value	0	39,627
Total, Fair Value	14,529	275,789
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months, Gross Unrealized Losses	(3)	(606)
In an Unrealized Loss Position 12 Months or Greater, Gross Unrealized Losses	0	(251)
Total, Gross Unrealized Losses	(3)	(857)
U.S. Treasury and government sponsored enterprises
Debt Securities, Available-for-sale [Line Items]
In an Unrealized Loss Position Less than 12 Months, Fair Value	2,848	28,105
In an Unrealized Loss Position 12 Months or Greater, Fair Value	0	9,182
Total, Fair Value	2,848	37,287
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months, Gross Unrealized Losses	(5)	(16)
In an Unrealized Loss Position 12 Months or Greater, Gross Unrealized Losses	0	(9)
Total, Gross Unrealized Losses	$ (5)	(25)
Commercial paper
Debt Securities, Available-for-sale [Line Items]
In an Unrealized Loss Position Less than 12 Months, Fair Value		7,091
In an Unrealized Loss Position 12 Months or Greater, Fair Value		0
Total, Fair Value		7,091
Gross Unrealized Losses
In an Unrealized Loss Position Less than 12 Months, Gross Unrealized Losses		(1)
In an Unrealized Loss Position 12 Months or Greater, Gross Unrealized Losses		0
Total, Gross Unrealized Losses		$ (1)

Cash and Investments (Narrative) (Details)	12 Months Ended
Cash and Investments (Narrative) (Details)	Jan. 03, 2020 USD ($) investment	Dec. 28, 2018 USD ($) investment	Dec. 29, 2017 USD ($)
Investments, Debt and Equity Securities [Abstract]
Number of investments in an unrealized loss position \| investment	9	199
Other-than-temporary impairment charges on available-for-sale securities \| $	$ 0	$ 0	$ 0

Cash and Investments (Summary by Contractual Maturity) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Investments, Debt and Equity Securities [Abstract]
Maturing in one year or less	$ 789,913	$ 626,711
Maturing after one year through five years	522,551	153,687
Total investment securities available-for-sale	$ 1,312,464	$ 780,398

Fair Value Measurements (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	$ 1,312,464	$ 780,398
Total financial assets carried at fair value	1,347,664	844,738
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	0	0
Total financial assets carried at fair value	2,467	47,744
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	1,312,464	780,398
Total financial assets carried at fair value	1,345,197	796,994
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	389,573	381,133
Commercial paper \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	0	0
Commercial paper \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	389,573	381,133
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	756,226	344,064
Corporate bonds \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	0	0
Corporate bonds \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	756,226	344,064
U.S. Treasury and government sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	166,665	55,201
U.S. Treasury and government sponsored enterprises \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	0	0
U.S. Treasury and government sponsored enterprises \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities available-for-sale	166,665	55,201
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	2,467	47,744
Money market funds \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	2,467	47,744
Money market funds \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0	0
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	32,733	16,596
Certificates of deposit \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0	0
Certificates of deposit \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 32,733	$ 16,596

Inventory (Details) - USD ($) $ in Thousands	12 Months Ended
Inventory (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Inventory [Line Items]
Raw materials	$ 2,709	$ 1,922
Work in process	9,447	6,170
Finished goods	4,367	3,836
Total	16,523	11,928
Inventory write-down	1,300	1,100	$ 1,200
Current portion included in inventory
Inventory [Line Items]
Total	12,886	9,838
Long-term portion included in other long-term assets
Inventory [Line Items]
Total	$ 3,637	$ 2,090

Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 74,452	$ 68,206
Less: accumulated depreciation and amortization	(25,560)	(17,309)
Property and equipment, net	48,892	50,897
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	33,904	33,941
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	17,338	15,022
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	13,053	12,709
Laboratory equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,904	5,668
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,253	$ 866
Minimum \| Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives	15 years
Maximum \| Leasehold improvements
Property, Plant and Equipment [Line Items]
Estimated useful lives	15 years
Maximum \| Computer equipment and software
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Maximum \| Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Maximum \| Laboratory equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years

Property and Equipment (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Property, Plant and Equipment [Abstract]
Depreciation and amortization expenses	$ 8.3	$ 4.9	$ 1.2

Employee Benefit Plans (Schedule of Allocated Employee Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 56,602	$ 40,626	$ 23,938
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	19,374	13,115	7,569
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 37,228	$ 27,511	$ 16,369

Employee Benefit Plans (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 28, 2018	Dec. 29, 2017	Dec. 31, 2010	Jun. 28, 2019	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	6,258,319
Stock-based compensation expense	$ 56,602	$ 40,626		$ 23,938
Stock options granted (in shares)	1,311,000
Expenses relating to stock match	$ 4,600	3,600		1,700
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options, vesting period	4 years				10 years
Life of stock options granted	7 years
Total unrecognized compensation expense	$ 33,700
Unrecognized compensation expense weighted-average period for recognition	2 years 2 months 12 days
Intrinsic value of options exercised	$ 54,100	39,100		85,200
Cash received from option exercises and purchases under the ESPP	16,400	12,100		17,600
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	23,400	$ 18,900		13,100
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 4,900
Instruments awarded (in shares)	1,926,605	693,131
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options, vesting period	4 years
Total unrecognized compensation expense	$ 158,000
Unrecognized compensation expense weighted-average period for recognition	2 years 8 months 12 days
Instruments awarded (in shares)	5,842,000
Number of awards (in shares)	8,801,000	4,857,000	4,857,000
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant						4,238,999
Discount rate from market value on purchase date (as a percent)	85.00%
Discount rate from market value on offering date (as a percent)	85.00%
Purchase period	6 months
Stock-based compensation expense	$ 2,200	$ 2,200		$ 1,600
Common stock issued (in shares)	483,009	330,492		434,523
Average price per share (in dollars per share)	$ 12.60	$ 15.74	$ 15.74				$ 11.20
Proceeds from employee stock purchase plan	$ 6,100	$ 5,200		$ 4,900
Performance Share Options (PSO)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted (in shares)			308,365
Exercise threshold, percentage of per share exercise price of the PSO	125.00%
Performance Shares, Achieved Before December 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employees percentage	150.00%
Additional shares to be earned (in shares)	963,136
Performance Shares, Second Product Approval
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employees percentage	200.00%
Additional shares to be earned (in shares)	1,926,605
Achieved \| Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards (in shares)	281,238
Vested \| Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards (in shares)	141,004
Probable \| Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense	$ 2,100
Number of awards (in shares)	99,281
Not Probable \| Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense	$ 80,200

Employee Benefit Plans (Weighted Average Grant Date Fair Value) (Details) - $ / shares	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant-date fair value (in dollars per share)	$ 8.19	$ 9.07	$ 11.42
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant-date fair value (in dollars per share)	$ 4.85	$ 6.40	$ 6.00

Employee Benefit Plans (Schedule of Fair Value of Employee Share-Based Payments Awards ESPP Assumptions and Weighted Average Fair Values) (Details)	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.77%	2.81%	1.98%
Dividend yield	0.00%	0.00%	0.00%
Volatility	48.00%	55.00%	59.00%
Expected life	4 years 3 months 18 days	4 years 4 months 24 days	4 years 6 months
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.16%	1.93%	1.09%
Dividend yield	0.00%	0.00%	0.00%
Volatility	50.00%	53.00%	58.00%
Expected life	6 months	6 months	6 months

Employee Benefit Plans (Summary of All Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 03, 2020 USD ($) $ / shares shares
Shares
Options outstanding at beginning of the year (in shares) \| shares	22,674
Granted (in shares) \| shares	1,311
Exercised (in shares) \| shares	(3,274)
Forfeited (in shares) \| shares	(217)
Expired (in shares) \| shares	(51)
Options outstanding at ending of the year (in shares) \| shares	20,443
Exercisable at end of the year (in shares) \| shares	16,216
Weighted Average Exercise Price
Options outstanding at beginning of the year (in dollars per share) \| $ / shares	$ 8.71
Granted (in dollars per share) \| $ / shares	20.08
Exercised (in dollars per share) \| $ / shares	5.01
Forfeited (in dollars per share) \| $ / shares	16.89
Expired (in dollars per share) \| $ / shares	22.98
Options outstanding at ending of the year (in dollars per share) \| $ / shares	9.91
Exercisable at end of the year (in dollars per share) \| $ / shares	$ 7.36
Weighted Average Remaining Contractual Term, Options outstanding at end of the year	3 years 2 months 12 days
Weighted Average Remaining Contractual Term, Exercisable at end of the year	2 years 7 months 6 days
Aggregate Intrinsic Value, Options outstanding at end of the year \| $	$ 169,299
Aggregate Intrinsic Value, Exercisable at end of the year \| $	$ 167,449

Employee Benefit Plans (Summary of All RSU Activity) (Details) - RSUs $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jan. 03, 2020 USD ($) $ / shares shares
Shares
Awards outstanding at beginning of period (in shares) \| shares	4,857
Awarded (in shares) \| shares	5,842
Vested and released (in shares) \| shares	(1,541)
Forfeited (in shares) \| shares	(357)
Awards outstanding at end of period (in shares) \| shares	8,801
Weighted Average Grant Date Fair Value
Awards outstanding at beginning of period (in dollars per share) \| $ / shares	$ 18.42
Awarded (in dollars per share) \| $ / shares	19.46
Vested and released (in dollars per share) \| $ / shares	17.23
Forfeited (in dollars per share) \| $ / shares	18.66
Awards outstanding at end of period (in dollars per share) \| $ / shares	$ 19.31
Weighted Average Remaining Contractual Term, Awards outstanding at end of the year	2 years 2 months 12 days
Aggregate Intrinsic Value, Awards outstanding at end of the year \| $	$ 149,701

Income Taxes (Components of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Current:
Federal	$ 0	$ 0	$ 0
State	6,095	6,133	4,350
Total current tax expense	6,095	6,133	4,350
Deferred:
Federal	71,580	(238,675)	0
State	(578)	(5,436)	0
Total deferred tax expense	71,002	(244,111)	0
Income tax provision (benefit)	$ 77,097	$ (237,978)	$ 4,350

Income Taxes (Schedule of Reconciliation of Income Taxes at the Statutory Federal Income Tax Rate to Net Income Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Income Tax Disclosure [Abstract]
Federal income tax rate	21.00%	21.00%	34.00%
U.S. federal income tax provision at statutory rate	$ 83,603	$ 94,939	$ 53,916
State tax expense	1,148	4,690	8,282
Change in valuation allowance	3,208	(315,394)	(34,266)
Research credits	(8,299)	(18,308)	0
Stock-based compensation	(9,177)	(5,998)	(20,548)
Non-deductible executive compensation	4,228	1,111	1,239
Non-deductible interest	0	0	1,367
Other	2,386	982	(5,640)
Income tax provision (benefit)	$ 77,097	$ (237,978)	$ 4,350

Income Taxes (Schedule of Deferred Assets and Liabilities) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Deferred tax assets:
Net operating loss carryforwards	$ 65,131	$ 146,701
Tax credit carryforwards	110,037	98,467
Depreciation and amortization	26,792	29,929
Stock-based compensation	14,966	11,366
Lease liabilities	11,211	3,265
Accruals and reserves not currently deductible	8,248	7,160
Deferred revenue	6,547	5,474
Other assets	345	1,140
Total deferred tax assets	243,277	303,502
Valuation allowance	(61,659)	(58,112)
Net deferred tax assets	181,618	245,390
Deferred tax liabilities:
Lease right-of-use assets	(9,244)	(1,279)
Total deferred tax liabilities	(9,244)	(1,279)
Net deferred taxes	$ 172,374	$ 244,111

Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	Dec. 28, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 31, 2017	Dec. 30, 2016
Income Tax Examination [Line Items]
Valuation allowance	$ 58,112	$ 61,659	$ 58,112
Valuation allowance increase (decrease)	244,100	3,500	(360,800)
Unrecognized tax benefits	$ 76,060	79,078	$ 76,060	$ 79,342	$ 61,809
Unrecognized tax benefits that would reduce income tax provision and effective tax rate		48,100
Federal
Income Tax Examination [Line Items]
Net operating loss carryforwards		225,000
Operating loss carryforwards with expiration dates		203,000
Research and development tax credits		112,000
State and Local Jurisdiction
Income Tax Examination [Line Items]
Net operating loss carryforwards		450,000
State and Local Jurisdiction \| Research Tax Credit Carryforward
Income Tax Examination [Line Items]
Research and development tax credits		$ 38,000

Income Taxes (Schedule of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 30, 2018	Sep. 30, 2017	Jan. 03, 2020
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Beginning balance			$ 76,060
Change relating to prior year provision	$ (4,254)	$ 247	589
Change relating to current year provision	1,083	17,378	2,429
Reductions based on the lapse of the applicable statutes of limitations	$ (111)	$ (92)	0
Ending balance			$ 79,078

Net Income Per Share (Computation of Basic and Diluted Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Numerator:
Net income	$ 68,743	$ 97,452	$ 79,042	$ 75,775	$ 360,089	$ 126,630	$ 87,494	$ 115,857	$ 321,012	$ 690,070	$ 154,227
Net income allocated to participating securities									0	0	(367)
Net income allocable to common stock - basic									321,012	690,070	153,860
Adjustment to net income allocated to participating securities									0	0	22
Net income allocable to common stock - diluted									$ 321,012	$ 690,070	$ 153,882
Denominator:
Weighted-average shares of common stock outstanding used in computing basic net income (loss) per share (in shares)									302,584	297,892	293,588
Outstanding stock options, unvested RSUs and ESPP contributions (in shares)									12,425	14,911	18,415
Weighted-average shares of common stock outstanding and dilutive securities used in computing diluted net income (loss) per share (in shares)									315,009	312,803	312,003
Net income (loss) per share, basic (in dollars per share)	$ 0.23	$ 0.32	$ 0.26	$ 0.25	$ 1.20	$ 0.42	$ 0.29	$ 0.39	$ 1.06	$ 2.32	$ 0.52
Net income (loss) per share, diluted (in dollars per share)	$ 0.22	$ 0.31	$ 0.25	$ 0.24	$ 1.15	$ 0.41	$ 0.28	$ 0.37	$ 1.02	$ 2.21	$ 0.49

Net Income Per Share (Potentially Dilutive Shares of Common Stock) (Details) - shares shares in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Outstanding stock options, unvested RSUs and ESPP contributions
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities and contingently issuable shares excluded	9,111	3,968	1,645

Net Income Per Share (Narrative) (Details) shares in Millions	Jan. 31, 2014 shares
2014 Warrants
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	1.0

Commitments (Narrative) (Details)	1 Months Ended	12 Months Ended
Commitments (Narrative) (Details)	Oct. 31, 2019 USD ($) ft² renewal_option $ / ft²	Jan. 03, 2020 USD ($) ft² renewal_option	Aug. 30, 2019 ft²	Apr. 30, 2019 USD ($)	Jan. 31, 2019 USD ($)	Dec. 28, 2018 USD ($)
Lessee, Lease, Description [Line Items]
Weighted average remaining lease term for operating lease		11 years 9 months 18 days
Future tenant improvement reimbursements		$ 1,742,000
Cash paid for amounts included in the measurement of lease liabilities		$ 2,900,000
Weighted average operating discount rate used to determine the operating lease liability		3.90%
Standby Letters of Credit
Lessee, Lease, Description [Line Items]
Line of credit borrowing capacity		$ 1,600,000				$ 1,100,000
Letters of credit outstanding		$ 0
Headquarters Lease
Lessee, Lease, Description [Line Items]
Area of leased property (in sqft) \| ft²		221,464	228,941
Number of options to extend the lease \| renewal_option		2
Renewal term		5 years
Tenant lease improvements allowance				$ 1,700,000	$ 8,200,000
Built-To-Suit Lease
Lessee, Lease, Description [Line Items]
Area of leased property (in sqft) \| ft²	220,000
Number of options to extend the lease \| renewal_option	2
Renewal term		5 years
Future tenant improvement reimbursements	$ 16,500,000
Build-to-suit lease period	242 months
Currently estimated amount	$ 700,000
Annual increase percentage	3.00%
Payment commencement period	60 days
Area of property available for lease (in squire feet) \| $ / ft²	525
Percentage of excess costs	50.00%
Option to terminate lease (after period)	180 months

Commitments (Balance Sheet Classification of Lease Liabilities) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Assets:
Right-of-use assets included in other long-term assets	$ 41,835	$ 5,867
Liabilities:
Current portion included in other current liabilities	2,728	2,738
Long-term portion of operating lease liabilities	48,011	12,099
Total operating lease liabilities	$ 50,739	$ 14,837

Commitments (Components of Lease Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 2,844	$ 4,189
Operating lease cost			$ 3,944
Variable lease cost	1,024	1,661
Variable lease cost			2,216
Sublease income	0	0
Sublease income			(1,225)
Total operating lease costs	$ 3,868	$ 5,850
Total operating lease costs			$ 4,935

Commitments (Maturities of Operating Lease Liabilities) (Details) - USD ($) $ in Thousands	Jan. 03, 2020	Dec. 28, 2018
Year Ending December 31,
2020	$ 4,538
2021	4,669
2022	4,820
2023	5,147
2024	5,407
Thereafter	41,585
Total lease payments	66,166
Less:
Imputed interest	(13,685)
Future tenant improvement reimbursements	(1,742)
Total operating lease liabilities	$ 50,739	$ 14,837

Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Jan. 03, 2020	Sep. 27, 2019	Jun. 28, 2019	Mar. 29, 2019	Dec. 28, 2018	Sep. 29, 2018	Jun. 29, 2018	Mar. 31, 2018	Jan. 03, 2020	Dec. 28, 2018	Dec. 29, 2017
Quarterly Financial Information Disclosure [Abstract]
Total revenues	$ 240,310	$ 271,703	$ 240,275	$ 215,487	$ 228,602	$ 225,397	$ 186,108	$ 213,719	$ 967,775	$ 853,826	$ 452,477
Gross profit	184,406	184,231	186,136	172,080	168,873	155,586	139,839	128,633
Income from operations	77,316	115,606	91,989	84,559	111,602	125,176	85,770	116,307	369,470	438,855	165,910
Net income	$ 68,743	$ 97,452	$ 79,042	$ 75,775	$ 360,089	$ 126,630	$ 87,494	$ 115,857	$ 321,012	$ 690,070	$ 154,227
Net income per share, basic (in dollars per share)	$ 0.23	$ 0.32	$ 0.26	$ 0.25	$ 1.20	$ 0.42	$ 0.29	$ 0.39	$ 1.06	$ 2.32	$ 0.52
Net income per share, diluted (in dollars per share)	$ 0.22	$ 0.31	$ 0.25	$ 0.24	$ 1.15	$ 0.41	$ 0.28	$ 0.37	$ 1.02	$ 2.21	$ 0.49
Income tax provision (benefit)					$ 244,100				$ 3,500	$ (360,800)
Milestone payments earned	$ 15,100	$ 50,600	$ 20,400	$ 10,000	$ 29,600	$ 42,600	$ 25,800	$ 66,500

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=116637232&loc=SL114874131-224263

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=117326831&loc=d3e1337-109256

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=117327953&loc=d3e4984-109258

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=116634182&loc=SL114868664-224227

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=117326831&loc=d3e1252-109256

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(23))
-URI http://asc.fasb.org/extlink&oid=116637391&loc=SL114874048-224260

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=117326831&loc=SL5780133-109256

+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=117327953&loc=d3e4984-109258

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=117326831&loc=d3e1252-109256

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(23))
-URI http://asc.fasb.org/extlink&oid=116637391&loc=SL114874048-224260

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=117326831&loc=d3e1337-109256

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=116634182&loc=SL114868664-224227

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=117326831&loc=SL5780133-109256

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=116637232&loc=SL114874131-224263

+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Label	Element	Value
Accounting Standards Update 2016-02 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 234,000
Accounting Standards Update 2016-02 [Member] \| Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	234,000
Accounting Standards Update 2016-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	0
Accounting Standards Update 2016-09 [Member] \| Additional Paid-in Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	252,000
Accounting Standards Update 2016-09 [Member] \| Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(252,000)
Accounting Standards Update 2014-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	258,505,000
Accounting Standards Update 2014-09 [Member] \| Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 258,505,000