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Total current liabilities

759

^[1]

592

392

^[1]

8,285

15,928

^[1]

Long-term debt, net of current portion

23,770

3,380

^[1]

Deferred revenue, net of current portion

2,990

3,148

^[1]

Operating lease liabilities, net of current portion

4,239

^[1]

93,537

93,287

^[1]

Other long-term liabilities

710

537

^[1]

Total liabilities

133,531

116,280

^[1]

Commitments and Contingencies

Stockholders’ (Deficit) Equity:

Common stock, $0.001 par value—200,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 78,914,170 and 78,757,930 shares issued and outstanding as of June 30, 2019 and December 31, 2018

^[1]

Additional paid-in capital

352,454

349,194

^[1]

Accumulated deficit

(370,952)

(345,019)

Total stockholders’ (deficit) equity

(18,419)

4,253

Total Liabilities and Stockholders’ (Deficit) Equity

$ 115,112

$ 120,533

^[1]

[1]	The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements as of that date included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, issued (in shares)	78,914,170	78,757,930
Common stock, outstanding (in shares)	78,914,170	78,757,930

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue:
Revenue	$ 941	$ 818	$ 1,206	$ 1,161
Operating costs and expenses:
Cost of goods sold	1,810	749	3,040	1,863
Research and development	1,163	3,278	2,540	6,791
Selling, general and administrative	11,329	3,944	21,305	7,929
Total operating costs and expenses	14,302	7,971	26,885	16,583
Loss from operations	(13,361)	(7,153)	(25,679)	(15,422)
Other income (expense):
Interest expense	(500)	(586)	(876)	(1,229)
Interest income and other income (expense), net	456	195	1,083	331
Non-cash interest income (expense) on liability related to future sale of royalties	996	(2,995)	(611)	(5,811)
Total other income (expense)	952	(3,386)	(404)	(6,709)
Net loss before income taxes	(12,409)	(10,539)	(26,083)	(22,131)
Provision for income taxes	(3)	(2)	(3)	(2)
Net loss	(12,412)	(10,541)	(26,086)	(22,133)
Comprehensive loss	$ (12,412)	$ (10,541)	$ (26,086)	$ (22,133)
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (0.16)	$ (0.20)	$ (0.33)	$ (0.43)
Shares used in computing net loss per share of common stock, basic and diluted (in shares)	78,902,470	51,841,550	78,845,944	51,388,762
Product [Member]
Revenue:
Revenue	$ 55		$ 102
Collaboration Agreement Revenue [Member]
Revenue:
Revenue	886	351	1,104	625
Contract and Other [Member]
Revenue:
Revenue		$ 467		$ 536

Condensed Consolidated Statements of Stockholders' (Deficit) Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2017	50,899,154
Balance at Dec. 31, 2017	$ 51	$ 261,310	$ (297,870)	$ (36,509)
Stock-based compensation		1,080		1,080
Issuance of common stock upon ESPP purchase (in shares)	92,290
Issuance of common stock upon ESPP purchase		141		141
Net loss			(11,592)	(11,592)
Balance (in shares) at Mar. 31, 2018	50,991,444
Balance at Mar. 31, 2018	$ 51	262,531	(309,462)	(46,880)
Balance (in shares) at Dec. 31, 2017	50,899,154
Balance at Dec. 31, 2017	$ 51	261,310	(297,870)	(36,509)
Net loss				(22,133)
Balance (in shares) at Jun. 30, 2018	53,327,187
Balance at Jun. 30, 2018	$ 53	270,984	(320,003)	(48,966)
Balance (in shares) at Mar. 31, 2018	50,991,444
Balance at Mar. 31, 2018	$ 51	262,531	(309,462)	(46,880)
Stock-based compensation		1,048		1,048
Net loss			(10,541)	(10,541)
Issuance of common stock in connection with equity financings (in shares)	2,335,743
Issuance of common stock in connection with equity financings	$ 2	7,405		7,407
Balance (in shares) at Jun. 30, 2018	53,327,187
Balance at Jun. 30, 2018	$ 53	270,984	(320,003)	(48,966)
Balance (in shares) at Dec. 31, 2018	78,757,930
Balance at Dec. 31, 2018	$ 78	349,194	(345,019)	4,253
Cumulative effect adjustment for adoption of ASU No. 2016-02 (Accounting Standards Update 2016-02 [Member]) at Dec. 31, 2018			153	153
Stock-based compensation		1,107		1,107
Issuance of common stock upon exercise of stock options (in shares)	13,583
Issuance of common stock upon exercise of stock options		31		31
Issuance of common stock upon ESPP purchase (in shares)	85,135
Issuance of common stock upon ESPP purchase	$ 1	238		239
Net loss			(13,674)	(13,674)
Balance (in shares) at Mar. 31, 2019	78,856,648
Balance at Mar. 31, 2019	$ 79	350,570	(358,540)	(7,891)
Balance (in shares) at Dec. 31, 2018	78,757,930
Balance at Dec. 31, 2018	$ 78	349,194	(345,019)	4,253
Cumulative effect adjustment for adoption of ASU No. 2016-02 (Accounting Standards Update 2016-02 [Member]) at Dec. 31, 2018			153	153
Net loss				(26,086)
Balance (in shares) at Jun. 30, 2019	78,914,170
Balance at Jun. 30, 2019	$ 79	352,454	(370,952)	(18,419)
Balance (in shares) at Mar. 31, 2019	78,856,648
Balance at Mar. 31, 2019	$ 79	350,570	(358,540)	(7,891)
Stock-based compensation		1,346		1,346
Issuance of common stock upon exercise of stock options (in shares)	57,522
Issuance of common stock upon exercise of stock options		155		155
Net loss			(12,412)	(12,412)
Issuance of warrants related to debt financing		383		383
Balance (in shares) at Jun. 30, 2019	78,914,170
Balance at Jun. 30, 2019	$ 79	$ 352,454	$ (370,952)	$ (18,419)

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended				6 Months Ended		45 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019
Cash flows from operating activities:
Net loss	$ (12,412,000)	$ (13,674,000)	$ (10,541,000)	$ (11,592,000)	$ (26,086,000)	$ (22,133,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash royalty revenue related to royalty monetization					(118,000)	(155,000)
Non-cash interest (income) expense on liability related to royalty monetization	(996,000)		2,995,000		611,000	5,811,000	$ 33,483,000
Depreciation and amortization					734,000	293,000
Non-cash interest expense related to debt financing					234,000	344,000
Stock-based compensation					2,453,000	2,128,000
Other					(212,000)	(79,000)
Changes in operating assets and liabilities:
Accounts receivable					(172,000)	760,000
Inventories					(1,990,000)	293,000
Prepaid expenses and other assets					(632,000)	(561,000)
Other assets					(314,000)
Accounts payable					559,000	469,000
Accrued liabilities					(164,000)	(837,000)
Operating lease liabilities					(313,000)
Deferred rent						65,000
Deferred revenue					(149,000)	(182,000)
Net cash used in operating activities					(25,559,000)	(13,784,000)
Cash flows from investing activities:
Purchase of property and equipment					(1,790,000)	(387,000)
Purchase of investments					(28,156,000)	(12,844,000)
Proceeds from maturities of investments					19,700,000	3,600,000
Net cash used in investing activities					(10,246,000)	(9,631,000)
Cash flows from financing activities:
Proceeds from issuance of long-term debt					25,000,000
Payment of costs in connection with refinancing of long-term debt					(190,000)
Payment of long-term debt					(3,470,000)	(3,762,000)
Extinguishment of debt					(8,864,000)
Net proceeds from issuance of common stock in connection with equity financings						7,407,000
Net proceeds from issuance of common stock through equity plans					425,000	141,000
Net cash provided by financing activities					12,901,000	3,786,000
Net decrease in cash and cash equivalents					(22,904,000)	(19,629,000)
Cash and cash equivalents—Beginning of period		$ 87,975,000		$ 52,902,000	87,975,000	52,902,000
Cash and cash equivalents—End of period	$ 65,071,000		$ 33,273,000		$ 65,071,000	$ 33,273,000	$ 65,071,000

Note 1 - Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Basis of Presentation and Significant Accounting Policies [Text Block]

Organization and Summary of Significant Accounting Policies

AcelRx Pharmaceuticals, Inc., or the Company or AcelRx, was incorporated in Delaware on

July 13, 2005

as SuRx, Inc., and in

January 2006,

the Company changed its name to AcelRx Pharmaceuticals, Inc. The Company’s operations are based in Redwood City, California.

AcelRx is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings. DSUVIA

(known as DZUVEO in Europe) and Zalviso

, are

both focused on the treatment of acute pain, and each utilize sufentanil, delivered via a non-invasive route of sublingual administration, exclusively for use in medically supervised settings. On

November 2, 2018,

the U.S. Food and Drug Administration, or FDA, approved DSUVIA for use in adults in a certified medically supervised healthcare setting, such as hospitals, surgical centers, and emergency departments, for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate. In

June 2018,

the European Commission, or EC, granted marketing approval of DZUVEO for the treatment of patients with moderate-to-severe acute pain in medically monitored settings. AcelRx is further developing a distribution capability and commercial organization to continue to market and sell DSUVIA in the United States. The commercial launch of DSUVIA in the United States occurred in the

first

quarter of

2019.

In geographies where AcelRx decides

not

to commercialize products by itself, including for DZUVEO in Europe, the Company

may

seek to out-license commercialization rights. The Company currently intends to commercialize and promote DSUVIA/DZUVEO outside the United States with

one

or more strategic partners, although it has

not

yet entered into any such arrangement. The Company is currently evaluating the timing of the resubmission of the new drug application, or NDA, for Zalviso. AcelRx intends to seek regulatory approval for Zalviso in the United States and, if successful, potentially promote Zalviso either by itself or with strategic partners. Zalviso is approved in Europe and is currently being commercialized by Grünenthal GmbH, or Grünenthal.

DSUVIA

/DZUVEO

DSUVIA, known as DZUVEO in Europe, approved by the FDA in

November 2018,

is indicated for use in adults in a certified medically supervised healthcare setting, such as hospitals, surgical centers, and emergency departments, for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate. DSUVIA was designed to provide rapid analgesia via a non-invasive route and to eliminate dosing errors associated with IV administration. DSUVIA is a single-strength solid dosage form administered sublingually via a single-dose applicator, or SDA, by healthcare professionals. Sufentanil is an opioid analgesic currently marketed for intravenous, or IV, and epidural anesthesia and analgesia. The sufentanil pharmacokinetic profile when delivered sublingually avoids the high peak plasma levels and short duration of action observed with IV administration. The EC approved DZUVEO for marketing in Europe in

June 2018.

DSUVIA was approved with a Risk Evaluation and Mitigation Strategy, or REMS, which restricts distribution to certified medically supervised healthcare settings in order to prevent respiratory depression resulting from accidental exposure. DSUVIA will only be distributed to facilities certified in the DSUVIA REMS program following attestation by an authorized representative to comply with appropriate dispensing and use restrictions of DSUVIA. To become certified, a healthcare setting will need to train their healthcare professionals on the proper use of DSUVIA and have the ability to manage respiratory depression. DSUVIA will

not

be available in retail pharmacies or for outpatient use. As part of the REMS program, the Company will monitor distribution and audit wholesalers’ data, evaluate proper usage within the healthcare settings and monitor for any diversion and abuse. Additionally, AcelRx will de-certify healthcare settings that are non-compliant with the REMS program.

Zalviso

Zalviso delivers

mcg sufentanil sublingually through a non-invasive delivery route via a pre-programmed, patient-controlled analgesia, or PCA, system. Zalviso is approved in Europe and is in late-stage development in the United States. The Company had initially submitted to the FDA an NDA seeking approval for Zalviso in

September 2013

but received a complete response letter, or CRL, on

July 25, 2014.

Subsequently, the FDA requested an additional clinical study,

IAP312,

designed to evaluate the effectiveness of changes made to the functionality and usability of the Zalviso device and to take into account comments from the FDA on the study protocol. In the

IAP312

study, for which top-line results were announced in

August 2017,

Zalviso met safety, satisfaction and device usability expectations. These results will supplement the

three

Phase

trials already completed in the Zalviso NDA resubmission. The Company is currently evaluating the timing of the NDA resubmission for Zalviso.

December 16, 2013,

AcelRx and Grünenthal entered into a Collaboration and License Agreement, or the License Agreement, which was amended effective

July 17, 2015

and

September 20, 2016,

or the Amended License Agreement, which grants Grünenthal rights to commercialize the Zalviso PCA system, or the Product, in the countries of the European Union, or EU, Switzerland, Liechtenstein, Iceland, Norway and Australia (collectively, the Territory) for human use in pain treatment within, or dispensed by, hospitals, hospices, nursing homes and other medically supervised settings, (collectively, the Field). In

September 2015,

the EC approved the marketing authorization application, or MAA, previously submitted to the EMA, for Zalviso for the management of acute moderate-to-severe post-operative pain in adult patients. On

December 16, 2013,

AcelRx and Grünenthal, entered into a Manufacture and Supply Agreement, or the MSA, and together with the License Agreement, the Agreements. Under the MSA, the Company will exclusively manufacture and supply the Product to Grünenthal for the Field in the Territory. On

July 22, 2015,

the Company and Grünenthal amended the MSA, or the Amended MSA, effective as of

July 17, 2015.

The Amended MSA and the Amended License Agreement are referred to as the Amended Agreements.

The Company has incurred recurring operating losses and negative cash flows from operating activities since inception. Although Zalviso has been approved for sale in Europe, on

September 18, 2015,

the Company sold the majority of the royalty rights and certain commercial sales milestones it is entitled to receive under the Amended License Agreement with Grünenthal to PDL BioPharma, Inc., or PDL, in a transaction referred to as the Royalty Monetization. The FDA approved DSUVIA in

November 2018

and the Company began its commercial launch of DSUVIA in the

first

quarter of

2019.

As a result, the Company expects to continue to incur operating losses and negative cash flows until such time as DSUVIA has gained market acceptance and generated significant revenues.

Except as the context otherwise requires, when we refer to "we," "our," "us," the "Company" or "AcelRx" in this document, we mean AcelRx Pharmaceuticals, Inc., and its consolidated subsidiary. “DZUVEO” is a trademark, and “ACELRX”, “DSUVIA” and “Zalviso” are registered trademarks, all owned by AcelRx Pharmaceuticals, Inc. This report also contains trademarks and trade names that are the property of their respective owners.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, ARPI LLC, which was formed in

September 2015

for the sole purpose of facilitating the Royalty Monetization. All intercompany accounts and transactions have been eliminated in consolidation. Refer to Note

“Liability Related to Sale of Future Royalties” for additional information.

Reclassifications

Certain prior year amounts in the condensed consolidated financial statements have been reclassified to conform to the current year's presentation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the United States. Securities and Exchange Commission, or SEC. Accordingly, they do

not

include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the

three

and

six

months ended

June 30, 2019,

are

not

necessarily indicative of the results that

may

be expected for the year ending

December

31,

2019.

The condensed consolidated balance sheet as of

December 31, 2018,

was derived from the Company’s audited financial statements as of

December 31, 2018,

included in the Company’s Annual Report on Form

-K filed with the SEC. These financial statements should be read in conjunction with the Company’s Annual Report on Form

-K for the year ended

December 31, 2018,

which includes a broader discussion of the Company’s business and the risks inherent therein.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management evaluates its estimates on an ongoing basis including critical accounting policies. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that the Company believes 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 from those estimates.

Inventories

Inventories are valued at the lower of cost and net realizable value. Cost is determined using the

first

-in,

first

-out method for all inventories. Inventory includes the cost of the active pharmaceutical ingredients, or API, raw materials and

third

-party contract manufacturing and packaging services. Indirect overhead costs associated with production and distribution are allocated to the appropriate cost pool and then absorbed into inventory based on the units produced or distributed, assuming normal capacity, in the applicable period. Indirect overhead costs in excess of normal capacity are recorded as period costs in the period incurred. DSUVIA was approved by the FDA in

November 2018.

Prior to FDA approval, all manufacturing costs for DSUVIA were expensed to research and development. Upon FDA approval, manufacturing costs for DSUVIA manufactured for commercial sale have been capitalized.

The Company's policy is to write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected requirements. The Company periodically evaluates the carrying value of inventory on hand for potential excess amount over demand using the same lower of cost or market approach as that used to value the inventory. Because the predetermined, contractual transfer prices the Company is receiving from Grünenthal are less than the direct costs of manufacturing, all Zalviso inventories are carried at net realizable value.

Leases

February 2016,

the FASB issued Accounting Standards Update, or ASU,

No.

2016

02,

Leases (Topic

842

)

, to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted the standard effective

January 1, 2019.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically

not

readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset

may

be required for items such as initial direct costs paid or incentives received.

Lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current. As a result, the Company

longer recognizes deferred rent on the balance sheet.

Revenue

from Contracts with Customers

Beginning

January

2018,

the Company has followed the provisions of Accounting Standards Codification, or ASC, Topic

606,

Revenue from Contracts with Customers

. The guidance provides a unified model to determine how revenue is recognized. The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Net product sales

revenue

Revenues from product sales are recognized when distributors obtain control of the Company’s product, which occurs at a point in time, upon delivery to such distributors. These distributors subsequently resell the product to certified medically supervised healthcare settings, such as hospitals, surgical centers, and emergency departments. In addition to distribution agreements with these customers, the Company enters into arrangements with group purchasing organizations, or GPOs, and/or privately-negotiated discounts with respect to the purchase of its products. Revenue from product sales is recorded at the transaction price, net of estimates for variable consideration consisting of discounts, returns and GPO discounts and administrative fees. Variable consideration is recorded at the time product sales are recognized resulting in a reduction in product revenue. Variable consideration is estimated using the most-likely amount method, which is the single-most likely outcome under a contract and is typically at the stated contractual rate. Actual amounts of consideration ultimately received

may

differ from the Company’s estimates. If actual results vary materially from the Company’s estimates, the Company will adjust these estimates, which will affect revenue from product sales and earnings in the period such estimates are adjusted. These items include:

●

Distributor Fees – The Company offers contractually determined discounts to its Customers. These discounts are paid

later than

two

months after the quarter in which product was shipped.

●

GPO Discounts - The Company offers discounts to GPO members. These discounts are taken when the GPO members purchase DSUVIA from the Company’s customers, who then charge the discount amount back to the Company.

●

GPO Administrative Fees - The Company pays administrative fees to GPOs for services and access to data. These fees are based on contracted terms and are paid after the quarter in which the product was purchased by the GPOs’ members.

●

Returns – The Company allows its Customers to return product for credit

months after its product expiration date. As such, there

may

be a significant period of time between the time the product is shipped and the time the credit is issued on returned product.

The Company believes its estimated allowance for product returns requires a high degree of judgment and is subject to change based on its experience and certain quantitative and qualitative factors. The Company believes its estimated allowances for distributor fees, GPO discounts and administrative fees do

not

require a high degree of judgment because the amounts are settled within a relatively short period of time.

Amounts accrued for product revenue allowances and related accruals are evaluated each reporting period and adjusted when trends or significant events indicate that a change in estimate is appropriate and to reflect actual experience. Product revenue-related liabilities are recorded in the Company’s condensed consolidated balance sheets as Accrued liabilities. The Company will continue to assess its estimates of variable consideration as it accumulates additional historical data and will adjust these estimates accordingly. Changes in sales allowance estimates could materially affect the Company’s results of operations and financial position.

Collaboration

agreement

evenue

The Company generates revenue from collaboration agreements. These agreements typically include payments for upfront signing or license fees, cost reimbursements for development and manufacturing services, milestone payments, product sales, and royalties on licensee’s future product sales.

Contract

and other

revenue

The Company entered into award contracts with U.S. Department of Defense, or the DoD, to support the development of DSUVIA. These contracts provided for the reimbursement of qualified expenses for research and development activities. Revenue under these arrangements was recognized when the related qualified research expenses were incurred. The Company was entitled to reimbursement of overhead costs associated with the study costs under the DoD arrangements. The Company estimated this overhead rate by utilizing forecasted expenditures. Final reimbursable overhead expenses were dependent on direct labor and direct reimbursable expenses throughout the life of each contract. The DoD Contract period of performance ended on

February 28, 2019.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic

606.

The Company’s performance obligations include delivering product to its distributors, commercialization license rights, development services, services associated with the regulatory approval process, joint steering committee services, demo devices, manufacturing services, material rights for discounts on manufacturing services, and product supply.

The Company has optional additional items in contracts, which are considered marketing offers and are accounted for as separate contracts when the customer elects such options. Arrangements that include a promise for future commercial product supply and optional research and development services at the customer’s or the Company’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, such material rights are accounted for as separate performance obligations. If the Company is entitled to additional payments when the customer exercises these options, any additional payments are recorded in revenue when the customer obtains control of the goods or services.

Transaction Price

The Company has both fixed and variable consideration. Variable consideration for product revenue is described as Net product sales in the condensed consolidated statements of comprehensive loss. For collaboration agreements, non-refundable upfront fees and product supply selling prices are considered fixed, while milestone payments are identified as variable consideration when determining the transaction price. Funding of research and development activities is considered variable until such costs are reimbursed at which point they are considered fixed. The Company allocates the total transaction price to each performance obligation based on the relative estimated standalone selling prices of the promised goods or services for each performance obligation.

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates 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 value of the associated milestone (such as a regulatory submission by the Company) is included in the transaction price. Milestone payments that are

not

within the control of the Company, such as approvals from regulators, are

not

considered probable of being achieved until those approvals are received.

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

Allocation of Consideration

As part of the accounting for collaboration arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. Estimated selling prices for license rights and material rights for discounts on manufacturing services are calculated using an income approach model and can include the following key assumptions: the development timeline, sales forecasts, costs of product sales, commercialization expenses, discount rate, the time which the manufacturing services are expected to be performed, and probabilities of technical and regulatory success. For all other performance obligations, the Company uses a cost- plus margin approach.

Timing of Recognition

Revenues from product sales are recognized when distributors obtain control of the Company’s products, which occurs at a point in time, upon delivery to such distributors. Significant management judgment is required to determine the level of effort required under collaboration arrangements and the period over which the Company expects to complete its performance obligations under the arrangement. The Company estimates the performance period or measure of progress at the inception of the arrangement and re-evaluates it each reporting period. This re-evaluation

may

shorten or lengthen the period over which revenue is recognized. Changes to these estimates are recorded on a cumulative catch up basis. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. Revenue is recognized for products at a point in time when control of the product is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those product sales, which is typically once the product physically arrives at the customer, and for licenses of functional intellectual property at the point in time the customer can use and benefit from the license. For performance obligations that are services, revenue is recognized over time proportionate to the costs that the Company has incurred to perform the services using the cost-to-cost input method.

Cost of Goods Sold

Cost of goods sold for product revenue includes

third

party manufacturing costs, shipping costs, and indirect overhead costs associated with production and distribution which are allocated to the appropriate cost pool and recognized when revenue is recognized. Indirect overhead costs in excess of normal capacity are recorded as period costs in the period incurred.

Under the Amended Agreements with Grünenthal, the Company sells Zalviso to Grünenthal at predetermined, contractual transfer prices that are less than the direct costs of manufacturing and recognizes indirect costs as period costs where they are in excess of normal capacity and

not

realizable on a lower of cost or market basis. Cost of goods sold for Zalviso shipped to Grünenthal includes the inventory costs of API,

third

-party contract manufacturing costs, packaging and distribution costs, shipping, handling and storage costs, depreciation and costs of the employees involved with production.

Non-Cash Interest Income (Expense) on Liability Related to Sale of Future Royalties

September 2015,

the Company sold certain royalty and milestone payment rights from the sales of Zalviso in the European Union by its commercial partner, Grünenthal, pursuant to the Collaboration and License Agreement, dated as of

December 16, 2013,

as amended, to PDL for gross proceeds of

$65.0

million, referred to as the Royalty Monetization. The Company continues to have significant continuing involvement in the Royalty Monetization primarily due to an obligation to supply Zalviso to Grünenthal. Under the relevant accounting guidance, because of the Company’s significant continuing involvement, the Royalty Monetization is accounted for as a liability that is being amortized using the effective interest method over the life of the arrangement. In order to determine the amortization of the liability, the Company is required to estimate the total amount of future royalty and milestone payments to be received by ARPI LLC and payments made to PDL, up to a capped amount of

$195.0

million, over the life of the arrangement. The aggregate future estimated royalty and milestone payments (subject to the capped amount), less the

$61.2

million of net proceeds the Company received, are amortized as interest expense over the life of the liability. Consequently, the Company imputes interest on the unamortized portion of the liability and records interest expense, or interest income, as estimates are updated related to the Royalty Monetization, accordingly.

There are a number of factors that could materially affect the amount and timing of royalty and milestone payments from Zalviso in Europe, most of which are

not

within the Company’s control. Such factors include, but are

not

limited to, the success of Grünenthal’s sales and promotion of Zalviso, changing standards of care, the introduction of competing products, manufacturing or other delays, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of Zalviso, significant changes in foreign exchange rates as the royalties remitted to ARPI LLC are made in U.S. dollars, and other events or circumstances that could result in reduced royalty payments from European sales of Zalviso, all of which

may

result in a reduction of non-cash royalty revenues and the non-cash interest expense over the life of the Royalty Monetization. Conversely, if sales of Zalviso in Europe are more than expected, the non-cash royalty revenues and the non-cash interest expense recorded by the Company would be greater over the term of the Royalty Monetization. The Company periodically assesses the expected royalty and milestone payments using a combination of historical results, internal projections and forecasts from external sources. To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments is materially different than its original estimates, the Company will prospectively adjust the amortization of the liability and the interest rate. Because estimated sales forecasts and payments

may

vary over the life of the Royalty Monetization, the Company

may

be required to recognize interest income as the imputed interest rate is adjusted prospectively to reflect the revised effective interest rate over the term of the Royalty Monetization.

The Company records non-cash royalty revenues and non-cash interest income (expense), within its Consolidated Statements of Comprehensive Loss over the term of the Royalty Monetization.

When the expected payments under the Royalty Monetization are lower than the gross proceeds of

$65.0

million received, the Company defers recognition of any probable contingent gain until the Royalty Monetization liability expires.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in its Annual Report on Form

-K for the year ended

December 31, 2018.

Aside from the adoption of ASU

No.

2016

02,

Leases (Topic

842

)

described below under “Recently Adopted Accounting Standards” and explained more fully above in “Leases,”

and in Note

“Leases” below, there have been

significant changes to the Company’s significant accounting policies during the

three

and

six

months ended

June 30, 2019,

from those previously disclosed in its

2018

Annual Report on Form

-K.

Recently Adopted Accounting Standards

August 29, 2018,

the Financial Accounting Standards Board, or FASB, issued ASU

No.

2018

15,

“

Intangibles – Goodwill and Other – Internal Use Software (Subtopic

350

)

”

. The FASB’s new guidance aligns the requirements for capitalizing implementation costs in a Cloud Computing Arrangement, or CCA, service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license.

The amendments in ASU

No.

2018

require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented.

ASU

No.

2018

is effective for public business entities for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have

not

been issued. Entities can choose to adopt the new guidance (

) prospectively to eligible costs incurred on or after the date this guidance is

first

applied or (

) retrospectively. The Company early adopted ASU

No.

2018

effective

January 1, 2019

under the prospective method, which did

not

have a material effect on the Company’s results of operations, financial condition or cash flows.

August 2018,

the SEC published Release

No.

10532,

Disclosure Update and Simplification

or DUSTR, which adopted amendments to certain disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded, in light of other SEC disclosure requirements, U.S. Generally Accepted Accounting Principles, or GAAP, or changes in the information environment. While most of the DUSTR amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to include a reconciliation of changes in stockholders’ equity (deficit) in the notes or as a separate statement for each period for which a statement of comprehensive income (loss) is required to be filed. The new interim reconciliation of changes in stockholders’ equity (deficit) is included herein as a separate statement.

February 2016,

the FASB issued ASU

No.

2016

02,

Leases (Topic

842

)

, which establishes a new lease accounting model for lessees. In

January, July

and

December 2018,

the FASB issued additional amendments to the new lease guidance relating to, transition, and clarification. The

July 2018

amendment, ASU

No.

2018

11,

Leases (Topic

842

): Targeted Improvements

, provided an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. The new standard establishes a right-of-use, or ROU, model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than

months. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU

No.

2016

became effective for the Company on

January 1, 2019.

The Company has implemented the standard using an optional transition method that allows the Company to initially apply the new leases standard as of the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit in the period of adoption. In connection with the adoption, the Company has elected to utilize the package of practical expedients, including: (

)

not

reassess the lease classification for any expired or existing leases, (

)

not

reassess the treatment of initial direct costs as they related to existing leases, and (

)

not

reassess whether expired or existing contracts are or contain leases. In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The election of the hindsight practical expedient resulted in the extension of the lease term for the Company’s embedded lease.

The adoption of the new leases standard resulted in the following adjustments to the consolidated balance sheet as of

January 1, 2019 (

in thousands):

	Increase/(Decrease)
Operating lease right-of-use assets	$	4,730
Accrued liabilities (a)	$	(100	)
Operating lease liabilities	$	484
Operating lease liabilities, net of current portion	$	4,610
Deferred rent, net of current portion	$	(416	)
Accumulated deficit (b)	$	(153	)

	(a)	Represents current portion of Deferred rent reclassified to Operating lease liabilities.

	(b)	Represents cumulative-effect adjustment upon adoption of ASU No. 2016 - 02.

The adoption of ASU

No.

2016

02,

the new leases standard, did

not

impact previously reported financial results because the impact to prior periods was reflected as a cumulative-effect adjustment to the accumulated deficit under the optional transition method.

Recently Issued Accounting Standards

June 2016,

the FASB issued ASU

2016

13,

“

Financial

Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments

” or ASU

2016

13.

ASU

2016

replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU

2016

is effective for public companies for interim and annual periods beginning after

December 15, 2019.

May 2019,

the FASB issued ASU

2019

05,

“

Financial Instruments – Credit Losses”

, or ASU

2019

05,

to allow entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. The new effective dates and transition align with those of ASU

2016

13.

Management is currently assessing the impact ASU

2016

and ASU

2019

will have on the Company, but it does

not

anticipate adoption of these new standards to have a material impact on the Company’s financial position, results of operations and cash flows.

Note 2 - Investments and Fair Value Measurement

6 Months Ended

Jun. 30, 2019

Investments and Fair Value Measurement Disclosure [Text Block]

Investments and Fair Value Measurement

Investments

The Company classifies its marketable securities as available-for-sale and records its investments at fair value. Available-for-sale securities are carried at estimated fair value based on quoted market prices or observable market inputs of almost identical assets, with the unrealized holding gains and losses included in accumulated other comprehensive income. Marketable securities which have maturities beyond

one

year as of the end of the reporting period are classified as non-current.

The table below summarizes the Company’s cash, cash equivalents and investments (in thousands):

	As of June 30 , 201 9
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	3,018	$	—	$	—	$	3,018
Money market funds		286		—		—		286
Commercial paper		61,767		—		—		61,767
Total cash and cash equivalents		65,071		—		—		65,071

Short-term investments:
Commercial paper	$	26,475	$	—	$	—	$	26,475
Total cash, cash equivalents and investments	$	91,546	$	—	$	—	$	91,546

	As of December 31 , 201 8
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	2,037	$	—	$	—	$	2,037
Money market funds		1,436		—		—		1,436
U.S. government agency securities		10,181		—		—		10,181
Commercial paper		74,321		—		—		74,321
Total cash and cash equivalents		87,975		—		—		87,975

Short-term investments:
U.S. government agency securities	$	1,497	$	—	$	—	$	1,497
Commercial paper		16,243		—		—		16,243
Total marketable securities and commercial paper		17,740		—		—		17,740

Total cash, cash equivalents and investments	$	105,715	$	—	$	—	$	105,715

As of

June 30, 2019

and

December

31,

2018,

none

of the available-for-sale securities held by the Company had material unrealized losses. There were

other-than-temporary impairments for these securities at

June 30, 2019

December

31,

2018.

gross realized gains or losses were recognized on the available-for-sale securities and, accordingly, there were

amounts reclassified out of accumulated other comprehensive income to earnings during the

three

and

six

months ended

June 30, 2019

and

June 30, 2018.

As of

June 30, 2019

and

December

31,

2018,

the contractual maturity of all investments held was less than

one

year.

Fair Value Measurement

The Company’s financial instruments consist of Level I and II assets and Level III liabilities. Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level

of the fair value hierarchy. For Level II instruments, the Company estimates fair value by utilizing

third

party pricing services in developing fair value measurements where fair value is based on valuation methodologies such as models using observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data. Such Level II instruments typically include U.S. treasury, U.S. government agency securities and commercial paper. As of

June 30, 2019,

the Company held, in addition to Level II assets, a contingent put option liability associated with the Loan and Security Agreement, or the Loan Agreement, with Oxford Finance LLC, or Oxford. Similarly, as of

December 31, 2018,

the Company held a contingent put option liability associated with the Amended and Restated Loan and Security Agreement, or the Amended Loan Agreement, or Prior Agreement, with Hercules Capital Funding Trust

2014

and Hercules Technology II, L.P., together, Hercules. See Note

“Long-Term Debt” for further description. The Company’s estimate of fair value of each of the contingent put option liabilities was determined by using a risk-neutral valuation model, wherein the fair value of the underlying debt facility is estimated both with and without the presence of the default provisions, holding all other assumptions constant. The resulting difference between the

two

estimated fair values is the estimated fair value of the default provisions, or the contingent put option. Changes to the estimated fair value of these liabilities are recorded in interest income and other income, net in the condensed consolidated statements of comprehensive loss. The fair value of the underlying debt facility is estimated by calculating the expected cash flows in consideration of an estimated probability of default and expected recovery rate in default and discounting such cash flows back to the reporting date using a risk-free rate.

The following table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy (in thousands):

	As of June 30 , 2019
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	286	$	286	$	—	$	—
Commercial paper		88,242		—		88,242		—

Total assets measured at fair value	$	88,528	$	286	$	88,242	$	—

Liabilities
Contingent put option liability	$	657	$	—	$	—	$	657

Total liabilities measured at fair value	$	657	$	—	$	—	$	657

	As of December 31 , 201 8
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	1,436	$	1,436	$	—	$	—
U.S. government agency securities		11,678		—		11,678		—
Commercial paper		90,564		—		90,564		—

Total assets measured at fair value	$	103,678	$	1,436	$	102,242	$	—

Liabilities
Contingent put option liability	$	121	$	—	$	—	$	121

Total liabilities measured at fair value	$	121	$	—	$	—	$	121

The following tables set forth a summary of the changes in the fair value of the Company’s Level III financial liabilities for the

three

and

six

months ended

June 30, 2019

and

June 30, 2018 (

in thousands):

	Three Months Ended June 30, 201 9			Six Months Ended June 30, 201 9
Fair value—beginning of period	$	98		$	121
Fair value of contingent put option associated with the Loan Agreement		657			657
Change in fair value of contingent put option associated with the Prior Agreement		(98	)		(121	)
Fair value—end of period	$	657		$	657

	Three Months Ended June 30, 201 8			Six Months Ended June 30, 201 8
Fair value—beginning of period	$	186		$	207
Change in fair value of contingent put option associated with the Prior Agreement		(20	)		(41	)
Fair value—end of period	$	166		$	166

Note 3 - Inventories

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Text Block]

Inventories

Inventories consist of raw materials, work in process and finished goods and are stated at the lower of cost or net realizable value and consist of the following (in thousands):

	Balance as of
	June 30 , 2019		December 31, 201 8
Raw materials	$	1,422	$	694
Work-in-process		273		160
Finished goods		1,149		—
Total	$	2,844	$	854

Note 4 - Revenue

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Text Block]

Revenue

As described in Note

“Organization and Summary of Significant Accounting Policies,” the Company has entered into the Amended Agreements with Grünenthal related to Zalviso and began its commercial launch of DSUVIA in the

first

quarter of

2019.

June 30, 2019,

approximately

$3.3

million of deferred revenue is attributable to the discount on future manufacturing services, which the Company expects to be recognized through

2029.

For additional detail on the Company’s accounting policy regarding revenue recognition, refer to Note

“Organization and Summary of Significant Accounting Policies - Revenue from Contracts with Customers.”

The following table presents changes in the Company’s contract liability for the

six

months ended

June 30, 2019:

	Balance at Beginning of the Period		Additions		Deductions			Balance at the end of the Period
	(in thousands)
Contract liability:
Deferred revenue	$	3,463	$	131	$	(280	)	$	3,314

During the

three

and

six

months ended

June 30, 2019,

the Company recognized the following revenue (in thousands):

	Three months ended June 30, 201 9		Six months ended June 30, 201 9
Amounts included in contract liabilities at the beginning of the period:
Performance obligations satisfied – Amended Agreements	$	79	$	158
New activities in the period from performance obligations satisfied:
Performance obligations satisfied – Amended Agreements		649		677
Total revenue from performance obligations satisfied		728		835
Royalty revenue		158		269
Net product sales		55		102
Total revenue	$	941	$	1,206

Note 5 - Collaboration Agreement	6 Months Ended
Note 5 - Collaboration Agreement	Jun. 30, 2019
Notes to Financial Statements
Collaborative Arrangement Disclosure [Text Block]	5 . Collaboration Agreement As described in Note 1 “Organization and Summary of Significant Accounting Policies,” the Company has entered into the Amended Agreements with Grünenthal related to Zalviso. Amended License Agreement Under the Amended License Agreement, the Company is eligible to receive approximately $194.5 million in additional milestone payments, based upon successful regulatory and product development efforts ( $28.5 million) and net sales target achievements ( $166.0 million). Grünenthal will also make tiered royalty and supply and trademark fee payments in the mid-teens up to the mid-twenties percent range, depending on the level of sales achieved, on net sales of Zalviso. A portion of the tiered royalty payment, exclusive of the supply and trademark fee payments, will be paid to PDL in connection with the Royalty Monetization. For additional information on the Royalty Monetization with PDL, see Note 8 “Liability Related to Sale of Future Royalties”. Unless earlier terminated, the Amended License Agreement continues in effect until the expiration of the obligation of Grünenthal to make royalty and supply and trademark fee payments, which supply and trademark fee continues for so long as the Company continues to supply the Product to Grünenthal. The Amended License Agreement is subject to earlier termination in the event the parties mutually agree, by a party in the event of an uncured material breach by the other party, upon the bankruptcy or insolvency of either party, or by Grünenthal for convenience. Amended MSA Under the terms of the Amended MSA, the Company will manufacture and supply the Product for use in the Field for the Territory exclusively for Grünenthal. The Product will be supplied at prices approximating the Company’s manufacturing cost, subject to certain caps, as defined in the MSA Amendment. The MSA Amendment requires the Company to use commercially reasonable efforts to enter stand-by contracts with third parties providing significant supply and manufacturing services and, under certain specified conditions, permits Grünenthal to use a third -party back-up manufacturer to manufacture the Product for Grünenthal’s commercial sale in the Territory. Unless earlier terminated, the Amended MSA continues in effect until the later of the expiration of the obligation of Grünenthal to make royalty and supply and trademark fee payments or the end of any transition period for manufacturing obligations due to the expiration or termination of the Amended License Agreement. The Amended MSA is subject to earlier termination in connection with certain termination events in the Amended License Agreement, in the event the parties mutually agree, by a party in the event of an uncured material breach by the other party or upon the bankruptcy or insolvency of either party. For the three and six months ended June 30, 2019, the Company recognized $0.9 million and $1.1 million in revenue under the Amended Agreements, respectively. For the three and six months ended June 30, 2018, the Company recognized $0.3 million and $0.6 million in revenue under the Amended Agreements, respectively. As of June 30, 2019, the Company had current and noncurrent portions of the deferred revenue balance under the Amended Agreements of $0.3 million and $3.0 million, respectively. The deferred revenue balance consists primarily of the significant and incremental discount on manufacturing services, which is being recognized on a straight-line basis over the period such discount is made available to Grünenthal, which began in February 2016 and is estimated to continue through 2029.

Note 6 - Long-term Debt	6 Months Ended
Note 6 - Long-term Debt	Jun. 30, 2019
Notes to Financial Statements
Long-term Debt [Text Block]	6 . Long-Term Debt Prior Agreement with Hercules The Prior Agreement with Hercules required equal monthly payments of principal and interest through the scheduled maturity date of March 1, 2020. In addition, the Prior Agreement required a final payment equal to 6.5% of the aggregate principal amount of $20.5 million in loans, or the End of Term Fee, owed upon full repayment of the loan. On May 30, 2019, the Company used approximately $8.9 million of the proceeds from the Loan Agreement with Oxford (described below) to repay its outstanding obligations under the Prior Agreement, including the outstanding principal plus accrued interest of $7.4 million, and the End of Term Fee of $1.3 million. We accounted for the termination of the Prior Agreement as a debt extinguishment and, accordingly, incurred a loss of approximately $0.2 million associated with the unamortized End of Term Fee. Interest expense related to the Amended Loan Agreement with Hercules was $0.2 million, $0.1 million of which represented amortization of the debt discount, for the three months ended June 30, 2019, and $0.6 million, $0.2 million of which represented amortization of the debt discount, for the six months ended June 30, 2019. Interest expense related to the Amended Loan Agreement with Hercules was $0.6 million, $0.1 million of which represented amortization of the debt discount, for the three months ended June 30, 2018, and $1.2 million, $0.3 million of which represented amortization of the debt discount, for the six months ended June 30, 2018. Loan Agreement with Oxford On May 30, 2019, the Company entered into the Loan Agreement with Oxford as the Lender. Under the Loan Agreement, the Lender made a term loan to the Company in an aggregate principal amount of $25.0 million, or the Loan, which was funded on May 30, 2019. The Company used approximately $8.9 million of the proceeds from the Loan to repay its outstanding obligations under the Prior Agreement, as described above. After deducting all loan initiation costs and outstanding interest on the Prior Agreement, the Company received $15.9 million in net proceeds. The interest rate is calculated at a rate equal to the sum of (a) the greater of (i) the 30 -day U.S. LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (ii) 2.50%, plus (b) 6.75%. Payments on the Loan are interest-only until July 1, 2020 followed by equal principal payments and monthly accrued interest payments through the scheduled maturity date of June 1, 2023. At the Company’s election, the interest-only period may be extended to July 1, 2021, if prior to June 30, 2020, the Company receives unrestricted net cash proceeds of at least $45.0 million from either (i) the issuance and sale of equity securities, or (ii) “up front” payments in connection with a joint venture, collaboration or other partnering transaction, both of which are on terms and conditions acceptable to the Lender. A final payment equal to 5% of the aggregate principal amount of the Loan, or EOT Fee, will be due at the earlier of the maturity date, acceleration of the Loan, or prepayment of the Loan. The Company’s obligations under the Loan Agreement are secured by a security interest in all the assets of the Company, other than the Company’s intellectual property which is subject to a negative pledge. The Company may prepay the Loan at any time. If the Loan is paid prior to the maturity date, the Company will pay the Lender a prepayment charge, based on a percentage of the then outstanding principal balance, equal to 2% if the prepayment occurs before May 30, 2020, 1.5% if the prepayment occurs after May 30, 2020, but on or before May 30, 2021 or 1% if the prepayment occurs after May 30, 2021. Upon voluntary or mandatory prepayment, in addition to the prepayment charge, the Company is required to pay the EOT Fee, Lender’s expenses and all outstanding principal and accrued interest through the prepayment date. The Loan Agreement includes customary representations and covenants that, subject to exceptions, will restrict the Company’s ability to do the following things: declare dividends or redeem or repurchase equity interests; incur additional liens; make loans and investments; incur additional indebtedness; engage in mergers, acquisitions, and asset sales; transact with affiliates; undergo a change in control; add or change business locations; and engage in businesses that are not related to its existing business. The Loan Agreement requires that the Company always maintain unrestricted cash of not less than $5.0 million in accounts subject to control agreements in favor of Lender, tested monthly as of the last day of the month. The Loan Agreement also includes standard events of default, including payment defaults, breaches of covenants following any applicable cure period, a material impairment in the perfection or priority of the Lender’s security interest or in the value of the collateral, a material adverse change in business, operations or the prospect of repayment, events relating to bankruptcy or insolvency. The Loan also contains a cross default provision, under which if a third party (under any agreement) has the right to accelerate indebtedness greater than $250,000, the Loan would also be considered in default. In addition, the Loan defines events which negatively impact government approvals, judgements in excess of $500,000 and the delisting of the Company’s shares of common stock on the Nasdaq Global Market, or Nasdaq, as events of default. Upon the occurrence of an event of default, a default interest rate of an additional 5% may be applied to the outstanding loan balances, and the Lender may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Loan Agreement. Acceleration would result in the payment of any applicable prepayment charges and application of the default interest rate to the outstanding balance until payment is made if full. The Company bifurcated a compound derivative liability related to a contingent interest feature and acceleration upon default provision (contingent put option) provided to the Lender. The bifurcated embedded derivative must be valued and separately accounted for in the Company’s financial statements. As of May 30, 2019 ( the date of issuance) and June 30, 2019, the estimated fair value of the contingent put option liability was $0.7 million and $0.7 million, respectively, which was determined by using a risk-neutral valuation model, wherein the fair value of the underlying debt facility is estimated both with and without the presence of the default provisions, holding all other assumptions constant. The resulting difference between the two estimated fair values is the estimated fair value of the default provisions, or the contingent put option. The fair value of the underlying debt facility is estimated by calculating the expected cash flows in consideration of an estimated probability of default and expected recovery rate in default and discounting such cash flows back to the reporting date using a risk-free rate. The contingent put option liability is revalued at the end of each reporting period and any change in the fair value is recognized in interest income and other income (expense), net in the Consolidated Statements of Comprehensive Loss. In connection with the Loan Agreement, on May 30, 2019, the Company issued warrants to the Lender and its affiliates, which are exercisable for an aggregate of 176,679 shares of the Company’s common stock with a per share exercise price of $2.83, or the Warrants. The Warrants have been classified within stockholders’ deficit and accounted for as a discount to the loan by allocating the gross proceeds on a relative fair value basis. For further discussion, see Note 9 “Warrants”. Interest expense related to the Loan Agreement was $0.3 million, $0.1 million of which represented amortization of the debt discount, for the three and six months ended June 30, 2019.

Note 7 - Leases

6 Months Ended

Jun. 30, 2019

Lessee, Operating Leases [Text Block]

Leases

Office Lease

The Company leases office and laboratory space for its corporate headquarters, located at

301

–

351

Galveston Drive, Redwood City, California. In

June 2017,

the Company renegotiated the Lease with its Landlord, or the New Lease. The New Lease is effective from

February 1, 2018

through

January 31, 2024

and contains a renewal option for a

six

-year extension after the current expiration date. The Company does

not

expect that the renewal option will be exercised and has therefore excluded the option from the calculation of the right of use asset and lease liability. The initial monthly rent is approximately

$0.1

million with annual increases of

commencing on

February 1

, and the

first

two

months to be abated provided that the Company is

not

in default thereunder. The lease includes non-lease components (i.e. property management costs) that are paid separately from rent based on actual costs incurred and therefore were

not

included in the right-of-use asset and liability but are reflected as an expense in the period incurred. The New Lease provided for an initial tenant incentive allowance of approximately

$0.4

million with an expiration of the unused portion in

December 2019.

In calculating the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the remaining lease term.

January 2, 2019,

the Company entered into an agreement to sublease approximately

47%

of its office and laboratory space effective

February 16, 2019

and expiring on

January 31, 2024,

or the Sublease. The initial monthly rent from the sublessee is approximately

$48,000

per month with annual increases of

commencing on

February 1

2019.

Under the Sublease agreement, the sublessee was granted early access to the facility on

January 2, 2019,

which is deemed the lease commencement date and rent was abated for

days until the effective date of the lease. The sublessee is obligated to pay its proportionate share of property management costs on a pass-through basis. The Company incurred a total of

$0.4

million in initial direct costs in entering the sublease of which approximately

$0.2

million is related to the tenant improvement allowance transferred to the sublessee. Initial direct costs are being amortized over the term of the sublease.

The transfer of the tenant improvement allowance to the sublessee resulted in a change in cash flows for the New Lease and was accounted for as a modification with changes in lease term and consideration. As a result, the Company remeasured the lease liability with the revised lease payments and recognized approximately

$24,000

as a decrease to the lease liability, with a corresponding adjustment to the right-of-use asset.

Contract Manufacturing Lease

December 12, 2012,

the Company entered into an agreement for commercial supply manufacturing services related to the Company’s Zalviso drug product with a contract manufacturing organization. The initial term of the agreement was through

December 31, 2017,

which term automatically renews in

two

-year increments unless earlier terminated by either party by giving

eighteen

months’ notice. Commencing in

2013,

the Company is required to make overhead fee payments each year of

$0.2

million, prorated based on aggregate revenues. The Company has determined that this fee is an in-substance fixed lease payment as it represents the minimum annual payment under the contract. The Company concluded that this agreement contains an embedded lease as the clean rooms have been built specifically for production of the Company’s product and their use is effectively controlled by the Company as it has priority over the space during the term of the agreement. The Company accounts for the agreement as an operating lease and has evaluated the non-cancelable term to be through the binding commitment date of

December 31, 2021.

The components of lease expense are presented in the following table (in thousands):

	Three months ended June 30 , 201 9			Six months ended June 30 , 201 9
Operating lease costs	$	340		$	680
Sublease income		(150	)		(296	)
Net lease costs	$	190		$	384

Other information related to the operating leases is presented in the following table (in thousands, except years and percentages):

	Three months ended June 30 , 201 9		Six months ended June 30 , 201 9
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	308	$	613
Supplemental non-cash disclosures of lease activities
Transfer of tenant improvement allowance to sublease	$	—	$	242
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	4,730

The weighted average remaining lease term and discount rate related to the operating leases are presented in the following table:

	June 30, 2019
Weighted-average remaining term – operating lease (in years)		4.39
Weighted-average discount rate – operating lease		11.72	%

Maturities of lease liabilities as of

June 30, 2019

are presented in the following table (in thousands):

Year:
2019 (remaining six months)	$	670
2020		1,468
2021		1,505
2022		1,345
2023		1,386
Thereafter		116
Total future minimum lease payments		6,490
Less imputed interest		(1,492	)
Total	$	4,998

Reported as:

Operating lease liabilities	$	759
Operating lease liabilities, net of current portion		4,239
Total lease liability	$	4,998

Future minimum sublease payments as of

June 30, 2019

are presented in the following table (in thousands):

Year:
2019 (remaining six months)	$	288
2020		593
2021		610
2022		629
2023		648
Thereafter		54
Total future minimum sublease payments	$	2,822

The rent receivable balance is reported in the balance sheet as follows (in thousands):

Reported as:

Prepaid expenses and other current assets	$	69
Other assets		394
Total rent receivable	$	463

Note 8 - Liability Related to Sale of Future Royalties

6 Months Ended

Jun. 30, 2019

. Liability Related to Sale of Future Royalties

September 18, 2015,

the Company entered into the Royalty Monetization with PDL for which it received gross proceeds of

$65.0

million. Under the Royalty Monetization, PDL will receive

75%

of the European royalties under the Amended License Agreement with Grünenthal, as well as

80%

of the

first

four

commercial milestones worth

$35.6

million (or

80%

$44.5

million), up to a capped amount of

$195.0

million over the life of the arrangement.

The Company periodically assesses the expected royalty and milestone payments using a combination of historical results, internal projections and forecasts from external sources. To the extent such payments are greater or less than the Company’s prior estimates or the timing of such payments is materially different than its prior estimates, the Company prospectively adjusts the amortization of the liability and the effective interest rate. From inception through

December 31, 2018,

the Company’s effective annual interest expense rate was approximately

13.0%.

During the

three

months ended

June 30, 2019,

the Company made a material revision to its estimates which resulted in an interest income rate on the Royalty Monetization liability balance at a prospective average rate of approximately

4.2%,

which will be applied over the remaining term of the agreement. The change in estimate of future payments to PDL was a result of lower projected European royalties and milestones from sales of Zalviso over the life of the liability. The change in estimate results in interest income being recognized prospectively, over the remaining term of the agreement, as the estimated expected payments are less than the

$65.0

million in gross proceeds received. The Company currently estimates that future payments to PDL over the remaining life of the arrangement will be approximately

$36

million, therefore, a contingent gain of approximately

$29

million

may

be recognized when it is realized upon expiration of the liability at the end of the Royalty Monetization term. Due to the significant judgments and factors related to the estimates of future payments under the Royalty Monetization arrangement, there are significant uncertainties surrounding the amount and timing of payments and the probability of realization of the estimated contingent gain.

The current change in estimate reduces the effective interest rate over the life of the liability to

by recording interest income over the remaining term of the arrangement as an offset to the interest expense that was recognized in prior periods. The change in estimate resulted in a decrease of

$2.7

million to the net loss and a decrease of

$0.03

to the net loss per share of common stock, basic and diluted, for both the

three

and

six

months ended

June 30, 2019.

The effective interest income rate for the

three

months ended

June 30, 2019

was approximately

4.2%.

The effective interest expense rate for the

six

months ended

June 30, 2019

was

1.4%.

The effective interest expense rate was approximately

13.4%

and

13.5%

for the

three

and

six

months ended

June 30, 2018,

respectively.

The following table shows the activity within the liability account for the

six

months ended and the period from inception to

June 30, 2019 (

in thousands):

	Six months ended June 30, 2019			Period from inception to June 30, 2019
Liability related to sale of future royalties — beginning balance	$	93,679		$	—
Proceeds from sale of future royalties		—			61,184
Non-cash royalty revenue		(161	)		(538	)
Non-cash interest expense recognized		611			33,483
Liability related to sale of future royalties as of June 30, 2019		94,129			94,129
Less: current portion		(592	)		(592	)
Liability related to sale of future royalties — net of current portion	$	93,537		$	93,537

As royalties and milestones are remitted to PDL from the Company’s subsidiary, ARPI LLC, as described in Note

“Organization and Summary of Significant Accounting Policies,” the balance of the liability will be effectively repaid over the life of the agreement. The Company records non-cash royalty revenues and non-cash interest income (expense) within its condensed consolidated statements of comprehensive loss over the term of the Royalty Monetization.

Note 9 - Warrants	6 Months Ended
Note 9 - Warrants	Jun. 30, 2019
Notes to Financial Statements
Warrants Disclosure [Text Block]	9 . Warrants Loan Agreement Warrants In connection with the Loan Agreement, on May 30, 2019, the Company issued warrants to the Lender and its affiliates, which are exercisable for an aggregate of 176,679 shares of the Company’s common stock with a per share exercise price of $2.83, or the Warrants. The Warrants may be exercised on a cashless basis. The Warrants are exercisable for a term beginning on the date of issuance and ending on the earlier to occur of ten years from the date of issuance or the consummation of certain acquisitions of the Company as set forth in the Warrants. The number of shares for which the Warrants are exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in the Warrants. The Company estimated the fair value of these Warrants as of the issuance date to be $0.4 million, which was used in estimating the fair value of the debt instrument and was recorded as equity. The fair value of the Warrants was calculated using the Black-Scholes option-valuation model, and was based on the strike price of $2.83, the stock price at issuance of $2.66, the ten -year contractual term of the warrants, a risk-free interest rate of 2.22%, expected volatility of 80.22% and 0% expected dividend yield. As of June 30, 2019, warrants to purchase 176,679 shares of common stock issued to the Lender and its affiliates had not been exercised and were still outstanding. These warrants expire in May 2029.

Note 10 - Stock-based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Text Block]

. Stock-Based Compensation

The Company recorded total stock-based compensation expense for stock options, stock awards and the

2011

Employee Stock Purchase Plan, or ESPP, as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	201 9		201 8		201 9		201 8
Cost of goods sold	$	68	$	74	$	129	$	161
Research and development		233		377		457		809
Selling, general and administrative		1,045		597		1,867		1,158
Total	$	1,346	$	1,048	$	2,453	$	2,128

As of

June 30, 2019,

there were

1,895,351

shares available for grant,

12,773,640

options outstanding and

959,642

restricted stock units outstanding under the Company’s

2011

Equity Incentive Plan and

773,754

shares available for grant under the ESPP.

Note 11 - Stockholders' Equity	6 Months Ended
Note 11 - Stockholders' Equity	Jun. 30, 2019
Notes to Financial Statements
Stockholders' Equity Note Disclosure [Text Block]	1 1 . Stockholders’ Equity Common Stock ATM Agreement On May 9, 2019, the Company increased the aggregate offering price of shares of the Company’s common stock which may be offered and sold under the Controlled Equity Offering SM Sales Agreement, or the ATM Agreement, with Cantor Fitzgerald & Co., or Cantor, as agent by $40.0 million. There were no sales of common stock under the ATM Agreement during the three and six months ended June 30, 2019. As of June 30, 2019, the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to $46,564,331, which includes the amount that remained for sale under the ATM Agreement before the increase.

Note 12 - Net Loss Per Share of Common Stock

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Text Block]

. Net Loss per Share of Common Stock

The Company’s basic net loss per share of common stock is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding for the period. The diluted net loss per share of common stock is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, options to purchase common stock and warrants to purchase common stock were considered to be common stock equivalents. In periods with a reported net loss, common stock equivalents are excluded from the calculation of diluted net loss per share of common stock if their effect is antidilutive.

The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been antidilutive:

	June 30 ,
	201 9		201 8
RSUs, ESPP and stock options to purchase common stock		14,090,688		11,779,042
Common stock warrants		176,679		176,730

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Business Description of Entity [Policy Text Block]

AcelRx Pharmaceuticals, Inc., or the Company or AcelRx, was incorporated in Delaware on

July 13, 2005

as SuRx, Inc., and in

January 2006,

the Company changed its name to AcelRx Pharmaceuticals, Inc. The Company’s operations are based in Redwood City, California.

AcelRx is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings. DSUVIA

(known as DZUVEO in Europe) and Zalviso

, are

both focused on the treatment of acute pain, and each utilize sufentanil, delivered via a non-invasive route of sublingual administration, exclusively for use in medically supervised settings. On

November 2, 2018,

June 2018,

first

quarter of

2019.

In geographies where AcelRx decides

not

to commercialize products by itself, including for DZUVEO in Europe, the Company

may

seek to out-license commercialization rights. The Company currently intends to commercialize and promote DSUVIA/DZUVEO outside the United States with

one

or more strategic partners, although it has

not

DSUVIA

/DZUVEO

DSUVIA, known as DZUVEO in Europe, approved by the FDA in

November 2018,

June 2018.

not

Zalviso

Zalviso delivers

September 2013

but received a complete response letter, or CRL, on

July 25, 2014.

Subsequently, the FDA requested an additional clinical study,

IAP312,

designed to evaluate the effectiveness of changes made to the functionality and usability of the Zalviso device and to take into account comments from the FDA on the study protocol. In the

IAP312

study, for which top-line results were announced in

August 2017,

Zalviso met safety, satisfaction and device usability expectations. These results will supplement the

three

Phase

trials already completed in the Zalviso NDA resubmission. The Company is currently evaluating the timing of the NDA resubmission for Zalviso.

December 16, 2013,

AcelRx and Grünenthal entered into a Collaboration and License Agreement, or the License Agreement, which was amended effective

July 17, 2015

and

September 20, 2016,

September 2015,

the EC approved the marketing authorization application, or MAA, previously submitted to the EMA, for Zalviso for the management of acute moderate-to-severe post-operative pain in adult patients. On

December 16, 2013,

July 22, 2015,

the Company and Grünenthal amended the MSA, or the Amended MSA, effective as of

July 17, 2015.

The Amended MSA and the Amended License Agreement are referred to as the Amended Agreements.

The Company has incurred recurring operating losses and negative cash flows from operating activities since inception. Although Zalviso has been approved for sale in Europe, on

September 18, 2015,

November 2018

and the Company began its commercial launch of DSUVIA in the

first

quarter of

2019.

As a result, the Company expects to continue to incur operating losses and negative cash flows until such time as DSUVIA has gained market acceptance and generated significant revenues.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, ARPI LLC, which was formed in

September 2015

for the sole purpose of facilitating the Royalty Monetization. All intercompany accounts and transactions have been eliminated in consolidation. Refer to Note

“Liability Related to Sale of Future Royalties” for additional information.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain prior year amounts in the condensed consolidated financial statements have been reclassified to conform to the current year's presentation.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

not

Operating results for the

three

and

six

months ended

June 30, 2019,

are

not

necessarily indicative of the results that

may

be expected for the year ending

December

31,

2019.

The condensed consolidated balance sheet as of

December 31, 2018,

was derived from the Company’s audited financial statements as of

December 31, 2018,

included in the Company’s Annual Report on Form

-K filed with the SEC. These financial statements should be read in conjunction with the Company’s Annual Report on Form

-K for the year ended

December 31, 2018,

which includes a broader discussion of the Company’s business and the risks inherent therein.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

not

readily apparent from other sources. Actual results could differ from those estimates.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are valued at the lower of cost and net realizable value. Cost is determined using the

first

-in,

first

-out method for all inventories. Inventory includes the cost of the active pharmaceutical ingredients, or API, raw materials and

third

November 2018.

Lessee, Leases [Policy Text Block]

Leases

February 2016,

the FASB issued Accounting Standards Update, or ASU,

No.

2016

02,

Leases (Topic

842

)

, to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted the standard effective

January 1, 2019.

not

may

be required for items such as initial direct costs paid or incentives received.

longer recognizes deferred rent on the balance sheet.

Revenue from Contract with Customer [Policy Text Block]

Revenue

from Contracts with Customers

Beginning

January

2018,

the Company has followed the provisions of Accounting Standards Codification, or ASC, Topic

606,

Revenue from Contracts with Customers

Net product sales

revenue

may

●

Distributor Fees – The Company offers contractually determined discounts to its Customers. These discounts are paid

later than

two

months after the quarter in which product was shipped.

●

Returns – The Company allows its Customers to return product for credit

months after its product expiration date. As such, there

may

be a significant period of time between the time the product is shipped and the time the credit is issued on returned product.

not

require a high degree of judgment because the amounts are settled within a relatively short period of time.

Collaboration

agreement

evenue

Contract

and other

revenue

February 28, 2019.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic

606.

Transaction Price

not

occur, the value of the associated milestone (such as a regulatory submission by the Company) is included in the transaction price. Milestone payments that are

not

within the control of the Company, such as approvals from regulators, are

not

considered probable of being achieved until those approvals are received.

Allocation of Consideration

Timing of Recognition

may

Cost of Goods and Service [Policy Text Block]

Cost of Goods Sold

Cost of goods sold for product revenue includes

third

not

realizable on a lower of cost or market basis. Cost of goods sold for Zalviso shipped to Grünenthal includes the inventory costs of API,

third

-party contract manufacturing costs, packaging and distribution costs, shipping, handling and storage costs, depreciation and costs of the employees involved with production.

Interest Expense, Policy [Policy Text Block]

Non-Cash Interest Income (Expense) on Liability Related to Sale of Future Royalties

September 2015,

December 16, 2013,

as amended, to PDL for gross proceeds of

$65.0

$195.0

million, over the life of the arrangement. The aggregate future estimated royalty and milestone payments (subject to the capped amount), less the

$61.2

There are a number of factors that could materially affect the amount and timing of royalty and milestone payments from Zalviso in Europe, most of which are

not

within the Company’s control. Such factors include, but are

not

may

vary over the life of the Royalty Monetization, the Company

may

be required to recognize interest income as the imputed interest rate is adjusted prospectively to reflect the revised effective interest rate over the term of the Royalty Monetization.

The Company records non-cash royalty revenues and non-cash interest income (expense), within its Consolidated Statements of Comprehensive Loss over the term of the Royalty Monetization.

When the expected payments under the Royalty Monetization are lower than the gross proceeds of

$65.0

million received, the Company defers recognition of any probable contingent gain until the Royalty Monetization liability expires.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

August 29, 2018,

the Financial Accounting Standards Board, or FASB, issued ASU

No.

2018

15,

“

Intangibles – Goodwill and Other – Internal Use Software (Subtopic

350

)

”

The amendments in ASU

No.

2018

ASU

No.

2018

is effective for public business entities for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have

not

been issued. Entities can choose to adopt the new guidance (

) prospectively to eligible costs incurred on or after the date this guidance is

first

applied or (

) retrospectively. The Company early adopted ASU

No.

2018

effective

January 1, 2019

under the prospective method, which did

not

have a material effect on the Company’s results of operations, financial condition or cash flows.

August 2018,

the SEC published Release

No.

10532,

Disclosure Update and Simplification

February 2016,

the FASB issued ASU

No.

2016

02,

Leases (Topic

842

)

, which establishes a new lease accounting model for lessees. In

January,

July

and

December 2018,

the FASB issued additional amendments to the new lease guidance relating to, transition, and clarification. The

July 2018

amendment, ASU

No.

2018

11,

Leases (Topic

842

): Targeted Improvements

months. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU

No.

2016

became effective for the Company on

January 1, 2019.

)

not

reassess the lease classification for any expired or existing leases, (

)

not

reassess the treatment of initial direct costs as they related to existing leases, and (

)

not

The adoption of the new leases standard resulted in the following adjustments to the consolidated balance sheet as of

January 1, 2019 (

in thousands):

	Increase/(Decrease)
Operating lease right-of-use assets	$	4,730
Accrued liabilities (a)	$	(100	)
Operating lease liabilities	$	484
Operating lease liabilities, net of current portion	$	4,610
Deferred rent, net of current portion	$	(416	)
Accumulated deficit (b)	$	(153	)

	(a)	Represents current portion of Deferred rent reclassified to Operating lease liabilities.

	(b)	Represents cumulative-effect adjustment upon adoption of ASU No. 2016 - 02.

The adoption of ASU

No.

2016

02,

the new leases standard, did

not

impact previously reported financial results because the impact to prior periods was reflected as a cumulative-effect adjustment to the accumulated deficit under the optional transition method.

Recently Issued Accounting Standards

June 2016,

the FASB issued ASU

2016

13,

“

Financial

Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments

” or ASU

2016

13.

ASU

2016

is effective for public companies for interim and annual periods beginning after

December 15, 2019.

May 2019,

the FASB issued ASU

2019

05,

“

Financial Instruments – Credit Losses”

, or ASU

2019

05,

2016

13.

Management is currently assessing the impact ASU

2016

and ASU

2019

will have on the Company, but it does

not

anticipate adoption of these new standards to have a material impact on the Company’s financial position, results of operations and cash flows.

Note 1 - Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

	Increase/(Decrease)
Operating lease right-of-use assets	$	4,730
Accrued liabilities (a)	$	(100	)
Operating lease liabilities	$	484
Operating lease liabilities, net of current portion	$	4,610
Deferred rent, net of current portion	$	(416	)
Accumulated deficit (b)	$	(153	)

Note 2 - Investments and Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2019

Cash, Cash Equivalents and Investments [Table Text Block]

	As of June 30 , 201 9
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	3,018	$	—	$	—	$	3,018
Money market funds		286		—		—		286
Commercial paper		61,767		—		—		61,767
Total cash and cash equivalents		65,071		—		—		65,071

Short-term investments:
Commercial paper	$	26,475	$	—	$	—	$	26,475
Total cash, cash equivalents and investments	$	91,546	$	—	$	—	$	91,546

	As of December 31 , 201 8
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	2,037	$	—	$	—	$	2,037
Money market funds		1,436		—		—		1,436
U.S. government agency securities		10,181		—		—		10,181
Commercial paper		74,321		—		—		74,321
Total cash and cash equivalents		87,975		—		—		87,975

Short-term investments:
U.S. government agency securities	$	1,497	$	—	$	—	$	1,497
Commercial paper		16,243		—		—		16,243
Total marketable securities and commercial paper		17,740		—		—		17,740

Total cash, cash equivalents and investments	$	105,715	$	—	$	—	$	105,715

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	As of June 30 , 2019
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	286	$	286	$	—	$	—
Commercial paper		88,242		—		88,242		—

Total assets measured at fair value	$	88,528	$	286	$	88,242	$	—

Liabilities
Contingent put option liability	$	657	$	—	$	—	$	657

Total liabilities measured at fair value	$	657	$	—	$	—	$	657

	As of December 31 , 201 8
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	1,436	$	1,436	$	—	$	—
U.S. government agency securities		11,678		—		11,678		—
Commercial paper		90,564		—		90,564		—

Total assets measured at fair value	$	103,678	$	1,436	$	102,242	$	—

Liabilities
Contingent put option liability	$	121	$	—	$	—	$	121

Total liabilities measured at fair value	$	121	$	—	$	—	$	121

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Three Months Ended June 30, 201 9			Six Months Ended June 30, 201 9
Fair value—beginning of period	$	98		$	121
Fair value of contingent put option associated with the Loan Agreement		657			657
Change in fair value of contingent put option associated with the Prior Agreement		(98	)		(121	)
Fair value—end of period	$	657		$	657

	Three Months Ended June 30, 201 8			Six Months Ended June 30, 201 8
Fair value—beginning of period	$	186		$	207
Change in fair value of contingent put option associated with the Prior Agreement		(20	)		(41	)
Fair value—end of period	$	166		$	166

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Note 3 - Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Inventory, Current [Table Text Block]

	Balance as of
	June 30 , 2019		December 31, 201 8
Raw materials	$	1,422	$	694
Work-in-process		273		160
Finished goods		1,149		—
Total	$	2,844	$	854

Note 4 - Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Contract with Customer, Asset and Liability [Table Text Block]

	Balance at Beginning of the Period		Additions		Deductions			Balance at the end of the Period
	(in thousands)
Contract liability:
Deferred revenue	$	3,463	$	131	$	(280	)	$	3,314

Disaggregation of Revenue [Table Text Block]

	Three months ended June 30, 201 9		Six months ended June 30, 201 9
Amounts included in contract liabilities at the beginning of the period:
Performance obligations satisfied – Amended Agreements	$	79	$	158
New activities in the period from performance obligations satisfied:
Performance obligations satisfied – Amended Agreements		649		677
Total revenue from performance obligations satisfied		728		835
Royalty revenue		158		269
Net product sales		55		102
Total revenue	$	941	$	1,206

Note 7 - Leases (Tables)

6 Months Ended

Jun. 30, 2019

Lease, Cost [Table Text Block]

	Three months ended June 30 , 201 9			Six months ended June 30 , 201 9
Operating lease costs	$	340		$	680
Sublease income		(150	)		(296	)
Net lease costs	$	190		$	384

	Three months ended June 30 , 201 9		Six months ended June 30 , 201 9
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	308	$	613
Supplemental non-cash disclosures of lease activities
Transfer of tenant improvement allowance to sublease	$	—	$	242
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	4,730

	June 30, 2019
Weighted-average remaining term – operating lease (in years)		4.39
Weighted-average discount rate – operating lease		11.72	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Year:
2019 (remaining six months)	$	670
2020		1,468
2021		1,505
2022		1,345
2023		1,386
Thereafter		116
Total future minimum lease payments		6,490
Less imputed interest		(1,492	)
Total	$	4,998

Operating lease liabilities	$	759
Operating lease liabilities, net of current portion		4,239
Total lease liability	$	4,998

Lessee, Operating Sublease, to Be Received, Maturity [Table Text Block]

Year:
2019 (remaining six months)	$	288
2020		593
2021		610
2022		629
2023		648
Thereafter		54
Total future minimum sublease payments	$	2,822

Prepaid expenses and other current assets	$	69
Other assets		394
Total rent receivable	$	463

Note 8 - Liability Related to Sale of Future Royalties (Tables)

6 Months Ended

Jun. 30, 2019

Other Liabilities [Table Text Block]

	Six months ended June 30, 2019			Period from inception to June 30, 2019
Liability related to sale of future royalties — beginning balance	$	93,679		$	—
Proceeds from sale of future royalties		—			61,184
Non-cash royalty revenue		(161	)		(538	)
Non-cash interest expense recognized		611			33,483
Liability related to sale of future royalties as of June 30, 2019		94,129			94,129
Less: current portion		(592	)		(592	)
Liability related to sale of future royalties — net of current portion	$	93,537		$	93,537

Note 10 - Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
	201 9		201 8		201 9		201 8
Cost of goods sold	$	68	$	74	$	129	$	161
Research and development		233		377		457		809
Selling, general and administrative		1,045		597		1,867		1,158
Total	$	1,346	$	1,048	$	2,453	$	2,128

Note 12 - Net Loss Per Share of Common Stock (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	June 30 ,
	201 9		201 8
RSUs, ESPP and stock options to purchase common stock		14,090,688		11,779,042
Common stock warrants		176,679		176,730

Note 1 - Organization and Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands		1 Months Ended	6 Months Ended	45 Months Ended
	Sep. 18, 2015	Sep. 30, 2015	Jun. 30, 2019	Jun. 30, 2019
Proceeds From Sale of Royalty and Milestone Rights	$ 65,000	$ 65,000
Royalty Arrangment Maximum Payments	$ 195,000	195,000
Net Proceeds from Sale of Future Royalties		$ 61,200		$ 61,184

Note 1 - Organization and Summary of Significant Accounting Policies - Adjustments for Adoption of New Lease Standard (Details) - USD ($)
$ in Thousands

Jun. 30, 2019

Jan. 01, 2019

Dec. 31, 2018

Operating lease right-of-use assets

$ 4,326

^[1]

Accrued liabilities

4,276

4,540

^[1]

Operating lease liabilities, net of current portion

759

^[1]

4,239

^[1]

Accumulated deficit

$ (370,952)

$ (345,019)

Accounting Standards Update 2016-02 [Member]

Operating lease right-of-use assets

$ 4,730

Accrued liabilities

^[2]

(100)

Operating lease liabilities, net of current portion

484

4,610

Deferred rent, net of current portion

(416)

Accumulated deficit

^[3]

$ (153)

[1]	The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements as of that date included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
[2]	Represents current portion of Deferred rent reclassified to Operating lease liabilities.
[3]	Represents cumulative-effect adjustment upon adoption of ASU No. 2016-02.

Note 2 - Investments and Fair Value Measurement (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Dec. 31, 2018
Available-for-sale Securities, Gross, Unrealized Gain (Loss) Accumulated In Investments	$ 0		$ 0	$ 0
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Total			0	0
Debt Securities, Available-for-sale, Realized Gain (Loss), Total			0	0
Other Comprehensive Income (Loss), Transfers from Held-to-maturity to Available-for-Sale Securities, Net of Tax	$ 0	$ 0	$ 0	$ 0

Note 2 - Investments and Fair Value Measurement - Summary of Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized Cost	$ 91,546	$ 105,715
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	91,546	105,715
Cash and Cash Equivalents [Member]
Amortized Cost	65,071	87,975
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	65,071	87,975
Cash and Cash Equivalents [Member] \| Cash [Member]
Amortized Cost	3,018	2,037
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	3,018	2,037
Cash and Cash Equivalents [Member] \| Money Market Funds [Member]
Amortized Cost	286	1,436
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	286	1,436
Cash and Cash Equivalents [Member] \| Commercial Paper [Member]
Amortized Cost	61,767	74,321
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	61,767	74,321
Cash and Cash Equivalents [Member] \| U.S. Government Agency Securities [Member]
Amortized Cost		10,181
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value		10,181
Marketable Securities [Member]
Amortized Cost		17,740
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value		17,740
Marketable Securities [Member] \| Commercial Paper [Member]
Amortized Cost	26,475	16,243
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	$ 26,475	16,243
Marketable Securities [Member] \| U.S. Government Agency Securities [Member]
Amortized Cost		1,497
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value		$ 1,497

Note 2 - Investments and Fair Value Measurement - Fair Value of Financial Assets and Liabilities by Level Within Fair Value Hierarchy (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets, fair value	$ 88,528	$ 103,678
Liabilities, fair value	657	121
Contingent Put Option Liability [Member]
Liabilities, fair value	657	121
Fair Value, Inputs, Level 1 [Member]
Assets, fair value	286	1,436
Liabilities, fair value
Fair Value, Inputs, Level 1 [Member] \| Contingent Put Option Liability [Member]
Liabilities, fair value
Fair Value, Inputs, Level 2 [Member]
Assets, fair value	88,242	102,242
Liabilities, fair value
Fair Value, Inputs, Level 2 [Member] \| Contingent Put Option Liability [Member]
Liabilities, fair value
Fair Value, Inputs, Level 3 [Member]
Assets, fair value
Liabilities, fair value	657	121
Fair Value, Inputs, Level 3 [Member] \| Contingent Put Option Liability [Member]
Liabilities, fair value	657	121
Money Market Funds [Member]
Assets, fair value	286	1,436
Money Market Funds [Member] \| Fair Value, Inputs, Level 1 [Member]
Assets, fair value	286	1,436
Money Market Funds [Member] \| Fair Value, Inputs, Level 2 [Member]
Assets, fair value
Money Market Funds [Member] \| Fair Value, Inputs, Level 3 [Member]
Assets, fair value
Commercial Paper [Member]
Assets, fair value	88,242	90,564
Commercial Paper [Member] \| Fair Value, Inputs, Level 1 [Member]
Assets, fair value
Commercial Paper [Member] \| Fair Value, Inputs, Level 2 [Member]
Assets, fair value	88,242	90,564
Commercial Paper [Member] \| Fair Value, Inputs, Level 3 [Member]
Assets, fair value
U.S. Government Agency Obligations [Member]
Assets, fair value		11,678
U.S. Government Agency Obligations [Member] \| Fair Value, Inputs, Level 1 [Member]
Assets, fair value
U.S. Government Agency Obligations [Member] \| Fair Value, Inputs, Level 2 [Member]
Assets, fair value		11,678
U.S. Government Agency Obligations [Member] \| Fair Value, Inputs, Level 3 [Member]
Assets, fair value

Note 2 - Investments and Fair Value Measurement - Summary of Changes in Fair Value of Level III Financial Liabilities (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Fair value, Beginning of period	$ 98	$ 186	$ 121	$ 207
Fair value of contingent put option associated with the Loan Agreement	657		657
Change in fair value of contingent put option associated with the Prior Agreement	(98)	(20)	(121)	(41)
Fair value, End of period	$ 657	$ 166	$ 657	$ 166

Note 3 - Inventories - Inventory Components (Details) - USD ($)
$ in Thousands

Jun. 30, 2019

Dec. 31, 2018

Raw materials

$ 1,422

$ 694

Work-in-process

273

160

Finished goods

1,149

Total

$ 2,844

$ 854

^[1]

[1]	The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements as of that date included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Note 4 - Revenue (Details Textual) $ in Millions	6 Months Ended
Note 4 - Revenue (Details Textual) $ in Millions	Jun. 30, 2019 USD ($)
Discount on Manufacturing Services	$ 3.3

Note 4 - Revenue - Changes in Contract Liabilities (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Contract Liabilities: Deferred Revenue	$ 3,463
Contract Liabilities: Deferred Revenue, Additions	131
Contract Liabilities: Deferred Revenue, Deductions	(280)
Contract Liabilities: Deferred Revenue	$ 3,314

Note 4 - Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Amounts included in contract liabilities at the beginning of the period: Performance obligations satisfied – Amended Agreements	$ 79		$ 158
New activities in the period from performance obligations satisfied: Performance obligations satisfied – Amended Agreements	649		677
Revenue	941	$ 818	1,206	$ 1,161
Amended License Agreement [Member]
Revenue	728		835
Royalty Revenue [Member]
Revenue	158		269
Product [Member]
Revenue	$ 55		$ 102

Note 5 - Collaboration Agreement (Details Textual) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Dec. 31, 2018

^[1]

Revenue Recognition Milestone Method Agreed, Additional Amount, Based On Efforts And Targets

$ 194,500

Revenue from Contract with Customer, Including Assessed Tax

941

$ 818

1,206

$ 1,161

Contract with Customer, Liability, Current

324

$ 315

Contract with Customer, Liability, Noncurrent

2,990

$ 3,148

Collaboration Agreement Revenue [Member]

Revenue from Contract with Customer, Including Assessed Tax

886

$ 351

1,104

$ 625

Contract with Customer, Liability, Current

300

Contract with Customer, Liability, Noncurrent

3,000

Based upon Successful Regulatory and Product Development Efforts [Member]

Revenue Recognition Milestone Method Agreed, Additional Amount, Based On Efforts And Targets

28,500

Based upon Net Sales Target Achievements [Member]

Revenue Recognition Milestone Method Agreed, Additional Amount, Based On Efforts And Targets

$ 166,000

[1]	The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements as of that date included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Note 6 - Long-term Debt (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
Note 6 - Long-term Debt (Details Textual) - USD ($)	May 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Mar. 02, 2017
Repayments of Long-term Debt, Total				$ 3,470,000	$ 3,762,000
Interest Expense, Total		$ 500,000	$ 586,000	876,000	1,229,000
Amortization of Debt Discount (Premium)				234,000	344,000
Warrant In Connection with Oxford Finance Loan Agreement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	176,679
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 2.83
Loan Agreement with Oxford Finance LLC [Member]
Debt Instrument, Final Payment, Percentage of Aggregate Principal Amount	5.00%
Debt Instrument, Face Amount	$ 25,000,000
Repayments of Long-term Debt, Total	8,900,000
Interest Expense, Total		300,000
Amortization of Debt Discount (Premium)				100,000
Proceeds from Debt, Net of Issuance Costs and Repayment of Debt	$ 15,900,000
Debt Instrument, Interest Rate, Base Percentage	2.50%
Prepayment Charge, Percentage of Outstanding Balance, Before May 30,2020	2.00%
Prepayment Charge, Percentage of Outstanding Balance, After May 30, 2020, Before May 30, 2021	1.50%
Prepayment Charge, Percentage of Outstanding Balance, After May 30,2021	1.00%
Debt Instrument, Covenant, Minimum Required Unrestircted Cash	$ 5,000,000
Debt Instrument, Minimum Indebtedness Amount with Acceleration Right	250,000
Loan Default Events, Trigger of Negative Impact of Government Approvals and Judgments	$ 500,000
Debt Instrument, Default Additional Interest Rate	5.00%
Fair Value of Contingent Put Option, Liability	$ 700,000	700,000		700,000
Loan Agreement with Oxford Finance LLC [Member] \| Minimum [Member]
Net Unrestricted Cash Proceeds, Contingent Threshold for Interest Only Period of Loan	$ 45,000,000
Loan Agreement with Oxford Finance LLC [Member] \| London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	6.75%
Hercules Loan and Security Agreement [Member]
Debt Instrument, Final Payment, Percentage of Aggregate Principal Amount						6.50%
Debt Instrument, Face Amount						$ 20,500,000
Repayments of Long-term Debt, Total	$ 8,900,000
Long-term Debt, Gross	7,400,000
Debt Instrument, Termination Fee	1,300,000
Gain (Loss) on Extinguishment of Debt, Total	$ (200,000)
Interest Expense, Total		200,000	600,000	600,000	1,200,000
Amortization of Debt Discount (Premium)		$ 100,000	$ 100,000	$ 200,000	$ 300,000

Note 7 - Leases (Details Textual) - USD ($)			1 Months Ended	3 Months Ended	6 Months Ended
Note 7 - Leases (Details Textual) - USD ($)	Jan. 02, 2019	Dec. 12, 2012	Jun. 30, 2017	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Feb. 16, 2019
Lessee, Operating Lease, Renewal Term		2 years	6 years
Lessee, Operating Lease, Monthly Rent			$ 100,000
Lessee, Operating Lease, Annual Rent Increase			3.00%
Lessee, Operating Lease, Initial Tenant Incentive Allowance			$ 400,000
Percentage of Office and Laboratory Space Sublease							47.00%
Lessee, Operating Sublease Monthly Rent	$ 48,000
Lessee, Operating Sublease, Annual Rent Increase	3.00%
Lessee, Operating Sublease, Direct Costs	$ 400,000
Lessee, Operating Sublease, Initial Tenant Incentive Allowance Transfered from Operating Lease	200,000				$ 242,000
Increase (Decrease) in Operating Lease Liabilities	(24,000)				$ (313,000)
Lessee, Operating Lease, Notice Period		1 year 180 days
Lessee, Operating Lease, Annual Overhead Fee Payments		$ 200,000
Increase (Decrease) in Right-of-use Assets	$ (24,000)

Note 7 - Leases - Operating Lease Costs (Details) - USD ($)		3 Months Ended	6 Months Ended
	Jan. 02, 2019	Jun. 30, 2019	Jun. 30, 2019
Operating lease costs		$ 340,000	$ 680,000
Sublease income		(150,000)	(296,000)
Net lease costs		190,000	384,000
Operating cash flows used for operating leases		308,000	613,000
Transfer of tenant improvement allowance to sublease	$ 200,000		242,000
Right-of-use assets obtained in exchange for new operating lease liabilities			$ 4,730,000
Weighted-average remaining term – operating lease (Year)		4 years 142 days	4 years 142 days
Weighted-average discount rate – operating lease		11.72%	11.72%

Note 7 - Leases - Maturities of Lease Liabilities (Details) - USD ($)
$ in Thousands

Jun. 30, 2019

Dec. 31, 2018

^[1]

2019 (remaining six months)

$ 670

1,468

1,505

1,345

1,386

116

Total future minimum lease payments

6,490

Less imputed interest

(1,492)

Total

4,998