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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2025
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements include the Company's accounts and those of its wholly-owned subsidiaries, and have been prepared inconformity with U.S. generally accepted accounting principles (“GAAP”). All intercompany transactions have been eliminated. Reclassifications Certain prior period amounts within the consolidated statements of cash flows have been reclassified to conform to the current period presentation. These reclassifications had no effect on the net change in cash. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. The most significant estimates in the Company’s consolidated financial statements relate to accrual of research and development expenses, valuation of stock-based awards, fair values of financial instruments, inventory valuation, revenue recognition, and the assumptions underlying the determination of the estimated incremental borrowing rate for the determination of the Company's operating lease right-of-use assets. Estimates are based on current facts, historical experiences and/or on forecasts, including information received from third parties and various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue and expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Investment in Radionetics In October 2021, the Company, together with other investors, announced the formation of Radionetics Oncology, Inc. ("Radionetics"). The Company first analyzes its investment in another entity to determine if the entity is a variable interest entity (“VIE”) and if so, whether the Company is the primary beneficiary requiring consolidation. An entity is considered a VIE if (1) the entity does not have enough equity to finance its own activities without additional support, (2) the entity’s at-risk equity holders lack the characteristics of a controlling financial interest, or (3) the entity is structured with non-substantive voting rights. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that potentially could be significant to the VIE. Variable interests in a VIE can be contractual, ownership, or other financial interests. The Company re-assesses its investment upon reconsideration events to determine whether the Company is the primary beneficiary of the VIE, in which case the Company would consolidate the VIE. When it is determined that the Company is not the primary beneficiary but has the ability to exercise significant influence over the VIE, the Company accounts for the unconsolidated investment under the equity method of accounting. Fair Value Measurements The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: •Level 1: Observable inputs such as quoted prices in active markets; •Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and •Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions about risk and the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The carrying amounts of the Company’s current financial assets, restricted cash and current financial liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash held in readily available checking and money market accounts, as well as short-term debt securities with maturities of three months or less when purchased. Restricted cash represents cash held as collateral for the Company’s lease and is reported as an asset in the accompanying consolidated balance sheets. Cash is considered a Level 1 investment. Investment Securities The Company’s investments in debt securities are classified as available-for-sale and carried at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss in the accompanying consolidated balance sheets. Investments are classified as short-term based on contractual maturity or the Company’s ability and intent to liquidate the investments within the next twelve months. The Company elected to exclude accrued interest from both the fair value and amortized costs basis of available-for-sale when assessing credit losses and to write-off any uncollectible accrued interest receivable as a reversal of interest income. Accrued interest receivable is recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Realized gains and losses are determined using the specific identification method and are included in other income (expense), net. Interest income is recognized when earned. At each reporting date, the Company evaluates available‑for‑sale debt securities in an unrealized loss position to determine whether losses should be recognized in earnings. The Company first assesses whether it intends to sell, or is more likely than not required to sell, the security before recovery of its amortized cost. If so, the amortized cost is written down to fair value through net loss. For securities not meeting these criteria, the Company evaluates whether the decline in fair value is due to credit losses, considering factors such as severity of impairment, interest rate changes, credit ratings, and expected recovery. Credit‑related unrealized losses are recorded as an allowance in interest income. No impairments or credit losses were recognized during the periods presented. Trade Accounts Receivable and Allowance Trade accounts receivable arise from the product sales and represent amounts due from customers, which include a specialty distributor and specialty pharmacies. Trade accounts receivable are recorded at the invoiced amount and are non-interest bearing. Trade accounts receivable are presented net of reserves for distribution service fees and chargebacks. The Company evaluates the collectability of trade accounts receivable on a regular basis, by reviewing the financial condition and payment history of its customers, the age of customer accounts, and general economic factors or events expected to affect future collections. An allowance for credit losses is recorded when a receivable is deemed to be uncollectible. The Company recorded no allowance for credit losses as of December 31, 2025. Inventories Inventories consist of raw materials, work in process, and finished goods held for sale and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. Inventory valuation reserves are established, as a reduction to the cost basis of the asset, for excess, obsolete, or unsaleable inventory, as appropriate. The Company capitalizes inventory costs related to products when future economic benefit is considered probable and the related costs are expected to be recoverable. If the criteria for capitalizing inventory are not met, such costs are expensed as research and development. As a result, inventory on hand at the time of regulatory approval may have a zero cost basis. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, investment securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held. Additionally, the Company has established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. The Company, through a 3PL, distributes PALSONIFY in the U.S. to its customers, The Company is subject to credit risk related to its accounts receivable from product sales, which are due from the specialty distributor and specialty pharmacies. These customers distribute products to a broad range of downstream channels, and the Company has not experienced material credit losses to date. Leases The Company determines whether an arrangement contains a lease at contract inception. Operating lease right‑of‑use (“ROU”) assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the expected lease term, which includes renewal or termination options the Company is reasonably certain to exercise. Short-term leases with an initial term of twelve months or less are not recorded on the balance sheets. The lease term includes renewal options that the Company is reasonably assured to exercise. Lease liabilities are measured using the Company’s incremental borrowing rate when the implicit rate is not readily determinable. Lease expense is recognized on a straight-line basis over the lease term. Variable lease costs are expensed as incurred. The Company accounts for lease and non-lease components as a single lease component. Lease modifications are evaluated to determine whether they represent a separate contract. Modifications that are not separate contracts result in remeasurement of the lease liability using updated terms and the Company’s revised incremental borrowing rate, with a corresponding adjustment to the ROU asset. Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation, and depreciated on a straight-line basis over their estimated useful lives. Estimated useful lives are generally as follows: •Lab equipment: three to five years; •Office equipment: three to five years; and •Computer equipment and software: three years. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvement or the remaining lease term. Repairs and maintenance costs are expensed as incurred, while expenditures that materially extend the useful lives of assets are capitalized. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized when the carrying amount of the asset group exceeds the sum of the undiscounted future cash flows expected to result from its use and eventual disposition. If an asset group is determined to be impaired, the impairment loss is measured as the excess of the carrying amount over its fair value. Deferred Compensation Plan The Company has a non-qualified deferred compensation plan that provides directors and certain employees the ability to defer receipt of current cash compensation and vested restricted stock units until a later date. The assets are held in the Rabbi Trust and participants have the option to invest their cash deferrals in a fixed income investment, a defined set of mutual funds, and, with respect to deferrals of restricted stock units, in Company common stock. The Company has made an accounting policy election to assess instruments held in the Rabbi Trust at the instrument level. The assets of the Rabbi Trust are subject to the claims of creditors in the event that the Company becomes insolvent. The deferred compensation liability related to cash deferrals is included in other liabilities in the Company’s consolidated balance sheets and the deferred compensation asset related to cash deferrals is included in prepaid expenses and other assets, net of current portion in the Company’s consolidated balance sheets. Changes in this liability balance are recorded to expense and reflected within operating expenses of the Company's consolidated statements of operations and comprehensive loss. Changes in the fair value of these assets are recorded within other income (expense) in the consolidated statements of operations and comprehensive loss. Investments in shares of the Company's common stock are included as stock held in trust, in the Company’s consolidated balance sheets. The participant's deferred compensation liability attributable to the participants' investments in shares of the Company's common stock are included within common stock and paid-in capital in the Company’s consolidated balance sheets. Revenue Recognition The Company's revenue consist of product sales of PALSONIFY and revenue derived from its collaborative and licensing arrangements. The Company recognizes revenue when, or as, the control of the promised goods or services are transferred to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements, the Company performs the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation(s) in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. At contract inception, the Company assesses the goods or services promised within each contract, assesses whether each promised good or service is distinct and identifies those that are performance obligations. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when, or as, the performance obligation is satisfied. In revenue arrangements involving third parties, the Company recognizes revenue as the principal when it maintains control of the product or service until it is transferred to our customer; under other circumstances, the Company recognizes revenue as an agent in the sales transaction. Determining whether the Company has control requires judgment over certain considerations, which generally include whether the Company is responsible for the fulfillment of the underlying products or services, whether it has inventory risk before fulfillment is completed, and if it has discretion to establish prices over the products or services. The Company evaluates whether it is the principal or the agent in revenue arrangements involving third parties should there be changes impacting control in transferring related goods or services to customers. Product Sales The Company, through a 3PL, distributes PALSONIFY in the U.S. to its customers, who then sell the product to other end-user customers. The Company maintains control throughout the sales transactions as the principal and recognizes revenue when control of the product transfers, generally upon delivery, to its customers in an amount that reflects the consideration received or expected to be received. Payment terms with customers are within approximately two months from invoice date. The Company sells PALSONIFY at Wholesale Acquisition Cost ("WAC") and calculates product revenue net of variable consideration and consideration payable to third parties associated with distribution of product. The Company utilizes the expected value method when estimating the amount of variable consideration to include in the transaction price. Variable consideration is included in the transaction price only to the extent it is probable that a significant revenue reversal will not occur. These amounts include government rebates, chargebacks, distribution service fees, co-payment assistance and return reserve, which are collectively referred to as “Gross-to-Net Adjustments.” Because all product sales commissions relate to contracts with a benefit period of less than one year, the Company expenses these commissions as incurred. Commissions are recorded in selling, general and administrative expenses in the consolidated statements of operations. The Company must make significant judgments to determine the estimate for certain Gross-to-Net Adjustments. The specific considerations that the Company uses in estimating the amounts related to Gross-to-Net Adjustments are as follows: Government Rebates Government rebates represent estimated obligations to government agencies under the Medicaid Drug Rebate Program, Medicare Part D program. Government rebates represent estimated obligations to government agencies and are recorded based on the Company's best estimates, which consider a variety of factors, including payer mix and discount terms. These estimated rebates are recorded as accrued liabilities at the time the related product revenue is recognized. Chargebacks Chargebacks relate to the Company's estimated obligations resulting from contractual commitments to sell products to qualified entities at prices lower than the list prices that the Company charges. The Company estimates the chargebacks that it expects to be obligated to provide based upon the terms of the applicable arrangements and the forecasted business mix. These estimated chargebacks are recorded as contra trade accounts receivable at the time the related product revenue is recognized. Distribution Service Fees The Company pays distribution service fees to its customers for services related to the distribution of PALSONIFY. These fees are contractually fixed as a percentage of WAC and are calculated at the time of sale based on the quantity of product purchased. The Company records these fees as contra trade accounts receivable at the time the related product revenue is recognized. Copay Assistance The Company offers co-payment assistance programs to commercially insured patients whose insurance plans require a co-payment at the time a prescription is filled. The Company estimates the cost of co-payment assistance based on estimated utilization, contractual program terms, and other relevant factors, including forecasted business mix. Co-payment programs estimates are included in accounts payable and accrued expenses on the consolidated balance sheets. Return Reserve The Company permits the return of product within a specified number of months prior to and after its expiration date, as well as returns resulting from incorrect shipments or damaged or defective product, which the Company expects to be rare. The Company estimates expected product returns based on current experience and expectations. Expected product returns are accounted for as variable consideration and recorded as a reduction of product revenue in the period the related sales are recognized. A refund liability for expected returns is included in accrued expenses on the consolidated balance sheets. The Company will adjust its estimates in future periods if actual experience or expectations change. Collaborative and Licensing Arrangements The Company has entered into licensing and collaboration agreements that mainly include the following: (i) upfront considerations; (ii) payments associated with achieving certain milestones; and (iii) royalties based on specified percentages of net product sales, if any. At the inception of an arrangement, the Company evaluates whether the arrangement falls within ASC 808, Collaborative Arrangemen ts, and/or ASC 606, Revenue from Contracts with Customers, and identifies the distinct performance obligations. Judgment is applied in determining whether the Company acts as principal or agent, whether licenses are functional or symbolic, and whether obligations are satisfied over time or at a point in time. Milestone payments that are within the Company’s control are included in the transaction price when it is probable that significant revenue reversal will not occur. Milestones outside the Company’s control, such as regulatory approvals, are recognized when achieved. Sales-based royalties and milestone payments related to sales are recognized when the related sale occurs or the associated performance obligation is satisfied. Transaction prices are allocated to performance obligations based on their estimated standalone selling prices. For obligations satisfied over time, the Company generally uses an input method, such as cost-to-cost, to measure progress, updating estimates each reporting period as necessary. Significant judgments include estimating costs, probabilities of success, development timelines, and other assumptions used to determine standalone selling prices and progress towards completion. Cost of Product Revenue Cost of product revenue consists of the purchase costs for finished products from third-party manufacturers, freight and handling from the Company’s 3PL logistics service provider, and certain salary-related and stock-based compensation expenses for employees involved in manufacturing, quality control, and supply chain activities. Manufacturing costs incurred for inventory produced prior to regulatory approval, for which there is no alternative future use, are expensed as research and development in the period incurred. As a result, inventory manufactured prior to regulatory approval that is subsequently approved and sold has a zero cost basis and does not result in cost of product revenue upon sale. Cost of product revenue also reflects any write-downs or reserve adjustments for the Company’s inventories and commercial manufacturing readiness and supplier qualification costs incurred for approved products, where activities relate to commercialization rather than research and development. Research and Development Expenses Research and development (“R&D”) expenses consist of personnel-related costs, including salaries, benefits, payroll taxes, and stock-based compensation for employees engaged in R&D activities, as well as costs for third-party research and development services, laboratory supplies, clinical materials, and allocated facilities and depreciation costs. R&D expenses are expensed as incurred. Costs incurred under contracts with contract research organizations (“CROs”) and other third parties that conduct and manage the Company’s clinical trials are included in R&D expenses and are accrued based on estimates of services performed to date. Estimates are determined by reviewing cost information provided by CROs, other third-party vendors, and internal clinical personnel, and the scope of work to be performed from contractual arrangements with CROs. Payments made in advance of the receipt of goods or services to be used in R&D activities are recorded as prepaid expenses and expensed as the related goods or services are received. Advertising Expenses Advertising costs are expensed as incurred and are included in selling, general and administrative expenses. Advertising costs for the year ended December 31, 2025 were approximately $16.9 million. Advertising costs for the years ended December 31, 2024 and 2023 were not significant to the Company's consolidated financial statements. Stock-Based Compensation Stock-based compensation expense represents the estimated grant date fair value of the Company’s equity awards, consisting of stock options, restricted stock units and shares issued under the Company’s Employee Stock Purchase Plan (“ESPP”), recognized over the requisite service period of such awards (usually the vesting period) on a straight-line basis and recognizes forfeitures as they occur. The Company estimates the fair value of all stock option grants and the ESPP using the Black-Scholes option pricing model. The key assumptions used in determining the fair value of stock options grants and ESPP, and the Company’s rationale, were as follows: (i) Expected term - the expected term for stock options represents the period that the stock options are expected to be outstanding and has been estimated using the simplified method, due to limited historical exercise behavior. The expected term using the simplified method is an average of the contractual option term and its vesting period; the expected term for awards granted under the ESPP represents the term the awards are expected to be outstanding; (ii) Expected volatility - the expected volatility assumption for stock-based awards granted is based on the historical volatility of the Company's common stock; (iii) Risk-free interest rate - the risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities that approximate the expected terms of awards; and (iv) Expected dividend yield - the expected dividend yield assumption is zero as the Company has never paid dividends and has no present intention to do so in the future. Restricted stock units are valued using the closing sale price of the Company's common stock on the date of grant. Income Taxes The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which the temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions using a two-step approach under which tax positions are recognized when it is more likely than not that the position will be sustained upon examination, and measured as the largest amount of tax benefit that is more than 50% likely to be realized upon settlement. Interest and penalties related to uncertain tax positions are recognized within income tax expense. Recently Adopted Accounting Pronouncements ASU 2023-09 In December 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard in the current period retrospectively for all periods presented (see Note 12). Recent Accounting Pronouncements Not Yet Adopted ASU 2024-03 In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes. ASU 2025-03 In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025-03”), which provides guidance for identifying the accounting acquirer in business combinations in which the legal acquiree is a VIE that meets the definition of a business. Under the ASU, the acquirer is determined using the factors in Accounting Standards Codification 805, Business Combinations (“ASC 805”) rather than assuming the primary beneficiary is the acquirer. ASU 2025‑03 is effective for fiscal years beginning after December 15, 2026, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the presentation of its consolidated financial statements and accompanying notes.

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