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Business Description and Basis of Presentation [Text Block]

1.	Organization and Business

Heron Therapeutics, Inc. (the “Company”, “Heron”, or “we”) is a commercial-stage biotechnology company focused on improving the lives of patients by developing best-in-class medicines that address major unmet medical needs. We are developing novel, patient-focused solutions that apply our innovative science and technologies to already-approved pharmacological agents.

August

2016,

our

first

commercial product, SUSTOL

(granisetron) extended-release injection (“SUSTOL”), was approved by the U.S. Food and Drug Administration (“FDA”). SUSTOL is indicated, in combination with other antiemetics, in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy or anthracycline and cyclophosphamide combination chemotherapy regimens. We commenced commercial sales of SUSTOL in

October

2016.

We have

two

investigational pharmaceutical products for patients suffering from cancer or post-operative pain. CINVANTI™ (

HTX-

019),

an intravenous formulation of the neurokinin-

receptor antagonist aprepitant, has been developed for the prevention of chemotherapy-induced nausea and vomiting as an adjunct to other antiemetic agents. HTX-

011,

a long-acting formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam, is being developed for the prevention of post-operative pain.

We have incurred significant operating losses and negative cash flows from operations. As of

December

31,

2016,

our accumulated deficit was

$586.0

million and we had

$51.1

million in cash, cash equivalents and short-term investments. In

January

2017,

we completed an underwritten public offering of our common stock for net proceeds of

$163.7

million. As of

December

31,

2016,

our pro-forma cash, cash equivalents and short-term investments, adjusting for the

January

2017

public offering, was

$214.8

million. Based on our current operating plan and projections, management believes that available cash, cash equivalents and short-term investments are sufficient to fund operations for at least

one

year from the date this annual report on Form

-K is filed with the U.S. Securities and Exchange Commission (the “SEC”).

Note 2 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Significant Accounting Policies [Text Block]

2.	Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Heron Therapeutics, Inc. and its wholly owned subsidiary, Heron Therapeutics, B.V., which was organized in the Netherlands in

March

2015.

Heron Therapeutics, B.V. has no operations and no material assets or liabilities, and there have been no significant transactions related to Heron Therapeutics, B.V. since its inception.

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 financial statements and disclosures made in the accompanying notes to the financial statements. Our critical accounting policies that involve significant judgment and estimates include revenue recognition, inventory, accrued clinical liabilities, income taxes and stock-based compensation. Actual results could differ materially from those estimates.

Cash,

Cash Equivalents

and Short-Term Investments

Cash and cash equivalents consist of cash and highly liquid investments with original maturities from purchase date of

three

months or less.

Short-term investments consist of securities with maturities from purchase date of greater than

three

months. We have classified our short-term investments as available-for-sale securities in the accompanying consolidated financial statements. Available-for-sale securities are stated at fair market value, with unrealized gains and losses reported in other comprehensive income (loss) and realized gains and losses included in interest income (expense). The cost of securities sold is based on the specific-identification method. Interest and dividends on securities classified as available-for-sale are included in interest income.

Our bank and investment accounts have been placed under control agreements in accordance with our Senior Secured Convertible Notes (the “Convertible Notes”) and Subordinated Secured Promissory Note (the

“Promissory Note”) (see Note

7).

Fair Value of Financial Instruments

Financial instruments, including cash and cash equivalents, receivables, inventory, prepaid expenses, other current assets, accounts payable and accrued expenses, are carried at cost, which is considered to be representative of their respective fair values because of the short-term maturity of these instruments.

Short-term available-for-sale investments are carried at fair value (see Note

. Our Convertible Notes and Promissory Note outstanding at

December

31,

2016

do not have a readily available ascertainable market value, however, the carrying value is considered to approximate its fair value.

Concentration of Credit Risk

Cash, cash equivalents and short-term investments are financial instruments that potentially subject us to concentrations of credit risk. We deposit our cash in financial institutions. At times, such deposits

may

be in excess of insured limits. We

may

also invest our excess cash in money market funds, corporate debt securities and commercial paper. We have established guidelines relative to our diversification of our cash investments and their maturities in an effort to maintain safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

Sales to ASD Specialty Healthcare, Inc., Cardinal Health, Inc. and McKesson Specialty Care Distribution Corporation each accounted for

10%

or more of our net revenues for the year ended

December

31,

2016.

The loss of any of these customers could materially and adversely affect our business, results of operations, financial condition and cash flows.

Inventory

Inventory is stated at the lower of cost or estimated net realizable value, on a

first

-in,

first

-out, or FIFO, basis. We periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and inventory quantities that are in excess of expected sales requirements as cost of product sales. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory

may

be required, which would be recorded as cost of product sales.

We capitalize pre-launch costs into inventory when we believe it is probable that: (i) a future economic benefit will be derived from the commercialization of the product; (ii) the FDA will approve the marketing of the product; and (iii) our process for manufacturing the product is within the specifications that we believe will be approved by the FDA for such product. In evaluating whether it is probable that we will derive future economic benefits from our pre-launch inventories and whether the pre-launch inventories are stated at the lower of cost or net realizable value, we consider, among other things, the remaining shelf life of that inventory, the current and expected market conditions, the amount of inventory on hand, and the substance of communications with the FDA during the regulatory approval process.

For the year ended

December

31,

2016,

we recognized cost of sales of

$35,000

for sales of SUSTOL, primarily related to shipping and distribution costs. All SUSTOL units sold in

2016

were manufactured prior to the approval of SUSTOL, and the costs to manufacture such units were recorded to research and development expense in prior periods.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets (primarily

five

years). Leasehold improvements are stated at cost and amortized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.

Impairment of Long-Lived Assets

If indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, we measure the amount of such impairment by comparing the carrying value of the asset to the fair value of the asset and record the impairment as a reduction in the carrying value of the related asset with a corresponding charge to operating expenses. Estimating the undiscounted future cash flows associated with long-lived assets requires judgment and assumptions that could differ materially from actual results.

Revenue

Recognition

Product

Sales

SUSTOL is distributed in the U.S. through a limited number of specialty distributors (“Customers”) that resell SUSTOL to healthcare providers, the end users of SUSTOL. Product sales are recorded net of sales allowances and estimated rebates, chargebacks, distributor fees, and other deductions.

Product sales are recognized as revenue when there is persuasive evidence that an arrangement exists, delivery has occurred and title has passed, the price is fixed or determinable and we are reasonably assured of collecting the resulting receivable. Product sales are recorded net of sales allowances and estimated rebates, chargebacks, distributor fees, and other deductions. Due to the recent launch of SUSTOL, we do not yet have sufficient historical data regarding the

third

-party payor mix and resulting rebates related to shipments of SUSTOL to our Customers. In addition, we have further determined that we do not currently have the necessary data to provide sufficient visibility into the ultimate utilization of SUSTOL, which inhibits our ability to determine a reasonable estimate of potential returns. As a result of the above, we have determined that we are not yet able to reliably make all of the estimates necessary to meet certain of the key recognition criteria to recognize product sales as revenue with respect to shipments of SUSTOL to our Customers. Accordingly, we concluded that revenue related to shipments to our Customers should be deferred, except to the extent that our Customers have resold SUSTOL to healthcare providers. As of

December

31,

2016,

product sales of

$1.1

million to our Customers have been deferred and are recorded as deferred revenue on our consolidated balance sheet.

Product Sales Allowances

We recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized. Product sales allowances are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of our agreements with Customers, historical product returns, rebates or discounts taken, the shelf life of the product, and specific known market events, such as competitive pricing and new product introductions. If actual future results vary from our estimates, we

may

need to adjust these estimates, which could have an effect on product sales and earnings in the period of adjustment. Our product sales allowances include:

●

Product Returns — We allow our Customers to return product for credit

months after its product expiration date. Because of the shelf life of our product and our return policy, 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.

●

Distributor Fees — We offer contractually determined discounts to our Customers. These discounts are paid on a quarterly basis within

two

months after the quarter in which product was shipped.

●

Group Purchasing Organization (“GPO”) Discounts and Rebates — We offer cash discounts to GPO members. These discounts are taken when the GPO members purchase SUSTOL from our Customers, who then charge back to us the discount amount. Additionally, we offer volume and contract-tier rebates to GPO members. Rebates are estimated based on actual purchase levels during the quarterly or semi-annual rebate purchase period.

●

GPO Administrative Fees — We pay administrative fees to GPO’s 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 GPO’s members.

●

Medicaid Rebates — We participate in Medicaid rebate programs, which provide assistance to certain low-income patients based on each individual state's guidelines regarding eligibility and services. Under the Medicaid rebate programs, we pay a rebate to each participating state, generally within

three

months after the quarter in which SUSTOL was sold.

We believe our estimated allowance for product returns requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We believe our estimated allowances for distributor fees, GPO discounts, rebates and administrative fees, and Medicaid rebates do not require a high degree of judgement because the amounts are settled within a relatively short period of time.

Our product sales allowances and related accruals are evaluated each reporting period and adjusted when trends or significant events indicate that a change in estimate is appropriate. Changes in sales allowance estimates could materially affect our results of operations and financial position. As of

December

31,

2016,

our product sales allowances totaled

$342,000,

which included

$72,000

for distributor fees,

$221,000

for rebates and chargebacks and

$49,000

for product returns. During the year ended

December

31,

2016,

we made

payments related to rebates, chargebacks or product returns.

Accrued Clinical Liabilities

We accrue clinical costs based on work performed, which relies on estimates of the progress of the trials and the related expenses incurred. Clinical trial related contracts vary significantly in duration, and

may

be for a fixed amount, based on the achievement of certain contingent events or deliverables, a variable amount based on actual costs incurred, capped at a certain limit, or contain a combination of these elements. Revisions are recorded to research and development expense in the period in which the facts that give rise to the revision become known. Historically, revisions have not resulted in material changes to research and development expense, however, a modification in the protocol of a clinical trial or cancellation of a trial could result in a material charge to our results of operations.

Research and Development Expenses

All costs of research and development are expensed in the period incurred. Research and development costs primarily consist of salaries and related expenses for personnel, stock-based compensation expense, fees paid to outside service providers and consultants, facilities costs and materials used in the clinical and preclinical trials and research and development.

Patent Costs

We incur outside legal fees in connection with filing and maintaining our various patent applications. All patent costs are expensed as incurred and are included in general and administrative expense in the consolidated statements of comprehensive loss.

Stock-Based Compensation Expense

We estimate the fair value of stock-based payment awards using the Black-Scholes option pricing model. This fair value is then amortized using the straight-line single-option method of attributing the value of stock-based compensation to expense over the requisite service periods of the awards. The Black-Scholes option pricing model requires the input of complex and subjective assumptions, including each option’s expected life and price volatility of the underlying stock.

As stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical data.

Warrants

We have issued warrants to purchase shares of our common stock in conjunction with certain equity financings. The terms of the warrants were evaluated to determine the appropriate classification as equity or a liability.

Income Taxes

We recognize the impact of a tax position in our consolidated financial statements if the position is more likely than not to be sustained upon examination and on the technical merits of the position. The total amount of unrecognized tax benefits, if recognized, would affect other tax accounts, primarily deferred taxes in future periods, and would not affect our effective tax rate since we maintain a full valuation allowance against its deferred tax assets (see Note

9).

Comprehensive

Loss

Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

Unrealized gains and losses on available-for-sale securities are included in other comprehensive loss and represent the difference between our loss and comprehensive net loss for all periods presented.

Earnings per Share

Basic earnings per share (“EPS”) is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration of common share equivalents. Diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, stock options, warrants and common stock underlying Convertible Notes are considered to be common stock equivalents and are included in the calculation of diluted EPS only when their effect is dilutive.

Because we have incurred a net loss for all periods presented in the consolidated statements of comprehensive loss, stock options, warrants and shares of common stock underlying Convertible Notes are not included in the computation of net loss per share because their effect would be anti-dilutive.

The following table includes the number of stock options, warrants and shares of common stock underlying Convertible Notes not included in the computation as of the dates shown below (in thousands):

	As of December 31 ,
	2016		2015		2014

Stock options outstanding		11,845		8,435		7,918
Warrants outstanding		600		3,565		4,108
Shares of common stock underlying Convertible Notes outstanding		7,521		7,087		6,677

Recent Accounting Pronouncements

March

2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016

09,

Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting

(“ASU

2016

09”).

ASU

2016

addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. ASU

2016

is effective for fiscal years beginning after

December

15,

2016,

including interim periods within those fiscal years. We plan to adopt the provisions of ASU

2016

in the

first

quarter of

2017.

We do not expect the adoption of ASU

2016

to have a material impact on our results of operations or financial condition.

February

2016,

FASB issued ASU No.

2016

02,

Leases

(“ASU

2016

02”).

ASU

2016

requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than

months. In addition, ASU

2016

requires both lessees and lessors to disclose certain key information about lease transactions. ASU

2016

is effective for fiscal years beginning after

December

15,

2018,

including interim periods within those fiscal years. We plan to adopt the provisions of ASU

2016

in the

first

quarter of

2019

and we are currently evaluating the impact on our results of operations and financial condition.

July

2015,

FASB issued ASU No.

2015

11,

Inventory (Topic

330)

(“ASU

2015

11”).

ASU

2015

requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predicable costs of completion, disposal and transportation. Subsequent measurements are unchanged for inventory measured using LIFO or the retail inventory method. ASU

2015

is effective for fiscal years beginning after

December

15,

2016,

and interim periods within fiscal years beginning after

December

15,

2017.

We plan to adopt the provisions of ASU

2015

2017.

We do not expect the adoption of ASU

2015

to have a material impact on our results of operations or financial condition.

August

2014,

FASB issued ASU No.

2014

15,

Presentation of Financial Statements – Going Concern (Subtopic

205

40)

(“ASU

2014

15”).

ASU

2014

requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments

(1)

provide a definition of the term substantial doubt,

(2)

require an evaluation every reporting period, including interim periods,

(3)

provide principles for considering the mitigating effect of management’s plans,

(4)

require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans,

(5)

require an express statement and other disclosures when substantial doubt is not alleviated, and

(6)

require an assessment for a period of

one

year after the date that the financial statements are issued (or available to be issued). The amendments in ASU

2014

are effective for the annual period ending after

December

15,

2016,

and for annual periods and interim periods thereafter. We adopted the provisions of ASU

2014

2016.

The adoption of ASU

2014

did not require any additional disclosures in our consolidated financial statements for the year ended

December

31,

2016.

May

2014,

FASB issued ASU No.

2014

09,

Revenue from Contracts with Customers (Topic

606)

(“ASU

2014

09”).

ASU

2014

is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU

2014

is effective for fiscal years beginning after

December

15,

2017,

including interim periods within those fiscal years. The provisions of ASU

2014

allows for either a full retrospective or a modified retrospective adoption approach. We plan to adopt the provisions of ASU

2014

in the

first

quarter of

2018

and we are currently evaluating the impact on our results of operations and financial condition.

Note 3 - Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Text Block]

3.	Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy based on

three

levels of inputs, of which the

first

two

are considered observable and the last unobservable, that

may

be used to measure fair value, is as follows:

•

Level

— Quoted prices in active markets for identical assets or liabilities.

•

Level

— Inputs other than Level

that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level

— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We measure the following financial assets at fair value on a recurring basis. The fair values of these financial assets at

December

31,

2016

and

2015,

respectively, were as follows (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Balance at		for Identical		Observable		Unobservable
	December 31 ,		Assets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	11,493	$	11,493	$	—	$	—
United States corporate debt securities		12,039		—		12,039		—
Foreign corporate debt securities		14,057		—		14,057		—
United States commercial paper		8,635		—		8,635		—
Foreign commercial paper		2,993		—		2,993		—
Total	$	49,217	$	11,493	$	37,724	$	—

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Balance at		for Identical		Observable		Unobservable
	December 31 ,		Assets		Inputs		Inputs
	201 5		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	67,089	$	67,089	$	—	$	—
United States corporate debt securities		28,715		—		28,715		—
Foreign corporate debt securities		4,922		—		4,922		—
United States commercial paper		7,770		—		7,770		—
Foreign commercial paper		15,579		—		15,579		—
Total	$	124,075	$	67,089	$	56,986	$	—

There were no significant transfers between level

and level

investments during the years ended

December

31,

2016

and

December

31,

2015.

As of

December

31,

2016,

short-term investments included

$37.7

million of available-for-sale securities with contractual maturities of

one

year or less. As of

December

31,

2015,

we had cash equivalents consisting of

$1.0

million of available-for-sale securities with contractual maturities of less than

three

months and short-term investments consisting of

$56.0

million of available-for-sale securities with contractual maturities of

one

year or less. The money market funds as of

December

31,

2016

and

2015

are included in cash and cash equivalents on the consolidated balance sheet.

A company

may

elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a

third

party to provide the warranty goods or services. If the use of fair value is elected, any upfront costs and fees related to the item such as debt issuance costs must be recognized in earnings and cannot be deferred. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. Unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings and any changes in fair value are recognized in earnings. We have elected to not apply the fair value option to our financial assets and liabilities.

We consider the carrying amount of cash and cash equivalents, receivables, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities to be representative of their respective fair values because of the short-term nature of those instruments.

Unrealized gains and losses associated with our investments are reported in accumulated other comprehensive loss. For the year ended

December

31,

2016,

we recorded

$23,000

in net unrealized gains associated with our short-term investments. For the year ended

December

31,

2015,

we recorded

$40,000

in net unrealized losses associated with our short-term investments.

Realized gains and losses associated with our investments, if any, are reported in the statement of comprehensive loss. There were

realized gains or losses for the years ended

December

31,

2016

and

2015.

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

Note 4 - Balance Sheet Details

12 Months Ended

Dec. 31, 2016

Supplemental Balance Sheet Disclosures [Text Block]

4.	Balance Sheet Details

Short-Term Investments

The following is a summary of our short-term, available-for-sale securities (in thousands):

	December 31, 201 6
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
United States corporate debt	$	12,048	$	—	$	(9	)	$	12,039
Foreign corporate debt		14,065		—		(8	)		14,057
United States commercial paper		8,635		—		—			8,635
Foreign commercial paper		2,993		—		—			2,993
Total	$	37,741	$	—	$	(17	)	$	37,724

	December 31, 201 5
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
United States corporate debt	$	27,750	$	—	$	(35	)	$	27,715
Foreign corporate debt		4,927		—		(5	)		4,922
United States commercial paper		7,770		—		—			7,770
Foreign commercial paper		15,579		—		—			15,579
Total	$	56,026	$	—	$	(40	)	$	55,986

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. We regularly monitor and evaluate the realizable value of our marketable securities. We did not recognize any impairment losses for the years ended

December

31,

2016

and

2015.

Inventory

Inventory consists of the following (in thousands):

	December 31,
	2016		2015
Raw materials	$	1,647	$	—
Work in process		1,104		—
Finished goods		2,589		—
Total inventory	$	5,340	$	—

Property and Equipment

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

	December 31,
	2016			2015
Scientific equipment	$	7,952		$	5,593
Computer equipment and software		1,429			1,272
Furniture, fixtures and office equipment		674			352
Leasehold improvements		1,635			1,384
Property and equipment		11,690			8,601
Less: accumulated depreciation and amortization		(6,614	)		(5,552	)
Property and equipment, net	$	5,076		$	3,049

Depreciation and amortization expense for the years ended

December

31,

2016,

2015

and

2014

was

$1.1

million,

$0.7

million and

$0.6

million, respectively. As of

December

31,

2016

and

2015,

$1.7

million and

$0.2

million of property and equipment, respectively, were in process and not depreciated during the respective years.

During the year ended

December

31,

2014,

we recognized

$0.9

million as an impairment loss due to the write-down of a piece of manufacturing-related equipment. In

2015,

we sold the equipment for cash proceeds of

$0.2

million, with a net gain of

$0.1

million.

Accrued Payroll and Employee Liabilities and Other Accrued

Liabilities

Accrued payroll and employee liabilities consist of the following (in thousands):

	December 31,
	20 16		2015
Accrued employee salaries and benefits	$	2,236	$	1,863
Accrued bonuses		3,474		2,965
Accrued expenses for realignment (see Note 6)		2,704		—
Total accrued payroll and employee liabilities	$	8,414	$	4,828

Other accrued liabilities consist of the following (in thousands):

	December 31,
	2016		2015
Accrued consulting and professional fees	$	4,703	$	3,914
Accrued accounts payable		1,039		36
Accrued sales allowances		342		—
Deferred rent		116		61
Other accrued liabilities		88		143
Total other accrued liabilities	$	6,288	$	4,154

Note 5 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Text Block]

5.	Commitments and Contingencies

Leases

We lease

28,275

square feet of laboratory and office space in San Diego, California under a lease which began on

December

2016

and expires on

April

15,

2024.

We have

one

-year option to renew this lease. We also lease

26,067

square feet of laboratory, office and warehouse space in Redwood City, California and

1,898

square feet of office space in Jersey City, New Jersey. The lease for the Redwood City space is under a lease expiring on

May

31,

2019.

The lease for the Jersey City office space expires on

June

30,

2018.

The annual rent expense for all properties is

$2.0

million. We believe our facilities are adequate and suitable for our current needs, and that we will be able to obtain new or additional leased space in the future when necessary. We also lease certain office equipment under operating lease arrangements.

Annual future minimum lease payments as of

December

31,

2016

are as follows (in thousands):

	Operating Leases
Years ended December 31,
2017	$	2,259
2018		2,553
2019		1,824
2020		1,424
2021		1,466
Thereafter		3,532
Total	$	13,058

Rent expense under all operating leases totaled

$2.1

million,

$1.5

million and

$1.4

million for the years ended

December

31,

2016,

2015

and

2014,

respectively.

Clinical Development Agreements

We have entered into agreements with various vendors for the research and development of product candidates, which are generally cancellable anytime at our option. Under the terms of these agreements, the vendors provide a variety of services including conducting preclinical development, research, manufacturing clinical compounds, enrolling and recruiting patients, monitoring studies, data analysis and regulatory filing assistance. Payments under these agreements typically include fees for services and reimbursement of expenses. In addition, under certain agreements, we are subject to penalties in the event we permanently discontinue performance under these agreements.

Purchase Obligations

December

31,

2016,

our purchase obligations of

$6.7

million primarily consisted of commitments with

third

-party manufacturers in connection with the manufacturing of SUSTOL, as well as commitments with various vendors for sales and marketing support and clinical and preclinical studies. For the year ended

December

31,

2016,

$4.6

million of the total purchase obligations were not included in our consolidated financial statements. We intend to use our current financial resources to fund our commitments under these purchase obligations.

Note 6 - Realignment of Goals and Objectives and New Development Focus	12 Months Ended
	Dec. 31, 2016
Notes to Financial Statements
Restructuring and Related Activities Disclosure [Text Block]	6. Realignment of Goals and Objectives and New Development Focus Following the approval of SUSTOL and consistent with our transition into a commercial-stage biotechnology company, we realigned our goals and objectives and refocused our development efforts to the area of post-operative pain management. On October 18, 2016, we entered into a lease agreement for new office and laboratory space in San Diego, California (see Note 5) which became our corporate headquarters in December 2016. On September 30, 2016, the board of directors accepted the resignations of three executive officers, and these executive officers and other employees directly affected by the realignment and refocusing will be provided with one -time severance payments upon termination, continued benefits for a specified period of time and outplacement assistance. We expect to incur total expenses of $10.4 million, $6.4 million of which is primarily for severance, and $4.0 million of which is for non-cash, stock-based compensation expense. For the year ended December 31, 2016, total expenses were $7.8 million, with $6.7 million included in research and development expense, $1.0 million in general and administrative expense and $0.1 million in sales and marketing expense. The remaining $2.6 million of total anticipated expenses relate to employees who are being retained until the fourth quarter of 2017 and are being recognized on a straight-line basis over the retention period. The Company expects to make the final payment resulting from the realignment of our goals and objectives and new development focus in the second quarter of 2018. As of December 31, 2016, we have paid $2.2 million of the total $6.4 million cash charges, and $2.7 million of the cash charges were included in accrued payroll and employee liabilities. The expenses we expect to incur are subject to a number of assumptions, and actual results may materially differ. We may also incur other material expenses not currently contemplated due to events that may be associated with, or result from, the realignment of our goals and objectives and new development focus. We have accounted for these expenses in accordance with Accounting Standard Codification No. 420, Exit or Disposal Cost Obligations .

Note 7 - Secured Notes to Related Party	12 Months Ended
Note 7 - Secured Notes to Related Party	Dec. 31, 2016
Notes to Financial Statements
Debt Disclosure [Text Block]	7. Secured Notes to Related Party Convertible Notes In April 2011, we entered into a securities purchase agreement for a private placement of up to $4.5 million in Convertible Notes with certain investors, including Tang Capital Partners, LP (“TCP”). TCP is controlled by Tang Capital Management, LLC (“TCM”). The manager of TCM is Kevin C. Tang, who served as a director at the time and currently serves as the Chairman of our Board of Directors. The terms of the Convertible Notes were determined by our independent directors to be no less favorable than terms that would be obtained in an arm’s length financing transaction. We received a total of $4.3 million, net of issuance costs, from the issuance of these Convertible Notes. The Convertible Notes are secured by substantially all of our assets, including placing our bank and investment accounts under a control agreement. The Convertible Notes bear interest at 6% per annum, payable quarterly in cash or in additional principal amount of Convertible Notes, at the election of the purchasers. The Convertible Notes mature on May 2, 2021; however, the holders of the Convertible Notes may require prepayment of the Convertible Notes at any time, at each holder’s option. The Convertible Notes are convertible into shares of our common stock at a rate of 1,250 shares for every $1,000 of outstanding principal due under the Convertible Notes. There is no right to convert the Convertible Notes to the extent that, after giving effect to such conversion, the holder would beneficially own in excess of 9.99% of our outstanding common stock. Each holder of the Convertible Notes can increase or decrease this beneficial ownership conversion limit by written notice to us, which will not be effective until 61 days after delivery of the notice. As of December 31, 2016, we were in compliance with all covenants under the Convertible Notes. Upon the occurrence of an event of default under the Convertible Notes, the holders of the Convertible Notes have the right to require us to redeem all or a portion of their Convertible Notes. In 2011, we filed a registration statement with the SEC to register for resale 3.5 million shares underlying the Convertible Notes. The registration statement was declared effective on July 29, 2011. The Convertible Note holders have agreed to waive their right to require us to maintain the effectiveness of the registration statement and to register the additional shares underlying the Convertible Notes until they provide notice otherwise. The Convertible Notes contain an embedded conversion feature that was in-the-money on the issuance dates. Based on an effective fixed conversion rate of 1,250 shares for every $1,000 of principal and accrued interest due under the Convertible Notes, the total conversion benefit at issuance exceeded the loan proceeds. Therefore, a debt discount was recorded in an amount equal to the face value of the Convertible Notes on the issuance dates and we began amortizing the resultant debt discount over the respective 10 -year term of the Convertible Notes. During the year ended December 31, 2016, accrued interest of $0.3 million was paid-in-kind and rolled into the Convertible Note principal balance, which resulted in an additional debt discount of $0.3 million. For the years ended December 31, 2016, 2015 and 2014, interest expense relating to the stated rate was $0.4 million, $0.3 million, and $0.3 million, respectively, and interest expense relating to the amortization of the debt discount was $0.7 million, $0.6 million and $0.6 million, respectively. As of December 31, 2016, the carrying value of the Convertible Notes was $2.9 million, which is comprised of the $6.0 million principal amount of the Convertible Notes outstanding, less debt discount of $3.1 million. If the $6.0 million principal amount of Convertible Notes is converted, we would issue 7.5 million shares of our common stock. In January 2017, in connection with the public offering (see Note 12), TCP executed a waiver (the “Waiver”) pursuant to which TCP waived: (i) our obligation under the Securities Purchase Agreement, dated April 24, 2011, among us, TCP and certain other investors (the “SPA”) to maintain a sufficient number of authorized shares of our common stock to permit the conversion of TCP’s outstanding principal and interest under the Convertible Notes to our common stock; and (ii) its right to convert the Convertible Notes for the duration of the Waiver. The Waiver will remain effective until the earliest to occur of: (i) a change in the control of the Company; (ii) the Company’s stockholders approving an increase of the number of authorized shares of our common stock; and (iii) July 18, 2017. If, upon the expiration of the Waiver, TCP seeks to convert part or all of the Convertible Notes and we do not have a sufficient number of authorized shares of our common stock to permit the conversion of the portion of the Convertible Notes being converted, then we will be obligated to make a cash payment to TCP equal to the value of the underlying shares of common stock that we are unable to deliver on conversion, based on the price of our common stock at such time. Promissory Note In August 2016, we entered into the Promissory Note with TCP whereby TCP will lend us up to $100.0 million. The Promissory Note has a two -year term and bears interest of 8% per annum. The first close of $50.0 million occurred on August 5, 2016. The second close of an additional $50.0 million is subject to the achievement of a corporate milestone. There are no fees, no warrants and no equity conversion feature associated with this transaction. The Promissory Note is secured by a second -priority lien on substantially all of our assets. TCP is controlled by TCM. The manager of TCM is Kevin C. Tang, who serves as the Chairman of our Board of Directors. The terms of the Promissory Note were determined by our independent directors to be no less favorable than terms that would be obtained in an arm’s length financing transaction. For the year ended December 31, 2016, interest expense was $1.6 million. As of December 31, 2016, the outstanding principal amount of the Promissory Note was $50.0 million.

Note 8 - Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders' Equity Note Disclosure [Text Block]

Stockholders’ Equity

2014

Common Stock Offering

June

2014,

we sold

4.8

million shares of our common stock at a public offering price of

$11.75

per share. In addition, as a component of the offering, we sold

600,000

pre-funded warrants to purchase shares of our common stock at a public offering price of

$11.74

per share. The pre-funded warrants have an exercise price of

$0.01

per share and expire on

June

30,

2021.

We received total net proceeds of

$58.9

million (net of

$4.0

million in issuance costs) from the sale of the common stock and the pre-funded warrants. As of

December

31,

2016,

all warrants from the

June

2014

public offering remain outstanding.

2015

Common Stock Offering

June

2015,

we sold

5.5

million shares of our common stock at a public offering price of

$24.75

per share. We received total net proceeds of

$128.2

million (net of

$8.4

million in issuance costs) from the sale of the common stock.

201

Common Stock Offering

January

2017,

we sold

14.1

million shares of our common stock at a public offering price of

$12.20

per share. We received total net proceeds of

$163.7

million (net of

$8.8

million in issuance costs) from the sale of the common stock.

Private Placement Warrants

June

2011,

we sold shares of common stock and warrants to purchase common stock in a private placement. A total of

4,000,000

warrants to purchase common stock at an exercise price of

$3.60

per share were issued as part of this private placement. As of

December

31,

2016,

all warrants from the

June

2011

Private Placement have been exercised.

During the year ended

December

31,

2016,

warrant holders exercised

2,965,477

warrants under the cashless exercise provision in each such holder’s warrant, which resulted in the net issuance of

2,395,700

shares of common stock and no net cash proceeds to us. During the year ended

December

31,

2015,

warrant holders exercised

343,813

warrants under the cashless exercise provision in each such holder’s warrant, which resulted in the net issuance of

285,713

shares of common stock and no net cash proceeds to us. During the year ended

December

31,

2014,

warrant holders exercised

460,706

warrants under the cashless exercise provision in the warrant agreement, which resulted in the net issuance of

303,614

shares of common stock and no net cash proceeds to us.

Common Stock Reserved for Future Issuance

Shares of our common stock reserved for future issuance as of

December

31,

2016

were as follows:

	Number of Shares
Stock options outstanding		11,845,376
Stock options available for grant		2,653,548
Employee stock purchase plan		144,600
Warrants outstanding		600,000
Shares of common stock underlying Convertible Notes outstanding (see Note 7)		7,521,416
Total shares reserved for future issuance		22,764,940

Employee Stock Purchase Plan

1997,

our stockholders approved our Employee Stock Purchase Plan (the “ESPP”). In

December

2007,

May

2009,

June

2011,

May

2014,

May

2015

and

June

2016,

our stockholders authorized increases in the number of shares reserved for issuance under the ESPP by

5,000,

10,000,

25,000,

100,000

and

100,000

shares, respectively, for a total of

275,000

shares reserved at

December

31,

2016.

Under the terms of the ESPP, employees can elect to have up to a maximum of

10%

of their base earnings withheld to purchase our common stock. The purchase price of the stock is

85%

of the lower of the closing prices for our common stock on: (i) the

first

trading day in the enrollment period, as defined in the ESPP, in which the purchase is made, or (ii) the purchase date. The length of the enrollment period is

six

months. Enrollment dates are the

first

business day of

May

and

November.

2016,

51%

of eligible employees participated in the ESPP. Under the ESPP, we issued

54,932,

30,361,

and

12,028

shares in

2016,

2015

and

2014,

respectively. The weighted-average exercise price per share of the purchase rights exercised during

2016,

2015

and

2014

was

$14.03,

$8.46

and

$7.59,

respectively. As of

December

31,

2016,

130,400

shares of common stock have been issued under the ESPP and

144,600

shares of common stock are available for future issuance.

Stock Option Plans

We currently have

one

stock option plan from which we can grant options and restricted stock awards to employees, officers, directors and consultants. In

December

2007,

the stockholders approved our

2007

Equity Incentive Plan (the

“2007

Plan”) at which time a maximum of

150,000

shares of common stock were available for grant. In

May

2010,

June

2011,

May

2014,

May

2015

and

June

2016,

our stockholders approved amendments to our

2007

Plan to increase the maximum number of shares of common stock available for grant by

100,000,

4,500,000,

1,750,000,

4,300,000

and

3,000,000

shares of common stock, respectively, resulting in an aggregate of

13,800,000

shares of common stock authorized for issuance as of

December

31,

2016.

December

31,

2016,

there were

2,653,548

shares available for future grant under the

2007

Plan. Any shares that are issuable upon exercise of options granted that expire, are cancelled, or that we receive pursuant to a net exercise of options, are available for future grant and issuance.

We also granted stock options and restricted stock awards under the

2002

Stock Incentive Plan (the

“2002

Plan”) in prior years. The remaining shares available to be granted under the

2002

Plan expired in

February

2012.

2014,

2013

and

2012,

we granted options to certain employees outside of our stockholder approved stock option plans. All options to purchase our common stock were granted with an exercise price that equals fair market value of the underlying common stock on the grant dates and expire no later than

ten

years from the date of grant. The options are exercisable in accordance with vesting schedules that generally provide for them to be fully vested and exercisable

four

years after the date of grant, provided, however, that we have also issued stock options awards that are subject to performance vesting requirements. All stock option grants issued outside of our stockholder approved plans have been registered on Form S-

with the SEC.

A summary of our stock option activity and related data follows:

	Outstanding Options
				Weighted-
				Average
	Number of			Exercise
	Shares			Price
Balance at December 31, 2013		6,355,681		$	8.22
Granted		3,181,001			9.40
Exercised		(756,593	)		6.34
Cancelled		(862,085	)		9.88
Balance at December 31, 2014		7,918,004			8.69
Granted		2,134,505			28.95
Exercised		(1,042,343	)		9.15
Cancelled		(575,178	)		10.42
Balance at December 31, 2015		8,434,988			13.64
Granted		4,920,661			15.98
Exercised		(798,363	)		8.37
Cancelled		(711,910	)		22.43
Balance at December 31, 2016		11,845,376		$	14.44

For the year ended

December

31,

2016,

option holders exercised

798,363

stock options resulting in cash proceeds to us of

$6.7

million.

For the year ended

December

31,

2016,

options cancelled (included in the above table) consisted of

707,617

options forfeited with a weighted-average exercise price of

$22.35

and

4,293

options expired with a weighted-average exercise price of

$35.09.

As of

December

31,

2016,

options exercisable have a weighted-average remaining contractual term of

5.3

years. The total intrinsic value of stock option exercises, which is the difference between the exercise price and closing price of our common stock on the date of exercise, during the years ended

December

31,

2016

and

2015,

was

$10.4

million and

$13.9

million, respectively. As of

December

31,

2016

and

2015,

the total intrinsic value of options outstanding and exercisable was

$16.9

million and

$46.6

million, respectively, which is the difference between the exercise price and closing price of our common stock.

	Years Ended December 31,
	2016				2015				2014
			Weighted-				Weighted-				Weighted-
			Average				Average				Average
			Exercise				Exercise				Exercise
	Options		Price		Options		Price		Options		Price
Exercisable at end of year		4,356,665	$	11.66		2,587,392	$	8.72		2,237,901	$	9.01
Options vested or expected to vest		11,234,529	$	14.32		8,059,481	$	13.38		7,841,074	$	8.69

Exercise prices and weighted-average remaining contractual lives for the options outstanding as of

December

31,

2016

were:

											Weighted-
					Weighted-						Average
					Average		Weighted-				Exercise
					Remaining		Average				Price of
Options	Range of				Contractual		Exercise		Options		Options
Outstanding	Exercise Prices				Life (in years)		Price		Exercisable		Exercisable
581,518		$3.80	–	7.00		1.01	$	6.02		581,518	$	6.02
1,935,473			$7.20			6.28		7.20		1,054,143		7.20
1,793,013		$7.61	–	9.05		7.09		8.93		1,104,899		8.94
843,387		$9.20	–	12.65		4.23		10.33		736,434		10.39
2,271,111			$13.00			9.97		13.00		—		—
548,025		$13.20	–	16.62		7.38		15.46		202,650		14.57
1,241,350			$16.83			9.71		16.83		51,320		16.83
1,226,884		$17.10	–	28.30		8.41		22.48		164,692		26.76
1,203,272		$28.73	–	29.86		8.49		29.44		395,686		29.44
201,343		$29.95	–	102.40		8.61		34.78		65,323		35.03
11,845,376		$3.80	–	102.40		7.60		14.44		4,356,665		11.66

December

31,

2016,

we had reserved

11,845,376

shares of common stock for future issuance upon exercise of outstanding options granted under the

2002

Plan and the

2007

Plan, as well as the non-plan grants.

Valuation and Expense Information

The following table summarizes stock-based compensation expense related to stock-based payment awards granted pursuant to all of our equity compensation arrangements for the years ended

December

31,

2016,

2015

and

2014

(in thousands):

	December 31,
	2016		2015		2014
Research and development	$	11,316	$	4,701	$	3,329
General and administrative		7,402		6,282		2,532
Sales and marketing		7,238		3,377		2,206
Stock-based compensation expense included in operating expenses	$	25,956	$	14,360	$	8,067

As of

December

31,

2016,

there was

$86.4

million of total unrecognized compensation cost related to non-vested, stock-based payment awards granted under all of our equity compensation plans and all non-plan option grants. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. We expect to recognize this compensation cost over a weighted-average period of

2.9

years.

For the years ended

December

31,

2016,

2015

and

2014,

we estimated the fair value of each option grant and ESPP purchase right on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Options:

	December 31,
	2016			2015			2014
Risk-free interest rate		1.7	%		1.7	%		1.9	%
Dividend yield		—	%		—	%		—	%
Volatility		89.1	%		92.7	%		99.0	%
Expected life (years)		6			6			6

ESPP:

	December 31,
	2016			2015			2014
Risk-free interest rate		0.4	%		0.1	%		0.1	%
Dividend yield		—	%		—	%		—	%
Volatility		68.3	%		86.7	%		53.8	%
Expected life (months)		6			6			6

The weighted-average fair value of options granted was

$11.82,

$21.92

and

$7.40

for the years ended

December

31,

2016,

2015

and

2014,

respectively.

The weighted-average fair value of shares purchased through the ESPP was

$6.10,

$8.23

and

$3.06

for the years ended

December

31,

2016,

2015

and

2014,

respectively.

The risk-free interest rate assumption is based on observed interest rates on United States Treasury debt securities with maturities close to the expected term of our employee and director stock options and ESPP purchases.

The dividend yield assumption is based on our history and expectation of dividend payouts. We have never paid dividends on our common stock and we do not anticipate paying dividends in the foreseeable future.

We used our historical stock price to estimate volatility.

The expected life of employee and director stock options represents the average of the contractual term of the options and the weighted-average vesting period, as permitted under the simplified method. We have elected to use the simplified method, as we do not have enough historical exercise experience to provide a reasonable basis upon which to estimate the expected term. The expected life for the ESPP purchase rights is

six

months, which represents the length of each purchase period.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 505
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
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-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

+ Details

Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Text Block]

9 .	Income Taxes

For the years ended

December

31,

2016,

2015

and

2014,

we did not record a provision for income taxes because we have incurred operating losses for all

three

years.

Deferred income tax assets and liabilities arising from differences between accounting for financial statement purposes and tax purposes, less valuation allowance at year-end are as follows (in thousands):

	December 31,
	201 6			201 5
Deferred tax assets:
Net operating loss carryforward	$	138,727		$	94,465
Research and development credits		16,687			11,181
Stock-based compensation		10,272			6,726
Other, net		3,204			1,345
Total deferred tax assets		168,890			113,717
Valuation allowance for net deferred tax assets		(168,890	)		(113,717	)
Net deferred taxes	$	—		$	—

Taxes on income vary from the statutory federal income tax rate applied to earnings before tax on income as follows (in thousands):

	December 31,
	201 6			201 5			201 4
Statutory federal income tax rate of 34%	$	(58,868	)	$	(33,181	)	$	(25,965	)
Stock-based compensation expense		2,694			894			551
NOL not benefitted		53,798			31,935			25,085
Non-deductible compensation		1,864			—			—
Other, net		512			352			329
Provision for taxes	$	—		$	—		$	—

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. We have established a valuation allowance to offset net deferred tax assets at

December

31,

2016

and

2015

due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets. The net change in the total valuation allowance for the year ended

December

31,

2016

and

2015

was an increase of

$55.2

million and

$40.4

million, respectively.

December

31,

2016,

we had federal and California state net operating loss (“NOL”) carryforwards of

$387.6

million and

$268.5

million, respectively, expiring beginning in

2018

for federal and

2017

for California state purposes. Federal NOLs of

$10.0

million and state NOLs of

$4.2

million relate to stock-based compensation deductions in excess of book expense, the tax effect of which would be to credit additional paid-in capital, if realized. At

December

31,

2016,

we had federal and California state research credit carryforwards of

$11.6

million and

$7.6

million, respectively, expiring beginning in

2022

for federal. The California state credits can be carried forward indefinitely.

Internal Revenue Code section

382

places a limitation on the amount of taxable income that can be offset by NOL carryforwards after a change in control (generally greater than

50%

change in ownership) of a loss corporation. California has similar rules. Generally, after a change in control, a loss corporation cannot deduct NOL carryforwards in excess of the Section

382

limitation. We have performed an IRC Section

382

analysis and determined there were ownership changes in

2007,

2011,

and

2013.

We are currently in the process of completing the IRC Section

382

analysis for

2016

and we do not expect an ownership change for the year ended

December

31,

2016.

The limitation in the Federal and state carryforwards associated with the NOL and credit carryforwards reduce the deferred tax assets, which are further offset by a full valuation allowance. The limitation can result in the expiration of the NOLs and credit carryforwards available as of

December

31,

2016,

before utilization.

We file U.S. and state income tax returns with varying statutes of limitations. The tax years from

1997

2016

remain open to examination due to the carryover of unused NOL carryforwards and tax credits.

For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than

percent likely of being realized upon settlement. It is our policy to recognize interest and penalties related to income tax matters in income tax expense. As of

December

31,

2016

and

2015,

we had no accrued interest and penalties related to uncertain tax positions.

As of

December

31,

2016

and

2015,

we had unrecognized tax benefits of

$0.1

million, and the amount that would impact our effective tax rate, before the consideration of the valuation allowance, is

$0.1

million. We do not expect any material changes to the estimated amount of liability associated with its uncertain tax positions within the next

months.

Note 10 - Employee Benefit Plan

12 Months Ended

Dec. 31, 2016

Pension and Other Postretirement Benefits Disclosure [Text Block]

10 .	Employee Benefit Plan

We have a defined contribution

401(k)

plan (the “Plan”) covering substantially all of our employees. In the past

three

calendar years, we made matching cash contributions equal to

50%

of each participant’s contribution during the Plan year up to a maximum amount equal to the lesser of

of each participant’s annual compensation or

$7,950,

$7,950

and

$7,800

for the years

2016,

2015

and

2014,

respectively. Such amounts were recorded as expense in the corresponding years. We

may

also contribute additional discretionary amounts to the Plan as we

may

determine. For the years ended

December

31,

2016,

2015

and

2014,

we contributed to the Plan

$0.6

million,

$0.3

million and

$0.2

million, respectively. No discretionary contributions have been made to the Plan since its inception.

Note 11 - Summary of Quarterly Consolidated Financial Data (unaudited)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information [Text Block]

11 .	Summary of Quarterly Consolidated Financial Data (unaudited)

The following is a summary of the unaudited quarterly results of operations for the years ended

December

31,

2016

and

2015:

	2016
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In thousands, except per share amounts)
Revenues:
Net product sales	$	—		$	—		$	—		$	1,279
Operating expenses:
Cost of product sales		—			—			—			35
Research and development		16,092			27,286			30,242			29,505
General and administrative		5,367			4,774			5,333			5,892
Sales and marketing		11,853			11,006			12,159			12,650
Loss from operations		(33,312	)		(43,066	)		(47,734	)		(46,803	)
Interest income		118			97			111			119
Interest expense		(251	)		(257	)		(886	)		(1,270	)
Other expense		—			—			—			(9	)
Net loss	$	(33,445	)	$	(43,226	)	$	(48,509	)	$	(47,963	)
Basic and diluted net loss per share	$	(0.92	)	$	(1.17	)	$	(1.24	)	$	(1.22	)

	2015
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In thousands, except per share amounts)
Operating expenses:
Research and development	$	14,504		$	16,175		$	14,241		$	16,263
General and administrative		3,587			4,082			4,127			6,599
Sales and marketing		2,269			2,757			4,123			8,198
Loss from operations		(20,360	)		(23,014	)		(22,491	)		(31,060	)
Interest income		22			26			61			65
Interest expense		(232	)		(237	)		(242	)		(247	)
Other income		—			118			—			—
Net loss	$	(20,570	)	$	(23,107	)	$	(22,672	)	$	(31,242	)
Basic and diluted net loss per share	$	(0.70	)	$	(0.74	)	$	(0.63	)	$	(0.87	)

Note 12 - Subsequent Events

12 Months Ended

Dec. 31, 2016

Subsequent Events [Text Block]

12 .	Subsequent Events

January

2017,

we sold

14.1

million shares of our common stock at a public offering price of

$12.20

per share. We received total net proceeds of

$163.7

million (net of

$8.8

million in issuance costs) from the sale of the common stock. In connection with the public offering, TCP executed a waiver pursuant to which TCP waived its right to convert the Convertible Notes (see Note

7).

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

March

2015.

Heron Therapeutics, B.V. has no operations and no material assets or liabilities, and there have been no significant transactions related to Heron Therapeutics, B.V. since its inception.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

Cash, Cash Equivalents, and Short-Term Investments [Policy Text Block]

Cash,

Cash Equivalents

and Short-Term Investments

Cash and cash equivalents consist of cash and highly liquid investments with original maturities from purchase date of

three

months or less.

Short-term investments consist of securities with maturities from purchase date of greater than

three

“Promissory Note”) (see Note

7).

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

Short-term available-for-sale investments are carried at fair value (see Note

. Our Convertible Notes and Promissory Note outstanding at

December

31,

2016

do not have a readily available ascertainable market value, however, the carrying value is considered to approximate its fair value.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

may

be in excess of insured limits. We

may

Sales to ASD Specialty Healthcare, Inc., Cardinal Health, Inc. and McKesson Specialty Care Distribution Corporation each accounted for

10%

or more of our net revenues for the year ended

December

31,

2016.

The loss of any of these customers could materially and adversely affect our business, results of operations, financial condition and cash flows.

Inventory, Policy [Policy Text Block]

Inventory

Inventory is stated at the lower of cost or estimated net realizable value, on a

first

-in,

first

may

be required, which would be recorded as cost of product sales.

For the year ended

December

31,

2016,

we recognized cost of sales of

$35,000

for sales of SUSTOL, primarily related to shipping and distribution costs. All SUSTOL units sold in

2016

were manufactured prior to the approval of SUSTOL, and the costs to manufacture such units were recorded to research and development expense.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets (primarily

five

years). Leasehold improvements are stated at cost and amortized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

mpairment of Long-Lived Assets

Revenue Recognition, Policy [Policy Text Block]

Revenue

Recognition

Product

Sales

third

December

31,

2016,

product sales of

$1.1

million to our Customers have been deferred and are recorded as deferred revenue on our consolidated balance sheet.

Product Sales Allowances

may

need to adjust these estimates, which could have an effect on product sales and earnings in the period of adjustment. Our product sales allowances include:

●

Product Returns — We allow our Customers to return product for credit

months after its product expiration date. Because of the shelf life of our product and our return policy, 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.

●

Distributor Fees — We offer contractually determined discounts to our Customers. These discounts are paid on a quarterly basis within

two

months after the quarter in which product was shipped.

●

three

months after the quarter in which SUSTOL was sold.

December

31,

2016,

our product sales allowances totaled

$342,000,

which included

$72,000

for distributor fees,

$221,000

for rebates and chargebacks and

$49,000

for product returns. During the year ended

December

31,

2016,

we made

payments related to rebates, chargebacks or product returns.

Clinical Trial Accruals [Policy Text Block]

Accrued Clinical Liabilities

may

Research and Development Expense, Policy [Policy Text Block]

Research and Development Expenses

Legal Costs, Policy [Policy Text Block]

Patent Costs

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation Expense

Warrants Issued in Equity Financings [Policy Text Block]

Warrants

Income Tax, Policy [Policy Text Block]

Income Taxes

9).

Comprehensive Income, Policy [Policy Text Block]

Comprehensive

Loss

Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

The following table includes the number of stock options, warrants and shares of common stock underlying Convertible Notes not included in the computation as of the dates shown below (in thousands):

	As of December 31 ,
	2016		2015		2014

Stock options outstanding		11,845		8,435		7,918
Warrants outstanding		600		3,565		4,108
Shares of common stock underlying Convertible Notes outstanding		7,521		7,087		6,677

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

March

2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016

09,

Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting

(“ASU

2016

09”).

ASU

2016

is effective for fiscal years beginning after

December

15,

2016,

including interim periods within those fiscal years. We plan to adopt the provisions of ASU

2016

in the

first

quarter of

2017.

We do not expect the adoption of ASU

2016

to have a material impact on our results of operations or financial condition.

February

2016,

FASB issued ASU No.

2016

02,

Leases

(“ASU

2016

02”).

ASU

2016

requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than

months. In addition, ASU

2016

requires both lessees and lessors to disclose certain key information about lease transactions. ASU

2016

is effective for fiscal years beginning after

December

15,

2018,

including interim periods within those fiscal years. We plan to adopt the provisions of ASU

2016

in the

first

quarter of

2019

and we are currently evaluating the impact on our results of operations and financial condition.

July

2015,

FASB issued ASU No.

2015

11,

Inventory (Topic

330)

(“ASU

2015

11”).

ASU

2015

is effective for fiscal years beginning after

December

15,

2016,

and interim periods within fiscal years beginning after

December

15,

2017.

We plan to adopt the provisions of ASU

2015

2017.

We do not expect the adoption of ASU

2015

to have a material impact on our results of operations or financial condition.

August

2014,

FASB issued ASU No.

2014

15,

Presentation of Financial Statements – Going Concern (Subtopic

205

40)

(“ASU

2014

15”).

ASU

2014

(1)

provide a definition of the term substantial doubt,

(2)

require an evaluation every reporting period, including interim periods,

(3)

provide principles for considering the mitigating effect of management’s plans,

(4)

require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans,

(5)

require an express statement and other disclosures when substantial doubt is not alleviated, and

(6)

require an assessment for a period of

one

year after the date that the financial statements are issued (or available to be issued). The amendments in ASU

2014

are effective for the annual period ending after

December

15,

2016,

and for annual periods and interim periods thereafter. We adopted the provisions of ASU

2014

2016.

The adoption of ASU

2014

did not require any additional disclosures in our consolidated financial statements for the year ended

December

31,

2016.

May

2014,

FASB issued ASU No.

2014

09,

Revenue from Contracts with Customers (Topic

606)

(“ASU

2014

09”).

ASU

2014

is effective for fiscal years beginning after

December

15,

2017,

including interim periods within those fiscal years. The provisions of ASU

2014

allows for either a full retrospective or a modified retrospective adoption approach. We plan to adopt the provisions of ASU

2014

in the

first

quarter of

2018

and we are currently evaluating the impact on our results of operations and financial condition.

Note 2 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

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

	As of December 31 ,
	2016		2015		2014

Stock options outstanding		11,845		8,435		7,918
Warrants outstanding		600		3,565		4,108
Shares of common stock underlying Convertible Notes outstanding		7,521		7,087		6,677

Note 3 - Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Balance at		for Identical		Observable		Unobservable
	December 31 ,		Assets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	11,493	$	11,493	$	—	$	—
United States corporate debt securities		12,039		—		12,039		—
Foreign corporate debt securities		14,057		—		14,057		—
United States commercial paper		8,635		—		8,635		—
Foreign commercial paper		2,993		—		2,993		—
Total	$	49,217	$	11,493	$	37,724	$	—

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Balance at		for Identical		Observable		Unobservable
	December 31 ,		Assets		Inputs		Inputs
	201 5		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	67,089	$	67,089	$	—	$	—
United States corporate debt securities		28,715		—		28,715		—
Foreign corporate debt securities		4,922		—		4,922		—
United States commercial paper		7,770		—		7,770		—
Foreign commercial paper		15,579		—		15,579		—
Total	$	124,075	$	67,089	$	56,986	$	—

Note 4 - Balance Sheet Details (Tables)

12 Months Ended

Dec. 31, 2016

Available-for-sale Securities [Table Text Block]

	December 31, 201 6
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
United States corporate debt	$	12,048	$	—	$	(9	)	$	12,039
Foreign corporate debt		14,065		—		(8	)		14,057
United States commercial paper		8,635		—		—			8,635
Foreign commercial paper		2,993		—		—			2,993
Total	$	37,741	$	—	$	(17	)	$	37,724

	December 31, 201 5
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
United States corporate debt	$	27,750	$	—	$	(35	)	$	27,715
Foreign corporate debt		4,927		—		(5	)		4,922
United States commercial paper		7,770		—		—			7,770
Foreign commercial paper		15,579		—		—			15,579
Total	$	56,026	$	—	$	(40	)	$	55,986

Schedule of Inventory, Current [Table Text Block]

	December 31,
	2016		2015
Raw materials	$	1,647	$	—
Work in process		1,104		—
Finished goods		2,589		—
Total inventory	$	5,340	$	—

Property, Plant and Equipment [Table Text Block]

	December 31,
	2016			2015
Scientific equipment	$	7,952		$	5,593
Computer equipment and software		1,429			1,272
Furniture, fixtures and office equipment		674			352
Leasehold improvements		1,635			1,384
Property and equipment		11,690			8,601
Less: accumulated depreciation and amortization		(6,614	)		(5,552	)
Property and equipment, net	$	5,076		$	3,049

Schedule of Accrued Liabilities [Table Text Block]

	December 31,
	20 16		2015
Accrued employee salaries and benefits	$	2,236	$	1,863
Accrued bonuses		3,474		2,965
Accrued expenses for realignment (see Note 6)		2,704		—
Total accrued payroll and employee liabilities	$	8,414	$	4,828

	December 31,
	2016		2015
Accrued consulting and professional fees	$	4,703	$	3,914
Accrued accounts payable		1,039		36
Accrued sales allowances		342		—
Deferred rent		116		61
Other accrued liabilities		88		143
Total other accrued liabilities	$	6,288	$	4,154

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

Note 5 - Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

	Operating Leases
Years ended December 31,
2017	$	2,259
2018		2,553
2019		1,824
2020		1,424
2021		1,466
Thereafter		3,532
Total	$	13,058

Note 8 - Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2016

Common Stock Reserved for Future Issuance [Table Text Block]

	Number of Shares
Stock options outstanding		11,845,376
Stock options available for grant		2,653,548
Employee stock purchase plan		144,600
Warrants outstanding		600,000
Shares of common stock underlying Convertible Notes outstanding (see Note 7)		7,521,416
Total shares reserved for future issuance		22,764,940

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Outstanding Options
				Weighted-
				Average
	Number of			Exercise
	Shares			Price
Balance at December 31, 2013		6,355,681		$	8.22
Granted		3,181,001			9.40
Exercised		(756,593	)		6.34
Cancelled		(862,085	)		9.88
Balance at December 31, 2014		7,918,004			8.69
Granted		2,134,505			28.95
Exercised		(1,042,343	)		9.15
Cancelled		(575,178	)		10.42
Balance at December 31, 2015		8,434,988			13.64
Granted		4,920,661			15.98
Exercised		(798,363	)		8.37
Cancelled		(711,910	)		22.43
Balance at December 31, 2016		11,845,376		$	14.44

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block]

	Years Ended December 31,
	2016				2015				2014
			Weighted-				Weighted-				Weighted-
			Average				Average				Average
			Exercise				Exercise				Exercise
	Options		Price		Options		Price		Options		Price
Exercisable at end of year		4,356,665	$	11.66		2,587,392	$	8.72		2,237,901	$	9.01
Options vested or expected to vest		11,234,529	$	14.32		8,059,481	$	13.38		7,841,074	$	8.69

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

											Weighted-
					Weighted-						Average
					Average		Weighted-				Exercise
					Remaining		Average				Price of
Options	Range of				Contractual		Exercise		Options		Options
Outstanding	Exercise Prices				Life (in years)		Price		Exercisable		Exercisable
581,518		$3.80	–	7.00		1.01	$	6.02		581,518	$	6.02
1,935,473			$7.20			6.28		7.20		1,054,143		7.20
1,793,013		$7.61	–	9.05		7.09		8.93		1,104,899		8.94
843,387		$9.20	–	12.65		4.23		10.33		736,434		10.39
2,271,111			$13.00			9.97		13.00		—		—
548,025		$13.20	–	16.62		7.38		15.46		202,650		14.57
1,241,350			$16.83			9.71		16.83		51,320		16.83
1,226,884		$17.10	–	28.30		8.41		22.48		164,692		26.76
1,203,272		$28.73	–	29.86		8.49		29.44		395,686		29.44
201,343		$29.95	–	102.40		8.61		34.78		65,323		35.03
11,845,376		$3.80	–	102.40		7.60		14.44		4,356,665		11.66

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	December 31,
	2016		2015		2014
Research and development	$	11,316	$	4,701	$	3,329
General and administrative		7,402		6,282		2,532
Sales and marketing		7,238		3,377		2,206
Stock-based compensation expense included in operating expenses	$	25,956	$	14,360	$	8,067

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	December 31,
	2016			2015			2014
Risk-free interest rate		1.7	%		1.7	%		1.9	%
Dividend yield		—	%		—	%		—	%
Volatility		89.1	%		92.7	%		99.0	%
Expected life (years)		6			6			6

	December 31,
	2016			2015			2014
Risk-free interest rate		0.4	%		0.1	%		0.1	%
Dividend yield		—	%		—	%		—	%
Volatility		68.3	%		86.7	%		53.8	%
Expected life (months)		6			6			6

Note 9 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31,
	201 6			201 5
Deferred tax assets:
Net operating loss carryforward	$	138,727		$	94,465
Research and development credits		16,687			11,181
Stock-based compensation		10,272			6,726
Other, net		3,204			1,345
Total deferred tax assets		168,890			113,717
Valuation allowance for net deferred tax assets		(168,890	)		(113,717	)
Net deferred taxes	$	—		$	—

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	December 31,
	201 6			201 5			201 4
Statutory federal income tax rate of 34%	$	(58,868	)	$	(33,181	)	$	(25,965	)
Stock-based compensation expense		2,694			894			551
NOL not benefitted		53,798			31,935			25,085
Non-deductible compensation		1,864			—			—
Other, net		512			352			329
Provision for taxes	$	—		$	—		$	—

Note 11 - Summary of Quarterly Consolidated Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information [Table Text Block]

	2016
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In thousands, except per share amounts)
Revenues:
Net product sales	$	—		$	—		$	—		$	1,279
Operating expenses:
Cost of product sales		—			—			—			35
Research and development		16,092			27,286			30,242			29,505
General and administrative		5,367			4,774			5,333			5,892
Sales and marketing		11,853			11,006			12,159			12,650
Loss from operations		(33,312	)		(43,066	)		(47,734	)		(46,803	)
Interest income		118			97			111			119
Interest expense		(251	)		(257	)		(886	)		(1,270	)
Other expense		—			—			—			(9	)
Net loss	$	(33,445	)	$	(43,226	)	$	(48,509	)	$	(47,963	)
Basic and diluted net loss per share	$	(0.92	)	$	(1.17	)	$	(1.24	)	$	(1.22	)

	2015
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(In thousands, except per share amounts)
Operating expenses:
Research and development	$	14,504		$	16,175		$	14,241		$	16,263
General and administrative		3,587			4,082			4,127			6,599
Sales and marketing		2,269			2,757			4,123			8,198
Loss from operations		(20,360	)		(23,014	)		(22,491	)		(31,060	)
Interest income		22			26			61			65
Interest expense		(232	)		(237	)		(242	)		(247	)
Other income		—			118			—			—
Net loss	$	(20,570	)	$	(23,107	)	$	(22,672	)	$	(31,242	)
Basic and diluted net loss per share	$	(0.70	)	$	(0.74	)	$	(0.63	)	$	(0.87	)

Note 1 - Organization and Business (Details Textual) - USD ($) $ in Thousands	1 Months Ended
	Jan. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Retained Earnings (Accumulated Deficit)		$ (585,971)	$ (412,828)
Cash, Cash Equivalents, and Short-term Investments		51,100
Pro Forma [Member]
Cash, Cash Equivalents, and Short-term Investments		$ 214,800
Subsequent Event [Member]
Proceeds from Issuance of Common Stock	$ 163,700

Cash includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid Investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Short-term investments, exclusive of cash equivalents, generally consist of marketable securities intended to be sold within one year (or the normal operating cycle if longer) and may include trading securities, available-for-sale securities, or held-to-maturity securities (if maturing within one year), as applicable.

Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended				12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cost of Goods Sold	$ 35,000				$ 35,000
Property, Plant and Equipment, Useful Life					5 years
Deferred Revenue, Current	$ 1,099,000				$ 1,099,000
Sales Allowances, Goods					342,000
Payments of Sales Returns and Allowances, Goods					0
Allowance for Sales Returns, Distributor Fees [Member]
Sales Allowances, Goods					72,000
Allowance for Sales Returns, Rebates and Chargebacks [Member]
Sales Allowances, Goods					221,000
Allowance for Sales Returns [Member]
Sales Allowances, Goods					$ 49,000

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