x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
¨ | TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Delaware | 26-2007174 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
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Item 1. | |||||
Item 2. | |||||
Item 3. | |||||
Item 4. | |||||
Item 1. | |||||
Item 1A. | |||||
Item 2. | |||||
Item 3. | |||||
Item 4. | |||||
Item 5. | |||||
Item 6. |
• | our estimates regarding our expenses, revenues, anticipated capital requirements and our needs for additional financing; |
• | the implementation of our business model and strategic plans for our business and technology; |
• | the timing of the commencement, progress and receipt of data from any of our preclinical and clinical trials; |
• | the expected results of any clinical trial and the impact on the likelihood or timing of any regulatory approval; |
• | the scope of protection we are able to establish and maintain for intellectual property rights covering our technology and product candidates; |
• | the timing or likelihood of regulatory filings and approvals; |
• | the outcome of any current or future litigation; |
• | developments relating to our competitors and our industry; and |
• | our expectations regarding licensing, acquisitions and strategic operations. |
September 30, 2016 | December 31, 2015 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 70,434 | $ | 112,921 | ||||
Short-term investments | 42,037 | — | ||||||
Accounts receivable | 7,494 | 972 | ||||||
Inventory | 709 | 13 | ||||||
Prepaid expenses and other current assets | 4,552 | 1,654 | ||||||
Total current assets | 125,226 | 115,560 | ||||||
Property and equipment, net | 433 | 585 | ||||||
Total assets | $ | 125,659 | $ | 116,145 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 4,863 | $ | 3,074 | ||||
Accrued liabilities | 4,696 | 3,959 | ||||||
Accrued litigation-related settlement, current | 4,600 | — | ||||||
Deferred revenue and other current liabilities | 2,931 | 78 | ||||||
Total current liabilities | 17,090 | 7,111 | ||||||
Accrued litigation-related settlement, noncurrent | 1,250 | — | ||||||
Other noncurrent liabilities | 60 | 41 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized at September 30, 2016 (unaudited) and December 31, 2015; 25,409,177 and 20,153,202 shares issued and outstanding at September 30, 2016 (unaudited) and December 31, 2015, respectively | 25 | 20 | ||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | — | — | ||||||
Additional paid-in capital | 276,519 | 239,181 | ||||||
Accumulated other comprehensive income | 7 | — | ||||||
Accumulated deficit | (169,292 | ) | (130,208 | ) | ||||
Total stockholders’ equity | 107,259 | 108,993 | ||||||
Total liabilities and stockholders’ equity | $ | 125,659 | $ | 116,145 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | ||||||||||||||||
Revenues: | ||||||||||||||||
Licensing revenue | $ | 7,000 | $ | 3,500 | $ | 7,000 | $ | 3,500 | ||||||||
Product sales | 426 | 824 | $ | 1,166 | 932 | |||||||||||
Collaborative revenue | 780 | 329 | 3,036 | 3,939 | ||||||||||||
Total revenues | 8,206 | 4,653 | 11,202 | 8,371 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of product sales | 72 | 298 | 347 | 421 | ||||||||||||
Research and development | 11,173 | 8,263 | 33,129 | 24,209 | ||||||||||||
General and administrative | 9,554 | 3,506 | 17,416 | 11,086 | ||||||||||||
Total operating expenses | 20,799 | 12,067 | 50,892 | 35,716 | ||||||||||||
Loss from operations | (12,593 | ) | (7,414 | ) | (39,690 | ) | (27,345 | ) | ||||||||
Interest and other income | 150 | 7 | 606 | 15 | ||||||||||||
Net loss | $ | (12,443 | ) | $ | (7,407 | ) | $ | (39,084 | ) | $ | (27,330 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized (loss) gain on investments | (23 | ) | — | 7 | — | |||||||||||
Comprehensive loss | $ | (12,466 | ) | $ | (7,407 | ) | $ | (39,077 | ) | $ | (27,330 | ) | ||||
Basic and diluted net loss per share | $ | (0.60 | ) | $ | (0.37 | ) | $ | (1.92 | ) | $ | (1.45 | ) | ||||
Weighted-average shares used to compute basic and diluted net loss per share | 20,803,776 | 20,131,260 | 20,372,376 | 18,822,517 |
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
Operating activities | ||||||||
Net loss | $ | (39,084 | ) | $ | (27,330 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 228 | 177 | ||||||
Amortization of premium/discount on investments | (30 | ) | — | |||||
Stock-based compensation expense | 6,907 | 4,451 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (6,522 | ) | (1,173 | ) | ||||
Inventory | (696 | ) | (282 | ) | ||||
Prepaid expenses and other current assets | (2,898 | ) | (792 | ) | ||||
Accounts payable | 1,277 | (4,224 | ) | |||||
Accrued liabilities | 737 | (557 | ) | |||||
Accrued litigation-related settlement | 5,850 | — | ||||||
Deferred revenue and other current liabilities | 2,872 | (528 | ) | |||||
Net cash used in operating activities | (31,359 | ) | (30,258 | ) | ||||
Investing activities | ||||||||
Purchases of property and equipment | (76 | ) | (308 | ) | ||||
Maturities of short-term investments | 23,000 | — | ||||||
Purchases of short-term investments | (65,000 | ) | — | |||||
Net cash used in investing activities | (42,076 | ) | (308 | ) | ||||
Financing activities | ||||||||
Issuance of common stock to the public, net of offering costs | 30,822 | 75,359 | ||||||
Proceeds from exercise of stock options and employee stock purchases | 126 | 343 | ||||||
Net cash provided by financing activities | 30,948 | 75,702 | ||||||
Net (decrease) increase in cash and cash equivalents | (42,487 | ) | 45,136 | |||||
Cash and cash equivalents, beginning of period | 112,921 | 75,354 | ||||||
Cash and cash equivalents, end of period | $ | 70,434 | $ | 120,490 | ||||
Supplemental cash flow information | ||||||||
Stock offering costs incurred, not yet paid | $ | 512 | $ | — |
September 30, | ||||||
2016 | 2015 | |||||
(unaudited) | ||||||
Outstanding options to purchase common stock | 3,481,952 | 2,307,967 | ||||
Unvested restricted stock units | 115,250 | — | ||||
Total outstanding shares of common stock equivalents | 3,597,202 | 2,307,967 |
September 30, 2016 | ||||||||||||||||
(unaudited) | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Money market funds | $ | 70,398 | $ | — | $ | — | $ | 70,398 | ||||||||
U.S. Treasury securities | 42,030 | 35 | (28 | ) | 42,037 | |||||||||||
Total | $ | 112,428 | $ | 35 | $ | (28 | ) | $ | 112,435 | |||||||
Classified as: | ||||||||||||||||
Cash equivalents | $ | 70,398 | ||||||||||||||
Short-term investments | 42,037 | |||||||||||||||
Total | $ | 112,435 |
September 30, 2016 | ||||||||||||||||
(unaudited) | ||||||||||||||||
Assets: | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||
Money market funds | $ | 70,398 | $ | — | $ | — | $ | 70,398 | ||||||||
U.S. Treasury securities | 42,037 | — | — | 42,037 | ||||||||||||
$ | 112,435 | $ | — | $ | — | $ | 112,435 |
December 31, 2015 | ||||||||||||||||
Assets: | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||
Money market funds | $ | 110,657 | $ | — | $ | — | $ | 110,657 |
September 30, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
Work in process | $ | 669 | $ | — | |||
Finished goods | 40 | 13 | |||||
Total inventory | $ | 709 | $ | 13 |
September 30, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
Research and development services | $ | 3,603 | $ | 2,043 | |||
Legal and professional services | — | 378 | |||||
Employee compensation | 1,093 | 1,538 | |||||
Total accrued liabilities | $ | 4,696 | $ | 3,959 |
September 30, 2016 | December 31, 2015 | |||||
(unaudited) | ||||||
Shares available for issuance under the employee stock purchase plan | 507,498 | 316,322 | ||||
Options granted and outstanding | 3,481,952 | 2,832,467 | ||||
Unvested restricted stock units | 115,250 | — | ||||
Shares available for future stock option grants | 825,164 | 804,553 | ||||
Shares of common stock reserved for future issuance | 4,929,864 | 3,953,342 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Outstanding at December 31, 2015 | — | — | |||||
Granted | 118,000 | $ | 19.39 | ||||
Vested | — | $ | — | ||||
Forfeited | (2,750 | ) | $ | 19.39 | |||
Outstanding at September 30, 2016 | 115,250 | $ | 19.39 |
OPTIONS OUTSTANDING | WEIGHTED- AVERAGE EXERCISE PRICE | WEIGHTED- AVERAGE REMAINING CONTRACT TERM (in years) | AGGREGATE INTRINSIC VALUE (in thousands) | ||||||||||
Outstanding at December 31, 2015 | 2,832,467 | $ | 11.48 | 8.24 | |||||||||
Granted (unaudited) | 827,088 | $ | 17.38 | ||||||||||
Exercised (unaudited) | (20,782 | ) | $ | 3.12 | |||||||||
Expired (unaudited) | (29,797 | ) | $ | 25.65 | |||||||||
Forfeited (unaudited) | (127,024 | ) | $ | 19.06 | |||||||||
Outstanding at September 30, 2016 (unaudited) | 3,481,952 | $ | 12.53 | 7.86 | $ | 7,591 | |||||||
Vested and expected to vest after September 30, 2016 (unaudited) | 3,331,546 | $ | 12.32 | 7.81 | $ | 7,542 | |||||||
Exercisable as of September 30, 2016 (unaudited) | 1,517,001 | $ | 7.95 | 6.65 | $ | 6,304 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | ||||||||||||||||
Employee: | ||||||||||||||||
Research and development | $ | 957 | $ | 480 | $ | 2,893 | $ | 1,369 | ||||||||
General and administrative | 1,198 | 866 | 3,753 | 2,811 | ||||||||||||
Non-Employee: | ||||||||||||||||
Research and development | 165 | (8 | ) | 202 | 88 | |||||||||||
General and administrative | 6 | 69 | 59 | 183 | ||||||||||||
Total stock-based compensation expense | $ | 2,326 | $ | 1,407 | $ | 6,907 | $ | 4,451 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2016 | 2015 | 2016 | 2015 | |||||
(unaudited) | ||||||||
Weighted-average estimated fair value | $3.25 | $12.60 | $11.72 | $21.20 | ||||
Risk-free interest rate | 1.10% - 1.26% | 1.64% - 1.86% | 1.10% - 1.84% | 1.50% - 1.86% | ||||
Expected term of options (in years) | 6.08 | 6.08 | 5.50 - 6.08 | 5.50 - 6.08 | ||||
Expected stock price volatility | 77% | 78% - 83% | 77% - 80% | 78% - 91% | ||||
Expected dividend yield | — | — | — | — |
• | complete our current and planned Phase 1 and Phase 2 clinical trials, as well as potentially initiate new clinical trials for existing product candidates, including pivotal trials; |
• | continue research and development efforts to build our pipeline beyond the current product candidates; |
• | perform additional process development for our product candidates, including initial commercial scale up efforts; |
• | seek regulatory approvals for our product candidates, if any, that successfully complete clinical trials; |
• | establish a sales, marketing and distribution infrastructure to commercialize and market products for which we obtain regulatory approval; |
• | maintain, expand and protect our intellectual property portfolio; |
• | hire additional clinical, quality control, scientific and management personnel; and |
• | add operational and financial personnel to support our product development efforts and operational support applicable to operating as a public company. |
• | CMB305. Enrollment is ongoing in the expansion arm of our Phase 1 single agent trial of CMB305 in patients with cancers expressing the NY-ESO-1 tumor antigen. Shortly after ASCO, we presented early patient data from a completed first-in-human dose-escalation trial and an early subset of patients from an expansion trial of CMB305 in patients with soft tissue sarcoma showed that CMB305 had a favorable safety profile with only grade 1 and 2 adverse events and without dose-limiting toxicities. In addition, patients who responded immunologically had a greater degree of antigen-specific T cell response than previously reported in the Phase 1 trial of LV305 alone, which is consistent with the rationale of the prime boost approach. We also observed preliminary clinical benefit in the form of a median progression-free survival (PFS) of 5.5 months, with a 93% patient survival as of the data review date. |
• | LV305. We completed enrollment in our Phase 1 single agent trial of LV305 in 24 patients with advanced or metastatic sarcoma expressing NY-ESO-1. At ASCO, we presented data showing that 58% had clinical benefit in the form of stable disease (SD) and one patient showed a partial response (PR), and median PFS was 4.6 months. In addition, median OS had not yet been reached, with 81% survival at one year. A different arm of this trial will explore the use of LV305 with Merck’s anti-PD-1 agent, KEYTRUDA®, in melanoma patients who have an inadequate response to anti-PD1 therapy, pursuant to a collaboration with Merck. |
• | G100. We completed enrollment of our Phase 1 trial of G100, in combination with radiation, in patients with Merkel cell carcinoma (MCC). At ASCO, we presented data on all 10 patients, which showed an overall |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | ||||||||||||||||
Direct research and development expense by platform: | ||||||||||||||||
ZVex | $ | 2,641 | $ | 4,911 | $ | 12,309 | $ | 11,712 | ||||||||
GLAAS | 2,628 | 656 | 4,479 | 1,747 | ||||||||||||
G103 | 832 | 314 | 2,943 | 3,735 | ||||||||||||
Total direct research and development program expense | 6,101 | 5,881 | 19,731 | 17,194 | ||||||||||||
Indirect research and development expense by type: | ||||||||||||||||
Personnel related costs | 2,720 | 2,003 | 8,048 | 5,920 | ||||||||||||
Research and development supplies and services | 1,779 | 141 | 3,985 | 408 | ||||||||||||
Allocated facility, equipment, travel and other expense | 573 | 238 | 1,365 | 687 | ||||||||||||
Total indirect research and development expense | 5,072 | 2,382 | 13,398 | 7,015 | ||||||||||||
Total research and development expense | $ | 11,173 | $ | 8,263 | $ | 33,129 | $ | 24,209 |
• | the scope, rate of progress, expense and results of our ongoing and additional clinical trials that we may conduct; |
• | the scope, rate of progress and expense of process development; |
• | other research activities; and |
• | the timing of regulatory approvals. |
Three Months Ended September 30, | Increase/ (Decrease) | |||||||||||
2016 | 2015 | |||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Total revenues | $ | 8,206 | $ | 4,653 | $ | 3,553 | ||||||
Operating expenses: | ||||||||||||
Cost of product sales | 72 | 298 | (226 | ) | ||||||||
Research and development | 11,173 | 8,263 | 2,910 | |||||||||
General and administrative | 9,554 | 3,506 | 6,048 | |||||||||
Total operating expenses | 20,799 | 12,067 | 8,732 | |||||||||
Loss from operations | (12,593 | ) | (7,414 | ) | (5,179 | ) | ||||||
Interest and other income | 150 | 7 | 143 | |||||||||
Net loss | $ | (12,443 | ) | $ | (7,407 | ) | $ | (5,036 | ) |
Nine Months Ended September 30, | Increase/ (Decrease) | |||||||||||
2016 | 2015 | |||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Total revenues | $ | 11,202 | $ | 8,371 | $ | 2,831 | ||||||
Operating expenses: | ||||||||||||
Cost of product sales | 347 | 421 | (74 | ) | ||||||||
Research and development | 33,129 | 24,209 | 8,920 | |||||||||
General and administrative | 17,416 | 11,086 | 6,330 | |||||||||
Total operating expenses | 50,892 | 35,716 | 15,176 | |||||||||
Loss from operations | (39,690 | ) | (27,345 | ) | (12,345 | ) | ||||||
Interest and other income | 606 | 15 | 591 | |||||||||
Net loss attributable to common stockholders | $ | (39,084 | ) | $ | (27,330 | ) | $ | (11,754 | ) |
• | the scope, rate of progress, results and costs of our clinical trials, preclinical studies and other research and development activities; |
• | the scope, rate of progress and costs of our manufacturing development and commercial manufacturing activities; |
• | the cost, timing and outcomes of regulatory proceedings, including the U.S. Food and Drug Administration (FDA) review of any Biologics License Application (BLA) we file; |
• | payments required with respect to development milestones we achieve under our in-licensing agreements; |
• | the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; |
• | the costs associated with commercializing our product candidates, if they receive regulatory approval; |
• | the cost and timing of developing our ability to establish sales and marketing capabilities; |
• | the costs of current or future litigation or judgments; |
• | competing technological efforts and market developments; |
• | changes in our existing research relationships; |
• | our ability to establish collaborative arrangements to the extent necessary; |
• | revenues received from any existing or future products; and |
• | payments received under any current or future strategic partnerships. |
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
Net cash used in operating activities | $ | (31,359 | ) | $ | (30,258 | ) | ||
Net cash used in investing activities | (42,076 | ) | (308 | ) | ||||
Net cash provided by financing activities | 30,948 | 75,702 |
• | successfully complete the research and clinical development of and receive regulatory approval for current and future product candidates, including those of our licensees for the use of GLA in specific indications; |
• | launch, commercialize and achieve market acceptance of our product candidates for which we obtain marketing approval, if any, and if launched independently, successfully establish a sales, marketing and distribution infrastructure; |
• | establish and maintain supplier and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply; |
• | obtain coverage and adequate product reimbursement from third-party payors, including government payors; |
• | establish, maintain and protect our intellectual property rights; and |
• | attract, hire and retain qualified personnel. |
• | the scope, rate of progress, results and costs of our clinical trials, preclinical studies and other research and development activities; |
• | the scope, rate of progress and costs of our manufacturing development and commercial manufacturing activities; |
• | the cost, timing and outcomes of regulatory proceedings, including FDA review of any BLA we file; |
• | payments required under our existing or future in-licensing agreements; |
• | the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; |
• | the costs associated with commercializing our product candidates, if they receive regulatory approval; |
• | the cost and timing of developing our ability to establish sales and marketing capabilities; |
• | the costs of current or future litigation, judgments or settlements; |
• | competing technological efforts and market developments; |
• | changes in our existing research relationships; |
• | our ability to establish collaborative arrangements to the extent necessary; |
• | revenues received from any existing or future products; and |
• | payments received under any current or future strategic partnerships. |
• | delays in initiating clinical trial sites to conduct our clinical trials and reaching agreement on acceptable terms and budgets with prospective clinical trial sites; |
• | delays in, or failure to obtain, approval from institutional review boards (IRBs), ethics committees (ECs) or institutional biosafety committees, to begin clinical trials at study sites; |
• | imposition of a clinical hold by the FDA or other regulatory authorities, or a decision by the FDA, other regulatory authorities, IRBs, ECs, or recommendation by a data safety monitoring board, to suspend or terminate clinical trials at any time for safety issues or for any other reason; |
• | deviations from the trial protocol by clinical trial sites and investigators, or failure to conduct the trial in accordance with regulatory requirements; |
• | failure of third parties, such as CROs, to satisfy their contractual duties or meet expected deadlines; |
• | delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites; |
• | for clinical trials in selected patient populations, delays in identification and auditing of central or other laboratories and the transfer and validation of assays or tests to be used to identify selected patients; |
• | delays in having patients enroll in a trial, complete participation in a trial or return for post-treatment follow-up; |
• | delays caused by patients dropping out of a trial due to side effects, disease progression or other reasons; |
• | slow patient enrollment because of the perceived risk of contracting HIV because the viral vector we use in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV; |
• | withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; or |
• | changes in government regulations or administrative actions or lack of adequate funding to continue the clinical trials. |
• | the nature and size of the patient population; |
• | the number and location of clinical sites we enroll; |
• | competition with other companies for clinical sites and patients; |
• | design of the trial protocol; |
• | eligibility criteria for the study in question; |
• | slow enrollment because of the perceived risk by patients of contracting HIV because the viral vector we use in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV; |
• | ability to obtain and maintain patient consents; and |
• | clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating. |
• | we may suspend marketing of, or withdraw or recall, such product; |
• | regulatory authorities may withdraw approvals of such product; |
• | regulatory authorities may require additional warnings on the label; |
• | the FDA or other regulatory authorities may issue safety alerts, “Dear Healthcare Provider” letters, press releases or other communications containing warnings about such product; |
• | the FDA may require the establishment or modification of a Risk Evaluation and Mitigation Strategy (REMS) or a comparable foreign regulatory authority may require the establishment or modification of a similar strategy that may, for instance, restrict distribution of our products and impose other implementation requirements on us; |
• | regulatory authorities may require that we conduct post-marketing studies; |
• | we could be sued and held liable for harm caused to subjects or patients; and |
• | our reputation may suffer. |
• | deficiencies in the conduct of the clinical trials, including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols; |
• | deficiencies in the clinical trial operations or trial sites; |
• | the product candidate may have unforeseen adverse side effects; |
• | deficiencies in the trial design necessary to adequately demonstrate efficacy; |
• | fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; |
• | the product candidate may not appear to be more effective than current therapies; or |
• | the quality or stability of the product candidate may fall below acceptable standards. |
• | disagreement with the design or implementation of our clinical trials; |
• | failure to demonstrate that a product candidate is safe and effective for its proposed indication; |
• | failure of clinical trials’ endpoints to meet the level of statistical significance required for approval; |
• | failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; |
• | disagreement with our interpretation of data from preclinical studies or clinical trials; |
• | the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval; |
• | failure to obtain approval of the manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies; or |
• | changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval. |
• | issue warning letters or untitled letters; |
• | mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners; |
• | impose a consent decree, which can include various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; |
• | seek an injunction or other court actions to impose civil or criminal penalties or monetary fines; |
• | suspend or withdraw regulatory approval; |
• | suspend any ongoing clinical trials; |
• | refuse to approve pending applications or supplements to applications filed by us; |
• | suspend or impose restrictions on operations, including costly new manufacturing requirements; or |
• | seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall. |
• | the efficacy and safety profile as demonstrated in clinical trials; |
• | the timing of market introduction of the product candidate as well as competitive products; |
• | the clinical indications for which the product candidate is approved; |
• | acceptance of the product candidate as a safe and effective treatment by physicians, clinics and patients; |
• | the potential and perceived advantages of product candidates over alternative treatments; |
• | the perceived risk of contracting HIV because the viral vector we use in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV; |
• | the cost of treatment in relation to alternative treatments; |
• | the availability of coverage and adequate reimbursement and pricing by third-party payors, including government payors and the willingness of patients to pay out-of-pocket in the absence of coverage by third-party payors; |
• | the willingness of the target patient population to try new therapies based on new technologies and of physicians to prescribe these therapies; |
• | the strength of marketing and distribution support; |
• | relative convenience, frequency and ease of administration; |
• | the frequency and severity of adverse events; |
• | the effectiveness of sales and marketing efforts; and |
• | unfavorable publicity relating to the product candidate. |
• | the efficacy and safety profile of our product candidates, including relative to marketed products and product candidates in development by third parties; |
• | the time it takes for our product candidates to complete clinical development and receive marketing approval; |
• | the ability to commercialize any of our product candidates that receive regulatory approval; |
• | the price of our products, including in comparison to branded or generic competitors; |
• | whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare; |
• | the ability to establish, maintain and protect intellectual property rights related to our product candidates; |
• | the ability to manufacture commercial quantities of any of our product candidates that receive regulatory approval; and |
• | acceptance of any of our product candidates that receive regulatory approval by physicians and other healthcare providers. |
• | train, manage and motivate a growing employee base; |
• | accurately forecast demand for our products; and |
• | expand existing operational, financial and management information systems. |
• | decreased demand for our products; |
• | termination of clinical trial sites or entire trial programs; |
• | injury to our reputation and significant negative media attention; |
• | withdrawal of trial participants; |
• | significant costs to defend the related litigation; |
• | substantial monetary awards to trial subjects or patients; |
• | diversion of management and scientific resources from our business operations; and |
• | the inability to commercialize any products that we may develop. |
• | the Physician Payment Sunshine Act (federal Open Payments program), created under Section 6002 of the Affordable Care Act and its implementing regulations, requires manufacturers of drugs, devices, |
• | the federal Anti-Kickback Statute prohibits persons from, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for the furnishing or arranging for the furnishing, or the purchase, lease or order, or arranging for or recommending purchase, lease or order, any good or service for which payment may be made under a federal healthcare program such as Medicare and Medicaid; |
• | the federal false claims laws impose civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; |
• | the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, or knowingly and willfully making false statements relating to healthcare matters; |
• | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and its implementing regulations, also imposes obligations on certain covered entity health care providers, health plans, and health care clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; |
• | analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; |
• | state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; |
• | state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and |
• | state and foreign laws that govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. |
• | our partners’ failure to timely perform their obligations under our agreements; |
• | our partners’ failure to timely or fully develop or effectively commercialize the product candidates; and |
• | a material contractual dispute between us and our partners. |
• | the development of certain of our current or future product candidates may be impaired or delayed; |
• | our cash expenditures related to development of certain of our current or future product candidates would increase significantly and we may need to seek additional financing; |
• | we may be required to hire additional employees or otherwise devote resources and develop expertise, such as sales and marketing expertise, for which we have not budgeted; and |
• | we will bear all of the risk related to the development of any such product candidates. |
• | we may not be able to control the amount and timing of resources that our collaborators devote to the development or commercialization of our product candidates; |
• | collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; |
• | collaborators may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs; |
• | collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; |
• | disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; |
• | collaborators may experience financial difficulties; |
• | collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; |
• | business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; |
• | collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and |
• | collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates. |
• | the success of competitive products or technologies; |
• | regulatory actions with respect to our products or our competitors’ products; |
• | actual or anticipated changes in our growth rate relative to our competitors; |
• | announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; |
• | results of clinical trials of our product candidates or those of our competitors; |
• | regulatory or legal developments in the United States and other countries; |
• | developments or disputes concerning patent applications, issued patents or other proprietary rights; |
• | the recruitment or departure of key personnel; |
• | the level of expenses related to any of our product candidates or clinical development programs; |
• | the results of our efforts to in-license or acquire additional product candidates or products; |
• | actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; |
• | variations in our financial results or those of companies that are perceived to be similar to us; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
• | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
• | announcement or expectation of additional financing efforts; |
• | sales of our common stock by us, our officers, directors, or their affiliated funds or our other stockholders; |
• | changes in the structure of healthcare payment systems; |
• | market conditions in the pharmaceutical and biotechnology sectors; |
• | rumors or new announcements by third parties, including competitors; and |
• | general economic, industry and market conditions. |
• | the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting; |
• | the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding |
• | the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and |
• | any rules that the Public Company Accounting Oversight Board may adopt requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements. |
• | authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue without stockholder approval; |
• | prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders to elect director candidates; |
• | prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; |
• | eliminating the ability of stockholders to call a special meeting of stockholders; and |
• | establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings. |
Immune Design Corp. | ||
(Registrant) | ||
Date: | November 9, 2016 | /s/ Carlos Paya, M.D., Ph.D. |
Carlos Paya, M.D., Ph.D. President and Chief Executive Officer (Principal Executive Officer) | ||
Date: | November 9, 2016 | /s/ Stephen Brady |
Stephen Brady Executive Vice President, Strategy & Finance (Principal Accounting Officer and Principal Financial Officer) |
Exhibit No. | Description |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on July 29, 2014). |
3.2 | Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-1 (File No. 333-196979), as filed with the SEC on June 23, 2014). |
4.1 | Specimen Common Stock Certificate of the Company (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 333-196979), as filed with the SEC on June 23, 2014). |
10.1† | License Agreement, by and between the Company and Aventis Inc., dated August 6, 2014. |
10.2 | Executive Employment Agreement, by and between the Company and Sergey Yurasov, M.D., Ph.D., dated September 30, 2016. |
31.1 | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. |
31.2 | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. |
32.1* | Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* | Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101 | Financial statements from the Quarterly Report on Form 10-Q of Immune Design Corp. for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss); (iii) the Condensed Consolidated Statements of Cash Flow; and (iv) Notes to Condensed Consolidated Financial Statements. |
* | Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing. |
† | Registrant has requested confidential treatment for certain portions of this exhibit. This exhibit omits the information subject to this confidentiality request. Omitted portions have been filed separately with the SEC. |
PRELIMINARY STATEMENT | 1 | |||
1. | DEFINITIONS | 2 | ||
2. | GRANT OF LICENSES; EXCLUSIVITY | 13 | ||
2.1 | Licenses to Sanofi | 13 | ||
2.2 | Sublicensing by Sanofi | 13 | ||
2.3 | *** | 14 | ||
2.4 | Reservation of Rights; No Implied Rights. | 16 | ||
2.5 | Exclusivity | 16 | ||
2.6 | Rights to IMDZ | 16 | ||
3. | ALLIANCE MANAGERS | 18 | ||
4. | OWNERSHIP; PATENT PROTECTION | 18 | ||
4.1 | Ownership of Sanofi Technology | 18 | ||
4.2 | Patent Filing, Prosecution and Maintenance of Patents | 18 | ||
5. | IDRI LICENSE AGREEMENT | 19 | ||
5.1 | Representations and Warranties of IMDZ with respect to the IDRI License Agreement | 19 | ||
5.2 | IMDZ Covenants with respect to the IDRI License Agreement | 19 | ||
5.3 | Sanofi Covenants with respect to the IDRI License Agreement | 20 | ||
6. | REGULATORY APPROVAL AND COMMERCIALIZATION | 20 | ||
6.1 | Efforts by Sanofi. | 20 | ||
6.2 | Reporting | 21 | ||
6.3 | Control and Ownership of Regulatory Filings | 21 | ||
6.4 | Regulatory Cooperation of IMDZ | 22 | ||
6.5 | Global Safety Database; SDEA Agreement | 22 | ||
6.6 | Inspection by Sanofi | 23 | ||
6.7 | Trademarks | 23 | ||
6.8 | Safety Data Transfer | 23 | ||
7. | MONETARY OBLIGATIONS | 23 | ||
7.1 | License Fee | 23 | ||
7.2 | Milestone Payments by Sanofi | 24 | ||
7.3 | Royalties | 25 | ||
7.4 | Third Party Royalties | 26 |
i |
8 | PAYMENTS | 26 | ||
8.1 | Mode of Payment; Currency Conversion | 26 | ||
8.2 | Interest on Late Payment | 27 | ||
8.3 | Records Retention | 27 | ||
8.4 | Audit Request | 27 | ||
8.5 | Taxes | 27 | ||
9 | MANUFACTURING AND SUPPLY | 28 | ||
9.1 | General | 28 | ||
9.2 | Research and Pre-Clinical Supply | 28 | ||
9.3 | *** | 28 | ||
9.4 | *** | 28 | ||
9.5 | *** | 28 | ||
9.6 | Product recall, withdrawal and stock recovery | 29 | ||
9.7 | *** | 29 | ||
9.8 | Sanofi as *** | 29 | ||
9.9 | Third Party Suppliers | 29 | ||
9.10 | Obligation of *** | 29 | ||
9.11 | Change of Control; *** | 29 | ||
10 | JOINT *** COMMITTEE | 30 | ||
10.1 | Size and Objectives | 30 | ||
10.2 | Members | 30 | ||
10.3 | Responsibilities | 30 | ||
10.4 | Meetings | 31 | ||
10.5 | Decisions | 31 | ||
10.6 | Minutes | 31 | ||
10.7 | Expenses | 31 | ||
10.8 | Term | 32 | ||
10.9 | Sub-Committees | 32 | ||
11 | REPRESENTATIONS AND WARRANTIES | 32 | ||
11.1 | Representations and Warranties of Both Parties | 32 | ||
11.2 | Additional Representations and Warranties of IMDZ | 33 |
ii |
12 | CONFIDENTIALITY | 34 | ||
12.1 | Confidentiality; Exceptions | 34 | ||
12.2 | Exclusions to Confidentiality | 34 | ||
12.3 | Protection of IMDZ’s Trade Secrets | 34 | ||
12.4 | Injunctive Relief | 35 | ||
13 | INTELLECTUAL PROPERTY | 35 | ||
13.1 | Patent Enforcement | 35 | ||
13.2 | Infringement Actions by Third Parties | 36 | ||
14 | INDEMNIFICATION AND INSURANCE | 36 | ||
14.1 | Indemnification of IMDZ | 36 | ||
14.2 | Indemnification of Sanofi | 37 | ||
14.3 | Notice of Claim | 37 | ||
14.4 | Control of Defense | 37 | ||
14.5 | Right to Participate in Defense | 37 | ||
14.6 | Settlement | 38 | ||
14.7 | Cooperation | 38 | ||
14.8 | Expenses | 38 | ||
14.9 | Insurance | 38 | ||
15 | TERM; TERMINATION | 39 | ||
15.1 | Term | 39 | ||
15.2 | Effect of Expiration | 39 | ||
15.3 | Termination by Either Party | 39 | ||
15.4 | Termination by Sanofi | 40 | ||
15.5 | Termination by IMDZ | 40 | ||
15.6 | Effect of Termination | 41 | ||
15.7 | *** | 42 | ||
15.8 | Accrued Rights, Surviving Obligations | 43 | ||
16 | FORCE MAJEURE | 44 | ||
17 | MISCELLANEOUS | 44 | ||
17.1 | Relationship of Parties | 44 | ||
17.2 | Assignment | 44 |
iii |
17.3 | Disclaimer of Warranties | 45 | ||
17.4 | Further Actions | 45 | ||
17.5 | Notice | 45 | ||
17.6 | Use of Name | 46 | ||
17.7 | Public Announcements. | 46 | ||
17.8 | Publications | 47 | ||
17.9 | Waiver | 47 | ||
17.10 | Compliance with Export Laws | 47 | ||
17.11 | Severability | 48 | ||
17.12 | Amendment | 48 | ||
17.13 | Governing Law; Dispute Resolution | 48 | ||
17.14 | No Consequential Damages | 49 | ||
17.15 | Entire Agreement | 49 | ||
17.16 | Parties in Interest | 49 | ||
17.17 | Descriptive Headings | 50 | ||
17.18 | Counterparts | 50 |
iv |
1. | DEFINITIONS |
2. | GRANT OF LICENSES; EXCLUSIVITY |
(i) | If at any time, and from time to time, prior to ***, IMDZ ***, then IMDZ shall give written notice to Sanofi ***. |
(ii) | Sanofi shall have the right to ***. |
(iii) | If Sanofi ***, as may be mutually agreed to. |
(iv) | If (1) Sanofi ***; provided, that if IMDZ does not ***, then Sanofi’s rights with respect to such ***. |
(i) | If at any time prior to ***. |
(ii) | Sanofi shall have the right to ***. If such *** is received by IMDZ after *** and Sanofi *** within such *** period, then Sanofi shall have ***. |
(iii) | If (1) Sanofi has ***. |
(iv) | If IMDZ does not ***. |
3. | ALLIANCE MANAGERS |
4. | OWNERSHIP; PATENT PROTECTION |
5. | IDRI LICENSE AGREEMENT |
6. | REGULATORY APPROVAL AND COMMERCIALIZATION |
7. | MONETARY OBLIGATIONS |
(i) | US$1,000,000 upon ***; |
(ii) | US$7,000,000 upon the Phase I Study Initiation; |
(iii) | US$*** upon ***; |
(iv) | US$*** upon ***; |
(v) | US$*** upon ***; |
(vi) | US$*** upon ***; and |
(vii) | US$*** upon ***. |
(i) | US$*** in the event that ***; |
(ii) | US$*** in the event that ***; and |
(iii) | US$*** in the event that ***. |
Net Sales of Licensed Products Achieved *** for *** | Royalty Payable Thereon |
*** | ***% |
*** | ***% |
*** | ***% |
8. | PAYMENTS |
9. | MANUFACTURING AND SUPPLY |
10. | JOINT *** COMMITTEE |
11. | REPRESENTATIONS AND WARRANTIES |
12. | CONFIDENTIALITY |
13. | INTELLECTUAL PROPERTY |
14. | INDEMNIFICATION AND INSURANCE |
15. | TERM; TERMINATION |
(i) | transfer to IMDZ (or its designee) or provide copies of *** that relate to Licensed Products, either in the Territory or with respect to the terminated country; |
(ii) | provide IMDZ (or its designee) with all information regarding, ***; |
(iii) | ***; |
(iv) | to the extent Sanofi owns or holds any right, title and interest in any ***; and |
(v) | ***. |
(i) | Subsequent to any ***: |
*** | *** |
*** | ***% |
*** | ***% |
*** | ***% |
(ii) | Notwithstanding the foregoing, IMDZ’s obligation to ***. |
*** | *** |
*** | *** |
*** | *** |
*** | *** |
16. | FORCE MAJEURE |
17. | MISCELLANEOUS |
(i) | In the case of Sanofi, to: Sanofi 54 rue La Boétie 75008 Paris, FRANCE Attention: General Counsel Facsimile No.: +33 1 53 77 43 03 |
(ii) | In the case of IMDZ, to: Immune Design Corp. |
1. | Severance Benefits. Upon a Change in Control Termination, and subject to the limitations and conditions set forth in this Agreement, Executive shall be eligible to receive the benefits set forth in this Article 2. |
2. | Severance Benefits. Upon a Covered Termination, and subject to the limitations and conditions set forth in this Agreement, Executive shall be eligible to receive the benefits set forth in this Article 3. |
3. | Rights Conditioned on Compliance. Executive’s rights to receive all severance benefits described in Article 2 and Article 3 shall be conditioned upon and subject to Executive’s compliance with the limitations and conditions on benefits as described in this Article 4. |
4. | Termination for Cause by the Company. If the Company shall terminate the Executive’s employment with the Company for Cause, then upon such termination, the Company shall have no further obligation to Executive hereunder except for the payment or provision, as applicable, of (i) the portion of the Annual Base Salary for the period prior to the effective date of termination earned but unpaid (if any), (ii) all unreimbursed expenses (if any), subject to Sections 1.4 and 4.10(c), and (iii) other payments, entitlements or benefits, if any, in accordance with terms of the applicable plans, programs, arrangements or other agreements of the Company (other than any severance plan or policy) as to which the Executive held rights to such payments, entitlements or benefits, whether as a participant, beneficiary or otherwise on the date of termination (“Other Benefits”). For the avoidance of doubt, Executive shall have no right to receive (and Other Benefits shall not include) any amounts under any Company severance plan or policy or pursuant to Article 2 or Article 3 upon Executive’s termination for Cause. |
5. | “Board” means the Board of Directors of the Company. |
6. | Employment Status. This Agreement does not constitute a contract of employment or impose upon Executive any obligation to remain as an employee, or impose on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee or (iii) to change the Company’s policies regarding termination of employment. |
IMMUNE DESIGN CORP. | EXECUTIVE | |||||||
By: | /s/ Carlos Paya, M.D., Ph.D. | By: | /s/ Sergey Yurasov, M.D., Ph.D. |
Name: | Carlos Paya, M.D., Ph.D. | Name: | Sergey Yurasov, M.D., Ph.D. |
Title: | President and Chief Executive Officer |
Signature | ||
Printed Name | ||
Date: |
Signature | ||
Printed Name | ||
Date: |
Signature | ||
Printed Name | ||
Date: |
/s/ Carlos Paya, M.D., Ph.D. |
Carlos Paya, M.D., Ph.D. |
President and Chief Executive Officer |
(Principal Executive Officer) |
/s/ Stephen Brady |
Stephen Brady |
Executive Vice President, Strategy & Finance |
(Principal Financial Officer) |
/s/ Carlos Paya, M.D., Ph.D. |
Carlos Paya, M.D., Ph.D. |
President and Chief Executive Officer |
(Principal Executive Officer) |
/s/ Stephen Brady |
Stephen Brady |
Executive Vice President, Strategy & Finance |
(Principal Financial Officer) |
\K7LG6.5O6L1W];6M.N24MV
M!2TV-5NZUJXV<]5E:%7UAUQ]$M9T+J)M=X5;-MP^4[
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 07, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | IMDZ | |
Entity Registrant Name | Immune Design Corp. | |
Entity Central Index Key | 0001437786 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 25,409,177 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Common stock | ||
Par value per share (in USD per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 100,000,000 | 100,000,000 |
Shares issued (in shares) | 25,409,177 | 20,153,202 |
Shares outstanding (in shares) | 25,409,177 | 20,153,202 |
Preferred stock | ||
Par value per share (in USD per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 10,000,000 | 10,000,000 |
Shares issued (in shares) | 0 | 0 |
Shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Revenues: | ||||
Licensing revenue | $ 7,000 | $ 3,500 | $ 7,000 | $ 3,500 |
Product sales | 426 | 824 | 1,166 | 932 |
Collaborative revenue | 780 | 329 | 3,036 | 3,939 |
Total revenues | 8,206 | 4,653 | 11,202 | 8,371 |
Operating expenses: | ||||
Cost of product sales | 72 | 298 | 347 | 421 |
Research and development | 11,173 | 8,263 | 33,129 | 24,209 |
General and administrative | 9,554 | 3,506 | 17,416 | 11,086 |
Total operating expenses | 20,799 | 12,067 | 50,892 | 35,716 |
Loss from operations | (12,593) | (7,414) | (39,690) | (27,345) |
Interest and other income | 150 | 7 | 606 | 15 |
Net loss | (12,443) | (7,407) | (39,084) | (27,330) |
Unrealized (loss) gain on investments | (23) | 0 | 7 | 0 |
Comprehensive loss | $ (12,466) | $ (7,407) | $ (39,077) | $ (27,330) |
Earnings Per Share | ||||
Basic and diluted net loss per share (in USD per share) | $ (0.60) | $ (0.37) | $ (1.92) | $ (1.45) |
Weighted Average Number of Shares Outstanding, Diluted | ||||
Weighted-average shares used to compute basic and diluted net loss per share (in shares) | 20,803,776 | 20,131,260 | 20,372,376 | 18,822,517 |
Description of the Business |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business Immune Design Corp. (we, us or our) is a clinical-stage immunotherapy company focused on cancer with next-generation in vivo approaches designed to enable the body’s immune system to fight disease. We have engineered our technologies to activate the immune system’s natural ability to create tumor-specific cytotoxic T cells (CTLs) to fight cancer. We are developing multiple product candidates from our two discovery platforms, ZVex® and GLAAS™. Our primary product candidates, CMB305 and G100, utilize multiple immuno-oncology approaches and are in Phase 1 and Phase 2 clinical trials. In addition, we have licensed to third parties the right to use the GLAAS platform in select infectious disease and allergy indications. We were incorporated in February 2008 in the State of Delaware. Our operations are headquartered in Seattle, Washington, and we have an additional facility in South San Francisco, California. |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). To conform with GAAP, the preparation of our financial statements requires management to make judgments, assumptions, and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, accruals for clinical trial activity, other accrued liabilities, and assumptions used in determining stock-based compensation expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ materially from those estimates. Principles of Consolidation Our condensed consolidated financial statements include the financial position and results of operations of Immune Design Corp. and Immune Design Ltd., our wholly owned subsidiary. Immune Design Ltd. was incorporated in the United Kingdom in February 2016 and to date there have been no financial transactions or balances related to this entity. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited financial statements and in the opinion of management, reflect all normal recurring adjustments necessary for a fair statement of our financial position for the interim periods presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ended December 31, 2016 or for other future interim periods or years. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (SEC) on March 15, 2016 (Annual Report). Short-Term Investments Our short-term investments include funds invested in U.S. Treasury securities with a final maturity of each security of less than one year. All investments are classified as available-for-sale securities and are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed consolidated statements of operations and comprehensive income (loss) using the specific-identification method. Comprehensive Loss Comprehensive loss is composed of net loss and other comprehensive income or loss that are excluded from net loss. For the periods presented, other comprehensive income consists of unrealized gains on our available-for-sale securities. Revenue Recognition We derive our revenue from collaboration and licensing agreements and the sale of products associated with material transfer, collaboration and supply agreements. Licensing fees are recognized when the amounts are earned and determinable during the applicable period. We recognize up-front nonrefundable license fees when due under contractual agreements and when we do not have a continuing obligation to provide services related to the agreement. Revenue associated with nonrefundable up-front license fees under arrangements where the license fees and research and development activities cannot be accounted for as separate units of accounting is deferred and recognized as revenue on a straight-line basis over the expected term of our continued involvement in the research and development process. Revenues from the achievement of research and development milestones, if deemed substantive, are recognized as revenue when the milestones are achieved, and the milestone payments are due and collectible. If not deemed substantive, we recognize such milestones as revenue on a straight-line basis over the remaining expected term of continued involvement in the research and development process. Milestones are considered substantive if all of the following conditions are met: (1) the milestone is nonrefundable, (2) achievement of the milestone was not reasonably assured at the inception of the arrangement, (3) substantive effort is involved to achieve the milestone, and (4) the amount of the milestone appears reasonable in relation to the effort expended, the other milestones in the arrangement and the related risk associated with the achievement of the milestone and any ongoing research and development or other services are priced at fair value. Payments received in advance of work performed are recorded as unearned revenue. Certain agreements from which we derive our revenue include multiple deliverables. We recognize the revenue for each deliverable at fair value determined to be the estimated selling price in cases when neither vendor specific objective evidence nor third-party evidence is available. Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the customer is fixed or determinable and (4) collectability is reasonably assured. The evaluation of these revenue recognition criteria requires significant management judgment. For instance, we use judgment to assess collectability based on factors such as the customer’s creditworthiness and past collection history, if applicable. If we determine that collection of a payment is not reasonably assured, revenue recognition is deferred until receipt of payment. We also use judgment to assess whether a price is fixed or determinable including, but not limited to, reviewing contractual terms and conditions related to payment terms. Revenue from product sales of glucopyranosyl lipid A (GLA), a product from our GLAAS platform, is recognized when the risk of loss has passed to the customer or deferred until such time that risk of loss has passed. All revenues associated from the sale of GLA products supplied by us are reported under product sales with the applicable costs reported under cost of product sales. Cost of product sales consist of the direct costs associated with the manufacture and formulation of GLA, including costs to purchase raw materials, third-party contract manufacturing costs, assay testing and ongoing product stability testing. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB), issued Accounting Standards Update (ASU) No. 2014-09, related to the recognition of revenue. ASU 2014-09 requires entities to recognize revenue through the application of a five step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations. The FASB has continued to issue ASUs to clarify and provide implementation guidance related to this standard, including ASU No. 2016-08, which clarifies the implementation guidance on principal versus agent considerations, ASU No. 2016-10, which clarifies the identification of performance obligations and the implementation of licensing guidance and ASU No. 2016-12 which provides narrow scope improvements and practical expedients. These standards are effective retrospectively for annual or interim reporting periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. Early adoption prior to that date is not permitted. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures. In February 2016, FASB issued ASU 2016-02 related to lease accounting. This standard will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases that are greater than 12 months in duration. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases; however, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the balance sheets. For capital or finance leases, lessees will recognize amortization of the right-of-use asset separately from interest on the lease liability. For operating leases, lessees will recognize a single total lease expense. This standard is effective for public companies for the fiscal years and interim reporting periods beginning after December 15, 2018. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures. In March 2016, FASB issued ASU No. 2016-09 related to stock-based compensation, which primarily changes the accounting for forfeitures and taxes in connection with share-based payment transactions. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Because of net losses recognized in each period, potential shares of common stock issuable upon the exercise of outstanding stock options have not been reflected in the calculation of diluted net loss per share due to the anti-dilutive effect. Diluted net loss per share, therefore, does not differ from basic net loss per share. The common stock equivalents issuable upon the exercise of the following dilutive securities have been excluded from the computation of the diluted net loss per share calculation because their effect would have been antidilutive for the periods presented:
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Cash Equivalents and Short-Term Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents and Short-term Investments | Cash Equivalents and Short-Term Investments The amortized cost and fair value of our cash equivalents and short-term investments are as follows (in thousands):
All U.S. Treasury securities held as of September 30, 2016 were classified as available-for-sale securities and had contractual maturities of less than one year. There were no realized gains or losses on these securities for the period presented. |
Fair Value of Financial Instruments |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments We measure and record cash and cash equivalents and short-term investments at fair value in the accompanying condensed consolidated financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or 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 three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices, 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 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 1 securities consist of highly liquid money market funds and U.S. Treasury securities. The fair value of Level 1 assets has been determined using quoted prices in active markets for identical assets. The following table summarizes our financial assets measured at fair value on a recurring basis (in thousands):
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Inventory | Inventory Inventory consists of the following (in thousands):
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Accrued Liabilities |
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Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following (in thousands):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases We lease laboratory and office space under an operating lease in Seattle, Washington. The lease commenced in February 2013 and continues through November 2016, with an option to extend the term for an additional month. We also lease office space under an operating lease in South San Francisco, California. The lease commenced in January 2015 and continues through January 2020, with an option to extend for an additional five years. In connection with this lease, we were required to provide a $121,000 letter of credit as a security deposit. As of September 30, 2016, no funds had been drawn on the letter of credit. In January 2016, we entered into a lease agreement to lease approximately 20,133 square feet of office and laboratory space in the building located at 1616 Eastlake Ave. E., Seattle, Washington. This lease includes and expands on the space we currently sublease for our headquarters. The term of the lease is five years with one option to extend the lease term by three years. The lease term is expected to commence on January 1, 2017. The annual base rent due under the lease is $1.1 million for the first year and will increase by 2.5% each year thereafter. In connection with this lease agreement, we will be required to provide a $200,000 letter of credit as a security deposit. Contingencies In June 2015, we entered into a clinical supply agreement with NanoPass Technologies LTD (NanoPass) for the use of its intradermal delivery device in certain of our clinical trials. In July 2015, in connection with the execution of the clinical supply agreement, we paid NanoPass an upfront fee of $600,000 for access and rights to use its device. In December 2015, we initiated our Phase 2 clinical trial of CMB305 in patients with soft tissue sarcoma which triggered a milestone payment to NanoPass of $500,000. Both the upfront fee and milestone payment were capitalized to prepaid expenses on the accompanying condensed consolidated balance sheets and are being amortized to research and development expense over the related milestone periods. As of September 30, 2016, $111,000 of the payments remain in prepaid expenses. We amortized to research and development expense $111,000 and $150,000 during the three months ended September 30, 2016 and 2015, respectively, and $633,000 and $150,000 during the nine months ended September 30, 2016 and 2015, respectively. In addition, we agreed to pay certain future milestone fees up to an aggregate of $4.0 million upon the achievement of certain clinical milestones using the device. Under our license agreements with the Infectious Disease Research Institute (IDRI), we are contingently obligated to pay potential future milestone payments for products developed from our GLAAS platform, which could total up to $2.3 million and $1.3 million, respectively, for the first and each subsequent exclusive licensed product we develop, and $1.3 million and $625,000, respectively, for the first and each subsequent non-exclusive licensed product we develop. We are contingently obligated to pay potential future milestone payments to third parties as part of certain licensing agreements for the ZVex products we develop, which could total up to $2.0 million in aggregate payments. We also have potential future royalty payments under our licensing agreements as described in Note 9. Payments under these agreements are uncertain due to the occurrence of the events requiring payment under these agreements, including our share of potential future milestone and royalty payments. These payments generally become due and payable only upon achievement of certain clinical development, regulatory or commercial milestones. |
License and Collaboration Agreements |
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Research and Development [Abstract] | |
License and Collaboration Agreements | License and Collaboration Agreements Licenses Granted In August 2014, we entered into an agreement with Sanofi under which we granted Sanofi an exclusive license for use of our GLAAS platform to discover, develop and commercialize products to treat peanut allergy. Sanofi may terminate the agreement at any time upon six months' written notice. We recognized milestone revenue under this agreement of $7.0 million for the three and nine months ended September 30, 2016, and $1.0 million for the three and nine months ended September 30, 2015, respectively. The agreement provides for additional payments of up to $160.0 million based upon the attainment of certain development and commercialization milestones, and tiered royalties on sales of approved products. In October 2010, we entered into three separate license agreements with MedImmune, LLC (MedImmune) pursuant to which we granted MedImmune a worldwide, sublicensable, exclusive license to use GLA to develop and sell vaccines in three different infectious disease indications. Two of the three agreements remain in full force and effect, and the rights granted under the third have returned to us. Under the license agreements, MedImmune is obligated to use commercially reasonable efforts to develop and obtain regulatory approval for a licensed product in certain markets and to market and sell licensed products in any country where it obtains regulatory approval. In 2010, MedImmune paid us upfront payments under the license agreements. Under each license agreement, MedImmune is obligated to make additional payments based on achievement of certain development, regulatory, and commercial milestones for the licensed indication. MedImmune is also obligated to pay us a low double-digit percentage share of non-royalty payments that it receives from sublicensees and a mid single-digit percentage royalty payment on net sales of licensed products, which royalty is subject to reduction under certain circumstances. Under each license agreement, MedImmune is obligated to make additional aggregate payments of up to $62.9 million to $72.5 million, depending on the infectious disease indication, upon the achievement of certain development, regulatory and commercial milestones for the licensed indication. We did not recognize any revenue under these agreements for the three and nine months ended September 30, 2016. For the three and nine months ended September 30, 2015, we recognized $2.5 million. Licenses Acquired In July 2008, we licensed certain patent rights, know-how and technology related to our GLAAS platform from IDRI, specifically products and formulations containing GLA and another synthetic TLR4 agonist referred to as SLA. This license was first amended and restated in 2010. In November 2015, we entered into a separate agreement with IDRI to license a patent related to our GLAAS technology in the field of cancer. Under this agreement, we paid IDRI an upfront license fee in the amount of $250,000, which was recognized as research and development expense. Upon the achievement of certain developmental and regulatory milestones, we will be obligated to pay IDRI up to $250,000 and $125,000, respectively, for the first and each subsequent licensed product we develop. In December 2015, we entered into a second amended and restated license agreement with IDRI, in which we obtained additional rights under the licensed technology, which rights vary by disease indication, and we returned to IDRI certain previously licensed GLA rights in select, primarily developing-world infectious disease indications. We received an exclusive license for SLA products in oncology, human allergy and addiction, as well as an option to obtain additional exclusive licenses in select infectious disease indications. In December 2015, in connection with the execution of the second amended and restated license agreement, we paid an upfront fee of $2.3 million, which was recorded as research and development expense. We are obligated to pay IDRI up to $2.3 million and $1.3 million, respectively, in additional payments for the first and each subsequent exclusive licensed product we develop, and $1.3 million and $625,000, respectively, for the first and each subsequent non-exclusive licensed product we develop, based on the achievement of certain developmental and regulatory milestones. In addition, we will be obligated to pay certain commercialization milestones and royalty payments of single-digit percentage of net sales, if and when a licensed product is commercialized. We are also obligated to share with IDRI a percentage of payments received from any third-party sublicensees. Additionally, if we exercise our option for additional infectious disease indications, we will be required to make upfront, milestone and royalty payments for such additional indications, which payments are subject to similar terms and conditions as are applicable to other milestone and royalty payments. We recognized $225,000 of IDRI license-related milestone fees for the three and nine months ended September 30, 2016, and nothing in IDRI license-related milestone fees for the three and nine months ended September 30, 2015. In 2009, we licensed certain patent rights utilized in our ZVex development platform from the California Institute of Technology (Caltech). As part of acquiring this license, we issued shares of our common stock to Caltech valued at $25,000. We make annual minimum royalty payments under the license. In addition, we are obligated to pay Caltech up to an aggregate of $1.6 million upon the achievement of certain development and regulatory milestones and will owe royalty payments on net sales of licensed products in the low single-digit percentage, if and when commercialized. We recognized no Caltech milestone fees for the three and nine months ended September 30, 2016 and 2015. In June 2015, we entered into a clinical supply agreement with NanoPass for the use of their intradermal delivery device in certain of our clinical trials. See Note 8 for additional information. Collaborations In October 2014, we entered into a collaboration with Sanofi Pasteur, the vaccines division of Sanofi, for the development of a Herpes Simplex Virus (HSV) immune therapy. Sanofi Pasteur and Immune Design are each contributing product candidates to the collaboration: Sanofi Pasteur is contributing HSV-529, a clinical-stage replication-defective HSV vaccine product candidate, and we are contributing G103, our preclinical trivalent vaccine product candidate. The collaboration will explore the potential of various combinations of agents, including leveraging our GLAAS platform, with the goal to select the best potential immune therapy for patients. Each company will develop the products jointly through Phase 2 clinical trials, at which point Sanofi Pasteur intends to continue development of the most promising candidate and be responsible for commercialization. Sanofi Pasteur will bear the costs of all preclinical and clinical development, with Immune Design providing a specific formulation of GLA from the GLAAS platform at its cost through Phase 2 studies. Immune Design will be eligible to receive future milestone and royalty payments on any product developed from the collaboration. We recognize funding from collaborative research and development efforts as revenue as we perform or deliver the related services in accordance with contract terms as long as we will receive payment for such services upon standard payment terms. The costs of the related services performed are recorded as research and development expenses on the condensed consolidated statements of operations and comprehensive income (loss). We recognized revenue under this collaboration of $780,000 and $329,000 for the three months ended September 30, 2016 and 2015, respectively, and $3.0 million and $3.9 million for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, we have $2.9 million in unearned revenue on our accompanying condensed consolidated balance sheets related to this agreement. |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Preferred Stock Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established. There was no preferred stock issued and outstanding as of September 30, 2016 or December 31, 2015. Common Stock In September 2016, we completed an underwritten follow-on public offering of 4,800,000 shares of our common stock at a price of $6.25 per share. Also that same month, we sold an additional 426,369 shares when our underwriters when they exercised a portion of their option to purchase additional shares at $6.25 per share. We received net proceeds of $30.3 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares), after underwriting discounts and commissions and offering expenses totaling $2.4 million. In April 2015, we closed an underwritten public offering of 3,000,000 shares of our common stock at a price of $26.50 per share. In May 2015, we sold an additional 47,409 shares directly to our underwriters when they exercised a portion of their option to purchase additional shares at $26.50 per share. We received net proceeds of $75.4 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares), after underwriting discounts and commissions and offering expenses totaling $5.4 million. We had 25,409,177 and 20,153,202 shares of common stock outstanding as of September 30, 2016 and December 31, 2015, respectively. Shares of common stock reserved for future issuance were as follows:
Equity Incentive Plans On January 1, 2016, in accordance with provisions of our 2014 Employee Stock Purchase Plan (2014 ESPP) the authorized shares available under the 2014 ESPP were increased by 200,000 shares. On January 1, 2016, in accordance with provisions of our 2014 Omnibus Incentive Plan (2014 Plan), the authorized shares available under the 2014 Plan were increased by 806,128 shares. There were a total of 2,918,334 shares of common stock authorized under the 2014 Plan as of September 30, 2016. Employee Stock Purchase Plan During the nine months ended September 30, 2016, 8,824 shares were issued under the 2014 ESPP at a purchase price of $6.94. Restricted Stock Units In 2016, we began issuing restricted stock units (RSUs) to employees under the 2014 Plan. The fair value of the RSUs is determined on the date of grant based on the market price of our common stock. RSUs are recognized as expense ratably over the vesting period and our RSUs generally vest over four years with 25% of the total award vesting on each anniversary of the vesting commencement date. The activity for our RSUs is summarized as follow:
Stock Option Activity Summary stock option information is as follows:
As of September 30, 2016, there was $18.4 million of total unrecognized stock-based compensation expense related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.5 years. The total intrinsic value of options exercised during the nine months ended September 30, 2016 and 2015 was $124,000 and $4.9 million, respectively. Stock-Based Compensation Expense Employee stock-based compensation expense recognized was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates. Total stock-based compensation expense recognized in our condensed consolidated statements of operations and comprehensive income (loss) is as follows (in thousands):
We use the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The fair values of stock options granted to employees were calculated using the following assumptions:
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Subsequent Events |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Settlement and License Agreements with TheraVectys SA On October 17, 2016, we entered into a Settlement Agreement and a License Agreement with TheraVectys SA (TVS) obtaining certain present and future intellectual property rights and resolving the litigation initiated against us by TVS in July 2014, as well as related claims and counterclaims. The history of the litigation with TVS is described in our quarterly report on Form 10-Q for the quarter ended June 30, 2016. Under the Settlement Agreement, TVS has agreed to dismiss all pending litigation brought by TVS against us and to withdraw patent opposition proceedings (EPO Proceeding) brought by TVS against our European Patent No EP 2 456 786 (EU Patent). Also under the Settlement Agreement, both parties have agreed to a broad release of claims against one another based on acts or omissions arising out of the litigation, or the facts and circumstances giving rise to the litigation. As a non-contingent fee for a license to certain present and future intellectual property of TVS and in consideration for the settlement of all claims and disputes between the parties, we are required to pay $6.0 million into an escrow account within 30 days of the effective date of the Settlement Agreement(Escrowed Payment). As an additional fee for a license to certain present and future intellectual property of TVS and for the settlement of all claims and disputes between the parties, we will be required to pay $1.25 million to TVS when, following the effective date of the Settlement Agreement, we raise $25.0 million, in the aggregate, through equity sales, debt or licensing revenue. The Escrowed Payment will be disbursed to TVS as follows: (a) fifty percent (50%) when Institut Pasteur consents to the granting by TVS to us of a sublicense to certain patents licensed by TVS (or to be licensed by TVS) from Institut Pasteur and the litigation in the United States and Belgium has been dismissed; and (b) fifty percent (50%) upon the final resolution of the EPO Proceeding if the scope of the EU Patent remains unchanged; provided, that the events described in item (a) are a condition to the release of any portion of the Escrowed Payment to TVS and must occur by certain agreed time periods. Currently, we believe that the condition under item (b) has been satisfied, because following an oral hearing in front of the EPO in September 2016, the EU Patent was maintained without a reduction in scope, and TVS has withdrawn from the EPO proceeding, thereby waiving the right to appeal the EPO's decision. The License Agreement provides us with a field limited, non-exclusive, sublicensable license for oncology uses to certain current and future intellectual property rights owned, controlled and licensed by TVS. For licensed products developed under the License Agreement, we would be obligated to pay certain development and commercial milestones and royalties. For each licensed product under the License Agreement, we will be obligated to pay TVS: (a) up to an aggregate of $5.75 million upon achievement of certain development and regulatory milestones, except that the first two milestone payments are waived for CMB305/LV305; (b) royalties on net sales made directly by us or our affiliates; (c) a mid-single digit percentage of sublicensing revenues received by us attributable to the sublicensing of TVS' intellectual property; and (d) a single commercial milestone payment based on the product achieving a specified net sales amount. The royalties on the first four licensed products (including CMB305/LV305 as a single product) will be on a low-single digit percentage of net sales, and royalties on subsequent licensed products will be tiered on low-to-mid-single digit percentages of net sales, in each case subject to royalty-offset provisions. The term of the License Agreement expires upon the last to expire valid patent claim that is licensed to us under the License Agreement. The License Agreement may also be terminated by either party for customary reasons, such as an uncured material breach by the other party, or the other party’s insolvency. We may terminate the License Agreement upon 30 days’ prior written notice to TVS. Per the terms of the Settlement Agreement, we determined that the aggregate payment amount expected to be paid to TVS is $7.25 million and as such, the aggregate payment amount should be allocated between (1) dismissal of the litigation; and (2) license to current and future TVS intellectual property (IP). As we are not able to reliably estimate the fair value of the litigation dismissal, we assigned a fair value to the aggregate amount of the license to current and future TVS IP through the use of a benchmarking approach and determined the fair value of the license to current and future IP obtained from TVS by benchmarking this deal against similar recent (within the last 5 years) deals within our industry. The metrics we used in our benchmarking approach included similarities in industry, product type, therapeutic area, stage of product development and exclusivity. Based upon the results of our benchmark approach, we determined that the fair value assigned to the license to current and future TVS IP to be $1.4 million with the remaining residual amount of $5.85 million allocated to the dismissal of the litigation. Because the litigation existed as of September 30, 2016, the dismissal of the litigation per the terms of the Settlement Agreement entered into on October 17, 2016 is deemed to be a recognized subsequent event, and the $5.85 million allocated to the dismissal of litigation is recorded as general and administrative expense for the three and nine months ended September 30, 2016. Since the $1.4 million allocated to the license acquired is for current and future TVS IP granted to us subsequent to September 30, 2016, this is considered a nonrecognized subsequent event, and will be recognized in the quarter ended December 31, 2016. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). To conform with GAAP, the preparation of our financial statements requires management to make judgments, assumptions, and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, accruals for clinical trial activity, other accrued liabilities, and assumptions used in determining stock-based compensation expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ materially from those estimates. |
Principles of Consolidation | Principles of Consolidation Our condensed consolidated financial statements include the financial position and results of operations of Immune Design Corp. and Immune Design Ltd., our wholly owned subsidiary. Immune Design Ltd. was incorporated in the United Kingdom in February 2016 and to date there have been no financial transactions or balances related to this entity. |
Short-term Investments | Short-Term Investments Our short-term investments include funds invested in U.S. Treasury securities with a final maturity of each security of less than one year. All investments are classified as available-for-sale securities and are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed consolidated statements of operations and comprehensive income (loss) using the specific-identification method. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is composed of net loss and other comprehensive income or loss that are excluded from net loss. For the periods presented, other comprehensive income consists of unrealized gains on our available-for-sale securities. |
Revenue Recognition | Revenue Recognition We derive our revenue from collaboration and licensing agreements and the sale of products associated with material transfer, collaboration and supply agreements. Licensing fees are recognized when the amounts are earned and determinable during the applicable period. We recognize up-front nonrefundable license fees when due under contractual agreements and when we do not have a continuing obligation to provide services related to the agreement. Revenue associated with nonrefundable up-front license fees under arrangements where the license fees and research and development activities cannot be accounted for as separate units of accounting is deferred and recognized as revenue on a straight-line basis over the expected term of our continued involvement in the research and development process. Revenues from the achievement of research and development milestones, if deemed substantive, are recognized as revenue when the milestones are achieved, and the milestone payments are due and collectible. If not deemed substantive, we recognize such milestones as revenue on a straight-line basis over the remaining expected term of continued involvement in the research and development process. Milestones are considered substantive if all of the following conditions are met: (1) the milestone is nonrefundable, (2) achievement of the milestone was not reasonably assured at the inception of the arrangement, (3) substantive effort is involved to achieve the milestone, and (4) the amount of the milestone appears reasonable in relation to the effort expended, the other milestones in the arrangement and the related risk associated with the achievement of the milestone and any ongoing research and development or other services are priced at fair value. Payments received in advance of work performed are recorded as unearned revenue. Certain agreements from which we derive our revenue include multiple deliverables. We recognize the revenue for each deliverable at fair value determined to be the estimated selling price in cases when neither vendor specific objective evidence nor third-party evidence is available. Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the customer is fixed or determinable and (4) collectability is reasonably assured. The evaluation of these revenue recognition criteria requires significant management judgment. For instance, we use judgment to assess collectability based on factors such as the customer’s creditworthiness and past collection history, if applicable. If we determine that collection of a payment is not reasonably assured, revenue recognition is deferred until receipt of payment. We also use judgment to assess whether a price is fixed or determinable including, but not limited to, reviewing contractual terms and conditions related to payment terms. Revenue from product sales of glucopyranosyl lipid A (GLA), a product from our GLAAS platform, is recognized when the risk of loss has passed to the customer or deferred until such time that risk of loss has passed. All revenues associated from the sale of GLA products supplied by us are reported under product sales with the applicable costs reported under cost of product sales. Cost of product sales consist of the direct costs associated with the manufacture and formulation of GLA, including costs to purchase raw materials, third-party contract manufacturing costs, assay testing and ongoing product stability testing. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB), issued Accounting Standards Update (ASU) No. 2014-09, related to the recognition of revenue. ASU 2014-09 requires entities to recognize revenue through the application of a five step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations. The FASB has continued to issue ASUs to clarify and provide implementation guidance related to this standard, including ASU No. 2016-08, which clarifies the implementation guidance on principal versus agent considerations, ASU No. 2016-10, which clarifies the identification of performance obligations and the implementation of licensing guidance and ASU No. 2016-12 which provides narrow scope improvements and practical expedients. These standards are effective retrospectively for annual or interim reporting periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. Early adoption prior to that date is not permitted. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures. In February 2016, FASB issued ASU 2016-02 related to lease accounting. This standard will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases that are greater than 12 months in duration. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases; however, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the balance sheets. For capital or finance leases, lessees will recognize amortization of the right-of-use asset separately from interest on the lease liability. For operating leases, lessees will recognize a single total lease expense. This standard is effective for public companies for the fiscal years and interim reporting periods beginning after December 15, 2018. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures. In March 2016, FASB issued ASU No. 2016-09 related to stock-based compensation, which primarily changes the accounting for forfeitures and taxes in connection with share-based payment transactions. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures. |
Net Loss Per Share | Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Because of net losses recognized in each period, potential shares of common stock issuable upon the exercise of outstanding stock options have not been reflected in the calculation of diluted net loss per share due to the anti-dilutive effect. Diluted net loss per share, therefore, does not differ from basic net loss per share. |
Fair Value Measurement | We measure and record cash and cash equivalents and short-term investments at fair value in the accompanying condensed consolidated financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or 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 three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices, 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 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 1 securities consist of highly liquid money market funds and U.S. Treasury securities. The fair value of Level 1 assets has been determined using quoted prices in active markets for identical assets. |
Net Loss Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Issuable Upon the Conversion or Exercise of Dilutive Securities Excluded from Diluted Net Loss Per Share Attributable to Common Stockholders | The common stock equivalents issuable upon the exercise of the following dilutive securities have been excluded from the computation of the diluted net loss per share calculation because their effect would have been antidilutive for the periods presented:
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Cash Equivalents and Short-Term Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents and Short-term Investments | The amortized cost and fair value of our cash equivalents and short-term investments are as follows (in thousands):
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets Measured at Fair Value on a Recurring Basis | The following table summarizes our financial assets measured at fair value on a recurring basis (in thousands):
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Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory consists of the following (in thousands):
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Accrued Liabilities (Tables) |
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Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands):
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Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Shares of Common Stock Reserved for Future Issuance | Shares of common stock reserved for future issuance were as follows:
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Schedule of Restricted Stock Unit Activity | The activity for our RSUs is summarized as follow:
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Summary of Stock Options | Summary stock option information is as follows:
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Schedule of Stock-Based Compensation Expense Recognized | Total stock-based compensation expense recognized in our condensed consolidated statements of operations and comprehensive income (loss) is as follows (in thousands):
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Schedule of Fair Value of Stock Options Granted to Employees | The fair values of stock options granted to employees were calculated using the following assumptions:
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Description of the Business - Narrative (Details) |
9 Months Ended |
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Sep. 30, 2016
platform
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of discovery platforms | 2 |
Net Loss Per Share - Common Stock Issuable Upon the Conversion or Exercise of Dilutive Securities Excluded from Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - shares |
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Sep. 30, 2015 |
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 3,597,202 | 2,307,967 |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 3,481,952 | 2,307,967 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 115,250 | 0 |
Cash Equivalents and Short-Term Investments (Details) $ in Thousands |
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Sep. 30, 2016
USD ($)
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Gain (Loss) on Investments [Line Items] | |
Money market funds, amortized cost | $ 70,398 |
Money market funds, fair value | 70,398 |
Gross unrealized gains | 35 |
Gross unrealized losses | (28) |
Cash equivalents and short-term investments, amortized cost | 112,428 |
Cash equivalents and short-term investments, fair value | 112,435 |
Cash equivalents, fair value | 70,398 |
Short-term Investments, fair value | 42,037 |
Cash equivalents and short-term investments, fair value | 112,435 |
US Treasury Securities [Member] | |
Gain (Loss) on Investments [Line Items] | |
Amortized cost basis | 42,030 |
Gross unrealized gains | 35 |
Gross unrealized losses | (28) |
Fair value | $ 42,037 |
Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Work in process | $ 669 | $ 0 |
Finished goods | 40 | 13 |
Total inventory | $ 709 | $ 13 |
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Research and development services | $ 3,603 | $ 2,043 |
Legal and professional services | 0 | 378 |
Employee compensation | 1,093 | 1,538 |
Total accrued liabilities | $ 4,696 | $ 3,959 |
Stockholders' Equity - Schedule of Shares of Common Stock Reserved for Future Issuance (Details) - shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 4,929,864 | 3,953,342 |
Employee Stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 507,498 | 316,322 |
Stock Options Outstanding [Member] | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 3,481,952 | 2,832,467 |
Restricted Stock Units (RSUs) [Member] | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 115,250 | 0 |
Future Stock Grants [Member] | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 825,164 | 804,553 |
Stockholders' Equity - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] |
9 Months Ended |
---|---|
Sep. 30, 2016
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding, beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 118,000 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (2,750) |
Outstanding, ending balance (in shares) | shares | 115,250 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 0.00 |
Granted (in dollars per share) | $ / shares | 19.39 |
Vested (in dollars per share) | $ / shares | 0.00 |
Forfeited (in dollars per share) | $ / shares | 19.39 |
Outstanding, ending balance (in dollars per share) | $ / shares | $ 19.39 |
Stockholders' Equity - Schedule of Fair Value of Stock Options Granted to Employees (Details) - Employee Stock Option [Member] - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average estimated fair value | $ 3.25 | $ 12.60 | $ 11.72 | $ 21.20 |
Risk-free interest rate min | 1.10% | 1.64% | 1.10% | 1.50% |
Risk-free interest rate max | 1.26% | 1.86% | 1.84% | 1.86% |
Expected stock price volatility minimum | 77.00% | 78.00% | 77.00% | 78.00% |
Expected stock price volatility maximum | 77.00% | 83.00% | 80.00% | 91.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Time to maturity | 6 years 29 days | 6 years 29 days | 5 years 6 months | 5 years 6 months |
Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Time to maturity | 6 years 29 days | 6 years 29 days | 6 years 29 days | 6 years 29 days |
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