☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 26-2025616 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
215 First Street, Suite 400 Cambridge, MA | 02142 |
(Address of principal executive offices) | (Zip code) |
Large Accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. |
• | the potential effectiveness of the License Agreement that we entered into with F. Hoffmann-La Roche Ltd. and Hoffmann-La Roche Inc. on June 10, 2016, and the impact of the transactions contemplated by the License Agreement, if it becomes effective; |
• | the outcome of our process to review a range of strategic alternatives with a goal of maximizing stockholder value; |
• | our plans to research and develop our product candidates; |
• | the initiation and conduct of clinical trials; |
• | our ability to successfully develop our product candidates and complete clinical programs; |
• | results of preclinical studies or other early stage studies and whether they will be indicative of the results of future studies; |
• | expectations regarding regulatory approvals, the nature and timing of our future interactions with regulatory authorities and our ability to design, implement and complete registration trials acceptable to such regulatory authorities and sufficient to support applications for regulatory approvals; |
• | the timing of and our ability to obtain marketing approval of our product candidates, and the ability of our product candidates to meet existing or future regulatory standards; |
• | the potential advantages of our product candidates; |
• | our estimates regarding the potential market opportunity for our product candidates; |
• | our sales, marketing and distribution capabilities and strategy; |
• | our ability to establish and maintain arrangements for the manufacture of our product candidates; |
• | our ability to enter into and successfully complete other collaborations or in-license or acquire rights to other products, product candidates or technologies; |
• | our ability to obtain, maintain and protect our intellectual property for our technology and products; |
• | the rate and degree of market acceptance and clinical utility of our products; |
• | our estimates regarding expenses, future revenues, capital requirements and need for additional financing; |
• | the impact of governmental laws and regulations; and |
• | our competitive position. |
June 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,484 | $ | 36,079 | |||
Prepaid expenses and other current assets | 350 | 232 | |||||
Total current assets | 8,834 | 36,311 | |||||
Property and equipment, net | 314 | 407 | |||||
Restricted cash | 119 | 94 | |||||
Other assets | — | 13 | |||||
Total assets | $ | 9,267 | $ | 36,825 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,855 | $ | 1,246 | |||
Accrued expenses | 1,153 | 1,794 | |||||
Notes payable, current portion | — | 4,134 | |||||
Deferred revenue | — | 406 | |||||
Total current liabilities | 3,008 | 7,580 | |||||
Other liabilities | 73 | 423 | |||||
Notes payable, net of current portion | — | 9,763 | |||||
Warrant liability | 13 | 115 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at June 30, 2016 and December 31, 2015 and no shares issued and outstanding at June 30, 2016 and December 31, 2015 | — | — | |||||
Common stock, $0.001 par value per share; 200,000,000 shares authorized at June 30, 2016 and December 31, 2015 and 20,005,771 and 19,619,124 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 20 | 20 | |||||
Additional paid-in capital | 145,420 | 144,126 | |||||
Accumulated deficit | (139,267 | ) | (125,202 | ) | |||
Total stockholders’ equity | 6,173 | 18,944 | |||||
Total liabilities and stockholders’ equity | $ | 9,267 | $ | 36,825 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | 277 | $ | 114 | $ | 506 | $ | 358 | |||||||
Operating expenses: | |||||||||||||||
Research and development | 3,298 | 6,269 | 7,930 | 11,507 | |||||||||||
General and administrative | 3,471 | 2,247 | 5,618 | 4,850 | |||||||||||
Total operating expenses | 6,769 | 8,516 | 13,548 | 16,357 | |||||||||||
Loss from operations | (6,492 | ) | (8,402 | ) | (13,042 | ) | (15,999 | ) | |||||||
Other income (expense): | |||||||||||||||
Other income, net | 1 | 1,826 | 139 | 3,134 | |||||||||||
Loss on extinguishment of debt | — | — | (915 | ) | — | ||||||||||
Interest expense | — | (330 | ) | (247 | ) | (565 | ) | ||||||||
Total other income (expense), net | 1 | 1,496 | (1,023 | ) | 2,569 | ||||||||||
Net loss and comprehensive loss | $ | (6,491 | ) | $ | (6,906 | ) | $ | (14,065 | ) | $ | (13,430 | ) | |||
Net loss per share applicable to common stockholders—basic and diluted | $ | (0.33 | ) | $ | (0.36 | ) | $ | (0.71 | ) | $ | (0.72 | ) | |||
Weighted-average number of common shares used in net loss per share applicable to common stockholders—basic and diluted | 19,874 | 19,087 | 19,756 | 18,532 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Operating activities | |||||||
Net loss | $ | (14,065 | ) | $ | (13,430 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 93 | 192 | |||||
Non-cash interest expense | 26 | 26 | |||||
Stock-based compensation expense | 1,207 | 1,266 | |||||
Change in fair value of warrant liability | (102 | ) | (3,123 | ) | |||
Loss on extinguishment of debt | 221 | — | |||||
Changes in operating assets and liabilities: | |||||||
Prepaid expenses and other assets | (126 | ) | (596 | ) | |||
Restricted cash | (25 | ) | — | ||||
Accounts payable | 609 | (578 | ) | ||||
Accrued expenses and other liabilities | (991 | ) | (1,209 | ) | |||
Deferred revenue | (406 | ) | (55 | ) | |||
Net cash used in operating activities | (13,559 | ) | (17,507 | ) | |||
Investing activities | |||||||
Purchases of property and equipment | — | (286 | ) | ||||
Net cash used in investing activities | — | (286 | ) | ||||
Financing activities | |||||||
Proceeds from issuance of common stock and common stock warrants, net of offering costs | — | 12,172 | |||||
Payments on notes payable | (14,124 | ) | — | ||||
Proceeds from notes payable | — | 5,000 | |||||
Proceeds from exercise of common stock options and warrants | 88 | 56 | |||||
Net cash (used in) provided by financing activities | (14,036 | ) | 17,228 | ||||
Net decrease in cash and cash equivalents | (27,595 | ) | (565 | ) | |||
Cash and cash equivalents at beginning of period | 36,079 | 54,059 | |||||
Cash and cash equivalents at end of period | $ | 8,484 | $ | 53,494 | |||
Supplemental non-cash financing activities | |||||||
Issuance of warrants for common stock | — | $ | 328 | ||||
Supplemental cash flow information | |||||||
Cash paid for interest | $ | 663 | $ | 374 |
• | The Company entered into the License Agreement with Roche, which, subject to effectiveness, would provide meaningful cash resources to the Company. |
• | The Company is engaged in a review of strategic alternatives with a goal of maximizing stockholder value.The Company cannot provide any commitment regarding precisely when or if this strategic review process will result in any type of additional transaction and no assurance can be given that the Company will determine to pursue a potential sale, strategic partnership, business combination or other arrangement. |
• | The Company does not see an immediate path forward for isunakinra and has implemented a plan to wind down the development activities associated with isunakinra. |
• | The Company has conducted a review of its operations and implemented a plan to reduce operating expenses to align with current operating conditions, including the workforce reduction described in Note 8 below. |
• | On March 1, 2016, the Company prepaid all outstanding amounts owed to SVB under the Loan Agreement. The Company continues to evaluate other financing alternatives to provide additional working capital on terms that are consistent with the Company’s business plans. |
As of June 30, | |||||
2016 | 2015 | ||||
Stock options | 2,205,774 | 2,060,334 | |||
Unvested restricted stock | 31,010 | 71,310 | |||
Restricted stock units | 77,133 | 211,400 | |||
Common stock warrants | 926,840 | 926,840 | |||
3,240,757 | 3,269,884 |
Description | Total | Active Markets (Level 1) | Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 8,484 | $ | 8,484 | $ | — | $ | — | |||||||
Total | $ | 8,484 | $ | 8,484 | $ | — | $ | — |
Description | Total | Active Markets (Level 1) | Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||
Liabilities: | |||||||||||||||
Warrant liability | $ | 13 | $ | — | $ | — | $ | 13 | |||||||
Total | $ | 13 | $ | — | $ | — | $ | 13 |
Description | Total | Active Markets (Level 1) | Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 36,079 | $ | 36,079 | $ | — | $ | — | |||||||
Total | $ | 36,079 | $ | 36,079 | $ | — | $ | — |
Description | Total | Active Markets (Level 1) | Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | |||||||||||
Liabilities: | |||||||||||||||
Warrant liability | $ | 115 | $ | — | $ | — | $ | 115 | |||||||
Total | $ | 115 | $ | — | $ | — | $ | 115 |
June 30, 2016 | December 31, 2015 | ||||
Risk-free interest rate | 0.52 | % | 1.06 | % | |
Expected dividend yield | — | % | — | % | |
Expected term (in years) | 1.42 | 1.92 | |||
Expected volatility | 79.43 | % | 70.67 | % |
Beginning balance, January 1, 2016 | $ | 115 | |
Change in fair value | (102 | ) | |
Ending balance, June 30, 2016 | $ | 13 |
June 30, 2016 | December 31, 2015 | ||||||
Development costs | $ | 160 | $ | 931 | |||
Employee compensation | 915 | 573 | |||||
Professional fees | 77 | 194 | |||||
Interest | — | 88 | |||||
Other | 1 | 8 | |||||
$ | 1,153 | $ | 1,794 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Stock options | $ | 444 | $ | 598 | $ | 879 | $ | 1,234 | |||||||
Restricted stock | 51 | 4 | 105 | 32 | |||||||||||
Restricted stock units | 106 | — | 198 | — | |||||||||||
Performance stock options | 14 | — | 14 | — | |||||||||||
Employee stock purchase plan | 6 | — | 11 | — | |||||||||||
$ | 621 | $ | 602 | $ | 1,207 | $ | 1,266 |
Shares | Weighted-Average Exercise Price | |||||
Outstanding at December 31, 2015 | 1,803,574 | $ | 6.28 | |||
Granted | 981,352 | 0.39 | ||||
Exercised | (281,441 | ) | 0.29 | |||
Cancelled or forfeited | (297,711 | ) | 3.60 | |||
Outstanding at June 30, 2016 | 2,205,774 | $ | 4.78 | |||
Exercisable at June 30, 2016 | 891,327 | $ | 6.05 | |||
Vested and expected to vest at June 30, 2016(1) | 1,923,413 | $ | 5.20 |
(1) | Represents the number of vested options, plus the number of unvested options expected to vest. |
Restricted Stock | Weighted-Average Grant Date Fair Value | |||||
Unvested at December 31, 2015 | 41,657 | $ | 11.05 | |||
Vested | (10,647 | ) | 9.94 | |||
Unvested at June 30, 2016 | 31,010 | $ | 11.43 |
Restricted Stock Units | Weighted-Average Grant Date Fair Value | |||||
Unvested at December 31, 2015 | 150,932 | $ | 2.85 | |||
Vested | (73,799 | ) | 2.82 | |||
Unvested at June 30, 2016 | 77,133 | $ | 2.88 |
• | We entered into the License Agreement with Roche, which, subject to effectiveness, would provide meaningful cash resources to us. |
• | We are engaged in a review of strategic alternatives with the goal of maximizing stockholder value. We cannot provide any commitment regarding precisely when or if this strategic review process will result in any type of additional transaction and no assurance can be given that we will determine to pursue a potential sale, strategic partnership, business combination or other arrangement. |
• | We do not see an immediate path forward for isunakinra and have implemented a plan to wind down the development activities associated with isunakinra. |
• | We have conducted a review of our operations and implemented a plan to reduce future operating expenses to align with current operating conditions, including the workforce reduction described in Note 8 to our Condensed Financial Statements included in this Quarterly Report on Form 10-Q. |
• | On March 1, 2016, we prepaid all outstanding amounts owed to Silicon Valley Bank, or SVB, under our Loan and Security Agreement with SVB. We continue to evaluate other financing alternatives to provide additional operating funds on terms that are consistent with our business plans. |
• | employee-related expenses, including salaries, benefits, travel and stock-based compensation expense; |
• | expenses incurred under agreements with contract research organizations, or CROs, and investigative sites that conduct our clinical trials; |
• | expenses associated with developing manufacturing capabilities and manufacturing clinical study materials; |
• | facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies; and |
• | expenses associated with preclinical and regulatory activities. |
• | the scope, progress, outcome and costs of our clinical trials and other research and development activities; |
• | the efficacy and potential advantages of our product candidates compared to alternative treatments, including any standard of care; |
• | the market acceptance of our product candidates; |
• | obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; |
• | significant and changing government regulation; and |
• | the timing, receipt and terms of any marketing approvals. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Programs: | |||||||||||||||
Isunakinra | $ | 208 | $ | 4,372 | $ | 1,530 | $ | 7,423 | |||||||
EBI-031 | 1,013 | 398 | 2,752 | 826 | |||||||||||
Total program expenses | 1,221 | 4,770 | 4,282 | 8,249 | |||||||||||
Personnel and other expenses: | |||||||||||||||
Employee and contractor-related expenses | 1,716 | 1,067 | 2,900 | 2,335 | |||||||||||
Platform-related lab expenses | 102 | 151 | 239 | 340 | |||||||||||
Facility expenses | 163 | 128 | 310 | 237 | |||||||||||
Other expenses | 96 | 153 | 199 | 346 | |||||||||||
Total personnel and other expenses | 2,077 | 1,499 | 3,648 | 3,258 | |||||||||||
Total research and development expenses | $ | 3,298 | $ | 6,269 | $ | 7,930 | $ | 11,507 |
Three Months Ended June 30, | |||||||||||
2016 | 2015 | Change | |||||||||
(in thousands) | |||||||||||
Revenue | $ | 277 | $ | 114 | $ | 163 | |||||
Operating expenses: | |||||||||||
Research and development | 3,298 | 6,269 | (2,971 | ) | |||||||
General and administrative | 3,471 | 2,247 | 1,224 | ||||||||
Total operating expenses | 6,769 | 8,516 | (1,747 | ) | |||||||
Loss from operations | (6,492 | ) | (8,402 | ) | 1,910 | ||||||
Other income, net | 1 | 1,496 | (1,495 | ) | |||||||
Net loss | $ | (6,491 | ) | $ | (6,906 | ) | $ | 415 |
Six Months Ended June 30, | |||||||||||
2016 | 2015 | Change | |||||||||
(in thousands) | |||||||||||
Revenue | $ | 506 | $ | 358 | $ | 148 | |||||
Operating expenses: | |||||||||||
Research and development | 7,930 | 11,507 | (3,577 | ) | |||||||
General and administrative | 5,618 | 4,850 | 768 | ||||||||
Total operating expenses | 13,548 | 16,357 | (2,809 | ) | |||||||
Loss from operations | (13,042 | ) | (15,999 | ) | 2,957 | ||||||
Other (expense) income, net | (1,023 | ) | 2,569 | (3,592 | ) | ||||||
Net loss | $ | (14,065 | ) | $ | (13,430 | ) | $ | (635 | ) |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Net cash (used in) provided by: | |||||||
Operating activities | $ | (13,559 | ) | $ | (17,507 | ) | |
Investing activities | — | (286 | ) | ||||
Financing activities | (14,036 | ) | 17,228 | ||||
Net decrease in cash and cash equivalents | $ | (27,595 | ) | $ | (565 | ) |
• | continue the research and development of our preclinical product candidates; |
• | seek to discover and develop additional product candidates; |
• | in-license or acquire the rights to other products, product candidates or technologies; |
• | seek marketing approvals for any product candidates that successfully complete clinical trials; |
• | establish sales, marketing and distribution capabilities and scale up and validate external manufacturing capabilities to commercialize any products for which we may obtain marketing approval; |
• | maintain, expand and protect our intellectual property portfolio; |
• | hire additional clinical, quality control, scientific and management personnel; and |
• | expand our operational, financial and management systems and personnel. |
• | effectiveness of the License Agreement with Roche; |
• | the outcome and timing of our review of a range of strategic alternatives with the goal of maximizing stockholder value; |
• | the scope, progress, results and costs of preclinical development, laboratory testing and, if we determine to proceed into clinical development, clinical trials of our preclincal product candidates; |
• | our ability to establish collaborations on favorable terms, if at all, particularly manufacturing, marketing and distribution arrangements for our product candidates; |
• | the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and |
• | the extent to which we in-license or acquire rights to other products, product candidates or technologies. |
Total | Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating lease obligations(1) | $ | 1,229 | $ | 666 | $ | 563 | $ | — | $ | — | |||||||||
Total fixed contractual obligations | $ | 1,229 | $ | 666 | $ | 563 | $ | — | $ | — |
Item 1A. | Risk Factors |
• | continue the research and development of our preclinical product candidates; |
• | seek to discover and develop additional product candidates; |
• | in-license or acquire the rights to other products, product candidates or technologies; |
• | seek marketing approvals for any product candidates that successfully complete clinical trials; |
• | establish sales, marketing and distribution capabilities and scale up and validate external manufacturing capabilities to commercialize any products for which we may obtain marketing approval; |
• | maintain, expand and protect our intellectual property portfolio; |
• | hire additional clinical, quality control, scientific and management personnel; and |
• | expand our operational, financial and management systems and personnel. |
• | we are required by the United States Food and Drug Administration, or FDA, or the European Medicine Agency, or EMA, to perform studies in addition to those currently expected; or |
• | if there are any delays in enrollment of patients in, or completing our clinical trials or the development of any product candidates that we may develop. |
• | initiating and completing clinical development of EBI-031 in patients with DME, uveitis, or other indications; |
• | subject to obtaining favorable results from clinical trials, applying for and obtaining marketing approvals for EBI-031; |
• | establishing sales, marketing and distribution capabilities, either ourselves or through collaboration or other arrangements with third parties, to effectively market and sell EBI-031; |
• | achieving an adequate level of market acceptance of EBI-031; |
• | protecting our rights to our intellectual property portfolio related to EBI-031; and |
• | ensuring the manufacture of commercial quantities of EBI-031. |
• | effectiveness of the License Agreement with Roche; |
• | the outcome and timing of our review of a range of strategic alternatives with the goal of maximizing stockholder value; |
• | the scope, progress, results and costs of preclinical development, laboratory testing and, if we determine to proceed into clinical development, clinical trials of our preclinical product candidates; |
• | our ability to establish collaborations on favorable terms, if at all, particularly manufacturing, marketing and distribution arrangements for our product candidates; |
• | the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and |
• | the extent to which we in-license or acquire rights to other products, product candidates or technologies. |
• | commencing clinical development of EBI-031; |
• | completing clinical development of EBI-031 in patients with DME, uveitis or other indications; |
• | manufacturing commercial quantities of EBI-031 and receiving regulatory approval of manufacturing processes and facilities from applicable regulatory authorities; |
• | subject to obtaining favorable results from clinical trials, applying for and obtaining marketing approvals for EBI-031; |
• | effectively marketing and selling EBI-031; |
• | acceptance of EBI-031, if and when approved, by patients, the medical community and third-party payors; |
• | effectively competing with other therapies, including the existing standard of care; |
• | maintaining a continued acceptable safety profile of EBI-031 following approval; |
• | obtaining and maintaining coverage and adequate reimbursement from third-party payors; |
• | obtaining and maintaining patent and trade secret protection and regulatory exclusivity; and |
• | protecting rights in our intellectual property portfolio related to EBI-031. |
• | clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; |
• | the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; |
• | our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; |
• | regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; |
• | we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; |
• | we may decide, or regulators or institutional review boards may require us, to suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; |
• | the cost of clinical trials of our product candidates may be greater than we anticipate; |
• | the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; and |
• | our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials. |
• | be delayed in obtaining marketing approval for our product candidates; |
• | not obtain marketing approval at all; |
• | obtain approval for indications or patient populations that are not as broad as intended or desired; |
• | obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; |
• | be subject to additional post-marketing testing requirements; or |
• | have the product removed from the market after obtaining marketing approval. |
• | the severity of the disease under investigation; |
• | the eligibility criteria for the study in question; |
• | the perceived risks and benefits of the product candidate under study; |
• | the efforts to facilitate timely enrollment in clinical trials; |
• | the patient referral practices of physicians; |
• | any ongoing clinical trials conducted by competitors for the same indication; |
• | the ability to monitor patients adequately during and after treatment; and |
• | the proximity and availability of clinical trial sites for prospective patients. |
• | the efficacy and potential advantages compared to alternative treatments, including the existing standard of care; |
• | our ability to offer our products for sale at competitive prices, particularly in light of the lower cost of alternative treatments; |
• | the convenience and ease of administration compared to alternative treatments; |
• | the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; |
• | the strength of our marketing and distribution support; |
• | timing of market introduction of competitive products; |
• | the availability of third-party coverage and adequate reimbursement; |
• | the prevalence and severity of any side effects; and |
• | any restrictions on the use of our products together with other medications. |
• | our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; |
• | the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe our products; |
• | the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and |
• | unforeseen costs and expenses associated with creating an independent sales and marketing organization. |
• | decreased demand for any product candidates or products that we develop; |
• | injury to our reputation and significant negative media attention; |
• | withdrawal of clinical trial participants; |
• | significant costs to defend the related litigation; |
• | substantial monetary awards to trial participants or patients; |
• | loss of revenue; |
• | reduced time and attention of our management to pursue our business strategy; and |
• | the inability to commercialize any products that we develop. |
• | collaborators or licensees have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations or licenses; |
• | collaborators or licensees may not perform their obligations as expected; |
• | collaborators or licensees may not pursue development and commercialization of our product candidates that receive marketing approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ or licensees' strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; |
• | collaborators or licensees may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; |
• | collaborators or licensees could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators or licensees believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; |
• | product candidates discovered under the collaboration or license with us may be viewed by our collaborators or licensees as competitive with their own product candidates or products, which may cause collaborators or licensees to cease to devote resources to the commercialization of our product candidates; |
• | a collaborator or licensee with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; |
• | disagreements with collaborators or licensees, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would divert management attention and resources, be time-consuming and expensive; |
• | collaborators or licensees may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; |
• | collaborators or licensees may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and |
• | collaborations or licenses may be terminated for the convenience of the collaborator or licensee and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates. |
• | any product candidates that we may develop may compete with other product candidates and products for access to a limited number of suitable manufacturing facilities that operate under current good manufacturing practices, or cGMP, regulations; |
• | reliance on the third party for regulatory compliance and quality assurance; |
• | the possible breach of the manufacturing agreement by the third party; |
• | the possible misappropriation of our proprietary information, including our trade secrets and know-how; and |
• | the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. |
• | the United States Congress could amend the BPCIA to significantly shorten this exclusivity period as has been previously proposed; and |
• | a potential competitor could seek and obtain approval of its own BLA during our exclusivity period instead of seeking approval of a biosimilar version. |
• | litigation involving patients taking our products; |
• | restrictions on such products, manufacturers or manufacturing processes; |
• | restrictions on the labeling or marketing of a product; |
• | restrictions on product distribution or use; |
• | requirements to conduct post-marketing studies or clinical trials; |
• | warning letters or untitled letters; |
• | withdrawal of the products from the market; |
• | refusal to approve pending applications or supplements to approved applications that we submit; |
• | recall of products; |
• | fines, restitution or disgorgement of profits or revenues; |
• | suspension or withdrawal of marketing approvals; |
• | damage to relationships with any potential collaborators; |
• | unfavorable press coverage and damage to our reputation; |
• | refusal to permit the import or export of our products; |
• | product seizure or detention; or |
• | injunctions or the imposition of civil or criminal penalties. |
• | the federal Anti-Kickback Statute, which prohibits, among other things, persons from 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, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; |
• | the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation |
• | the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; |
• | the federal Physician Payments Sunshine Act requires applicable manufacturers of covered products to report payments and other transfers of value to physicians and teaching hospitals, with data collection beginning in August 2013; |
• | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which imposes obligations, including mandatory contractual terms, on covered healthcare providers, health plans and healthcare clearinghouses, as well as their business associates, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and |
• | analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, 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 governing 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. |
• | an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription products and biologic agents; |
• | an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; |
• | a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for products that are inhaled, infused, instilled, implanted or injected; |
• | expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; |
• | a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand products to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient products to be covered under Medicare Part D; |
• | extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations; |
• | expansion of eligibility criteria for Medicaid programs; |
• | expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; |
• | new requirements to report certain financial arrangements with physicians and teaching hospitals; |
• | a new requirement to annually report product samples that manufacturers and distributors provide to physicians; |
• | a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; |
• | a new Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription products; and |
• | established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models. |
• | delay, defer or prevent a change in control; |
• | entrench our management and the board of directors; or |
• | delay or prevent a merger, consolidation, takeover or other business combination involving us on terms that other stockholders may desire. |
• | establish a classified board of directors such that only one of three classes of directors is elected each year; |
• | allow the authorized number of our directors to be changed only by resolution of our board of directors; |
• | limit the manner in which stockholders can remove directors from our board of directors; |
• | establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; |
• | require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; |
• | limit who may call stockholder meetings; |
• | authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and |
• | require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our certificate of incorporation or bylaws. |
• | the success of competitive products or technologies; |
• | results of clinical trials of EBI-031 or any other product candidate that we may develop; |
• | results of clinical trials of product candidates 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 scientific or management personnel; |
• | the level of expenses related to any of our product candidates or clinical development programs; |
• | the results of our efforts to discover, develop, acquire or in-license additional products, product candidates or technologies for the treatment of ophthalmic diseases, the costs of commercializing any such products and the costs of development of any such product candidates or technologies; |
• | 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; |
• | changes in the structure of healthcare payment systems; |
• | market conditions in the pharmaceutical and biotechnology sectors; |
• | general economic, industry and market conditions; and |
• | the other factors described in this “Risk Factors” section. |
• | For the prior 30 consecutive business days, the bid price of our common stock on The NASDAQ Global Market closed below the minimum $1.00 per share required for continued inclusion under NASDAQ Marketplace Rule 5810(c)(3)(A), or the Minimum Bid Price Rule. |
• | For the prior 30 consecutive business days, our stockholders’ equity did not comply with the minimum stockholders’ equity requirement of $5,000,000 for continued listing on The NASDAQ Global Market pursuant to NASDAQ Marketplace Rule 5810(c)(3)(D), or the Minimum Market Value Rule. |
• | not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; |
• | not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; |
• | reduced disclosure obligations regarding executive compensation; and |
• | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
ELEVEN BIOTHERAPEUTICS, INC. | ||
By: | /s/ John J. McCabe | |
John J. McCabe | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit No. | Description | |
10.1*† | License Agreement, dated as of June 10, 2016, by and among Eleven Biotherapeutics, Inc., F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. | |
31.1 | Rule 13a-14(a) Certification of Principal Executive Officer | |
31.2 | Rule 13a-14(a) Certification of Principal Financial Officer | |
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. §1350 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
† | Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and Exchange Commission. |
1. | Definitions | 1 | ||
1.1 | Affiliate | 1 | ||
1.2 | Agreement | 1 | ||
1.3 | Agreement Term | 2 | ||
1.4 | Alternative Transaction | 2 | ||
1.5 | Applicable Law | 2 | ||
1.6 | Base Returnable Product | 2 | ||
1.7 | Biosimilar Product | 2 | ||
1.8 | BLA | 2 | ||
1.9 | Business Day | 2 | ||
1.10 | Calendar Quarter | 3 | ||
1.11 | Calendar Year | 3 | ||
1.12 | Carve-Out Transaction | 3 | ||
1.13 | Change of Control | 3 | ||
1.14 | Change of Control Group | 3 | ||
1.15 | Clinical Study | 3 | ||
1.16 | Combination Product | 3 | ||
1.17 | Commercially Reasonable Efforts | 4 | ||
1.18 | Companion Diagnostic | 4 | ||
1.19 | Composition of Matter Claim | 4 | ||
1.20 | Compound | 4 | ||
1.21 | Compulsory Sublicense Compensation | 4 | ||
1.22 | Confidential Information | 5 | ||
1.23 | Continuation Election Evaluation Process | 5 | ||
1.24 | Continuation Election Notice | 5 | ||
1.25 | Control | 5 | ||
1.26 | Cover | 6 | ||
1.27 | Core Compound Patent Rights | 6 | ||
1.28 | Early Returnable Product | 6 | ||
1.29 | Effective Date | 6 | ||
1.30 | Eleven Base Patent Rights | 6 | ||
1.31 | Eleven Cell Line Materials | 6 | ||
1.32 | Eleven Compounds | 6 | ||
1.33 | Eleven Know-How | 7 | ||
1.34 | Eleven Patent Rights | 7 | ||
1.35 | EU | 7 | ||
1.36 | Excluded Eleven Patent Right | 7 | ||
1.37 | Exclusivity Agreement | 7 | ||
1.38 | Expert | 7 | ||
1.39 | Expiration Date | 8 | ||
1.40 | Extended Roche GLP Tox Study | 8 | ||
1.41 | FDA | 8 | ||
1.42 | FDCA | 8 |
1.43 | Field | 8 | ||
1.44 | Filing | 8 | ||
1.45 | First Commercial Sale | 8 | ||
1.46 | First Option Period | 9 | ||
1.47 | FujiFilm | 9 | ||
1.48 | Handle | 9 | ||
1.49 | ICD-10 | 9 | ||
1.50 | IFRS | 9 | ||
1.51 | IND | 9 | ||
1.52 | IND Clearance | 9 | ||
1.53 | IND Clearance Activities | 9 | ||
1.54 | Indication | 10 | ||
1.55 | Infringe | 10 | ||
1.56 | Initiation | 10 | ||
1.57 | Inventory | 10 | ||
1.58 | Know-How | 10 | ||
1.59 | Licensed Compound | 10 | ||
1.60 | Licensed Product | 10 | ||
1.61 | Major EU Country | 11 | ||
1.62 | Modified Returnable Product | 11 | ||
1.63 | Net Sales | 11 | ||
1.64 | Non-Prosecution Claim | 11 | ||
1.65 | Non-Prosecution Patent Right | 12 | ||
1.66 | Party | 12 | ||
1.67 | Patent Rights | 12 | ||
1.68 | Phase I Study | 12 | ||
1.69 | Phase II Study | 12 | ||
1.70 | Phase III Study | 12 | ||
1.71 | Pre-Commercialized Returnable Product | 12 | ||
1.72 | Primary Composition of Matter Claim | 12 | ||
1.73 | Product | 13 | ||
1.74 | Proprietary Manufacturing IP | 13 | ||
1.75 | Qualified Person | 13 | ||
1.76 | Regulatory Approval | 13 | ||
1.77 | Regulatory Authority | 13 | ||
1.78 | Required Company Stockholder Vote | 13 | ||
1.79 | Responsibility Transfer Date | 14 | ||
1.80 | Returnable Product | 14 | ||
1.81 | Roche Activated Termination | 14 | ||
1.82 | Roche Group | 14 | ||
1.83 | Roche Group Third Party | 14 | ||
1.84 | Roche Know-How | 14 | ||
1.85 | Roche Patent Rights | 14 | ||
1.86 | Royalty Term | 14 |
1.87 | Sales | 14 | ||
1.88 | Secondary Composition of Matter Claim | 15 | ||
1.89 | Second Option Period | 16 | ||
1.90 | Signature Date | 16 | ||
1.91 | Stockholder Voting Proposal | 16 | ||
1.92 | Sublicensee | 16 | ||
1.93 | Symbiosis | 16 | ||
1.94 | Territory | 16 | ||
1.95 | Third Party | 16 | ||
1.96 | Third Party Eleven IP | 16 | ||
1.97 | US | 16 | ||
1.98 | US$ | 16 | ||
1.99 | Valid Claim | 16 | ||
1.100 | Additional Definitions | 17 | ||
2. | Grant of License | 18 | ||
2.1 | Grant of Rights | 18 | ||
2.2 | License | 18 | ||
2.3 | Sublicense | 18 | ||
2.4 | Retained Rights | 19 | ||
3. | Diligence | 19 | ||
4. | Development | 20 | ||
4.1 | Development for IND Clearance | 20 | ||
4.2 | Development Other Than IND Clearance Activities | 20 | ||
5. | Regulatory | 20 | ||
5.1 | Responsibility | 20 | ||
5.2 | Disclosure Covenant | 21 | ||
6. | Manufacture and Supply of Product | 21 | ||
6.1 | Product Inventory | 21 | ||
6.2 | Responsibility and Transfer | 21 | ||
6.3 | GMP Quality Agreements and Auditing | 22 | ||
7. | Commercialization | 22 | ||
8. | Information Exchange and Reports | 22 | ||
8.1 | Alliance Director | 22 | ||
8.2 | Updates to Eleven | 23 | ||
9. | Payment | 23 | ||
9.1 | License Fee | 23 | ||
9.2 | Event Payments | 23 | ||
9.3 | Royalty Payments | 24 | ||
9.4 | Buy-out Options | 27 | ||
9.5 | Disclosure of Payments | 28 | ||
10. | Accounting and Reporting | 28 | ||
10.1 | Timing of Payments | 28 | ||
10.2 | Late Payment | 28 | ||
10.3 | Method of Payment | 28 |
10.4 | Currency Conversion | 28 | ||
10.5 | Reporting | |||
11. | Taxes | 29 | ||
12. | Auditing | 29 | ||
12.1 | Eleven Right to Audit | 29 | ||
12.2 | Audit Reports | 30 | ||
12.3 | Over- or Underpayment | 30 | ||
13. | Intellectual Property | 30 | ||
13.1 | Prosecution of Primary Eleven Patent Rights | 30 | ||
13.2 | Prosecution of Select Non-Prosecution Patent Rights | 31 | ||
13.3 | Patent Coordination Liaison | 31 | ||
13.4 | Infringement | 31 | ||
13.5 | Defense | 33 | ||
13.6 | Common Interest Disclosures | 33 | ||
13.7 | Biosimilar or interchangeable biological products | 34 | ||
13.8 | Patent Term Extensions | 34 | ||
13.9 | Consent to File Patent Applications | 34 | ||
14. | Representations and Warranties | 34 | ||
14.1 | Eleven Representations and Warranties | 34 | ||
14.2 | Roche Representations and Warranties | 36 | ||
14.3 | No Other Representations | 37 | ||
15. | Indemnification | 37 | ||
16. | Liability | 38 | ||
16.1 | Limitation of Liability | 38 | ||
16.2 | Coordination | 38 | ||
17. | Obligation Not to Disclose Confidential Information | 38 | ||
17.1 | Non-Use and Non-Disclosure | 38 | ||
17.2 | Permitted Disclosure | 38 | ||
17.3 | Press Releases | 38 | ||
17.4 | Commercial Considerations | 39 | ||
18. | Agreement Expiration and Termination | 40 | ||
18.1 | Commencement and Expiration | 40 | ||
18.2 | Termination | 41 | ||
18.3 | Consequences of Termination | 42 | ||
18.4 | Royalty and Payment Obligations | 48 | ||
18.5 | Survival | 48 | ||
19. | Solicitation | 48 | ||
20. | Bankruptcy | 49 | ||
21. | Miscellaneous | 49 | ||
21.1 | Governing Law | 49 | ||
21.2 | Disputes | 49 | ||
21.3 | Jurisdiction; Arbitration | 49 | ||
21.4 | Assignment and Change of Control | 50 | ||
21.5 | Debarment | 51 |
21.6 | Independent Contractor | 51 | ||
21.7 | Unenforceable Provisions and Severability | 51 | ||
21.8 | Waiver | 51 | ||
21.9 | Appendices | 51 | ||
21.10 | Entire Understanding | 52 | ||
21.11 | Amendments | 52 | ||
21.12 | Invoices | 52 | ||
21.13 | Notice | 52 | ||
21.14 | Interpretation | 53 |
1. | Definitions |
1.1 | Affiliate |
1.2 | Agreement |
1.3 | Agreement Term |
1.4 | Alternative Transaction |
1.5 | Applicable Law |
1.6 | Base Returnable Product |
1.7 | Biosimilar Product |
1.8 | BLA |
1.9 | Business Day |
1.10 | Calendar Quarter |
1.11 | Calendar Year |
1.12 | Carve-Out Transaction |
1.13 | Change of Control |
1.14 | Change of Control Group |
1.15 | Clinical Study |
1.16 | Combination Product |
a) | a single pharmaceutical formulation containing as its active ingredients both |
(i) | a Compound and |
(ii) | one or more other therapeutically or prophylactically active ingredients that are not Compounds (each such therapeutically or prophylactically active ingredients, a “Non-Compound Active Agent”), or |
b) | a combination therapy comprised of |
(i) | a Compound and |
(ii) | one or more other therapeutically or prophylactically active products containing at least one Non-Compound Active Agent but not containing any Compounds, |
1.17 | Commercially Reasonable Efforts |
(i) | with respect to Eleven, the efforts that a company of comparable size and resources to and at the same stage of development as Eleven devotes, and |
(ii) | with respect to Roche, the efforts that Roche devotes, |
1.18 | Companion Diagnostic |
1.19 | Composition of Matter Claim |
1.20 | Compound |
1.21 | Compulsory Sublicense Compensation |
1.22 | Confidential Information |
(i) | was generally available to the public at the time of disclosure by the Disclosing Party to the Receiving Party, or becomes available to the public after disclosure by the Disclosing Party to the Receiving Party other than through fault (whether by action or inaction) of the Receiving Party or any of its Affiliates under circumstances permitting its use or disclosure, |
(ii) | can be evidenced by written records to have been already known to the Receiving Party or any of its Affiliates prior to its receipt from the Disclosing Party, |
(iii) | is obtained by the Receiving Party or any of its Affiliates at any time lawfully from a Third Party under circumstances permitting its use or disclosure, |
(iv) | is developed independently by the Receiving Party or any of its Affiliates as evidenced by written records other than through knowledge of or reference to the Disclosing Party’s Confidential Information, or |
(v) | is approved in writing by the Disclosing Party for release by the Receiving Party. |
1.23 | Continuation Election Evaluation Process |
1.24 | Continuation Election Notice |
1.25 | Control |
1.26 | Cover |
1.27 | Core Compound Patent Rights |
1.28 | Early Returnable Product |
1.30 | Eleven Base Patent Rights |
(a) | are Controlled by Eleven on the Signature Date or |
(b) | are Controlled by Eleven and claim first priority to an application filed after the Signature Date and claim an invention conceived or reduced to practice before the Signature Date by an employee of Eleven or an individual with an obligation to assign all rights in such invention and related Patent Rights to Eleven, |
1.31 | Eleven Cell Line Materials |
1.32 | Eleven Compounds |
(i) | EBI-031 (“EBI-031”), |
(ii) | EBI-028, |
(iii) | EBI-029, and |
(iv) | EBI-030. |
1.33 | Eleven Know-How |
(i) | on the Signature Date or |
(ii) | during the Agreement Term but prior to a Change of Control (however for clarity, even in the event of a Change of Control, Eleven Know-How includes the Know-How relating to Licensed Compounds and Licensed Products to be transferred to Roche in connection with Articles 4, 5 and 6). |
1.34 | Eleven Patent Rights |
(a) | the Eleven Base Patent Rights and |
(b) | to the extent not included in Eleven Base Patent Rights, the Patent Rights that Eleven Controls on the period commencing the day after the Signature Date and ending at the end of the Agreement Term; provided, however, that |
(i) | if Roche has exercised a Buy-Out Option, such period shall end on the second (2nd) anniversary of the Expiration Date, and |
(ii) | in any event, such period shall end on the occurrence of a Change of Control, |
1.35 | EU |
1.36 | Excluded Eleven Patent Right |
1.37 | Exclusivity Agreement |
1.38 | Expert |
1.39 | Expiration Date |
(a) | the date Roche provides timely written notice of exercise of a Buy-out Option, or |
(b) | if Roche does not provide timely written notice of exercise of a Buy-out Option, then on the date after the First Commercial Sale of any Licensed Product when (i) Roche is not conducting any |
1.40 | Extended Roche GLP Tox Study |
(a) | an FDA-Required GLP Tox Study or |
(b) | a GLP toxicity study that (i) is not required by the FDA for IND Clearance but still satisfies the FDA’s requirements for IND Clearance and (ii) is not run in parallel with or after an FDA-Required GLP Tox Study designed such that the last dose is administered to subjects fifteen (15) or fewer weeks after the administration of the first dose. |
1.41 | FDA |
1.42 | FDCA |
1.43 | Field |
1.44 | Filing |
1.45 | First Commercial Sale |
1.46 | First Option Period |
1.47 | FujiFilm |
1.48 | Handle |
1.49 | ICD-10 |
1.50 | IFRS |
1.51 | IND |
1.52 | IND Clearance |
1.53 | IND Clearance Activities |
(a) | new GLP toxicology stud(y)(ies) required by the FDA to achieve IND Clearance for EBI-031 (each an “FDA-Required GLP Tox Study”), |
(b) | IND Clearance Activities that the Parties mutually agree should be conducted by Roche; and |
(c) | on or after September 16, 2016, any IND Clearance Activities that Roche requests to either conduct or take over from Eleven. |
1.54 | Indication |
1.55 | Infringe |
1.56 | Initiation |
1.57 | Inventory |
1.58 | Know-How |
1.59 | Licensed Compound |
(a) | any Eleven Compound or |
(b) | any other Compound that (i) is Covered by a Core Compound Patent Right in the US or EU or (ii) was Covered by an issued Core Compound Patent Right in the US or EU that has expired less than ten (10) years from the applicable date. |
1.60 | Licensed Product |
1.61 | Major EU Country |
1.62 | Modified Returnable Product |
1.63 | Net Sales |
1.64 | Non-Prosecution Claim |
1.65 | Non-Prosecution Patent Right |
1.66 | Party |
1.67 | Patent Rights |
1.68 | Phase I Study |
1.69 | Phase II Study |
(i) | a control arm (placebo or standard of care), |
(ii) | a minimum of one hundred (100) patients per indication (except (x) if the indication is an orphan indication as determined under Applicable Law, in which case there shall be no such minimum, or (y) if the clinical trial is intended to explore multiple indications in the same arm or arms of |
(iii) | a minimum duration of dosing for each patient of five (5) months from the initial dose until the last dose, regardless of how frequently any such patients are dosed, |
1.70 | Phase III Study |
1.71 | Pre-Commercialized Returnable Product |
1.72 | Primary Composition of Matter Claim |
1.73 | Product |
1.74 | Proprietary Manufacturing IP |
1.75 | Qualified Person |
1.76 | Regulatory Approval |
1.77 | Regulatory Authority |
1.78 | Required Company Stockholder Vote |
1.79 | Responsibility Transfer Date |
(a) | the date of the IND Clearance for a Licensed Product containing EBI-031 or |
(b) | in the case of on-going Roche IND Clearance Activities, the conclusion of Eleven IND Clearance Activities (with the Parties to work in good faith to agree upon the appropriate date for conclusion of Eleven IND Clearance Activities). |
1.80 | Returnable Product |
1.81 | Roche Activated Termination |
1.82 | Roche Group |
1.83 | Roche Group Third Party |
1.84 | Roche Know-How |
1.85 | Roche Patent Rights |
1.86 | Royalty Term |
1.87 | Sales |
(i) | the amount stated in the Roche Holding AG “Sales” line of its externally published audited consolidated financial statements with respect to such Licensed Product for such period (excluding sales for resale to any Sublicensees that are not Affiliates of Roche). This amount reflects the gross invoice price at which such Licensed Product was sold or otherwise disposed of (other than for use as clinical supplies or free samples) by Roche and its Affiliates to such Third Parties (excluding sales to any Sublicensees that are not Affiliates of Roche) in such period reduced by gross-to-net deductions, if not previously deducted from such invoiced amount, taken in accordance with the then currently used IFRS. |
(a) | credits, reserves or allowances granted for (i) damaged, outdated, returned, rejected, withdrawn or recalled Licensed Product, (ii) wastage replacement and short-shipments; (iii) billing errors and (iv) indigent patient and similar programs (e.g., price capitation); |
(b) | governmental price reductions and government mandated rebates; |
(c) | chargebacks, including those granted to wholesalers, buying groups and retailers; |
(d) | customer rebates, including cash sales incentives for prompt payment, cash and volume discounts; and |
(e) | taxes, duties and any other governmental charges or levies imposed upon or measured by the import, export, use, manufacture or sale of a Licensed Product (excluding income or franchise taxes). |
(ii) | for Sublicensees that are not Roche Affiliates (and excluding Compulsory Sublicensees), the sales amounts reported to Roche and its Affiliates in accordance with the sublicensee contractual terms and their then-currently used accounting standards. For the purpose of clarity, any such Sublicensee sales as reported to Roche in accordance with Compulsory Sublicense agreements shall be excluded from the sales amount. |
1.88 | Secondary Composition of Matter Claim |
1.89 | Second Option Period |
1.90 | Signature Date |
1.91 | Stockholder Voting Proposal |
1.92 | Sublicensee |
1.93 | Symbiosis |
1.94 | Territory |
1.95 | Third Party |
1.96 | Third Party Eleven IP |
1.97 | US |
1.98 | US$ |
1.99 | Valid Claim |
1.100 | Additional Definitions |
Definition | Section |
Accounting Period | 10.1 |
Alliance Director | 8.1 |
Bankruptcy Code | 20 |
Breaching Party | 18.2.1 |
Buy-out Notice | 9.4 |
Buy-out Option | 9.4 |
CEEP Start Date | 18.3.2 |
Chugai | 1.1 |
Company Meeting | 1.78 |
Compound-Free Product | 1.64 |
Compulsory Profit Share Percentage | 9.3.8 |
Compulsory Sublicense | 1.21 |
Compulsory Sublicensee | 1.21 |
Core Patent Rights | 1.30 |
Decision Period | 13.4 |
EBI-031 | 1.32 |
Eleven Assigned Patent Rights | 13.1.2 |
Eleven IND Clearance Activities | 1.53 |
Eleven MTA Information | 21.10 |
Eleven NDA Information | 21.10 |
Eleven-Originated Transfer Activities | 18.3.4.3 |
Excluded Roche Patent Rights | 1.85 |
Expert Committee | 9.3.3 |
Extended Roche GLP Tox Study Event | 9.2 |
FDA-Required GLP Tox Study | 1.53(a) |
First Buy-out Option | 9.4 |
FMI | 1.1 |
Definition | Section |
HSR Act | 14.1.5 |
Indemnified Party | 15.3 |
Indemnifying Party | 15.3 |
Initiating Party | 13.4 |
Involuntary Termination | 1.81 |
Minimum Transfer Payment | 18.3.4.3 |
MTA | 13.9 |
NDA | 21.10 |
Non-Breaching Party | 18.2.1 |
Non-Compound Active Agent | 1.16 |
Patent Term Extensions | 13.8 |
Payment Currency | 10.3 |
Peremptory Notice Period | 18.2.1 |
Primary Eleven Patent Rights | 13.1.1 |
Redacted Agreement | 17.4 |
Reference Product Sponsor | 13.7 |
Relative Commercial Value | 9.3.3 |
Representatives | 19 |
Roche IND Clearance Activities | 1.53 |
Roche Indemnitees | 15.2 |
Roche Transfer Activities | 18.3.4.3 |
Samples and PI Information | 18.3.4.3 |
Second Buy-out Option | 9.4 |
Select Non-Prosecution Patent Rights | 13.2 |
Sensitive Information | 21.4(c) |
Settlement | 13.4 |
SPCs | 13.8 |
Suit Notice | 13.4 |
Voluntary Termination | 1.81 |
2. | Grant of License |
2.1 | Grant of Rights |
2.2 | License |
2.3 | Sublicense |
2.3.1 | Right to Sublicense to its Affiliates |
2.3.2 | Right to Sublicense to Third Parties |
2.3.3 | Right to Subcontract |
2.4 | Retained Rights |
3. | Diligence |
4. | Development |
4.1 | Development for IND Clearance |
4.2 | Development Other Than IND Clearance Activities |
5. | Regulatory |
5.1 | Responsibility |
5.2 | Disclosure Covenant |
6. | Manufacture and Supply of Product |
6.1 | Product Inventory |
6.2 | Responsibility and Transfer |
6.3 | GMP Quality Agreements and Auditing |
(a) | promptly enter into a GMP quality agreement with Eleven’s CMOs (including Eurofins Lancaster Laboratories, Inc.), and |
(b) | in good faith facilitate a joint GMP audit of such CMOs by Eleven with Roche, in each case at Roche’s expense. |
7. | Commercialization |
8. | Information Exchange and Reports |
8.1 | Alliance Director |
8.2 | Updates to Eleven |
9. | Payment |
9.1 | License Fee |
9.2 | Event Payments |
Event | US Dollars (in millions) | |
IND Clearance-Related Events | (a) IND Clearance (if IND Clearance is achieved on or before September 15, 2016) | $22.5* |
(b) IND Clearance (if IND Clearance is achieved after September 15, 2016 and no Extended Roche GLP Tox Study) | $20* | |
(c) Initiation of the first Extended Roche GLP Tox Study (the “Extended Roche GLP Tox Study Event”) | $5* | |
(d) IND Clearance (if IND Clearance is achieved after September 15, 2016 and subsequent to completion of an Extended Roche GLP Tox Study) | $15 | |
Initiation of the first Phase II Study | $20 | |
Initiation of the first Phase III Study | $30 | |
BLA Filing in US | $25 | |
BLA Filing anywhere in the EU** | $15 | |
BLA Filing in Japan | $10 | |
First Commercial Sale in US | $40 | |
First Commercial Sale anywhere in the EU** | $25 | |
First Commercial Sale in Japan | $10 | |
BLA Filing for a second Indication in US | $10 | |
BLA Filing for a second Indication anywhere in the EU** | $5 | |
Regulatory Approval in a second Indication in US | $30 | |
Regulatory Approval in a second Indication anywhere in the EU** | $20 |
9.3 | Royalty Payments |
9.3.1 | Royalty Term |
9.3.2 | Royalty Rates |
Tier of Calendar Year Net Sales in billion US$ | Percent (%) of Net Sales of Licensed Products containing EBI-031* |
0 – 1 | 7.5% |
> 1 – 2 | 9% |
> 2 – 4 | 11% |
> 4 | 15% |
9.3.3 | Combination Product |
9.3.4 | No Primary Composition of Matter Claim |
(a) | If, after the ten year anniversary of the First Commercial Sale of such Licensed Product in such country, there is a Secondary Composition of Matter Claim Covering such Licensed Product in such country and a Biosimilar Product has entered the market in such country then no royalty payments shall be due to Eleven for such Licensed Product in such country; otherwise |
(b) | the royalty payments due to Eleven for such Licensed Product in such country shall be reduced by fifty percent (50%). |
9.3.5 | Biosimilar Product |
(a) | If a Product that is a Biosimilar Product to a given Licensed Product enters the market in a given country prior to the end of the Royalty Term and Net Sales of such Licensed Product in such country subsequently decrease for two consecutive Calendar Quarters by more than twenty-five percent (25%) of the level of the Net Sales of such Licensed Product in such country achieved in the Calendar Year immediately prior to such entry divided by four, then the royalty rate owed to Eleven for such Licensed Product shall be reduced by fifty percent (50%) in such country. |
(b) | If subsequent to such a Biosimilar Product entry, the Net Sales of such Licensed Product in such country decrease by more than fifty percent (50%) of the level of the Net Sales of such Licensed Product in such country achieved in the Calendar Year immediately prior to such entry divided by four, then the royalty rate owed to Eleven in such country for such Licensed Product shall be reduced by seventy-five percent (75%) in such country. |
9.3.6 | Third Party Payments |
(a) | The Roche Group shall not have the right to deduct any amounts paid by the Roche Group for any Patent Right that claims (i) any pharmaceutically-active compound other than a Licensed Compound, (ii) any use claims (except those claiming one or more approved Indications for the Licensed Product in the given country) or (iii) any manufacturing claims. |
(b) | For all other Patent Rights that the Roche Group otherwise would have Infringed by selling the relevant Licensed Product in the relevant country, the Roche Group shall have the right to deduct from royalties otherwise due and payable by the Roche Group to Eleven for such Licensed Product in such country under the Agreement (i) a maximum of fifty percent (50%) of the royalties actually paid by the Roche Group to a Roche Group Third Party with respect to such arrangement except for Patent Rights that claim any delivery device and (i) a maximum of twenty-five percent (25%) of the royalties actually paid by the Roche Group to a Roche Group Third Party with respect to such arrangement for Patent Rights that claim any delivery device. Roche may not otherwise deduct the amounts paid to any such Roche Group Third Party, including any amounts for the development of any Licensed Product. |
9.3.7 | Maximum Deductions |
9.3.8 | Apportionment of Compulsory Sublicensee Consideration |
1.5 x | (royalties payable to Eleven for the Licensed Product in the Territory) |
(Net Sales related to the royalties payable for the Licensed Product in the Territory) |
9.4 | Buy-out Options |
(i) | Two Hundred Sixty-Five Million US Dollars (US$ 265,000,000) in the event a Patent Right containing a Primary Composition of Matter Claim Covering any Licensed Compound or Licensed Product has issued anywhere in the EU, or |
(ii) | Two Hundred Twenty Million US Dollars (US$ 220,000,000) in the event no Patent Right containing a Primary Composition of Matter Claim Covering any Licensed Compound or Licensed Product has issued anywhere in the EU, |
9.5 | Disclosure of Payments |
10. | Accounting and Reporting |
10.1 | Timing of Payments |
10.2 | Late Payment |
10.3 | Method of Payment |
10.4 | Currency Conversion |
10.5 | Reporting |
(a) | Sales in Swiss Francs; |
(b) | Net Sales in Swiss Francs; |
(c) | adjustments made pursuant to Section 9.3.3; |
(d) | Net Sales in Swiss Francs after adjustments made pursuant to Section 9.3.3 in Swiss Francs; |
(e) | exchange rate used for the conversion of Net Sales from Swiss Francs to the Payment Currency pursuant to Section 10.4; |
(f) | Net Sales after adjustments made pursuant to Section 9.3.3 in the Payment Currency; |
(g) | royalty rate pursuant to Section 9.3.2; |
(h) | adjustments under Sections 9.3.4 - 9.3.7; and |
(i) | total royalty payable in the Payment Currency after adjustments made pursuant to Sections 9.3.4 - 9.3.7. |
11. | Taxes |
12. | Auditing |
12.1 | Eleven Right to Audit |
12.2 | Audit Reports |
12.3 | Over- or Underpayment |
13. | Intellectual Property |
13.1 | Prosecution of Primary Eleven Patent Rights |
13.1.1 | Prior to Exercising Buy-out Option |
(i) | Core Patent Rights and |
(ii) | other Eleven Patent Rights (excluding Non-Prosecution Patent Rights) claiming Products or any Compound therein (or any uses thereof) for a Product that has reached at least Initiation of a Phase I Study in development by or on behalf of a member of the Roche Group, |
(a) | Roche shall use Commercially Reasonable Efforts to Handle Primary Eleven Patent Rights, without Roche taking into account the payment reductions under this Agreement that would occur if any such Patent Rights were not to exist or if any applicable Composition of Matter Claim were not to exist. |
(b) | Should Roche decide that it does not desire to Handle a Primary Eleven Patent Right, it shall promptly advise Eleven thereof in writing in sufficient time as is reasonably needed for Eleven to not lose any rights with respect to such Primary Eleven Patent Right. Eleven may thereafter Handle the same at Eleven’s own cost, to the extent that Eleven desires to do so. |
13.1.2 | After Exercising Buy-out Option |
13.2 | Prosecution of Select Non-Prosecution Patent Rights |
13.3 | Patent Coordination Liaison |
13.4 | Infringement |
(i) | known infringement or suspected infringement by a Roche Group Third Party of any Valid Claim of the Primary Eleven Patent Rights through the unauthorized manufacture, use, sale or importation of a Licensed Compound or Licensed Product, or |
(ii) | known or suspected unauthorized use or misappropriation by a Roche Group Third Party of any Eleven Know-How in the unauthorized manufacture, use, sale or importation of a Licensed Compound or Licensed Product by such Roche Group Third Party, |
(i) | if a member of the Roche Group is the Initiating Party, |
(A) | any remaining amount that represents compensation for lost sales, a reasonable royalty or lost profits, shall be retained by or paid to the Initiating Party; provided, however, any such amount (after relevant adjustment to convert to Net Sales of Products) shall be subject to the royalty obligations set forth in Section 9.3; and |
(B) | any remaining amount that represents additional damages (e.g., enhanced or punitive damages) shall be allocated to Roche; and |
(ii) | if Eleven is the Initiating Party, the balance, if any, shall be allocated seventy five percent (75%) to the Initiating Party, and twenty five percent (25%) to the other Party. |
13.5 | Defense |
13.6 | Common Interest Disclosures |
13.7 | Biosimilar or interchangeable biological products |
13.8 | Patent Term Extensions |
13.9 | Consent to File Patent Applications |
14. | Representations and Warranties |
14.1 | Eleven Representations and Warranties |
14.1.1 | Safety Data |
(a) | Eleven has disclosed to Roche and, to the extent set forth in Section 5.2, will promptly disclose to Roche the results of all preclinical testing of Licensed Product in its Control. |
(b) | Eleven has not conducted human clinical testing of any Licensed Product. In accordance with Section 5.2, Eleven will disclose to Roche all information in its Control concerning side effects, injury, toxicity or sensitivity reaction and incidents or severity thereof in humans with respect to Licensed Product. |
14.1.2 | Ownership of Patent Rights |
14.1.3 | Third Party Eleven IP |
14.1.4 | Inventors |
14.1.5 | Grants |
14.1.6 | Authorization |
14.1.7 | Validity of Patent Rights |
14.1.8 | Ownership and Validity of Know-How |
14.1.9 | No Claims |
14.1.10 | Scope of License |
14.2 | Roche Representations and Warranties |
14.2.1 | Authorization |
14.2.2 | No Claims |
14.3 | No Other Representations |
15. | Indemnification |
15.1 | Indemnification by Roche |
15.2 | Indemnification by Eleven |
15.3 | Procedure |
16. | Liability |
16.1 | Limitation of Liability |
(a) | Subject to Article 3, neither Party shall be liable to the other Party as a result of failure or delay to develop or commercialize the Licensed Compound or the Licensed Product, as applicable, including but not limited to, a) a delay in timelines, or b) delay or failure to recruit patients, or c) a change in its respective study protocols, or d) failure of the other Party to obtain Regulatory Approval for the Licensed Compound or the Licensed Product, as applicable. |
(b) | EXCEPT FOR INDEMNIFICATION UNDER ARTICLE 15, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES, OR LOST PROFITS, IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER REGARDLESS OF THE FORM OF ACTION THROUGH WHICH ANY OF THE FOREGOING ARE SOUGHT. |
16.2 | Coordination |
17. | Obligation Not to Disclose Confidential Information |
17.1 | Non-Use and Non-Disclosure |
17.2 | Permitted Disclosure |
17.3 | Press Releases |
(a) | The Parties may issue solely or jointly the press releases announcing the existence and selected key terms of this Agreement, in a form substantially similar to the templates attached as Appendix 17.3. |
(b) | Eleven shall only issue other press releases related to the activities contemplated by this Agreement that either (i) have been approved by Roche or (ii) are required to be issued by Eleven as a matter of law based on advice of legal counsel. In all such circumstances, Eleven shall provide Roche with a draft press release at least two (2) weeks prior to its intended publication for Roche's review. During such period, Roche shall (i) approve the draft press release and permit Eleven to issue the press release, (ii) contact Eleven to discuss modification to the draft press release, or (iii) contact Eleven and disapprove the press release. If Roche asks for modification, then Eleven shall either make such modification or work with Roche to arrive at a press release that Roche approves. |
(c) | Notwithstanding anything else to the contrary in this Agreement, Eleven may issue press releases or announcements, make filings or submissions or otherwise publicly disclose information regarding this Agreement and the transactions contemplated hereby without the prior written consent of Roche to the extent required by Applicable Law or the rules or regulations of any applicable U.S. or non-U.S. securities exchange or regulatory governmental body to which it is subject to or submits to, including any disclosures contained in proxy or other similar materials issued in connection with the Stockholder Voting Proposal; provided, however, the issuance by Eleven of any such press release without following the procedures of Section 17.3(b) must be based on advice of legal counsel that the release was required to be issued by Eleven as a matter of law. Notwithstanding the foregoing, in all such cases Eleven shall use Commercially Reasonable |
(d) | To the extent the content of any press release or other announcement has been made in accordance with this Section 17.3 or with Section 17.4, no separate approval shall be required in respect of such content to the extent replicated in whole or in part in any subsequent press release or other announcement. |
(e) | To ensure communication alignment, responses (if any) to inquiries by media or other Third Parties (other than inquiries by any governmental authority, body, agency or other instrumentality) after issuance of a permitted press release by Eleven (solely or jointly with Roche) shall consist solely of the press release language or shall follow the response guidelines that may be mutually developed by the Parties. |
17.4 | Commercial Considerations |
(a) | After the Effective Date, nothing in this Agreement shall prevent Roche or its Affiliates from disclosing Confidential Information of Eleven to (i) governmental agencies to the extent required or desirable to secure government approval for the development, manufacture or sale of Product in the Territory, (ii) Third Parties acting on behalf of Roche, to the extent reasonably necessary for the development, manufacture or sale of Product in the Territory, or (iii) Third Parties to the extent reasonably necessary to market the Product in the Territory. |
(b) | Either Party may disclose this Agreement to actual or potential licensees, sublicensees, acquirers or investors under terms of confidentiality no less stringent than in this Agreement. |
(c) | The Receiving Party may disclose Confidential Information of the Disclosing Party to the extent that such Confidential Information is required to be disclosed by the Receiving Party to comply with Applicable Law, to defend or prosecute litigation or to comply with governmental regulations, provided that the Receiving Party provides prior written notice of such disclosure to the Disclosing Party, if possible, and, to the extent practicable, takes reasonable and lawful actions to minimize the degree of such disclosure. |
(d) | The Parties acknowledge that either or both Parties may be obligated to make one or more filings (including to file a copy of this Agreement) with the U.S. Securities and Exchange Commission (or equivalent foreign agency) or a governmental authority. Each Party will be entitled to make such a required filing, provided that it will (i) submit in connection with such filing a copy of this Agreement in a form mutually agreed by the Parties in advance or, if despite the commercially reasonable efforts of Eleven a form mutually agreed by the Parties cannot be agreed in advance, redacted to the extent permitted by Applicable Law (the “Redacted Agreement”), (ii) request, and use commercially reasonable efforts consistent with Applicable Laws to obtain, confidential treatment of all terms redacted from this Agreement, as reflected in |
18. | Agreement Expiration and Termination |
18.1 | Commencement and Expiration |
18.2 | Termination |
18.2.1 | Termination for Material Breach After the Effective Date |
18.2.2 | Termination by Roche without Cause After the Effective Date |
18.2.3 | Termination by Eleven for Development Discontinuation After the Effective Date |
18.2.4 | Termination for Eleven Debarment |
18.2.5 | Termination by a Party Prior to the Effective Date |
(a) | Eleven will inform Roche of the date of the Company Meeting at which a vote of the Stockholder Voting Proposal is to be taken. Eleven will inform Roche of the results of the Company Meeting at which a vote on the Stockholder Voting Proposal was taken within one (1) Business Day of such meeting. Eleven will inform Roche within one (1) Business Day of a decision by the Board of Directors of Eleven to approve or recommend to the stockholders any Alternative Transaction from a Qualified Person. |
(b) | Prior to the Effective Date, if, at the Company Meeting at which a vote on the Stockholder Voting Proposal is taken, the Required Company Stockholder Vote in favor of the Stockholder Voting Proposal is not obtained, this Agreement shall automatically terminate as of the date of such Company Meeting at which such vote on the Stockholder Voting Proposal was taken. |
(c) | Prior to the Effective Date, Roche shall have the right to terminate this Agreement upon written notice if the Company Meeting at which a vote on the Stockholder Voting Proposal is taken does not occur on or prior to the seventy-fifth (75th) day following the Signature Date. |
(d) | Prior to the Effective Date, either Party shall have the right to terminate this Agreement upon written notice if the Board of Directors of Eleven shall have approved or recommended to the stockholders any Alternative Transaction from a Qualified Person. |
18.3 | Consequences of Termination |
18.3.1 | Termination for Eleven Breach or Debarment |
18.3.2 | Roche Activated Termination |
a) | Roche shall, and shall ensure that its Affiliates shall, (and, to the extent Roche or any of its Affiliates has the right to do so and to the extent such sublicensees do not take a direct license in accordance with Section 18.3.3, shall require the other members of the Roche Group to,) promptly transfer to Eleven all regulatory filings and approvals, all final pre-clinical and clinical study reports and clinical study protocols, and all data, including clinical data, in their possession and control related to Returnable Product(s) necessary for Eleven to continue to develop and commercialize the Returnable Product(s). All data shall be transferred in the form and format in which it is maintained by the relevant member of the Roche Group. Original paper copies shall only be transferred, if legally required. Roche shall not be required to prepare or finalize any new data, reports or information solely for purposes of transfer to Eleven. |
b) | Roche shall, and shall ensure that its Affiliates shall, (and, to the extent Roche or any of its Affiliates has the right to do so and to the extent such sublicensees do not take a direct license in accordance with Section 18.3.3, shall require the other members of the Roche Group to,) make reasonable efforts to promptly assign all clinical trial agreements, to the extent such agreements have not been cancelled, are assignable without subjecting Roche to any material liability and are assignable without Roche paying any consideration (unless Eleven agrees to pay such consideration) or commencing litigation in order to effect an assignment of any such agreement. |
c) | Eleven shall, upon such transfer, have the right to disclose such filings, approvals and data to (i) governmental agencies of the country to the extent required or desirable to secure government |
d) | In exchange for Roche’s transfer of such items that were not originally provided from Eleven to Roche under this Agreement (i.e., created or developed by or on behalf of Roche), Eleven shall pay Roche a royalty on all net sales (as determined by reasonable accounting methods) of such Returnable Product(s) by Eleven, its Affiliates or licensees or sublicensees to which Eleven has licensed or sublicensed rights other than through a Compulsory Sublicense, mutatis mutandis, for such Returnable Product(s) (other than licensees that have a direct license in accordance with Section 18.3.3), with the royalty rate as follows: |
Status of Returnable Product at time of termination | Royalty rate |
Phase II Study Initiated | 2% |
Phase III Study Initiated | 5% |
First Commercial Sale in US or anywhere in the EU | 10% |
e) | In connection with such transfer, and in all cases subject to Section 18.3.4.3, Eleven shall have a non-exclusive license, sublicensable through multiple tiers, under the Roche Patent Rights and Roche Know-How, solely to the extent necessary to allow Eleven, its Affiliates or licensees or sublicensees to register, have registered, develop, manufacture, have manufactured, use, offer to sell, sell, promote, export and import the Base Returnable Product associated with each applicable Returnable Product specified in such Continuation Election Notice and all associated applicable Modified Returnable Product(s) for such Base Returnable Product in the applicable country(ies), with the proviso that |
(i) | with respect to Early Returnable Products, unless Roche specifically agrees to the contrary, such license shall not extend to Proprietary Manufacturing IP for Early Returnable Products; |
(ii) | with respect to Returnable Products other than Early Returnable Products, such license does not apply to Proprietary Manufacturing IP for so long as Roche elects to manufacture and supply such Returnable Product under Section 18.3.4.2(c), and if Roche transfers the process to one or more Third Party CMOs acceptable to Roche under conditions of confidentiality and non-use acceptable to Roche in accordance with Section 18.3.4.2(c), such license of |
f) | If requested by Eleven in writing, and solely to the extent Roche is able to do so truthfully, Roche will represent and warrant to Eleven that, as of the effective date of the termination, Roche and its Affiliates have not been debarred under 21 U.S.C. §335a, disqualified under 21 C.F.R. §312.70 or §812.119, sanctioned by a Federal Health Care Program (as defined in 42 U.S.C. §1320 a-7b(f)), including without limitation the federal Medicare or a state Medicaid program, or debarred, suspended, excluded or otherwise declared ineligible from any other similar Federal or state agency or program in a manner that would materially impact the Returnable Products. |
18.3.3 | Direct License |
18.3.4 | Other Obligations Applicable for Roche Activated Terminations |
18.3.4.1 | Obligations Related to Ongoing Activities |
(a) | If Eleven does not provide timely a Continuation Election Notice, then Roche (i) shall have the right to cancel all ongoing obligations with Third Parties with respect to any terminated Returnable Product under this Agreement and (ii) shall be permitted to complete, and be solely responsibility for, all non-cancellable obligations with Third Parties with respect to any terminated Returnable Product, but only at its own expense. |
(b) | If Eleven provides such timely Continuation Election Notice, then from the date of notice of termination until (i) the effective date of termination (in the event of a Voluntary Termination) and (ii) four (4) months after the effective date of termination (in the event of an Involuntary Termination), Roche shall continue activities, including preparatory activities, ongoing as of the date of notice of termination with respect to the relevant Returnable Products, at Roche’s expense. However, Roche shall not be obliged to initiate any new activities not ongoing at the date of notice of termination except as expressly set forth herein. |
(c) | After the effective date of termination, Roche shall have no obligation to perform or complete any activities or to make any payments for performing or completing any activities under this Agreement, except as expressly stated herein. |
(i) | both Eleven and Roche in their reasonable judgment have concluded that completing any such Clinical Studies does not present an unreasonable risk to patient safety; |
(ii) | Roche shall have no obligation to recruit or enroll any additional patients after the effective date of termination; and |
(iii) | Subject to Section 18.3.4.1(b), Eleven agrees to reimburse Roche for all of its reasonable development costs that arise after the effective date of termination in completing or transitioning such Clinical Studies. |
18.3.4.2 | Obligations Related to Manufacturing |
a) | Clinical Supplies |
b) | Commercial Supplies |
c) | Option of Roche |
18.3.4.3 | Limitations on Grant-Backs; Transfer Expenses |
a) | All transfers and licenses from Roche to Eleven or other obligations of Roche under Section 18.3 are solely with respect to Returnable Product(s) that are not Combination Product(s). Such transfers, licenses and obligations do not extend to |
(i) | other therapeutically active ingredients or therapeutically active products, even if physically mixed, combined or packaged together with a Returnable Product, or |
(ii) | with respect to Pre-Commercialized Returnable Products, delivery technologies that are proprietary to Roche (through ownership or license) (with the proviso that if Eleven would be unable to use any alternative delivery technology to commercialize such Pre-Commercialized Returnable Product, Roche will in good faith consider making such delivery technologies available to Eleven), |
b) | In connection with research studies, clinical trials or other activities associated with the development and commercialization of Returnable Products, Roche or other members of the Roche Group may have collected human samples and patient information that may contain personal identifiable information (“Samples and PI Information”). Legal and contractual restrictions may apply to such Samples and PI Information. Eleven acknowledges and accepts that, where Roche in good faith has reasonable concerns that Applicable Law or insufficient patient consent would prohibit the transfer of such Samples and PI Information or subject Roche to liability because of such transfer and subsequent use by Eleven, then Roche shall not be obliged to transfer such Samples and PI Information to Eleven. |
c) | Nothing in this Agreement shall be construed as granting Eleven any license under the Excluded Roche Patent Rights. |
d) | If Eleven issues a Continuation Election Notice, then Eleven shall reimburse Roche for all reasonable out-of-pocket costs and expenses (including FTE charges) incurred by or on behalf of Roche for transfer activities from Roche to Eleven under Section 18.3.2 (including costs associated with locating, assembling and populating information into the data room) (“Roche Transfer Activities”) within thirty (30) days after receipt of an invoice, with an invoice to be provided no more than once per Calendar Quarter; however transfer activities corresponding to the return of material remains, data, reports, records, documents, regulatory filings and Regulatory Approvals originally provided by Eleven to Roche no less than three (3) years prior to the effective date of termination (“Eleven-Originated Transfer Activities”) shall be returned to Eleven free of charge. If the Agreement was terminated due to a Voluntary Termination and Eleven desires Roche Transfer Activities other than Eleven-Originated Transfer Activities, Eleven shall make a payment to Roche of Two Hundred Fifty Thousand US Dollars (US$ 250,000) (“Minimum Transfer Payment”) within thirty (30) days after receipt of an invoice. The Minimum Transfer Payment shall be non-refundable, but shall be fully creditable against Eleven’s reimbursement for the Roche Transfer Activities and payments under Section 18.3.2(d). Roche shall be under no obligation to provide Roche Transfer Activities (beyond the Eleven-Originated Transfer Activities) prior to receipt of the Minimum Transfer Payment, if applicable. |
18.4 | Royalty and Payment Obligations |
18.5 | Survival |
19. | Solicitation |
(a) | solicit, initiate or knowingly facilitate or knowingly encourage the submission of any proposal or offer from any Third Party for an Alternative Transaction; |
(b) | enter into or participate in any discussions or negotiations with, furnish any non-public information relating to the IL-6 program to, or afford access to the business, properties, assets, books or records of the IL-6 program to, any Third Party that, to Eleven’s knowledge, is seeking to make, or has made, any proposal or offer for an Alternative Transaction, in each case relating to or in connection with an Alternative Transaction; or |
(c) | enter into any agreement with any person or entity (other than Roche) for an Alternative Transaction. |
20. | Bankruptcy |
21. | Miscellaneous |
21.1 | Governing Law |
21.2 | Disputes |
21.3 | Jurisdiction; Arbitration |
21.4 | Assignment and Change of Control |
(a) | Eleven shall provide written notice to Roche within fifteen (15) days after completion of such Change of Control. |
(b) | The acquirer of or the successor to in connection with such Change of Control shall acknowledge in writing to Roche that the Eleven Know-How and the Primary Eleven Patent Rights are subject to the exclusive licenses to Roche for the research, development or commercialization of Compounds or Products, subject to the terms and conditions of this Agreement. |
(c) | If either Eleven or the Change of Control Group are engaged in the conduct of clinical studies or commercialization of competing ophthalmic products either at the time of the Change of Control or thereafter, then Roche may upon written request require Eleven and the Change of Control Group to institute a firewall to limit access of information and reports provided to Eleven by the Roche Group under Article 8 and Article 13 (collectively “Sensitive Information”) to (1) such Eleven and Change of Control Group personnel, attorneys, agents and advisors that reasonably need access to and knowledge of such Sensitive Information to perform Eleven’s obligations and exercise Eleven’s rights under the Agreement and (2) C-level personnel of Eleven or the Change of Control Group, with the objective to prohibit the use of such Sensitive Information by Eleven or the Change of Control Group for competitive reasons that would be detrimental to Roche’s interests under the Agreement or Licensed Compounds or Licensed Products without foreclosing the ability of Eleven or the Change of Control Group to perform Eleven’s obligations and exercise Eleven’s rights under the Agreement. For clarity, (i) information about payments made by Roche under this Agreement shall not be deemed as Sensitive Information that is subject to the firewall of this Section 21.4(c), and (ii) the exceptions under Sections 1.21(i)-(v), 17.3 and 17.4 to Eleven’s obligations to protect Roche’s Confidential Information shall also apply to Sensitive Information. |
21.5 | Debarment |
21.6 | Independent Contractor |
21.7 | Unenforceable Provisions and Severability |
21.8 | Waiver |
21.9 | Appendices |
21.10 | Entire Understanding |
21.11 | Amendments |
21.12 | Invoices |
21.13 | Notice |
if to Eleven, to: | Eleven Biotherapeutics, Inc. 215 First Street, Suite 400 Cambridge, Massachusetts 02142 U.S.A. Attn: Chief Executive Officer Facsimile: +1 617-858-0911 |
if to Roche, to: | F. Hoffmann-La Roche Ltd Grenzacherstrasse 124 4070 Basel Switzerland Attn: Legal Department Facsimile No.: +41 61 688 13 96 |
and: | Hoffmann-La Roche Inc. 150 Clove Road Suite 8 Little Falls, New Jersey 07424 U.S.A. Attn. Corporate Secretary Facsimile No.: +1 973 890-8433 |
21.14 | Interpretation |
a) | Each Party acknowledges that it has been advised by counsel during the course of negotiation of this Agreement, and, therefore, that this Agreement shall be interpreted without regard to any presumption or rule requiring construction against the Party causing this Agreement to be drafted. |
b) | The headings, captions and table of contents in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement. |
c) | In construing this Agreement, except where the context acquires otherwise, (i) use of the singular includes the plural and vice versa; (ii) the words “include” “including”, “includes” and “e.g.” means “including without limitation”; (iii) the word “or” is used in the inclusive sense that is typically associated with the phrase “and/or”; (iv) the words “herein,” “hereof” and “hereunder,” and words of similar import, refer to this Agreement in its entirety and not to any particular provision hereof; (v) the verb “will” shall be construed to have the same meaning and effect as the word “shall”; (vi) use of any gender includes any other gender; (vii) any reference to any law or regulation includes any amendment or modification to such law or regulation and shall be deemed also to refer to all rules and regulations promulgated thereunder; (viii) references to a particular person or entity include such person’s or entity’s successors and assigns to the extent not prohibited by this Agreement; and (ix) a capitalized term not defined herein but reflecting a different part of speech than a capitalized term which is defined herein shall be interpreted in a correlative manner. |
Eleven Biotherapeutics, Inc. ___/s/ Abbie Celniker___________ Name: Abbie Celniker Title: Chief Executive Officer |
F. Hoffmann-La Roche Ltd /s/ Stefan Arnold______________ Name: Stefan Arnold Title: Head Legal Pharma | /s/ Vikas Kabra________________ Name: Vikas Kabra Title: Head of Transaction Excellence |
Hoffmann-La Roche Inc. ___/s/ John P. Parise_________________ Name: John P. Parise Title: Authorized Signatory |
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1. | I have reviewed this Quarterly Report on Form 10-Q of Eleven Biotherapeutics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Abbie C. Celniker |
Abbie C. Celniker |
President and Chief Executive Officer |
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Eleven Biotherapeutics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ John J. McCabe |
John J. McCabe |
Chief Financial Officer |
(Principal Financial Officer) |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Abbie C. Celniker |
Abbie C. Celniker |
President and Chief Executive Officer |
(Principal Executive Officer) |
/s/ John J. McCabe |
John J. McCabe |
Chief Financial Officer |
(Principal Financial Officer) |
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Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 31, 2016 |
|
Document And Entity Information [Abstract] | ||
Trading symbol | EBIO | |
Entity registrant name | Eleven Biotherapeutics, Inc. | |
Entity central index key | 0001485003 | |
Current fiscal year end date | --12-31 | |
Entity filer category | Non-accelerated Filer | |
Document type | 10-Q | |
Document period end date | Jun. 30, 2016 | |
Document fiscal year focus | 2016 | |
Document fiscal period focus | Q2 | |
Amendment flag | false | |
Entity common stock, shares outstanding (in shares) | 20,058,298 |
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 20,005,771 | 19,619,124 |
Common stock, shares outstanding (in shares) | 20,005,771 | 19,619,124 |
Organization and Basis of Presentation |
6 Months Ended | ||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||
Organization and Basis of Presentation | Organization and Basis of Presentation Eleven Biotherapeutics, Inc. (the “Company”), formerly known as Denovo Therapeutics, Inc. and Newco LS14, Inc., a Delaware corporation formed on February 25, 2008, is a biopharmaceutical company with a proprietary protein engineering platform, called AMP-Rx, that it applies to the discovery and development of protein therapeutics to treat diseases of the eye. The Company’s most advanced product candidate, which is still in preclinical development, is EBI-031, which the Company designed, engineered and generated using its AMP-Rx platform and is developing as an intravitreal injection for diabetic macular edema ("DME") and uveitis. On June 10, 2016, the Company submitted an investigational new drug application ("IND") to the United States Food and Drug Administration ("FDA") to initiate a Phase I clinical trial of its product candidate EBI-031, and the FDA granted clearance of this IND on July 7, 2016 ("IND Clearance"). License Transaction On June 10, 2016, the Company entered into a License Agreement (the “License Agreement”) with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively, “Roche”). Under the License Agreement, the Company has agreed to grant Roche an exclusive, worldwide license, including the right to sublicense, to its patent rights and know-how related to the Company’s monoclonal antibody EBI-031 or any other IL-6 antagonist anti-IL-6 monoclonal antibody, to make, have made, use, have used, register, have registered, sell, have sold, offer for sale, import and export any product containing such an antibody or any companion diagnostic used to predict or monitor response to treatment with such a product (collectively, the “Licensed Intellectual Property”). Under the License Agreement, Roche will be required to continue developing EBI-031 and any other product made from the Licensed Intellectual Property that contains an IL-6 antagonist anti-IL-6 monoclonal antibody (a “Licensed Product”) at its cost, except that the Company will be responsible, at its cost, for any tissue cross-reactivity studies of EBI-031 that had been initiated before the achievement of IND Clearance. Financial Terms Roche has agreed to pay an up-front license fee of $7.5 million within 30 days after the effective date of the license under the License Agreement and receipt of an invoice from the Company, and up to an additional $262.5 million upon the achievement of specified regulatory, development and commercial milestones with respect to up to two unrelated indications. Specifically, an aggregate amount of up to $197.5 million is payable to the Company for the achievement of specified milestones with respect to the first indication: $72.5 million in development milestones, $50.0 million in regulatory milestones and $75.0 million in commercialization milestones. The first development milestone payment will equal $22.5 million as a result of the IND application for EBI-031 becoming effective on or before September 15, 2016. Additional amounts of up to $65.0 million are payable upon the achievement of specified development and regulatory milestones in a second indication. In addition, the Company will be entitled to receive royalty payments in accordance with a tiered royalty rate scale, with rates ranging from 7.5% to 15% for net sales of potential future products containing EBI-031 and at up to 50% of these rates for net sales of potential future products containing other IL-6 compounds, with each of the royalties subject to reduction under certain circumstances and to the buy-out options of Roche further described below. Buy-Out Options The License Agreement provides for two “option periods” during which Roche may elect to make a one-time payment to the Company and, in turn, terminate its diligence, milestone and royalty payment obligations under the License Agreement. Specifically, (i) Roche may exercise a buy-out option following the first dosing (“Initiation”) in the first Phase II study for a Licensed Product until the day before Initiation of the first Phase III study for a Licensed Product, in which case Roche is required to pay the Company $135 million within 30 days after Roche's exercise of such buy-out option and receipt of an invoice from the Company, or (ii) Roche may exercise a buy-out option following the day after Initiation of the first Phase III study for a Licensed Product until the day before the acceptance for review by the FDA or other regulatory authority of a biologics license application (“BLA”) or similar application for marketing approval for a Licensed Product in either the United States or in the European Union, in which case Roche is required to pay the Company, within 30 days after Roche’s exercise of such buy-out option and receipt of an invoice from the Company, $265 million, which amount would be reduced to $220 million if none of the Company’s patent rights containing a composition of matter claim covering any compound or Licensed Product has issued in the European Union. Conditions to Effectiveness The transactions contemplated by the License Agreement (the "License Transaction") may constitute the sale of all or substantially all of the property and assets of the Company within the meaning of Section 271 of the Delaware General Corporation Law (the “DGCL”). As a result, the Company is seeking approval of the License Transaction from the holders of a majority of its outstanding common stock entitled to vote thereon pursuant to the DGCL. The effectiveness of the license under the License Agreement and the receipt of any upfront payment or potential milestone or royalty payments are each conditioned on obtaining this stockholder approval. A special meeting of stockholders is to be held on August 15, 2016 for the purpose of obtaining stockholder approval. If the License Transaction is approved by the Company’s stockholders, the License Agreement will automatically become effective on the following business day; provided that no governmental entity of competent jurisdiction shall have issued or entered any order, judgment or injunction or statute, rule or regulation which has the effect of prohibiting the consummation of the transactions contemplated by the License Agreement. Termination The License Agreement will terminate automatically if the Company fails to obtain approval of the transactions contemplated by the License Agreement by the holders of a majority of its outstanding common stock entitled to vote thereon. The License Agreement may be terminated by Roche if the special meeting of stockholders at which such vote will be taken does not occur within 75 days following execution of the License Agreement. The License Agreement may also be terminated prior to effectiveness by either party if the Company’s board of directors has approved or recommended to the stockholders of the Company an alternative strategic transaction with respect to the Licensed Intellectual Property that the Company’s board of directors has determined in good faith is, or could reasonably be expected to lead to such an alternative strategic transaction which is, more favorable to the Company or its stockholders than the transactions contemplated by the License Agreement. The Company or Roche may each terminate the License Agreement if the other party breaches any of its material obligations under the License Agreement and does not cure such breach within a specified cure period. Roche may terminate the License Agreement following effectiveness by providing advance written notice to the Company or by providing written notice if the Company is debarred, disqualified, suspended, excluded, or otherwise declared ineligible from certain federal or state agencies or programs. The Company may terminate the License Agreement if, prior to the first filing of a BLA for a Licensed Product, there is a period of 12 months where Roche is not conducting sufficient development activities with respect to the products made from the Licensed Intellectual Property. Representations and Warranties and Certain Covenants The License Agreement contains certain representations and warranties from both the Company and Roche. The License Agreement also contains certain covenants, including covenants requiring the Company to not solicit, initiate or knowingly facilitate or knowingly encourage the submission of any proposals or offers relating to alternative transactions in respect of the Licensed Intellectual Property, or, subject to certain exceptions, to engage in any discussions or negotiations with respect thereto. Indemnification and Dispute Resolution The License Agreement contains indemnification and dispute resolution provisions that are customary for agreements of its kind. Liquidity The Company has financed its operations to date primarily through private placements of its common stock and preferred stock and convertible bridge notes, venture debt borrowings and its initial public offering ("IPO"), and as of June 30, 2016, the Company had cash and cash equivalents totaling approximately $8.5 million, net working capital of $5.8 million and an accumulated deficit of $139.3 million. In January 2016, as a result of the outcome of the Company’s Phase 3 clinical trial of its lead product candidate, isunakinra (EBI-005), for the treatment of severe allergic conjunctivitis, the Company was required to fund a cash collateral account with Silicon Valley Bank ("SVB") in an amount equal to approximately $15.1 million, representing the outstanding obligations under the Loan and Security Agreement with SVB dated May 27, 2010, as amended on September 4, 2012, November 25, 2014 and December 4, 2015 (the “Loan Agreement”). In March 2016, the Company prepaid all outstanding amounts owed to SVB and terminated the Loan Agreement with existing cash on hand. The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain profitable operations. The Company is subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful discovery and development of its product candidates, raising additional capital with favorable terms, development by its competitors of new technological innovations, protection of proprietary technology and market acceptance of the Company’s products. The successful discovery and development of product candidates requires substantial working capital which may not be available to the Company on favorable terms. These factors raise substantial doubt about the Company’s ability to continue as a going concern. In order for the Company to continue operations beyond 2016 and be able to discharge its liabilities and commitments in the normal course of business, the Company has taken or will take the following steps, not all of which are entirely within the Company’s control:
The Company believes that its cash and cash equivalents of $8.5 million as of June 30, 2016, together with the aggregate upfront and initial milestone payments of approximately $30 million that will be due and payable within 30 days after effectiveness of the License Agreement with Roche, will be sufficient to fund the Company’s current operating plan into 2017. If the Company is unable to obtain stockholder approval of the License Transaction and the License Agreement with Roche does not become effective or the Company is unable to obtain other adequate financing or engage in another strategic transaction on acceptable terms and when needed, the Company will be required to implement further cost reduction strategies. These factors and the factors described above continue to raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). |
Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies Unaudited interim financial information Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. Accordingly, these interim condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “2015 10-K”). The condensed financial statements as of June 30, 2016 and for the three and six months ended June 30, 2016 and 2015 and the related information contained within the notes to the financial statements are unaudited. The unaudited financial statements have been prepared on the same basis as the annual audited financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2016, the statements of operations and comprehensive loss for the three and six months ended June 30, 2016 and 2015 and the statement of cash flows for the six months ended June 30, 2016 and 2015. The results for the three and six months ended June 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016, or any other future annual or interim periods. Net loss per share Basic net loss per share applicable to common stockholders is calculated by dividing net loss applicable to common stockholders by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, stock options, unvested restricted stock, restricted stock units and warrants are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share was the same for all periods presented. The following common stock equivalents were excluded from the calculation of diluted net loss per share applicable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect or the exercise prices were greater than the average market price of the common shares.
There have been no material changes to the significant accounting policies previously disclosed in the 2015 10-K. Recent Accounting Pronouncements In the second quarter of 2014, the Financial Accounting Standards Board ("FASB") issued guidance applicable to revenue recognition that will be effective for the Company for the year ending December 31, 2018. The new guidance must be adopted using either a full retrospective approach for all periods presented or a modified retrospective approach. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new guidance applies a more principles-based approach to recognizing revenue. The Company is evaluating the new guidance and the expected effect on the Company’s financial statements. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). The guidance is effective for fiscal years ending after December 15, 2016 and for interim periods after that fiscal year. The Company does not expect the adoption of this guidance to have a material effect on the Company’s financial statements, but may require further disclosure in its financial statements once adopted. In November 2015, the FASB issued Accounting Standard Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The guidance may be adopted on either a prospective or retrospective basis. The Company does not expect the adoption of this guidance to have a material effect on the Company’s financial statements. In February 2016, the FASB issued Accounting Standard Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 addresses the financial reporting of leasing transactions. Under current guidance for lessees, leases are only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, are met. This update will require the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of operations and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company has not yet completed the analysis of how adopting this guidance will affect its financial statements. In March 2016, the FASB issued Accounting Standard Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas of simplification apply only to nonpublic entities. For public business entities, the amendments in ASU 2016-09 are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period for which financial statements haven’t been issued or made available for issuance. If an entity early adopts the amendments in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company has not yet completed the analysis of how adopting this guidance will affect its financial statements. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value. The Company determines the fair value of the common stock warrants using Level 3 inputs. The following table summarizes the assets measured at fair value on a recurring basis at June 30, 2016 (in thousands):
The following table summarizes the assets and liabilities measured at fair value on a recurring basis at December 31, 2015 (in thousands):
The Company measures the fair value of the warrants classified as a liability at each reporting date using the Black-Scholes option pricing model using the following assumptions:
The following table sets forth a summary of changes in the fair value of the Company’s common stock warrant liability, which represented a recurring measurement classified within Level 3 of the fair value hierarchy, wherein fair value was estimated using significant unobservable inputs (in thousands):
The change in the fair value of the warrant liability is primarily influenced by the price of the underlying common stock. There have been no changes to the valuation methods utilized during the three and six months ended June 30, 2016. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of assets or liabilities between levels during the three and six months ended June 30, 2016. |
Collaboration Agreement |
6 Months Ended |
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Jun. 30, 2016 | |
Collaboration Arrangement Disclosure [Abstract] | |
Collaboration Agreement | Collaboration Agreement On May 28, 2013, the Company entered into the collaboration and license agreement (the "Collaboration and License Agreement") with ThromboGenics N.V. ("ThromboGenics"). Under the Collaboration and License Agreement, the Company and ThromboGenics collaborated to seek to identify protein or peptide therapeutics that directly modulate any of a specified set of targets in a novel pathway in retinal disease. In connection with the Collaboration and License Agreement, ThromboGenics paid the Company an upfront technology licensing fee of $1.75 million and paid the Company to perform activities under the Collaboration and License Agreement at a set rate per full-time equivalent person working on collaboration activities. The initial research term concluded in November 2015, however it was amended at that time to extend the performance period into 2016. The Collaboration and License Agreement provides for potential future payments to the Company upon achievement of specified preclinical, clinical and regulatory milestones with respect to collaboration products and royalties on sales of collaboration products by ThromboGenics, its affiliates or sublicensees. However, as there have not been any collaboration products identified whose modulation of any of the targets has been confirmed in the course of the research conducted under the Collaboration and License Agreement, none of these milestones or royalties are expected to be payable. On August 1, 2016, the Company received notice from ThromboGenics of ThromboGenics’s termination, effective as of October 31, 2016, of the Collaboration and License Agreement. The Company accounts for this agreement pursuant to ASC Topic 605-25, Revenue Recognition - Multiple Element Arrangements, or ASC 605-25. The Company was recognizing the arrangement consideration using the proportional performance method, by which the amounts are recognized in proportion to the costs incurred based on full time equivalent personnel efforts. Subsequent to the amendment in November 2015, the Company is recognizing revenue on a straight-line basis over the remaining performance period. For the three and six month periods ended June 30, 2016, the Company recognized $0.2 million and 0.4 million included in revenue in the consolidated statement of operations. No further amounts are expected to be recognized in the future. The costs incurred by the Company related to the research activities are recorded as research and development expense in the statement of operations and comprehensive loss. |
Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands):
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Share-Based Payments |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payments | Share-Based Payments In December 2013, the Company's 2014 Stock Incentive Plan (the "2014 Plan") was adopted by the Board of Directors and approved by the Company's stockholders in January 2014. Pursuant to the terms of the plan, the number of shares authorized for issuance automatically increases on the first day of each fiscal year. On January 1, 2016 and 2015, the number of shares reserved for issuance under the 2014 Plan increased by 786,431 and 722,331 shares, respectively. As of June 30, 2016, the total number of shares of common stock available for issuance under the 2014 Plan was 618,988. The Company also maintains the Eleven Biotherapeutics, Inc. 2009 Stock Incentive Plan, as amended and restated. Stock-Based Compensation Expense Stock-based compensation expense by award type was as follows (in thousands):
At June 30, 2016, there was $3.1 million of total unrecognized compensation expense, net of estimated forfeitures, related to non-vested stock options, unvested restricted stock, restricted stock units (each with service-based vesting provisions), and shares issued pursuant to the Company's 2014 Employee Stock Purchase Plan (the "ESPP"). This unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.85 years. The Company has granted stock options to the founders and officers of the Company, which contain both performance-based and service-based vesting criteria. Milestone events are specific to the Company’s corporate goals, including but not limited to certain preclinical and clinical development milestones related to the Company’s product candidates. Stock-based compensation expense associated with these performance-based stock options is recognized if the performance condition is considered probable of achievement using management’s best estimates. On June 15, 2016 the Compensation Committee of the Company determined that the Company had achieved a milestone event on June 10, 2016 and the Company recorded $14,000 of expense during the three and six months ended June 30, 2016 associated with the achievement of that milestone. There was no expense recorded for performance-based vesting awards during the three and six months ended June 30, 2015. The remaining milestones were not deemed to be probable of achievement as of June 30, 2016. As of June 30, 2016, unrecognized compensation expense related to performance based awards was $28,000. Stock Options A summary of the stock option activity is presented below:
Restricted Stock From time to time, upon approval by the Board of Directors, certain employees, directors and advisors have been granted restricted shares of common stock. A summary of the unvested restricted stock is presented below:
Restricted Stock Units From time to time, upon approval by the Board of Directors, certain employees have been granted restricted stock units. A summary of the restricted stock units is presented below:
Employee Stock Purchase Plan On January 21, 2014, the Company’s board of directors adopted its 2014 ESPP, which was subsequently approved by its stockholders and became effective upon the closing of the Company’s IPO on February 6, 2014. The 2014 ESPP authorizes the initial issuance of up to a total of 157,480 shares of the Company’s common stock to participating employees. The first offering period under the 2014 ESPP opened on September 15, 2015 and closed on March 14, 2016. On March 14, 2016, the Company issued and sold 20,760 shares of its common stock pursuant to the 2014 ESPP at a purchase price of $0.31 per share. The second offering period under the 2014 opened on March 15, 2016. |
Indebtedness |
6 Months Ended |
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Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Term Loan On March 1, 2016, the Company prepaid all outstanding amounts owed to SVB under the Loan Agreement. These obligations included the outstanding principal and interest of $13.8 million and a prepayment penalty of $0.2 million. In addition, the Company was required to pay a final payment equal to 6% of the amounts borrowed under the Loan Agreement, or $0.9 million, of which $0.4 million was accrued as of March 1, 2016. In addition, as a result of the prepayment, the Company wrote off the unamortized debt issuance costs and debt discount of $0.2 million. In connection with the prepayment, the Company has recorded a loss on extinguishment of debt of $0.9 million, which is included in other expense on the condensed statement of operations and comprehensive loss for the six months ending June 30, 2016. |
Reduction in Workforce |
6 Months Ended |
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Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Reduction in Workforce | Reduction in Workforce On June 16, 2016, the Board of Directors (the “Board”) of the Company approved a strategic restructuring of the Company to eliminate a portion of the Company’s workforce in order to preserve the Company’s resources as it determines future strategic plans. As part of this strategic restructuring, the Company will eliminate 14 positions across the organization, representing approximately 70% of the Company’s workforce. The Company expects the restructuring to be substantially complete in the third quarter of 2016. The Company incurred total restructuring costs of approximately $0.6 million, which includes severance, benefits and related costs in accordance with the Company's severance benefit plan. As the Company determined the severance was a continuation of a benefit arrangement with employees, the Company recorded the total $0.6 million of restructuring charges as $0.1 million in general and administrative expenses and $0.5 million in research and development expenses within the Condensed Statement of Operations and Comprehensive Loss for the three and six months ended June 30, 2016. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On August 1, 2016, the Company received notice from ThromboGenics of ThromboGenics’s termination, effective as of October 31, 2016, of the Collaboration and License Agreement. |
Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Unaudited interim financial information | Unaudited interim financial information Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. Accordingly, these interim condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “2015 10-K”). The condensed financial statements as of June 30, 2016 and for the three and six months ended June 30, 2016 and 2015 and the related information contained within the notes to the financial statements are unaudited. The unaudited financial statements have been prepared on the same basis as the annual audited financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2016, the statements of operations and comprehensive loss for the three and six months ended June 30, 2016 and 2015 and the statement of cash flows for the six months ended June 30, 2016 and 2015. The results for the three and six months ended June 30, 2016 are not necessarily indicative of results to be expected for the year ending December 31, 2016, or any other future annual or interim periods. |
Net loss per share | Net loss per share Basic net loss per share applicable to common stockholders is calculated by dividing net loss applicable to common stockholders by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, stock options, unvested restricted stock, restricted stock units and warrants are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share was the same for all periods presented. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In the second quarter of 2014, the Financial Accounting Standards Board ("FASB") issued guidance applicable to revenue recognition that will be effective for the Company for the year ending December 31, 2018. The new guidance must be adopted using either a full retrospective approach for all periods presented or a modified retrospective approach. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new guidance applies a more principles-based approach to recognizing revenue. The Company is evaluating the new guidance and the expected effect on the Company’s financial statements. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). The guidance is effective for fiscal years ending after December 15, 2016 and for interim periods after that fiscal year. The Company does not expect the adoption of this guidance to have a material effect on the Company’s financial statements, but may require further disclosure in its financial statements once adopted. In November 2015, the FASB issued Accounting Standard Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The guidance may be adopted on either a prospective or retrospective basis. The Company does not expect the adoption of this guidance to have a material effect on the Company’s financial statements. In February 2016, the FASB issued Accounting Standard Update No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 addresses the financial reporting of leasing transactions. Under current guidance for lessees, leases are only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, are met. This update will require the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of operations and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company has not yet completed the analysis of how adopting this guidance will affect its financial statements. In March 2016, the FASB issued Accounting Standard Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the areas of simplification apply only to nonpublic entities. For public business entities, the amendments in ASU 2016-09 are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period for which financial statements haven’t been issued or made available for issuance. If an entity early adopts the amendments in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company has not yet completed the analysis of how adopting this guidance will affect its financial statements. |
Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following common stock equivalents were excluded from the calculation of diluted net loss per share applicable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect or the exercise prices were greater than the average market price of the common shares.
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the assets measured at fair value on a recurring basis at June 30, 2016 (in thousands):
The following table summarizes the assets and liabilities measured at fair value on a recurring basis at December 31, 2015 (in thousands):
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Summary of Assumptions Used in Valuing Warrants | The Company measures the fair value of the warrants classified as a liability at each reporting date using the Black-Scholes option pricing model using the following assumptions:
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Summary of Changes in the Fair Value of the Company's Preferred Stock Warrant Liability | The following table sets forth a summary of changes in the fair value of the Company’s common stock warrant liability, which represented a recurring measurement classified within Level 3 of the fair value hierarchy, wherein fair value was estimated using significant unobservable inputs (in thousands):
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Accrued Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accrued expenses | Accrued expenses consisted of the following (in thousands):
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Share-Based Payments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-Based Compensation Expense | Stock-based compensation expense by award type was as follows (in thousands):
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Summary of Stock Option Activity and Related Information | A summary of the stock option activity is presented below:
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Summary of Status and Changes of Unvested Restricted Stock | A summary of the unvested restricted stock is presented below:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | A summary of the restricted stock units is presented below:
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Significant Accounting Policies - Summary of Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share (Detail) - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares, total | 3,240,757 | 3,269,884 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares, total | 2,205,774 | 2,060,334 |
Unvested restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares, total | 31,010 | 71,310 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares, total | 77,133 | 211,400 |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive shares, total | 926,840 | 926,840 |
Fair Value of Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | $ 8,484 | $ 36,079 | $ 53,494 | $ 54,059 |
Total | 8,484 | 36,079 | ||
Warrant liability | 13 | 115 | ||
Total | 13 | 115 | ||
Active Markets (Level 1) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | 8,484 | 36,079 | ||
Total | 8,484 | 36,079 | ||
Unobservable Inputs (Level 3) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Warrant liability | 13 | 115 | ||
Total | $ 13 | $ 115 |
Fair Value of Financial Instruments - Assumptions Used in Valuing Warrants (Detail) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
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Fair Value Disclosures [Abstract] | ||
Risk-free interest rate | 0.52% | 1.06% |
Expected dividend yield | 0.00% | 0.00% |
Expected term (in years) | 1 year 5 months 1 day | 1 year 11 months 1 day |
Expected volatility | 79.43% | 70.67% |
Fair Value of Financial Instruments - Summary of Changes in the Fair Value of the Company's Preferred Stock Warrant Liability (Detail) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance, January 1, 2016 | $ 115 |
Change in fair value | (102) |
Ending balance, June 30, 2016 | $ 13 |
Fair Value of Financial Instruments - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
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Fair Value Disclosures [Abstract] | ||
Transfers of assets or liabilities | $ 0 | $ 0 |
Collaboration Agreement - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
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Collaboration Arrangement Disclosure [Abstract] | ||
Upfront payment received | $ 1,750 | |
Collaboration revenue | $ 200 | $ 400 |
Accrued Expenses - Components of Accrued Expenses (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Development costs | $ 160 | $ 931 |
Employee compensation | 915 | 573 |
Professional fees | 77 | 194 |
Interest | 0 | 88 |
Other | 1 | 8 |
Total accrued expenses | $ 1,153 | $ 1,794 |
Share-Based Payments - Summary of Stock Option Activity and Related Information (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2016
$ / shares
shares
| |
Shares | |
Outstanding at beginning of period (in shares) | shares | 1,803,574 |
Granted (in shares) | shares | 981,352 |
Exercised (in shares) | shares | (281,441) |
Cancelled or forfeited (in shares) | shares | (297,711) |
Outstanding at end of period (in shares) | shares | 2,205,774 |
Exercisable at June 30, 2016 (in shares) | shares | 891,327 |
Vested and expected to vest at June 30, 2016 (in shares) | shares | 1,923,413 |
Weighted-Average Exercise Price | |
Outstanding at beginning of period (in USD per share) | $ / shares | $ 6.28 |
Granted (in USD per share) | $ / shares | 0.39 |
Exercised (in USD per share) | $ / shares | 0.29 |
Cancelled or forfeited (in USD per share) | $ / shares | 3.60 |
Outstanding at end of period (in USD per share) | $ / shares | 4.78 |
Exercisable at end of period (in USD per share) | $ / shares | 6.05 |
Vested and expected to vest at end of period | $ / shares | $ 5.20 |
Share-Based Payments - Summary of Status and Changes of Unvested Restricted Stock (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2016
$ / shares
shares
| |
Restricted Stock | |
Restricted Stock Units | |
Unvested, Beginning Balance (in shares) | shares | 41,657 |
Vested (in shares) | shares | (10,647) |
Unvested, Ending Balance (in shares) | shares | 31,010 |
Weighted-Average Grant Date Fair Value | |
Unvested, beginning balance (in USD per share) | $ / shares | $ 11.05 |
Vested (in USD per share) | $ / shares | 9.94 |
Unvested, ending balance (in USD per share) | $ / shares | $ 11.43 |
Restricted stock units | |
Restricted Stock Units | |
Unvested, Beginning Balance (in shares) | shares | 150,932 |
Vested (in shares) | shares | (73,799) |
Unvested, Ending Balance (in shares) | shares | 77,133 |
Weighted-Average Grant Date Fair Value | |
Unvested, beginning balance (in USD per share) | $ / shares | $ 2.85 |
Vested (in USD per share) | $ / shares | 2.82 |
Unvested, ending balance (in USD per share) | $ / shares | $ 2.88 |
Indebtedness (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 01, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
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Debt Instrument [Line Items] | ||||||
Amount of debt accrued | $ 0 | $ 0 | $ 4,134 | |||
Debt issuance cost and discount | 221 | $ 0 | ||||
Loss on extinguishment of debt | $ 0 | $ 0 | 915 | $ 0 | ||
Silicon Valley Bank | Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Principal and interest amount outstanding | $ 13,800 | |||||
Prepayment penalty | $ 200 | |||||
Percentage of final payment | 6.00% | |||||
Amount of final payment | $ 900 | |||||
Amount of debt accrued | 400 | |||||
Debt issuance cost and discount | $ 200 | |||||
Loss on extinguishment of debt | $ 900 |
Reduction in Workforce (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
position
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 16, 2016
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost to be incurred | $ 600,000 | |||
Restructuring charges | $ 600,000 | |||
Payments for restructuring | $ 0 | |||
Scenario, Forecast | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of positions to be eliminated pursuant to restructuring | position | 14 | |||
Percentage of positions to be eliminated pursuant to restructuring | 70.00% | |||
General and Administrative Expense | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 100,000 | 100,000 | ||
Research and Development Expense | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 500,000 | 500,000 | ||
Accrued Liabilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring reserve | $ 600,000 | $ 600,000 |
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