UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2017 |
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Or |
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ___________ to ___________ |
Commission File No. 000-23143
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PROGENICS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware |
13-3379479 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
|
One World Trade Center, 47th Floor
New York, NY 10007
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (646) 975-2500
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ☐ |
Accelerated filer ☒ | |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) |
Smaller reporting company ☐ | |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 1, 2017, a total of 70,225,199 shares of common stock, par value $0.0013 per share, were outstanding.
PROGENICS PHARMACEUTICALS, INC.
INDEX
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Page No. |
Part I |
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Item 1. |
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3 | |
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4 | |
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5 | |
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6 | |
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7 | |
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8 | |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
20 |
Item 3. |
25 | |
Item 4. |
26 | |
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PART II |
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Item 1. |
26 | |
Item 1A. |
26 | |
Item 5. |
26 | |
Item 6. |
27 | |
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28 |
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
PROGENICS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, |
December 31, |
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2017 |
2016 |
|||||||
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(unaudited) |
(audited) |
||||||
ASSETS | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 126,306 | $ | 138,909 | ||||
Accounts receivable, net |
2,097 | 4,864 | ||||||
Other current assets |
3,676 | 4,328 | ||||||
Total current assets |
132,079 | 148,101 | ||||||
Property and equipment, net |
4,702 | 4,760 | ||||||
Intangible assets, net |
30,528 | 30,581 | ||||||
Goodwill |
13,074 | 13,074 | ||||||
Other assets |
2,471 | 2,470 | ||||||
Total assets |
$ | 182,854 | $ | 198,986 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 971 | $ | 567 | ||||
Accrued expenses |
12,705 | 15,764 | ||||||
Other current liabilities |
677 | 26 | ||||||
Total current liabilities |
14,353 | 16,357 | ||||||
Long-term debt, net |
48,850 | 49,453 | ||||||
Contingent consideration liability |
16,100 | 14,200 | ||||||
Deferred tax liability |
13,010 | 13,010 | ||||||
Other liabilities |
1,286 | 1,204 | ||||||
Total liabilities |
93,599 | 94,224 | ||||||
Commitments and Contingencies |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock, $0.001 par value Authorized - 20,000 shares; issued and outstanding - none |
- | - | ||||||
Common stock, $0.0013 par value Authorized - 160,000 shares; issued - 70,425 shares in 2017 and 70,390 shares in 2016 |
92 | 92 | ||||||
Additional paid-in capital |
598,904 | 598,069 | ||||||
Treasury stock at cost, 200 shares of common stock |
(2,741 | ) | (2,741 | ) | ||||
Accumulated other comprehensive loss |
(67 | ) | (85 | ) | ||||
Accumulated deficit |
(506,933 | ) | (490,573 | ) | ||||
Total stockholders’ equity |
89,255 | 104,762 | ||||||
Total liabilities and stockholders’ equity |
$ | 182,854 | $ | 198,986 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
PROGENICS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended |
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March 31, |
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2017 |
2016 |
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Revenue: |
||||||||
Royalty income |
$ | 2,119 | $ | 2,189 | ||||
License revenue |
215 | 242 | ||||||
Other revenue |
13 | 19 | ||||||
Total revenue |
2,347 | 2,450 | ||||||
Operating expenses: |
||||||||
Research and development |
10,005 | 9,149 | ||||||
General and administrative |
5,695 | 5,817 | ||||||
Change in contingent consideration liability |
1,900 | 200 | ||||||
Total operating expenses |
17,600 | 15,166 | ||||||
Operating loss |
(15,253 | ) | (12,716 | ) | ||||
Other (expense) income: |
||||||||
Interest (expense) income, net |
(1,107 | ) | 43 | |||||
Total other (expense) income |
(1,107 | ) | 43 | |||||
Net loss |
(16,360 | ) | (12,673 | ) | ||||
Net loss attributable to noncontrolling interests |
- | (18 | ) | |||||
Net loss attributable to Progenics |
$ | (16,360 | ) | $ | (12,655 | ) | ||
Net loss per share attributable to Progenics - basic and diluted |
$ | (0.23 | ) | $ | (0.18 | ) | ||
Weighted-average shares - basic and diluted |
70,196 | 69,946 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
PROGENICS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended |
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March 31, |
||||||||
2017 |
2016 |
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Net loss |
$ | (16,360 | ) | $ | (12,673 | ) | ||
Other comprehensive loss: |
||||||||
Foreign currency translation adjustments |
18 | (69 | ) | |||||
Comprehensive loss |
(16,342 | ) | (12,742 | ) | ||||
Comprehensive loss attributable to noncontrolling interests |
- | (21 | ) | |||||
Comprehensive loss attributable to Progenics |
$ | (16,342 | ) | $ | (12,721 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
PROGENICS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
Accumulated |
||||||||||||||||||||||||||||||||
Common Stock |
Additional |
Other |
Treasury Stock |
Total |
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Number |
Paid-in |
Accumulated |
Comprehensive |
Number |
Stockholders’ |
|||||||||||||||||||||||||||
of Shares |
Par Value |
Capital |
Deficit |
Loss |
of Shares |
Cost |
Equity |
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Balance at December 31, 2016 |
70,390 | $ | 92 | $ | 598,069 | $ | (490,573 | ) | $ | (85 | ) | (200 | ) | $ | (2,741 | ) | $ | 104,762 | ||||||||||||||
Net loss |
- | - | - | (16,360 | ) | - | - | - | (16,360 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments |
- | - | - | - | 18 | - | - | 18 | ||||||||||||||||||||||||
Stock-based compensation expense |
- | - | 603 | - | - | - | - | 603 | ||||||||||||||||||||||||
Exercise of stock options |
35 | - | 232 | - | - | - | - | 232 | ||||||||||||||||||||||||
Balance at March 31, 2017 |
70,425 | $ | 92 | $ | 598,904 | $ | (506,933 | ) | $ | (67 | ) | (200 | ) | $ | (2,741 | ) | $ | 89,255 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
PROGENICS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended |
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March 31, |
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2017 |
2016 |
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Cash flows from operating activities: |
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Net loss | $ | (16,360 | ) | $ | (12,673 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization |
256 | 751 | ||||||
Stock-based compensation expense |
603 | 576 | ||||||
Gain on sale of fixed assets |
(15 | ) | (112 | ) | ||||
Paid in-kind interest |
(13 | ) | - | |||||
Non-cash interest expense |
61 | - | ||||||
Change in fair value of contingent consideration liability |
1,900 | 200 | ||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
2,767 | 1,204 | ||||||
Other current assets |
638 | 448 | ||||||
Other assets |
(1 | ) | - | |||||
Accounts payable |
402 | 1,156 | ||||||
Accrued expenses |
(3,066 | ) | 513 | |||||
Other current liabilities |
- | (59 | ) | |||||
Other liabilities |
81 | 29 | ||||||
Net cash used in operating activities |
(12,747 | ) | (7,967 | ) | ||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment | (145 | ) | (607 | ) | ||||
Proceeds from sale of fixed assets | 32 | 113 | ||||||
Net cash used in investing activities |
(113 | ) | (494 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from exercise of stock options | 232 | - | ||||||
Net cash provided by financing activities |
232 | - | ||||||
Effect of currency rate changes on cash and cash equivalents |
25 | 33 | ||||||
Net decrease in cash and cash equivalents |
(12,603 | ) | (8,428 | ) | ||||
Cash and cash equivalents at beginning of period |
138,909 | 74,103 | ||||||
Cash and cash equivalents at end of period |
$ | 126,306 | $ | 65,675 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Summary of Significant Accounting Policies
Business
Progenics Pharmaceuticals, Inc. and its subsidiaries (“the Company,” “Progenics,” “we,” or “us”) develop innovative medicines and other technologies to target and treat cancer. Our pipeline includes: 1) therapeutic agents designed to precisely target cancer (AZEDRA® and 1095), 2) PSMA-targeted imaging agents for prostate cancer (1404 and PyLTM), and 3) imaging analysis tools.
In February 2011, we licensed our first commercial drug, RELISTOR® (methylnaltrexone bromide) subcutaneous injection for the treatment of opioid induced constipation (“OIC”), to Salix Pharmaceuticals, Inc. (a wholly-owned subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”)). In September 2014, RELISTOR received an expanded approval from the U.S. Food and Drug Administration ("FDA") for the treatment of OIC in patients taking opioids for chronic non-cancer pain, and in July 2016, RELISTOR Tablets were approved by the FDA for the treatment of OIC in adults with chronic non-cancer pain. We have in the past and continue to consider opportunities for strategic collaborations, out-licenses, and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.
Our current principal sources of revenue from operations are royalty, development and commercial milestones, and sublicense revenue-sharing payments from Valeant relating to RELISTOR. Royalty and further milestone payments from RELISTOR depend on success in development and commercialization, which is dependent on many factors, such as Valeant’s efforts, decisions by the FDA and other regulatory bodies, competition from drugs for the same or similar indications, and the outcome of clinical and other testing of RELISTOR.
We commenced principal operations in 1988, became publicly traded in 1997, and throughout have been engaged primarily in research and development efforts, establishing corporate collaborations and related activities. Certain of our intellectual property rights are held by wholly owned subsidiaries. All of our U.S. operations are presently conducted at our headquarters in New York, and the operations of our foreign subsidiary, EXINI Diagnostics A.B. (“EXINI”), are conducted at our facility in Lund, Sweden. We operate under a single research and development operating segment.
Liquidity
At March 31, 2017, we had $126.3 million of cash and cash equivalents, a decrease of $12.6 million from $138.9 million at December 31, 2016. We expect that this amount will be sufficient to fund operations as currently anticipated beyond one year from the filing date of this Form 10-Q. We have historically funded our operations to a significant extent from capital-raising and we expect to require additional funding in the future, the availability of which is never guaranteed and may be uncertain. We expect that we may continue to incur operating losses for the foreseeable future.
Basis of Presentation
Our interim condensed consolidated financial statements have been prepared in accordance with applicable presentation requirements, and accordingly, do not include all information and disclosures necessary for a presentation of our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, these financial statements reflect all adjustments, consisting primarily of normal recurring accruals necessary for a fair statement of results for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Our interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2016. The year-end consolidated balance sheet data in these financial statements were derived from audited financial statements but do not include all disclosures required by GAAP. Certain prior period amounts in our condensed consolidated financial statements have been reclassified to conform to the current period presentation. Accounts payable, which was historically combined with accrued expenses on our consolidated balance sheet, has been presented as a separate line item for all periods presented in these unaudited condensed consolidated financial statements.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Progenics as well as its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.
In December 2015, we commenced a judicial process in Sweden for acquiring the remaining shares of EXINI. On December 8, 2016, a Swedish arbitral tribunal awarded us advanced title to the remaining shares of EXINI and, as of that date, EXINI became a wholly-owned subsidiary with 100% of the voting shares owned by us. We paid $368 thousand to the minority interest shareholders in connection with the acquisition of the remaining shares of EXINI.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
Foreign Currency Translation
Each of our international subsidiaries generally considers their respective local currency to be their functional currency. Assets and liabilities of these international subsidiaries are translated into U.S. dollars at quarter-end exchange rates and revenues and expenses are translated at average exchange rates during the quarter and year-to-date period. Foreign currency translation adjustments for the reported periods are included in accumulated other comprehensive loss (“AOCL”) in our condensed consolidated statements of comprehensive loss, and the cumulative effect is included in the stockholders' equity section of our condensed consolidated balance sheets. Realized gains and losses denominated in foreign currencies are recorded in operating expenses in our condensed consolidated statements of operations and were not material to our consolidated results of operations for the three months ended March 31, 2017 or 2016.
Property and Equipment
Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $1.0 million and $0.8 million as of March 31, 2017 and December 31, 2016, respectively. The following table summarizes our property and equipment (in thousands):
March 31, |
December 31, |
|||||||
2017 |
2016 |
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Machinery and equipment |
$ | 2,224 | $ | 1,493 | ||||
Leasehold improvements |
1,716 | 1,640 | ||||||
Computer equipment |
701 | 695 | ||||||
Furniture and fixtures |
878 | 877 | ||||||
Construction in progress |
221 | 893 | ||||||
Property and equipment, gross |
5,740 | 5,598 | ||||||
Less - accumulated depreciation |
(1,038 | ) | (838 | ) | ||||
Property and equipment, net |
$ | 4,702 | $ | 4,760 |
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 2. New Accounting Pronouncements
Recently Adopted
In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718) ("ASU 2016-09"). The standard simplifies several aspects of accounting for stock-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this standard on January 1, 2017. For the three months ended March 31, 2017, we recognized all excess tax benefits and tax deficiencies associated with exercise of stock options as income tax expense or benefit as a discrete event. The adoption of this ASU did not have a material impact on our consolidated financial statements.
Not Yet Adopted
In January 2017, the FASB issued ASU 2017-04 (“ASU 2017-04”), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. ASU 2017-04 will be effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of the new standard to have a material impact on our consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230) – Restricted Cash. For entities that have restricted cash and are required to present a statement of cash flows, ASU 2016-18 changes the cash flow presentation for restricted cash. ASU 2016-18 will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. We do not expect the adoption of this new standard to have a material impact on our consolidated financial statements or statement of cash flows.
In August 2016, the FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The standard provides guidance on eight (8) cash flow issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon bonds; (3) contingent consideration payments after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 with early adoption permitted. We do not expect the adoption of this new standard to have a material impact on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). The standard requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. Additionally, ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted for all entities. We are currently evaluating the impact of this new standard on our consolidated financial statements.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). The standard requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, and separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. Additionally, ASU 2016-01 eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments on the balance sheet. ASU 2016-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Other than an amendment relating to presenting in comprehensive income the portion of the total change in the fair value of a liability resulting from a change in instrument-specific credit risk (if the entity has elected to measure the liability at fair value), early adoption is not permitted. We are currently evaluating the impact of this standard on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). The standard provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. This ASU provides that an entity should recognize revenue to depict transfers of promised goods or services to customers in amounts reflecting the consideration to which the entity expects to be entitled in the transaction by: (1) identifying the contract; (2) identifying the contract's performance obligations; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when or as the entity satisfies the performance obligations. The guidance permits companies to apply the requirements either retrospectively to all prior periods presented or in the year of adoption through a cumulative adjustment by applying a modified retrospective transition method. ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016 and interim periods therein. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the process of identifying performance obligations. We are in the process of evaluating our significant revenue contracts and reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our revenue contracts and the impact the new standard might have on our consolidated financial statements and disclosures. In addition, we are in the process of identifying the appropriate changes to business processes, systems, and controls to support recognition and disclosure under the new standard. We expect to adopt the new revenue standard in the first quarter of 2018, applying the modified retrospective transition method.
Note 3. Net Loss Per Share
Our basic net loss per share attributable to Progenics amounts have been computed by dividing net loss attributable to Progenics by the weighted-average number of common shares outstanding during the period. For the three months ended March 31, 2017 and 2016, we reported net losses and, accordingly, potential common shares were not included since such inclusion would have been anti-dilutive.
The calculations of net loss per share, basic and diluted, are as follows (amounts in thousands, except per share data):
Net loss |
Weighted-average |
|||||||||||
attributable |
shares |
|||||||||||
to Progenics |
outstanding |
Per share |
||||||||||
(Numerator) |
(Denominator) |
amount |
||||||||||
Three months ended March 31, 2017 |
||||||||||||
Basic and diluted |
$ | (16,360 | ) | 70,196 | $ | (0.23 | ) | |||||
Three months ended March 31, 2016 |
||||||||||||
Basic and diluted |
$ | (12,655 | ) | 69,946 | $ | (0.18 | ) |
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The following table summarizes anti-dilutive common shares or common shares where performance conditions have not been met, that were excluded from the calculation of diluted net loss per share (in thousands):
Three Months Ended March 31, |
||||||||
2017 |
2016 |
|||||||
Stock options |
1,150 | 5,411 | ||||||
Contingent consideration liability |
1,706 | 4,267 | ||||||
Total securities excluded |
2,856 | 9,678 |
Note 4. Fair Value Measurements
To estimate the fair values of our financial assets and liabilities, we use valuation approaches within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is divided into three levels based on the source of inputs as follows:
● |
Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access |
● |
Level 2 – Valuations for which all significant inputs are observable, either directly or indirectly, other than Level 1 inputs |
● |
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement |
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used for measuring fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.
We believe the carrying amounts of our cash equivalents, accounts receivable, other current assets, other assets, accounts payable and accrued expenses approximated their fair values as of March 31, 2017 and December 31, 2016.
We record the contingent consideration liability resulting from our acquisition of Molecular Insight Pharmaceuticals, Inc. ("MIP") at fair value in accordance with Accounting Standards Codification ("ASC") 820 (Topic 820, Fair Value Measurement).
The following tables summarize each major class of our financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated, classified by valuation hierarchy (in thousands):
Fair Value Measurements at March 31, 2017 |
||||||||||||||||
Quoted Prices in |
Significant Other |
Significant |
||||||||||||||
Active Markets for |
Observable |
Unobservable |
||||||||||||||
Balance at |
Identical Assets |
Inputs |
Inputs |
|||||||||||||
March 31, 2017 |
(Level 1) |
(Level 2) |
(Level 3) |
|||||||||||||
Assets: |
||||||||||||||||
Money market funds |
$ | 122,351 | $ | 122,351 | $ | - | $ | - | ||||||||
Total assets |
$ | 122,351 | $ | 122,351 | $ | - | $ | - | ||||||||
Liabilities: |
||||||||||||||||
Contingent consideration liability |
$ | 16,100 | $ | - | $ | - | $ | 16,100 | ||||||||
Total liabilities |
$ | 16,100 | $ | - | $ | - | $ | 16,100 |
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
Fair Value Measurements at December 31, 2016 |
||||||||||||||||
Quoted Prices in |
Significant Other |
Significant |
||||||||||||||
Active Markets for |
Observable |
Unobservable |
||||||||||||||
Balance at |
Identical Assets |
Inputs |
Inputs |
|||||||||||||
December 31, 2016 |
(Level 1) |
(Level 2) |
(Level 3) |
|||||||||||||
Assets: |
||||||||||||||||
Money market funds |
$ | 137,340 | $ | 137,340 | $ | - | $ | - | ||||||||
Total assets |
$ | 137,340 | $ | 137,340 | $ | - | $ | - | ||||||||
Liabilities: |
||||||||||||||||
Contingent consideration liability |
$ | 14,200 | $ | - | $ | - | $ | 14,200 | ||||||||
Total liabilities |
$ | 14,200 | $ | - | $ | - | $ | 14,200 |
The estimated fair value of the contingent consideration liability of $16.1 million as of March 31, 2017, represents future potential milestone payments to former MIP stockholders. We consider this liability a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flow and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success and discount rates.
Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement, respectively. We record the contingent consideration liability at fair value with changes in estimated fair values recorded in change in contingent consideration liability in our condensed consolidated statements of operations.
The following table summarizes quantitative information and assumptions pertaining to the fair value measurement of the Level 3 inputs at March 31, 2017 and December 31, 2016 (in thousands). The increase in the contingent consideration liability of $1.9 million during the three months ended March 31, 2017 was primarily attributable to an increase in the estimated probability of success for AZEDRA given our successful completion of the registrational study and a reduction in the discount period.
Fair Value at |
|||||||||||||
March 31, |
Range |
||||||||||||
2017 |
Valuation Technique |
Unobservable Input |
(Weighted-Average) |
||||||||||
Contingent Consideration Liability: |
|||||||||||||
AZEDRA commercialization |
$ | 5,100 |
Probability adjusted discounted |
Probability of success |
72% | ||||||||
cash flow model |
Period of expected milestone achievement |
|
2018 | ||||||||||
Discount rate |
10% | ||||||||||||
1404 commercialization |
4,800 |
Probability adjusted discounted |
Probability of success |
59% | |||||||||
cash flow model |
Period of expected milestone achievement |
2019 | |||||||||||
Discount rate |
10% | ||||||||||||
1095 commercialization |
400 |
Probability adjusted discounted |
Probability of success |
16% | |||||||||
cash flow model |
Period of expected milestone achievement |
|
2024 | ||||||||||
Discount rate |
10% | ||||||||||||
Net sales targets |
5,800 |
Monte-Carlo simulation |
Probability of success |
16% | - | 72% | |||||||
Discount rate |
10% | ||||||||||||
Total |
$ | 16,100 |
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
Fair Value at |
|||||||||||||
December 31, |
Range | ||||||||||||
2016 |
Valuation Technique |
Unobservable Input |
(Weighted-Average) | ||||||||||
Contingent Consideration Liability: |
|||||||||||||
AZEDRA commercialization |
$ | 3,800 |
Probability adjusted discounted |
Probability of success |
54% | ||||||||
cash flow model |
Period of expected milestone achievement |
2018 |
|||||||||||
Discount rate |
10% | ||||||||||||
1404 commercialization |
4,700 |
Probability adjusted discounted |
Probability of success |
59% | |||||||||
cash flow model |
Period of expected milestone achievement |
2019 |
|||||||||||
Discount rate |
10% | ||||||||||||
1095 commercialization |
400 |
Probability adjusted discounted |
Probability of success |
16% | |||||||||
cash flow model |
Period of expected milestone achievement |
2024 |
|||||||||||
Discount rate |
10% | ||||||||||||
Net sales targets |
5,300 |
Monte-Carlo simulation |
Probability of success |
16% | - | 59% | |||||||
Discount rate |
10% | ||||||||||||
Total |
$ | 14,200 |
For those financial instruments with significant Level 3 inputs, the following tables summarize the activities for the periods indicated:
Liability - Contingent Consideration |
||||||||
Fair Value Measurements Using |
||||||||
Significant Unobservable Inputs |
||||||||
(Level 3) |
||||||||
For the Three Months Ended March 31, |
||||||||
2017 |
2016 |
|||||||
Balance at beginning of period |
$ | 14,200 | $ | 18,800 | ||||
Fair value change included in net loss |
1,900 | 200 | ||||||
Balance at end of period |
$ | 16,100 | $ | 19,000 | ||||
Changes in unrealized gains or losses for the period |
||||||||
included in earnings (or changes in net assets) for |
||||||||
liabilities held at the end of the reporting period |
$ | 1,900 | $ | 200 |
Note 5. Accounts Receivable
Our accounts receivable represent amounts due to us from collaborators, royalties, and sales of research reagents, and consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
March 31, |
December 31, |
|||||||
2017 |
2016 |
|||||||
Royalties |
$ | 1,847 | $ | 2,407 | ||||
Collaborators |
202 | 2,000 | ||||||
Other |
48 | 457 | ||||||
Accounts receivable, net |
$ | 2,097 | $ | 4,864 |
Note 6. Goodwill, In-Process Research and Development, and Other Intangible Assets
The fair values of in-process research and development (“IPR&D”) and other identified intangible assets acquired in business combinations are capitalized. We utilize the “income method,” which applies a probability weighting that considers the risk of development and commercialization to the estimated future net cash flows that are derived from projected sales revenues and estimated costs or “replacement costs”, whichever is greater. These projections are based on factors such as relevant market size, patent protection, historical pricing of similar products and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. This analysis is performed for each IPR&D project and other identified intangible assets, independently. IPR&D assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate. Other identified intangible assets, which include the technology asset acquired as part of the EXINI business combination, are amortized over the relevant estimated useful life. The IPR&D assets are tested for impairment at least annually or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in our condensed consolidated statements of operations.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
Goodwill represents excess consideration in a business combination over the fair value of identifiable net assets acquired. Goodwill is not amortized, but is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential impairment. We determine whether goodwill may be impaired by comparing the fair value of the reporting unit (we have determined that we have only one reporting unit for this purpose), calculated as the product of shares outstanding and the share price as of the end of a period, to its carrying value (for this purpose, our total stockholders' equity). No goodwill impairment has been recognized as of March 31, 2017 or 2016.
The following tables summarize the activity related to our goodwill and intangible assets (in thousands):
Other |
||||||||||||
Intangible |
||||||||||||
Goodwill |
IPR&D |
Assets |
||||||||||
Balance at January 1, 2017 |
$ | 13,074 | $ | 28,700 | $ | 1,881 | ||||||
Amortization expense |
- | - | (53 | ) | ||||||||
Balance at March 31, 2017 |
$ | 13,074 | $ | 28,700 | $ | 1,828 |
Goodwill |
IPR&D |
Other Intangible Assets |
||||||||||
Balance at January 1, 2016 |
$ | 13,074 | $ | 28,700 | $ | 2,093 | ||||||
Amortization expense |
- | - | (53 | ) | ||||||||
Balance at March 31, 2016 |
$ | 13,074 | $ | 28,700 | $ | 2,040 |
Note 7. Accrued Expenses
The carrying value of our accrued expenses approximates fair value as it represents amounts that will be satisfied within one year. Accrued expenses consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
March 31, |
December 31, |
|||||||
2017 |
2016 |
|||||||
Loss contingency for litigation |
$ | 4,000 | $ | 4,000 | ||||
Accrued legal and professional fees |
1,003 | 1,123 | ||||||
Accrued consulting and clinical trial costs |
5,487 | 6,933 | ||||||
Accrued payroll and related costs |
1,015 | 1,957 | ||||||
Other |
1,200 | 1,751 | ||||||
Accrued expenses |
$ | 12,705 | $ | 15,764 |
Note 8. Commitments and Contingencies
We are or may be from time to time involved in various other disputes, governmental and/or regulatory inspections, inquiries, investigations, and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect us, our results of operations, financial condition, and cash flows.
In each of the matters described in this filing or in Note 10. Commitments and Contingencies to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016, plaintiffs seek an award of a not-yet-quantified amount of damages or an amount that is not material. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, none of the matters described in this filing, except for the former employee litigation, have progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material. While it is not possible to accurately predict or determine the eventual outcomes of these items, an adverse determination in one or more of these items currently pending could have a material adverse effect on our consolidated results of operations, financial position, or cash flows.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
Former Employee Litigation
On January 4, 2017, we settled all claims against us under a federal action brought in 2010 by a former employee, where such former employee had complained that we had violated the anti-retaliation provisions of the Federal Sarbanes-Oxley law by terminating him. In connection with this settlement, we and the former employee exchanged mutual releases and we are to pay an aggregate sum of $4.0 million to the former employee and his attorneys, which is included in accrued expenses on our consolidated balance sheet at March 31, 2017. We have $1.7 million held by the District Court in escrow and recorded as restricted cash in other current assets on our consolidated balance sheet at March 31, 2017.
Abbreviated New Drug Application Litigations
On October 7, 2015 Progenics, Valeant and Wyeth LLC (Valeant’s predecessor as licensee of RELISTOR) received notification of a Paragraph IV certification for certain patents for RELISTOR® (methylnaltrexone bromide) subcutaneous injection, which are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. The certification resulted from the filing by Mylan Pharmaceuticals, Inc. of an Abbreviated New Drug Application (“ANDA”) with the FDA, challenging such patents for RELISTOR subcutaneous injection and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of these patents expire.
On October 28, 2015, Progenics, Valeant and Wyeth LLC received a second notification of a Paragraph IV certification with respect to the same patents for RELISTOR subcutaneous injection from Actavis LLC as a result of Actavis LLC’s filing of an ANDA with the FDA, also challenging these patents and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of these patents expire.
In October 2016, Progenics, Valeant, and Wyeth LLC received a notification of a Paragraph IV certification with respect to certain patents for RELISTOR Tablets. The certification accompanied the filing by Actavis LLC of an ANDA challenging such patents for RELISTOR Tablets and seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of these patents expire.
In accordance with the Drug Price Competition and Patent Term Restoration Act (commonly referred to as the Hatch-Waxman Act), Progenics and Valeant timely commenced litigation against each of these ANDA filers in order to obtain an automatic stay of FDA approval of the ANDA until the earlier of (i) 30 months from receipt of the notice or (ii) a District Court decision finding that the identified patents are invalid, unenforceable or not infringed.
In addition to the above described ANDA notifications, in October 2015 Progenics received notices of opposition to three European patents relating to methylnaltrexone. The oppositions were filed separately by each of Actavis Group PTC ehf. and Fresenius Kabi Deutschland GmbH.
Each of the above-described proceedings is in its early stages and Progenics and Valeant continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Valeant, Valeant has the first right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement.
9. Non-Recourse Long-Term Debt, Net
In November 2016, through a new wholly-owned subsidiary MNTX Royalties Sub LLC (“MNTX Royalties”), we entered into a loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P. (“HCRP”). We borrowed $50.0 million and can borrow an additional $50.0 million, subject to mutual agreement with HCRP, up to twelve months after the closing date. Under the terms of the Royalty-Backed Loan, the lenders have no recourse to us or to any of our assets other than the right to receive royalty payments from the commercial sales of RELISTOR products owed under our agreement with Valeant. The RELISTOR royalty payments will be used to repay the principal and interest on the loan. The Royalty-Backed Loan bears interest at a per annum rate of 9.5%.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
Under the terms of the loan agreement, payments of interest and principal, if any, under the loan will be made on the last day of each calendar quarter out of RELISTOR royalty payments received since the immediately-preceding payment date. On each payment date prior to March 31, 2018, RELISTOR royalty payments received since the immediately preceding payment date will be applied solely to the payment of interest on the loan, with any royalties in excess of the interest amount retained by us. Beginning on March 31, 2018, 50% of RELISTOR royalty payments received since the immediately-preceding payment date in excess of accrued interest on the loan will be used to repay the principal of the loan, with the balance retained by us. Starting on September 30, 2021, all of the RELISTOR royalties received since the immediately-preceding payment date will be used to repay the interest and outstanding principal balance until the balance is fully repaid. The loan has a maturity date of June 30, 2025. Upon the occurrence of certain triggers in the loan agreement, or if HCRP so elects on or after January 1, 2018, all of the RELISTOR royalty payments received after the immediately-preceding payment date shall be applied to the payment of interest and repayment of principal until the principal of the loan is fully repaid. In the event of such an election by HCRP, we have the right to repay the loan without any prepayment penalty.
In connection with the Royalty-Backed Loan, we paid HCRP a lender fee of $0.5 million and incurred additional debt issuance costs totaling $0.9 million, which includes expenses that we paid on behalf of HCRP and expenses incurred directly by us. Debt issuance costs and the lender fee have been netted against the debt as of March 31, 2017, and are being amortized over the estimated term of the debt using the effective interest method. For the three months ended March 31, 2017, we recognized interest expense, including amortization of the debt discount, related to the Royalty-Backed Loan, of $1.3 million. On March 31, 2017, we paid HCRP the accrued interest due for the quarter of $1.2 million.
The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs require that we make estimates that could impact the short- and long-term classification of these costs, as well as the period over which these costs will be amortized. As of March 31, 2017, the outstanding balance of the Royalty-Backed Loan was $49.5 million, inclusive of payment-in-kind interest expense of $0.8 million and net of unamortized debt discount of $1.3 million.
As of March 31, 2017, we were in compliance with all material covenants under the Royalty-Backed Loan and there was no material adverse change in our business, operations, or financial conditions, as defined in the loan agreement.
Note 10. Stockholders' Equity
Common Stock and Preferred Stock
We are authorized to issue 160.0 million shares of our common stock, par value $0.0013, and 20.0 million shares of preferred stock, par value $0.001. The Board of Directors (the "Board") has the authority to issue common and preferred shares, in series, with rights and privileges as determined by the Board.
Shelf Registration
During the first quarter of 2017, we established a $250.0 million replacement shelf registration statement.
Accumulated Other Comprehensive Loss
The following table summarizes the components of AOCL at March 31, 2017 (in thousands):
Foreign |
||||||||
Currency |
||||||||
Translation |
AOCL |
|||||||
Balance at January 1, 2017 |
$ | (85 | ) | $ | (85 | ) | ||
Foreign currency translation adjustment |
18 | 18 | ||||||
Balance at March 31, 2017 |
$ | (67 | ) | $ | (67 | ) |
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
We did not have any reclassifications out of AOCL to losses during the three months ended March 31, 2017 or 2016.
Note 11. Stock-Based Compensation
Equity Incentive Plans
We adopted the following stockholder-approved equity incentive plans:
● The 1996 Amended Stock Incentive Plan (the "1996 Plan") authorized the issuance of up to 5,000,000 shares of our common stock covering several different types of awards, including stock options, restricted shares, stock appreciation rights, performance shares, and phantom stock. The 1996 Plan was terminated in 2006. Options granted before termination of the 1996 Plan will continue to remain outstanding until exercised, cancelled, or expired.
● The 2005 Stock Incentive Plan (the “2005 Plan”), pursuant to which we are authorized to issue up to 11,450,000 shares of common stock covering several different types of awards, including stock options, restricted shares, stock appreciation rights, performance shares, and phantom stock. The 2005 Plan will terminate on March 25, 2024.
The stock option plans provide that options may be granted at an exercise price of 100% of fair market value of our common stock on the date of grant, may be exercised in full or in installments, at the discretion of the Board or its Compensation Committee, and must be exercised within ten years from date of grant. Stock options generally vest pro rata over three to five years. We recognize stock-based compensation expense on a straight-line basis over the requisite service (vesting) period based on fair values. We use historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of stock-based compensation expense as of the grant date. We adjust the total amount of stock-based compensation expense recognized for each award, in the period in which each award vests, to reflect the actual forfeitures related to that award. Changes in our estimated forfeiture rate will result in changes in the rate at which compensation cost for an award is recognized over its vesting period.
Stock Options
The following table summarizes stock options activity for the three months ended March 31, 2017 (in thousands, except per share data or as otherwise noted):
Weighted |
||||||||||||
Weighted |
Average |
|||||||||||
Number |
Average |
Remaining |
||||||||||
of Shares |
Exercise Price |
Contractual Life |
||||||||||
Outstanding at January 1, 2017 |
4,887 | $ | 7.57 | 5.81 | ||||||||
Granted |
941 | $ | 11.30 | |||||||||
Exercised |
(35 | ) | $ | 6.62 | ||||||||
Cancelled |
(46 | ) | $ | 6.36 | ||||||||
Expired |
(28 | ) | $ | 26.66 | ||||||||
Outstanding at March 31, 2017 |
5,719 | $ | 8.11 | 6.29 | ||||||||
Exercisable at March 31, 2017 |
3,889 | $ | 7.96 | 4.86 | ||||||||
Vested and expected to vest at March 31, 2017 |
5,285 | $ | 8.04 | 6.03 |
The weighted average fair value of options granted during the three months ended March 31, 2017 and 2016 was $7.60 and $3.07 per share, respectively.
The total intrinsic value (the excess of the market price over the exercise price) was approximately $15.1 million for stock options outstanding, $11.6 million for stock options exercisable, and $14.5 million for stock options vested and expected to vest as of March 31, 2017. The total intrinsic value for stock options exercised during the three months ended March 31, 2017 was approximately $167 thousand. No stock options were exercised during the three months ended March 31, 2016.
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - Continued
We do not expect to realize any tax benefits from our stock option activity or the recognition of stock-based compensation expense, because we currently have net operating losses and have a full valuation allowance against our deferred tax assets.
Stock-Based Compensation Expense
We account for stock-based awards issued to employees in accordance with the provisions of ASC 718 (Topic 718, Compensation – Stock Compensation). We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally three to five years. Stock-based awards issued to consultants are accounted for in accordance with the provisions of ASC 718 and ASC 505-50 (Subtopic 50 “Equity-Based Payments to Non-Employees” of Topic 505, Equity). Options granted to consultants are periodically revalued as the options vest, and are recognized as an expense over the related period of service or the vesting period, whichever is longer. Under the provisions of ASC 718, members of the Board are considered employees for calculation of stock-based compensation expense.
We estimated the fair value of the stock options granted on the date of grant using a Black-Scholes valuation model that used the weighted average assumptions noted in the following table. The risk-free interest rate assumption we use is based upon United States Treasury interest rates appropriate for the expected life of the awards. The expected life (estimated period of time that we expect employees, directors, and consultants to hold their stock options) was estimated based on historical rates for three group classifications, (i) employees, (ii) outside directors and officers, and (iii) consultants. Expected volatility was based on historical volatility of our stock price for a period equal to the stock option's expected life and calculated on a daily basis. The expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future.
Three Months Ended |
||||||||
March 31, |
||||||||
2017 |
2016 |
|||||||
Risk-free interest rate |
2.22 | % | 1.55 | % | ||||
Expected life (in years) |
6.73 | 6.71 | ||||||
Expected volatility |
72 | % | 75 | % | ||||
Expected dividend yield |
-- | -- |
Stock-based compensation expense for the three months ended March 31, 2017 and 2016 was recorded in our condensed consolidated statement of operations as follows (in thousands):
Three Months Ended |
||||||||
March 31, |
||||||||
2017 |
2016 |
|||||||
Research and development expenses |
$ | 235 | $ | 275 | ||||
General and administrative expenses |
368 | 301 | ||||||
Total stock-based compensation expense |
$ | 603 | $ | 576 |
At March 31, 2017, unrecognized stock-based compensation expense related to stock options was approximately $7.5 million and is expected to be recognized over a weighted average period of approximately 2.78 years.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to assist the reader in understanding the business of Progenics Pharmaceuticals, Inc. and its subsidiaries (the "Company," "Progenics," "we," or "us"). MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended December 31, 2016. Our results of operations discussed in MD&A are presented in conformity with accounting principles generally accepted in the U.S. ("GAAP"). We operate under a single research and development business segment. Therefore, our results of operations are discussed on a consolidated basis.
Note Regarding Forward-Looking Statements
This document and other public statements we make may contain statements that do not relate strictly to historical fact, any of which may be forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements contained in this communication that refer to our estimated or anticipated future results or other non-historical facts are forward-looking statements that reflect our current perception of existing trends and information as of the date of this communication. Forward looking statements generally will be accompanied by words such as "anticipate," "believe," "plan," "could," "should, "estimate," "expect" "forecast," "outlook," "guidance," "intend," "may," "might," "will," "possible," "potential," "predict," "project," or other similar words, phrases or expressions. Such statements are predictions only, and are subject to risks and uncertainties that could cause actual events or results to differ materially. Forward-looking statements involve known and unknown risks and uncertainties which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. While it is impossible to identify or predict all such matters, these differences between forward-looking statements and our actual results, performance or achievement may result from, among other things, the inherent uncertainty of the timing and success of, and expense associated with, research, development, regulatory approval and commercialization of our products and product candidates, including the risks that clinical trials will not commence or proceed as planned; products which appear to be promising in early trials will not demonstrate efficacy or safety in larger-scale trials; the sales of RELISTOR® and other products by our partners and the revenue and income generated for us thereby may not meet expectations; competing products currently on the market or in development might reduce the commercial potential of our products; we, our collaborators or others might identify side effects after the product is on the market; or efficacy or safety concerns regarding marketed products, whether or not originating from subsequent testing or other activities by us, governmental regulators, other entities or organizations or otherwise, and whether or not scientifically justified, may lead to product recalls, withdrawals of marketing approval, reformulation of the product, additional pre-clinical testing or clinical trials, changes in labeling of the product, the need for additional marketing applications, declining sales, or other adverse events.
We are also subject to risks and uncertainties associated with the actions of our corporate, academic and other collaborators and government regulatory agencies, including risks from market forces and trends; potential product liability; intellectual property, litigation and other dispute resolution, environmental and other risks; the risk that we may not be able to obtain sufficient capital, recruit and retain employees, enter into favorable collaborations or transactions, or other relationships or that existing or future relationships or transactions may not proceed as planned; the risk that current and pending patent protection for our products may be invalid, unenforceable or challenged, or fail to provide adequate market exclusivity, or that our rights to in-licensed intellectual property may be terminated for our failure to satisfy performance milestones; the risk of difficulties in, and regulatory compliance relating to, manufacturing products; and the uncertainty of our future profitability.
Risks and uncertainties to which we are subject also include general economic conditions, including interest and currency exchange-rate fluctuations and the availability of capital; changes in generally accepted accounting principles; the impact of legislation and regulatory compliance; the highly regulated nature of our business, including government cost-containment initiatives and restrictions on third-party payments for our products; trade buying patterns; the competitive climate of our industry; and other factors set forth in this document and other reports filed with the U.S. Securities and Exchange Commission ("SEC"). In particular, we cannot assure you that RELISTOR will be commercially successful or be approved in the future in other formulations, indications or jurisdictions, that any of our other programs will result in a commercial product, or that we will be able to successfully complete our integration of EXINI Diagnostics AB ("EXINI") and to develop and commercialize its products.
We do not have a policy of updating or revising forward-looking statements and, except as expressly required by law, we disclaim any intent or obligation to update or revise any statements as a result of new information or future events or developments. It should not be assumed that our silence over time means that actual events are bearing out as expressed or implied in forward-looking statements.
Overview
Business
We develop innovative medicines and other technologies to target and treat cancer. Our pipeline includes: (1) therapeutic agents designed to precisely target cancer (AZEDRA® and 1095), (2) PSMA-targeted imaging agents for prostate cancer (1404 and PyLTM), and (3) imaging analysis tools. Our first commercial product, RELISTOR (methylnaltrexone bromide) for opioid-induced constipation, is partnered with Valeant Pharmaceuticals International, Inc. (“Valeant”).
We have licensed RELISTOR to Valeant, and have partnered other internally-developed or acquired compounds and technologies with third parties. We continue to consider opportunities for strategic collaborations, out-licenses and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.
Pipeline
Our goal is to become a preeminent, patient-centric oncology company and we intend to make a difference in how patients with prostate cancer, pheochromocytoma, and paraganglioma are diagnosed and treated. Our pipeline includes the following products and product candidates:
Product / Candidate |
Description |
Status | ||
Ultra-Orphan Theranostic |
||||
AZEDRA |
Treatment of malignant and/or recurrent pheochromocytoma and paraganglioma |
Phase 2b registrational study achieved primary endpoint under a Special Protocol Assessment agreement with the U.S. Food and Drug Administration ("FDA"); New Drug Application expected to be submitted by mid-2017; an Expanded Access Program in progress | ||
Prostate Cancer Theranostics |
||||
1404 |
Technetium-99m labeled PSMA targeted SPECT/CT imaging agent for prostate cancer |
Phase 3 trial in progress | ||
PyL |
Fluorinated PSMA-targeted PET/CT imaging agent for prostate cancer |
Phase 2/3 trial in progress | ||
1095 |
Iodine-131 labeled PSMA-targeted small molecule therapeutic for treatment of metastatic prostate cancer |
Phase 1 trial in progress | ||
PSMA TTC (Targeted Thorium Conjugate) (antibody licensed to Bayer) |
Thorium-227 labeled PSMA-targeted antibody therapeutic for treatment of metastatic prostate cancer |
Preclinical development in progress | ||
Prostate cancer bone scan indexing products |
Software that quantifies the hotspots on bone scans and automatically calculates the bone scan index value |
Automated BSI is currently sold in Europe and Japan; a web-based version is available without charge to researchers in the U.S.; the product has a 510(k) clearance from the FDA | ||
Opioid-Induced Constipation ("OIC") Treatment |
||||
RELISTOR-Subcutaneous injection (licensed to Valeant) |
Treatment of OIC in adults with chronic non-cancer pain and treatment of OIC in advanced-illness adult patients receiving palliative care when laxative therapy has not been sufficient |
Sold in the U.S., European Union, and Canada | ||
RELISTOR-Oral Tablets (licensed to Valeant) |
Treatment of OIC in adults with chronic non-cancer pain |
Approved by the FDA on July 19, 2016; U.S. commercialization commenced in third quarter of 2016 |
We continue to consider opportunities for strategic collaborations, out-licenses, and other arrangements with biopharmaceutical companies involving proprietary research, development, clinical, and commercialization programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.
Under our agreement with Valeant, we received a development milestone of $40.0 million upon U.S. marketing approval for subcutaneous RELISTOR in non-cancer pain patients in 2014, and a development milestone of $50.0 million for the U.S. marketing approval of an oral formulation of RELISTOR in 2016. We are also eligible to receive up to $200.0 million of commercialization milestone payments upon achievement of specified U.S. sales targets, including:
● |
$10 million based on the first achievement of combined U.S. net sales in excess of $100 million in any single calendar year; |
● |
$15 million based on the first achievement of combined U.S. net sales in excess of $150 million in any single calendar year; |
● |
$20 million based on the first achievement of combined U.S. net sales in excess of $200 million in any single calendar year; |
● |
$30 million based on the first achievement of combined U.S. net sales in excess of $300 million in any single calendar year; |
● |
$50 million based on the first achievement of combined U.S. net sales in excess of $750 million in any single calendar year; and |
● |
$75 million based on the first achievement of combined U.S. net sales in excess of $1 billion in any single calendar year. |
Each commercialization milestone payment is payable one time only, regardless of the number of times the condition is satisfied, and all six payments could be made within the same calendar year. We are also eligible to receive royalties from Valeant and its affiliates based on the following royalty scale: 15% on worldwide net sales up to $100 million, 17% on the next $400 million in worldwide net sales, and 19% on worldwide net sales over $500 million each calendar year, and 60% of any upfront, milestone, reimbursement or other revenue (net of costs of goods sold, as defined, and territory-specific research and development expense reimbursement) Valeant receives from sublicensees outside the U.S.
Valeant has also entered into license and distribution agreements to expand its sales channels outside of the U.S. for RELISTOR.
Under our agreement with a subsidiary of Bayer AG (“Bayer”), we received an upfront payment of $4.0 million and milestone payments totaling $3.0 million and could receive up to an additional $46.0 million in potential clinical and regulatory development milestones. We are also entitled to single digit royalties on net sales, and potential net sales milestone payments up to an aggregate total of $130.0 million.
Results of Operations
The following table is an overview of our results of operations (in thousands, except percentages):
Three Months Ended |
||||||||||||
March 31, |
||||||||||||
2017 |
2016 |
Change |
||||||||||
Total revenue |
$ | 2,347 | $ | 2,450 | (4% | ) | ||||||
Operating expenses |
$ | 17,600 | $ | 15,166 | (16% | ) | ||||||
Operating loss |
$ | (15,253 | ) | $ | (12,716 | ) | (20% | ) | ||||
Net loss |
$ | (16,360 | ) | $ | (12,673 | ) | (29% | ) | ||||
Net loss attributable to Progenics |
$ | (16,360 | ) | $ | (12,655 | ) | (29% | ) |
Revenue
Our sources of revenue include license and other agreements with Valeant and other collaborators and, to a small extent, sale of research reagents. The following table is a summary of our worldwide revenue (in thousands, except percentages):
Three Months Ended |
||||||||||||
March 31, |
||||||||||||
Source |
2017 |
2016 |
Change |
|||||||||
Royalty income |
$ | 2,119 | $ | 2,189 | -3 | % | ||||||
License revenue |
215 | 242 | -11 | % | ||||||||
Other revenue |
13 | 19 | -32 | % | ||||||||
Total revenue |
$ | 2,347 | $ | 2,450 | -4 | % |
Royalty income. We recognized royalty income primarily based on the below net sales of RELISTOR as reported to us by Valeant (in thousands). The royalty income recognized during the three months ended March 31, 2016 is net of a 2015 adjustment.
Three Months Ended |
||||||||||||
March 31, |
||||||||||||
2017 |
2016 |
Change |
||||||||||
U.S. |
$ | 13,500 | $ | 15,500 | -13 | % | ||||||
Outside U.S. |
600 | 1,100 | -45 | % | ||||||||
Worldwide net sales of RELISTOR |
$ | 14,100 | $ | 16,600 | -15 | % |
The decrease in worldwide net sales of RELISTOR of $2.5 million in the three months ended March 31, 2017 compared to the same period in 2016 was primarily attributable to lower unit sales.
Operating Expenses
The following table is a summary of our operating expenses (in thousands, except percentages):
Three Months Ended |
||||||||||||
March 31, |
||||||||||||
Operating Expenses |
2017 |
2016 |
Change |
|||||||||
Research and development |
$ | 10,005 | $ | 9,149 | (9 | %) | ||||||
General and administrative |
5,695 | 5,817 | 2 | % | ||||||||
Change in contingent consideration liability |
1,900 | 200 | (850 | %) | ||||||||
Total operating expenses |
$ | 17,600 | $ | 15,166 | (16 | %) |
Research and Development (“R&D”)
R&D expenses increased by $0.9 million, or 9%, during the three months ended March 31, 2017, compared to the same period in 2016. The increase was primarily attributable to higher clinical trial and contract manufacturing expenses for PyL, partially offset by lower compensation expense.
General and Administrative (“G&A”)
G&A expenses decreased by $0.1 million, or 2%, during the three months ended March 31, 2017, compared to the same period in 2016. The decrease was primarily attributable to lower depreciation and compensation expenses, partially offset by higher costs associated with pre-launch activities for AZEDRA.
Change in Contingent Consideration Liability
The increase in the contingent consideration liability of $1.9 million during the three months ended March 31, 2017 resulted primarily from an increase in the probability of success of AZEDRA used to calculate the potential milestone payments to former Molecular Insight Pharmaceuticals, Inc. stockholders. On March 30, 2017, we announced the achievement of the primary endpoint in our registrational Phase 2b trial of AZEDRA under a Special Protocol Assessment agreement with the FDA.
Other (Expense) Income
The following table is a summary of our other (expense) income (in thousands, except percentages):
Three Months Ended |
||||||||||||
March 31, |
||||||||||||
2017 |
2016 |
Change |
||||||||||
Interest (expense) income, net |
$ | (1,107 | ) | $ | 43 | -2674 | % | |||||
Other (expense) income, net |
$ | (1,107 | ) | $ | 43 | -2674 | % |
Other expense, net increased by $1.2 million, or 2,674%, during the three months ended March 31, 2017 compared to the same period in 2016. The decrease was primarily attributable to interest expense on the RELISTOR royalty-backed loan, which was executed in November 2016.
Liquidity and Capital Resources
The following table is a summary of selected financial data (in thousands):
March 31, |
December 31, |
|||||||
2017 |
2016 |
|||||||
Cash and cash equivalents |
$ | 126,306 | $ | 138,909 | ||||
Accounts receivable, net |
$ | 2,097 | $ | 4,864 | ||||
Total assets |
$ | 182,854 | $ | 198,986 | ||||
Working capital |
$ | 117,726 | $ | 131,744 |
We have to-date funded operations principally through payments received from private placements of equity securities, public offerings of our common stock, up-front payments, development milestones, and royalties from license agreements, and proceeds from the exercise of stock options.
At March 31, 2017, we held $126.3 million in cash and cash equivalents, a decrease of $12.6 million from $138.9 million at December 31, 2016. We believe our existing balances of cash and cash equivalents will be sufficient to satisfy our working capital needs, capital asset purchases, outstanding commitments, and other liquidity requirements associated with our existing operations over the next twelve (12) months.
If we do not realize sufficient royalties or milestone payments from Valeant, Bayer, or other licensees, or raise additional capital, we will have to reduce, delay, or eliminate spending on certain programs, and/or take other economic measures.
During the first quarter of 2017, we filed a $250.0 million replacement shelf registration statement, which was declared effective as of January 19, 2017. During this quarter, we also entered into a controlled equity offering sales agreement (“Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), as sales agent, pursuant to which we may offer and sell through Cantor, from time to time, shares of our common stock up to an aggregate offering price of $75.0 million. This Sales Agreement may be terminated by Cantor or us at any time upon ten (10) days’ notice, or by Cantor at any time in certain circumstances, including the occurrence of a material adverse change in our business or financial condition.
Cash Flows
The following table is a summary of our cash flow activities (in thousands):
Three Months Ended |
||||||||
March 31, |
||||||||
2017 |
2016 |
|||||||
Net cash used in operating activities |
$ | (12,747 | ) | $ | (7,967 | ) | ||
Net cash used in investing activities |
$ | (113 | ) | $ | (494 | ) | ||
Net cash provided by financing activities |
$ | 232 | $ | - |
Operating Activities
Net cash used in operating activities during the three months ended March 31, 2017 was primarily attributable to operating expenses, net of non-cash items.
Investing Activities
Net cash used in investing activities during the three months ended March 31, 2017 was primarily related to capital expenditures, partially offset by proceeds from the sale of fixed assets.
Financing Activities
Net cash provided by financing activities during the three months ended March 31, 2017 was related to proceeds from the exercise of stock options.
Off-Balance Sheet Arrangements and Guarantees
We have no obligations under off-balance sheet arrangements and do not guarantee the obligations of any other unconsolidated entity.
Critical Accounting Policies
We prepare our financial statements in conformity with accounting principles generally accepted in the U.S. Our significant accounting policies are disclosed in Note 2. Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. The selection and application of these accounting principles and methods requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. We evaluate these estimates on an ongoing basis. We base these estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities that are not otherwise readily apparent. While we believe that the estimates and assumptions we use in preparing the financial statements are appropriate, they are subject to a number of factors and uncertainties regarding their ultimate outcome and, therefore, actual results could differ from these estimates.
There have been no changes to our critical accounting policies and estimates as of and for the three months ended March 31, 2017, which are disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016.
Recent Accounting Developments
Refer to our discussion of recently adopted accounting pronouncements and other recent accounting pronouncements in Note 2. New Accounting Pronouncements to the accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our primary investment objective is to preserve principal. Our money market funds have interest rates that were variable and totaled $122.3 million at March 31, 2017. As a result, we do not believe that these investment balances have a material exposure to interest-rate risk.
The majority of our business is conducted in U.S. dollars. However, we do conduct certain transactions in other currencies, including Euros, British Pounds, Swiss Francs, and Swedish Krona. Historically, fluctuations in foreign currency exchange rates have not materially affected our condensed consolidated results of operations, and during the three months ended March 31, 2017 and 2016, our consolidated results of operations were not materially affected by fluctuations in foreign currency exchange rates.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports, is recorded, processed, summarized and reported within the timelines specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have a Disclosure Committee consisting of certain members of our senior management which monitors and implements our policy of disclosing material information concerning the Company in accordance with applicable law.
As required by SEC Rule 13a-15(e), we carried out an evaluation, under the supervision and with the participation of senior management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon the foregoing, our CEO and CFO concluded that our current disclosure controls and procedures, as designed and implemented, were effective at the reasonable assurance level.
There have been no changes in our internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f) and 15d-15(f), during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no other material changes from the information discussed in Part I, Item 3. Legal Proceedings of our Annual Report on Form 10-K for the year ended December 31, 2016. We are or may be from time to time involved in various other disputes, governmental, and/or regulatory inspections, inquiries, investigations, and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect us, our results of operations, financial condition, and cash flows. Refer to our discussion in Note 8. Commitments and Contingencies to the accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There have been no material changes from the information discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2016. You should carefully consider the risks and uncertainties we discussed in our Form 10-K before deciding to invest in, or retain, shares of our common stock. These are not the only risks and uncertainties that we face. Additional risks and uncertainties that we do not currently know about or that we currently believe are immaterial, or that we have not predicted, may also harm our business operations or adversely affect us. If any of these risks or uncertainties actually occurs, our business, financial condition, operating results, or liquidity could be materially harmed.
Item 5. Material Changes to Board Nomination Procedures
On January 25, 2017, the Board of Directors of Progenics approved an amendment and restatement of Progenics’ bylaws to establish advance notice requirements for stockholders to make nominations of persons for election to the Board or propose other business at any annual or special meeting of stockholders. A further section was added to the bylaws to permit, commencing after the 2017 annual meeting of stockholders, a stockholder, or a group of no more than twenty (20) stockholders, owning at least three percent of Progenics’ outstanding common stock continuously for at least three years, to nominate and include in Progenics’ proxy materials for an annual meeting of stockholders qualified director nominees constituting up to the greater of two or 25% of the total number of directors then serving on the Board, whichever is greater. The foregoing is a summary, does not purport to be a complete description of the amendments to the Progenics’ bylaws, and is qualified in its entirety by reference to their text, attached as Exhibit 3.2 to the Current Report on Form 8-K, filed on January 30, 2017 and incorporated by reference herein.
Item 6. Exhibits
(a) Exhibits
Exhibit Number |
Description |
|
|
10.53(1) |
Controlled Equity Offering Sales Agreement, dated as of January 6, 2017, by and between Progenics Pharmaceuticals, Inc. and Cantor Fitzgerald & Co. |
31.1 |
Certification of Mark R. Baker, Chief Executive Officer of the Registrant, pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. |
31.2 |
Certification of Patrick Fabbio, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of the Registrant, pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. |
32 |
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
101 |
Interactive Data Files: |
101.INS |
XBRL Instance Document |
101.SCH |
XBRL Taxonomy Extension Schema |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase |
101.LAB |
XBRL Taxonomy Extension Label Linkbase |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase |
101.DEF |
XBRL Taxonomy Extension Definition Document |
|
|
* The exhibit footnoted as previously filed has been filed as an exhibit to the document of the Registrant or other registrant referenced in the footnote below, and are incorporated by reference herein.
(1) |
Previously filed as Exhibit 1.1 to the registration statement on Form S-3 filed on January 6, 2017. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
PROGENICS PHARMACEUTICALS, INC. | |
Date: May 4, 2017 |
By: |
/s/ Patrick Fabbio |
|
|
Patrick Fabbio Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
28
Exhibit 31.1
CERTIFICATION
PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Mark R. Baker, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Progenics Pharmaceuticals, 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 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/ Mark R. Baker |
Date: May 4, 2017 |
Mark R. Baker (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Patrick Fabbio, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Progenics Pharmaceuticals, 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 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/ Patrick Fabbio |
Date: May 4, 2017 |
Patrick Fabbio (Principal Financial and Accounting Officer) |
Exhibit 32
CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, in his capacity as an officer of Progenics Pharmaceuticals, Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
(1) |
The Quarterly Report of the Company on Form 10-Q for the period ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 4, 2017 |
/s/ Mark R. Baker |
|
Mark R. Baker Chief Executive Officer (Principal Executive Officer) |
|
|
|
/s/ Patrick Fabbio |
|
Patrick Fabbio (Principal Financial and Accounting Officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Progenics Pharmaceuticals, Inc. and will be retained by Progenics Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Progenics Pharmaceuticals Inc | |
Entity Central Index Key | 0000835887 | |
Trading Symbol | pgnx | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 70,225,199 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares shares in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 20,000 | 20,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par vaule (in dollars per share) | $ 0.0013 | $ 0.0013 |
Common stock, shares authorized (in shares) | 160,000 | 160,000 |
Common stock, shares issued (in shares) | 70,425 | 70,390 |
Treasury stock, shares (in shares) | 200 | 200 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Revenue: | ||
Royalty income | $ 2,119 | $ 2,189 |
License revenue | 215 | 242 |
Other revenue | 13 | 19 |
Total revenue | 2,347 | 2,450 |
Operating expenses: | ||
Research and development | 10,005 | 9,149 |
General and administrative | 5,695 | 5,817 |
Change in contingent consideration liability | 1,900 | 200 |
Total operating expenses | 17,600 | 15,166 |
Operating loss | (15,253) | (12,716) |
Other (expense) income: | ||
Interest (expense) income, net | (1,107) | 43 |
Total other (expense) income | (1,107) | 43 |
Net loss | (16,360) | (12,673) |
Net loss attributable to noncontrolling interests | (18) | |
Net loss attributable to Progenics | $ (16,360) | $ (12,655) |
Net loss per share attributable to Progenics - basic and diluted (in dollars per share) | $ (0.23) | $ (0.18) |
Weighted-average shares - basic and diluted (in shares) | 70,196 | 69,946 |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net loss | $ (16,360) | $ (12,673) |
Other comprehensive loss: | ||
Foreign currency translation adjustments | 18 | (69) |
Comprehensive loss | (16,342) | (12,742) |
Comprehensive loss attributable to noncontrolling interests | (21) | |
Comprehensive loss attributable to Progenics | $ (16,342) | $ (12,721) |
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($) shares in Thousands, $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
AOCI Attributable to Parent [Member] |
Treasury Stock [Member] |
Noncontrolling Interest [Member] |
Total |
---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2016 | 70,390 | (200) | |||||
Balance at Dec. 31, 2016 | $ 92 | $ 598,069 | $ (490,573) | $ (85) | $ (2,741) | $ 104,762 | $ 104,762 |
Net loss | (16,360) | (16,360) | (16,360) | ||||
Foreign currency translation adjustments | 18 | 18 | $ 18 | ||||
Stock-based compensation expense | 603 | 603 | |||||
Exercise of stock options (in shares) | 35 | 35 | |||||
Exercise of stock options | 232 | 232 | |||||
Balance (in shares) at Mar. 31, 2017 | 70,425 | (200) | |||||
Balance at Mar. 31, 2017 | $ 92 | $ 598,904 | $ (506,933) | $ (67) | $ (2,741) | $ 89,255 | $ 89,255 |
Note 1 - Summary of Significant Accounting Policies |
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Business Description and Accounting Policies [Text Block] | Note 1. Summary of Significant Accounting PoliciesBusiness Progenics Pharmaceuticals, Inc. and its subsidiaries (“the Company,” “Progenics,” “we,” or “us”) develop innovative medicines and other technologies to target and treat cancer. Our pipeline includes: 1) therapeutic agents designed to precisely target cancer (AZEDRA® and 1095), 2) PSMA-targeted imaging agents for prostate cancer (1404 and PyLTM ), and 3) imaging analysis tools. In February 2011, we licensed our first commercial drug, RELISTOR® (methylnaltrexone bromide) subcutaneous injection for the treatment of opioid induced constipation (“OIC”), to Salix Pharmaceuticals, Inc. (a wholly-owned subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”)). In September 2014, RELISTOR received an expanded approval from the U.S. Food and Drug Administration ("FDA") for the treatment of OIC in patients taking opioids for chronic non-cancer pain, and in July 2016, RELISTOR Tablets were approved by the FDA for the treatment of OIC in adults with chronic non-cancer pain. We have in the past and continue to consider opportunities for strategic collaborations, out-licenses, and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.Our current principal sources of revenue from operations are royalty, development and commercial milestones, and sublicense revenue-sharing payments from Valeant relating to RELISTOR. Royalty and further milestone payments from RELISTOR depend on success in development and commercialization, which is dependent on many factors, such as Valeant’s efforts, decisions by the FDA and other regulatory bodies, competition from drugs for the same or similar indications, and the outcome of clinical and other testing of RELISTOR. We commenced principal operations in 1988, became publicly traded in 1997, and throughout have been engaged primarily in research and development efforts, establishing corporate collaborations and related activities. Certain of our intellectual property rights are held by wholly owned subsidiaries. All of our U.S. operations are presently conducted at our headquarters in New York, and the operations of our foreign subsidiary, EXINI Diagnostics A.B. (“EXINI”), are conducted at our facility in Lund, Sweden. We operate under a single research and development operating segment. Liquidity At March 31, 2017, we had $126.3 million of cash and cash equivalents, a decrease of $12.6 million from $138.9 million at December 31, 2016. We expect that this amount will be sufficient to fund operations as currently anticipated beyond one year from the filing date of this Form 10 -Q. We have historically funded our operations to a significant extent from capital-raising and we expect to require additional funding in the future, the availability of which is never guaranteed and may be uncertain. We expect that we may continue to incur operating losses for the foreseeable future.Basis of Presentation Our interim condensed consolidated financial statements have been prepared in accordance with applicable presentation requirements, and accordingly, do not include all information and disclosures necessary for a presentation of our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, these financial statements reflect all adjustments, consisting primarily of normal recurring accruals necessary for a fair statement of results for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year. Our interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in our Annual Report on Form 10 -K for the year ended December 31, 2016. The year-end consolidated balance sheet data in these financial statements were derived from audited financial statements but do not include all disclosures required by GAAP. Certain prior period amounts in our condensed consolidated financial statements have been reclassified to conform to the current period presentation. Accounts payable, which was historically combined with accrued expenses on our consolidated balance sheet, has been presented as a separate line item for all periods presented in these unaudited condensed consolidated financial statements.Principles of Consolidation The condensed consolidated financial statements include the accounts of Progenics as well as its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. In December 2015, we commenced a judicial process in Sweden for acquiring the remaining shares of EXINI. On December 8, 2016, a Swedish arbitral tribunal awarded us advanced title to the remaining shares of EXINI and, as of that date, EXINI became a wholly-owned subsidiary with 100% of the voting shares owned by us. We paid $368 thousand to the minority interest shareholders in connection with the acquisition of the remaining shares of EXINI. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates.Foreign Currency Translation Each of our international subsidiaries generally considers their respective local currency to be their functional currency. Assets and liabilities of these international subsidiaries are translated into U.S. dollars at quarter-end exchange rates and revenues and expenses are translated at average exchange rates during the quarter and year-to-date period. Foreign currency translation adjustments for the reported periods are included in accumulated other comprehensive loss (“AOCL”) in our condensed consolidated statements of comprehensive loss, and the cumulative effect is included in the stockholders' equity section of our condensed consolidated balance sheets. Realized gains and losses denominated in foreign currencies are recorded in operating expenses in our condensed consolidated statements of operations and were not material to our consolidated results of operations for the three months ended March 31, 2017 or 2016. Property and Equipment Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $1.0 million and $0.8 million as of March 31, 2017 and December 31, 2016, respectively. The following table summarizes our property and equipment (in thousands):
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Note 2 - New Accounting Pronouncemets |
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Description of New Accounting Pronouncements Not yet Adopted [Text Block] | Note 2. New Accounting PronouncementsRecently Adopted In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016 -09, Compensation – Stock Compensation (Topic ("ASU 718) 2016 -09"). The standard simplifies several aspects of accounting for stock-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this standard on January 1, 2017. For the three months ended March 31, 2017, we recognized all excess tax benefits and tax deficiencies associated with exercise of stock options as income tax expense or benefit as a discrete event. The adoption of this ASU did not have a material impact on our consolidated financial statements. Not Yet Adopted In January 2017, the FASB issued ASU 2017 -04 (“ASU 2017 -04”), Intangibles - Goodwill and Other (Topic . The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 350): Simplifying the Test for Goodwill Impairment2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. ASU 2017 -04 will be effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of the new standard to have a material impact on our consolidated financial statements.In November 2016, the FASB issued ASU No. 2016 -18 (“ASU 2016 -18”), Statement of Cash Flows (Topic d Cash. For entities that have restricted cash and are required to present a statement of cash flows, ASU 230) – Restricte2016 -18 changes the cash flow presentation for restricted cash. ASU 2016 -18 will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. We do not expect the adoption of this new standard to have a material impact on our consolidated financial statements or statement of cash flows. In August 2016, the FASB issued ASU No. 2016 -15 (“ASU 2016 -15”), Statement of Cash Flows (Topic . The standard provides guidance on 230): Classification of Certain Cash Receipts and Cash Paymentseight (8) cash flow issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero -coupon bonds; (3) contingent consideration payments after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. ASU 2016 -15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016 -15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 with early adoption permitted. We do not expect the adoption of this new standard to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016 -02, Leases (Topic ("ASU 842) 2016 -02") . The standard requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. Additionally, ASU 2016 -02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. ASU 2016 -02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted for all entities. We are currently evaluating the impact of this new standard on our consolidated financial statements.In January 2016, the FASB issued ASU No. 2016 -01, Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016 -01"). The standard requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, and separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. Additionally, ASU 2016 -01 eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments on the balance sheet. ASU 2016 -01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Other than an amendment relating to presenting in comprehensive income the portion of the total change in the fair value of a liability resulting from a change in instrument-specific credit risk (if the entity has elected to measure the liability at fair value), early adoption is not permitted. We are currently evaluating the impact of this standard on our consolidated financial statements.In May 2014, the FASB issued ASU No. 2014 -09, Revenue from Contracts with Customers (Topic ("ASU 606) 2014 -09"). The standard provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. This ASU provides that an entity should recognize revenue to depict transfers of promised goods or services to customers in amounts reflecting the consideration to which the entity expects to be entitled in the transaction by: (1) identifying the contract; (2) identifying the contract's performance obligations; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when or as the entity satisfies the performance obligations. The guidance permits companies to apply the requirements either retrospectively to all prior periods presented or in the year of adoption through a cumulative adjustment by applying a modified retrospective transition method. ASU 2014 -09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016 and interim periods therein. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the process of identifying performance obligations. We are in the process of evaluating our significant revenue contracts and reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our revenue contracts and the impact the new standard might have on our consolidated financial statements and disclosures. In addition, we are in the process of identifying the appropriate changes to business processes, systems, and controls to support recognition and disclosure under the new standard. We expect to adopt the new revenue standard in the first quarter of 2018, applying the modified retrospective transition method. |
Note 3 - Net Loss Per Share |
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Earnings Per Share [Text Block] | Note 3. Net Loss Per ShareOur basic net loss per share attributable to Progenics amounts have been computed by dividing net loss attributable to Progenics by the weighted-average number of common shares outstanding during the period. For the three months ended March 31, 2017 and 2016, we reported net losses and, accordingly, potential common shares were not included since such inclusion would have been anti-dilutive. The calculations of net loss per share, basic and diluted, are as follows (amounts in thousands, except per share data):
The following table summarizes anti-dilutive common shares or common shares where performance conditions have not been met, that were excluded from the calculation of diluted net loss per share (in thousands):
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Note 4 - Fair Value Measurements |
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Fair Value Disclosures [Text Block] | Note 4. Fair Value MeasurementsTo estimate the fair values of our financial assets and liabilities, we use valuation approaches within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is divided into three levels based on the source of inputs as follows:
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used for measuring fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.We believe the carrying amounts of our cash equivalents, accounts receivable, other current assets, other assets, accounts payable and accrued expenses approximated their fair values as of March 31, 2017 and December 31, 2016. We record the contingent consideration liability resulting from our acquisition of Molecular Insight Pharmaceuticals, Inc. ("MIP") at fair value in accordance with Accounting Standards Codification ("ASC") 820 (Topic 820, Fair Value Measurement ).The following tables summarize each major class of our financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated, classified by valuation hierarchy (in thousands):
PROGENICS PHARMACEUTICALS, INC .NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (U naudited) - Continued
The estimated fair value of the contingent consideration liability of $16.1 million as of March 31, 2017, represents future potential milestone payments to former MIP stockholders. We consider this liability a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flow and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success and discount rates.Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement, respectively. We record the contingent consideration liability at fair value with changes in estimated fair values recorded in change in contingent consideration liability in our condensed consolidated statements of operations. The following table summarizes quantitative information and assumptions pertaining to the fair value measurement of the Level 3 inputs at March 31, 2017 and December 31, 2016 (in thousands). The increase in the contingent consideration liability of $1.9 million during the three months ended March 31, 2017 was primarily attributable to an increase in the estimated probability of success for AZEDRA given our successful completion of the registrational study and a reduction in the discount period.
PROGENICS PHARMACEUTICALS, INC .NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (U naudited) - Continued
For those financial instruments with significant Level 3 inputs, the following tables summarize the activities for the periods indicated:
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Note 5 - Accounts Receivable |
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Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5. Accounts ReceivableOur accounts receivable represent amounts due to us from collaborators, royalties, and sales of research reagents, and consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
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Note 6 - Goodwill, In-process Research and Development, and Other Intangible Assets |
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Intangible Assets Disclosure [Text Block] | Note 6. Goodwill, In-Process Research and Development, and Other Intangible AssetsThe fair values of in-process research and development (“IPR&D”) and other identified intangible assets acquired in business combinations are capitalized. We utilize the “income method,” which applies a probability weighting that considers the risk of development and commercialization to the estimated future net cash flows that are derived from projected sales revenues and estimated costs or “replacement costs”, whichever is greater. These projections are based on factors such as relevant market size, patent protection, historical pricing of similar products and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. This analysis is performed for each IPR&D project and other identified intangible assets, independently. IPR&D assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate. Other identified intangible assets, which include the technology asset acquired as part of the EXINI business combination, are amortized over the relevant estimated useful life. The IPR&D assets are tested for impairment at least annually or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in our condensed consolidated statements of operations. Goodwill represents excess consideration in a business combination over the fair value of identifiable net assets acquired. Goodwill is not amortized, but is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential impairment. We determine whether goodwill may be impaired by comparing the fair value of the reporting unit (we have determined that we have only one No March 31, 2017 or 2016. The following tables summarize the activity related to our goodwill and intangible assets (in thousands):
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Note 7 - Accrued Expenses |
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Accounts Payable and Accrued Liabilities Disclosure [Text Block] | Note 7 . Accrued Expenses The carrying value of our accrued expenses approximates fair value as it represents amounts that will be satisfied within one year. Accrued expenses consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
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Note 8 - Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Text Block] | Note 8. Commitments and ContingenciesWe are or may be from time to time involved in various other disputes, governmental and/or regulatory inspections, inquiries, investigations, and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect us, our results of operations, financial condition, and cash flows. In each of the matters described in this filing or in Note to our consolidated financial statements in our Annual Report on Form 10. Commitments and Contingencies10 -K for the year ended December 31, 2016, plaintiffs seek an award of a not-yet-quantified amount of damages or an amount that is not material. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, none of the matters described in this filing, except for the former employee litigation, have progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material. While it is not possible to accurately predict or determine the eventual outcomes of these items, an adverse determination in one or more of these items currently pending could have a material adverse effect on our consolidated results of operations, financial position, or cash flows.Former Employee Litiga tion On January 4, 2017, we settled all claims against us under a federal action brought in 2010 by a former employee, where such former employee had complained that we had violated the anti-retaliation provisions of the Federal Sarbanes-Oxley law by terminating him. In connection with this settlement, we and the former employee exchanged mutual releases and we are to pay an aggregate sum of $4.0 million to the former employee and his attorneys, which is included in accrued expenses on our consolidated balance sheet at March 31, 2017. We have $1.7 million held by the District Court in escrow and recorded as restricted cash in other current assets on our consolidated balance sheet at March 31, 2017. Abbreviated New Drug Application Litigations On October 7, 2015 Progenics, Valeant and Wyeth LLC (Valeant’s predecessor as licensee of RELISTOR) received notification of a Paragraph IV certification for certain patents for RELISTOR® (methylnaltrexone bromide) subcutaneous injection, which are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. The certification resulted from the filing by Mylan Pharmaceuticals, Inc. of an Abbreviated New Drug Application (“ANDA”) with the FDA, challenging such patents for RELISTOR subcutaneous injection and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of these patents expire.On October 28, 2015, Progenics, Valeant and Wyeth LLC received a second notification of a Paragraph IV certification with respect to the same patents for RELISTOR subcutaneous injection from Actavis LLC as a result of Actavis LLC’s filing of an ANDA with the FDA, also challenging these patents and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of these patents expire.In October 2016, Progenics, Valeant, and Wyeth LLC received a notification of a Paragraph IV certification with respect to certain patents for RELISTOR Tablets. The certification accompanied the filing by Actavis LLC of an ANDA challenging such patents for RELISTOR Tablets and seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of these patents expire.In accordance with the Drug Price Competition and Patent Term Restoration Act (commonly referred to as the Hatch-Waxman Act), Progenics and Valeant timely commenced litigation against each of these ANDA filers in order to obtain an automatic stay of FDA approval of the ANDA until the earlier of (i) 30 months from receipt of the notice or (ii) a District Court decision finding that the identified patents are invalid, unenforceable or not infringed. In addition to the above described ANDA notifications, in October 2015 Progenics received notices of opposition to three European patents relating to methylnaltrexone. The oppositions were filed separately by each of Actavis Group PTC ehf. and Fresenius Kabi Deutschland GmbH. Each of the above-described proceedings is in its early stages and Progenics and Valeant continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Valeant, Valeant has the first right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement. |
Note 9 - Non-recourse Long-term Debt, Net |
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Debt Disclosure [Text Block] | 9. Non-Recourse Long-Term Debt, NetIn November 2016, through a new wholly-owned subsidiary MNTX Royalties Sub LLC (“MNTX Royalties”), we entered into a loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P. (“HCRP”). We borrowed $50.0 million and can borrow an additional $50.0 million, subject to mutual agreement with HCRP, up to twelve months after the closing date. Under the terms of the Royalty-Backed Loan, the lenders have no recourse to us or to any of our assets other than the right to receive royalty payments from the commercial sales of RELISTOR products owed under our agreement with Valeant. The RELISTOR royalty payments will be used to repay the principal and interest on the loan. The Royalty-Backed Loan bears interest at a per annum rate of 9.5%. Under the terms of the loan agreement, payments of interest and principal, if any, under the loan will be made on the last day of each calendar quarter out of RELISTOR royalty payments received since the immediately-preceding payment date. On each payment date prior to March 31, 2018, RELISTOR royalty payments received since the immediately preceding payment date will be applied solely to the payment of interest on the loan, with any royalties in excess of the interest amount retained by us. Beginning on March 31, 2018, 50% of RELISTOR royalty payments received since the immediately-preceding payment date in excess of accrued interest on the loan will be used to repay the principal of the loan, with the balance retained by us. Starting on September 30, 2021, all of the RELISTOR royalties received since the immediately-preceding payment date will be used to repay the interest and outstanding principal balance until the balance is fully repaid. The loan has a maturity date of June 30, 2025. Upon the occurrence of certain triggers in the loan agreement, or if HCRP so elects on or after January 1, 2018, all of the RELISTOR royalty payments received after the immediately-preceding payment date shall be applied to the payment of interest and repayment of principal until the principal of the loan is fully repaid. In the event of such an election by HCRP, we have the right to repay the loan without any prepayment penalty.In connection with the Royalty-Backed Loan, we paid HCRP a lender fee of $0.5 million and incurred additional debt issuance costs totaling $0.9 million, which includes expenses that we paid on behalf of HCRP and expenses incurred directly by us. Debt issuance costs and the lender fee have been netted against the debt as of March 31, 2017, and are being amortized over the estimated term of the debt using the effective interest method. For the three months ended March 31, 2017, we recognized interest expense, including amortization of the debt discount, related to the Royalty-Backed Loan, of $1.3 million. On March 31, 2017, we paid HCRP the accrued interest due for the quarter of $1.2 million.The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs require that we make estimates that could impact the short- and long-term classification of these costs, as well as the period over which these costs will be amortized. As of March 31, 2017, the outstanding balance of the Royalty-Backed Loan was $49.5 million, inclusive of payment-in-kind interest expense of $0.8 million and net of unamortized debt discount of $1.3 million.As of March 31, 2017, we were in compliance with all material covenants under the Royalty-Backed Loan and there was no material adverse change in our business, operations, or financial conditions, as defined in the loan agreement. |
Note 10 - Stockholders' Equity |
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Stockholders' Equity Note Disclosure [Text Block] | Note 10. Stockholders' EquityCommon Stock and Preferred Stock We are authorized to issue 160.0 million shares of our common stock, par value $0.0013, and 20.0 million shares of preferred stock, par value $0.001. The Board of Directors (the "Board") has the authority to issue common and preferred shares, in series, with rights and privileges as determined by the Board.Shelf Registration During the first quarter of 2017, we established a $250.0 million replacement shelf registration statement.Accumulated Other Comprehensive Loss The following table summarizes the components of AOCL at March 31, 2017 (in thousands):
We did not three months ended March 31, 2017 or 2016. |
Note 11 - Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 11. Stock-Based CompensationEquity Incentive Plans We adopted the following stockholder-approved equity incentive plans: ● The 1996 Amended Stock Incentive Plan (the "1996 Plan") authorized the issuance of up to 5,000,000 shares of our common stock covering several different types of awards, including stock options, restricted shares, stock appreciation rights, performance shares, and phantom stock. The 1996 Plan was terminated in 2006. Options granted before termination of the 1996 Plan will continue to remain outstanding until exercised, cancelled, or expired.● The 2005 Stock Incentive Plan (the “2005 Plan”), pursuant to which we are authorized to issue up to 11,450,000 shares of common stock covering several different types of awards, including stock options, restricted shares, stock appreciation rights, performance shares, and phantom stock. The 2005 Plan will terminate on March 25, 2024. The stock option plans provide that options may be granted at an exercise price of 100% of fair market value of our common stock on the date of grant, may be exercised in full or in installments, at the discretion of the Board or its Compensation Committee, and must be exercised within ten years from date of grant. Stock options generally vest pro rata over three to five years. We recognize stock-based compensation expense on a straight-line basis over the requisite service (vesting) period based on fair values. We use historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of stock-based compensation expense as of the grant date. We adjust the total amount of stock-based compensation expense recognized for each award, in the period in which each award vests, to reflect the actual forfeitures related to that award. Changes in our estimated forfeiture rate will result in changes in the rate at which compensation cost for an award is recognized over its vesting period.Stock Options The following table summarizes stock options activity for the three months ended March 31, 2017 (in thousands, except per share data or as otherwise noted):
The weighted average fair value of options granted during the three months ended March 31, 2017 and 2016 was $7.60 and $3.07 per share, respectively.The total intrinsic value (the excess of the market price over the exercise price) was approximately $15.1 million for stock options outstanding, $11.6 million for stock options exercisable, and $14.5 million for stock options vested and expected to vest as of March 31, 2017. The total intrinsic value for stock options exercised during the three months ended March 31, 2017 was approximately $167 thousand. No stock options were exercised during the three months ended March 31, 2016. We do not expect to realize any tax benefits from our stock option activity or the recognition of stock-based compensation expense, because we currently have net operating losses and have a full valuation allowance against our deferred tax assets. Stock-Based Compensation Expense We account for stock-based awards issued to employees in accordance with the provisions of ASC 718 (Topic 718, Compensation – Stock Compensation ). We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally three to five years. Stock-based awards issued to consultants are accounted for in accordance with the provisions of ASC 718 and ASC 505 -50 (Subtopic 50 “Equity-Based Payments to Non-Employees” of Topic 505, Equity ). Options granted to consultants are periodically revalued as the options vest, and are recognized as an expense over the related period of service or the vesting period, whichever is longer. Under the provisions of ASC 718, members of the Board are considered employees for calculation of stock-based compensation expense.We estimated the fair value of the stock options granted on the date of grant using a Black-Scholes valuation model that used the weighted average assumptions noted in the following table. The risk-free interest rate assumption we use is based upon United States Treasury interest rates appropriate for the expected life of the awards. The expected life (estimated period of time that we expect employees, directors, and consultants to hold their stock options) was estimated based on historical rates for three group classifications, (i) employees, (ii) outside directors and officers, and (iii) consultants. Expected volatility was based on historical volatility of our stock price for a period equal to the stock option's expected life and calculated on a daily basis. The expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future.
Stock-based compensation expense for the three months ended March 31, 2017 and 2016 was recorded in our condensed consolidated statement of operations as follows (in thousands):
At March 31, 2017, unrecognized stock-based compensation expense related to stock options was approximately $7.5 million and is expected to be recognized over a weighted average period of approximately 2.78 years. |
Significant Accounting Policies (Policies) |
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Liquidity [Policy Text Block] | Liquidity At March 31, 2017, we had $126.3 million of cash and cash equivalents, a decrease of $12.6 million from $138.9 million at December 31, 2016. We expect that this amount will be sufficient to fund operations as currently anticipated beyond one year from the filing date of this Form 10 -Q. We have historically funded our operations to a significant extent from capital-raising and we expect to require additional funding in the future, the availability of which is never guaranteed and may be uncertain. We expect that we may continue to incur operating losses for the foreseeable future. |
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Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation Our interim condensed consolidated financial statements have been prepared in accordance with applicable presentation requirements, and accordingly, do not include all information and disclosures necessary for a presentation of our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, these financial statements reflect all adjustments, consisting primarily of normal recurring accruals necessary for a fair statement of results for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year. Our interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in our Annual Report on Form 10 -K for the year ended December 31, 2016. The year-end consolidated balance sheet data in these financial statements were derived from audited financial statements but do not include all disclosures required by GAAP. Certain prior period amounts in our condensed consolidated financial statements have been reclassified to conform to the current period presentation. Accounts payable, which was historically combined with accrued expenses on our consolidated balance sheet, has been presented as a separate line item for all periods presented in these unaudited condensed consolidated financial statements. |
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Consolidation, Policy [Policy Text Block] | Principles of Consolidation The condensed consolidated financial statements include the accounts of Progenics as well as its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. In December 2015, we commenced a judicial process in Sweden for acquiring the remaining shares of EXINI. On December 8, 2016, a Swedish arbitral tribunal awarded us advanced title to the remaining shares of EXINI and, as of that date, EXINI became a wholly-owned subsidiary with 100% of the voting shares owned by us. We paid $368 thousand to the minority interest shareholders in connection with the acquisition of the remaining shares of EXINI. |
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. |
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Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Translation Each of our international subsidiaries generally considers their respective local currency to be their functional currency. Assets and liabilities of these international subsidiaries are translated into U.S. dollars at quarter-end exchange rates and revenues and expenses are translated at average exchange rates during the quarter and year-to-date period. Foreign currency translation adjustments for the reported periods are included in accumulated other comprehensive loss (“AOCL”) in our condensed consolidated statements of comprehensive loss, and the cumulative effect is included in the stockholders' equity section of our condensed consolidated balance sheets. Realized gains and losses denominated in foreign currencies are recorded in operating expenses in our condensed consolidated statements of operations and were not material to our consolidated results of operations for the three months ended March 31, 2017 or 2016. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $1.0 million and $0.8 million as of March 31, 2017 and December 31, 2016, respectively. The following table summarizes our property and equipment (in thousands):
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Note 1 - Summary of Significant Accounting Policies (Tables) |
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Property, Plant and Equipment [Table Text Block] |
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Note 3 - Net Loss Per Share (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] |
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Note 4 - Fair Value Measurements (Tables) |
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Fair Value Inputs, Assets and Liabilities, Quantitative Information [Table Text Block] |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] |
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Note 5 - Accounts Receivable (Tables) |
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Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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Note 6 - Goodwill, In-process Research and Development, and Other Intangible Assets (Tables) |
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Schedule of Intangible Assets and Goodwill [Table Text Block] |
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Note 7 - Accrued Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] |
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Note 10 - Stockholders' Equity (Tables) |
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
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Note 11 - Stock-based Compensation (Tables) |
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Share-based Compensation, Stock Options, Activity [Table Text Block] |
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Dec. 08, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Cash and Cash Equivalents, at Carrying Value | $ 126,306 | $ 65,675 | $ 138,909 | $ 74,103 | |
Cash and Cash Equivalents, Period Increase (Decrease) | $ (12,603) | $ (8,428) | |||
Number of Years Cash is Sufficient to Fund Operations | 1 year | ||||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 1,038 | $ 838 | |||
EXINI Diagnostics AB [Member] | |||||
Payments to Noncontrolling Interests | $ 368 |
Note 1 - Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, Plant and Equipment (gross) | $ 5,740 | $ 5,598 |
Less - accumulated depreciation | (1,038) | (838) |
Property and equipment, net | 4,702 | 4,760 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment (gross) | 2,224 | 1,493 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment (gross) | 1,716 | 1,640 |
Computer Equipment [Member] | ||
Property, Plant and Equipment (gross) | 701 | 695 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment (gross) | 878 | 877 |
Construction in Progress [Member] | ||
Property, Plant and Equipment (gross) | $ 221 | $ 893 |
Note 3 - Net Loss Per Share - Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Basic and diluted, Net loss attributable to Progenics | $ (16,360) | $ (12,655) |
Weighted-average shares - basic and diluted (in shares) | 70,196 | 69,946 |
Net loss per share attributable to Progenics - basic and diluted (in dollars per share) | $ (0.23) | $ (0.18) |
Note 3 - Net Loss Per Share - Net Loss Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Total securities excluded (in shares) | 2,856 | 9,678 |
Stock Options [Member] | ||
Total securities excluded (in shares) | 1,150 | 5,411 |
Contingent Consideration Liability [Member] | ||
Total securities excluded (in shares) | 1,706 | 4,267 |
Note 4 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Business Combination, Contingent Consideration, Liability, Noncurrent | $ 16,100 | $ 14,200 | |
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | $ 1,900 | $ 200 |
Note 4 - Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Money market funds | $ 122,351 | $ 137,340 |
Total assets | 122,351 | 137,340 |
Business Combination, Contingent Consideration, Liability, Noncurrent | 16,100 | 14,200 |
Total liabilities | 16,100 | 14,200 |
Fair Value, Inputs, Level 1 [Member] | ||
Money market funds | 122,351 | 137,340 |
Total assets | 122,351 | 137,340 |
Business Combination, Contingent Consideration, Liability, Noncurrent | ||
Total liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Money market funds | ||
Total assets | ||
Business Combination, Contingent Consideration, Liability, Noncurrent | ||
Total liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Money market funds | ||
Total assets | ||
Business Combination, Contingent Consideration, Liability, Noncurrent | 16,100 | 14,200 |
Total liabilities | $ 16,100 | $ 14,200 |
Note 4 - Fair Value Measurements - Quantitative Information for Fair Value Measurement of Level 3 (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Fair value | $ 16.1 | $ 14.2 |
AZEDRA commercialization [Member] | ||
Fair value | $ 5.1 | $ 3.8 |
Valuation technique | Probability adjusted discounted cash flow model | Probability adjusted discounted cash flow model |
Probability of success | 72.00% | 54.00% |
Discount rate | 10.00% | 10.00% |
MIP - 1404 Commercialization [Member] | ||
Fair value | $ 4.8 | $ 4.7 |
Valuation technique | Probability adjusted discounted cash flow model | Probability adjusted discounted cash flow model |
Probability of success | 59.00% | 59.00% |
Discount rate | 10.00% | 10.00% |
MIP-1095 Commercialization [Member] | ||
Fair value | $ 0.4 | $ 0.4 |
Valuation technique | Probability adjusted discounted cash flow model | Probability adjusted discounted cash flow model |
Probability of success | 16.00% | 16.00% |
Discount rate | 10.00% | 10.00% |
Net sales targets [Member] | ||
Fair value | $ 5.8 | $ 5.3 |
Valuation technique | Monte-Carlo simulation | Monte-Carlo simulation |
Discount rate | 10.00% | 10.00% |
Net sales targets [Member] | Minimum [Member] | ||
Probability of success | 16.00% | 16.00% |
Net sales targets [Member] | Maximum [Member] | ||
Probability of success | 72.00% | 59.00% |
Note 4 - Fair Value Measurements - Summary of Activities in Financial Instruments With Level 3 Inputs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Balance | $ 14.2 | $ 18.8 |
Fair value change included in net loss | 1.9 | 0.2 |
Balance | 16.1 | 19.0 |
Changes in unrealized gains or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period | $ 1.9 | $ 0.2 |
Note 5 - Accounts Receivable - Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounts receivable, net | $ 2,097 | $ 4,864 |
Royalties [Member] | ||
Accounts receivable, Current | 1,847 | 2,407 |
Collaborators [Member] | ||
Accounts receivable, Current | 202 | 2,000 |
Other [Member] | ||
Accounts receivable, Current | $ 48 | $ 457 |
Note 6 - Goodwill, In-process Research and Development, and Other Intangible Assets (Details Textual) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
|
Mar. 31, 2016
USD ($)
|
|
Number of Reporting Units | 1 | 1 |
Goodwill, Impairment Loss | $ 0 | $ 0 |
Note 6 - Goodwill, In-Process Research and Development, and Other Intangible Assets - Goodwill, In-Process Research and Development, and Other Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Balance, Goodwill | $ 13,074 | $ 13,074 |
Balance, IPR&D | 28,700 | 28,700 |
Balance, Finite-lived Intangible Assets | 1,881 | 2,093 |
Amortization expense, Finite-lived Intangible Assets | (53) | (53) |
Balance, Goodwill | 13,074 | 13,074 |
Balance, IPR&D | 28,700 | 28,700 |
Balance, Finite-lived Intangible Assets | $ 1,828 | $ 2,040 |
Note 7 - Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Loss contingency for litigation | $ 4,000 | $ 4,000 |
Accrued legal and professional fees | 1,003 | 1,123 |
Accrued consulting and clinical trial costs | 5,487 | 6,933 |
Accrued payroll and related costs | 1,015 | 1,957 |
Other | 1,200 | 1,751 |
Accrued expenses | $ 12,705 | $ 15,764 |
Note 8 - Commitments and Contingencies (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 04, 2017 |
Mar. 31, 2017 |
|
Loss Contingency, Damages Awarded, Value | $ 1.7 | |
Settled Litigation [Member] | Anti-Retaliation Termination [Member] | ||
Litigation Settlement, Amount Awarded to Other Party | $ 4.0 |
Note 9 - Non-recourse Long-term Debt, Net (Details Textual) - Royalty-backed Loans [Member] - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Nov. 04, 2016 |
Mar. 31, 2017 |
|
Proceeds from Issuance of Long-term Debt | $ 50.0 | ||
Debt Agreement, Remaining Bowrrowing Capacity | $ 50.0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 9.50% | ||
Interest Expense, Debt | $ 1.3 | ||
Interest Paid | 1.2 | ||
Long-term Debt | 49.5 | ||
Paid-in-Kind Interest Expense Included in Debt Balance | 0.8 | ||
Debt Instrument, Unamortized Discount | $ 1.3 | ||
Lender Fee [Member] | |||
Debt Issuance Costs, Gross | $ 0.5 | ||
Expenses Paid on Behalf of HCRP and expenses Incurred Directly by Company [Member] | |||
Debt Issuance Costs, Gross | $ 0.9 | ||
Scenario, Forecast [Member] | |||
Percentage of RELISTOR Royalty Payments Used to Repay Principal of Loan | 50.00% |
Note 10 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Common Stock, Shares Authorized | 160,000 | 160,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.0013 | $ 0.0013 | |
Preferred Stock, Shares Authorized | 20,000 | 20,000 | |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |
Replacement Shelf Registration | $ 250,000 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ 0 | $ 0 |
Note 10 - Stockholders' Equity - Components of Accumulated Other Comprehensive Loss (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Balance | $ (85) |
Balance | (67) |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | |
Balance | (85) |
Foreign currency translation adjustment | 18 |
Balance | (67) |
AOCI Attributable to Parent [Member] | |
Balance | (85) |
Foreign currency translation adjustment | 18 |
Balance | $ (67) |
Note 11 - Stock-based Compensation - Assumptions Used in Computing the Fair Value of Option Grants (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Risk-free interest rate | 2.22% | 1.55% |
Expected life (in years) (Year) | 6 years 266 days | 6 years 259 days |
Expected volatility | 72.00% | 75.00% |
Expected dividend yield | 0.00% | 0.00% |
Note 11 - Stock-based Compensation - Allocation of Recognized Period Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Total compensation expense recognized | $ 603 | $ 576 |
Research and Development Expense [Member] | ||
Total compensation expense recognized | 235 | 275 |
General and Administrative Expense [Member] | ||
Total compensation expense recognized | $ 368 | $ 301 |