Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CLVS | |
Entity Registrant Name | Clovis Oncology, Inc. | |
Entity Central Index Key | 1,466,301 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,711,827 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Product revenue | $ 22,757 | $ 16,806 | $ 65,037 | $ 38,471 |
Type of Revenue [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Operating expenses: | ||||
Cost of sales | $ 4,766 | $ 13,262 | ||
Research and development | 63,887 | $ 38,924 | 160,138 | $ 104,479 |
Selling, general and administrative | 42,495 | 35,011 | 126,634 | 100,384 |
Total expenses | 111,919 | 77,333 | 301,885 | 212,898 |
Operating loss | (89,162) | (60,527) | (236,848) | (174,427) |
Other income (expense): | ||||
Interest expense | (3,376) | (2,618) | (9,592) | (7,796) |
Foreign currency gain (loss) | 151 | (44) | (34) | (127) |
Legal settlement loss | (7,975) | (117,000) | ||
SEC settlement costs | (20,000) | |||
Other income | 2,536 | 1,291 | 5,419 | 2,237 |
Other expense, net | (689) | (1,371) | (32,182) | (122,686) |
Loss before income taxes | (89,851) | (61,898) | (269,030) | (297,113) |
Income tax (expense) benefit | (13) | 1,234 | 280 | 2,599 |
Net loss | (89,864) | (60,664) | (268,750) | (294,514) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, net of tax | (495) | 1,595 | (2,448) | 4,874 |
Net unrealized (loss) gain on available-for-sale securities, net of tax | (10) | 10 | 71 | 5 |
Other comprehensive (loss) income: | (505) | 1,605 | (2,377) | 4,879 |
Comprehensive loss | $ (90,369) | $ (59,059) | $ (271,127) | $ (289,635) |
Loss per basic and diluted common share: | ||||
Basic and diluted net loss per common share | $ (1.71) | $ (1.24) | $ (5.18) | $ (6.39) |
Basic and diluted weighted average common shares outstanding | 52,669 | 48,917 | 51,844 | 46,062 |
Intangible asset amortization | ||||
Operating expenses: | ||||
Cost of sales | $ 771 | $ 372 | $ 1,851 | $ 1,115 |
Product | ||||
Operating expenses: | ||||
Cost of sales | $ 4,766 | $ 3,026 | $ 13,262 | $ 6,920 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 290,853 | $ 464,198 |
Accounts receivable, net | 14,495 | 6,181 |
Inventories | 43,682 | 27,508 |
Available-for-sale securities | 313,525 | 99,533 |
Prepaid research and development expenses | 2,907 | 1,559 |
Deposit on inventory | 13,514 | 20,461 |
Other current assets | 11,780 | 7,500 |
Total current assets | 690,756 | 626,940 |
Inventories | 20,005 | |
Deposit on inventory | 31,119 | 0 |
Property and equipment, net | 11,035 | 4,007 |
Intangible assets, net | 52,709 | 19,561 |
Goodwill | 63,074 | 65,217 |
Other assets | 22,766 | 19,505 |
Total assets | 891,464 | 735,230 |
Current liabilities: | ||
Accounts payable | 30,501 | 15,147 |
Accrued research and development expenses | 21,259 | 18,465 |
Milestone liability | 0 | 22,022 |
Other accrued expenses | 24,732 | 25,883 |
Total current liabilities | 76,492 | 81,517 |
Convertible senior notes | 574,828 | 282,406 |
Deferred rent, long-term | 6,478 | 3,671 |
Total liabilities | 657,798 | 367,594 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2018 and December 31, 2017 | ||
Common stock, $0.001 par value per share, 100,000,000 shares authorized at September 30, 2018 and December 31, 2017; 52,708,767 and 50,565,119 shares issued and outstanding at September 30, 2018 and December 31, 2017 respectively | 53 | 51 |
Additional paid-in capital | 2,021,997 | 1,887,198 |
Accumulated other comprehensive loss | (44,550) | (42,173) |
Accumulated deficit | (1,743,834) | (1,477,440) |
Total stockholders' equity | 233,666 | 367,636 |
Total liabilities and stockholders' equity | $ 891,464 | $ 735,230 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 52,708,767 | 50,565,119 |
Common stock, shares outstanding | 52,708,767 | 50,565,119 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities | ||
Net loss | $ (268,750) | $ (294,514) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation expense | 37,715 | 32,201 |
Depreciation and amortization | 2,497 | 1,911 |
Amortization of premiums and discounts on available-for-sale securities | 1,079 | 6 |
Amortization of debt issuance costs | 1,536 | 956 |
Legal settlement loss | 117,000 | |
Deferred income taxes | (2,403) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,978) | 121 |
Inventory | (25,540) | (5,345) |
Prepaid and accrued research and development expenses | 1,390 | (16,284) |
Deposit on inventory | (24,173) | (31,818) |
Other operating assets | (7,507) | (4,156) |
Accounts payable | 4,765 | 5,050 |
Other accrued expenses | (1,304) | 1,949 |
Net cash used in operating activities | (283,270) | (195,326) |
Investing activities | ||
Purchases of property and equipment | (7,763) | (416) |
Deposits for purchases of property and equipment | 0 | (2,515) |
Purchases of available-for-sale securities | (320,000) | (180,000) |
Sales of available-for-sale securities | 105,000 | 213,500 |
Acquired in-process research and development - milestone payment | (55,000) | (1,100) |
Net cash used in investing activities | (277,763) | 29,469 |
Financing activities | ||
Proceeds from the sale of common stock, net of issuance costs | 93,890 | 545,838 |
Proceeds from the issuance of convertible senior notes, net of issuance costs | 290,887 | 0 |
Proceeds from the exercise of stock options and employee stock purchases | 3,197 | 14,419 |
Net cash provided by financing activities | 387,974 | 560,257 |
Effect of exchange rate changes on cash and cash equivalents | (286) | 886 |
(Decrease) increase in cash and cash equivalents | (173,345) | 395,286 |
Cash and cash equivalents at beginning of period | 464,198 | 216,186 |
Cash and cash equivalents at end of period | 290,853 | 611,472 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 9,188 | 7,188 |
Non-cash investing and financing activities: | ||
Vesting of restricted stock units | $ 10,130 | $ 9,449 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Nature of Business and Basis of Presentation | |
Nature of Business and Basis of Presentation | 1. Nature of Business and Basis of Presentation Clovis Oncology, Inc. (together with its consolidated subsidiaries, the “Company”, “Clovis”, “we”, “our”, “us”) is a biopharmaceutical company focused on acquiring, developing and commercializing innovative anti-cancer agents in the United States, Europe and additional international markets. We target our development programs for the treatment of specific subsets of cancer populations, and simultaneously develop, with partners, diagnostic tools intended to direct a compound in development to the population that is most likely to benefit from its use. We have and intend to continue to license or acquire rights to oncology compounds in all stages of clinical development. In exchange for the right to develop and commercialize these compounds, we generally expect to provide the licensor with a combination of upfront payments, milestone payments and royalties on future sales. In addition, we generally expect to assume the responsibility for future drug development and commercialization costs. We currently operate in one segment. Since inception, our operations have consisted primarily of developing in-licensed compounds, evaluating new product acquisition candidates and general corporate activities and since 2016 we have also marketed and sold products. Our marketed product Rubraca® (rucaparib) is approved in the United States by the Food and Drug Administration (“FDA”) for two indications, encompassing two settings for the treatment of recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer. The initial treatment indication received in December 2016 covers the treatment of adult patients with deleterious BRCA (human genes associated with the repair of damaged DNA) mutation (germline and/or somatic) epithelial ovarian, fallopian tube, or primary peritoneal cancer who have been treated with two or more chemotherapies, and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. In April 2018, the FDA also approved Rubraca for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy. The FDA granted regular approval for Rubraca in this second, broader and earlier-line indication on a priority review timeline based on positive data from the phase 3 ARIEL3 clinical trial. Diagnostic testing is not required for patients to be prescribed Rubraca in this maintenance treatment indication. In May 2018, the European Commission granted a conditional marketing authorization for Rubraca as monotherapy treatment of adult patients with platinum sensitive, relapsed or progressive, BRCA mutated (germline and/or somatic), high-grade epithelial ovarian, fallopian tube, or primary peritoneal cancer, who have been treated with two or more prior lines of platinum based chemotherapy, and who are unable to tolerate further platinum based chemotherapy. As this is a conditional approval, it will be necessary to complete confirmatory post marketing commitments, including ensuring that sufficient partially platinum sensitive patients are enrolled in our ARIEL4 confirmatory trial to support the indication. This may require enrollment of additional patients into the study, increasing its overall size and extending the time for enrollment. In June 2018, we submitted to the European Union’s European Medicines Agency (“EMA”) a variation to the marketing authorization for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy, for which we received EMA validation for this application in July 2018. We anticipate an opinion on this application from the Committee for Medicinal Products for Human Use (“CHMP”) of the EMA by the end of 2018, with a potential formal European Commission approval in early 2019. Beyond our initial labeled indication, we have a robust Rubraca clinical development program underway in a variety of solid tumor types, also including prostate and bladder cancers, and in July 2017, we entered into a broad clinical collaboration with Bristol-Myers Squibb Company to evaluate the combination of their immunotherapy OPDIVO® (nivolumab) with Rubraca in several tumor types. We hold worldwide rights for Rubraca. In October 2018, the FDA granted breakthrough therapy designation for Rubraca as a monotherapy treatment of adult patients with BRCA1/2-mutated metastatic castration resistant prostate cancer (mCRPC) who have received at least one prior androgen receptor (AR)-directed therapy and taxane-based chemotherapy. In addition to Rubraca, we have two other product candidates. Lucitanib is an oral, potent inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors 1 through 3 (VEGFR1-3), platelet-derived growth factor receptors alpha and beta (PDGFR α/β) and fibroblast growth factor receptors 1 through 3 (FGFR1-3). Lucitanib was originally developed by Clovis and Servier with the hypothesis of activity in FGFR driven tumors; however, data in breast and lung cancer were insufficient to move that program forward. We received notice from Servier of termination of their rights to lucitanib, resulting in the return of global rights (excluding China) for lucitanib to us during October 2018. We believe that recent data for a drug similar to lucitanib that inhibits these same pathways – when combined with a PD-1 inhibitor – provide support for development of lucitanib in combination with a PD-(L)1 inhibitor, and we intend to initiate a study of the combination. We also intend to initiate a study of lucitanib in combination with Rubraca, based on encouraging data of VEGF and PARP inhibitors in combination. Each of these studies is expected to initiate in the first quarter of 2019. We maintain certain development and commercialization rights for lucitanib. Because of termination of the Servier license agreement, we have global development and commercialization rights (except for China) for lucitanib. Rociletinib is an oral mutant-selective inhibitor of epidermal growth factor receptor (“EGFR”). While we have stopped enrollment in ongoing trials for rociletinib, we continue to provide drug to patients whose clinicians recommend continuing therapy. We have global development and commercialization rights for rociletinib. Basis of Presentation All financial information presented includes the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited financial statements of Clovis Oncology, Inc. included herein reflect all adjustments that, in the opinion of management, are necessary to fairly state our financial position, results of operations and cash flows for the periods presented herein. Interim results may not be indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”) for a broader discussion of our business and the opportunities and risks inherent in such business. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and revenue and related disclosures. On an ongoing basis, we evaluate our estimates, including estimates related to revenue deductions, intangible asset impairment, clinical trial accruals and share-based compensation expense. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. Liquidity We have incurred significant net losses since inception and have relied on our ability to fund our operations through debt and equity financings. We expect operating losses and negative cash flows to continue for the foreseeable future. As we continue to incur losses, transition to profitability is dependent upon achieving a level of revenues from Rubraca adequate to support our cost structure. We may never achieve profitability, and unless or until we do, we will continue to need to raise additional cash. In April 2018, we sold 1,837,898 shares of our common stock in a public offering at $54.41 per share. The net proceeds from the offering were $93.9 million, after deducting underwriting discounts and commissions and offering expenses. Concurrently, we completed the public offering of $300.0 million aggregate principal amount of 1.25% convertible senior notes due 2025. The net proceeds from this offering were $290.9 million, after deducting underwriting discounts and commissions and offering expenses. We intend to use the net proceeds of the offerings for general corporate purposes, including sales and marketing expenses associated with Rubraca in the United States and Europe, funding of our development programs, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital. Based on current estimates, we believe that our existing cash, cash equivalents and available-for-sale securities will allow us to fund our operating plan through at least the next 12 months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers”, and has subsequently issued several supplemental and/or clarifying ASUs (collectively, “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 is intended to provide a more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. We adopted the new standard using the modified retrospective method on January 1, 2018 for contracts that are not completed as of the adoption date. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We examined our revenue recognition policy specific to revenue streams from contracts governing product sales from Rubraca and have come to conclusions on the impact of the new standard using the 5-step process prescribed by ASC 606. We reviewed all of our contracts, including our collaboration agreements with Servier and Bristol-Myers Squibb, and determined the potential impact to our accounting policies, financial controls and operations. Our conclusions include recognizing revenue on product sales once the product is sold to the specialty distributor and specialty pharmacy providers. As noted above, we used the modified retrospective method to adopt the new standard. This means that we did not restate previously issued financial statements, but we recorded a one-time adjustment to retained earnings of $2.4 million. This adjustment represents the sales of our product to our customers prior to January 1, 2018, that had not been sold to patients or healthcare providers, offset by related gross-to-net adjustments and other direct costs, including royalties and sales incentive compensation. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows (in thousands): Balance at Adjustments due to Balance at December 31, 2017 Adoption of ASC 606 January 1, 2018 ASSETS Accounts receivable, net $ 6,181 $ 3,336 $ 9,517 Inventories $ 27,508 (62) $ 27,446 Total assets $ 735,230 $ 3,274 $ 738,504 LIABILITIES AND STOCKHOLDERS' EQUITY Other accrued expenses $ 25,883 $ 918 $ 26,801 Accumulated deficit $ (1,477,440) 2,356 $ (1,475,084) Total liabilities and stockholders' equity $ 735,230 $ 3,274 $ 738,504 Previously, we recognized revenue on product sales once the product was sold to the patient or healthcare provider by the specialty distributor or specialty pharmacy provider, i.e. when product is sold through the channel. Effective January 1, 2018, we began recognizing revenue when our customers, the specialty distributors and specialty pharmacy providers, take control of our product or when product is sold into the channel. This will have the impact of us recognizing revenue approximately two to four weeks earlier than before adopting the new standard and will also increase the significance of estimating variable consideration. The following financial statement line items for the three and nine months ended September 30, 2018 were affected as a result of the adoption. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except for per share amounts) Three months ended September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) Product revenue $ 22,757 $ 25,213 $ (2,456) Cost of sales - product $ 4,766 $ 5,158 $ 392 Selling, general and administrative $ 42,495 $ 42,689 $ 194 Net loss $ (89,864) $ (87,994) $ (1,870) Loss per basic and diluted common share: Basic and diluted net loss per common share $ (1.71) $ (1.67) $ (0.04) Nine months ended September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) Product revenue $ 65,037 $ 63,541 $ 1,496 Cost of sales - product $ 13,262 $ 12,697 $ (565) Selling, general and administrative $ 126,634 $ 126,602 $ (32) Net loss $ (268,750) $ (269,648) $ 898 Loss per basic and diluted common share: Basic and diluted net loss per common share $ (5.18) $ (5.20) $ 0.02 CONSOLIDATED BALANCE SHEET (In thousands) September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) ASSETS Accounts receivable, net $ 14,495 $ 12,907 $ 1,588 Inventories $ 63,687 $ 63,992 $ (305) LIABILITIES AND STOCKHOLDERS' EQUITY Other accrued expenses $ 24,732 $ 24,347 $ 385 Accumulated deficit $ (1,743,834) $ (1,744,732) $ 898 ASC 606 did not have an aggregate impact on our net cash provided by operating activities but resulted in offsetting changes in certain assets and liabilities presented within net cash used in operating activities in our consolidated statement of cash flows, as reflected in the above tables. Recently Issued Accounting Standards From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an ASU. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered after, the date of initial application, with an option to use certain transition relief. We will adopt ASU 2016-02 as of January 1, 2019 using the effective date method which leaves the comparative period reporting unchanged. Comparative reporting periods are presented in accordance with Topic 840, while periods subsequent to the effective date are presented in accordance with Topic 842. We expect to recognize substantially all our leases on the balance sheet by recording a right-of-use asset and corresponding lease liability. We are currently evaluating the impact the standard may have on our consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allow a reclassification from accumulated other comprehensive income (loss) (“AOCI”) to retained earnings for stranded tax effects resulting from the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts at the date of enactment of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We will adopt ASU 2018-02 as of January 1, 2019. We are currently evaluating the impact the standard may have on our consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, simplifies the accounting for share-based payment granted to nonemployees for goods and services. Under the standard, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We will adopt ASU 2018-07 as of January 1, 2019. We do not expect significant impact on our consolidated financial statements and related disclosures since our accounting for share-based payments to employees and nonemployees is similar. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We will adopt ASU 2018-02 as of January 1, 2020. We will evaluate the impact the standard may have on our consolidated financial statements and related disclosures as the adoption date approaches. Revenue Recognition We are currently approved to sell Rubraca in the United States market. We distribute our product principally through a limited number of specialty distributor and specialty pharmacy providers, collectively, our customers. Our customers subsequently sell our products to patients and health care providers. Separately, we have arrangements with certain payors and other third parties that provide for government-mandated and privately-negotiated rebates, chargebacks and discounts. Product Revenue Revenue from product sales are recognized when the performance obligation is satisfied, which is when customers obtain control of our product at a point in time, typically upon delivery. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less. Reserves for Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from rebates, chargebacks, discounts, co-pay assistance, estimated product returns and other allowances that are offered within contracts between us and our customers, health care providers, payors and other indirect customers relating to the sales of our product. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customers) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we adjust these estimates, which would affect product revenue and earnings in the period such variances become known. Rebates . Rebates include mandated discounts under the Medicaid Drug Rebate Program and the Medicare coverage gap program. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public-sector benefit providers. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet. We estimate our Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. The accrual for rebates is based on statutory discount rates and known sales to specialty pharmacy patients or expected utilization for specialty distributor sales to healthcare providers. As we gain more historical experience, the accrual will be based solely on the expected utilization from historical data we have accumulated since the Rubraca product launch. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. Chargebacks . Chargebacks are discounts that occur when contracted customers, which currently consist primarily of group purchasing organizations, Public Health Service organizations and federal government entities purchasing via the Federal Supply Schedule, purchase directly from our specialty distributors at a discounted price. The specialty distributor, in turn, charges back the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the healthcare provider. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. The accrual for specialty distributor chargebacks is estimated based on known chargeback rates and known sales to specialty distributors adjusted for the estimated utilization by healthcare providers. Discounts and Fees . Our payment terms are generally 30 days. Specialty distributors and specialty pharmacies are offered various forms of consideration, including service fees and prompt pay discounts for payment within a specified period. We expect these customers will earn prompt pay discounts and therefore, we deduct the full amount of these discounts and service fees from product sales when revenue is recognized. Co-pay assistance . Patients who have commercial insurance and meet certain eligibility requirements may receive co-pay assistance. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation provided by third-party administrators at month end. Returns . Consistent with industry practice, we generally offer customers a right of return limited only to product that will expire in six months or product that is six months beyond the expiration date. To date, we have had minimal product returns and we currently do not have an accrual for product returns. We will continue to assess our estimate for product returns as we gain additional historical experience. Cost of Sales – Product Product cost of sales consists primarily of materials, third-party manufacturing costs as well as freight and royalties owed to our licensing partners for Rubraca sales. Cost of Sales – Intangible Asset Amortization Cost of sales for intangible asset amortization consists of the amortization of capitalized milestone payments made to our licensing partners upon FDA approval of Rubraca. Milestone payments are amortized on a straight-line basis over the estimated remaining patent life of Rubraca. Inventory Inventories are stated at the lower of cost or estimated net realizable value, on a first-in, first-out (“FIFO”) basis. We began capitalizing incurred inventory related costs upon the regulatory approval of Rubraca. Prior to the regulatory approval of Rubraca, we incurred costs for the manufacture of the drug that could potentially be available to support the commercial launch of Rubraca and all such costs were recognized as research and development expense. We periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and/or inventory in excess of expected sales requirements as cost of product revenues. Expired inventory would be disposed of and the related costs would be written off as cost of product revenues. The active pharmaceutical ingredient (“API”) in Rubraca is currently produced by a single supplier. As the API has undergone significant manufacturing specific to its intended purpose at the point it is purchased by us, we classify the API as work-in-process inventory. Inventory used in clinical trials is expensed as research and development expense when it has been identified for such use. Our other significant accounting policies are described in Note 2, Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in our 2017 Form 10-K. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Financial Instruments and Fair Value Measurements | |
Financial Instruments and Fair Value Measurements | 3. Financial Instruments and Fair Value Measurements Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (at exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three levels of inputs that may be used to measure fair value include: Level 1: Quoted prices in active markets for identical assets or liabilities. Our Level 1 assets consist of money market investments. We do not have Level 1 liabilities. Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Our Level 2 assets consist of U.S. treasury securities. We do not have Level 2 liabilities. Level 3: Unobservable inputs that are supported by little or no market activity. We do not have Level 3 assets or liabilities that are measured at fair value on a recurring basis. The following table identifies our assets and liabilities that were measured at fair value on a recurring basis (in thousands): Balance Level 1 Level 2 Level 3 September 30, 2018 Assets: Money market $ 255,143 $ 255,143 $ — $ — U.S. treasury securities 313,525 — 313,525 — Total assets at fair value $ 568,668 $ 255,143 $ 313,525 $ — December 31, 2017 Assets: Money market $ 433,136 $ 433,136 $ — $ — U.S. treasury securities 99,533 — 99,533 — Total assets at fair value $ 532,669 $ 433,136 $ 99,533 $ — There were no transfers between the Level 1 and Level 2 categories or into or out of the Level 3 category during the three and nine months ended September 30, 2018. Financial instruments not recorded at fair value include our convertible senior notes. At September 30 2018, the carrying amount of the 2021 Notes was $283.4 million, which represents the aggregate principal amount net of remaining debt issuance costs, and the fair value was $268.2 million. At September 30 2018, the carrying amount of the 2025 Notes was $291.4 million, which represents the aggregate principal amount net of remaining debt issuance costs, and the fair value was $232.8 million. The fair value was determined using Level 2 inputs based on the indicative pricing published by certain investment banks or trading levels of these notes, which are not listed on any securities exchange or quoted on an inter-dealer automated quotation system. See Note 9, Convertible Senior Notes for discussion of the convertible senior notes. |
Available-for-Sale Securities
Available-for-Sale Securities | 9 Months Ended |
Sep. 30, 2018 | |
Debt Securities, Available-for-sale [Abstract] | |
Available-for-Sale Securities | 4. Available-for-Sale Securities As of September 30, 2018, available-for-sale securities consisted of the following (in thousands): Gross Gross Aggregate Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. treasury securities $ 313,570 $ — $ (45) $ 313,525 As of December 31, 2017, available-for-sale securities consisted of the following (in thousands): Gross Gross Aggregate Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. treasury securities $ 99,650 $ — $ (117) $ 99,533 As of September 30, 2018, our available-for-sale securities have been in a continuous loss position for less than 12 months. We have concluded that decline in the market value of the available-for-sale securities is temporary. A decline in the market value of a security below its cost that is deemed to be other than temporary is charged to earnings and results in the establishment of a new cost basis for the security. Factors evaluated to determine if an investment is other-than-temporarily impaired include significant deterioration in earnings performance, credit rating, asset quality or business prospects of the issuer; adverse changes in the general market conditions in which the issuer operates; and our intent and ability to hold the security until an anticipated recovery in value occurs. As of September 30, 2018, the amortized cost and fair value of available-for-sale securities by contractual maturity were (in thousands): Amortized Fair Cost Value Due in one year or less $ 313,570 $ 313,525 Due in one year to two years — — Total $ 313,570 $ 313,525 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventories | |
Inventories | 5. Inventories The following table presents current and long-term inventories as of September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 Work-in-process $ 51,707 $ 24,721 Finished goods 11,980 2,787 Total inventories $ 63,687 $ 27,508 Some of the costs related to our finished goods on-hand as of September 30, 2018 were expensed as incurred prior to the commercialization of Rubraca on December 19, 2016. At September 30, 2018, deposit on inventory on the Consolidated Balance Sheets is a cash deposit of $44.6 million made to a manufacturer for the purchase of work-in-process inventory which we expect to be converted to finished goods during the next twelve months and beyond. |
Other Current Assets
Other Current Assets | 9 Months Ended |
Sep. 30, 2018 | |
Other Current Assets | |
Other Current Assets | 6. Other Current Assets Other current assets were comprised of the following (in thousands): September 30, December 31, 2018 2017 Prepaid insurance $ 752 $ 1,926 Prepaid expenses - other 7,031 3,355 Receivable - other 3,741 2,023 Other 256 196 Total $ 11,780 $ 7,500 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 7. Intangible Assets and Goodwill Intangible assets related to capitalized milestones under license agreements consisted of the following (in thousands): September 30, December 31, 2018 2017 Intangible asset - milestones $ 56,100 $ 21,100 Accumulated amortization (3,391) (1,539) Total intangible asset, net $ 52,709 $ 19,561 The increase in our intangible asset – milestones since December 31, 2017 is due to a $15.0 million milestone payment to Pfizer related to the April 6, 2018 FDA approval of our sNDA for Rubraca as maintenance treatment and a $20.0 million milestone payment to Pfizer related to the European Commission approval of Rubraca in May 2018. See Note 12, License Agreements for further discussion of these approvals. The estimated useful lives of these intangible assets are based on the estimated remaining patent life of Rubraca and extend through 2035. We recorded amortization expense of $0.8 million and $1.9 million related to capitalized milestone payments during the three and nine months ended September 30, 2018, respectively. We recorded amortization expense of $0.4 million and $1.2 million related to capitalized milestone payments during the three and nine months ended September 30, 2017, respectively. Amortization expense is included in cost of sales – intangible asset amortization on the Consolidated Statements of Operations and Comprehensive Loss. Estimated future amortization expense associated with intangibles is expected to be as follows (in thousands): 2018 $ 779 2019 3,116 2020 3,116 2021 3,116 2022 3,116 Thereafter 39,466 $ 52,709 The change in goodwill established as part of the purchase accounting of EOS in November 2013 consisted of the following (in thousands): Balance at December 31, 2017 $ 65,217 Change in foreign currency gains and losses (2,143) Balance at September 30, 2018 $ 63,074 |
Other Accrued Expenses
Other Accrued Expenses | 9 Months Ended |
Sep. 30, 2018 | |
Other Accrued Expenses | |
Other Accrued Expenses | 8. Other Accrued Expenses Other accrued expenses were comprised of the following (in thousands): September 30, December 31, 2018 2017 Accrued personnel costs $ 14,217 $ 13,889 Accrued interest payable — 2,096 Income tax payable 186 — Accrued corporate legal fees and professional services 731 415 Accrued royalties 4,187 2,984 Accrued variable considerations 2,407 1,008 Payable to third party logistics provider 14 2,661 Accrued expenses - other 2,990 2,830 Total $ 24,732 $ 25,883 |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | |
Convertible Senior Notes | 9. Convertible Senior Notes 2021 Notes On September 9, 2014, we completed a private placement of $287.5 million aggregate principal amount of 2.5% convertible senior notes due 2021 (the “2021 Notes”) resulting in net proceeds of $278.3 million after deducting offering expenses. In accordance with the accounting guidance, the conversion feature did not meet the criteria for bifurcation, and the entire principal amount was recorded as a long-term liability on the Consolidated Balance Sheets. The 2021 Notes are governed by the terms of the indenture between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2021 Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on March 15 and September 15 of each year. The 2021 Notes will mature on September 15, 2021, unless earlier converted, redeemed or repurchased. Holders may convert all or any portion of the 2021 Notes at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, the holders will receive shares of our common stock at an initial conversion rate of 16.1616 shares per $1,000 in principal amount of 2021 Notes, equivalent to a conversion price of approximately $61.88 per share. The conversion rate is subject to adjustment upon the occurrence of certain events described in the indenture. In addition, following certain corporate events that occur prior to the maturity date or upon our issuance of a notice of redemption, we will increase the conversion rate for holders who elect to convert the 2021 Notes in connection with such a corporate event or during the related redemption period in certain circumstances. On or after September 15, 2018, we may redeem the 2021 Notes, at our option, in whole or in part, if the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending not more than two trading days preceding the date on which we provide written notice of redemption at a redemption price equal to 100% of the principal amount of the 2021 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2021 Notes. If we undergo a fundamental change, as defined in the indenture, prior to the maturity date of the 2021 Notes, holders may require us to repurchase for cash all or any portion of the 2021 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2021 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2021 Notes rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2021 Notes; equal in right of payment to all of our liabilities that are not so subordinated; effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. In connection with the issuance of the 2021 Notes, we incurred $9.2 million of debt issuance costs. The debt issuance costs are presented as a deduction from the convertible senior notes on the Consolidated Balance Sheets and are amortized as interest expense over the expected life of the 2021 Notes using the effective interest method. We determined the expected life of the debt was equal to the seven-year term of the 2021 Notes. 2025 Notes On April 19, 2018, we completed an underwritten public offering of $300.0 million aggregate principal amount of 1.25% convertible senior notes due 2025 (the “2025 Notes”) resulting in net proceeds of $290.9 million, after deducting underwriting discounts and commissions and offering expenses. In accordance with the accounting guidance, the conversion feature did not meet the criteria for bifurcation, and the entire principal amount was recorded as a long-term liability on the Consolidated Balance Sheets. The 2025 Notes are governed by the terms of the indenture between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the terms of that certain first supplemental indenture thereto. The 2025 Notes are senior unsecured obligations and bear interest at a rate of 1.25% per year, payable semi-annually in arrears on May 1 and November 1 of each year. The 2025 Notes will mature on May 1, 2025, unless earlier converted, redeemed or repurchased. Holders may convert all or any portion of the 2025 Notes at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, the holders will receive shares of our common stock at an initial conversion rate of 13.1278 shares per $1,000 in principal amount of 2025 Notes, equivalent to a conversion price of approximately $76.17 per share. The conversion rate is subject to adjustment upon the occurrence of certain events described in the indenture. In addition, following certain corporate events that occur prior to the maturity date or upon our issuance of a notice of redemption, we will increase the conversion rate for holders who elect to convert the 2025 Notes in connection with such a corporate event or during the related redemption period in certain circumstances. On or after May 2, 2022, we may redeem the 2025 Notes, at our option, in whole or in part, if the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending not more than two trading days preceding the date on which we provide written notice of redemption at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes. If we undergo a fundamental change, as defined in the indenture, prior to the maturity date of the 2025 Notes, holders may require us to repurchase for cash all or any portion of the 2025 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2025 Notes rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to all of our liabilities that are not so subordinated, including the 2021 Notes; effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. In connection with the issuance of the 2025 Notes, we incurred $9.1 million of debt issuance costs. The debt issuance costs are presented as a deduction from the convertible senior notes on the Consolidated Balance Sheets and are amortized as interest expense over the expected life of the 2025 Notes using the effective interest method. We determined the expected life of the debt was equal to the seven-year term of the 2025 Notes. As of September 30, 2018 and December 31, 2017, the balance of unamortized debt issuance costs was $12.7 million and $5.1 million, respectively . The following table sets forth total interest expense recognized during the three and nine months ended September 30, 2018 and 2017 (in thousands): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Contractual interest expense $ 2,735 $ 1,797 $ 7,078 $ 5,391 Accretion of interest on milestone liability — 500 978 1,449 Amortization of debt issuance costs 641 321 1,536 956 Total interest expense $ 3,376 $ 2,618 $ 9,592 $ 7,796 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders’ Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Common Stock In April 2018, we sold 1,837,898 shares of our common stock in a public offering at $54.41 per share. The net proceeds from the offering were $93.9 million, after deducting underwriting discounts and commissions and offering expenses. The holders of common stock are entitled to one vote per share on all matters to be voted upon by our stockholders. Subject to the preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by our Board of Directors. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consists of changes in foreign currency translation adjustments, which includes changes in a subsidiary’s functional currency, and unrealized gains and losses on available-for-sale securities. The changes in accumulated balances related to each component of other comprehensive income (loss) are summarized for the three months ended September 30, 2018 and 2017, as follows (in thousands): Foreign Currency Unrealized Total Accumulated Translation Adjustments (Losses) Gains Other Comprehensive Loss 2018 2017 2018 2017 2018 2017 Balance at July 1, $ (43,870) $ (44,155) $ (175) $ (151) $ (44,045) $ (44,306) Other comprehensive income (loss) (495) 2,510 (10) 15 (505) 2,525 Total before tax (44,365) (41,645) (185) (136) (44,550) (41,781) Tax effect — (915) — (5) — (920) Balance at September 30, $ (44,365) $ (42,560) $ (185) $ (141) $ (44,550) $ (42,701) The changes in accumulated balances related to each component of other comprehensive income (loss) are summarized for the nine months ended September 30, 2018 and 2017, as follows (in thousands): Foreign Currency Unrealized Total Accumulated Translation Adjustments (Losses) Gains Other Comprehensive Loss 2018 2017 2018 2017 2018 2017 Balance at January 1, $ (41,917) $ (47,434) $ (256) $ (146) $ (42,173) $ (47,580) Other comprehensive income (loss) (2,448) 7,695 71 8 (2,377) 7,703 Total before tax (44,365) (39,739) (185) (138) (44,550) (39,877) Tax effect — (2,821) — (3) — (2,824) Balance at September 30, $ (44,365) $ (42,560) $ (185) $ (141) $ (44,550) $ (42,701) The period change in each of the periods was primarily due to the currency translation of the goodwill and deferred income taxes associated with the acquisition of EOS in November 2013. There were no reclassifications out of accumulated other comprehensive loss in each of the three and nine months ended September 30, 2018 and 2017. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Share-Based Compensation | |
Share-Based Compensation | 11. Share-Based Compensation Share-based compensation expense for all equity based programs, including stock options, restricted stock units and the employee stock purchase plan, for the three and nine months ended September 30, 2018 and 2017 was recognized in the accompanying Consolidated Statements of Operations as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Research and development $ 5,038 $ 5,636 $ 15,380 $ 14,628 Selling, general and administrative 5,909 7,001 22,335 17,573 Total share-based compensation expense $ 10,947 $ 12,637 $ 37,715 $ 32,201 We did not recognize a tax benefit related to share-based compensation expense during the three and nine months ended September 30, 2018 and 2017, respectively, as we maintain net operating loss carryforwards and have established a valuation allowance against the entire net deferred tax asset as of September 30, 2018. Stock Options The following table summarizes the activity relating to our options to purchase common stock for the nine months ended September 30, 2018: Weighted Weighted Average Aggregate Average Remaining Intrinsic Number of Exercise Contractual Value Options Price Term (Years) (Thousands) Outstanding at December 31, 2017 5,789,735 $ 46.77 Granted 639,793 52.33 Exercised (70,480) 25.82 Forfeited (217,007) 60.47 Outstanding at September 30, 2018 6,142,041 $ 47.11 6.6 $ 24,884 Vested and expected to vest at September 30, 2018 5,919,341 $ 47.00 6.5 $ 24,555 Vested and exercisable at September 30, 2018 4,284,706 $ 45.70 5.8 $ 21,421 The aggregate intrinsic value in the table above represents the pretax intrinsic value, based on our closing stock price of $29.37 as of September 28, 2018, which would have been received by the option holders had all option holders with in-the-money options exercised their options as of that date. The following table summarizes information about our stock options as of and for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Weighted-average grant date fair value per share $ 28.97 $ 60.81 $ 38.52 $ 48.39 Intrinsic value of options exercised $ 325 $ 3,400 $ 1,697 $ 17,684 Cash received from stock option exercises $ 604 $ 2,149 $ 1,820 $ 13,262 As of September 30, 2018, the unrecognized share-based compensation expense related to unvested options, adjusted for expected forfeitures, was $60.4 million and the estimated weighted-average remaining vesting period was 2.46 years. Restricted Stock The following table summarizes the activity relating to our unvested restricted stock units (“RSUs”) for the nine months ended September 30, 2018: Weighted Average Number of Grant Date Units Fair Value Unvested at December 31, 2017 589,529 $ 41.67 Granted 479,255 55.05 Vested (199,602) 40.43 Forfeited (44,686) 46.65 Unvested as of September 30, 2018 824,496 $ 49.48 Expected to vest after September 30, 2018 706,795 $ 49.25 As of September 30, 2018, the unrecognized share-based compensation expense related to unvested RSUs, adjusted for expected forfeitures, was $31.2 million and the estimated weighted-average remaining vesting period was 3.0 years. |
License Agreements
License Agreements | 9 Months Ended |
Sep. 30, 2018 | |
License Agreements | |
License Agreements | 12. License Agreements Rucaparib In June 2011, we entered into a worldwide license agreement with Pfizer, Inc. to obtain exclusive global rights to develop and commercialize rucaparib, a small molecule inhibitor of poly (ADP-ribose) polymerase (“PARP”), used for the treatment of selected solid tumors. The exclusive rights are exclusive even as to Pfizer and include the right to grant sublicenses. Pursuant to the terms of the license agreement, we made a $7.0 million upfront payment to Pfizer and are required to make additional payments to Pfizer for the achievement of certain development and regulatory and sales milestones and royalties on sales as required by the license agreement. Prior to the FDA approval of rucaparib, discussed below, we made milestone payments of $1.4 million, which were recognized as acquired in-process research and development expense. On August 30, 2016, we entered into a first amendment to the worldwide license agreement with Pfizer, which amends the June 2011 existing worldwide license agreement to permit us to defer payment of the milestone payments payable upon (i) FDA approval of an NDA for 1 st Indication in US and (ii) EMA approval of an MAA for 1 st Indication in EU, to a date that is 18 months after the date of achievement of such milestones. On December 19, 2016, the FDA approved Rubraca (rucaparib) tablets as monotherapy for the treatment of patients with deleterious BRCA mutation (germline and/or somatic) associated advanced ovarian cancer who have been treated with two or more chemotherapies, and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. The FDA approval resulted in a $0.75 million milestone payment to Pfizer as required by the license agreement, which was made in the first quarter of 2017. The FDA approval also resulted in the obligation to pay a $20.0 million milestone payment, for which we exercised the option to defer payment by agreeing to pay $23.0 million within 18 months after the date of the FDA approval. We paid the $23.0 million milestone payment in June 2018. On April 6, 2018, the FDA approved our sNDA for Rubraca as maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy. This approval resulted in the obligation to pay a $15.0 million milestone payment, which we paid in April 2018. In May 2018, the European Commission granted a conditional marketing authorization for Rubraca as monotherapy treatment of adult patients with platinum sensitive, relapsed or progressive, BRCA mutated (germline and/or somatic), high-grade epithelial ovarian, fallopian tube, or primary peritoneal cancer, who have been treated with two or more prior lines of platinum based chemotherapy, and who are unable to tolerate further platinum based chemotherapy. This approval resulted in the obligation to pay a $20.0 million milestone payment, which we paid in June 2018. These milestone payments were recognized as intangible assets and will be amortized over the estimated remaining useful life of Rubraca. We are obligated under the license agreement to use commercially reasonable efforts to develop and commercialize rucaparib and we are responsible for all remaining development and commercialization costs for rucaparib. We are required to make regulatory milestone payments to Pfizer of up to an additional $31.75 million in aggregate if specified clinical study objectives and regulatory filings, acceptances and approvals are achieved. In addition, we are obligated to make sales milestone payments to Pfizer if specified annual sales targets for rucaparib are met, which relate to annual sales targets of $250.0 million and above, which, in the aggregate, could amount to total milestone payments of $170.0 million, and tiered royalty payments at a mid-teen percentage rate on our net sales, with standard provisions for royalty offsets to the extent we need to obtain any rights from third parties to commercialize rucaparib. In April 2012, we entered into a license agreement with AstraZeneca UK Limited to acquire exclusive rights associated with rucaparib under a family of patents and patent applications that claim methods of treating patients with PARP inhibitors in certain indications. The license enables the development and commercialization of rucaparib for the uses claimed by these patents. AstraZeneca receives royalties on any net sales of rucaparib. Lucitanib In connection with our acquisition of EOS in November 2013, we gained rights to develop and commercialize lucitanib, an oral, selective tyrosine kinase inhibitor. As further described below, EOS licensed the worldwide rights, excluding China, to develop and commercialize lucitanib from Advenchen Laboratories LLC (“Advenchen”). Subsequently, rights to develop and commercialize lucitanib in markets outside the U.S. and Japan were sublicensed by EOS to Servier in exchange for upfront milestone fees, royalties on sales of lucitanib in the sublicensed territories and research and development funding commitments. In October 2008, EOS entered into an exclusive license agreement with Advenchen to develop and commercialize lucitanib on a global basis, excluding China. We are obligated to pay Advenchen tiered royalties at percentage rates in the mid-single digits on net sales of lucitanib, based on the volume of annual net sales achieved. In addition, after giving effect to the first and second amendments to the license agreement, we are required to pay to Advenchen 25% of any consideration, excluding royalties, received pursuant to any sublicense agreements for lucitanib, including the agreement with Servier. We are obligated under the agreement to use commercially reasonable efforts to develop and commercialize at least one product candidate containing lucitanib, and we are also responsible for all remaining development and commercialization costs for lucitanib. The license agreement with Advenchen will remain in effect until the expiration of all our royalty obligations to Advenchen, determined on a product-by-product and country-by-country basis, unless we elect to terminate the agreement earlier. If we fail to meet our obligations under the agreement and are unable to cure such failure within specified time periods, Advenchen can terminate the agreement, resulting in a loss of our rights to lucitanib. During 2017, we completed the committed on-going development activities related to lucitanib and received full reimbursement of our development costs from Servier. Reimbursements are recorded as a reduction to research and development expense on the Consolidated Statements of Operations. Lucitanib was originally developed by Clovis and Servier with the hypothesis of activity in FGFR driven tumors; however, data in breast and lung cancer were insufficient to move the program forward. We received notice from Servier of termination of their rights to lucitanib, resulting in the return of global rights (excluding China) for lucitanib to us during October 2018. We are party to a product license agreement for our other drug candidate rociletinib (see our 2017 Form 10-K for additional details). |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Net Loss Per Common Share | |
Net Loss Per Common Share | 13. Net Loss Per Common Share Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding using the treasury-stock method for the stock options and RSUs and the if-converted method for the 2021 Notes and 2025 Notes. As a result of our net losses for the periods presented, all potentially dilutive common share equivalents were considered anti-dilutive and were excluded from the computation of diluted net loss per share. The shares outstanding at the end of the respective periods presented in the table below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in thousands): Three and Nine months ended September 30, 2018 2017 Common shares under option 3,381 5,696 Convertible senior notes 8,584 4,646 Total potential dilutive shares 11,965 10,342 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies Royalty and License Fee Commitments We have entered into certain license agreements, as identified in Note 12, License Agreements , with third parties that include the payment of development and regulatory milestones, as well as royalty payments, upon the achievement of pre-established development, regulatory and commercial targets. Our payment obligation related to these license agreements is contingent upon the successful development, regulatory approval and commercialization of the licensed products. Due to the nature of these arrangements, the future potential payments are inherently uncertain, and accordingly, we only recognize payment obligations which are probable and estimable as of the balance sheet date. Milestone liabilities of $0.0 million and $22.0 million are recorded on our Consolidated Balance Sheets at September 30, 2018 and December 31, 2017, respectively, and relate to milestone payments for the licensing of our rucaparib product, which was approved by the FDA on December 19, 2016. Manufacture and Services Agreement Commitments On October 3, 2016, we entered into a Manufacturing and Services Agreement (the “Agreement”) with a non-exclusive third-party supplier for the production of the active ingredient for Rubraca. Under the terms of the Agreement, we will provide the third-party supplier a rolling forecast for the supply of the active ingredient in Rubraca that will be updated by us on a quarterly basis. We are obligated to order material sufficient to satisfy an initial quantity specified in any forecast. In addition, the third-party supplier will construct, in its existing facility, a production train that will be exclusively dedicated to the manufacture of the Rubraca active ingredient. We are obligated to make scheduled capital program fee payments toward capital equipment and other costs associated with the construction of the dedicated production train. Further, once the facility is operational, we are obligated to pay a fixed facility fee each quarter for the duration of the Agreement, which expires on December 31, 2025, unless extended by mutual consent of the parties. As of September 30, 2018, $165.1 million of purchase commitments exist under the Agreement. Legal Proceedings We and certain of our officers were named as defendants in several lawsuits, as described below. We cannot reasonably predict the outcome of these legal proceedings, nor can we estimate the amount of loss or range of loss, if any, that may result. An adverse outcome in these proceedings could have a material adverse effect on our results of operations, cash flows or financial condition. Rociletinib-Related Litigation Following Clovis’ regulatory announcement in November 2015 of adverse developments in its ongoing clinical trials for rociletinib, Clovis and certain of its current and former executives were named in various securities lawsuits, the largest of which was a putative class action lawsuit in the District of Colorado (the “Medina Action”) which was settled on October 26, 2017 (the “Medina Settlement”). The open actions currently pending against Clovis are discussed below. On November 10, 2016, Antipodean Domestic Partners (“Antipodean”) filed a complaint (the “Antipodean Complaint”) against Clovis and certain of its officers, directors and underwriters in New York Supreme Court, County of New York. The Antipodean Complaint alleges that the defendants violated certain sections of the Securities Act by making allegedly false statements to Antipodean and in the offering materials for the July 2015 Offering relating to the efficacy of rociletinib, its safety profile, and its prospects for market success. In addition to the Securities Act claims, the Antipodean Complaint also asserts Colorado state law claims and common law claims. Both the state law and common law claims are based on allegedly false and misleading statements regarding rociletinib’s progress toward FDA approval. The Antipodean Complaint seeks compensatory, recessionary, and punitive damages. On December 15, 2016, the Antipodean Plaintiffs filed an amended complaint (the “Antipodean Amended Complaint”) asserting substantially the same claims against the same defendants and purporting to correct certain details in the original Antipodean Complaint. Following a stay that Justice Masley of the New York Supreme Court, County of New York entered in favor of the Medina Action and briefing on defendants’ motions to dismiss, the parties participated in a Preliminary Conference on April 17, 2018, following which the Court entered a preliminary conference order, providing deadlines for document productions, depositions, and other discovery. The Court has scheduled a status conference for January 21, 2019, following which the Court anticipates setting an end date for discovery. On May 2, 2018, the Court issued an order denying the defendants’ motion to dismiss. Defendants filed an answer to the Antipodean Amended Complaint on June 6, 2018. The Company intends to vigorously defend against the allegations in the Antipodean Amended Complaint. However, there can be no assurance that the defense will be successful. In March 2017, two putative shareholders of the Company, Macalinao and McKenry (the “Derivative Plaintiffs”), filed shareholder derivative complaints against certain directors and officers of the Company in the Court of Chancery of the State of Delaware. On May 4, 2017, the Macalinao and McKenry actions were consolidated for all purposes in a single proceeding under the caption In re Clovis Oncology, Inc. Derivative Litigation, Case No, 2017-0222 (the “Consolidated Derivative Action”). On May 18, 2017, the Derivative Plaintiffs filed a Consolidated Verified Shareholder Derivative Complaint (the “Consolidated Derivative Complaint”). The Consolidated Derivative Complaint generally alleged that the defendants breached their fiduciary duties owed to the Company by allegedly causing or allowing misrepresentations of the Company’s business operations and prospects, failing to ensure that the TIGER-X clinical trial was being conducted in accordance with applicable rules, regulations and protocols, and engaging in insider trading. The Consolidated Derivative Complaint purported to rely on documents produced by the Company in response to prior demands for inspection of the Company’s books and records served on the Company by each of Macalinao and McKenry under 8 Del. C. § 220. The Consolidated Derivative Complaint sought, among other things, an award of money damages. On July 31, 2017, the defendants filed a motion to dismiss the Consolidated Derivative Complaint. Plaintiffs filed an opposition to the motion to dismiss on August 31, 2017, and the defendants filed a reply in further support of the motion to dismiss on September 26, 2017. Oral argument on the defendants’ motion to dismiss the Consolidated Derivative Complaint has been scheduled for February 4, 2019. The Company intends to vigorously defend against the allegations in the Consolidated Derivative Complaint, but there can be no assurance that the defense will be successful. On March 20, 2017, a purported shareholder of the Company, filed a shareholder derivative complaint (the “Guo Complaint”) against certain officers and directors of the Company in the United States District Court for the District of Colorado. The Guo Complaint generally alleged that the defendants breached their fiduciary duties owed to the Company by either recklessly or with gross negligence approving or permitting misrepresentations of the Company’s business operations and prospects. The Guo Complaint also alleged claims for waste of corporate assets and unjust enrichment. Finally, the Guo Complaint alleged that certain of the individual defendants violated Section 14(a) of the Securities Exchange Act, by allegedly negligently issuing, causing to be issued, and participating in the issuance of materially misleading statements to stockholders in the Company’s Proxy Statement on Schedule DEF 14A in connection with the 2015 Annual Meeting of Stockholders, held on June 11, 2015. The Guo Complaint sought, among other things, an award of money damages. On June 19, 2017, the parties filed a joint motion to stay the Guo action pending resolution of the motion to dismiss the Consolidated Derivative Complaint. On June 20, 2017, the court granted the motion to stay. The Company intends to vigorously defend against the allegations in the Guo Complaint, but there can be no assurance that the defense will be successful. As previously disclosed, the Company has received inquiries and requests for information from governmental agencies, including the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice, relating to the Company’s regulatory update announcement in November 2015 that the FDA requested additional clinical data on the efficacy and safety of rociletinib. Earlier this year, the Company and Mr. Mahaffy engaged in discussions with the SEC staff to resolve this matter. On September 18, 2018, the SEC announced it had reached an agreement with the Company to settle this matter on negligence-based charges. Pursuant to the settlement, without admitting or denying the SEC’s allegations, the Company paid a $20.0 million civil penalty, which the Company reserved as a loss contingency on its consolidated balance sheet as of June 30, 2018, and stipulated to a standard injunction against future violations of those provisions of the federal securities laws. Also, on September 18, 2018, the SEC announced that Mr. Mahaffy also reached a settlement with the SEC on similar negligence-based allegations, to which he neither admits nor denies, and paid a civil penalty and will be similarly enjoined. Mr. Mahaffy will continue to serve as the Company’s Chief Executive Officer and as a member of the Company’s Board of Directors. The settlements do not allege that the Company or any of its current or former officers engaged in any intentional fraud or misconduct. The settlements were approved by the United States District Court for the District of Colorado on September 19, 2018 and resolve the SEC’s nearly three year investigation into the regulatory approval process of rociletinib. European Patent Opposition Two oppositions were filed in the granted European counterpart of the rucaparib camsylate salt/polymorph patent on June 20, 2017. The grounds of opposition related to Rubraca were lack of novelty and lack of inventive step. A preliminary opinion and summons to oral proceedings were issued on April 4, 2018. The oral hearing is scheduled for December 4, 2018. The preliminary opinion provides a non-binding indication of the tribunal’s view. In the preliminary opinion, the tribunal agreed with some of our positions and agreed with certain objections made by the opponents. As part of the proceeding, we have the opportunity to submit further arguments and pursue alternative claims in the form of auxiliary requests. On October 3, 2018, we submitted further arguments and auxiliary requests and on October 4, 2018, both opponents submitted further arguments. While the ultimate results of patent challenges can be difficult to predict, we believe a number of factors, including a constellation of unexpected properties, support the novelty and non-obviousness of our rucaparib camsylate salt/polymorph composition of matter patent. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation All financial information presented includes the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited financial statements of Clovis Oncology, Inc. included herein reflect all adjustments that, in the opinion of management, are necessary to fairly state our financial position, results of operations and cash flows for the periods presented herein. Interim results may not be indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”) for a broader discussion of our business and the opportunities and risks inherent in such business. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and revenue and related disclosures. On an ongoing basis, we evaluate our estimates, including estimates related to revenue deductions, intangible asset impairment, clinical trial accruals and share-based compensation expense. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. |
Liquidity | Liquidity We have incurred significant net losses since inception and have relied on our ability to fund our operations through debt and equity financings. We expect operating losses and negative cash flows to continue for the foreseeable future. As we continue to incur losses, transition to profitability is dependent upon achieving a level of revenues from Rubraca adequate to support our cost structure. We may never achieve profitability, and unless or until we do, we will continue to need to raise additional cash. In April 2018, we sold 1,837,898 shares of our common stock in a public offering at $54.41 per share. The net proceeds from the offering were $93.9 million, after deducting underwriting discounts and commissions and offering expenses. Concurrently, we completed the public offering of $300.0 million aggregate principal amount of 1.25% convertible senior notes due 2025. The net proceeds from this offering were $290.9 million, after deducting underwriting discounts and commissions and offering expenses. We intend to use the net proceeds of the offerings for general corporate purposes, including sales and marketing expenses associated with Rubraca in the United States and Europe, funding of our development programs, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital. Based on current estimates, we believe that our existing cash, cash equivalents and available-for-sale securities will allow us to fund our operating plan through at least the next 12 months. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers”, and has subsequently issued several supplemental and/or clarifying ASUs (collectively, “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 is intended to provide a more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. We adopted the new standard using the modified retrospective method on January 1, 2018 for contracts that are not completed as of the adoption date. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We examined our revenue recognition policy specific to revenue streams from contracts governing product sales from Rubraca and have come to conclusions on the impact of the new standard using the 5-step process prescribed by ASC 606. We reviewed all of our contracts, including our collaboration agreements with Servier and Bristol-Myers Squibb, and determined the potential impact to our accounting policies, financial controls and operations. Our conclusions include recognizing revenue on product sales once the product is sold to the specialty distributor and specialty pharmacy providers. As noted above, we used the modified retrospective method to adopt the new standard. This means that we did not restate previously issued financial statements, but we recorded a one-time adjustment to retained earnings of $2.4 million. This adjustment represents the sales of our product to our customers prior to January 1, 2018, that had not been sold to patients or healthcare providers, offset by related gross-to-net adjustments and other direct costs, including royalties and sales incentive compensation. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows (in thousands): Balance at Adjustments due to Balance at December 31, 2017 Adoption of ASC 606 January 1, 2018 ASSETS Accounts receivable, net $ 6,181 $ 3,336 $ 9,517 Inventories $ 27,508 (62) $ 27,446 Total assets $ 735,230 $ 3,274 $ 738,504 LIABILITIES AND STOCKHOLDERS' EQUITY Other accrued expenses $ 25,883 $ 918 $ 26,801 Accumulated deficit $ (1,477,440) 2,356 $ (1,475,084) Total liabilities and stockholders' equity $ 735,230 $ 3,274 $ 738,504 Previously, we recognized revenue on product sales once the product was sold to the patient or healthcare provider by the specialty distributor or specialty pharmacy provider, i.e. when product is sold through the channel. Effective January 1, 2018, we began recognizing revenue when our customers, the specialty distributors and specialty pharmacy providers, take control of our product or when product is sold into the channel. This will have the impact of us recognizing revenue approximately two to four weeks earlier than before adopting the new standard and will also increase the significance of estimating variable consideration. The following financial statement line items for the three and nine months ended September 30, 2018 were affected as a result of the adoption. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except for per share amounts) Three months ended September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) Product revenue $ 22,757 $ 25,213 $ (2,456) Cost of sales - product $ 4,766 $ 5,158 $ 392 Selling, general and administrative $ 42,495 $ 42,689 $ 194 Net loss $ (89,864) $ (87,994) $ (1,870) Loss per basic and diluted common share: Basic and diluted net loss per common share $ (1.71) $ (1.67) $ (0.04) Nine months ended September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) Product revenue $ 65,037 $ 63,541 $ 1,496 Cost of sales - product $ 13,262 $ 12,697 $ (565) Selling, general and administrative $ 126,634 $ 126,602 $ (32) Net loss $ (268,750) $ (269,648) $ 898 Loss per basic and diluted common share: Basic and diluted net loss per common share $ (5.18) $ (5.20) $ 0.02 CONSOLIDATED BALANCE SHEET (In thousands) September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) ASSETS Accounts receivable, net $ 14,495 $ 12,907 $ 1,588 Inventories $ 63,687 $ 63,992 $ (305) LIABILITIES AND STOCKHOLDERS' EQUITY Other accrued expenses $ 24,732 $ 24,347 $ 385 Accumulated deficit $ (1,743,834) $ (1,744,732) $ 898 ASC 606 did not have an aggregate impact on our net cash provided by operating activities but resulted in offsetting changes in certain assets and liabilities presented within net cash used in operating activities in our consolidated statement of cash flows, as reflected in the above tables. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an ASU. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered after, the date of initial application, with an option to use certain transition relief. We will adopt ASU 2016-02 as of January 1, 2019 using the effective date method which leaves the comparative period reporting unchanged. Comparative reporting periods are presented in accordance with Topic 840, while periods subsequent to the effective date are presented in accordance with Topic 842. We expect to recognize substantially all our leases on the balance sheet by recording a right-of-use asset and corresponding lease liability. We are currently evaluating the impact the standard may have on our consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allow a reclassification from accumulated other comprehensive income (loss) (“AOCI”) to retained earnings for stranded tax effects resulting from the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts at the date of enactment of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We will adopt ASU 2018-02 as of January 1, 2019. We are currently evaluating the impact the standard may have on our consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, simplifies the accounting for share-based payment granted to nonemployees for goods and services. Under the standard, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We will adopt ASU 2018-07 as of January 1, 2019. We do not expect significant impact on our consolidated financial statements and related disclosures since our accounting for share-based payments to employees and nonemployees is similar. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We will adopt ASU 2018-02 as of January 1, 2020. We will evaluate the impact the standard may have on our consolidated financial statements and related disclosures as the adoption date approaches. |
Revenue Recognition | Revenue Recognition We are currently approved to sell Rubraca in the United States market. We distribute our product principally through a limited number of specialty distributor and specialty pharmacy providers, collectively, our customers. Our customers subsequently sell our products to patients and health care providers. Separately, we have arrangements with certain payors and other third parties that provide for government-mandated and privately-negotiated rebates, chargebacks and discounts. Product Revenue Revenue from product sales are recognized when the performance obligation is satisfied, which is when customers obtain control of our product at a point in time, typically upon delivery. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less. Reserves for Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from rebates, chargebacks, discounts, co-pay assistance, estimated product returns and other allowances that are offered within contracts between us and our customers, health care providers, payors and other indirect customers relating to the sales of our product. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customers) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we adjust these estimates, which would affect product revenue and earnings in the period such variances become known. Rebates . Rebates include mandated discounts under the Medicaid Drug Rebate Program and the Medicare coverage gap program. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public-sector benefit providers. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet. We estimate our Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. The accrual for rebates is based on statutory discount rates and known sales to specialty pharmacy patients or expected utilization for specialty distributor sales to healthcare providers. As we gain more historical experience, the accrual will be based solely on the expected utilization from historical data we have accumulated since the Rubraca product launch. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. Chargebacks . Chargebacks are discounts that occur when contracted customers, which currently consist primarily of group purchasing organizations, Public Health Service organizations and federal government entities purchasing via the Federal Supply Schedule, purchase directly from our specialty distributors at a discounted price. The specialty distributor, in turn, charges back the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the healthcare provider. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. The accrual for specialty distributor chargebacks is estimated based on known chargeback rates and known sales to specialty distributors adjusted for the estimated utilization by healthcare providers. Discounts and Fees . Our payment terms are generally 30 days. Specialty distributors and specialty pharmacies are offered various forms of consideration, including service fees and prompt pay discounts for payment within a specified period. We expect these customers will earn prompt pay discounts and therefore, we deduct the full amount of these discounts and service fees from product sales when revenue is recognized. Co-pay assistance . Patients who have commercial insurance and meet certain eligibility requirements may receive co-pay assistance. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation provided by third-party administrators at month end. Returns . Consistent with industry practice, we generally offer customers a right of return limited only to product that will expire in six months or product that is six months beyond the expiration date. To date, we have had minimal product returns and we currently do not have an accrual for product returns. We will continue to assess our estimate for product returns as we gain additional historical experience. |
Cost of Sales | Cost of Sales – Product Product cost of sales consists primarily of materials, third-party manufacturing costs as well as freight and royalties owed to our licensing partners for Rubraca sales. Cost of Sales – Intangible Asset Amortization Cost of sales for intangible asset amortization consists of the amortization of capitalized milestone payments made to our licensing partners upon FDA approval of Rubraca. Milestone payments are amortized on a straight-line basis over the estimated remaining patent life of Rubraca. |
Convertible Senior Notes | The debt issuance costs are presented as a deduction from the convertible senior notes on the Consolidated Balance Sheets and are amortized as interest expense over the expected life of the 2021 Notes using the effective interest method. We determined the expected life of the debt was equal to the seven-year term of the 2021 Notes. |
Lucitanib | Reimbursements are recorded as a reduction to research and development expense on the Consolidated Statements of Operations. Lucitanib was originally developed by Clovis and Servier with the hypothesis of activity in FGFR driven tumors; however, data in breast and lung cancer were insufficient to move the program forward. We received notice from Servier of termination of their rights to lucitanib, resulting in the return of global rights (excluding China) for lucitanib to us during October 2018. |
Net Loss Per Common Share | Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding using the treasury-stock method for the stock options and RSUs and the if-converted method for the 2021 Notes and 2025 Notes. As a result of our net losses for the periods presented, all potentially dilutive common share equivalents were considered anti-dilutive and were excluded from the computation of diluted net loss per share. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
ASU 2014-09 | |
Revenue Recognition | |
Schedule of new accounting pronouncements | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows (in thousands): Balance at Adjustments due to Balance at December 31, 2017 Adoption of ASC 606 January 1, 2018 ASSETS Accounts receivable, net $ 6,181 $ 3,336 $ 9,517 Inventories $ 27,508 (62) $ 27,446 Total assets $ 735,230 $ 3,274 $ 738,504 LIABILITIES AND STOCKHOLDERS' EQUITY Other accrued expenses $ 25,883 $ 918 $ 26,801 Accumulated deficit $ (1,477,440) 2,356 $ (1,475,084) Total liabilities and stockholders' equity $ 735,230 $ 3,274 $ 738,504 Previously, we recognized revenue on product sales once the product was sold to the patient or healthcare provider by the specialty distributor or specialty pharmacy provider, i.e. when product is sold through the channel. Effective January 1, 2018, we began recognizing revenue when our customers, the specialty distributors and specialty pharmacy providers, take control of our product or when product is sold into the channel. This will have the impact of us recognizing revenue approximately two to four weeks earlier than before adopting the new standard and will also increase the significance of estimating variable consideration. The following financial statement line items for the three and nine months ended September 30, 2018 were affected as a result of the adoption. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except for per share amounts) Three months ended September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) Product revenue $ 22,757 $ 25,213 $ (2,456) Cost of sales - product $ 4,766 $ 5,158 $ 392 Selling, general and administrative $ 42,495 $ 42,689 $ 194 Net loss $ (89,864) $ (87,994) $ (1,870) Loss per basic and diluted common share: Basic and diluted net loss per common share $ (1.71) $ (1.67) $ (0.04) Nine months ended September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) Product revenue $ 65,037 $ 63,541 $ 1,496 Cost of sales - product $ 13,262 $ 12,697 $ (565) Selling, general and administrative $ 126,634 $ 126,602 $ (32) Net loss $ (268,750) $ (269,648) $ 898 Loss per basic and diluted common share: Basic and diluted net loss per common share $ (5.18) $ (5.20) $ 0.02 CONSOLIDATED BALANCE SHEET (In thousands) September 30, 2018 Balances without Effect of Change As reported Adoption of ASC 606 Higher/(Lower) ASSETS Accounts receivable, net $ 14,495 $ 12,907 $ 1,588 Inventories $ 63,687 $ 63,992 $ (305) LIABILITIES AND STOCKHOLDERS' EQUITY Other accrued expenses $ 24,732 $ 24,347 $ 385 Accumulated deficit $ (1,743,834) $ (1,744,732) $ 898 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Financial Instruments and Fair Value Measurements | |
Assets Measured at Fair Value on Recurring Basis | The following table identifies our assets and liabilities that were measured at fair value on a recurring basis (in thousands): Balance Level 1 Level 2 Level 3 September 30, 2018 Assets: Money market $ 255,143 $ 255,143 $ — $ — U.S. treasury securities 313,525 — 313,525 — Total assets at fair value $ 568,668 $ 255,143 $ 313,525 $ — December 31, 2017 Assets: Money market $ 433,136 $ 433,136 $ — $ — U.S. treasury securities 99,533 — 99,533 — Total assets at fair value $ 532,669 $ 433,136 $ 99,533 $ — |
Available-for-Sale Securities (
Available-for-Sale Securities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Securities, Available-for-sale [Abstract] | |
Summary of Available-for-Sale Securities | As of September 30, 2018, available-for-sale securities consisted of the following (in thousands): Gross Gross Aggregate Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. treasury securities $ 313,570 $ — $ (45) $ 313,525 As of December 31, 2017, available-for-sale securities consisted of the following (in thousands): Gross Gross Aggregate Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. treasury securities $ 99,650 $ — $ (117) $ 99,533 |
Schedule of Amortized Cost and Fair Value of Available-for-Sale Securities by Contractual Maturity | As of September 30, 2018, the amortized cost and fair value of available-for-sale securities by contractual maturity were (in thousands): Amortized Fair Cost Value Due in one year or less $ 313,570 $ 313,525 Due in one year to two years — — Total $ 313,570 $ 313,525 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventories | |
Schedule of Inventories | September 30, December 31, 2018 2017 Work-in-process $ 51,707 $ 24,721 Finished goods 11,980 2,787 Total inventories $ 63,687 $ 27,508 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Other Current Assets | |
Other Current Assets | Other current assets were comprised of the following (in thousands): September 30, December 31, 2018 2017 Prepaid insurance $ 752 $ 1,926 Prepaid expenses - other 7,031 3,355 Receivable - other 3,741 2,023 Other 256 196 Total $ 11,780 $ 7,500 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets and Goodwill | |
Intangible assets related to capitalized milestones under license agreements | Intangible assets related to capitalized milestones under license agreements consisted of the following (in thousands): September 30, December 31, 2018 2017 Intangible asset - milestones $ 56,100 $ 21,100 Accumulated amortization (3,391) (1,539) Total intangible asset, net $ 52,709 $ 19,561 |
Estimated future amortization expense for intangible assets | Estimated future amortization expense associated with intangibles is expected to be as follows (in thousands): 2018 $ 779 2019 3,116 2020 3,116 2021 3,116 2022 3,116 Thereafter 39,466 $ 52,709 |
Summary of Goodwill | The change in goodwill established as part of the purchase accounting of EOS in November 2013 consisted of the following (in thousands): Balance at December 31, 2017 $ 65,217 Change in foreign currency gains and losses (2,143) Balance at September 30, 2018 $ 63,074 |
Other Accrued Expenses (Tables)
Other Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Other Accrued Expenses | |
Other Accrued Expenses | Other accrued expenses were comprised of the following (in thousands): September 30, December 31, 2018 2017 Accrued personnel costs $ 14,217 $ 13,889 Accrued interest payable — 2,096 Income tax payable 186 — Accrued corporate legal fees and professional services 731 415 Accrued royalties 4,187 2,984 Accrued variable considerations 2,407 1,008 Payable to third party logistics provider 14 2,661 Accrued expenses - other 2,990 2,830 Total $ 24,732 $ 25,883 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | |
Schedule of Total Interest Expense Recognized Related to Notes | Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Contractual interest expense $ 2,735 $ 1,797 $ 7,078 $ 5,391 Accretion of interest on milestone liability — 500 978 1,449 Amortization of debt issuance costs 641 321 1,536 956 Total interest expense $ 3,376 $ 2,618 $ 9,592 $ 7,796 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders’ Equity | |
Component of Other Comprehensive Income (Loss) | The changes in accumulated balances related to each component of other comprehensive income (loss) are summarized for the three months ended September 30, 2018 and 2017, as follows (in thousands): Foreign Currency Unrealized Total Accumulated Translation Adjustments (Losses) Gains Other Comprehensive Loss 2018 2017 2018 2017 2018 2017 Balance at July 1, $ (43,870) $ (44,155) $ (175) $ (151) $ (44,045) $ (44,306) Other comprehensive income (loss) (495) 2,510 (10) 15 (505) 2,525 Total before tax (44,365) (41,645) (185) (136) (44,550) (41,781) Tax effect — (915) — (5) — (920) Balance at September 30, $ (44,365) $ (42,560) $ (185) $ (141) $ (44,550) $ (42,701) The changes in accumulated balances related to each component of other comprehensive income (loss) are summarized for the nine months ended September 30, 2018 and 2017, as follows (in thousands): Foreign Currency Unrealized Total Accumulated Translation Adjustments (Losses) Gains Other Comprehensive Loss 2018 2017 2018 2017 2018 2017 Balance at January 1, $ (41,917) $ (47,434) $ (256) $ (146) $ (42,173) $ (47,580) Other comprehensive income (loss) (2,448) 7,695 71 8 (2,377) 7,703 Total before tax (44,365) (39,739) (185) (138) (44,550) (39,877) Tax effect — (2,821) — (3) — (2,824) Balance at September 30, $ (44,365) $ (42,560) $ (185) $ (141) $ (44,550) $ (42,701) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Share-Based Compensation | |
Share-Based Compensation Expense Recognized in Accompanying Statements of Operations | Share-based compensation expense for all equity based programs, including stock options, restricted stock units and the employee stock purchase plan, for the three and nine months ended September 30, 2018 and 2017 was recognized in the accompanying Consolidated Statements of Operations as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Research and development $ 5,038 $ 5,636 $ 15,380 $ 14,628 Selling, general and administrative 5,909 7,001 22,335 17,573 Total share-based compensation expense $ 10,947 $ 12,637 $ 37,715 $ 32,201 |
Summary of Stock Options Activity | Weighted Weighted Average Aggregate Average Remaining Intrinsic Number of Exercise Contractual Value Options Price Term (Years) (Thousands) Outstanding at December 31, 2017 5,789,735 $ 46.77 Granted 639,793 52.33 Exercised (70,480) 25.82 Forfeited (217,007) 60.47 Outstanding at September 30, 2018 6,142,041 $ 47.11 6.6 $ 24,884 Vested and expected to vest at September 30, 2018 5,919,341 $ 47.00 6.5 $ 24,555 Vested and exercisable at September 30, 2018 4,284,706 $ 45.70 5.8 $ 21,421 |
Schedule of Share-Based Compensation Arrangements by Share-Based Payment Award | The following table summarizes information about our stock options as of and for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Weighted-average grant date fair value per share $ 28.97 $ 60.81 $ 38.52 $ 48.39 Intrinsic value of options exercised $ 325 $ 3,400 $ 1,697 $ 17,684 Cash received from stock option exercises $ 604 $ 2,149 $ 1,820 $ 13,262 |
Summary of activity related to our unvested RSUs | Weighted Average Number of Grant Date Units Fair Value Unvested at December 31, 2017 589,529 $ 41.67 Granted 479,255 55.05 Vested (199,602) 40.43 Forfeited (44,686) 46.65 Unvested as of September 30, 2018 824,496 $ 49.48 Expected to vest after September 30, 2018 706,795 $ 49.25 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Net Loss Per Common Share | |
Shares Outstanding Excluded from Calculation of Diluted Net Loss Per Share | The shares outstanding at the end of the respective periods presented in the table below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in thousands): Three and Nine months ended September 30, 2018 2017 Common shares under option 3,381 5,696 Convertible senior notes 8,584 4,646 Total potential dilutive shares 11,965 10,342 |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)segmentproductitem | Sep. 30, 2017USD ($) | |
Number of operating segments | segment | 1 | ||
Number of other product candidates | product | 2 | ||
Issuance of common stock, net of issuance costs (in shares) | shares | 1,837,898 | ||
Sale of stock, price per share | $ / shares | $ 54.41 | ||
Proceeds from offering | $ 93,900 | $ 93,890 | $ 545,838 |
Aggregate principal amount of public offering | $ 300,000 | ||
Convertible senior notes, interest rate | 1.25% | ||
Net proceeds from convertible senior notes | $ 290,900 | $ 290,887 | $ 0 |
Minimum estimated number of months operating plan funded | 12 months | ||
Minimum | |||
Number of chemotherapies received by an adult patient | item | 2 | ||
Number of prior lines of platinum based chemotherapy received by patient | item | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenues: | ||||||
Product revenue | $ 22,757 | $ 65,037 | ||||
Cost of sales - product | 4,766 | 13,262 | ||||
Selling, general and administrative | 42,495 | $ 35,011 | 126,634 | $ 100,384 | ||
Net loss | $ (89,864) | $ (60,664) | $ (268,750) | $ (294,514) | ||
Payment terms number of days | 30 days | |||||
Loss per basic and diluted common share: | ||||||
Basic and diluted net loss per common share | $ (1.71) | $ (1.24) | $ (5.18) | $ (6.39) | ||
Assets | ||||||
Accounts receivable, net | $ 14,495 | $ 14,495 | $ 9,517 | $ 6,181 | ||
Inventories | 43,682 | 43,682 | 27,446 | 27,508 | ||
Inventories | 63,687 | 63,687 | ||||
Total assets | 891,464 | 891,464 | 738,504 | 735,230 | ||
Liabilities | ||||||
Other accrued expenses | 24,732 | 24,732 | 26,801 | 25,883 | ||
Accumulated deficit | (1,743,834) | (1,743,834) | (1,475,084) | (1,477,440) | ||
Equity | ||||||
Total liabilities and stockholders' equity | 891,464 | $ 891,464 | 738,504 | $ 735,230 | ||
Product Revenue | ||||||
Amortization period of the asset | true | |||||
ASU 2014-09 | Balances without Adoption of ASC 606 | ||||||
Revenues: | ||||||
Product revenue | 25,213 | $ 63,541 | ||||
Cost of sales - product | 5,158 | 12,697 | ||||
Selling, general and administrative | 42,689 | 126,602 | ||||
Net loss | $ (87,994) | $ (269,648) | ||||
Loss per basic and diluted common share: | ||||||
Basic and diluted net loss per common share | $ (1.67) | $ (5.20) | ||||
Assets | ||||||
Accounts receivable, net | $ 12,907 | $ 12,907 | ||||
Inventories | 63,992 | 63,992 | ||||
Liabilities | ||||||
Other accrued expenses | 24,347 | 24,347 | ||||
Accumulated deficit | (1,744,732) | (1,744,732) | ||||
ASU 2014-09 | Effect of Change Higher/(Lower) | ||||||
Revenues: | ||||||
Product revenue | (2,456) | 1,496 | ||||
Cost of sales - product | 392 | (565) | ||||
Selling, general and administrative | 194 | (32) | ||||
Net loss | $ (1,870) | $ 898 | ||||
Loss per basic and diluted common share: | ||||||
Basic and diluted net loss per common share | $ (0.04) | $ 0.02 | ||||
Assets | ||||||
Accounts receivable, net | $ 1,588 | $ 1,588 | 3,336 | |||
Inventories | (62) | |||||
Inventories | (305) | (305) | ||||
Total assets | 3,274 | |||||
Liabilities | ||||||
Other accrued expenses | 385 | 385 | 918 | |||
Accumulated deficit | $ 898 | $ 898 | 2,356 | |||
Equity | ||||||
Total liabilities and stockholders' equity | $ 3,274 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Measurements | ||
Assets at fair value | $ 568,668 | $ 532,669 |
Money market | ||
Fair Value Measurements | ||
Assets at fair value | 255,143 | 433,136 |
U.S. treasury securities | ||
Fair Value Measurements | ||
Assets at fair value | 313,525 | 99,533 |
Fair Value, Inputs, Level 1 | ||
Fair Value Measurements | ||
Assets at fair value | 255,143 | 433,136 |
Fair Value, Inputs, Level 1 | Money market | ||
Fair Value Measurements | ||
Assets at fair value | 255,143 | 433,136 |
Fair Value, Inputs, Level 1 | U.S. treasury securities | ||
Fair Value Measurements | ||
Assets at fair value | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Fair Value Measurements | ||
Assets at fair value | 313,525 | 99,533 |
Fair Value, Inputs, Level 2 | Money market | ||
Fair Value Measurements | ||
Assets at fair value | 0 | 0 |
Fair Value, Inputs, Level 2 | U.S. treasury securities | ||
Fair Value Measurements | ||
Assets at fair value | 313,525 | 99,533 |
Fair Value, Inputs, Level 3 | ||
Fair Value Measurements | ||
Assets at fair value | 0 | 0 |
Fair Value, Inputs, Level 3 | Money market | ||
Fair Value Measurements | ||
Assets at fair value | 0 | 0 |
Fair Value, Inputs, Level 3 | U.S. treasury securities | ||
Fair Value Measurements | ||
Assets at fair value | $ 0 | $ 0 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements - More Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Fair Value Measurements | ||
Transfers between level 1 and level 2, assets | $ 0 | |
Transfers between level 2 and level 1, assets | 0 | |
Transfers between level 1 and level 2, liabilities | 0 | |
Transfers between level 2 and level 1, liabilities | 0 | |
Transfer of assets into level 3 | 0 | |
Transfer of assets out of level 3 | 0 | |
Transfer of liabilities into level 3 | 0 | |
Transfer of liabilities out of level 3 | 0 | |
Convertible senior notes | 574,828 | $ 282,406 |
Convertible Senior Unsecured Notes 2021 Notes | ||
Fair Value Measurements | ||
Convertible senior notes | 283,400 | |
Convertible Senior Unsecured Notes 2021 Notes | Fair Value, Inputs, Level 2 | ||
Fair Value Measurements | ||
Convertible senior notes, fair value | 268,200 | |
Convertible Senior Unsecured Notes 2025 Notes | ||
Fair Value Measurements | ||
Convertible senior notes | 291,400 | |
Convertible senior notes, fair value | $ 232,800 |
Available-for-Sale Securities_2
Available-for-Sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Available-for-Sale Securities | ||
Amortized Cost | $ 313,570 | |
Aggregate Fair Value | 313,525 | |
U.S. treasury securities | ||
Available-for-Sale Securities | ||
Amortized Cost | 313,570 | $ 99,650 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (45) | (117) |
Aggregate Fair Value | $ 313,525 | $ 99,533 |
Available-for-Sale Securities -
Available-for-Sale Securities - Additional Information (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Debt Securities, Available-for-sale [Abstract] | |
Amortized Cost, Due in one year or less | $ 313,570 |
Amortized Cost, Due in one year to two years | 0 |
Amortized Cost | 313,570 |
Fair Value, Due in one year or less | 313,525 |
Fair Value, Due in one year to two years | 0 |
Aggregate Fair Value | $ 313,525 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Inventories | |||
Work-in-process | $ 51,707 | $ 24,721 | |
Finished goods | 11,980 | 2,787 | |
Total inventories | 63,687 | ||
Total inventories | 43,682 | $ 27,446 | $ 27,508 |
Cash deposit on inventory made to a manufacturer | $ 44,600 | ||
Maximum number of months purchased inventory converted to finished goods | 12 months |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Other Current Assets | ||
Prepaid Insurance | $ 752 | $ 1,926 |
Prepaid expenses - other | 7,031 | 3,355 |
Receivable - other | 3,741 | 2,023 |
Other | 256 | 196 |
Total | $ 11,780 | $ 7,500 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) - Licensing Agreements - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Finite Lived Intangible Assets [Line Items] | ||
Intangible asset - milestones | $ 56,100 | $ 21,100 |
Accumulated amortization | (3,391) | (1,539) |
Total intangible asset, net | $ 52,709 | $ 19,561 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2018 | Apr. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Licensing Agreements | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Amortization of Intangible Assets | $ 0.8 | $ 0.4 | $ 1.9 | $ 1.2 | ||
Rucaparib | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Milestone payments | $ 20 | |||||
Rucaparib | First approval of NDA by FDA | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Milestone payments | $ 15 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Estimated Future Amortization (Details) - Licensing Agreements - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Finite Lived Intangible Assets | ||
2,018 | $ 779 | |
2,019 | 3,116 | |
2,020 | 3,116 | |
2,021 | 3,116 | |
2,022 | 3,116 | |
Thereafter | 39,466 | |
Total intangible asset, net | $ 52,709 | $ 19,561 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill - Summary of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill: | |
Balance at beginning of period | $ 65,217 |
Balance at end of period | 63,074 |
Ethical Oncology Science, S.p.A. | |
Goodwill: | |
Balance at beginning of period | 65,217 |
Change in foreign currency gains and losses | (2,143) |
Balance at end of period | $ 63,074 |
Other Accrued Expenses (Details
Other Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Other Accrued Expenses | |||
Accrued personnel costs | $ 14,217 | $ 13,889 | |
Accrued interest payable | 2,096 | ||
Income tax payable | 186 | 0 | |
Accrued corporate legal fees and professional services | 731 | 415 | |
Accrued royalties | 4,187 | 2,984 | |
Accrued variable considerations | 2,407 | 1,008 | |
Payable to third party logistics provider | 14 | 2,661 | |
Accrued expenses - other | 2,990 | 2,830 | |
Total | $ 24,732 | $ 26,801 | $ 25,883 |
Convertible Senior Notes (Detai
Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands | Apr. 19, 2018USD ($)D$ / shares | Sep. 09, 2014USD ($)Ditem$ / shares | Apr. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument | ||||||
Aggregate principal amount of public offering | $ 300,000 | |||||
Convertible senior notes, interest rate | 1.25% | |||||
Net proceeds from convertible senior notes | $ 290,900 | $ 290,887 | $ 0 | |||
Convertible Senior Unsecured Notes | ||||||
Debt Instrument | ||||||
Aggregate principal amount of public offering | $ 300,000 | $ 287,500 | ||||
Convertible senior notes, interest rate | 1.25% | 2.50% | ||||
Net proceeds from convertible senior notes | $ 290,900 | $ 278,300 | ||||
Convertible senior notes, maturity date | Sep. 15, 2021 | |||||
Common stock initial conversion rate per $1,000 in principal amount | 13.1278 | 16.1616 | ||||
Convertible senior notes, initial conversion price per share | $ / shares | $ 76.17 | $ 61.88 | ||||
Debt instrument, redemption period start date | Sep. 15, 2018 | |||||
Last reported sale price of common stock as a percent of conversion price | 150.00% | 150.00% | ||||
Debt instrument, conversion in effect for number of trading days | D | 20 | 20 | ||||
Debt instrument conversion, consecutive trading day period | D | 30 | 30 | ||||
Debt instrument, trading days preceding redemption notice, maximum | 2 | 2 | ||||
Debt instrument redemption price percentage to principal amount | 100.00% | 100.00% | ||||
Debt instrument repurchase percentage | 100.00% | 100.00% | ||||
Debt issuance costs | $ 9,100 | $ 9,200 | ||||
Debt instrument term | 7 years | 7 years | ||||
Unamortized debt issuance costs | $ 12,700 | $ 5,100 | ||||
Convertible Senior Unsecured Notes | Semi Annual Payment, First payment date | ||||||
Debt Instrument | ||||||
Interest payment date on senior notes | --05-01 | --03-15 | ||||
Convertible Senior Unsecured Notes | Semi Annual Payment, Second payment date | ||||||
Debt Instrument | ||||||
Interest payment date on senior notes | --11-01 | --09-15 |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Convertible Senior Notes | ||||
Contractual interest expense | $ 2,735 | $ 1,797 | $ 7,078 | $ 5,391 |
Accretion of interest on milestone liability | 500 | 978 | 1,449 | |
Amortization of debt issuance costs | 641 | 321 | 1,536 | 956 |
Total interest expense | $ 3,376 | $ 2,618 | $ 9,592 | $ 7,796 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)Vote | Sep. 30, 2017USD ($) | |
Stockholders’ Equity | |||
Common stock, shares issued | shares | 1,837,898 | ||
Sale of stock, price per share | $ / shares | $ 54.41 | ||
Proceeds from the sale of common stock, net of issuance costs | $ | $ 93,900 | $ 93,890 | $ 545,838 |
Number Of Vote Per Common Stock | Vote | 1 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Loss | ||||
Beginning balance | $ (44,045) | $ (44,306) | $ (42,173) | $ (47,580) |
Other comprehensive income (loss) | (505) | 2,525 | (2,377) | 7,703 |
Total before tax | (44,550) | (41,781) | (44,550) | (39,877) |
Tax effect | 0 | (920) | 0 | (2,824) |
Ending balance | (44,550) | (42,701) | (44,550) | (42,701) |
Reclassifications out of accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Loss | ||||
Beginning balance | (43,870) | (44,155) | (41,917) | (47,434) |
Other comprehensive income (loss) | (495) | 2,510 | (2,448) | 7,695 |
Total before tax | (44,365) | (41,645) | (44,365) | (39,739) |
Tax effect | 0 | (915) | 0 | (2,821) |
Ending balance | (44,365) | (42,560) | (44,365) | (42,560) |
Unrealized (Losses) Gains | ||||
Accumulated Other Comprehensive Loss | ||||
Beginning balance | (175) | (151) | (256) | (146) |
Other comprehensive income (loss) | (10) | 15 | 71 | 8 |
Total before tax | (185) | (136) | (185) | (138) |
Tax effect | 0 | (5) | 0 | (3) |
Ending balance | $ (185) | $ (141) | $ (185) | $ (141) |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 29, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Total Share-based compensation expense | $ 10,947 | $ 12,637 | $ 37,715 | $ 32,201 | |
Employee Service Share Based Compensation Tax Benefit From Compensation Expense | 0 | 0 | 0 | 0 | |
Closing Stock Price | $ 29.37 | ||||
Research and development | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Total Share-based compensation expense | 5,038 | 5,636 | 15,380 | 14,628 | |
Selling, general and administrative | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Total Share-based compensation expense | 5,909 | $ 7,001 | 22,335 | $ 17,573 | |
Common shares under option | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized stock-based compensation expense related to unvested RSUs | 60,400 | $ 60,400 | |||
Unrecognized stock-based compensation expense related to non-vested options and RSUs, weighted-average remaining vesting period | 2 years 5 months 16 days | ||||
Restricted Stock Units (RSUs) | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized stock-based compensation expense related to unvested RSUs | $ 31,200 | $ 31,200 | |||
Unrecognized stock-based compensation expense related to non-vested options and RSUs, weighted-average remaining vesting period | 3 years |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock Options Activity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Share-Based Compensation | |
Beginning Balance, Number of Options Outstanding | shares | 5,789,735 |
Number of Options, Granted | shares | 639,793 |
Number of Options, Exercised | shares | (70,480) |
Number of Options, Forfeited | shares | (217,007) |
Ending Balance, Number of Options Outstanding | shares | 6,142,041 |
Number of Options, Vested and expected to vest at June 30,2018 | shares | 5,919,341 |
Number of Options, Vested and exercisable at June 30,2018 | shares | 4,284,706 |
Beginning Balance, Weighted Average Exercise Price | $ / shares | $ 46.77 |
Granted, Weighted Average Exercise Price | $ / shares | 52.33 |
Exercised, Weighted Average Exercise Price | $ / shares | 25.82 |
Forfeited, Weighted Average Exercise Price | $ / shares | 60.47 |
Ending Balance, Weighted Average Exercise Price | $ / shares | 47.11 |
Vested and expected to vest, Weighted Average Exercise Price | $ / shares | 47 |
Vested and exercisable, Weighted Average Exercise Price | $ / shares | $ 45.70 |
Outstanding, Weighted Average Remaining Contractual Term (Years) | 6 years 7 months 6 days |
Vested and expected to vest, Weighted Average Remaining Contractual Term (Years) | 6 years 6 months |
Exercisable, Weighted Average Remaining Contractual Term (Years) | 5 years 9 months 18 days |
Outstanding at June 30, 2018, Aggregate Intrinsic Value | $ | $ 24,884 |
Vested and expected to vest at June 30, 2018, Aggregate Intrinsic Value | $ | 24,555 |
Vested and exercisable at June 30, 2018, Aggregate Intrinsic Value | $ | $ 21,421 |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Share-Based Compensation Arrangements by Share-Based Payment Award (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-Based Compensation | ||||
Weighted-average grant date fair value per share | $ 28.97 | $ 60.81 | $ 38.52 | $ 48.39 |
Intrinsic value of options exercised | $ 325 | $ 3,400 | $ 1,697 | $ 17,684 |
Cash received from stock option exercises | $ 604 | $ 2,149 | $ 1,820 | $ 13,262 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - Restricted Stock Units (RSUs) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unvested as of Beginning Balance | shares | 589,529 |
Number of Units, Granted | shares | 479,255 |
Number of Units, Vested | shares | (199,602) |
Number of Units, Forfeited | shares | (44,686) |
Unvested as of Ending Balance | shares | 824,496 |
Number of Units, Expected to vest after March 31, 2018 | shares | 706,795 |
Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 41.67 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 55.05 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 40.43 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 46.65 |
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | 49.48 |
Weighted Average Grant Date Fair Value, Expected to vest after March 31, 2018 | $ / shares | $ 49.25 |
License Agreements (Details)
License Agreements (Details) $ in Thousands | Dec. 19, 2016USD ($)item | Jun. 30, 2018USD ($) | Apr. 30, 2018USD ($) | Jun. 30, 2011USD ($) | Oct. 31, 2008 | Mar. 31, 2017USD ($) | Sep. 30, 2018USD ($) |
License Agreements | |||||||
Minimum number of chemotherapies | item | 2 | ||||||
Rucaparib | |||||||
License Agreements | |||||||
Milestone payments | $ 20,000 | ||||||
Rucaparib | First approval of NDA by FDA | |||||||
License Agreements | |||||||
Milestone payments | $ 15,000 | ||||||
License Agreements Licensor Pfizer | Rucaparib | |||||||
License Agreements | |||||||
Milestone payments | $ 23,000 | $ 750 | |||||
Milestone payment due prior to deferment of milestone payment | $ 20,000 | ||||||
Deferred milestone payment | $ 23,000 | ||||||
Maximum number of months after FDA approval | 18 months | ||||||
License Agreements Licensor Pfizer | Rucaparib | Minimum | |||||||
License Agreements | |||||||
Annual sales target for sales milestone payments | $ 250,000 | ||||||
License Agreements Licensor Pfizer | Rucaparib | Maximum | |||||||
License Agreements | |||||||
Maximum potential future development, regulatory milestone payments | 31,750 | ||||||
Additional maximum payments payable on attaining the sales target | $ 170,000 | ||||||
License Agreement Terms | License Agreements Licensor Pfizer | Rucaparib | |||||||
License Agreements | |||||||
Upfront payment | $ 7,000 | ||||||
Milestones paid to Pfizer prior to FDA approval | $ 1,400 | ||||||
License Agreement Terms | Advenchen Laboratories LLC | License Agreements Lucitanib | |||||||
License Agreements | |||||||
Percentage of Non-Royalty Consideration Payable on Sublicense Agreements | 25.00% |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share | ||
Total potential dilutive shares | 11,965 | 10,342 |
Common shares under option | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share | ||
Total potential dilutive shares | 3,381 | 5,696 |
Convertible senior notes | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share | ||
Total potential dilutive shares | 8,584 | 4,646 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Jun. 20, 2017item | Mar. 31, 2017shareholder | Sep. 30, 2018USD ($) | Sep. 18, 2018USD ($) | Dec. 31, 2017USD ($) |
Commitments and Contingencies | |||||
Deferred Long-term Liability Charges | $ 0 | $ 22,022 | |||
Purchase commitment | 165,100 | ||||
Number of putative shareholders | shareholder | 2 | ||||
Loss contingency due to civil penalty | $ 20,000 | ||||
Litigation Settlement, Expense | $ 20,000 | ||||
Number of oppositions filed regarding salt and polymorph patents | item | 2 |