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Document and Entity Information (USD $)
6 Months Ended
Jun. 30, 2014
Jul. 31, 2014
Entity Information [Line Items] ' '
Entity Registrant Name 'NEWLINK GENETICS CORP '
Entity Central Index Key '0001126234 '
Current Fiscal Year End Date '--12-31 '
Entity Filer Category 'Accelerated Filer '
Document Type '10-Q '
Document Period End Date Jun 30, 2014 '
Document Fiscal Year Focus '2014 '
Document Fiscal Period Focus 'Q2 '
Amendment Flag 'false '
Entity Common Stock, Shares Outstanding ' 27,909,031
Entity Well-known Seasoned Issuer 'No '
Entity Voluntary Filers 'No '
Entity Current Reporting Status 'Yes '
Entity Public Float $ 528,615,385 '
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Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets: ' '
Cash and cash equivalents $ 76,861 $ 61,291
Certificates of deposit 249 249
Prepaid expenses 446 773
State research and development credit receivable 497 329
Other receivables 161 1,328
Total current assets 78,214 63,970
Leasehold improvements and equipment: ' '
Leasehold improvements 5,577 5,588
Computer equipment 1,261 1,133
Lab equipment 3,994 3,724
Total leasehold improvements and equipment 10,832 10,445
Less accumulated depreciation and amortization (4,376) (3,858)
Leasehold improvements and equipment, net 6,456 6,587
Total assets 84,670 70,557
Current liabilities: ' '
Accounts payable 687 612
Accrued expenses 2,891 2,861
Accrued Income Taxes, Current 5 130
Deferred rent 84 84
Current portion of long term debt 190 189
Total current liabilities 3,857 3,876
Long term liabilities: ' '
Royalty obligation payable to Iowa Economic Development Authority 6,000 6,000
Notes payable and obligations under capital leases 937 1,033
Deferred rent, excluding current portion 1,279 1,321
Total long-term liabilities 8,216 8,354
Total liabilities 12,073 12,230
Equity (deficit): ' '
Blank check preferred stock, $0.01 par value: Authorized shares — 5,000,000 at June 30, 2014 and December 31, 2013; issued and outstanding shares — 0 at June 30, 2014 and December 31, 2013 0 0
Common stock, $0.01 par value: Authorized shares — 75,000,000 at June 30, 2014 and December 31, 2013; issued shares — 27,912,198 and outstanding shares — 27,903,705 at June 30, 2014, and issued and outstanding shares — 26,573,023 at December 31, 2013 279 266
Additional paid-in capital 226,876 194,038
Treasury stock (182) 0
Retained deficit (154,376) (135,977)
Total equity 72,597 58,327
Total liabilities and equity $ 84,670 $ 70,557
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Consolidated Balance Sheets (Parentheticals) (USD $)
Jun. 30, 2014
Dec. 31, 2013
Stockholders' Equity: ' '
Blank check preferred stock, par value $ 0.01 $ 0.01
Blank check preferred stock, authorized shares 5,000,000 5,000,000
Blank check preferred stock, issued shares 0 0
Blank check preferred stock, outstanding shares 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, authorized shares 75,000,000 75,000,000
Common stock, issued shares 27,912,198 26,573,023
Common stock, outstanding shares 27,903,705 26,573,023
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Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Grant revenue $ 212 $ 232 $ 546 $ 534
Operating expenses: ' ' ' '
Research and development 6,475 5,037 12,863 11,380
General and administrative 2,863 2,264 6,114 4,265
Total operating expenses 9,338 7,301 18,977 15,645
Loss from operations (9,126) (7,069) (18,431) (15,111)
Other income and expense: ' ' ' '
Miscellaneous income (50) 0 0 114
Interest income 21 2 45 4
Interest expense (9) (10) (13) (18)
Other (expense) income, net (38) (8) 32 100
Net loss before taxes (9,164) (7,077) (18,399) (15,011)
Income tax expense 0 0 0 0
Net loss $ (9,164) $ (7,077) $ (18,399) $ (15,011)
Basic and diluted net loss per share $ (0.33) $ (0.28) $ (0.66) $ (0.61)
Weighted-average common shares outstanding, basic and diluted 27,876,652 25,620,566 27,742,029 24,745,380
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Consolidated Statements of Operations (Weighted-average common shares outstanding, diluted)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Weighted-average common shares outstanding, basic and diluted 27,876,652 25,620,566 27,742,029 24,745,380
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Consolidated Statements of Stockholders' Equity (Deficit) (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Deficit [Member]
Balance at Dec. 31, 2013 $ 58,327 $ 266 $ 194,038 ' $ (135,977)
Balance (shares) at Dec. 31, 2013 26,573,023 ' ' ' '
Increase (Decrease) in Stockholders' Equity [Roll Forward] ' ' ' ' '
Stock issued 27,555 10 27,545 ' '
Stock issued (shares) 1,017,217 ' ' ' '
Stock Repurchased During Period (182) ' ' (182) '
Stock compensation 3,604 ' 3,604 ' '
Exercise of stock options 1,459 3 1,456 ' '
Exercise of stock options (shares) 309,148 ' ' ' '
Sale of shares under stock purchase plan 233 ' 233 ' '
Sale of shares under stock purchase plan (shares) 12,810 ' ' ' '
Treasury stock (shares) (8,493) ' ' ' '
Net loss (18,399) ' ' ' (18,399)
Balance at Jun. 30, 2014 $ 72,597 $ 279 $ 226,876 $ 182 $ (154,376)
Balance (shares) at Jun. 30, 2014 27,903,705 ' ' ' '
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Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash Flows From Development Activities ' '
Net loss $ (18,399) $ (15,011)
Adjustments to reconcile net loss to net cash used in development activities: ' '
Share-based compensation 3,604 2,027
Depreciation and amortization 517 425
Changes in operating assets and liabilities: ' '
Prepaid expenses 327 372
State research and development credit receivable (168) 107
Other receivables 1,167 (617)
Accounts payable 98 104
Increase (Decrease) in Income Taxes Payable (125) 0
Accrued expenses and deferred rent (124) 1,116
Net cash used in development activities (13,103) (11,477)
Cash Flows From Investing Activities ' '
Sale of certificates of deposit 0 1,245
Purchase of equipment (297) (274)
Net cash used in investing activities (297) 971
Cash Flows From Financing Activities ' '
Issuance of common stock, net of offering costs 29,247 49,416
Repurchase of common stock (182) 0
Principal payments on debt (77) (74)
Payments under capital lease obligations (18) (47)
Net cash provided by financing activities 28,970 49,295
Net (decrease) increase in cash and cash equivalents 15,570 38,789
Cash and cash equivalents at beginning of period 61,291 20,250
Cash and cash equivalents at end of period 76,861 59,039
Supplemental disclosure of cash flows information: ' '
Cash paid for interest 13 18
Noncash financing and investing activities: ' '
Purchased leasehold improvements and equipment in accounts payable $ 89 $ 71
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Description of Business (Notes)
6 Months Ended
Jun. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract] '
Description of Business '
Description of Business
On June 4, 1999, NewLink Genetics Corporation (NewLink) was incorporated as a Delaware corporation. NewLink was formed for the purpose of developing treatments for cancer and other diseases. NewLink initiated operations in April of 2000, which primarily consist of research and development.
In 2005, NewLink created a wholly-owned subsidiary, BioProtection Systems Corporation (BPS). NewLink contributed certain licensing agreements and other intangible assets for BPS to create vaccines against potential biological terror threats. Subsequent to its creation, certain interests in BPS were sold to minority stockholders. On January 7, 2011, NewLink acquired all of the minority interest in BPS, by merging a newly-formed subsidiary of NewLink with BPS, with BPS as the surviving corporation resulting in NewLink owning all the outstanding capital stock of BPS.
In 2013, NewLink created a wholly-owned subsidiary, NewLink International (NI). In 2014, NewLink created another wholly-owned subsidiary, NewLink Global (NG). NewLink plans to conduct all or a portion of its operations outside of the United States through NI and NG.
NewLink and its subsidiaries (the Company) are devoting substantially all of their efforts toward research and development. The Company has never earned revenue from sales of its drugs. The Company incurred a net loss of 9.2 million and 18.4 million for the three and six months ending June 30, 2014. The Company has managed its liquidity needs to date through a series of capital market transactions. On February 4, 2013, the Company completed an offering of its common stock. The Company sold 4,600,000 shares of common stock at a price of $11.40 per share raising a total of $49.0 million in net proceeds.
NewLink entered into a sales agreement with Cantor Fitzgerald & Co., dated as of September 5, 2013, under which NewLink may sell up to $60.0 million in shares of its common stock in one or more placements at prevailing market prices for its common stock (the ATM Offering). Any such sales would be effected pursuant to its registration statement on Form S-3 (333-185721), declared effective by the SEC on January 4, 2013. As of June 30, 2014, the Company had sold 1,833,838 shares of common stock under the ATM Offering, raising a total of $45.0 million in net proceeds. During the years ended December 31, 2013 and 2012, the Company received equity financing of $67.2 million and $1.3 million, respectively, through common stock offerings. Subsequent to March 31, 2014 and through the date of this filing, the Company sold no additional shares of common stock under the ATM Offering.
The accompanying financial statements as of June 30, 2014 and for the three and six months then ended have been prepared assuming the Company will continue as a going concern. The Company successfully raised net proceeds of $37.6 million from its initial public offering in 2011, completed a follow-on offering of its common stock raising net proceeds of $49.0 million, and raised an additional $45.0 million in net proceeds from the ATM Offering prior to June 30, 2014. The Company's cash and cash equivalents after these offerings are expected to be adequate to satisfy the Company's liquidity requirements well into 2015, although not through commercialization and launch of revenue producing products. If available liquidity becomes insufficient to meet the Company’s operating obligations as they come due, the Company's plans include pursuing alternative funding arrangements and/or reducing expenditures as necessary to meet the Company’s cash requirements. However, there is no assurance that, if required, the Company will be able to raise additional capital or reduce discretionary spending to provide the required liquidity. Failure by the Company to successfully execute its plans or otherwise address its liquidity needs may have a material adverse effect on its business and financial position, and may materially affect the Company’s ability to continue as a going concern.
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Basis of Presentation (Notes)
6 Months Ended
Jun. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract] '
Basis of Presentation '
Basis of Presentation
The interim financial statements have been prepared and presented by the Company in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and the rules and regulations of the U.S. Securities and Exchange Commission (SEC), without audit, and, in management’s opinion, reflect all adjustments necessary to present fairly the Company’s interim financial information.
Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2013, included in the Company’s Annual Report on Form 10-K. There were no significant changes in the Company’s accounting policies since the end of fiscal 2013. The financial results for any interim period are not necessarily indicative of financial results for the full year.
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Significant Accounting Policies (Notes)
6 Months Ended
Jun. 30, 2014
Accounting Policies [Abstract] '
Significant Accounting Policies '
Significant Accounting Policies
(a) Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(b) Principles of Consolidation
The consolidated financial statements include the financial statements of NewLink and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
(c) Financial Instruments and Concentrations of Credit Risk
The fair values of cash and cash equivalents, certificates of deposit, receivables, and accounts payable, which are recorded at cost, approximate fair value based on the short-term nature of these financial instruments. The fair value and carrying value of notes payable and capital lease obligations was $1.1 million and $1.2 million as of June 30, 2014 and December 31, 2013, respectively, and was determined using Level 3 inputs. The Company is unable to estimate the fair value of the royalty obligation because the timing and receipt of payments is uncertain. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, and certificates of deposit. Cash and cash equivalents are held by financial institutions and are federally insured up to certain limits. At times, the Company’s cash and cash equivalents balance exceeds the federally insured limits. To limit the credit risk, the Company invests its excess cash primarily in high quality cash equivalents, such as money market funds, or certificates of deposit.
(d) Recent Accounting Pronouncements
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The ASU eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in the ASU will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company early adopted this standard effective June 30, 2014. Adoption of this standard did not have a material impact on our condensed consolidated financial statements.
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Long-Term Debt (Notes)
6 Months Ended
Jun. 30, 2014
Debt Disclosure [Abstract] '
Long-Term Debt '
Long-Term Debt and Conversion to Royalty Obligation
March 2010 City of Ames Forgivable Loan
In March 2010, the Company entered into a $400,000 forgivable loan agreement with the City of Ames, Iowa and the Ames Chamber of Commerce, jointly, as lenders. The project provides the Company with financial assistance to construct new facilities within the Ames city limits. In the absence of a default, there are no principal or interest payments due until the expected completion date for the project, which is March 10, 2015.
The project calls for the Company to create or retain at least 70 full-time jobs located in Ames, Iowa as of March 10, 2012 and to create or maintain at least 150 full-time positions located in Ames, Iowa as of March 10, 2015. The agreement also calls for the Company to enter into a five-year building lease with the option for extension for an additional five years of not less than 20,000 square feet within the corporate limits of the City of Ames by March 10, 2015. If, as of March 10, 2015, the Company has fulfilled the terms of the loan agreement, the loan will be forgiven. If on March 10, 2015, the Company has failed to create or retain at least 150 full-time jobs in Ames, Iowa, the Company will be required to repay approximately $3,100 per job not created or retained following such date. As of December 31, 2013, $300,000 of the total $400,000 forgivable loan was advanced to the Company. The final $100,000 available under the agreement was advanced to the Company on July 25, 2014. In the event of default, including failure to repay any amounts under the loan when due, the Company will be required to repay the note, including 6.5% interest per annum, beginning at the date of default.
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Common Stock Equity Incentive Plan (Notes)
6 Months Ended
Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] '
Common Stock Equity Incentive Plan '
Common Stock Equity Incentive Plan
In April 2000, the stockholders approved the Company's 2000 Equity Incentive Plan (the “2000 Plan”), and in July 2009, the stockholders approved the Company's 2009 Equity Incentive Plan (the “2009 Plan”). Following the approval of the 2009 Plan, all options outstanding under the 2000 Plan are effectively included under the 2009 Plan. Under the provisions of the 2009 Plan, the Company may grant the following types of common stock awards:
Incentive Stock Options
Nonstatutory Stock Options
Restricted Stock Awards
Stock Appreciation Rights
Awards under the 2009 Plan, as amended, may be made to officers, employees, members of the Board of Directors, advisors, and consultants to the Company. Shares are added to the reserve of shares available for issuance pursuant to an “evergreen provision” on January 1 of each year, from 2012 to (and including) 2019, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As of June 30, 2014, there were 6,799,854 shares of common stock authorized for the 2009 plan and 1,075,709 shares remained available for issuance.
On January 1, 2013, an additional 838,375 shares of common stock were added to the shares reserved for future issuance under the 2009 Plan. On January 1, 2014 an additional 1,066,340 shares of common stock were added to the shares reserved for future issuance under the 2009 Plan.
Under the terms of the Company’s 2010 Non-Employee Directors’ Stock Award Plan (Directors’ Plan), which became effective on November 10, 2011, 238,095 shares of common stock were reserved for future issuance. On May 9, 2013 an additional 161,905 shares of common stock were added to the shares reserved for future issuance under the Directors' Plan. As of June 30, 2014, 207,327 shares remained available for issuance under the plan.
Under the terms of the Company’s 2010 Employee Stock Purchase Plan (2010 Purchase Plan), which became effective on November 10, 2011, 214,285 shares of common stock were reserved for future issuance. On May 9, 2013 an additional 185,715 shares of common stock were added to the shares reserved for future issuance under the 2010 Purchase Plan. As of June 30, 2014, 283,998 shares remained available for issuance under the plan.
Share-based Compensation
Share-based compensation expense for the three and six months ended June 30, 2014 and the three and six months ended June 30, 2013 was $1.5 million, $3.6 million, $1.1 million, and $2.0 million, respectively, and is allocated between research and development and general and administrative expenses within the consolidated statements of operations, giving rise to a related tax benefit of $0 for all periods.
As of June 30, 2014, the total compensation cost related to nonvested option awards not yet recognized was $12.9 million and the weighted average period over which it is expected to be recognized is 2.9 years.
The following table summarizes the stock option activity for the six months ended June 30, 2014:
 
 
Number
of options
 
Weighted
average
exercise
price
 
Weighted
average
remaining
contractual
term (years)
Outstanding at beginning of period
 
4,486,564

 
$
5.89

 
 
Options granted
 
604,805

 
23.24

 
 
Options exercised
 
(269,148
)
 
5.42

 
 
Options forfeited
 
(17,371
)
 
14.82

 
 
Options expired
 

 

 
 
Outstanding at end of period
 
4,804,850

 
$
8.07

 
6.7
Options exercisable at end of period
 
3,425,050

 
$
4.90

 
5.9


The following table summarizes options that were granted during the six months ended June 30, 2014, and the range of assumptions used to estimate the fair value of those stock options using a Black-Scholes valuation model:
Risk-free interest rate
 
1.86%-2.24%
Expected dividend yield
 
—%
Expected volatility
 
57.4%-62.4%
Expected term (in years)
 
6.0-7.0
Weighted average grant-date fair value per share
 
$13.62

The intrinsic value of options exercised during the six months ended June 30, 2014 was $6.9 million. The fair value of awards vested during the six months ended June 30, 2014 was $3.8 million.
Restricted stock is common stock that is subject to restrictions, including risks of forfeiture, determined by the plan committee of the Board of Directors in its sole discretion, for so long as such common stock remains subject to any such restrictions. A holder of restricted stock has all rights of a stockholder with respect to such stock, including the right to vote and to receive dividends thereon, except as otherwise provided in the award agreement relating to such award. Restricted stock awards are equity classified within the consolidated balance sheets. The fair value of each restricted stock grant is estimated on the date of grant using the closing price of Company's Common Stock on the The NASDAQ Stock Market on the date of grant.
During the six months ended June 30, 2014 and 2013, respectively, there were 133,420 and 0 shares of restricted stock granted. These restricted stock grants had a weighted average fair value (per share) at date of grant of $21.71. At June 30, 2014, and December 31, 2013, there were 93,420 and 0 shares of unvested restricted stock outstanding, respectively. Compensation expense is determined for the issuance of restricted stock by amortizing over the requisite service period, or the vesting period, the aggregate fair value of the restricted stock awarded based on the closing price of the Company’s common stock on the date of grant.
A summary of the Company’s unvested restricted stock at June 30, 2014 and changes during the six months ended June 30, 2014 is as follows:
 
 
Restricted Stock
 
Weighted Average Grant Date Fair Value
Unvested at December 31, 2013
 

 
$

Granted
 
133,420

 
21.71

Vested
 
(40,000
)
 
21.38

Forfeited/cancelled
 

 

Unvested restricted stock at June 30, 2014
 
93,420

 
$
21.85

 
 
 
 
 

As of June 30, 2014, the total remaining unrecognized compensation cost related to issuances of restricted stock was approximately $1.8 million and is expected to be recognized over a weighted-average period of 3.1 years.
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Income Taxes (Notes)
6 Months Ended
Jun. 30, 2014
Income Tax Disclosure [Abstract] '
Income Taxes '
Income Taxes
The company incurred no income tax expense for the six months ended June 30, 2014 and 2013. Income tax expense differs from the amount that would be expected after applying the statutory U.S. federal income tax rate primarily due to changes in the valuation allowance for deferred taxes.
The valuation allowance for deferred tax assets as of June 30, 2014 and December 31, 2013 was $27.5 million and $25.2 million, respectively. The net change in the total valuation allowance for the six months ended June 30, 2014 and 2013 was an increase of $2.4 million and $4.2 million, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment. Valuation allowances have been established for the entire amount of the net deferred tax assets as of June 30, 2014 and December 31, 2013, due to the uncertainty of future recoverability.
Based on analysis from inception through December 31, 2011, we believe that NewLink experienced Section 382 ownership changes in September 2001 and March 2003 and BPS experienced Section 382 ownership changes in January 2006 and January 2011. These ownership changes limit NewLink’s ability to utilize federal net operating loss carryforwards (and certain other tax attributes) that accrued prior to the respective ownership changes of NewLink and BPS. Additional ownership changes may have occurred subsequent to December 31, 2011 and may occur in the future as a result of events over which the Company will have little or no control, including purchases and sales of the Company’s equity by our 5% stockholders, the emergence of new 5% stockholders, additional equity offerings or redemptions of the Company’s stock or certain changes in the ownership of any of the Company’s 5% stockholders.

Additional analysis will be required to determine whether changes in our ownership since December 31, 2011 and/or changes in our ownership that resulted from our follow-on offering or our ATM Offering have caused or will cause another ownership change to occur. Any such change could result in significant limitations on some or all of our net operating loss carryforwards and other tax attributes.

Even if another ownership change has not occurred, additional ownership changes may occur in the future as a result of events over which we will have little or no control, including purchases and sales of our equity by our 5% stockholders, the emergence of new 5% stockholders, additional equity offerings or redemptions of our stock or certain changes in the ownership of any of our 5% stockholders.
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Net Loss per Common Share (Notes)
6 Months Ended
Jun. 30, 2014
Earnings Per Share [Abstract] '
Net Loss per Common Share '
Net Loss per Common Share
Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, preferred stock, stock options and warrants are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.
The following table presents the computation of basic and diluted net loss per common share (in thousands, except share and per share data):
 
 
Six Months Ended
June 30,
 
 
 
2014
 
2013
 
Historical net loss per share
 
 
 
 
 
Numerator
 
 
 
 
 
Net loss attributable to common stockholders
 
$
(18,399
)
 
$
(15,011
)
 
Denominator
 
 
 
 
 
Weighted-average common shares outstanding (basic and diluted)
 
$
27,742,029

 
$
24,745,380

 
Basic and diluted net loss per share
 
$
(0.66
)
 
$
(0.61
)
 

As of June 30, 2014 and 2013 respectively, 4.9 million and 4.5 million common equivalent shares of potentially dilutive securities were not included in the calculation of diluted net loss per common share because to do so would be anti-dilutive.
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Commitments and Contingencies (Notes)
6 Months Ended
Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract] '
Commitments and Contingencies Disclosure '
Commitments and Contingencies
In June 2014, we entered into a Development and Manufacturing Terms and Conditions and a Development and Process Transfer Program Leading to Commercial Manufacturing for algenpantucel-L HyperAcute Pancreas with WuXi AppTec, Inc., or WuXi, or collectively, the WuXi Agreement. The WuXi Agreement is intended to establish a source of supply for algenpantucel-L for commercial sale, if and when that drug is approved by the FDA. Under the WuXi Agreement, we granted WuXi a non-exclusive right to use certain starting materials and our confidential information to develop manufacturing processes and to manufacture cell material to be formulated into algenpantucel-L. WuXi will adapt facilities and equipment for production, generate batch records and other documents, perform studies and test manufacturing runs and conduct process validation and characterization.
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Subsequent Events (Notes)
6 Months Ended
Jun. 30, 2014
Subsequent Events [Abstract] '
Subsequent Events '
Subsequent Events
The Company entered into a letter contract dated August 4, 2014, with the United States Defense Threat Reduction Agency. The letter contract is for $1.0 million with additional funding subject to final negotiation and will fund Investigational New Drug (IND)-enabling pre-clinical toxicology studies and includes the manufacture of clinical materials.
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Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2014
Accounting Policies [Abstract] '
Use of Estimates '
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation '
Principles of Consolidation
The consolidated financial statements include the financial statements of NewLink and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Financial Instruments '
Financial Instruments and Concentrations of Credit Risk
The fair values of cash and cash equivalents, certificates of deposit, receivables, and accounts payable, which are recorded at cost, approximate fair value based on the short-term nature of these financial instruments. The fair value and carrying value of notes payable and capital lease obligations was $1.1 million and $1.2 million as of June 30, 2014 and December 31, 2013, respectively, and was determined using Level 3 inputs. The Company is unable to estimate the fair value of the royalty obligation because the timing and receipt of payments is uncertain.
Concentration of Credit Risk '
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, and certificates of deposit. Cash and cash equivalents are held by financial institutions and are federally insured up to certain limits. At times, the Company’s cash and cash equivalents balance exceeds the federally insured limits. To limit the credit risk, the Company invests its excess cash primarily in high quality cash equivalents, such as money market funds, or certificates of deposit
Recent Accounting Pronouncements '
Recent Accounting Pronouncements
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The ASU eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in the ASU will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company early adopted this standard effective June 30, 2014. Adoption of this standard did not have a material impact on our condensed consolidated financial statements.
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Common Stock Equity Incentive Plan (Tables)
6 Months Ended
Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] '
Stock Option Activity '
The following table summarizes the stock option activity for the six months ended June 30, 2014:
 
 
Number
of options
 
Weighted
average
exercise
price
 
Weighted
average
remaining
contractual
term (years)
Outstanding at beginning of period
 
4,486,564

 
$
5.89

 
 
Options granted
 
604,805

 
23.24

 
 
Options exercised
 
(269,148
)
 
5.42

 
 
Options forfeited
 
(17,371
)
 
14.82

 
 
Options expired
 

 

 
 
Outstanding at end of period
 
4,804,850

 
$
8.07

 
6.7
Options exercisable at end of period
 
3,425,050

 
$
4.90

 
5.9
Assumptions Used in Black-Scholes Pricing Model for New Grants '
The following table summarizes options that were granted during the six months ended June 30, 2014, and the range of assumptions used to estimate the fair value of those stock options using a Black-Scholes valuation model:
Risk-free interest rate
 
1.86%-2.24%
Expected dividend yield
 
—%
Expected volatility
 
57.4%-62.4%
Expected term (in years)
 
6.0-7.0
Weighted average grant-date fair value per share
 
$13.62
Restricted Stock Activity '
A summary of the Company’s unvested restricted stock at June 30, 2014 and changes during the six months ended June 30, 2014 is as follows:
 
 
Restricted Stock
 
Weighted Average Grant Date Fair Value
Unvested at December 31, 2013
 

 
$

Granted
 
133,420

 
21.71

Vested
 
(40,000
)
 
21.38

Forfeited/cancelled
 

 

Unvested restricted stock at June 30, 2014
 
93,420

 
$
21.85

 
 
 
 
 
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Net Loss per Common Share (Tables)
6 Months Ended
Jun. 30, 2014
Earnings Per Share [Abstract] '
Basic and Diluted Net Loss per Common Share '
The following table presents the computation of basic and diluted net loss per common share (in thousands, except share and per share data):
 
 
Six Months Ended
June 30,
 
 
 
2014
 
2013
 
Historical net loss per share
 
 
 
 
 
Numerator
 
 
 
 
 
Net loss attributable to common stockholders
 
$
(18,399
)
 
$
(15,011
)
 
Denominator
 
 
 
 
 
Weighted-average common shares outstanding (basic and diluted)
 
$
27,742,029

 
$
24,745,380

 
Basic and diluted net loss per share
 
$
(0.66
)
 
$
(0.61
)
 
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Description of Business (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Dec. 31, 2012
Nov. 16, 2011
Initial Public Offering
Sep. 05, 2013
Follow-on Offering
Feb. 04, 2013
Follow-on Offering
Jun. 30, 2014
ATM Offering
Organization, Consolidation and Presentation of Financial Statements [Abstract] ' ' ' ' ' ' ' ' ' '
Net loss $ (9,164,000) $ (7,077,000) $ (18,399,000) $ (15,011,000) ' ' ' ' ' '
Financings ' ' ' ' ' ' ' ' ' '
FInancing proceeds ' ' ' ' ' ' 37,600,000 60,000,000 49,000,000 45,000,000
Financing price per share ' ' ' ' ' ' ' ' $ 11.4 '
Financing shares ' ' ' ' ' ' ' ' 4,600,000 1,833,838
Financing received ' ' ' ' $ 67,200,000 $ 1,300,000 ' ' ' '
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Significant Accounting Policies (Details) (Reported Value Measurement, USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Reported Value Measurement ' '
Financial Instruments, Financial Liabilities, Balance Sheet Groupings ' '
Financial and Nonfinancial Liabilities, Fair Value Disclosure $ 1.1 $ 1.2
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(Details) (Amount, City of Ames Forgivable Loan 2010, USD $)
Jun. 30, 2014
Jul. 25, 2014
Subsequent Event
Debt Instrument ' '
Outstanding Balance $ 300,000 '
Original Available Balance 400,000 '
Amount Advanced ' 100,000
Interest rate in default 6.50% '
Jobs by March 10, 2012 70 '
Jobs by March 10, 2015 150 '
Lease square feet 20,000 '
Repayment per job $ 3,100 '
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Common Stock Equity Incentive Plan (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Stock Option
Jun. 30, 2014
Restricted Stock
Jun. 30, 2013
Restricted Stock
Jun. 30, 2014
Minimum
Stock Option
Jun. 30, 2014
Maximum
Stock Option
Jun. 30, 2014
2009 Equity Incentive Plan
Dec. 31, 2013
2009 Equity Incentive Plan
Jun. 30, 2014
2010 Employee Stock Purchase Plan
Jun. 30, 2014
2010 Non-Employee Directors' Stock Option Plan
Common Stock Equity Incentive Plan ' ' ' ' ' ' ' ' ' ' ' ' '
Number of Shares Authorized ' ' ' ' ' ' ' ' ' 6,799,854 ' 214,285 238,095
Number of Shares Available for Grant ' ' ' ' ' ' ' ' ' 1,075,709 ' 283,998 207,327
Increase in Number of Shares Authorized ' ' ' ' ' ' ' ' ' 1,066,340 838,375 185,715 161,905
Evergreen Increase Percentage ' ' ' ' ' ' ' ' ' 4.00% ' ' '
Total Compensation Cost Related to Non-vested Option Awards ' ' ' ' $ 12,900,000 $ 1,800,000 ' ' ' ' ' ' '
Weighted Average Vesting Period for Non-vested Option Awards, In Years ' ' ' ' 2.9 3.1 ' ' ' ' ' ' '
Share-based Compensation Expense 1,500,000 1,100,000 3,600,000 2,000,000 ' ' ' ' ' ' ' ' '
Income Tax Benefit from Compensation Expense ' ' 0 0 ' ' ' ' ' ' ' ' '
Intrinsic Value of Options Exercised ' ' ' ' 6,900,000 ' ' ' ' ' ' ' '
Fair Value of Awards Vested ' ' ' ' $ 3,800,000 ' ' ' ' ' ' ' '
Assumptions Used in Black Scholes Pricing Model for New Grants ' ' ' ' ' ' ' ' ' ' ' ' '
Risk Free Interest Rate ' ' ' ' ' ' ' 1.86% 2.24% ' ' ' '
Dividend Rate ' ' ' ' ' ' ' 0.00% 0.00% ' ' ' '
Volatility Rate ' ' ' ' ' ' ' 57.40% 62.40% ' ' ' '
Expected Term (in years) ' ' ' ' ' ' ' 6 7 ' ' ' '
Weighted average grant-date fair value per share ' ' ' ' $ 13.62 $ 21.71 ' ' ' ' ' ' '
Stock Option Activity ' ' ' ' ' ' ' ' ' ' ' ' '
Outstanding at beginning of period ' ' ' ' 4,486,564 0 ' ' ' ' ' ' '
Outstanding at beginning of period, weighted average exercise price ' ' ' ' $ 5.89 $ 0 ' ' ' ' ' ' '
Grants ' ' ' ' 604,805 133,420 0 ' ' ' ' ' '
Grants, weighted average exercise price ' ' ' ' $ 23.24 $ 21.71 ' ' ' ' ' ' '
Vested ' ' ' ' ' (40,000) ' ' ' ' ' ' '
Vested, weighted average exercise price ' ' ' ' ' $ 21.38 ' ' ' ' ' ' '
Exercises ' ' (309,148) ' (269,148) ' ' ' ' ' ' ' '
Exercises, weighted average exercise price ' ' ' ' $ 5.42 ' ' ' ' ' ' ' '
Forfeitures ' ' ' ' (17,371) 0 ' ' ' ' ' ' '
Forfeitures, weighted average exercise price ' ' ' ' $ 14.82 $ 0 ' ' ' ' ' ' '
Expirations ' ' ' ' 0 ' ' ' ' ' ' ' '
Expirations, weighted average exercise price ' ' ' ' $ 0 ' ' ' ' ' ' ' '
Outstanding at end of period ' ' ' ' 4,804,850 93,420 ' ' ' ' ' ' '
Outstanding at end of period, weighted average exercise price ' ' ' ' $ 8.07 $ 21.85 ' ' ' ' ' ' '
Outstanding at end of period, weighted average remaining contractual term, in years ' ' ' ' 6.7 ' ' ' ' ' ' ' '
Exercisable ' ' ' ' 3,425,050 ' ' ' ' ' ' ' '
Exercisable, weighted average exercise price ' ' ' ' $ 4.9 ' ' ' ' ' ' ' '
Exercisable, weighted average remaining contractual term, in years ' ' ' ' 5.9 ' ' ' ' ' ' ' '
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Income Taxes (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Income Tax Disclosure [Abstract] ' ' ' ' '
Income tax expense $ 0 $ 0 $ 0 $ 0 '
Deferred Tax Valuation Allowance (27,500,000) ' (27,500,000) ' (25,200,000)
Change in Deferred Tax Valuation Allowance ' ' $ 2,400,000 $ 4,200,000 '
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Net Loss per Common Share (Net Loss Per Share Computation) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Earnings Per Share [Abstract] ' ' ' '
Net loss attributable to common stockholders ' ' $ (18,399) $ (15,011)
Weighted-average number of common share outstanding, basic and diluted 27,876,652 25,620,566 27,742,029 24,745,380
Basic and diluted net loss per share $ (0.33) $ (0.28) $ (0.66) $ (0.61)
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Net Loss per Common Share (Antidilutive Securities) (Details)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share ' '
Potentially dilutive securities excluded from computation of diluted net loss per share 4.9 4.5
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Subsequent Events (Details) (Subsequent Event, USD $)
In Millions, unless otherwise specified
Aug. 04, 2014
Subsequent Event '
Subsequent Event '
Letter Contract Amount $ 1
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