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EX-10.2 - EX-10.2 - EXACT SCIENCES CORPexas-20150630ex10299d8d1.htm
EX-32.1 - EX-32.1 - EXACT SCIENCES CORPexas-20150630ex321c86351.htm
EX-31.1 - EX-31.1 - EXACT SCIENCES CORPexas-20150630ex31143a53a.htm
EX-31.2 - EX-31.2 - EXACT SCIENCES CORPexas-20150630ex312a3fbe8.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 


 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2015

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-35092

 

EXACT SCIENCES CORPORATION

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

02-0478229

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

 

 

441 Charmany Drive, Madison WI

 

53719

(Address of principal executive offices)

 

(Zip Code)

 

(608) 284-5700 (Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No  

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes    No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

 

Accelerated filer 

 

 

 

Non-accelerated filer 

 

Smaller reporting company 

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No  

 

As of July 29, 2015, the registrant had 96,087,664 shares of common stock outstanding.

 

 

 


 

EXACT SCIENCES CORPORATION

 

INDEX

 

 

 

 

 

 

Page

 

 

Number

 

 

 

 

Part I - Financial Information

 

 

 

 

Item 1. 

Financial Statements

 

 

 

 

 

Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2015 and December 31, 2014

 

 

 

 

Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2015 and 2014

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the Three and Six Months Ended June 30, 2015 and 2014

 

 

 

 

Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2015 and 2014

 

 

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

 

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22 

 

 

 

Item 3. 

Quantitative and Qualitative Disclosures About Market Risk

33 

 

 

 

Item 4. 

Controls and Procedures

33 

 

 

 

 

Part II - Other Information

 

 

 

 

Item 1. 

Legal Proceedings

33 

 

 

 

Item 1A. 

Risk Factors

34 

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

36 

 

 

 

Item 3. 

Defaults Upon Senior Securities

36 

 

 

 

Item 4. 

Mine Safety Disclosures

37 

 

 

 

Item 5 

Other Information

37 

 

 

 

Item 6. 

Exhibits

37 

 

 

 

 

Signatures

38 

 

 

 

 

Exhibit Index

39 

 

 

2


 

Part I — Financial Information

 

EXACT SCIENCES CORPORATION

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share data - unaudited)

 

 

 

 

 

 

 

 

 

 

 

    

June 30,

    

December 31,

 

 

 

2015

 

2014

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

33,765

 

$

58,131

 

Marketable securities

 

 

177,053

 

 

224,625

 

Accounts receivable, net

 

 

2,151

 

 

1,376

 

Inventory, net

 

 

6,275

 

 

4,017

 

Prepaid expenses and other current assets

 

 

4,019

 

 

3,528

 

Total current assets

 

 

223,263

 

 

291,677

 

Property and Equipment, at cost:

 

 

 

 

 

 

 

Laboratory equipment

 

 

11,279

 

 

10,381

 

Assets under construction

 

 

7,664

 

 

1,552

 

Computer equipment and computer software

 

 

10,807

 

 

7,577

 

Leasehold improvements

 

 

6,446

 

 

5,937

 

Furniture and fixtures

 

 

933

 

 

939

 

 

 

 

37,129

 

 

26,386

 

Less—Accumulated depreciation

 

 

(9,817)

 

 

(6,439)

 

Net property and equipment

 

 

27,312

 

 

19,947

 

Other long-term assets

 

 

2,442

 

 

1,200

 

Total assets

 

$

253,017

 

$

312,824

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

1,345

 

$

2,647

 

Accrued liabilities

 

 

16,306

 

 

13,960

 

Debt and capital lease obligation, current portion

 

 

345

 

 

360

 

Other short-term liabilities

 

 

734

 

 

554

 

Total current liabilities

 

 

18,730

 

 

17,521

 

Long-term debt

 

 

3,488

 

 

1,000

 

Long-term accrued interest

 

 

 —

 

 

106

 

Other long-term liabilities

 

 

4,620

 

 

3,599

 

Lease incentive obligation, less current portion

 

 

1,338

 

 

1,614

 

     Total liabilities

 

 

28,176

 

 

23,840

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Preferred stock, $0.01 par value Authorized—5,000,000 shares Issued and outstandingno shares at June 30, 2015 and December 31, 2014

 

 

 

 

 

Common stock, $0.01 par value Authorized—200,000,000 shares Issued and outstanding89,061,044 and 88,626,042 shares at June 30, 2015 and December 31, 2014

 

 

891

 

 

887

 

Additional paid-in capital

 

 

719,635

 

 

709,019

 

Accumulated other comprehensive income (loss)

 

 

(11)

 

 

(115)

 

Accumulated deficit

 

 

(495,674)

 

 

(420,807)

 

Total stockholders’ equity

 

 

224,841

 

 

288,984

 

Total liabilities and stockholders’ equity

 

$

253,017

 

$

312,824

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

EXACT SCIENCES CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data - unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2015

 

2014

    

2015

    

2014

    

Laboratory service revenue

 

$

8,119

 

$

 —

 

$

12,385

 

$

 —

 

License fees

 

 

 —

 

 

 —

 

 

 —

 

 

294

 

Total revenue

 

 

8,119

 

 

 —

 

 

12,385

 

 

294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

5,094

 

 

 —

 

 

9,306

 

 

 —

 

Gross margin

 

 

3,025

 

 

 —

 

 

3,079

 

 

294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

8,115

 

 

7,174

 

 

14,686

 

 

14,604

 

General and administrative

 

 

13,683

 

 

6,230

 

 

26,654

 

 

10,816

 

Sales and marketing

 

 

20,593

 

 

6,166

 

 

37,117

 

 

10,622

 

Total operating expenses

 

 

42,391

 

 

19,570

 

 

78,457

 

 

36,042

 

Loss from operations

 

 

(39,366)

 

 

(19,570)

 

 

(75,378)

 

 

(35,748)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income

 

 

193

 

 

146

 

 

415

 

 

232

 

Interest income (expense)

 

 

107

 

 

(13)

 

 

96

 

 

(28)

 

Total other income

 

 

300

 

 

133

 

 

511

 

 

204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(39,066)

 

$

(19,437)

 

$

(74,867)

 

$

(35,544)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share—basic and diluted

 

$

(0.44)

 

$

(0.24)

 

$

(0.84)

 

$

(0.46)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding—basic and diluted

 

 

88,919

 

 

82,048

 

 

88,791

 

 

76,548

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

 

EXACT SCIENCES CORPORATION

Condensed Consolidated Statements of Comprehensive Loss

(Amounts in thousands - unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2015

 

2014

    

2015

    

2014

    

Net loss

 

$

(39,066)

 

$

(19,437)

 

$

(74,867)

 

$

(35,544)

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale investments

 

 

(59)

 

 

(44)

 

 

136

 

 

(36)

 

Foreign currency translation loss

 

 

(22)

 

 

 —

 

 

(32)

 

 

 —

 

Comprehensive loss

 

$

(39,147)

 

$

(19,481)

 

$

(74,763)

 

$

(35,580)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

 

 

EXACT SCIENCES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except share data - unaudited)

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

    

2015

    

2014

    

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(74,867)

 

$

(35,544)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization of fixed assets

 

 

3,377

 

 

1,344

 

Stock-based compensation

 

 

8,168

 

 

4,478

 

Amortization of deferred license fees

 

 

 —

 

 

(294)

 

Amortization of other liabilities

 

 

(241)

 

 

 —

 

Forgiveness of long-term debt

 

 

(1,000)

 

 

 —

 

Amortization of premium on short-term investments

 

 

702

 

 

370

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(291)

 

 

(1,788)

 

Accounts receivable

 

 

(775)

 

 

 —

 

Inventory, net

 

 

(2,258)

 

 

 —

 

Accounts payable

 

 

(1,302)

 

 

(404)

 

Accrued liabilities

 

 

3,181

 

 

3,210

 

Lease incentive obligation

 

 

(276)

 

 

(270)

 

Accrued interest

 

 

(106)

 

 

11

 

Net cash used in operating activities

 

 

(65,688)

 

 

(28,887)

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(19,318)

 

 

(138,855)

 

Maturities of marketable securities

 

 

66,324

 

 

44,768

 

Purchases of property and equipment

 

 

(10,742)

 

 

(7,196)

 

Net cash provided by (used in) investing activities

 

 

36,264

 

 

(101,283)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from exercise of common stock options

 

 

859

 

 

193

 

Proceeds from sale of common stock, net of issuance costs

 

 

 —

 

 

137,670

 

Payments on capital lease obligations

 

 

(183)

 

 

(173)

 

Proceeds from mortgage payable

 

 

3,656

 

 

 —

 

Proceeds in connection with the Company's employee stock purchase plan

 

 

758

 

 

337

 

Net cash provided by financing activities

 

 

5,090

 

 

138,027

 

 

 

 

 

 

 

 

 

Effects of exchange rate on cash and cash equivalents

 

 

(32)

 

 

 —

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

(24,366)

 

 

7,857

 

Cash and cash equivalents, beginning of period

 

 

58,131

 

 

12,851

 

Cash and cash equivalents, end of period

 

$

33,765

 

$

20,708

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

Unrealized gain on available-for-sale investments

 

$

136

 

$

36

 

Issuance of 21,826 and 32,669 shares of common stock to fund the Company’s 401(k) matching contribution for 2014 and 2013, respectively

 

$

835

 

$

456

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

EXACT SCIENCES CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

(1) ORGANIZATION AND BASIS OF PRESENTATION

 

Organization

 

Exact Sciences Corporation (together with its subsidiaries, “Exact”, “we”, “us” or the “Company”) was incorporated in February 1995. Exact is a molecular diagnostics company currently focused on the early detection and prevention of some of the deadliest forms of cancer. The Company has developed an accurate, non-invasive, patient-friendly screening test for the early detection of colorectal cancer and pre-cancer, and is currently working on the development of tests for lung cancer, pancreatic cancer and esophageal cancer.

 

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements, which include the accounts of Exact Sciences Corporation and those of its wholly-owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, and variable interest entities are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements and notes as of and for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K (the “2014 Form 10-K”). These condensed financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the results of operations have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. The statements should be read in conjunction with the audited financial statements and related notes included in the 2014 Form 10-K.  Management has evaluated subsequent events for disclosure or recognition in the accompanying financial statements up to the filing of this report.

 

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, and variable interest entities. All significant intercompany transactions and balances have been eliminated in consolidation.

References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries.

Use of Estimates

The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Cash and Cash Equivalents

The Company considers cash on hand, demand deposits in bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at June 30, 2015 and December 31, 2014.

 

7


 

Marketable Securities

 

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive loss. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight-line method, which approximates the effective interest method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income.

 

At June 30, 2015 and December 31, 2014, the Company’s investments were comprised of fixed income investments and all were deemed available-for-sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives.  The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with a contractual term greater than one year from the date of purchase) are classified as current. All of the Company’s investments are considered current. There were no realized losses for the six months ended June 30, 2015 and 2014.  Realized gains were $4.8 thousand and $7.6 thousand for the six months ended June 30, 2015 and 2014, respectively.

 

We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will have to sell the security before recovery of its cost basis. For the six months ended June 30, 2015, no investments were identified with other-than-temporary declines in value.

 

Available-for-sale securities at June 30, 2015 consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2015

 

 

    

 

 

    

Gains in Accumulated

    

Losses in Accumulated

    

 

 

 

 

 

 

 

 

Other Comprehensive

 

Other Comprehensive

 

Estimated Fair

 

(In thousands)

 

Amortized Cost

 

Income

 

Income

 

Value

 

Corporate bonds

 

$

120,096

 

$

28

 

$

(22)

 

$

120,102

 

U.S. government agency securities

 

 

4,249

 

 

 —

 

 

(1)

 

 

4,248

 

Asset backed securities

 

 

48,687

 

 

26

 

 

(10)

 

 

48,703

 

Commercial paper

 

 

4,000

 

 

 —

 

 

 

 

4,000

 

Total available-for-sale securities

 

$

177,032

 

$

54

 

$

(33)

 

$

177,053

 

 

Available-for-sale securities at December 31, 2014 consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

    

 

 

    

Gains in Accumulated

    

Losses in Accumulated

    

 

 

 

 

 

 

 

 

Other Comprehensive

 

Other Comprehensive

 

Estimated Fair

 

(In thousands)

 

Amortized Cost

 

Income

 

Income

 

Value

 

Corporate bonds

 

$

141,239

 

$

21

 

$

(136)

 

$

141,124

 

U.S. government agency securities

 

 

18,687

 

 

8

 

 

(7)

 

 

18,688

 

Certificates of deposit

 

 

60,821

 

 

17

 

 

(18)

 

 

60,820

 

Commercial paper

 

 

3,993

 

 

 

 

 

 

3,993

 

Total available-for-sale securities

 

$

224,740

 

$

46

 

$

(161)

 

$

224,625

 

 

8


 

Changes in Accumulated Other Comprehensive Income (Loss)

The amounts recognized in accumulated other comprehensive income (loss) (AOCI) for the six months ended June 30, 2015 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

Cumulative

 

Unrealized

 

Other

 

 

 

Translation

 

Gain (Loss)

 

Comprehensive

 

 

    

Adjustment

    

on Securities

    

Income (Loss)

 

Balance at December 31, 2014

 

$

 —

 

$

(115)

 

$

(115)

 

Other comprehensive (loss) income before reclassifications

 

 

(32)

 

 

142

 

 

110

 

Amounts reclassified from accumulated other comprehensive loss

 

 

 —

 

 

(6)

 

 

(6)

 

Net current period change in accumulated other comprehensive income (loss)

 

 

(32)

 

 

136

 

 

104

 

Balance at June 30, 2015

 

$

(32)

 

$

21

 

$

(11)

 

 

The amounts recognized in AOCI for the six months ended June 30, 2014 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

Cumulative

 

Unrealized

 

Other

 

 

 

Translation

 

Gain (Loss)

 

Comprehensive

 

 

    

Adjustment

    

on Securities

    

Income (Loss)

 

Balance at December 31, 2013

 

$

 —

 

$

125

 

$

125

 

Other comprehensive (loss) income before reclassifications

 

 

 —

 

 

(24)

 

 

(24)

 

Amounts reclassified from accumulated other comprehensive loss

 

 

 —

 

 

(12)

 

 

(12)

 

Net current period change in accumulated other comprehensive income (loss)

 

 

 —

 

 

(36)

 

 

(36)

 

Balance at June 30, 2014

 

$

 —

 

$

89

 

$

89

 

 

Amounts reclassified from accumulated other comprehensive income (loss) for the six months ended June 30, 2015 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affected Line Item in the

 

Six Months Ended June 30,

Details about AOCI  Components

 

Statement of Operations

 

2015

 

2014

 

Change in value of available-for-sale investments

 

 

 

 

 

 

 

 

 

Sales and maturities of available-for-sale investments

 

Investment income

 

$

(6)

 

$

(12)

 

Total reclassifications

 

 

 

$

(6)

 

$

(12)

 

 

Property and Equipment

 

Property and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of fixed assets are as follows:

 

 

 

 

 

 

 

 

Estimated

 

Asset Classification

    

Useful Life

 

Laboratory equipment

 

3 - 5 years

 

Computer equipment and computer software

 

3 years

 

Leasehold improvements

 

Lesser of the remaining lease term or useful life

 

Furniture and fixtures

 

3 years

 

 

At June 30, 2015, the Company had $7.7 million of assets under construction which consisted of $4.8 million related to a new building purchase, $1.5 million of capitalized costs related to software projects, $0.8 million of costs related to machinery and equipment, and $0.6 million of costs related to leasehold improvement and building projects.

9


 

Depreciation will begin on these assets once they are placed into service. The Company expects to incur $2.4 million in costs to complete the building improvements of which $1.4 million will be financed.  The Company expects to incur minimal costs to complete the leasehold improvements, machinery and equipment, and the software projects, and these projects are expected to be completed in 2015.

 

 

Software Capitalization Policy

Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software.

 

Net Loss Per Share

 

Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period.  Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses.

 

The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period:

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

    

2015

    

2014

    

Shares issuable upon exercise of stock options

 

5,144

 

6,221

 

Shares issuable upon exercise of outstanding warrants(1)

 

 —

 

75

 

Shares issuable upon the release of restricted stock awards

 

2,277

 

1,546

 

Shares issuable upon the vesting of restricted stock awards related to licensing agreement

 

 —

 

24

 

 

 

7,421

 

7,866

 

 


(1)

At June 30, 2014, represents warrants to purchase 75,000 shares of common stock issued under a consulting agreement.

 

Revenue Recognition

 

Laboratory Service Revenue. The Company’s revenues will be generated primarily by the Cologuard® test. Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. The Company assesses whether the fee is fixed or determinable and if the collectability is reasonably assured based on the nature of the fee charged for the laboratory services delivered and whether there are existing contractual arrangements with customers, third-party commercial payors (insurance carriers and health plans) or coverage of the test by Centers for Medicare & Medicaid Services (CMS). In addition, when evaluating collectability, the Company considers factors such as collection experience for the healthcare industry, the financial standing of customers or third-party commercial payors, and whether it has sufficient collection history to reliably estimate a payor's individual payment patterns.

 

A portion of laboratory service revenues earned by the Company will be initially recognized on a cash basis because the above criteria will not have been met at the time the test results are delivered. The Company generally bills third-party payors upon generation and delivery of a test result to the ordering physician following completion of a test.  Patients may have out-of-pocket costs for amounts not covered by their insurance carrier and the Company bills the patient directly for these amounts in the form of co-pays and deductibles in accordance with their insurance carrier and health plans. Some third-party payors may not cover the Cologuard test under their reimbursement policies. Consequently, in such cases, the Company pursues reimbursement on a case-by-case basis directly from the patient.

10


 

 

For laboratory services performed, where the collectability is not reasonably assured, the Company will continue to recognize revenues upon cash collection until it can reliably estimate the amount that would be ultimately collected for the Cologuard test. In order to begin to record revenue on an accrual basis in these scenarios, the Company expects to use at least several months of payment history, review the number of tests paid against the number of tests billed, and consider the payor's outstanding balance for unpaid tests to determine whether payments are being made for a consistently high percentage of tests billed and at appropriate amounts given the contracted or historical payment amount.  With regard to Cologuard tests covered by Medicare, the national coverage determination for Cologuard was released by CMS on October 9, 2014 and for these tests, revenue is recognized on an accrual basis once the services have been performed as the price is fixed or determinable, and collectability is reasonably assured.

 

The Company recognized approximately $8.1 million and $12.4 million in laboratory service revenue for the three and six months ended June 30, 2015.

License fees.  License fees for the licensing of product rights are recorded as deferred revenue upon receipt of cash and recognized as revenue on a straight-line basis over the license period. As more fully described in the 2014 Form 10-K, in connection with the Company’s January 2009 strategic transaction with Genzyme Corporation, the Company deferred the initial $16.65 million in cash received at closing and amortized that up-front payment on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014. In addition, in 2010 the Company received holdback amounts of $1.85 million, which were deferred at the time of receipt and were amortized on a straight-line basis into revenue over the then remaining term of the collaboration period.

 

In addition, the Company deferred $1.53 million premium related to common stock purchased by Genzyme and amortized that amount on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014.

 

The Company did not recognize revenue in connection with the amortization of the up-front payments from Genzyme during the three and six months ended June 30, 2015. The Company recognized approximately $0.3 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the six months ended June 30, 2014. There was no license fee revenue recognized during the three months ended June 30, 2014.

Inventory

 

Inventory is stated at the lower of cost or market value (net realizable value). The Company determines the cost of inventory using the first-in, first out method (FIFO). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and records a charge to cost of sales for such inventory as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value.

 

Direct and indirect manufacturing costs incurred during process validation and for other research and development activities, which are not permitted to be sold, have been expensed to research and development.  Raw material inventory that was purchased in prior periods, and expensed to research and development, may still be on hand and used toward the production of commercial Cologuard, provided it has an appropriate remaining shelf life.  This inventory is expected to provide a gross margin benefit to the Company in future periods of $0.3 million if the entirety of those balances are allocated to inventory produced for resale and not allocated to research and development activities.

 

11


 

Inventory consist of the following (amount in thousands):

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

    

2015

    

2014

 

Raw Materials

 

$

1,072

 

$

1,019

 

Semi-finished and finished goods

 

 

5,203

 

 

2,998

 

Total inventory

 

$

6,275

 

$

4,017

 

 

Foreign Currency Translation

 

For the Company’s international subsidiary, formed in 2014, the local currency is the functional currency. Assets and liabilities of this subsidiary are translated into United States dollars at the period-end exchange rate or historical rates as appropriate. Consolidated statements of earnings amounts are translated at average exchange rates for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheet as a component of accumulated other comprehensive income in total Exact Sciences Corporation’s shareholders’ equity. Transaction gains and losses are included in the consolidated statement of operations in 2015.

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and accompanying notes to the consolidated financial statements.

 

 

(3) MAYO LICENSE AGREEMENT

 

Overview

 

As more fully described in the 2014 Form 10-K, in June 2009 the Company entered into a license agreement (the “MAYO Agreement”) with MAYO Foundation for Medical Education and Research (“MAYO”). Pursuant to the MAYO Agreement, the Company granted MAYO two common stock purchase warrants with an exercise price of $1.90 per share covering 1,000,000 and 250,000 shares of common stock, respectively. The MAYO Agreement required the Company to make payments to MAYO for up-front fees, fees upon the achievement of certain milestones, and certain other payments. In addition to the license to intellectual property owned by MAYO, MAYO agreed to make available personnel to provide the Company product development and research and development assistance. The Company agreed to make royalty payments to MAYO on potential future net sales of any products developed from the licensed technology. The Company sought rights to the MAYO intellectual property for the specific purpose of developing a non-invasive, stool-based DNA screening test for colorectal cancer.  At the time the MAYO Agreement was executed, the Company’s sole focus was the development of such a test.  Accordingly, the Company recognized the initial payments and expenses related to the warrants at the time of the transaction and the amounts were expensed to research and development as there were no anticipated alternative future uses associated with the intellectual property.

 

Warrants

 

The warrants granted to MAYO were valued based on a Black-Scholes pricing model at the date of the grant. The warrants were granted with an exercise price of $1.90 per share of common stock. The grant to purchase 1,000,000 shares was immediately exercisable and the grant to purchase 250,000 shares vested and became exercisable over a four year period.

 

MAYO exercised the warrant to purchase 1,000,000 shares through several partial exercises. As of September 2011, the warrant covering 1,000,000 shares was fully exercised.

 

MAYO exercised the warrant to purchase 250,000 shares through partial exercises, the last of which occurred in June 2014. In June 2014, MAYO exercised the remaining shares of this warrant by utilizing the cashless exercise provision contained in the warrant. As a result of this exercise for a gross amount of 80,000 shares, in lieu of paying a

12


 

cash exercise price, MAYO forfeited its right with respect to 10,587 shares leaving it with a net amount of 69,413 shares. Following this exercise, all of MAYO’s warrants to purchase the Company’s common stock were fully exercised.

 

Royalty Payments

 

Under the MAYO Agreement, the Company agreed to make royalty payments to MAYO based on a percentage of net sales of products developed from the licensed technology starting in the third year of the agreement.  In 2012, minimum royalty payments were $10,000. For each year from 2015 through 2033 (the year the last patent expires), the minimum royalty payments are $25,000 per year.

 

Other Payments

 

Other payments under the MAYO Agreement include an upfront payment of $80,000, a milestone payment of $250,000 on the commencement of patient enrollment in a human cancer screening clinical trial, and a $500,000 payment upon FDA approval of the Company’s Cologuard test.  The upfront payment of $80,000 was made in the third quarter of 2009 and expensed to research and development in the second quarter of 2009. The Company began enrollment in human cancer screening clinical trial in June 2011 and the milestone payment of $250,000 was made and expensed to research and development in June 2011.  The Company received FDA approval for its Cologuard test in August 2014, and the milestone payment of $500,000 was made and expensed to research and development in August 2014.

 

In addition, the Company pays MAYO for research and development efforts.  During the three and six months ended June 30, 2015, the Company made payments of $0.4 million and $1.6 million, respectively. At June 30, 2015 the Company recorded an estimated liability in the amount of $0.7 million for MAYO’s research and development efforts.  During the three and six months ended June 30, 2014, the Company made research and development payments to MAYO of $0.2 million and $0.7 million, respectively. At June 30, 2014 the Company recorded an estimated liability in the amount of $1.0 million for research and development efforts.

 

May 2012 Amendment

 

In May 2012 the Company expanded the relationship with MAYO through an amendment to the MAYO Agreement. As part of the amendment, MAYO expanded the Company’s license to include all gastrointestinal cancers and diseases, and new cancer screening applications of stool- and blood-based testing.

 

As part of the amendment, the Company agreed to make restricted stock grants to MAYO upon the achievement of certain milestones with respect to commercial launch of the Company’s second and third licensed products. Additionally, the Company agreed to make milestone payments once certain sales levels are reached on licensed products. It is uncertain as to when or if these milestones will be met; therefore, the milestone payments have not been recorded as a liability. The Company evaluates the status of the milestone payments at each reporting date to determine if a liability should be recorded for the milestone payment.

 

February 2015 Amendment

 

In February 2015 the Company amended and restated the MAYO Agreement to extend the Company’s arrangement with MAYO for an additional five years and to broaden the Company’s and MAYO’s collaboration efforts to develop screening, surveillance and diagnostic tests and tools for use in connection with gastrointestinal cancers, precancers, diseases and conditions.  Under the amended and restated agreement (the “Restated MAYO Agreement”), MAYO agreed to continue to make personnel available during the additional five year period to provide the Company product development and research and development assistance. The Restated MAYO Agreement defines “gastrointestinal” to include certain airway organs (including the pharynx, larynx, trachea, bronchi and lungs) and certain head and neck organs (including nasal passages, mouth and throat).  The Restated MAYO Agreement also reflects an expanded list of patent rights that MAYO licenses to the Company.

Pursuant to the Restated MAYO Agreement, the Company agreed to pay MAYO an additional $5.0 million, payable in five annual $1.0 million installments, the first of which was due February 10, 2015. The first $1.0 million

13


 

payment was made to MAYO in February 2015 and was capitalized to pre-paid assets and will be amortized to research and development expenses straight-line over the initial 12 month research period.  Additionally, the Company will make milestone payments once certain sales levels are reached on licensed products. It is uncertain as to when or if these milestones will be met; therefore, the milestone payments have not been recorded as a liability. The Company evaluates the status of the milestone payments at each reporting date to determine if a liability should be recorded for the milestone payment.

 

 

(4) MD ANDERSON LICENSE AGREEMENT

 

Overview

 

On April 10, 2015, the Company entered into a Joint Development and License Agreement (“MD Anderson Agreement”) with the University of Texas M.D. Anderson Cancer Center (“MD Anderson”) to jointly develop, clinically validate and obtain FDA approval and CMS coverage and reimbursement for in-vitro diagnostic and screening tools for the early detection of lung cancer (the “IVD Assays”). Under the MD Anderson Agreement, MD Anderson granted the Company an exclusive license which provides the Company with the intellectual property rights for the purpose of developing, manufacturing and marketing IVD Assays. In addition to granting the Company a license to the covered MD Anderson intellectual property, MD Anderson agreed to make personnel available to provide the Company product development and research and development assistance. Pursuant to the MD Anderson Agreement, the Company is obligated to reimburse IVD Assay development expenses incurred by the staff at MD Anderson, up to a maximum of $1.0 million per year for the first two years of the MD Anderson Agreement. At June 30, 2015 the Company recorded an estimated liability in the amount of $0.3 million for IVD Assay development efforts. As of June 30, 2015 the Company has not made payments for IVD Assay development costs. Beginning on April 30, 2015 and continuing through December 31, 2016, the Company is required to pay a quarterly fee of $0.3 million for the use of samples already collected prior to the effective date of the agreement which will be utilized in the continued research and development of IVD Assays. As of June 30, 2015 the Company recorded an estimated liability in the amount of $0.5 million for the use of samples provided by MD Anderson. Further, the Company has agreed to pay MD Anderson a low single digit royalty on the Company’s net sales of products using the licensed MD Anderson intellectual property. As of June 30, 2015 there have been no commercial sales of such product.    

 

 

(5) STOCK-BASED COMPENSATION

 

Stock-Based Compensation Plans

 

The Company’s stock-based compensation plans include the 2010 Omnibus Long-Term Incentive Plan (As Amended and Restated Effective April 28, 2015), the 2010 Employee Stock Purchase Plan, the 2015 Inducement Grant Plan and the 2000 Stock Option and Incentive Plan (collectively, the “Stock Plans”).

 

Stock-Based Compensation Expense

 

The Company recorded $4.6 million and $8.2 million in stock-based compensation expense during the three and six months ended June 30, 2015 in connection with the amortization of restricted stock and restricted stock unit awards, stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees, non-employee consultants and non-employee directors.   The Company recorded $2.5 million and $4.5 million in stock-based compensation expense during the three and six months ended June 30, 2014 in connection with the amortization of restricted stock and restricted stock unit awards, stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees and non-employee directors.

 

Determining Fair Value

 

Valuation and Recognition – The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below. The estimated fair value of employee stock options is recognized to expense using the straight-line method over the vesting period.

14


 

 

Expected Term – Expected term is based on the Company’s historical life data and is determined using the average of the vesting period and the contractual life of the stock options granted.

 

Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards.

 

Risk-Free Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent expected term.

 

Forfeitures - The Company records stock-based compensation expense only for those awards that are expected to vest.  A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.  The Company’s forfeiture rate used in the six months ended June 30, 2015 and 2014 was 4.99%.  

 

The fair value of each restricted stock and restricted stock unit award is determined on the date of grant using the closing stock price on that day.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

June 30,

 

 

    

2015

    

2014

    

2015

    

2014

    

Option Plan Shares

 

 

 

 

 

 

 

 

 

Risk-free interest rates

 

(1)

 

(1)

 

1.5%  -  1.92%

 

 1.96%

 

Expected term (in years)

 

(1)

 

(1)

 

 6.25

 

6.25

 

Expected volatility

 

(1)

 

(1)

 

67.1%  -  73.2%

 

80.8%

 

Dividend yield

 

(1)

 

(1)

 

0 %

 

0%

 

Weighted average fair value per share of options granted during the period

 

(1)

 

(1)

 

$  15.81 

 

$  9.86

 

ESPP Shares

 

   

 

 

 

   

 

 

 

Risk-free interest rates

 

0.25%  -  0.6%

 

0.1%  - 0.41%

 

0.25%  -  0.6%

 

0.1%  - 0.41%

 

Expected term (in years)

 

0.5  -  2

 

0.5  - 2

 

0.5  -  2

 

0.5  - 2

 

Expected volatility

 

51.2%  -  57.4%

 

42.5%  - 49.5%

 

51.2%  -  57.4%

 

42.5%  - 49.5%

 

Dividend yield

 

0 %

 

0%

 

0 %

 

0%

 

Weighted average fair value per share of stock purchase rights granted during the period

 

$ 7.48

 

$ 3.76

 

$ 7.48

 

$ 3.76

 

 


(1)

The Company did not grant options under its 2010 Option Plan during the period indicated.

 

15


 

Stock Option and Restricted Stock Activity

 

A summary of stock option activity under the Stock Plans during the six months ended June 30, 2015 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

Weighted

    

 

 

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

 

 

 

Exercise

 

Contractual

 

Intrinsic

 

Options

 

Shares

 

Price

 

Term (Years)

 

Value(1)

 

(Aggregate intrinsic value in thousands)

 

 

 

 

 

 

 

 

 

 

 

Outstanding, December 31, 2014

 

4,934,317

 

$

3.63

 

5.2

 

 

 

 

Granted

 

340,978

 

 

23.51

 

 

 

 

 

 

Exercised

 

(96,573)

 

 

8.08

 

 

 

 

 

 

Forfeited

 

(35,025)

 

 

16.55

 

 

 

 

 

 

Outstanding, June 30, 2015

 

5,143,697

 

$

4.77

 

5.0

 

$

128,421

 

Exercisable, June 30, 2015

 

4,367,935

 

$

2.61

 

4.3

 

$

118,496

 

Vested and expected to vest, June 30, 2015

 

5,104,986

 

$

4.68

 

5.2

 

$

127,926

 

 


(1)

The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices that were lower than the $29.74 market price of the Company’s common stock at June 30, 2015.  The total intrinsic value of options exercised during the six months ended June 30, 2015 and 2014 was $1.8 million and $0.7 million, respectively.

 

As of June 30, 2015, there was $38.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all Stock Plans.  Total unrecognized compensation cost will be adjusted for future changes in forfeitures.  The Company expects to recognize that cost over a weighted average period of 3.1 years.

 

A summary of restricted stock activity under the Stock Plans during the six months ended June 30, 2015 is as follows:

 

 

 

 

 

 

 

 

    

 

    

Weighted

 

 

 

Restricted

 

Average Grant

 

 

 

Shares

 

Date Fair Value

 

Outstanding, January 1, 2015

 

1,541,114

 

$

13.86

 

Granted

 

1,104,074

 

 

23.62

 

Released

 

(262,656)

 

 

11.84

 

Forfeited

 

(105,825)

 

 

14.79

 

Outstanding, June 30, 2015

 

2,276,707

 

$

18.78

 

 

 

 

 

(6) FAIR VALUE MEASUREMENTS

 

The FASB has issued authoritative guidance which requires that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.  Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy.  The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs.  Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.  Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

16


 

The three levels of the fair value hierarchy established are as follows:

 

 

 

 

Level 1

 

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

 

 

Level 2

 

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.  These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

 

 

Level 3

 

Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

 

Fixed-income securities and mutual funds are valued using a third party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material change from period to period.  The estimated fair value of the Company’s long-term debt based on a market approach was approximately $3.5 million and $1.0 million as of June 30, 2015 and December 31, 2014, respectively, and represent Level 2 measurements.  When determining the estimated fair value of the Company’s long-term debt, the Company used market-based risk measurements, such as credit risk.

 

The following table presents the Company’s fair value measurements as of June 30, 2015 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  Amounts in the table are in thousands.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurement at June 30, 2015 Using:

 

 

    

 

 

    

Quoted Prices

    

Significant

    

 

 

 

 

 

 

 

 

in Active

 

Other

 

Significant

 

 

 

 

 

 

Markets for

 

Observable

 

Unobservable

 

 

 

Fair Value at

 

Identical Assets

 

Inputs

 

Inputs

 

Description

 

June 30, 2015

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and money market

 

$

33,765

 

$

33,765

 

$

 —

 

$

 —

 

Available-for-Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

120,101

 

 

 —

 

 

120,101

 

 

 —

 

U.S. government agency securities

 

 

4,249

 

 

 —

 

 

4,249

 

 

 —

 

Asset backed securities

 

 

48,703

 

 

 —

 

 

48,703

 

 

 —

 

Commercial paper

 

 

4,000

 

 

 —

 

 

4,000

 

 

 —

 

Total

 

$

210,818

 

$

33,765

 

$

177,053

 

$

 —

 

 

17


 

The following table presents the Company’s fair value measurements as of December 31, 2014 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  Amounts in the table are in thousands.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurement at December 31, 2014 Using:

 

 

    

 

 

    

Quoted Prices

    

Significant

    

 

 

 

 

 

 

 

 

in Active

 

Other

 

Significant

 

 

 

 

 

 

Markets for

 

Observable

 

Unobservable

 

 

 

Fair Value at

 

Identical Assets

 

Inputs

 

Inputs

 

Description

 

December 31, 2014

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and money market

 

$

53,569

 

$

53,569

 

$

 —

 

$

 —

 

Corporate bonds

 

 

4,562

 

 

 —

 

 

4,562

 

 

 —

 

Available-for-Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

141,124

 

 

 —

 

 

141,124

 

 

 —

 

U.S. government agency securities

 

 

18,688

 

 

 —

 

 

18,688

 

 

 —

 

Asset backed securities

 

 

60,820

 

 

 —