Attached files
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EX-32.1 - EX-32.1 - AGENUS INC | agen-ex321_8.htm |
EX-31.1 - EX-31.1 - AGENUS INC | agen-ex311_7.htm |
EX-31.2 - EX-31.2 - AGENUS INC | agen-ex312_6.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2016
or
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 000-29089
Agenus Inc.
(exact name of registrant as specified in its charter)
Delaware |
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06-1562417 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
3 Forbes Road, Lexington, Massachusetts 02421
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
(781) 674-4400
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 x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations 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 x No o
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 |
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Accelerated filer |
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x |
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Non-accelerated filer |
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o (Do not check if a smaller reporting company) |
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Smaller reporting company |
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o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Number of shares outstanding of the issuer's Common Stock as of May 2, 2016: 86,882,451 shares
Three Months Ended March 31, 2016
Table of Contents
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Page |
PART I |
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ITEM 1. |
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2 |
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Condensed Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015 |
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2 |
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3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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5 |
ITEM 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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12 |
ITEM 3. |
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16 |
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ITEM 4. |
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17 |
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PART II |
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ITEM 1A. |
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18 |
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ITEM 6. |
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40 |
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41 |
PART I - FINANCIAL INFORMATION
AGENUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31, 2016 |
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December 31, 2015 |
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ASSETS |
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Cash and cash equivalents |
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$ |
78,330,566 |
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$ |
136,702,873 |
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Short-term investments |
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69,899,364 |
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34,964,730 |
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Inventories |
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88,200 |
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88,200 |
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Accounts Receivable |
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10,224,299 |
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9,800,342 |
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Prepaid expenses |
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2,780,937 |
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1,956,941 |
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Other current assets |
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289,445 |
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582,280 |
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Total current assets |
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161,612,811 |
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184,095,366 |
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Property, plant and equipment, net of accumulated amortization and depreciation of $30,171,945 and $29,488,793 at March 31, 2016 and December 31, 2015, respectively |
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16,587,788 |
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15,310,623 |
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Goodwill |
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23,267,789 |
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22,792,778 |
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Acquired intangible assets, net of accumulated amortization of $1,583,654 and $987,394 at March 31, 2016 and December 31, 2015, respectively |
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18,388,271 |
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18,759,662 |
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Other long-term assets |
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1,282,662 |
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1,270,055 |
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Total assets |
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$ |
221,139,321 |
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$ |
242,228,484 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current portion, long-term debt |
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$ |
146,061 |
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$ |
146,061 |
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Current portion, deferred revenue |
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3,156,659 |
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3,829,371 |
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Accounts payable |
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2,512,567 |
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4,488,561 |
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Accrued liabilities |
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19,852,005 |
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14,165,816 |
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Other current liabilities |
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5,590,802 |
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6,304,281 |
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Total current liabilities |
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31,258,094 |
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28,934,090 |
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Long-term debt, net of current portion |
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118,161,987 |
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114,326,489 |
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Deferred revenue, net of current portion |
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14,200,898 |
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15,065,754 |
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Contingent purchase price consideration |
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5,266,000 |
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5,608,000 |
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Other long-term liabilities |
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7,799,602 |
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7,566,601 |
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Commitments and contingencies |
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STOCKHOLDERS’ EQUITY |
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Preferred stock, par value $0.01 per share; 5,000,000 shares authorized: |
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Series A-1 convertible preferred stock; 31,620 shares designated, issued, and outstanding at March 31, 2016 and December 31, 2015; liquidation value of $32,266,373 at March 31, 2016 |
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316 |
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316 |
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Common stock, par value $0.01 per share; 140,000,000 shares authorized; 86,529,579 and 86,390,697 shares issued at March 31, 2016 and December 31, 2015, respectively |
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865,296 |
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863,907 |
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Additional paid-in capital |
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856,067,607 |
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851,103,934 |
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Accumulated other comprehensive loss |
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(1,514,512 |
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(2,053,143 |
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Accumulated deficit |
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(810,965,967 |
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(779,187,464 |
) |
Total stockholders’ equity |
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44,452,740 |
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70,727,550 |
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Total liabilities and stockholders’ equity |
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$ |
221,139,321 |
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$ |
242,228,484 |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
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Three Months Ended March 31, |
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2016 |
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2015 |
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Revenue: |
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Service revenue |
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$ |
147,456 |
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$ |
— |
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Research and development |
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5,811,420 |
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3,953,299 |
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Total revenues |
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5,958,876 |
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3,953,299 |
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Operating expenses: |
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Research and development |
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(25,038,478 |
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(9,220,143 |
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General and administrative |
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(9,231,521 |
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(5,487,109 |
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Contingent purchase price consideration fair value adjustment |
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342,000 |
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(7,537,700 |
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Operating loss |
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(27,969,123 |
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(18,291,653 |
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Other (expense) income: |
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Non-operating income (expense) |
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323,083 |
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(52,945 |
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Interest expense, net |
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(4,132,463 |
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(396,863 |
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Net loss |
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(31,778,503 |
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(18,741,461 |
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Dividends on Series A-1 convertible preferred stock |
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(50,941 |
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(50,620 |
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Net loss attributable to common stockholders |
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$ |
(31,829,444 |
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$ |
(18,792,081 |
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Per common share data: |
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Basic and diluted net loss attributable to common stockholders |
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$ |
(0.37 |
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$ |
(0.28 |
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Weighted average number of common shares outstanding: |
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Basic and diluted |
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86,686,515 |
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66,667,290 |
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Other comprehensive income: |
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Foreign currency translation gain |
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$ |
539,396 |
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$ |
764,321 |
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Unrealized loss on investments |
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(765 |
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— |
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Other comprehensive gain |
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538,631 |
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764,321 |
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Comprehensive loss |
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$ |
(31,290,813 |
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$ |
(18,027,760 |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended March 31, |
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2016 |
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2015 |
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Cash flows from operating activities: |
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Net loss |
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$ |
(31,778,503 |
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$ |
(18,741,461 |
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Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
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Depreciation and amortization |
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1,244,417 |
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445,497 |
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Share-based compensation |
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4,762,477 |
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1,492,791 |
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Non-cash interest expense |
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3,954,998 |
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203,347 |
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Change in fair value of contingent obligations |
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(342,000 |
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7,058,700 |
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Loss on extinguishment of debt |
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— |
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154,117 |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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(369,445 |
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(2,055,256 |
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Inventories |
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— |
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7,500 |
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Prepaid expenses |
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(811,976 |
) |
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(973,812 |
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Accounts payable |
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(2,263,635 |
) |
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2,273,733 |
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Deferred revenue |
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(1,537,574 |
) |
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23,635,860 |
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Accrued liabilities and other current liabilities |
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5,575,656 |
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724,760 |
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Other operating assets and liabilities |
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32,606 |
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(10,930,439 |
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Net cash (used in) provided by operating activities |
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(21,532,979 |
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3,295,337 |
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Cash flows from investing activities: |
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Purchases of plant and equipment |
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(1,536,948 |
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(323,552 |
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Purchases of available-for-sale securities |
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(34,923,535 |
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— |
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Proceeds from sale of available-for-sale securities |
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— |
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14,534,486 |
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Net cash (used in) provided by investing activities |
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(36,460,483 |
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14,210,934 |
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Cash flows from financing activities: |
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Net proceeds from sale of equity |
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— |
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35,000,000 |
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Proceeds from employee stock purchases and option exercises |
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437,074 |
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1,108,906 |
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Proceeds from issuance of long-term debt |
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— |
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9,000,000 |
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Payments of debt |
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— |
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(833,334 |
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Payment of contingent purchase price consideration |
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— |
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(8,180,000 |
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Payment under a purchase agreement for in-process research and development |
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(1,000,000 |
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— |
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Net cash (used in) provided by financing activities |
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(562,926 |
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36,095,572 |
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Effect of exchange rate changes on cash |
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184,081 |
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(12,155 |
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Net (decrease) increase in cash and cash equivalents |
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(58,372,307 |
) |
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53,589,688 |
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Cash and cash equivalents, beginning of period |
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136,702,873 |
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25,714,519 |
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Cash and cash equivalents, end of period |
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$ |
78,330,566 |
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$ |
79,304,207 |
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Supplemental cash flow information: |
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Cash paid for interest |
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$ |
276,164 |
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$ |
201,731 |
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Supplemental disclosures - non-cash activities: |
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Purchases of plant and equipment in accounts payable and accrued liabilities |
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$ |
333,045 |
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$ |
— |
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Issuance of common stock, $0.01 par value, in connection with the acquisition of 4-Antibody AG |
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— |
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216,597 |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2016
Note A - Business, Liquidity and Basis of Presentation
Agenus Inc. (including its subsidiaries, collectively referred to as “Agenus,” the “Company,” “we,” “us,” and “our”) is an immuno-oncology company focused on the discovery and development of revolutionary new treatments that engage the body’s immune system to benefit patients suffering from cancer. We are developing a comprehensive immuno-oncology portfolio driven by the following platforms and programs, which we intend to utilize individually and in combination:
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our antibody discovery platforms, including our Retrocyte Display™, SECANT® yeast display, and phage display technologies designed to produce quality human antibodies; |
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our antibody candidate programs, including our checkpoint modulator (“CPM”) programs; |
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our vaccine programs, including Prophage™ and AutoSynVax™; and |
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our saponin-based vaccine adjuvants, principally our QS-21 Stimulon® adjuvant (“QS-21 Stimulon”). |
We have a portfolio of programs in various stages of development, including a series of antibodies in discovery and pre-clinical and clinical development, our Prophage vaccine, a Heat Shock Protein (“HSP”)-based autologous vaccine candidate for a form of brain cancer that has successfully completed Phase 2 trials, and a number of advanced QS-21 Stimulon-containing vaccine candidates in late stage development by our licensee, GlaxoSmithKline (“GSK”).
Our core antibody technologies include our antibody discovery platforms that are designed to effectively discover and produce quality human antibodies against antigens of interest. We and our partners currently have programs targeting GITR, OX40, CTLA-4, LAG-3, TIM-3, PD-1, CEACAM1 and other undisclosed targets.
Our business activities include product research and development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of our collaborations. Our product candidates require clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace. Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing arrangements with academic and corporate collaborators and licensees and by entering into new collaborations.
We have incurred significant losses since our inception. As of March 31, 2016, we had an accumulated deficit of $811.0 million. Since our inception, we have financed our operations primarily through the sale of equity and convertible and other notes, and interest income earned on cash, cash equivalents, and short-term investment balances. We believe that, based on our current plans and activities, our cash, cash equivalents and short-term investments balance of $148.2 million as of March 31, 2016 will be sufficient to satisfy our liquidity requirements through the first half of 2017.
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual consolidated financial statements. In the opinion of our management, the condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of our financial position and operating results. All significant intercompany transactions and accounts have been eliminated in consolidation. Operating results for the three months ended March 31, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. For further information, refer to our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (the “SEC”).
For our foreign subsidiaries the local currency is the functional currency. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates during the period. The cumulative translation adjustment resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive loss in total stockholders’ equity.
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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
5
Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our Directors’ Deferred Compensation Plan, or “DDCP”). Diluted income per common share is calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our DDCP) plus the dilutive effect of outstanding instruments such as warrants, stock options, nonvested shares, convertible preferred stock, and convertible notes. Because we reported a net loss attributable to common stockholders for all periods presented, diluted loss per common share is the same as basic loss per common share, as the effect of utilizing the fully diluted share count would have reduced the net loss per common share. Therefore, the following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as of March 31, 2016 and 2015, as they would be anti-dilutive:
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Three Months Ended March 31, |
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2016 |
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2015 |
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Warrants |
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4,351,450 |
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4,351,450 |
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Stock options |
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9,474,652 |
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7,834,555 |
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Nonvested shares |
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1,934,951 |
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67,578 |
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Convertible preferred stock |
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333,333 |
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333,333 |
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Cash equivalents and short-term investments consisted of the following as of March 31, 2016 and December 31, 2015 (in thousands):
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March 31, 2016 |
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December 31, 2015 |
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Cost |
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Estimated Fair Value |
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Cost |
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Estimated Fair Value |
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Institutional money market funds |
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$ |
26,296 |
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$ |
26,296 |
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$ |
106,370 |
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$ |
106,370 |
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U.S. Treasury Bills |
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114,840 |
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114,867 |
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|
54,945 |
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|
54,961 |
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Total |
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$ |
141,136 |
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$ |
141,163 |
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$ |
161,315 |
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$ |
161,331 |
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For the three months ended March 31, 2016, we received proceeds of approximately $15.0 million from the maturity of U.S. Treasury Bills classified as cash equivalents. For the three months ended March 31, 2015, we received proceeds of approximately $14.5 million from the sale of available-for-sale securities. As a result of the short-term nature of our investments, there were minimal unrealized holding gains or losses as of March 31, 2016 and 2015.
Of the investments listed above, $71.3 million and $126.4 million have been classified as cash equivalents and $69.9 million and $35.0 million as short-term investments on our condensed consolidated balance sheets as of March 31, 2016 and December 31, 2015, respectively.
Note D - Goodwill and Acquired Intangible Assets
The following table sets forth the changes in the carrying amount of goodwill for the three months ended March 31, 2016 (in thousands):
Balance, December 31, 2015 |
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$ |
22,793 |
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Foreign currency translation adjustment |
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|
475 |
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Balance, March 31, 2016 |
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$ |
23,268 |
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6
Acquired intangible assets consisted of the following as of March 31, 2016 and December 31, 2015 (in thousands):
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As of March 31, 2016 |
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Amortization period (years) |
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Gross carrying amount |
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Accumulated amortization |
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Net carrying amount |
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Intellectual property |
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7-15 years |
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$ |
16,607 |
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$ |
(1,027 |
) |
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$ |
15,580 |
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Trademarks |
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4.5 years |
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|
837 |
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(396 |
) |
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441 |
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Other |
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2-6 years |
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573 |
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(161 |
) |
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412 |
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In-process research and development |
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Indefinite |
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1,955 |
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- |
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1,955 |
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Total |
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$ |
19,972 |
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$ |
(1,584 |
) |
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$ |
18,388 |
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As of December 31, 2015 |
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Amortization period (years) |
|
Gross carrying amount |
|
|
Accumulated amortization |
|
|
Net carrying amount |
|
|||
Intellectual property |
|
7-15 years |
|
$ |
16,472 |
|
|
$ |
(541 |
) |
|
$ |
15,931 |
|
Trademarks |
|
4.5 years |
|
|
812 |
|
|
|
(339 |
) |
|
|
473 |
|
Other |
|
2-6 years |
|
|
567 |
|
|
|
(107 |
) |
|
|
460 |
|
In-process research and development |
|
Indefinite |
|
|
1,896 |
|
|
|
— |
|
|
|
1,896 |
|
Total |
|
|
|
$ |
19,747 |
|
|
$ |
(987 |
) |
|
$ |
18,760 |
|
The weighted average amortization period of our finite-lived intangible assets is 9 years. Amortization expense related to acquired intangibles is estimated at $1.8 million for the remainder of 2016, $2.2 million for the year ending 2017, $2.1 million for the year ending 2018 and $1.9 million for each of the years ending 2019 and 2020.
The acquired in-process research and development ("IPR&D") asset relates to the pre-clinical CPM antibody programs acquired with our acquisition of 4-Antibody AG in February 2014. IPR&D acquired in a business combination is capitalized at fair value and is subject to impairment testing at least annually until the underlying project is completed. Once the project is completed, the carrying value of IPR&D is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the acquired IPR&D are expensed as incurred.
Note E - Debt
Debt obligations consisted of the following as of March 31, 2016 and December 31, 2015 (in thousands):
Debt instrument |
|
Principal at March 31, 2016 |
|
|
Non-cash Interest |
|
|
Unamortized Debt Issuance Costs |
|
|
Unamortized Debt Discount |
|
|
Balance at March 31, 2016 |
|
|||||
Current Portion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
|
$ |
146 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
146 |
|
Long-term Portion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Subordinated Notes |
|
|
14,000 |
|
|
|
— |
|
|
|
— |
|
|
|
(2,059 |
) |
|
|
11,941 |
|
Note Purchase Agreement |
|
|
100,000 |
|
|
|
7,903 |
|
|
|
(1,445 |
) |
|
|
(237 |
) |
|
|
106,221 |
|
Total long-term |
|
$ |
114,000 |
|
|
$ |
7,903 |
|
|
$ |
(1,445 |
) |
|
$ |
(2,296 |
) |
|
$ |
118,162 |
|
Total |
|
$ |
114,146 |
|
|
$ |
7,903 |
|
|
$ |
(1,445 |
) |
|
$ |
(2,296 |
) |
|
$ |
118,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt instrument |
|
Principal at December 31, 2015 |
|
|
Non-cash Interest |
|
|
Unamortized Debt Issuance Costs |
|
|
Unamortized Debt Discount |
|
|
Balance at December 31, 2015 |
|
|||||
Current Portion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
|
$ |
146 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
146 |
|
Long-term Portion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Subordinated Notes |
|
|
14,000 |
|
|
|
— |
|
|
|
— |
|
|
|
(2,292 |
) |
|
|
11,708 |
|
Note Purchase Agreement |
|
|
100,000 |
|
|
|
4,342 |
|
|
|
(1,481 |
) |
|
|
(243 |
) |
|
|
102,618 |
|
Total long-term |
|
$ |
114,000 |
|
|
$ |
4,342 |
|
|
$ |
(1,481 |
) |
|
$ |
(2,535 |
) |
|
$ |
114,326 |
|
Total |
|
$ |
114,146 |
|
|
$ |
4,342 |
|
|
$ |
(1,481 |
) |
|
$ |
(2,535 |
) |
|
$ |
114,472 |
|
7
Note F - Accrued and Other Current Liabilities
Accrued liabilities consisted of the following as of March 31, 2016 and December 31, 2015 (in thousands):
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
||
Payroll |
|
$ |
3,543 |
|
|
$ |
4,600 |
|
Professional fees |
|
|
3,770 |
|
|
|
3,343 |
|
Contract manufacturing costs |
|
|
8,844 |
|
|
|
3,886 |
|
Contract research costs |
|
|
2,103 |
|
|
|
1,368 |
|
Other |
|
|
1,592 |
|
|
|
969 |
|
Total |
|
$ |
19,852 |
|
|
$ |
14,166 |
|
Other current liabilities consisted of the following as of March 31, 2016 and December 31, 2015 (in thousands):
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
||
Current portion of deferred purchase price |
|
$ |
4,973 |
|
|
$ |
5,906 |
|
Other |
|
|
618 |
|
|
|
398 |
|
Total |
|
$ |
5,591 |
|
|
$ |
6,304 |
|
Note G - Fair Value Measurements
We measure our cash equivalents and short-term investments and contingent purchase price considerations at fair value. Our cash equivalents and short-term investments are comprised solely of U.S. Treasury Bills that are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1 assets.
The fair value of our contingent purchase price consideration, $5.3 million, is based on significant inputs not observable in the market, which require it to be reported as Level 3 liabilities within the fair value hierarchy. The valuation of these liabilities use assumptions we believe would be made by a market participant and are based on estimates from a Monte Carlo simulation of our market capitalization and share price, and other factors impacting the probability of triggering the milestone payments. Market capitalization and share price were evolved using a geometric brownian motion, calculated daily for the life of the contingent purchase price considerations.
Assets and liabilities measured at fair value are summarized below (in thousands):
Description |
|
March 31, 2016 |
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobservable Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
44,968 |
|
|
$ |
44,968 |
|
|
$ |
— |
|
|
$ |
— |
|
Short-term investments |
|
|
69,899 |
|
|
|
69,899 |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
114,867 |
|
|
$ |
114,867 |
|
|
$ |
— |
|
|
$ |
— |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent purchase price consideration |
|
$ |
5,266 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
|
December 31, 2015 |
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
|
|
Significant Unobservable Inputs (Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
19,996 |
|
|
$ |
19,996 |
|
|
$ |
— |
|
|
$ |
— |
|
Short-term investments |
|
|
34,965 |
|
|
|
34,965 |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
54,961 |
|
|
$ |
54,961 |
|
|
$ |
— |
|
|
$ |
— |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent purchase price consideration |
|
$ |
5,608 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,608 |
|
8
The following table presents our liabilities measured at fair value using significant unobservable inputs (Level 3), as of March 31, 2016 (in thousands):
Balance, December 31, 2015 |
|
$ |
5,608 |
|
Change in fair value of contingent purchase price consideration during the period |
|
|
(342 |
) |
Balance, March 31, 2016 |
|
$ |
5,266 |
|
The estimated fair values of all of our financial instruments, excluding our outstanding debt, approximate their carrying amounts in our condensed consolidated balance sheets.
The fair value of our outstanding debt balance at March 31, 2016 and December 31, 2015 was $118.9 million and $115.9 million, respectively, based on the Level 2 valuation hierarchy of the fair value measurements standard using a present value methodology that was derived by evaluating the nature and terms of each note and considering the prevailing economic and market conditions at the balance sheet date. The principal amount of our outstanding debt balance at March 31, 2016 and December 31, 2015 was $122.0 million, inclusive of $7.9 million of accrued interest, and $118.5 million, inclusive of $4.3 million of accrued interest, respectively.
Note H - Share-based Compensation Plans
We primarily use the Black-Scholes option pricing model to value stock options granted to employees and non-employees, including stock options granted to members of our Board of Directors. All stock options have 10-year terms and generally vest ratably over a 3 or 4-year period. A non-cash charge to operations for the stock options granted to non-employees that have vesting or other performance criteria is affected each reporting period, until the non-employee options vest, by changes in the fair value of our common stock.
A summary of option activity for the three months ended March 31, 2016 is presented below:
|
|
Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term (in years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding at December 31, 2015 |
|
|
8,345,835 |
|
|
$ |
4.77 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
1,288,856 |
|
|
|
4.18 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(82,254 |
) |
|
|
2.98 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(19,132 |
) |
|
|
5.34 |
|
|
|
|
|
|
|
|
|
Expired |
|
|
(58,653 |
) |
|
|
7.21 |
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2016 |
|
|
9,474,652 |
|
|
$ |
4.69 |
|
|
|
7.56 |
|
|
$ |
3,968,159 |
|
Vested or expected to vest at March 31, 2016 |
|
|
8,548,437 |
|
|
$ |
4.71 |
|
|
|
7.44 |
|
|
$ |
3,648,388 |
|
Exercisable at March 31, 2016 |
|
|
5,025,089 |
|
|
$ |
4.82 |
|
|
|
6.36 |
|
|
$ |
2,498,980 |
|
The weighted average grant-date fair values of stock options granted during the three months ended March 31, 2016 and 2015 were $1.83 and $3.21, respectively.
As of March 31, 2016, $8.1 million of total unrecognized compensation cost related to stock options granted to employees and directors is expected to be recognized over a weighted average period of 1.8 years.
As of March 31, 2016, unrecognized expense for options granted to outside advisors for which performance (vesting) has not yet been completed but the exercise price of the option is known is $672,000. Such amount is subject to change each reporting period based upon changes in the fair value of our common stock, expected volatility, and the risk-free interest rate, until the outside advisor completes his or her performance under the option agreement.
Certain employees and consultants have been granted nonvested stock. The fair value of nonvested stock is calculated based on the closing sale price of our common stock on the date of issuance.
9
A summary of nonvested stock activity for the three months ended March 31, 2016 is presented below:
|
|
Nonvested Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Outstanding at December 31, 2015 |
|
|
1,730,604 |
|
|
$ |
8.55 |
|
Granted |
|
|
221,811 |
|
|
|
4.46 |
|
Vested |
|
|
(6,250 |
) |
|
|
4.24 |
|
Forfeited |
|
|
(11,214 |
) |
|
|
8.78 |
|
Outstanding at March 31, 2016 |
|
|
1,934,951 |
|
|
$ |
7.58 |
|
As of March 31, 2016, there was approximately $11.9 million of unrecognized share-based compensation expense related to these nonvested shares awarded to employees which pertained primarily to performance based awards for which, if all milestones are achieved, will be recognized over a 2.25 year period. As of March 31, 2016, unrecognized expense for nonvested shares awarded to outside advisors is $15,000. The total intrinsic value of shares vested during the three months ended March 31, 2016, was $26,500.
During the three months ended March 31, 2016, 50,387 shares were issued under the 2009 Employee Stock Purchase Plan, 6,250 shares were issued as a result of the vesting of nonvested stock and 82,254 shares were issued as a result of stock option exercises.
The impact on our results of operations from share-based compensation for the three ended March 31, 2016 and 2015, was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
2016 |
|
|
2015 |
|
||
Research and development |
|
$ |
2,290 |
|
|
$ |
570 |
|
General and administrative |
|
|
2,472 |
|
|
|
923 |
|
Total share-based compensation expense |
|
$ |
4,762 |
|
|
$ |
1,493 |
|
Note I - Benefit Plans
We maintain a multiple employer benefit plan that covers our international employees. The annual measurement date for this plan is December 31. Benefits are based upon years of service and compensation.
For the three months ended March 31, 2016 and 2015 we contributed approximately $39,000 and $24,000, respectively, to our international multiple employer benefit plan. For the remainder of the year ending December 31, 2016, we expect to contribute approximately $108,000 to our international multiple employer benefit plan.
Note J - Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). ASU 2014-09 amends revenue recognition principles and provides a single set of criteria for revenue recognition among all industries. This new standard provides a five step framework whereby revenue is recognized when promised goods or services are transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures pertaining to revenue recognition in both interim and annual periods. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. These ASUs are effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the potential impact these ASUs may have on our financial position and results of operations.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, ("ASU 2014-15"). ASU 2014-15 describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in the financial statements. The standard provides accounting that will be used along with existing auditing standards. ASU 2014-15 applies to all entities and is effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter with early adoption permitted. We are currently evaluating the potential impact that ASU 2014-15 may have on our consolidated financial statements and related disclosures.
10
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes Topic 840, Leases. ASU2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all leases with terms greater than twelve months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. We are evaluating the impact of the adoption of the standard on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”). ASU 2016-09 provides for the simplification of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 applies to all entities and is effective for the annual effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. We are currently evaluating the potential impact that ASU 2016-09 may have on our financial position and results of operations.
11
Forward Looking Statements
This Quarterly Report on Form 10-Q and other written and oral statements we make from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify these forward-looking statements by the fact they use words such as “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will,” “potential,” “opportunity,” “future” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements are likely to relate to, among other things, our business strategy, our research and development, our product development efforts, our ability to commercialize our product candidates, the activities of our licensees, our prospects for initiating partnerships or collaborations, the timing of the introduction of products, the effect of new accounting pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds as well as our plans, objectives, expectations, and intentions.
We have included more detailed descriptions of these risks and uncertainties and other risks and uncertainties applicable to our business that we believe could cause actual results to differ materially from any forward-looking statements in Part II-Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q. We encourage you to read those descriptions carefully. Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved. We caution investors not to place significant reliance on forward-looking statements contained in this document; such statements need to be evaluated in light of all the information contained in this document. Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements.
ASV ™, AutoSynVax ™, Oncophage®, PSV ™, PhosphoSynVax ™, Prophage™, Retrocyte Display™, SECANT® and Stimulon® are trademarks of Agenus Inc. and its subsidiaries. All rights reserved.
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