Attached files

file filename
EX-32.1 - EX-32.1 - AGENUS INCagen-ex321_8.htm
EX-31.2 - EX-31.2 - AGENUS INCagen-ex312_7.htm
EX-31.1 - EX-31.1 - AGENUS INCagen-ex311_6.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 September 30, 2016

or

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

 

06-1562417

(State or other jurisdiction of

incorporation or organization)

 

(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      No  

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      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

 

  (Do not check if a smaller reporting company)

 

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  

Number of shares outstanding of the issuer’s Common Stock as of November 2, 2016: 87,126,180 shares

 

 

 


Agenus Inc.

Nine Months Ended September 30, 2016

Table of Contents

 

 

 

 

 

Page

PART I

 

 

ITEM 1.

 

Financial Statements:

 

2

 

 

Condensed Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015

 

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2016 and 2015 (Unaudited)

 

3

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (Unaudited)

 

4

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

5

ITEM 2.

 

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

 

13

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

18

ITEM 4.

 

Controls and Procedures

 

18

 

 

 

PART II

 

 

ITEM 1A.

 

Risk Factors

 

20

ITEM 6.

 

Exhibits

 

42

 

 

Signatures

 

43

 

 

 

 


PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30, 2016

 

 

December 31, 2015

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

75,438,489

 

 

$

136,702,873

 

Short-term investments

 

 

19,960,567

 

 

 

34,964,730

 

Inventories

 

 

88,200

 

 

 

88,200

 

Accounts Receivable

 

 

10,284,267

 

 

 

9,800,342

 

Prepaid expenses

 

 

3,029,182

 

 

 

1,956,941

 

Other current assets

 

 

725,519

 

 

 

582,280

 

Total current assets

 

 

109,526,224

 

 

 

184,095,366

 

Property, plant and equipment, net of accumulated amortization and depreciation of

   $31,359,385 and $29,488,793 at September 30, 2016 and December 31, 2015, respectively

 

 

23,508,290

 

 

 

15,310,623

 

Goodwill

 

 

23,165,457

 

 

 

22,792,778

 

Acquired intangible assets, net of accumulated amortization of $2,705,219 and

   $987,394 at September 30, 2016 and December 31, 2015, respectively

 

 

17,218,224

 

 

 

18,759,662

 

Other long-term assets

 

 

1,423,690

 

 

 

1,270,055

 

Total assets

 

$

174,841,885

 

 

$

242,228,484

 

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

Current portion, long-term debt

 

$

146,061

 

 

$

146,061

 

Current portion, deferred revenue

 

 

2,610,729

 

 

 

3,829,371

 

Accounts payable

 

 

3,267,788

 

 

 

4,488,561

 

Accrued liabilities

 

 

21,533,583

 

 

 

14,165,816

 

Other current liabilities

 

 

7,290,750

 

 

 

6,304,281

 

Total current liabilities

 

 

34,848,911

 

 

 

28,934,090

 

Long-term debt, net of current portion

 

 

126,263,126

 

 

 

114,326,489

 

Deferred revenue, net of current portion

 

 

12,997,414

 

 

 

15,065,754

 

Contingent purchase price considerations

 

 

16,962,000

 

 

 

5,608,000

 

Other long-term liabilities

 

 

4,809,858

 

 

 

7,566,601

 

Commitments and contingencies

 

 

 

 

 

 

 

 

STOCKHOLDERS’(DEFICIT) EQUITY

 

 

 

 

 

 

 

 

Preferred stock, par value $0.01 per share; 5,000,000 shares authorized:

 

 

 

 

 

 

 

 

Series A-1 convertible preferred stock; 31,620 shares designated, issued, and

   outstanding at September 30, 2016 and December 31, 2015; liquidation value

   of $32,368,496 at September 30, 2016

 

 

316

 

 

 

316

 

Common stock, par value $0.01 per share; 240,000,000 and 140,000,000 shares authorized at September 30, 2016 and December 31, 2015, respectively; 87,115,524 and 86,390,697 shares issued at September 30, 2016 and December 31, 2015, respectively

 

 

871,155

 

 

 

863,907

 

Additional paid-in capital

 

 

858,854,694

 

 

 

851,103,934

 

Accumulated other comprehensive loss

 

 

(1,559,541

)

 

 

(2,053,143

)

Accumulated deficit

 

 

(879,206,048

)

 

 

(779,187,464

)

Total stockholders’ (deficit) equity

 

 

(21,039,424

)

 

 

70,727,550

 

Total liabilities and stockholders’ (deficit) equity

 

$

174,841,885

 

 

$

242,228,484

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

2


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

$

 

 

$

 

 

$

147,456

 

 

$

 

Research and development

 

 

4,446,171

 

 

 

6,848,194

 

 

 

16,849,876

 

 

 

17,178,191

 

Total revenues

 

 

4,446,171

 

 

 

6,848,194

 

 

 

16,997,332

 

 

 

17,178,191

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(21,588,026

)

 

 

(18,502,063

)

 

 

(68,988,290

)

 

 

(52,495,316

)

General and administrative

 

 

(8,107,262

)

 

 

(6,407,902

)

 

 

(24,456,016

)

 

 

(19,910,650

)

Contingent purchase price consideration fair value adjustment

 

 

(10,975,000

)

 

 

6,994,000

 

 

 

(11,354,000

)

 

 

(7,326,700

)

Operating loss

 

 

(36,224,117

)

 

 

(11,067,771

)

 

 

(87,800,974

)

 

 

(62,554,475

)

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating expense

 

 

(139,636

)

 

 

(653,376

)

 

 

(325,347

)

 

 

(7,356,139

)

Interest expense, net

 

 

(4,409,767

)

 

 

(1,401,102

)

 

 

(12,745,581

)

 

 

(2,363,484

)

Net loss

 

 

(40,773,520

)

 

 

(13,122,249

)

 

 

(100,871,902

)

 

 

(72,274,098

)

Dividends on Series A-1 convertible preferred stock

 

 

(51,102

)

 

 

(50,780

)

 

 

(153,064

)

 

 

(152,099

)

Net loss attributable to common stockholders

 

$

(40,824,622

)

 

$

(13,173,029

)

 

$

(101,024,966

)

 

$

(72,426,197

)

Per common share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss attributable to common stockholders

 

$

(0.47

)

 

$

(0.16

)

 

$

(1.16

)

 

$

(0.95

)

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

87,206,685

 

 

 

84,569,118

 

 

 

86,954,060

 

 

 

75,935,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

$

98,514

 

 

$

(680,993

)

 

$

493,602

 

 

$

625,132

 

Unrealized gain on investments

 

 

-

 

 

 

7,760

 

 

 

-

 

 

 

13,650

 

Other comprehensive gain (loss)

 

 

98,514

 

 

 

(673,233

)

 

 

493,602

 

 

 

638,782

 

Comprehensive loss

 

$

(40,726,108

)

 

$

(13,846,262

)

 

$

(100,531,364

)

 

$

(71,787,415

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

3


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2016

 

 

2015

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(100,871,902

)

 

$

(72,274,098

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,658,483

 

 

 

1,403,324

 

Share-based compensation

 

 

8,701,292

 

 

 

5,218,479

 

Non-cash interest expense

 

 

12,193,674

 

 

 

1,643,417

 

In-process research and development purchase

 

 

 

 

 

12,245,230

 

Change in fair value of contingent obligations

 

 

11,354,000

 

 

 

14,190,000

 

Loss on extinguishment of debt

 

 

 

 

 

154,117

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(480,833

)

 

 

(7,232,669

)

Inventories

 

 

 

 

 

7,500

 

Prepaid expenses

 

 

(1,067,534

)

 

 

(693,981

)

Accounts payable

 

 

(1,272,690

)

 

 

1,266,219

 

Deferred revenue

 

 

(3,286,987

)

 

 

18,465,694

 

Accrued liabilities and other current liabilities

 

 

6,340,539

 

 

 

8,390,007

 

Other operating assets and liabilities

 

 

887,383

 

 

 

(10,367,586

)

Net cash used in operating activities

 

 

(63,844,575

)

 

 

(27,584,347

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of plant and equipment

 

 

(8,191,515

)

 

 

(2,818,429

)

Purchases of held-to-maturity securities

 

 

(54,884,101

)

 

 

(15,006,730

)

Proceeds from securities held-to-maturity

 

 

70,000,000

 

 

 

14,534,486

 

Net cash provided by (used in) investing activities

 

 

6,924,384

 

 

 

(3,290,673

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from sale of equity

 

 

 

 

 

109,669,980

 

Proceeds from employee stock purchases and option exercises

 

 

1,092,722

 

 

 

1,963,738

 

Purchase of treasury shares to satisfy tax withholdings

 

 

(667,050

)

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

109,000,000

 

Debt issuance costs

 

 

 

 

 

(1,774,323

)

Payments of debt

 

 

 

 

 

(1,111,112

)

Payment of contingent purchase price consideration

 

 

 

 

 

(8,380,483

)

Payment under a purchase agreement for in-process research and development

 

 

(5,000,000

)

 

 

 

Payment of contingent royalty obligation

 

 

 

 

 

(20,000,000

)

Payment of capital lease obligation

 

 

(72,330

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(4,646,658

)

 

 

189,367,800

 

Effect of exchange rate changes on cash

 

 

302,465

 

 

 

(68,339

)

Net (decrease) increase in cash and cash equivalents

 

 

(61,264,384

)

 

 

158,424,441

 

Cash and cash equivalents, beginning of period

 

 

136,702,873

 

 

 

25,714,519

 

Cash and cash equivalents, end of period

 

$

75,438,489

 

 

$

184,138,960

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

837,699

 

 

$

770,538

 

Supplemental disclosures - non-cash activities:

 

 

 

 

 

 

 

 

Purchases of plant and equipment in accounts payable and

   accrued liabilities

 

 

1,000,101

 

 

 

111,903

 

Issuance of common stock, $0.01 par value, issued in connection with the

   settlement of the contingent royalty obligation

 

 

 

 

 

2,142,000

 

Issuance of common stock, $0.01 par value, in connection with

   the acquisition of the SECANT yeast display technology

 

 

 

 

 

3,000,000

 

Issuance of common stock, $.01 par value, in connection with

   payment of the contingent purchase price obligation

 

 

 

 

 

344,500

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


AGENUS INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 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 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:

 

our antibody discovery platforms, including our Retrocyte Display™, SECANT® yeast display, and phage display technologies designed to produce quality human antibodies;

 

our antibody candidate programs, including our checkpoint modulator (“CPM”) programs;

 

our vaccine programs, including Prophage™, AutoSynVax™ and PhosphoSynVax™; and

 

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.

Our cash, cash equivalents, and short-term investments at September 30, 2016 were $95.4 million, a decrease of $76.3 million from December 31, 2015.

The following table outlines our quarter end cash, cash equivalents and short-term investments balances and the changes therein.

 

 

Quarter ended

 

 

 

March 31, 2016

 

 

June 30, 2016

 

 

September 30, 2016

 

 

 

(in millions)

 

Cash, cash equivalents and short-term investments

 

$

148.2

 

 

$

123.3

 

 

$

95.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Decrease in cash, cash equivalents and short-term

   investments

 

$

23.5

 

 

$

24.9

 

 

$

27.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash used in operating activities

 

$

21.5

 

 

$

18.5

 

 

$

23.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported net loss

 

$

31.8

 

 

$

28.3

 

 

$

40.8

 

We have incurred significant losses since our inception. As of September 30, 2016, we had an accumulated deficit of $879.2 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 investments balances. We believe that, based on our current plans and activities, our cash, cash equivalents and short-term investments balance of $95.4 million as of September 30, 2016 will be sufficient to satisfy our liquidity requirements through the first half of 2017. We expect to raise additional funds in advance of depleting our current funds. We continue to monitor the likelihood of success of our key initiatives and are prepared to discontinue funding of such activities if they do not prove to be feasible, restrict capital expenditures and/or reduce the scale of our operations, if necessary.

5


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 nine months ended September 30, 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”) on March 15, 2016.

Effective June 14, 2016, our certificate of incorporation was amended to increase the number of authorized shares of common stock from 140,000,000 to 240,000,000.

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’ (deficit) 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.

 

 

Note B - Net Loss Per Share

 

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 September 30, 2016 and 2015, as they would be anti-dilutive:

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2016

 

 

2015

 

Warrants

 

 

4,351,450

 

 

 

4,351,450

 

Stock options

 

 

11,761,554

 

 

 

8,226,791

 

Nonvested shares

 

 

1,937,023

 

 

 

1,734,821

 

Convertible preferred stock

 

 

333,333

 

 

 

333,333

 

 

Note C - Investments

Cash equivalents and short-term investments consisted of the following as of September 30, 2016 and December 31, 2015 (in thousands):

 

 

 

September 30, 2016

 

 

December 31, 2015

 

 

 

Cost

 

 

Estimated

Fair Value

 

 

Cost

 

 

Estimated

Fair Value

 

Institutional money market funds

 

$

28,284

 

 

$

28,284

 

 

$

106,370

 

 

$

106,370

 

U.S. Treasury Bills

 

 

44,941

 

 

 

44,941

 

 

 

54,945

 

 

 

54,961

 

    Total

 

$

73,225

 

 

$

73,225

 

 

$

161,315

 

 

$

161,331

 

 

6


For the nine months ended September 30, 2016, we received proceeds of approximately $100.0 million from the maturity of U.S. Treasury Bills classified as cash equivalents and $70.0 million Treasury Bills classified as short-term investments. As a result of the short-term nature of our investments, there were minimal unrealized holding gains or losses for the three and nine months ended September 30, 2016 and 2015.

Of the investments listed above, $53.3 million and $126.4 million have been classified as cash equivalents and $19.9 million and $35.0 million as short-term investments on our condensed consolidated balance sheets as of September 30, 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 nine months ended September 30, 2016 (in thousands):

 

Balance, December 31, 2015

 

$

22,793

 

Foreign currency translation adjustment

 

 

372

 

Balance, September 30, 2016

 

$

23,165

 

 

Acquired intangible assets consisted of the following as of September 30, 2016 and December 31, 2015 (in thousands):

 

 

 

As of September 30, 2016

 

 

 

Amortization

period

(years)

 

Gross carrying

amount

 

 

Accumulated

amortization

 

 

Net carrying

amount

 

Intellectual property

 

7-15 years

 

$

16,578

 

 

$

(1,958

)

 

$

14,620

 

Trademarks

 

4.5 years

 

 

832

 

 

 

(486

)

 

 

346

 

Other

 

2-6 years

 

 

571

 

 

 

(261

)

 

 

310

 

In-process research and development

 

Indefinite

 

 

1,942

 

 

 

-

 

 

 

1,942

 

Total

 

 

 

$

19,923

 

 

$

(2,705

)

 

$

17,218

 

 

 

 

As of December 31, 2015

 

 

 

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 $800,000 for the remainder of 2016, $2.2 million for the year ending December 31, 2017, $2.1 million for the year ending December 31, 2018 and $1.9 million for each of the years ending December 31, 2019 and 2020.

 

 

7


Note E - Debt

Debt obligations consisted of the following as of September 30, 2016 and December 31, 2015 (in thousands):  

 

Debt instrument

 

Principal  at

September 30,

2016

 

 

Non-cash

Interest

 

 

Unamortized

Debt Issuance

Costs

 

 

Unamortized

Debt Discount

 

 

Balance at

September 30,

2016

 

Current Portion:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debentures

 

$

146

 

 

$

 

 

$

 

 

$

 

 

$

146

 

Long-term Portion:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015 Subordinated Notes

 

 

14,000

 

 

 

 

 

 

 

 

 

(1,570

)

 

 

12,430

 

Note Purchase Agreement

 

 

100,000

 

 

 

15,438

 

 

 

(1,378

)

 

 

(227

)

 

 

113,833

 

Total long-term

 

$

114,000

 

 

$

15,438

 

 

$

(1,378

)

 

$

(1,797

)

 

$

126,263

 

Total

 

$

114,146

 

 

$

15,438

 

 

$

(1,378

)

 

$

(1,797

)

 

$

126,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

In June 2016, we executed a capital lease agreement that expires in June 2020 for equipment with a carrying value of approximately $1.0 million, which is included in property, plant and equipment, net on our condensed consolidated balance sheets as of September 30, 2016. Under the terms of the capital lease agreement, we will remit payments to the lessor of $72,000 for the remainder of 2016, $288,000 for each of the years 2017 through 2019 and $144,000 for the year ending December 31, 2020.  As of September 30, 2016, our remaining obligations under the capital lease agreement are approximately $1.0 million, of which $300,000 and $665,000 are classified as other current and other long-term liabilities, respectively, on our condensed consolidated balance sheets.

 

Note F - Accrued and Other Current Liabilities

Accrued liabilities consisted of the following as of September 30, 2016 and December 31, 2015 (in thousands):

 

 

 

September 30,

2016

 

 

December 31, 2015

 

Payroll

 

$

5,218

 

 

$

4,600

 

Professional fees

 

 

4,431

 

 

 

3,343

 

Contract manufacturing costs

 

 

7,531

 

 

 

3,886

 

Other

 

 

4,354

 

 

 

2,337

 

Total

 

$

21,534

 

 

$

14,166

 

 

Other current liabilities consisted of the following as of September 30, 2016 and December 31, 2015 (in thousands):

 

 

 

September 30,

2016

 

 

December 31, 2015

 

Current portion of deferred purchase price

 

$

4,895

 

 

$

5,906

 

Other

 

 

2,396

 

 

 

398

 

Total

 

$

7,291

 

 

$

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.

8


The fair values of our contingent purchase price considerations, $17.0 million, are 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

 

September 30,

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

 

$

24,980

 

 

$

24,980

 

 

$

 

 

$

 

Short-term investments

 

 

19,961

 

 

 

19,961

 

 

 

 

 

 

 

Total

 

$

44,941

 

 

$

44,941

 

 

$

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent purchase price considerations

 

$

16,962

 

 

$

 

 

$

 

 

$

16,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 considerations