Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 10, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ARDM | |
Entity Registrant Name | ARADIGM CORP | |
Entity Central Index Key | 1,013,238 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 14,751,689 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 48,987 | $ 47,990 |
Restricted cash | 250 | 250 |
Receivables | 440 | 1,058 |
Prepaid and other current assets | 1,180 | 1,207 |
Total current assets | 50,857 | 50,505 |
Property and equipment, net | 353 | 502 |
Other assets | 2,926 | 2,956 |
Total assets | 54,136 | 53,963 |
Current liabilities: | ||
Accounts payable | 3,018 | 2,706 |
Accrued clinical and cost of other studies | 3,651 | 2,070 |
Accrued compensation | 837 | 819 |
Deferred revenue - related party | 875 | 790 |
Facility lease exit obligation | 206 | 193 |
Other accrued liabilities | 115 | 191 |
Total current liabilities | 8,702 | 6,769 |
Deferred rent | 73 | 97 |
Accrued clinical and cost of other studies, non-current | 142 | 33 |
Facility lease exit obligation, non-current | 4 | 104 |
Deferred revenue - related party, non-current | 7,845 | 7,845 |
Total liabilities | $ 16,766 | $ 14,848 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock, 5,000,000 shares authorized, none outstanding | ||
Common stock, no par value; authorized shares: 25,045,765 at June 30, 2015 and December 31, 2014; issued and outstanding shares: 14,751,689 at June 30, 2015; 14,726,960 at December 31, 2014 | $ 427,950 | $ 427,387 |
Accumulated deficit | (390,580) | (388,272) |
Total shareholders' equity | 37,370 | 39,115 |
Total liabilities and shareholders' equity | $ 54,136 | $ 53,963 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 25,045,765 | 25,045,765 |
Common stock, shares issued | 14,751,689 | 14,726,960 |
Common stock, shares outstanding | 14,751,689 | 14,726,960 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue: | ||||
Contract revenue - related party | $ 9,927 | $ 12,173 | $ 18,666 | $ 18,415 |
Grant revenue | 25 | 72 | 54 | 261 |
Royalty revenue | 200 | |||
Total revenue | 9,952 | 12,245 | 18,720 | 18,876 |
Operating expenses: | ||||
Research and development | 9,754 | 11,656 | 18,115 | 17,452 |
General and administrative | 1,339 | 1,931 | 2,881 | 3,582 |
Restructuring and asset impairment | 3 | 5 | 7 | 11 |
Total operating expenses | 11,096 | 13,592 | 21,003 | 21,045 |
Loss from operations | (1,144) | (1,347) | (2,283) | (2,169) |
Interest income | 7 | 1 | 15 | 3 |
Interest expense | (288) | |||
Other expense | (8) | (12) | (40) | (13) |
Gain on assignment of royalty interests | 5,823 | |||
Gain from extinguishment of debt | 3,041 | |||
Net income (loss) | (1,145) | (1,358) | (2,308) | 6,397 |
Change in unrealized gains (losses) on available-for-sale securities | 0 | 0 | 0 | 0 |
Comprehensive income (loss) | $ (1,145) | $ (1,358) | $ (2,308) | $ 6,397 |
Basic net income (loss) per common share | $ (0.08) | $ (0.09) | $ (0.16) | $ 0.44 |
Diluted net income (loss) per common share | $ (0.08) | $ (0.09) | $ (0.16) | $ 0.43 |
Shares used in computing basic net income (loss) per common share | 14,749 | 14,697 | 14,738 | 14,683 |
Shares used in computing diluted net income (loss) per common share | 14,749 | 14,697 | 14,738 | 14,717 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (2,308) | $ 6,397 |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Depreciation and amortization | 149 | 148 |
Stock-based compensation expense | 442 | 338 |
Amortization of note discount | 19 | |
Gain on assignment of royalty interests | (5,823) | |
Gain from extinguishment of debt | (3,041) | |
Changes in operating assets and liabilities: | ||
Receivables | 618 | (976) |
Restricted cash | (250) | |
Prepaid and other current assets | 27 | 473 |
Other assets | 30 | (2,844) |
Accounts payable | 312 | 3,360 |
Accrued compensation | 18 | 764 |
Current deferred revenue - related party | 85 | (3,941) |
Accrued liabilities | 1,505 | 24 |
Deferred rent | (24) | (12) |
Accrued clinical and cost of other studies, non-current | 109 | |
Deferred revenue - related party | 7,816 | |
Facility lease exit obligation | (87) | (75) |
Net cash provided by operating activities | 876 | 2,377 |
Cash flows from investing activities: | ||
Capital expenditures | (287) | |
Net cash used in investing activities | (287) | |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 121 | 69 |
Net cash provided by financing activities | 121 | 69 |
Net increase in cash and cash equivalents | 997 | 2,159 |
Cash and cash equivalents at beginning of period | 47,990 | 48,131 |
Cash and cash equivalents at end of period | $ 48,987 | 50,290 |
Supplemental disclosure of cash flow information: | ||
Non cash reduction in other assets from extinguishment of debt and assignment of royalty interests | (237) | |
Non cash reduction in note payable from extinguishment of debt and assignment of royalty interests | $ (9,101) |
Organization, Basis of Presenta
Organization, Basis of Presentation and Liquidity | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Liquidity | 1. Organization, Basis of Presentation and Liquidity Organization Aradigm Corporation (the “Company,” “we,” “our,” or “us”) is a California corporation, incorporated in 1991, focused on the development and commercialization of drugs delivered by inhalation for the treatment and prevention of severe respiratory diseases. The Company’s principal activities to date have included conducting research and development and developing collaborations. Management does not anticipate receiving revenues from the sale of any of its products during the 2015 fiscal year. The Company operates as a single operating segment. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for fair presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 18, 2015 (the “2014 Annual Report on Form 10-K”). The consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and notes thereto included in the 2014 Annual Report on Form 10-K. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned Liquidity The Company has incurred significant operating losses and negative cash flows from operations. At June 30, 2015, the Company had an accumulated deficit of $390.6 million, working capital of $42.2 million and shareholders’ equity of $37.4 million. The Company had cash and cash equivalents of approximately $49.0 million as of June 30, 2015. Management believes that this amount will be sufficient to meet its obligations through at least the quarter ended March 31, 2016. However, the Company’s business strategy may require it to, or it may otherwise determine to, raise additional capital at any time through equity or debt financing(s), strategic transactions or otherwise. Such additional funding may be necessary to develop the Company’s potential product candidates. In addition, the Company may determine to raise capital opportunistically. Reverse Stock Split On May 13, 2014, the Company filed an amendment to its Amended and Restated Articles of Incorporation which effected on May 23, 2014 a 1-for-40 reverse split of all outstanding shares of the Company’s common stock (the “Reverse Split”) and reduced the number of authorized shares of common stock from 1,001,830,627 to 25,045,765. Any fractional shares of common stock resulting from the Reverse Split were settled in cash equal to the fraction of a share to which the holder was entitled. All shares, stock options, warrants to purchase common stock and per share information presented in the consolidated financial statements have been adjusted to reflect the Reverse Split on a retroactive basis for all periods presented and all share information is rounded down to the nearest whole share after reflecting the Reverse Split. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates include useful lives for property and equipment and related depreciation calculations, assumptions for valuing options and warrants, and income taxes. Actual results could differ from these estimates. Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the time of purchase are classified as cash equivalents. Property and Equipment The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful lives of the respective assets. Machinery and equipment includes external costs incurred for validation of the equipment. The Company does not capitalize internal validation expense. Computer equipment and software includes capitalized computer software. All of the Company’s capitalized software is purchased; the Company has no internally-developed computer software. Leasehold improvements are depreciated over the shorter of the term of the lease or useful life of the improvement. Impairment of Long-Lived Assets The Company reviews for impairment whenever events or changes in circumstances indicate that the carrying amount of property and equipment may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written down to their estimated fair values and the loss is recognized in the consolidated statements of operations. Accounting for Costs Associated with Exit or Disposal Activities The Company recognizes a liability for the cost associated with an exit or disposal activity that is measured initially at its fair value in the period in which the liability is incurred. The Company accounted for the partial sublease of its headquarters building as an exit activity and recorded the sublease loss in its Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (see Note 5). Costs to terminate an operating lease or other contracts are (a) costs to terminate the contract before the end of its term or (b) costs that will continue to be incurred under the contract for its remaining term without economic benefit to the entity. In periods subsequent to initial measurement, changes to the liability are measured using the credit-adjusted risk-free rate that was used to measure the liability initially. Revenue Recognition Contract revenues consist of revenues from grants, collaboration agreements and feasibility studies. License and collaboration revenue is primarily generated through agreements with strategic partners for the development and commercialization of our product candidates. The terms of the agreement typically include non-refundable upfront fees, funding of research and development activities, payments based upon achievement of milestones and royalties on net product sales. The Company recognizes revenue under the provisions of the Securities and Exchange Commission issued Staff Accounting Bulletin 104, Topic 13, Revenue Recognition Revised and Updated (“SAB Topic 13”) and Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition-Multiple Elements. Revenue for arrangements not having multiple deliverables, as outlined in ASC 605-25, is recognized once costs are incurred and collectability is reasonably assured. Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collection is reasonably assured. Multiple-deliverable arrangements, such as license and development agreements, are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price method and the appropriate revenue recognition principles are applied to each unit. When the Company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. The Company estimates its performance period used for revenue recognition based on the specific terms of each agreement, and adjusts the performance periods, if appropriate, based on the applicable facts and circumstances. Significant management judgment may be required to determine the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. The Company adopted the provisions of Accounting Standards Update No. 2009-13, Revenue Recognition (Topic 605); Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) for new and materially modified arrangements originating on or after January 1, 2010. ASU 2009-13 provides updated guidance on how the deliverables in an arrangement should be separated, and how consideration should be allocated, and it changes the level of evidence of standalone selling price required to separate deliverables by allowing a vendor to make its best estimate of the standalone selling price of deliverables when vendor-specific objective evidence or third-party evidence of selling price is not available. The Company allocates non-contingent consideration to each stand-alone deliverable based upon the relative selling price of each element. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence, or VSOE, of selling price, if it exists, or third-party evidence, or TPE, of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses best estimated selling price, or BESP, for that deliverable. Assuming the elements meet the revenue recognition guidelines, the revenue recognition methodology prescribed for each unit of accounting is summarized below: Upfront Fees Funded Research and Development and Grant Revenue Milestones Royalties Research and Development Research and development expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct and research-related overhead expenses. The Company expenses research and development costs as such costs are incurred. Stock-Based Compensation The Company accounts for share-based payment arrangements in accordance with ASC 718, Compensation-Stock Compensation Equity-Equity Based Payments to Non-Employees Income Taxes The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. As part of the process of preparing the financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves the Company estimating its current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities which are included in the Company’s consolidated balance sheets. The Company estimated its current tax exposure to be zero as it expects to be able to utilize its net operating loss carryovers (NOLs) to offset the income recognized in the quarter and year to date. The Company has updated its Section 382 analysis through December 31, 2014 and noted no additional changes since the last change in 2010. The Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including the historical levels of income and losses, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If the Company does not consider it more likely than not that it will recover its deferred tax assets, the Company records a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. At June 30, 2015, and December 31, 2014 the Company believed that the amount of its deferred income taxes would not be ultimately recovered. Accordingly, the Company recorded a full valuation allowance for deferred tax assets. However, should there be a change in the Company’s ability to recover its deferred tax assets the Company would recognize a benefit to its tax provision in the period in which it determines that it is more likely than not that it will recover its deferred tax assets. Net Income/(Loss) Per Common Share Basic net income/(loss) per common share is computed using the weighted-average number of shares of common stock outstanding during the period less the weighted-average number of restricted shares of common stock subject to repurchase. Diluted net income/(loss) per common share is based on the weighted average number of common stock and common equivalent shares, such as stock options and unvested restricted stock shares outstanding during the period. Potentially dilutive securities were not included in the net loss per common share calculation for the six months ended June 30, 2015, because the inclusion of such shares would have had an anti-dilutive effect but were included for the six months ended June 30, 2014. Recently Issued Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2015, as compared to the recent accounting pronouncements described in the Company’s 2014 Annual Report on Form 10-K that are of significance or potential significance to the Company. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 6 Months Ended |
Jun. 30, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | 3. Cash and Cash Equivalents At June 30, 2015 and December 31, 2014, the amortized cost of the Company’s cash and cash equivalents approximated their fair values. The Company currently invests its cash and cash equivalents in money market funds. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements The Company follows ASC 820, Fair Value Measurements The Company’s cash and cash equivalents at June 30, 2015 consist of cash and money market funds. Money market funds are valued using quoted market prices. |
Sublease Agreement and Lease Ex
Sublease Agreement and Lease Exit Liability | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Sublease Agreement and Lease Exit Liability | 5. Sublease Agreement and Lease Exit Liability See Note 5 to the audited consolidated financial statements included in Part II, Item 8 of the 2014 Annual Report on Form 10-K for information of the sublease agreement. The lease exit liability activity for the six months ended June 30, 2015 is as follows (in thousands): Six Months Ended June 30, 2015 Balance at January 1, 2015 $ 297 Accretion expense 7 Lease payments (94 ) Balance at June 30, 2015 $ 210 As of June 30, 2015, $206,000 of the $210,000 balance was recorded as a current liability and $4,000 was recorded as a non-current liability. |
Collaboration Agreement
Collaboration Agreement | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Collaboration Agreement | 6. Collaboration Agreement Grifols License and Collaboration Agreement See Note 6 to the audited consolidated financial statements included in Part II, Item 8 of the 2014 Annual Report on Form 10-K for information on the Grifols Collaboration Transaction. The Company is recognizing reimbursements of development expenses under the License Agreement as collaboration services are performed and costs are incurred. During the three and six months ended June 30, 2015, the Company recognized $9.9 million and $18.7 million, respectively, in contract revenue—related party for services performed and costs incurred during the period under the License Agreement related to development of the Pulmaquin ® Costs incurred under the Grifols License Agreement in the quarters ended June 30, 2015 and 2014 are $9.9 million and $12.2 million, respectively. Costs incurred under the Grifols License Agreement for the six months ended June 30, 2015 and 2014 are $18.7 million and $18.4 million, respectively. Development expenses are fully burdened and include direct costs reported as research and development expenses and collaboration-related general and administrative expenses. |
Royalty Agreement, Note Payable
Royalty Agreement, Note Payable and Accrued Interest | 6 Months Ended |
Jun. 30, 2015 | |
Text Block [Abstract] | |
Royalty Agreement, Note Payable and Accrued Interest | 7. Royalty Agreement, Note Payable and Accrued Interest See Note 7 to the audited consolidated financial statements included in Part II, Item 8 of the 2014 Annual Report on Form 10-K for information on the royalty agreement and associated transactions. |
Stock-Based Compensation and St
Stock-Based Compensation and Stock Options and Awards | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation and Stock Options and Awards | 8. Stock-Based Compensation and Stock Options and Awards The following table shows the stock-based compensation expense included in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Costs and expenses: Research and development $ 139 $ 47 $ 217 $ 104 General and administrative 118 98 225 234 Total stock-based compensation expense $ 257 $ 145 $ 442 $ 338 There was no capitalized stock-based employee compensation cost for the three and six months ended June 30, 2015 and 2014. Since the Company did not record a tax provision during the quarters ended June 30, 2015 and 2014, there was no recognized tax benefit associated with stock-based compensation expense. For restricted stock awards, the Company recognizes compensation expense over the vesting period for the fair value of the stock award on the measurement date. The total fair value of restricted stock awards that vested during the six months ended June 30, 2015 was zero. The Company retained purchase rights with respect to 300 shares of unvested restricted stock awards issued pursuant to stock purchase agreements at no cost per share as of June 30, 2015. Stock Option Plans: 1996 Equity Incentive Plan (the “1996 Plan”), 2005 Equity Incentive Plan (the “2005” Plan), 2015 Equity Incentive Plan (the “2015” Plan) and 1996 Non-Employee Directors’ Plan On March 13, 2015 the Board adopted and, on May 14, 2015 the Company’s shareholders approved, the 2015 Plan. The 2015 Plan replaces the Company’s 2005 Plan, which expired in March 2015. The 2015 Plan is intended to promote our long-term success and increase shareholder value by attracting, motivating, and retaining non-employee directors, officers, employees, advisors, consultants and independent contractors, and allows the flexibility to grant a variety of awards to eligible individuals, thereby strengthening their commitment to the Company’s success and aligning their interests with those of the Company’s shareholders. The Company did not request that shareholders authorize any new shares of Common Stock in connection with the approval of the 2015 Plan; rather, the shares authorized for issuance under the 2005 Plan are now available for issuance under the 2015 Plan. Stock Option Activity The following is a summary of activity under the 1996 Plan, the 2005 Plan, the 2015 Plan and the Directors’ Plan for the six months ended June 30, 2015: Shares Available for Balance at January 1, 2015 688,001 Options granted (374,340 ) Options cancelled 1,246 Balance at June 30, 2015 314,907 Options Outstanding Number of Shares Weighted Weighted Aggregate Outstanding at January 1, 2015 515,366 $ 15.55 Options granted 374,340 $ 7.18 Options exercised (3,500 ) $ 6.00 Options cancelled (1,246 ) $ 249.92 Outstanding at June 30, 2015 884,960 $ 11.72 8.27 $ 174,764 Exercisable at June 30, 2015 233,214 $ 21.85 5.43 $ 72,752 During the six months ended June 30, 2015, 3,500 stock options were exercised. The total amount of unrecognized compensation cost related to non-vested stock options and stock purchases, net of forfeitures, was $2.6 million as of June 30, 2015. This amount will be recognized over a weighted average period of 2.71 years. |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Common Share | 9. Net Income (Loss) Per Common Share The following data was used in computing net income/(loss) per share and the effect on the weighted-average number of shares of potentially dilutive common stock. Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (In thousands, except per share amounts) Numerator: Net income/(loss) $ (1,145 ) $ (1,358 ) $ (2,308 ) $ 6,397 Denominator: Weighted average number of common shares used in basic net income/(loss) per share 14,749 14,697 14,738 14,683 Effect of dilutive securities (using treasury stock method): Common stock options and restricted stock awards and units — — — 34 Weighted average number of common shares and dilutive potential common shares used in diluted net income/(loss) per share 14,749 14,697 14,738 14,717 Basic net income/(loss) per share $ (0.08 ) $ (0.09 ) $ (0.16 ) $ 0.44 Diluted net income/(loss) per share $ (0.08 ) $ (0.09 ) $ (0.16 ) $ 0.43 For the six months ended June 30, 2014, the Company excluded 307,000 shares of outstanding stock options and 71,000 shares of warrants from the calculation of diluted net income/(loss) per share. These shares were excluded because the exercise prices of these stock options were greater than or equal to the average market price of the common shares during the period and the inclusion of these shares would be anti-dilutive. For the three and six months ended June 30, 2015 and the three months ended June 30, 2014 dilutive securities were not included in the computation of net loss per share as the effect would be anti-dilutive due to the Company’s net loss position. For the six months ended June 30, 2014 potentially dilutive securities were included in the computation of net income. At June 30, 2015 and 2014, the Company had the following dilutive securities outstanding (in thousands): Six months ended June 30, 2015 2014 Outstanding stock options 885 470 Unvested restricted stock — 5 Unvested restricted stock units 10 10 |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates include useful lives for property and equipment and related depreciation calculations, assumptions for valuing options and warrants, and income taxes. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the time of purchase are classified as cash equivalents. |
Property and Equipment | Property and Equipment The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful lives of the respective assets. Machinery and equipment includes external costs incurred for validation of the equipment. The Company does not capitalize internal validation expense. Computer equipment and software includes capitalized computer software. All of the Company’s capitalized software is purchased; the Company has no internally-developed computer software. Leasehold improvements are depreciated over the shorter of the term of the lease or useful life of the improvement. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews for impairment whenever events or changes in circumstances indicate that the carrying amount of property and equipment may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written down to their estimated fair values and the loss is recognized in the consolidated statements of operations. |
Accounting for Costs Associated with Exit or Disposal Activities | Accounting for Costs Associated with Exit or Disposal Activities The Company recognizes a liability for the cost associated with an exit or disposal activity that is measured initially at its fair value in the period in which the liability is incurred. The Company accounted for the partial sublease of its headquarters building as an exit activity and recorded the sublease loss in its Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (see Note 5). Costs to terminate an operating lease or other contracts are (a) costs to terminate the contract before the end of its term or (b) costs that will continue to be incurred under the contract for its remaining term without economic benefit to the entity. In periods subsequent to initial measurement, changes to the liability are measured using the credit-adjusted risk-free rate that was used to measure the liability initially. |
Revenue Recognition | Revenue Recognition Contract revenues consist of revenues from grants, collaboration agreements and feasibility studies. License and collaboration revenue is primarily generated through agreements with strategic partners for the development and commercialization of our product candidates. The terms of the agreement typically include non-refundable upfront fees, funding of research and development activities, payments based upon achievement of milestones and royalties on net product sales. The Company recognizes revenue under the provisions of the Securities and Exchange Commission issued Staff Accounting Bulletin 104, Topic 13, Revenue Recognition Revised and Updated (“SAB Topic 13”) and Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition-Multiple Elements. Revenue for arrangements not having multiple deliverables, as outlined in ASC 605-25, is recognized once costs are incurred and collectability is reasonably assured. Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collection is reasonably assured. Multiple-deliverable arrangements, such as license and development agreements, are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price method and the appropriate revenue recognition principles are applied to each unit. When the Company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. The Company estimates its performance period used for revenue recognition based on the specific terms of each agreement, and adjusts the performance periods, if appropriate, based on the applicable facts and circumstances. Significant management judgment may be required to determine the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. The Company adopted the provisions of Accounting Standards Update No. 2009-13, Revenue Recognition (Topic 605); Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) for new and materially modified arrangements originating on or after January 1, 2010. ASU 2009-13 provides updated guidance on how the deliverables in an arrangement should be separated, and how consideration should be allocated, and it changes the level of evidence of standalone selling price required to separate deliverables by allowing a vendor to make its best estimate of the standalone selling price of deliverables when vendor-specific objective evidence or third-party evidence of selling price is not available. The Company allocates non-contingent consideration to each stand-alone deliverable based upon the relative selling price of each element. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence, or VSOE, of selling price, if it exists, or third-party evidence, or TPE, of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses best estimated selling price, or BESP, for that deliverable. Assuming the elements meet the revenue recognition guidelines, the revenue recognition methodology prescribed for each unit of accounting is summarized below: Upfront Fees Funded Research and Development and Grant Revenue Milestones Royalties |
Research and Development | Research and Development Research and development expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct and research-related overhead expenses. The Company expenses research and development costs as such costs are incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for share-based payment arrangements in accordance with ASC 718, Compensation-Stock Compensation Equity-Equity Based Payments to Non-Employees |
Income Taxes | Income Taxes The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. As part of the process of preparing the financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves the Company estimating its current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities which are included in the Company’s consolidated balance sheets. The Company estimated its current tax exposure to be zero as it expects to be able to utilize its net operating loss carryovers (NOLs) to offset the income recognized in the quarter and year to date. The Company has updated its Section 382 analysis through December 31, 2014 and noted no additional changes since the last change in 2010. The Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including the historical levels of income and losses, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If the Company does not consider it more likely than not that it will recover its deferred tax assets, the Company records a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. At June 30, 2015, and December 31, 2014 the Company believed that the amount of its deferred income taxes would not be ultimately recovered. Accordingly, the Company recorded a full valuation allowance for deferred tax assets. However, should there be a change in the Company’s ability to recover its deferred tax assets the Company would recognize a benefit to its tax provision in the period in which it determines that it is more likely than not that it will recover its deferred tax assets. |
Net Income/(Loss) Per Common Share | Net Income/(Loss) Per Common Share Basic net income/(loss) per common share is computed using the weighted-average number of shares of common stock outstanding during the period less the weighted-average number of restricted shares of common stock subject to repurchase. Diluted net income/(loss) per common share is based on the weighted average number of common stock and common equivalent shares, such as stock options and unvested restricted stock shares outstanding during the period. Potentially dilutive securities were not included in the net loss per common share calculation for the six months ended June 30, 2015, because the inclusion of such shares would have had an anti-dilutive effect but were included for the six months ended June 30, 2014. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2015, as compared to the recent accounting pronouncements described in the Company’s 2014 Annual Report on Form 10-K that are of significance or potential significance to the Company. |
Sublease Agreement and Lease 16
Sublease Agreement and Lease Exit Liability (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Lease Exit Liability Activity | The lease exit liability activity for the six months ended June 30, 2015 is as follows (in thousands): Six Months Ended June 30, 2015 Balance at January 1, 2015 $ 297 Accretion expense 7 Lease payments (94 ) Balance at June 30, 2015 $ 210 |
Stock-Based Compensation and 17
Stock-Based Compensation and Stock Options and Awards (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-Based Compensation Expense | The following table shows the stock-based compensation expense included in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Costs and expenses: Research and development $ 139 $ 47 $ 217 $ 104 General and administrative 118 98 225 234 Total stock-based compensation expense $ 257 $ 145 $ 442 $ 338 |
Schedule of Activity Under Stock Option Plan | The following is a summary of activity under the 1996 Plan, the 2005 Plan, the 2015 Plan and the Directors’ Plan for the six months ended June 30, 2015: Shares Available for Balance at January 1, 2015 688,001 Options granted (374,340 ) Options cancelled 1,246 Balance at June 30, 2015 314,907 Options Outstanding Number of Shares Weighted Weighted Aggregate Outstanding at January 1, 2015 515,366 $ 15.55 Options granted 374,340 $ 7.18 Options exercised (3,500 ) $ 6.00 Options cancelled (1,246 ) $ 249.92 Outstanding at June 30, 2015 884,960 $ 11.72 8.27 $ 174,764 Exercisable at June 30, 2015 233,214 $ 21.85 5.43 $ 72,752 |
Net Income (Loss) Per Common 18
Net Income (Loss) Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Computing Net Income/(Loss) Per Share and Effect on Weighted-Average Number of Shares of Potentially Dilutive Common Stock | The following data was used in computing net income/(loss) per share and the effect on the weighted-average number of shares of potentially dilutive common stock. Three Months Ended Six Months Ended June 30 June 30 2015 2014 2015 2014 (In thousands, except per share amounts) Numerator: Net income/(loss) $ (1,145 ) $ (1,358 ) $ (2,308 ) $ 6,397 Denominator: Weighted average number of common shares used in basic net income/(loss) per share 14,749 14,697 14,738 14,683 Effect of dilutive securities (using treasury stock method): Common stock options and restricted stock awards and units — — — 34 Weighted average number of common shares and dilutive potential common shares used in diluted net income/(loss) per share 14,749 14,697 14,738 14,717 Basic net income/(loss) per share $ (0.08 ) $ (0.09 ) $ (0.16 ) $ 0.44 Diluted net income/(loss) per share $ (0.08 ) $ (0.09 ) $ (0.16 ) $ 0.43 |
Schedule of Dilutive Securities Outstanding not Included in Computation of Net Income Per Share | At June 30, 2015 and 2014, the Company had the following dilutive securities outstanding (in thousands): Six months ended June 30, 2015 2014 Outstanding stock options 885 470 Unvested restricted stock — 5 Unvested restricted stock units 10 10 |
Organization, Basis of Presen19
Organization, Basis of Presentation and Liquidity - Additional Information (Detail) $ in Thousands | May. 23, 2014shares | Jun. 30, 2015USD ($)Segmentshares | Dec. 31, 2014USD ($)shares | Jun. 30, 2014USD ($) | Dec. 31, 2013USD ($) |
Summary Of Organization And Operations [Line Items] | |||||
Number of operating segment | Segment | 1 | ||||
Accumulated deficit | $ (390,580) | $ (388,272) | |||
Working capital | 42,200 | ||||
Shareholders' equity | 37,370 | 39,115 | |||
Cash and cash equivalents | $ 48,987 | $ 47,990 | $ 50,290 | $ 48,131 | |
Common stock, shares authorized | shares | 25,045,765 | 25,045,765 | 25,045,765 | ||
Common Stock [Member] | |||||
Summary Of Organization And Operations [Line Items] | |||||
Reverse stock split ratio | 1-for-40 | ||||
Reverse stock split conversion ratio | 0.025 | ||||
Before Stock Split [Member] | |||||
Summary Of Organization And Operations [Line Items] | |||||
Common stock, shares authorized | shares | 1,001,830,627 |
Summary of Significant Accoun20
Summary of Significant Accounting Policies - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Estimated current tax exposure | $ 0 |
Sublease Agreement and Lease 21
Sublease Agreement and Lease Exit Liability - Schedule of Lease Exit Liability Activity (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Leases [Abstract] | |
Balance at January 1, 2015 | $ 297 |
Accretion expense | 7 |
Lease payments | (94) |
Balance at June 30, 2015 | $ 210 |
Sublease Agreement and Lease 22
Sublease Agreement and Lease Exit Liability - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Leases [Abstract] | ||
Lease exit current liability | $ 206 | $ 193 |
Lease exit non-current liability | 4 | 104 |
Lease exit liability | $ 210 | $ 297 |
Collaboration Agreement - Grifo
Collaboration Agreement - Grifols License and Collaboration Agreement - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Contract revenue-related party | $ 9,927 | $ 12,173 | $ 18,666 | $ 18,415 | |
Deferred revenue-related party | 875 | 875 | $ 790 | ||
Long-term deferred revenue-related party | 7,845 | 7,845 | $ 7,845 | ||
Long term deferred revenue-related party, milestone payment received | 5,000 | ||||
Milestone payment will be recognized as revenue upon receiving the first regulatory approval | 5,000 | 5,000 | |||
License Agreement with Grifols [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Fully burdened development expenses | $ 9,900 | $ 12,200 | $ 18,700 | $ 18,400 |
Stock-Based Compensation and 24
Stock-Based Compensation and Stock Options and Awards - Schedule of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Costs and expenses: | ||||
Total stock-based compensation expense | $ 257 | $ 145 | $ 442 | $ 338 |
Research and development [Member] | ||||
Costs and expenses: | ||||
Total stock-based compensation expense | 139 | 47 | 217 | 104 |
General and administrative [Member] | ||||
Costs and expenses: | ||||
Total stock-based compensation expense | $ 118 | $ 98 | $ 225 | $ 234 |
Stock-Based Compensation and 25
Stock-Based Compensation and Stock Options and Awards - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Capitalized stock-based employee compensation cost | $ 0 | $ 0 | $ 0 | $ 0 |
Tax benefit associated with stock-based compensation expense | $ 0 | $ 0 | ||
Unvested restricted stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total fair value of restricted stock awards vested | $ 0 | |||
Company retained purchase rights on unvested restricted stock awards, shares | 300 | 300 | ||
Stock options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options exercised during the period | 3,500 | |||
Unvested stock options and stock purchases [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation cost related to non-vested stock options and stock purchases | $ 2,600,000 | $ 2,600,000 | ||
Unrecognized compensation costs, weighted average period expected to be recognized | 2 years 8 months 16 days | |||
2005 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Plan expiration date | 2015-03 |
Stock-Based Compensation and 26
Stock-Based Compensation and Stock Options and Awards - Schedule of Activity Under Stock Option Plan - Shares Available for Future Grant (Detail) - Stock options [Member] | 6 Months Ended |
Jun. 30, 2015shares | |
Shares Available for Future Grant | |
Balance at January 1, 2015 | 688,001 |
Options granted | (374,340) |
Options cancelled | 1,246 |
Balance at June 30, 2015 | 314,907 |
Stock-Based Compensation and 27
Stock-Based Compensation and Stock Options and Awards - Schedule of Activity Under Stock Option Plan - Options Outstanding (Detail) - Jun. 30, 2015 - Stock options [Member] - USD ($) | Total |
Number of Shares | |
Outstanding at January 1, 2015 | 515,366 |
Options granted | 374,340 |
Options exercised | (3,500) |
Options cancelled | (1,246) |
Outstanding at June 30, 2015 | 884,960 |
Exercisable at June 30, 2015 | 233,214 |
Weighted Average Exercise Price | |
Outstanding at January 1, 2015 | $ 15.55 |
Options granted | 7.18 |
Options exercised | 6 |
Options cancelled | 249.92 |
Outstanding at June 30, 2015 | 11.72 |
Exercisable at June 30, 2015 | $ 21.85 |
Weighted Average Remaining Contractual Term | |
Outstanding at June 30, 2015 | 8 years 3 months 7 days |
Exercisable at June 30, 2015 | 5 years 5 months 5 days |
Aggregate Intrinsic Value | |
Outstanding at June 30, 2015 | $ 174,764 |
Exercisable at June 30, 2015 | $ 72,752 |
Net Income (Loss) Per Common 28
Net Income (Loss) Per Common Share - Schedule of Computing Net Income/(Loss) Per Share and Effect on Weighted-Average Number of Shares of Potentially Dilutive Common Stock (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||||
Net income/(loss) | $ (1,145) | $ (1,358) | $ (2,308) | $ 6,397 |
Denominator: | ||||
Weighted average number of common shares used in basic net income/(loss) per share | 14,749 | 14,697 | 14,738 | 14,683 |
Effect of dilutive securities (using treasury stock method): | ||||
Common stock options and restricted stock awards and units | 34 | |||
Weighted average number of common shares and dilutive potential common shares used in diluted net income/(loss) per share | 14,749 | 14,697 | 14,738 | 14,717 |
Basic net income/(loss) per share | $ (0.08) | $ (0.09) | $ (0.16) | $ 0.44 |
Diluted net income/(loss) per share | $ (0.08) | $ (0.09) | $ (0.16) | $ 0.43 |
Net Income (Loss) Per Common 29
Net Income (Loss) Per Common Share - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2014shares | |
Stock Option [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Shares excluded from calculation of diluted net income/ (loss) per share | 307,000 |
Warrants [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Shares excluded from calculation of diluted net income/ (loss) per share | 71,000 |
Net Income (Loss) Per Common 30
Net Income (Loss) Per Common Share - Schedule of Dilutive Securities Outstanding not Included in Computation of Net Income Per Share (Detail) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Dilutive securities outstanding | 885 | 470 |
Unvested restricted stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Dilutive securities outstanding | 5 | |
Restricted Stock Units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Dilutive securities outstanding | 10 | 10 |