Seagen (SGEN) 10-Q 1 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 26, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
Trading Symbol	SGEN
Entity Registrant Name	SEATTLE GENETICS INC /WA
Entity Central Index Key	1,060,736
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		143,027,210

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Cash and cash equivalents	$ 197,104	$ 108,673
Short-term investments	255,307	480,313
Accounts receivable, net	71,940	61,928
Inventories	69,247	68,124
Prepaid expenses and other current assets	22,411	15,610
Total current assets	616,009	734,648
Property and equipment, net	85,170	62,870
Long-term investments	20,572	29,988
Other non-current assets	35,720	10,890
Total assets	757,471	838,396
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities	106,665	120,669
Current portion of deferred revenue	31,114	27,847
Total current liabilities	137,779	148,516
Long-term liabilities
Deferred revenue, less current portion	43,559	53,006
Deferred rent and other long-term liabilities	2,601	2,787
Total long-term liabilities	46,160	55,793
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001 par value, 5,000 shares authorized; none issued	0	0
Common stock, $0.001 par value, 250,000 shares authorized; 142,981 shares issued and outstanding at June 30, 2017 and 142,193 shares issued and outstanding at December 31, 2016	143	142
Additional paid-in capital	1,748,423	1,701,048
Accumulated other comprehensive income (loss)	8,356	(63)
Accumulated deficit	(1,183,390)	(1,067,040)
Total stockholders' equity	573,532	634,087
Total liabilities and stockholders' equity	$ 757,471	$ 838,396

Consolidated Balance Sheets (U3

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	142,981,000	142,193,000
Common stock, shares outstanding	142,981,000	142,193,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues
Net product sales	$ 74,343	$ 66,216	$ 144,664	$ 124,864
Collaboration and license agreement revenues	21,505	19,998	43,335	40,174
Royalty revenues	12,375	9,188	29,355	41,519
Total revenues	108,223	95,402	217,354	206,557
Costs and expenses
Cost of sales	8,055	6,901	15,536	12,845
Cost of royalty revenues	4,324	3,107	8,704	6,722
Research and development	114,406	85,554	232,590	178,425
Selling, general and administrative	40,712	33,282	79,116	63,029
Total costs and expenses	167,497	128,844	335,946	261,021
Loss from operations	(59,274)	(33,442)	(118,592)	(54,464)
Investment and other income, net	2,914	699	2,242	1,243
Net loss	$ (56,360)	$ (32,743)	$ (116,350)	$ (53,221)
Net loss per share-basic and diluted	$ (0.39)	$ (0.23)	$ (0.82)	$ (0.38)
Shares used in computation of net loss per share-basic and diluted	142,802	140,283	142,631	140,086
Comprehensive loss:
Net loss	$ (56,360)	$ (32,743)	$ (116,350)	$ (53,221)
Other comprehensive income:
Unrealized gain on securities available-for-sale, net of tax	4,435	252	8,417	1,037
Foreign currency translation gain	4	6	2	14
Comprehensive loss	$ (51,921)	$ (32,485)	$ (107,931)	$ (52,170)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities
Net loss	$ (116,350)	$ (53,221)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation	31,993	24,285
Depreciation and amortization	10,215	8,646
Amortization of premiums, accretion of discounts and (gain) loss on investments	(35)	3,747
Deferred rent and other long-term liabilities	(186)	(459)
Changes in operating assets and liabilities
Accounts receivable, net	(10,012)	(4,812)
Inventories	(1,123)	(14,712)
Prepaid expenses and other assets	(5,519)	(807)
Accounts payable and accrued liabilities	(11,078)	6,511
Deferred revenue	(6,180)	(19,506)
Net cash used in operating activities	(108,275)	(50,328)
Investing activities
Purchases of securities available-for-sale	(253,877)	(329,153)
Proceeds from maturities of securities available-for-sale	412,700	469,500
Proceeds from sales of securities available-for-sale	60,056	0
Purchases of property and equipment	(37,556)	(10,684)
Net cash provided by investing activities	181,323	129,663
Financing activities
Proceeds from exercise of stock options and employee stock purchase plan	15,383	10,498
Net cash provided by financing activities	15,383	10,498
Net increase in cash and cash equivalents	88,431	89,833
Cash and cash equivalents at beginning of period	108,673	102,255
Cash and cash equivalents at end of period	$ 197,104	$ 192,088

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	1. Summary of significant accounting policies Basis of presentation The accompanying unaudited condensed consolidated financial statements reflect the accounts of Seattle Genetics, Inc. and its wholly-owned subsidiaries (collectively “Seattle Genetics” or the “Company”). All intercompany transactions and balances have been eliminated. Management has determined that the Company operates in one segment: the development and sale of pharmaceutical products on its own behalf or in collaboration with others. Substantially all of the Company’s assets and revenues are related to operations in the United States; however, the Company also has subsidiaries in Canada, Switzerland and the United Kingdom. The condensed consolidated balance sheet data as of December 31, 2016 were derived from audited financial statements not included in this quarterly report on Form 10-Q. Unless indicated otherwise, all amounts presented in financial tables are presented in thousands, except for per share and par value amounts. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The results of the Company’s operations for the three and six month periods ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year. Non-cash The Company had $2.7 million and $8.1 million of accrued capital expenditures as of June 30, 2017 and December 31, 2016, respectively. Accrued capital expenditures have been treated as a non-cash Investments The Company invests cash resources primarily in debt securities. In addition, as of June 30, 2017, the Company held an equity investment in the common stock of Immunomedics, Inc., or Immunomedics, as further described in Note 6. These debt and equity securities are classified as available-for-sale, non-current If the estimated fair value of a security is below its carrying value, the Company evaluates whether it is more likely than not that it will sell the security before its anticipated recovery in market value and whether evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. The Company also evaluates whether or not it intends to sell the investment. If the impairment is considered to be other-than-temporary, the security is written down to its estimated fair value. In addition, the Company considers whether credit losses exist for any securities. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. Other-than-temporary declines in estimated fair value and credit losses are charged against investment and other income, net. Other non-current In addition to the equity investment in Immunomedics, other non-current non-controlling Long-term incentive plans The Company has established Long-Term Incentive Plans, or LTIPs. The LTIPs provide eligible employees with the opportunity to receive performance-based incentives, which may be comprised of a cash payment, stock options, and restricted stock units. As of June 30, 2017, the estimated unrecognized compensation expense related to the LTIPs was $36.3 million. The total estimate of unrecognized compensation expense is expected to change in the future for several reasons, including the addition of more eligible employees, or the termination or modification of a plan. Revenue recognition The Company’s revenues are comprised of ADCETRIS ® Net product sales The Company sells ADCETRIS through a limited number of pharmaceutical distributors in the U.S. and Canada. Customers order ADCETRIS through these distributors and the Company typically ships product directly to the customer. The Company records product sales when title and risk of loss pass, which generally occurs upon delivery of the product to the customer. Product sales are recorded net of estimated government-mandated rebates and chargebacks, distribution fees, estimated product returns and other deductions. Accruals are established for these deductions and actual amounts incurred are offset against applicable accruals. The Company reflects these accruals as either a reduction in the related account receivable from the distributor, or as an accrued liability depending on the nature of the sales deduction. Sales deductions are based on management’s estimates that consider payer mix in target markets and experience to date. These estimates involve a substantial degree of judgment. Government-mandated rebates and chargebacks Distribution fees, product returns and other deductions Collaboration and license agreement revenues The Company has developed a proprietary technology for linking cytotoxic agents to monoclonal antibodies called antibody-drug conjugates, or ADCs. This proprietary technology is the basis of ADC collaborations that the Company has entered into in the ordinary course of its business with a number of biotechnology and pharmaceutical companies. Under these ADC collaboration agreements, the Company grants its collaborators research and commercial licenses to the Company’s technology and provides technology transfer services, technical advice, supplies and services for a period of time. If there are continuing performance obligations, the Company uses a time-based proportional performance model to recognize revenue over the Company’s performance period for the related agreement. Collaboration and license agreements are evaluated to determine whether the multiple elements and associated deliverables can be considered separate units of accounting. To date, the pre-commercial The Company’s collaboration and license agreements include contractual milestones. Generally, the milestone events contained in the Company’s collaboration and license agreements coincide with the progression of the collaborators’ product candidates from development, to regulatory approval and then to commercialization and fall into the following categories. Development milestones in the Company’s collaborations may include the following types of events: • Designation of a product candidate or initiation of preclinical studies. The Company’s collaborators must undertake significant preclinical research and studies to make a determination of the suitability of a product candidate and the time from those studies or designation to initiation of a clinical trial may take several years. • Initiation of a phase 1 clinical trial. Generally, phase 1 clinical trials may take one to two years to complete. • Initiation of a phase 2 clinical trial. Generally, phase 2 clinical trials may take one to three years to complete. • Initiation of a phase 3 clinical trial. Generally, phase 3 clinical trials may take two to six years to complete. Regulatory milestones in the Company’s collaborations may include the following types of events: • Filing of regulatory applications for marketing approval such as a Biologics License Application in the United States or a Marketing Authorization Application in Europe. Generally, it may take up to twelve months to prepare and submit regulatory filings. • Receiving marketing approval in a major market, such as in the United States, Europe, Japan or other significant countries. Generally, it may take up to three years after a marketing application is submitted to obtain approval for marketing and pricing from the applicable regulatory agency. Commercialization milestones in the Company’s collaborations may include the following types of events: • First commercial sale in a particular market, such as in the United States, Europe, Japan or other significant countries. • Product sales in excess of a pre-specified The Company’s ADC collaborators are solely responsible for the development of their product candidates and the achievement of milestones in any of the categories identified above is based solely on the collaborators’ efforts. In the case of the Company’s ADCETRIS collaboration with Takeda, the Company may be involved in certain development activities; however, the achievement of milestone events under the agreement is primarily based on activities undertaken by Takeda. The process of successfully developing a product candidate, obtaining regulatory approval and ultimately commercializing a product candidate is highly uncertain and the attainment of any milestones is therefore uncertain and difficult to predict. In addition, since the Company does not take a substantive role or control the research, development or commercialization of any products generated by its ADC collaborators, the Company is not able to reasonably estimate when, if at all, any milestone payments or royalties may be payable to the Company by its ADC collaborators. As such, the milestone payments associated with its ADC collaborations involve a substantial degree of uncertainty and risk that they may never be received. Similarly, even in those collaborations where the Company may have an active role in the development of the product candidate, such as the Company’s ADCETRIS collaboration with Takeda, the attainment of a milestone is based on the collaborator’s activities and is generally outside the direction and control of the Company. The Company generally invoices its collaborators and licensees on a monthly or quarterly basis, or upon the completion of the effort or achievement of a milestone, based on the terms of each agreement. Deferred revenue arises from amounts received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Deferred revenue expected to be recognized within the next twelve months is classified as a current liability. Royalty revenues and cost of royalty revenues Royalty revenues primarily reflect amounts earned under the ADCETRIS collaboration with Takeda. These royalties include sales royalties, which are based on a percentage of Takeda’s net sales at rates that range from the mid-teens mid-twenties Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued an Accounting Standards Update entitled “ASU 2014-09, 2015-14, 2014-09 2016-08, 2016-10, 2016-12, 2016-20, In January 2016, FASB issued an Accounting Standards Update entitled “ASU 2016-01, In February 2016, FASB issued an Accounting Standards Update entitled “ASU 2016-02, right-of-use In March 2016, FASB issued an Accounting Standard Update entitled “ASU 2016-09, In October 2016, FASB issued an Accounting Standard Update entitled “ASU 2016-16, pre-tax In June 2016, FASB issued an Accounting Standard Update entitled “ASU 2016-13, In January 2017, FASB issued an Accounting Standard Update entitled, “ASU 2017-01, In May 2017, FASB issued an Accounting Standard Update entitled, “ASU 2017-09,

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Jun. 30, 2017
Earnings Per Share [Abstract]
Net Loss Per Share	2. Net loss per share Basic and diluted net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The Company excluded all restricted stock units and options to purchase common stock from the calculation of basic and diluted net loss per share as such securities are anti-dilutive for all periods presented. The weighted-average number of restricted stock units and options to purchase common stock that have been excluded from the number of shares used to calculate basic and diluted net loss per share totaled 13,057,000 and 12,548,000 for the three months ended June 30, 2017 and 2016, respectively, and 13,188,000 and 12,432,000 for the six months ended June 30, 2017 and 2016, respectively.

Investments

Investments	6 Months Ended
	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Investments	3. Investments Investments consisted of available-for-sale Amortized cost Gross unrealized gains Gross unrealized losses Fair value June 30, 2017 U.S. Treasury securities $ 276,159 $ 0 $ (280 ) $ 275,879 Common stock investment in Immunomedics 12,677 13,813 0 26,490 Total $ 288,836 $ 13,813 $ (280 ) $ 302,369 Contractual Maturities (at date of purchase) Due in one year or less $ 145,445 $ 145,377 Due in one to two years 130,714 130,502 Total $ 276,159 $ 275,879 Amortized cost Gross unrealized gains Gross unrealized losses Fair value December 31, 2016 U.S. Treasury securities $ 510,356 $ 68 $ (123 ) $ 510,301 Contractual Maturities (at date of purchase) Due in one year or less $ 229,856 $ 229,864 Due in one to two years 280,500 280,437 Total $ 510,356 $ 510,301 Investments classified as available-for-sale June 30, 2017 December 31, 2016 Short-term investments $ 255,307 $ 480,313 Long-term investments 20,572 29,988 Other non-current 26,490 0 Total $ 302,369 $ 510,301 The aggregate estimated fair value of the Company’s investments with unrealized losses was as follows (in thousands): Period of continuous unrealized loss 12 Months or less Greater than 12 months Fair value Gross unrealized losses Fair value Gross unrealized losses June 30, 2017 U.S. Treasury securities $ 275,879 $ (280 ) $ NA $ NA December 31, 2016 U.S. Treasury securities $ 200,327 $ (123 ) $ NA $ NA

Fair Value

Fair Value	6 Months Ended
	Jun. 30, 2017
Fair Value Disclosures [Abstract]
Fair Value	4. Fair value The Company holds short-term and long-term available-for-sale Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The determination of a financial instrument’s level within the fair value hierarchy is based on an assessment of the lowest level of any input that is significant to the fair value measurement. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Level 1 investments are valued based on quoted market prices in active markets. The Company did not hold any Level 2 or 3 investments as of June 30, 2017 or December 31, 2016 and did not transfer any investments between Levels 1, 2 and 3 during the six months ended June 30, 2017. The following table presents the Company’s available-for-sale Fair value measurement using: Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total As of June 30, 2017 Short-term investments—U.S. Treasury securities $ 255,307 $ 0 $ 0 $ 255,307 Long-term investments—U.S. Treasury securities 20,572 0 0 20,572 Other non-current 26,490 0 0 26,490 Total $ 302,369 $ 0 $ 0 $ 302,369 Fair value measurement using: Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total As of December 31, 2016 Short-term investments—U.S. Treasury securities $ 480,313 $ 0 $ 0 $ 480,313 Long-term investments—U.S. Treasury securities 29,988 0 0 29,988 Total $ 510,301 $ 0 $ 0 $ 510,301

Inventories

Inventories	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Inventories	5. Inventories The following table presents the Company’s inventories of ADCETRIS (in thousands): June 30, 2017 December 31, 2016 Raw materials $ 59,559 $ 62,516 Work in process 2,191 8 Finished goods 7,497 5,600 Total $ 69,247 $ 68,124 The Company capitalizes ADCETRIS inventory costs. ADCETRIS inventory that is deployed into clinical, research or development use is charged to research and development expense when it is no longer available for use in commercial sales. The Company does not capitalize manufacturing costs for any of its product candidates.

Immunomedics, Inc. Stock Purcha

Immunomedics, Inc. Stock Purchase Agreement	6 Months Ended
	Jun. 30, 2017
Text Block [Abstract]
Immunomedics, Inc. Stock Purchase Agreement	6. Immunomedics, Inc. stock purchase agreement In February 2017, the Company entered into a stock purchase agreement, or the Stock Purchase Agreement, with Immunomedics in connection with its entry into a development and license agreement, or the Immunomedics License, with Immunomedics. The Company paid Immunomedics $14.7 million as consideration for 3.0 million shares of Immunomedics common stock and a warrant to purchase an additional 8.7 million shares of common stock at an exercise price $4.90 per share. The consideration was allocated between the common stock and the warrant based on the relative fair values as of the purchase date, or $12.7 million and $2.0 million, respectively. The shares of common stock were classified as available-for-sale non-current

Legal Matters

Legal Matters	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Legal Matters	7. Legal matters On January 10, 2017, the Company became a named defendant in a securities class action complaint seeking compensatory damages of an undisclosed amount. On March 29, 2017, a stockholder derivative lawsuit was filed in Washington Superior Court for the County of Snohomish, naming as defendants certain of the Company’s current and former executive officers and members of its board of directors. The Company is named as a nominal defendant. The Company does not believe it is feasible to predict or determine the outcome or resolution of these proceedings, or to estimate the amount of, or potential range of, loss with respect to these proceedings. In addition, the timing of the final resolution of these proceedings is uncertain. As a result of these lawsuits, the Company will incur litigation expenses and may incur indemnification expenses, and potential resolutions of the lawsuits could include settlements requiring payments. Those expenses could have a material impact on the Company’s financial position, results of operations, and cash flows. On February 13, 2017, the Company was named a co-defendant

Subsequent Event

Subsequent Event	6 Months Ended
	Jun. 30, 2017
Subsequent Events [Abstract]
Subsequent Event	8. Subsequent event On July 30 and July 31, 2017, the Company entered into certain agreements to acquire a biologics manufacturing facility located in Bothell, Washington. As part of the transaction, the Company and Bristol Myers Squibb Company, or BMS, through BMS or its wholly-owned subsidiary, entered into an assignment and assumption agreement, or the Assignment Agreement, an asset purchase agreement, or the Asset Purchase Agreement, and agreed to enter into certain ancillary transitional service agreements effective upon the closing of the transactions contemplated by the Asset Purchase Agreement. Under the Assignment Agreement, on July 30, 2017, BMS assigned to the Company all of its rights and obligations under a purchase agreement, or the Purchase Agreement, pursuant to which BMS agreed to purchase the manufacturing facility site location, which includes the underlying real estate and the manufacturing building, from BMR-3450 Under the Asset Purchase Agreement, which was entered into between the Company and BMS on July 31, 2017, or the Asset Purchase Agreement, the Company would acquire certain plant equipment and improvements from BMS upon closing of the transactions contemplated by the Asset Purchase Agreement in exchange for a payment of approximately $25.5 million. The closing of the transactions contemplated by the Asset Purchase Agreement is subject to customary closing conditions, and the execution of a clinical manufacturing services agreement and certain additional ancillary agreements. Under the clinical manufacturing services agreement, the Company will agree to manufacture certain BMS clinical product candidates in accordance with prescribed production schedules and quantities through the later of December 31, 2018 or when certain technical transfer activities have been completed, and to maintain personnel, equipment and expertise sufficient to perform the agreed upon services. BMS will compensate the Company for services rendered under the clinical manufacturing services agreement based on an agreed upon rate for use of the facility and employees, which will be subject to reconciliation based on actual costs incurred. Under the terms of the Asset Purchase Agreement, the Company has agreed to hire the employees who are currently employed by BMS at the manufacturing facility site location.

Summary of Significant Accoun14

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The accompanying unaudited condensed consolidated financial statements reflect the accounts of Seattle Genetics, Inc. and its wholly-owned subsidiaries (collectively “Seattle Genetics” or the “Company”). All intercompany transactions and balances have been eliminated. Management has determined that the Company operates in one segment: the development and sale of pharmaceutical products on its own behalf or in collaboration with others. Substantially all of the Company’s assets and revenues are related to operations in the United States; however, the Company also has subsidiaries in Canada, Switzerland and the United Kingdom. The condensed consolidated balance sheet data as of December 31, 2016 were derived from audited financial statements not included in this quarterly report on Form 10-Q. Unless indicated otherwise, all amounts presented in financial tables are presented in thousands, except for per share and par value amounts.
Non-cash investing activities	Non-cash The Company had $2.7 million and $8.1 million of accrued capital expenditures as of June 30, 2017 and December 31, 2016, respectively. Accrued capital expenditures have been treated as a non-cash
Investments	Investments The Company invests cash resources primarily in debt securities. In addition, as of June 30, 2017, the Company held an equity investment in the common stock of Immunomedics, Inc., or Immunomedics, as further described in Note 6. These debt and equity securities are classified as available-for-sale, non-current If the estimated fair value of a security is below its carrying value, the Company evaluates whether it is more likely than not that it will sell the security before its anticipated recovery in market value and whether evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. The Company also evaluates whether or not it intends to sell the investment. If the impairment is considered to be other-than-temporary, the security is written down to its estimated fair value. In addition, the Company considers whether credit losses exist for any securities. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. Other-than-temporary declines in estimated fair value and credit losses are charged against investment and other income, net.
Other non-current assets	Other non-current In addition to the equity investment in Immunomedics, other non-current non-controlling
Long-term incentive plans	Long-term incentive plans The Company has established Long-Term Incentive Plans, or LTIPs. The LTIPs provide eligible employees with the opportunity to receive performance-based incentives, which may be comprised of a cash payment, stock options, and restricted stock units. As of June 30, 2017, the estimated unrecognized compensation expense related to the LTIPs was $36.3 million. The total estimate of unrecognized compensation expense is expected to change in the future for several reasons, including the addition of more eligible employees, or the termination or modification of a plan.
Revenue recognition	Revenue recognition The Company’s revenues are comprised of ADCETRIS ® Net product sales The Company sells ADCETRIS through a limited number of pharmaceutical distributors in the U.S. and Canada. Customers order ADCETRIS through these distributors and the Company typically ships product directly to the customer. The Company records product sales when title and risk of loss pass, which generally occurs upon delivery of the product to the customer. Product sales are recorded net of estimated government-mandated rebates and chargebacks, distribution fees, estimated product returns and other deductions. Accruals are established for these deductions and actual amounts incurred are offset against applicable accruals. The Company reflects these accruals as either a reduction in the related account receivable from the distributor, or as an accrued liability depending on the nature of the sales deduction. Sales deductions are based on management’s estimates that consider payer mix in target markets and experience to date. These estimates involve a substantial degree of judgment. Government-mandated rebates and chargebacks Distribution fees, product returns and other deductions Collaboration and license agreement revenues The Company has developed a proprietary technology for linking cytotoxic agents to monoclonal antibodies called antibody-drug conjugates, or ADCs. This proprietary technology is the basis of ADC collaborations that the Company has entered into in the ordinary course of its business with a number of biotechnology and pharmaceutical companies. Under these ADC collaboration agreements, the Company grants its collaborators research and commercial licenses to the Company’s technology and provides technology transfer services, technical advice, supplies and services for a period of time. If there are continuing performance obligations, the Company uses a time-based proportional performance model to recognize revenue over the Company’s performance period for the related agreement. Collaboration and license agreements are evaluated to determine whether the multiple elements and associated deliverables can be considered separate units of accounting. To date, the pre-commercial The Company’s collaboration and license agreements include contractual milestones. Generally, the milestone events contained in the Company’s collaboration and license agreements coincide with the progression of the collaborators’ product candidates from development, to regulatory approval and then to commercialization and fall into the following categories. Development milestones in the Company’s collaborations may include the following types of events: • Designation of a product candidate or initiation of preclinical studies. The Company’s collaborators must undertake significant preclinical research and studies to make a determination of the suitability of a product candidate and the time from those studies or designation to initiation of a clinical trial may take several years. • Initiation of a phase 1 clinical trial. Generally, phase 1 clinical trials may take one to two years to complete. • Initiation of a phase 2 clinical trial. Generally, phase 2 clinical trials may take one to three years to complete. • Initiation of a phase 3 clinical trial. Generally, phase 3 clinical trials may take two to six years to complete. Regulatory milestones in the Company’s collaborations may include the following types of events: • Filing of regulatory applications for marketing approval such as a Biologics License Application in the United States or a Marketing Authorization Application in Europe. Generally, it may take up to twelve months to prepare and submit regulatory filings. • Receiving marketing approval in a major market, such as in the United States, Europe, Japan or other significant countries. Generally, it may take up to three years after a marketing application is submitted to obtain approval for marketing and pricing from the applicable regulatory agency. Commercialization milestones in the Company’s collaborations may include the following types of events: • First commercial sale in a particular market, such as in the United States, Europe, Japan or other significant countries. • Product sales in excess of a pre-specified The Company’s ADC collaborators are solely responsible for the development of their product candidates and the achievement of milestones in any of the categories identified above is based solely on the collaborators’ efforts. In the case of the Company’s ADCETRIS collaboration with Takeda, the Company may be involved in certain development activities; however, the achievement of milestone events under the agreement is primarily based on activities undertaken by Takeda. The process of successfully developing a product candidate, obtaining regulatory approval and ultimately commercializing a product candidate is highly uncertain and the attainment of any milestones is therefore uncertain and difficult to predict. In addition, since the Company does not take a substantive role or control the research, development or commercialization of any products generated by its ADC collaborators, the Company is not able to reasonably estimate when, if at all, any milestone payments or royalties may be payable to the Company by its ADC collaborators. As such, the milestone payments associated with its ADC collaborations involve a substantial degree of uncertainty and risk that they may never be received. Similarly, even in those collaborations where the Company may have an active role in the development of the product candidate, such as the Company’s ADCETRIS collaboration with Takeda, the attainment of a milestone is based on the collaborator’s activities and is generally outside the direction and control of the Company. The Company generally invoices its collaborators and licensees on a monthly or quarterly basis, or upon the completion of the effort or achievement of a milestone, based on the terms of each agreement. Deferred revenue arises from amounts received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Deferred revenue expected to be recognized within the next twelve months is classified as a current liability. Royalty revenues and cost of royalty revenues Royalty revenues primarily reflect amounts earned under the ADCETRIS collaboration with Takeda. These royalties include sales royalties, which are based on a percentage of Takeda’s net sales at rates that range from the mid-teens mid-twenties
Recent accounting pronouncements	Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued an Accounting Standards Update entitled “ASU 2014-09, 2015-14, 2014-09 2016-08, 2016-10, 2016-12, 2016-20, In January 2016, FASB issued an Accounting Standards Update entitled “ASU 2016-01, In February 2016, FASB issued an Accounting Standards Update entitled “ASU 2016-02, right-of-use In March 2016, FASB issued an Accounting Standard Update entitled “ASU 2016-09, In October 2016, FASB issued an Accounting Standard Update entitled “ASU 2016-16, pre-tax In June 2016, FASB issued an Accounting Standard Update entitled “ASU 2016-13, In January 2017, FASB issued an Accounting Standard Update entitled, “ASU 2017-01, In May 2017, FASB issued an Accounting Standard Update entitled, “ASU 2017-09,

Investments (Tables)

Investments (Tables)	6 Months Ended
	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Available-for-Sale Securities	Investments consisted of available-for-sale Amortized cost Gross unrealized gains Gross unrealized losses Fair value June 30, 2017 U.S. Treasury securities $ 276,159 $ 0 $ (280 ) $ 275,879 Common stock investment in Immunomedics 12,677 13,813 0 26,490 Total $ 288,836 $ 13,813 $ (280 ) $ 302,369 Contractual Maturities (at date of purchase) Due in one year or less $ 145,445 $ 145,377 Due in one to two years 130,714 130,502 Total $ 276,159 $ 275,879 Amortized cost Gross unrealized gains Gross unrealized losses Fair value December 31, 2016 U.S. Treasury securities $ 510,356 $ 68 $ (123 ) $ 510,301 Contractual Maturities (at date of purchase) Due in one year or less $ 229,856 $ 229,864 Due in one to two years 280,500 280,437 Total $ 510,356 $ 510,301
Summary of Investments Classified as Available-for-Sale Securities	Investments classified as available-for-sale June 30, 2017 December 31, 2016 Short-term investments $ 255,307 $ 480,313 Long-term investments 20,572 29,988 Other non-current 26,490 0 Total $ 302,369 $ 510,301
Estimated Fair Value of Investments with Unrealized Losses	The aggregate estimated fair value of the Company’s investments with unrealized losses was as follows (in thousands): Period of continuous unrealized loss 12 Months or less Greater than 12 months Fair value Gross unrealized losses Fair value Gross unrealized losses June 30, 2017 U.S. Treasury securities $ 275,879 $ (280 ) $ NA $ NA December 31, 2016 U.S. Treasury securities $ 200,327 $ (123 ) $ NA $ NA

Fair Value (Tables)

Fair Value (Tables)	6 Months Ended
	Jun. 30, 2017
Fair Value Disclosures [Abstract]
Schedule of Financial Assets by Level within Fair Value Hierarchy	The following table presents the Company’s available-for-sale Fair value measurement using: Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total As of June 30, 2017 Short-term investments—U.S. Treasury securities $ 255,307 $ 0 $ 0 $ 255,307 Long-term investments—U.S. Treasury securities 20,572 0 0 20,572 Other non-current 26,490 0 0 26,490 Total $ 302,369 $ 0 $ 0 $ 302,369 Fair value measurement using: Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total As of December 31, 2016 Short-term investments—U.S. Treasury securities $ 480,313 $ 0 $ 0 $ 480,313 Long-term investments—U.S. Treasury securities 29,988 0 0 29,988 Total $ 510,301 $ 0 $ 0 $ 510,301

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Schedule of Inventories	The following table presents the Company’s inventories of ADCETRIS (in thousands): June 30, 2017 December 31, 2016 Raw materials $ 59,559 $ 62,516 Work in process 2,191 8 Finished goods 7,497 5,600 Total $ 69,247 $ 68,124

Summary of Significant Accoun18

Summary of Significant Accounting Policies - Additional Information (Detail)	Jun. 30, 2017USD ($)	Jun. 30, 2017USD ($)Segment	Dec. 31, 2016USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of reporting segment operated | Segment		1
Accrued capital expenditures		$ 2,700,000	$ 8,100,000
Cost method investment, carrying value	$ 5,000,000	5,000,000
Impairment of investments	$ 0
LTIP estimated unrecognized compensation expense		$ 36,300,000
Number of days allowed to the customer to return product for expiration or damage		30 days
Collaboration and License Agreement Revenues [Member] | Takeda [Member]
Summary Of Significant Accounting Policies [Line Items]
Performance obligation period, years		10 years
Collaboration and License Agreement Revenues [Member] | Genentech [Member]
Summary Of Significant Accounting Policies [Line Items]
Performance obligation period, years		17 years
Minimum [Member] | Collaboration and License Agreement Revenues [Member]
Summary Of Significant Accounting Policies [Line Items]
Performance obligation periods of each agreement, years		1 year
Maximum [Member] | Collaboration and License Agreement Revenues [Member]
Summary Of Significant Accounting Policies [Line Items]
Performance obligation periods of each agreement, years		3 years
Remaining performance obligation period, years		3 years

Net Loss Per Share - Additional

Net Loss Per Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Stock Options and RSUs [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted-average shares that have been excluded from the number of shares used to calculate basic and diluted net loss per share	13,057,000	12,548,000	13,188,000	12,432,000

Investments - Available-for-Sal

Investments - Available-for-Sale Securities (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized cost	$ 288,836
Available-for-sale securities, Gross unrealized gains	13,813
Available-for-sale securities, Gross unrealized losses	(280)
Available-for-sale securities, Fair value	302,369	$ 510,301
Common Stock Investment in Immunomedics [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized cost	12,677
Available-for-sale securities, Gross unrealized gains	13,813
Available-for-sale securities, Gross unrealized losses	0
Available-for-sale securities, Fair value	26,490
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized cost	276,159	510,356
Available-for-sale securities, Fair value	275,879	510,301
Debt Securities [Member] | U.S. Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized cost	276,159	510,356
Available-for-sale securities, Gross unrealized gains	0	68
Available-for-sale securities, Gross unrealized losses	(280)	(123)
Available-for-sale securities, Fair value	275,879	510,301
Debt Securities [Member] | Contractual Maturities Due in One Year or Less [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized cost	145,445	229,856
Available-for-sale securities, Fair value	145,377	229,864
Debt Securities [Member] | Contractual Maturities Due in One to Two Years [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized cost	130,714	280,500
Available-for-sale securities, Fair value	$ 130,502	$ 280,437

Investments - Summary of Invest

Investments - Summary of Investments Classified as Available-for-Sale Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Short-term investments	$ 255,307	$ 480,313
Long-term investments	20,572	29,988
Other non-current assets-Common stock investment in Immunomedics	26,490	0
Total	$ 302,369	$ 510,301

Investments - Estimated Fair Va

Investments - Estimated Fair Value of Investments with Unrealized Losses (Detail) - U.S. Treasury Securities [Member] - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Period of continuous unrealized loss, 12 Months or less, Fair value	$ 275,879	$ 200,327
Available-for-sale securities, Period of continuous unrealized loss, 12 Months or less, Gross unrealized losses	(280)	(123)
Available-for-sale securities, Period of continuous unrealized loss, Greater than 12 months, Fair value	0	0
Available-for-sale securities, Period of continuous unrealized loss, Greater than 12 months, Gross unrealized losses	$ 0	$ 0

Fair Value - Additional Informa

Fair Value - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017USD ($)
Fair Value Disclosures [Abstract]
Transfer of investments between Levels 1, 2 and 3	$ 0

Fair Value - Schedule of Financ

Fair Value - Schedule of Financial Assets by Level within Fair Value Hierarchy (Detail) - Fair Value Measurements Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 302,369	$ 510,301
U.S. Treasury Securities [Member] | Short-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	255,307	480,313
U.S. Treasury Securities [Member] | Long-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	20,572	29,988
Common Stock Investment in Immunomedics [Member] | Other Non-current Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	26,490
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	302,369	510,301
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Securities [Member] | Short-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	255,307	480,313
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Securities [Member] | Long-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	20,572	29,988
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Stock Investment in Immunomedics [Member] | Other Non-current Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	26,490
Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Other Observable Inputs (Level 2) [Member] | U.S. Treasury Securities [Member] | Short-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Other Observable Inputs (Level 2) [Member] | U.S. Treasury Securities [Member] | Long-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Other Observable Inputs (Level 2) [Member] | Common Stock Investment in Immunomedics [Member] | Other Non-current Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury Securities [Member] | Short-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	0
Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury Securities [Member] | Long-term Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	0	$ 0
Significant Unobservable Inputs (Level 3) [Member] | Common Stock Investment in Immunomedics [Member] | Other Non-current Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 0

Inventories - Schedule of Inven

Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 59,559	$ 62,516
Work in process	2,191	8
Finished goods	7,497	5,600
Total	$ 69,247	$ 68,124

Immunomedics, Inc. Stock Purc26

Immunomedics, Inc. Stock Purchase Agreement - Additional Information (Detail) - Immunomedics [Member] $ / shares in Units, $ in Millions	1 Months Ended
	Feb. 28, 2017USD ($)$ / sharesshares
Investment Holdings [Line Items]
Total consideration paid under stock purchase agreement	$ 14.7
Share of Immunomedics common stock purchased | shares	3,000,000
Warrant to purchase additional shares of Immunomedics common stock | shares	8,700,000
Warrant exercise price | $ / shares	$ 4.90
Relative fair value, common stock	$ 12.7
Relative fair value, warrant	$ 2

Legal Matters - Additional Info

Legal Matters - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017
Loss Contingencies [Line Items]
Lawsuit filing date description	On February 13, 2017, the Company was named a co-defendant in a lawsuit filed by venBio Select Advisors LLC, or venBio, in the Delaware Chancery Court, or the Court, against the members of the board of directors of Immunomedics.
Name of Plaintiff	VenBio
Name of Defendant	Members of the board of directors of Immunomedics
Shareholder Class Action [Member]
Loss Contingencies [Line Items]
Lawsuit filing date description	On January 10, 2017, the Company became a named defendant in a securities class action complaint seeking compensatory damages of an undisclosed amount.
Shareholder Derivative Action [Member]
Loss Contingencies [Line Items]
Lawsuit filing date description	On March 29, 2017, a stockholder derivative lawsuit was filed in Washington Superior Court for the County of Snohomish

Subsequent Event - Additional I

Subsequent Event - Additional Information (Detail) - USD ($) $ in Thousands	Jul. 31, 2017	Jul. 30, 2017	Jun. 30, 2017	Jun. 30, 2016
Subsequent Event [Line Items]
Purchases of property and equipment			$ 37,556	$ 10,684
Assignment Agreement [Member]
Subsequent Event [Line Items]
Purchases of property and equipment			$ 17,800
Assignment Agreement [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Date of acquisition		Jul. 31, 2017
Asset Purchase Agreement [Member] | Scenario, Forecast [Member]
Subsequent Event [Line Items]
Agreement expiration date	Dec. 31, 2018
Asset Purchase Agreement [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Date of acquisition	Jul. 31, 2017
Asset purchase agreement payment	$ 25,500