Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 28, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | EXACT SCIENCES CORP | |
Entity Central Index Key | 1,124,140 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 96,338,000 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 31,522 | $ 58,131 |
Marketable securities | 311,987 | 224,625 |
Accounts receivable, net | 4,209 | 1,376 |
Inventory, net | 6,032 | 4,017 |
Prepaid expenses and other current assets | 5,602 | 3,528 |
Total current assets | 359,352 | 291,677 |
Property and Equipment, at cost: | ||
Laboratory equipment | 11,929 | 10,381 |
Computer equipment and computer software | 12,662 | 7,577 |
Assets under construction | 7,066 | 1,552 |
Leasehold improvements | 6,454 | 5,937 |
Buildings | 4,777 | |
Furniture and fixtures | 1,038 | 939 |
Property and Equipment, gross | 43,926 | 26,386 |
Less-Accumulated depreciation | (11,851) | (6,439) |
Net property and equipment | 32,075 | 19,947 |
Other long-term assets | 2,562 | 1,200 |
Total assets | 393,989 | 312,824 |
Current Liabilities: | ||
Accounts payable | 1,503 | 2,647 |
Accrued liabilities | 20,929 | 13,960 |
Debt and capital lease obligation, current portion | 221 | 360 |
Other short-term liabilities | 861 | 554 |
Total current liabilities | 23,514 | 17,521 |
Long-term debt | 3,535 | 1,000 |
Long-term accrued interest | 106 | |
Other long-term liabilities | 4,455 | 3,599 |
Lease incentive obligation, less current portion | 1,199 | 1,614 |
Total liabilities | $ 32,703 | $ 23,840 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.01 par value Authorized—5,000,000 shares Issued and outstanding—no shares at September 30, 2015 and December 31, 2014 | ||
Common stock, $0.01 par value Authorized—200,000,000 shares Issued and outstanding—96,311,415 and 88,626,042 shares at September 30, 2015 and December 31, 2014 | $ 964 | $ 887 |
Additional paid-in capital | 898,786 | 709,019 |
Accumulated other comprehensive income (loss) | 155 | (115) |
Accumulated deficit | (538,619) | (420,807) |
Total stockholders' equity | 361,286 | 288,984 |
Total liabilities and stockholders’ equity | $ 393,989 | $ 312,824 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, Issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 200,000,000 | 200,000,000 |
Common stock, Issued shares | 96,311,415 | 88,626,042 |
Common stock, outstanding shares | 93,311,415 | 88,626,042 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net sales | ||||
Laboratory service revenue | $ 12,632 | $ 25,017 | ||
License fees | $ 294 | |||
Total revenue | 12,632 | 25,017 | 294 | |
Cost of sales | 7,528 | $ 924 | 16,834 | 924 |
Gross margin | 5,104 | (924) | 8,183 | (630) |
Operating expenses: | ||||
Research and development | 9,863 | 9,073 | 24,549 | 23,677 |
General and administrative | 15,432 | 8,994 | 42,086 | 19,810 |
Sales and marketing | 23,079 | 13,217 | 60,196 | 23,839 |
Total operating expenses | 48,374 | 31,284 | 126,831 | 67,326 |
Loss from operations | (43,270) | (32,208) | (118,648) | (67,956) |
Other income (expense) | ||||
Investment income | 365 | 160 | 780 | 392 |
Interest income (expense) | (40) | (12) | 56 | (40) |
Total other income | 325 | 148 | 836 | 352 |
Net loss | $ (42,945) | $ (32,060) | $ (117,812) | $ (67,604) |
Net loss per share-basic and diluted (in dollars per share) | $ (0.45) | $ (0.39) | $ (1.30) | $ (0.86) |
Weighted average common shares outstanding-basic and diluted (in shares) | 94,444 | 82,941 | 90,696 | 78,702 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (42,945) | $ (32,060) | $ (117,812) | $ (67,604) |
Other comprehensive loss, net of tax: | ||||
Unrealized (loss) gain on available-for-sale investments | 75 | (95) | 211 | (131) |
Foreign currency translation loss | 91 | 59 | ||
Comprehensive loss | $ (42,779) | $ (32,155) | $ (117,542) | $ (67,735) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (117,812) | $ (67,604) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization of fixed assets | 5,412 | 2,264 |
Stock-based compensation | 13,148 | 8,643 |
Amortization of deferred license fees | (294) | |
Amortization of other liabilities | (399) | |
Amortization of deferred financing costs | 33 | |
Forgiveness of long-term debt | (1,000) | |
Amortization of premium on short-term investments | 1,020 | 628 |
Changes in assets and liabilities: | ||
Accounts receivable | (2,833) | |
Inventory, net | (2,015) | (2,719) |
Prepaid expenses and other current assets | (1,907) | (178) |
Accounts payable | (1,144) | 3,874 |
Accrued liabilities | 7,805 | 5,778 |
Lease incentive obligation | (415) | (405) |
Accrued interest | (106) | 16 |
Net cash used in operating activities | (100,213) | (49,997) |
Cash flows from investing activities: | ||
Purchases of marketable securities | (197,997) | (141,355) |
Maturities of marketable securities | 109,826 | 77,689 |
Purchases of property and equipment | (17,540) | (9,522) |
Net cash provided by (used in) investing activities | (105,711) | (73,188) |
Cash flows from financing activities: | ||
Proceeds from exercise of common stock options | 961 | 424 |
Proceeds from sale of common stock, net of issuance costs | 174,140 | 137,664 |
Payments on capital lease obligations | (360) | (262) |
Proceeds from mortgage payable | 3,756 | |
Proceeds in connection with the Company's employee stock purchase plan | 759 | 337 |
Net cash provided by financing activities | 179,256 | 138,163 |
Effects of exchange rate on cash and cash equivalents | 59 | |
Net increase (decrease) in cash and cash equivalents | (26,609) | 14,978 |
Cash and cash equivalents, beginning of period | 58,131 | 12,851 |
Cash and cash equivalents, end of period | 31,522 | 27,829 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Unrealized gain (loss) on available-for-sale investments | 211 | (131) |
Issuance of 21,826 and 32,666 shares of common stock to fund the Company’s 401(k) matching contribution for 2014 and 2013, respectively | $ 835 | $ 456 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Parenthetical) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Cash Flows | ||
Issuance of shares of common stock to fund the Company's 401(k) matching contribution | 21,826 | 32,669 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | (1) ORGANIZATION AND BASIS OF PRESENTATION Organization Exact Sciences Corporation (together with its subsidiaries, “Exact”, “we”, “us” or the “Company”) was incorporated in February 1995. Exact is a molecula r diagnostics company focused on the early detection and prevention of some of the deadliest forms of cancer. The Company has developed an accurate, non-invasive, patient-friendly screening test for the early detection of colorectal cancer and pre-cancer, and is currently working on the development of tests for lung cancer, pancreatic cancer and esophageal cancer. Basis of Presentation The accompanying condensed consolidated financial statements, which include the accounts of Exact Sciences Corporation and those of its wholly-owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, Beijing Exact Sciences Medical Technology Company Limited, and variable interest entities are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements and notes as of and for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K (the “2014 Form 10-K”). These condensed financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the results of operations have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. The statements should be read in conjunction with the audited financial statements and related notes included in the 2014 Form 10-K. Management has evaluated subsequent events for disclosure or recognition in the accompanying financial statements up to the filing of this report. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, Beijing Exact Sciences Medical Technology Company Limited, and variable interest entities. All significant intercompany transactions and balances have been eliminated in consolidation. References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers cash on hand, demand deposits in bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at September 30, 2015 and December 31, 2014 . Marketable Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive loss. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight-line method, which approximates the effective interest method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income. At September 30, 2015 and December 31, 2014 , the Company’s investments were comprised of fixed income investments and all were deemed available-for-sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with a contractual term greater than one year from the date of purchase) are classified as current. All of the Company’s investments are considered current. There were no realized losses for the nine months ended September 30, 2015 and 2014 . Realized gains were $7.7 thousand and $11.1 thousand for the nine months ended September 30, 2015 and 2014, respectively. We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will have to sell the security before recovery of its cost basis. For the nine months ended September 30, 2015, no investments were identified with other-than-temporary declines in value. Available-for-sale securities at September 30, 2015 consisted of the following: September 30, 2015 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income Income Value Corporate bonds $ $ $ $ U.S. government agency securities Asset backed securities Certificates of deposit — — Commercial paper — Total available-for-sale securities $ $ $ $ Available-for-sale securities at December 31, 2014 consisted of the following: December 31, 2014 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income Income Value Corporate bonds $ $ $ $ U.S. government agency securities Asset backed securities Commercial paper — — Total available-for-sale securities $ $ $ $ Changes in Accumulated Other Comprehensive Income (Loss) The amounts recognized in accumulated other comprehensive income (loss) (AOCI) for the nine months ended September 30, 2015 were as follows (in thousands): Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive Adjustment on Securities Income (Loss) Balance at December 31, 2014 $ — $ $ Other comprehensive (loss) income before reclassifications Amounts reclassified from accumulated other comprehensive loss — Net current period change in accumulated other comprehensive income (loss) Balance at September 30, 2015 $ $ $ The amounts recognized in AOCI for the nine months ended September 30, 2014 were as follows (in thousands): Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive Adjustment on Securities Income (Loss) Balance at December 31, 2013 $ — $ $ Other comprehensive loss before reclassifications — Amounts reclassified from accumulated other comprehensive loss — Net current period change in accumulated other comprehensive loss — Balance at September 30, 2014 $ — $ $ Amounts reclassified from AOCI for the nine months ended September 30, 2015 were as follows (in thousands): Affected Line Item in the Nine Months Ended September 30, Details about AOCI Components Statement of Operations 2015 2014 Change in value of available-for-sale investments Sales and maturities of available-for-sale investments Investment income $ $ Total reclassifications $ $ Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of fixed assets are as follows: Estimated Asset Classification Useful Life Laboratory equipment 3 - 5 years Computer equipment and computer software 3 years Leasehold improvements Lesser of the remaining lease term or useful life Furniture and fixtures 3 years Buildings 30 years At September 30, 2015, the Company had $7.1 million of assets under construction which consisted of $4.6 million re lated to building and leasehold improvements , $1.6 million of capitalized costs related to software projects and $0.9 million of costs related to machinery and equipment. Depreciation will begin on these assets once they are placed into service. At September 30, 2015, the Company has incurred $2.2 million in building improvement costs, of which, $0.1 million has been paid through financing at the period end and an additional $1.3 million will be financed in October 2015. The Company expects to incur minimal costs to complete the leasehold improvements, machinery and equipment, and the software projects, and these projects are expected to be completed in 2015. Software Capitalization Policy Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized, when the software is ready for its intended use, using the straight-line basis over the estimated economic useful life of the software. Net Loss Per Share Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses. The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period: September 30, 2015 2014 Shares issuable upon exercise of stock options Shares issuable upon exercise of outstanding warrants(1) — Shares issuable upon the release of restricted stock awards Shares issuable upon the vesting of restricted stock awards related to licensing agreement — (1) At September 30, 2014, represents warrants to purchase 75,000 shares of common stock issued under a consulting agreement. Revenue Recognition Laboratory Service Revenue. The Company’s r evenues are generated by the Cologuard® test. Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. The Company assesses whether the fee is fixed or determinable and if the collectability is reasonably assured based on the nature of the fee charged for the laboratory services delivered and whether there are existing contractual arrangements with customers, third-party commercial payors (insurance carriers and health plans) or coverage of the test by Centers for Medicare & Medicaid Services (CMS). In addition, when evaluating collectability, the Company considers factors such as collection experience for the healthcare industry, the financial standing of customers or third-party commercial payors, and whether it has sufficient collection history to reliably estimate a payor's individual payment patterns. A portion of laboratory service revenues earned by the Company will be initially recognized on a cash basis because the above criteria will not have been met at the time the test results are delivered. The Company generally bills third-party payors upon generation and delivery of a test result to the ordering physician following completion of a test. Patients may have out-of-pocket costs for amounts not covered by their insurance carrier and the Company bills the patient directly for these amounts in the form of co-pays and deductibles in accordance with their insurance carrier and health plans. Some third-party payors may not fully cover the Cologuard test under their reimbursement policies. Consequently, in such cases, the Company pursues reimbursement on a case-by-case basis directly from the patient. For laboratory services performed, where the collectability is not reasonably assured, the Company will continue to recognize revenues upon cash collection until it can reliably estimate the amount that will be ultimately collected for the Cologuard test. In order to begin to record revenue on an accrual basis in these scenarios, the Company expects to use at least several months of payment history, review the number of tests paid against the number of tests billed, and consider the payor's outstanding balance for unpaid tests to determine whether payments are being made for a consistently high percentage of tests billed and at appropriate amounts given the contracted or historical payment amount. With regard to Cologuard tests covered by Medicare, the national coverage determination for Cologuard was released by CMS on October 9, 2014 and for these tests, revenue is recognized on an accrual basis once the services have been performed as the price is fixed or determinable, and collectability is reasonably assured. The Company recognized approximately $ 12.6 million and $ 25.0 million in laboratory service revenue for the three and nine months ended September 30, 2015. License fees. License fees for the licensing of product rights are recorded as deferred revenue upon receipt of cash and recognized as revenue on a straight-line basis over the license period. As more fully described in the 2014 Form 10-K, in connection with the Company’s January 2009 strategic transaction with Genzyme Corporation, the Company deferred the initial $16.65 million in cash received at closing and amortized that up-front payment on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014. In addition, in 2010 the Company received holdback amounts of $1.85 million, which were deferred at the time of receipt and were amortized on a straight-line basis into revenue over the then remaining term of the collaboration period. In addition, the Company deferred $1.53 million premium related to common stock purchased by Genzyme and amortized that amount on a straight-line basis into revenue over the initial five -year collaboration period which ended in January 2014. The Company did not recognize revenue in connection with the amortization of the up-front payments from Genzyme during the three and nine months ended September 30, 2015. The Company recognized approximately $0.3 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the nine months ended September 30, 2014. There was no license fee revenue recognized during the three months ended September 30, 2014. Inventory Inventory is stated at the lower of cost or market value (net realizable value). The Company determines the cost of inventory using the first-in, first out method (FIFO). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and records a charge to cost of sales for such inventory as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value. Direct and indirect manufacturing costs incurred during process validation and for other research and development activities, which are not permitted to be sold, have been expensed to research and development. Inventory consist of the following (amount in thousands): September 30, December 31, 2015 2014 Raw materials $ $ Semi-finished and finished goods Total inventory $ $ Foreign Currency Translation For the Company’s international subsidiaries, the local currency is the functional currency. Assets and liabilities of these subsidiaries are translated into United States dollars at the period-end exchange rate or historical rates as appropriate. Consolidated statements of operations amounts are translated at average exchange rates for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheet as a component of accumulated other comprehensive income in total Exact Sciences Corporation’s shareholders’ equity. Transaction gains and losses are included in the consolidated statement of operations in 2015. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and accompanying notes to the consolidated financial statements. |
MAYO LICENSE AGREEMENT
MAYO LICENSE AGREEMENT | 9 Months Ended |
Sep. 30, 2015 | |
MAYO LICENSE AGREEMENT | |
MAYO LICENSE AGREEMENT | (3) MAYO LICENSE AGREEMENT Overview As more fully described in the 2014 Form 10-K, in June 2009 the Company entered into a license agreement (the “MAYO Agreement”) with MAYO Foundation for Medical Education and Research (“MAYO”). Pursuant to the MAYO Agreement, the Company granted MAYO two common stock purchase warrants with an exercise price of $1.90 per share covering 1,000,000 and 250,000 shares of common stock, respectively. The MAYO Agreement required the Company to make payments to MAYO for up-front fees, fees upon the achievement of certain milestones, and certain other payments. In addition to the license to intellectual property owned by MAYO, MAYO agreed to make available personnel to provide the Company product development and research and development assistance. The Company agreed to make royalty payments to MAYO on potential future net sales of any products developed from the licensed technology. The Company sought rights to the MAYO intellectual property for the specific purpose of developing a non-invasive, stool-based DNA screening test for colorectal cancer. At the time the MAYO A greement was executed, the Company’s sole focus was the development of such a test. Accordingly, the Company recognized the initial payments and expenses related to the warrants at the time of the transaction and the amounts were expensed to research and development as there were no anticipated alternative future uses associated with the intellectual property. Warrants The warrants granted to MAYO were valued based on a Black-Scholes pricing model at the date of the grant. The warrants were granted with an exercise price of $1.90 per share of common stock. The grant to purchase 1,000,000 shares was immediately exercisable and the grant to purchase 250,000 shares vested and became exercisable over a four year period. MAYO exercised the warrant to purchase 1,000,000 shares through several partial exercises. As of September 2011, the warrant covering 1,000,000 shares was fully exercised. MAYO exercised the warrant to purchase 250,000 shares through partial exercises, the last of which occurred in June 2014. In June 2014, MAYO exercised the remaining shares of this warrant by utilizing the cashless exercise provision contained in the warrant. As a result of this exercise for a gross amount of 80,000 shares, in lieu of paying a cash exercise price, MAYO forfeited its right with respect to 10,587 shares leaving it with a net amount of 69,413 shares. Following this exercise, all of MAYO’s warrants to purchase the Company’s common stock were fully exercised. Royalty Payments Under the MAYO Agreement, the Company agreed to make royalty payments to MAYO based on a percentage of net sales of products developed from the licensed technology starting in the third year of the agreement. Starting in 2012, minimum royalty payments were $10,000 per year. For each year from 2015 through 2033 (the year the last patent expires), the minimum royalty payments are $25,000 per year. Other Payments Other payments under the MAYO Agreement include an upfront payment of $ 80,000 , a milestone payment of $ 250,000 on the commencement of patient enrollment in a human cancer screening clinical trial, and a $500,000 payment upon FDA approval of the Company’s Cologuard test. The upfront payment of $80,000 was made in the third quarter of 2009 and expensed to research and development in the second quarter of 2009. The Company began enrollment in human cancer screening clinical trial in June 2011 and the milestone payment of $250,000 was made and expensed to research and development in June 2011. The Company received FDA approval for its Cologuard test in August 2014, and the milestone payment of $ 500,000 was made and expensed to research and development in August 2014. In addition, the Company pays MAYO for research and development efforts. During the three and nine months ended September 30, 2015, the Company made payments of $0.9 million and $2.4 million, respectively. At September 30, 2015 the Company recorded an estimated liability in the amount of $0.4 million for MAYO’s research and development efforts. During the three months ended September 30, 2014, the Company did not make research and development payments to MAYO. During the nine months ended September 30, 2014, the Company made research and development payments to MAYO of $0.7 million. At September 30, 2014 the Company recorded an estimated liability in the amount of $1.6 million for research and development efforts. May 2012 Amendment In May 2012 the Company expanded the relationship with MAYO through an amendment to the MAYO Agreement. As part of the amendment, MAYO expanded the Company’s license to include all gastrointestinal cancers and diseases, and new cancer screening applications of stool- and blood-based testing. As part of the amendment, the Company agreed to make restricted stock grants to MAYO upon the achievement of certain milestones with respect to commercial launch of the Company’s second and third licensed products. Additionally, the Company agreed to make milestone payments once certain sales levels are reached on licensed products. It is uncertain as to when or if these milestones will be met; therefore, the milestone payments have not been recorded as a liability. The Company evaluates the status of the milestone payments at each reporting date to determine if a liability should be recorded for the milestone payment. February 2015 Amendment In February 2015 the Company amended and restated the MAYO Agreement to extend the Company’s arrangement with MAYO for an additional five years and to broaden the Company’s and MAYO’s collaboration efforts to develop screening, surveillance and diagnostic tests and tools for use in connection with gastrointestinal cancers, precancers, diseases and conditions. Under the amended and restated agreement (the “Restated MAYO Agreement”), MAYO agreed to continue to make personnel available during the additional five year period to provide the Company product development and research and development assistance. The Restated MAYO Agreement defines “gastrointestinal” to include certain airway organs (including the pharynx, larynx, trachea, bronchi and lungs) and certain head and neck organs (including nasal passages, mouth and throat). The Restated MAYO Agreement also reflects an expanded list of patent rights that MAYO licenses to the Company. Pursuant to the Restated MAYO Agreement, the Company agreed to pay MAYO an additional $5.0 million, payable in five annual $1.0 million installments, the first of which was due February 10, 2015. The first $1.0 million payment was made to MAYO in February 2015 and was capitalized to pre-paid assets and will be amortized to research and development expenses straight-line over the initial 12 month research period. Additionally, the Company will make milestone payments once certain sales levels are reached on licensed products. It is uncertain as to when or if these milestones will be met; therefore, the milestone payments have not been recorded as a liability. The Company evaluates the status of the milestone payments at each reporting date to determine if a liability should be recorded for the milestone payment. |
MD ANDERSON LICENSE AGREEMENT
MD ANDERSON LICENSE AGREEMENT | 9 Months Ended |
Sep. 30, 2015 | |
MD ANDERSON LICENSE AGREEMENT | |
MD ANDERSON LICENSE AGREEMENT | (4) MD ANDERSON LICENSE AGREEMENT Overview On April 10, 2015, the Company entered into a Joint Development and License Agreement (“MD Anderson Agreement”) with the University of Texas M.D. Anderson Cancer Center (“MD Anderson”) to jointly develop, clinically validate and obtain FDA approval and CMS coverage and reimbursement for in-vitro diagnostic and screening tools for the early detection of lung cancer (the “IVD Assays”). Under the MD Anderson Agreement, MD Anderson assigned certain patent rights to the Company and granted the Company an exclusive license to certain intellectual property rights for the purpose of developing, manufacturing and marketing IVD Assays. In addition, MD Anderson agreed to make personnel available to provide the Company product development and research and development assistance. Pursuant to the MD Anderson Agreement, the Company is obligated to reimburse IVD Assay development expenses incurred by the staff at MD Anderson, up to a maximum of $1.0 million per year for the first two years of the MD Anderson Agreement. At September 30, 2015 the Company recorded an estimated liability in the amount of $0.5 million for IVD Assay development efforts. During the three and nine months ended September 30, 2015, the Company made payments for IVD Assay development costs to MD Anderson of $0.3 million. Beginning on April 30, 2015 and continuing through December 31, 2016, the Company is required to pay a quarterly fee of $0.3 million for the use of samples already collected prior to the effective date of the agreement which will be utilized in the continued research and development of IVD Assays. Further, the Company has agreed to pay MD Anderson a low single digit royalty on the Company’s net sales of licensed products covered by specified patent rights. As of September 30, 2015 there have been no commercial sales of such product. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2015 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | (5) STOCK-BASED COMPENSATION Stock-Based Compensation Plans The Company’s stock-based compensation plans include the 2010 Omnibus Long-Term Incentive Plan (As Amended and Restated Effective April 28, 2015), the 2010 Employee Stock Purchase Plan, the 2015 Inducement Grant Plan and the 2000 Stock Option and Incentive Plan (collectively, the “Stock Plans”). Stock-Based Compensation Expense The Company recorded $4.9 million and $13.1 million in stock-based compensation expense during the three and nine months ended September 30, 2015 in connection with the amortization of restricted stock and restricted stock unit awards, stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees, non-employee consultants and non-employee directors. The Company recorded $4.1 million and $8.6 million in stock-based compensation expense during the three and nine months ended September 30, 2014, respectively, in connection with the amortization of restricted stock and restricted stock unit awards, stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees, non-employee consultants and non-employee directors. Determining Fair Value Valuation and Recognition – The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below. The estimated fair value of employee stock options is recognized to expense using the straight-line method over the vesting period. Expected Term – Expected term is based on the Company’s historical life data and is determined using the average of the vesting period and the contractual life of the stock options granted. Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards. Risk-Free Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent expected term. Forfeitures - The Company records stock-based compensation expense only for those awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. The Company’s forfeiture rate used in the nine months ended September 30, 201 5 and 2014 was 4.99% . The fair value of each restricted stock and restricted stock unit award is determined on the date of grant using the closing stock price on that day. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Option Plan Shares Risk-free interest rates (1) 2.01% 1.5% - 1.92% 1.96% - 2.01 % Expected term (in years) (1) 6 6.25 - 6.6 6 Expected volatility (1) 77.6% 67.1% - 73.2% 77.6% - 80.8% Dividend yield (1) 0% 0 % 0% Weighted average fair value per share of options granted during the period (1) $ 11.37 $ 15.81 $ 10.05 ESPP Shares Risk-free interest rates (2) (2) 0.25% - 0.6% 0.1% - 0.41% Expected term (in years) (2) (2) 0.5 - 2 0.5 - 2 Expected volatility (2) (2) 51.2% - 57.4% 42.5% - 49.5% Dividend yield (2) (2) 0 % 0% Weighted average fair value per share of stock purchase rights granted during the period (2) (2) $ 7.48 $ 3.76 (1) The Company did not grant options under its 2010 Option Plan during the period indicated. (2) The Company did not issue stock purchase rights under its 2010 Employee Stock Purchase Plan during the respective period. Stock Option and Restricted Stock Activity A summary of stock option activity under the Stock Plans during the nine months ended September 30, 2015 is as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (Years) Value(1) (Aggregate intrinsic value in thousands) Outstanding, December 31, 2014 $ Granted Exercised Forfeited Outstanding, September 30, 2015 $ $ Exercisable, September 30, 2015 $ $ Vested and expected to vest, September 30, 2015 $ $ (1) The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices that were lower than the $17.99 market price of the Company’s common stock at September 30, 2015. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 was $2.0 million and $1.4 million, respectively. As of September 30, 2015, there was $39.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all Stock Plans. Total unrecognized compensation cost will be adjusted for future changes in forfeitures. The Company expects to recognize that cost over a weighted average period of 2.9 years. A summary of restricted stock activity under the Stock Plans during the nine months ended September 30, 2015 is as follows: Weighted Restricted Average Grant Shares Date Fair Value Outstanding, January 1, 2015 $ Granted Released Forfeited Outstanding, September 30, 2015 $ |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | (6) FAIR VALUE MEASUREMENTS The FASB has issued authoritative guidance which requires that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three levels of the fair value hierarchy established are as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available. Fixed-income securities and mutual funds are valued using a third party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material change from period to period. The estimated fair value of the Company’s long-term debt based on a market approach was approximately $3.5 million and $1.0 million as of September 30, 2015 and December 31, 2014, respectively, and represent Level 2 measurements. When determining the estimated fair value of the Company’s long-term debt, the Company used market-based risk measurements, such as credit risk. The following table presents the Company’s fair value measurements as of September 30, 2015 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands. Fair Value Measurement at September 30, 2015 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs Description September 30, 2015 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ $ $ — $ — Available-for-Sale Marketable securities Corporate bonds — — Asset backed securities — — U.S. government agency securities — — Commercial paper — — Certificates of deposit — — Total $ $ $ $ — The following table presents the Company’s fair value measurements as of December 31, 2014 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands. Fair Value Measurement at December 31, 2014 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs Description December 31, 2014 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ $ $ — $ — Corporate bonds — — Available-for-Sale Marketable securities Corporate bonds — — U.S. government agency securities — — Asset backed securities — — Commercial paper — — Total $ $ $ $ — The following table summarizes gross unrealized losses and fair values of our investments in an unrealized loss position as of September 30, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: September 30, 2015 Less than 12 months 12 months or greater Total (In thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Marketable Securities Corporate bonds $ $ $ — $ — $ $ U.S. government agency securities — — Asset backed securities Total $ $ $ $ $ $ The following summarizes contractual underlying maturities of the Company’s available-for-sale investments in debt securities at September 30, 2015 (in thousands): Due one year or less Due after one year through two years Description Cost Fair Value Cost Fair Value Marketable Securities U.S. government agency securities $ $ $ $ Corporate bonds Commercial paper — — Certificates of deposit — — Asset backed securities Total $ $ $ $ |
NEW MARKET TAX CREDIT
NEW MARKET TAX CREDIT | 9 Months Ended |
Sep. 30, 2015 | |
NEW MARKET TAX CREDIT | |
NEW MARKET TAX CREDIT | (7) NEW MARKET TAX CREDIT During the fourth quarter of 2014, the Company received approximately $2.4 million in net proceeds from financing agreements related to working capital and capital improvements at one of its Madison, Wisconsin facilities. This financing arrangement was structured with an unrelated third party financial institution (the “Investor”), an investment fund, and its majority owned community development entity in connection with the Company’s participation in transactions qualified under the federal New Markets Tax Credit (“NMTC”) program, pursuant to Section 45D of the Internal Revenue Code of 1986, as amended. Through its participation in this program, the Company has secured low interest financing and the potential for future debt forgiveness related to the Madison, Wisconsin facility. Upon closing of this transaction, the Company provided an aggregate of approximately $5.1 million to the Investor, in the form of a loan receivable, with a term of seven years, bearing an interest rate of 2.74% per annum. This $5.1 million in proceeds plus capital from the Investor was used to make an aggregate $7.5 million loan to a subsidiary of the Company. This financing arrangement is not secured by any assets of the Company. On December 1, 2021, the Company would receive a repayment of its approximately $ 5.1 million loan. The $5.1 million is eliminated in the consolidation of the financial statements. This transaction also includes a put/call feature that becomes enforceable at the end of the seven -year compliance period. The Investor may exercise its put option or the Company can exercise the call, both of which will serve to trigger forgiveness of the net debt. The value attributable to the put/call is nominal. The $ 2.4 million was recorded in Other Long-Term Liabilities on the consolidated balance sheets. The benefit of this net $2.4 million contribution will be recognized as a decrease in expenses, included in cost of sales, as the Company amortizes the contribution liability over the seven -year compliance period as it is being earned through our on-going compliance with the conditions of the NMTC program. The Company has recorded $0.1 million and $0.3 million as a decrease of expenses for the three and nine months ended September 30, 2015. At September 30, 2015, the remaining balance is $2.1 million. The Company incurred approximately $0.2 million of debt issuance costs related to the above transactions, which are being amortized over the life of the agreements. The Investor is subject to 100% recapture of the NMTC it receives for a period of seven years as provided in the Internal Revenue Code and applicable U.S. Treasury regulations. The Company is required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Noncompliance with applicable requirements could result in the Investor’s projected tax benefits not being realized and, therefore, require the Company to indemnify the Investor for any loss or recapture of NMTC related to the financing until such time as the recapture provisions have expired under the applicable statute of limitations. The Company does not anticipate any credit recapture will be required in connection with this financing arrangement. The Investor and its majority owned community development entity are considered Variable Interest Entities (VIEs) and the Company is the primary beneficiary of the VIEs. This conclusion was reached based on the following: · The ongoing activities of the VIEs—collecting and remitting interest and fees and NMTC compliance—were all considered in the initial design and are not expected to significantly affect performance throughout the life of the VIE; · Contractual arrangements obligate the Company to comply with NMTC rules and regulations and provide various other guarantees to the Investor and community development entity; · The Investor lacks a material interest in the underling economics of the project; and · The Company is obligated to absorb losses of the VIEs. Because the Company is the primary beneficiary of the VIEs, they have been included in the consolidated financial statements. There are no other assets, liabilities or transactions in these VIEs outside of the financing transactions executed as part of the NMTC arrangement. The $ 5.1 million loan is eliminated in consolidation of the financial statements. Also in December 2014, in connection with the NMTC transaction, the Company entered into a land purchase option agreement with the owner of certain real property (land) adjacent to certain of the Company’s current Madison, Wisconsin facilities. The option is renewable annually in exchange for a fee. If the Company exercises its land purchase option, it will pay a fixed amount for the land. That fixed amount approximates the then-current fair value of the land. If the Company decides not to exercise its option, then on December 31, 2021 (which is after the seven year compliance period of the NMTC program) the Company must pay $1.2 million to the community development entity. As discussed below, the community development entity is a variable interest entity consolidated into the Company. The community development entity would then distribute this money to its members. The majority member of the community development entity is also the owner of the land subject to the land purchase option. The Company has recorded the obligation and the land purchase option asset for $1.2 million to reflect the Company’s assessment that it is probable that at least $1.2 million will be paid in the future based on resolution of the land purchase option. The asset is included in Other Long-Term Assets and the liability is included in Other Long-Term Liabilities on the consolidated balance sheet. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2015 | |
LONG TERM DEBT | |
LONG-TERM DEBT | (8) LONG-TERM DEBT Building Purchase Mortgage During June 2015, the Company entered into a credit agreement with an unrelated third party financial institution to finance the purchase of the facility and contemplated improvements located at 501 Charmany Drive in Madison, WI for $5.1 million. Of the $ 5.1 million in funds available pursuant to the credit agreement, $3.7 million was directly applied towards the purchase price of the building in June 2015 and the remaining $1.4 million is a construction loan available to finance future improvements. The credit agreement is secured by the acquired building. Borrowings under the credit agreement bear interest at 4.15% per annum which is calculated on the outstanding principal balance. The Company made interest only payments on the outstanding principal balance for the period between July 12, 2015 and September 12, 2015 which is the period the Company anticipates completing all building related improvements. Beginning on October 12, 2015 and continuing through the maturity date, May 12, 2019, the Company is required to make monthly principal and interest payments of $31.2 thousand. The final principal and interest payment due on June 12, 2019 is $4.4 million. As of September 30, 201 5, the building improvements were nearly complete and the Company had drawn $0.1 million of the total available construction funds. The Company expects the financial institution to fund the remaining $1.3 million in October 201 5. The financial institution did not fund the $ 1.3 million on or prior to September 30, 2015, as such the liability is included in our financial statements under other current liabilities. There is an outstanding principal balance of $3.8 million, and the current portion is $0.2 million. Additionally, the Company has recorded $70.4 thousand in deferred financing costs which are being amortized through June 12, 2019. For the three and nine months ended September 30, 2015, the Company has recorded $5.7 thousand in amortization of deferred financing costs. Wisconsin Department of Commerce Loan During November 2009, the Company entered into a loan agreement with the Wisconsin Department of Commerce pursuant to which the Wisconsin Department of Commerce agreed to lend up to $1.0 million to the Company subject to the Company’s satisfaction of certain conditions. The Company received the $1.0 million in December 2009. The terms of the loan are such that portions of the loan become forgivable if the Company meets certain job creation requirements at a specified wage rate. After the Company creates 100 full time positions, the principal shall be reduced at the rate of $5,405 for each new position created thereafter during the measurement period. The loan bears an interest rate of 2% , which is subject to an increase to 4% if the Company does not meet certain job creation requirements. Both principal and interest payments under the loan agreement are deferred for five years. The loan’s terms also contain a milestone that if the Company has created 185 new full ‑time positions as of June 30, 2015, the full amount of principal shall be forgiven. The Company met this job creation milestone and the $1.0 million benefit associated with the loan forgiveness has been recorded as an offset to the operating expenses during the nine months ended September 30, 2015. |
WISCONSIN ECONOMIC DEVELOPMENT
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDIT | 9 Months Ended |
Sep. 30, 2015 | |
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDIT. | |
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDIT | (9) WISCONSIN ECONOMIC DEVELOPMENT TAX CREDITS During the first quarter of 2015, the Company entered into an agreement with the Wisconsin Economic Development Corporation (“WEDC”) to earn $9.0 million in refundable tax credits if the Company expends $26.3 million in capital investments and establishes and maintains 758 full-time positions in the state of Wisconsin over a seven year period. The tax credits earned should first be applied against the tax liability otherwise due and if there is no such liability present, the claim for tax credits will be reimbursed in cash to the Company. The maximum amount of the refundable tax credit to be earned for each year is fixed, and the Company earns the credits by meeting certain capital investment and job creation thresholds over the seven year period. Should the Company earn and receive the job creation tax credits but not maintain those full-time positions through the end of the agreement, the Company may be required to pay those credits back to the WEDC. The Company will record the earned tax credits as job creation and capital investments occur. The amount of tax credits earned will be recorded as a liability and amortized as a reduction of operating expenses over the expected period of benefit. The tax credits earned from capital inv estment will be recognized as an offset to depreciation expense over the expected life of the acquired capital assets. The tax credits earned related to job creation will be recognized as an offset to operational expenses over the life of the agreement as the Company is required to maintain the minimum level of full-time positions through the seven year period. As of September 30, 2015 the Company has earned $1.6 million of tax credits. $0.2 million is classified as a current asset and $1.4 million is classified as a long term asset, reflecting when collection of the refundable tax credits is expected to occur. During the three and nine month periods ending September 30, 2015, the Company has amortized $72.6 thousand and $112.8 thousand of the credits earned as a reduction of operating expenses, respectively. At September 30, 2015, the Company also has a $0.3 million current liability and a $1.1 million long term liability, reflecting when the expected benefit of the tax credit amortization will reduce future operating expenses. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
EQUITY | |
EQUITY | (10) EQUITY On July 24, 2015 the Company completed an underwritten public offering of 7.0 million shares of common stock at a price of $25.50 per share to the public. The Company received approximately $174.1 million of net proceeds from the offering, after deducting $4.4 million for the underwriting discount and commissions and other stock issuance costs paid by the Company. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS. | |
RECENT ACCOUNTING PRONOUNCEMENTS | (11) RECENT ACCOUNTING PRONOUNCEMENTS In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-11, “Simplifying the Measurement of Inventory (Topic 330).” The new guidance requires most inventory to be measured at the lower of cost and net realizable value, thereby simplifying the previous guidance under which an entity must measure inventory at the lower of cost or market. Market is defined as replacement cost, net realizable value (“NRV”), or NRV less a normal profit margin. The Accounting Standards Update will not apply to inventory that is measured using either the last-in, first-out method or the retail inventory method. The standard will be effective prospectively for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and is currently assessing the provisions of the guidance and has not determined the impact of the adoption of this guidance on its consolidated financial statements. In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-05, “ Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”, which provides guidance that requires management to evaluate each cloud computing arrangement in order to determine whether it includes a software license that must be accounted for separately from hosted services. The new guidance clarifies that if a cloud computing arrangement includes a software license, the Company should account for the software license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the Company should account for the arrangement as a service contract. The standard is effective for the Company’s financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not previously been issued. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03, “ Simplifying the Presentation of Debt Issuance Costs”, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This guidance simplifies presentation of debt issuance costs but does not address presentation or subsequent measurement of debt issue costs related to line of credit arrangements. In August 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-15 “Interest-Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” which indicates the SEC staff would not object to an entity deferring and presenting debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. Accounting Standards Update No. 2015-03 will be effective for the first interim period within annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements. In August 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date” to defer for one year the effective date of the new revenue standard and allow early adoption as of the original effective date which is for annual reports beginning after December 15, 2016. The Company is currently evaluating the impact of this amendment on its financial position and results of operations . |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, Exact Sciences Laboratories, LLC, Exact Sciences Finance Corporation, Exact Sciences Europe LTD, Beijing Exact Sciences Medical Technology Company Limited, and variable interest entities. All significant intercompany transactions and balances have been eliminated in consolidation. References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash on hand, demand deposits in bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at September 30, 2015 and December 31, 2014 . |
Marketable Securities | Marketable Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive loss. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight-line method, which approximates the effective interest method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income. At September 30, 2015 and December 31, 2014 , the Company’s investments were comprised of fixed income investments and all were deemed available-for-sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with a contractual term greater than one year from the date of purchase) are classified as current. All of the Company’s investments are considered current. There were no realized losses for the nine months ended September 30, 2015 and 2014 . Realized gains were $7.7 thousand and $11.1 thousand for the nine months ended September 30, 2015 and 2014, respectively. We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will have to sell the security before recovery of its cost basis. For the nine months ended September 30, 2015, no investments were identified with other-than-temporary declines in value. Available-for-sale securities at September 30, 2015 consisted of the following: September 30, 2015 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income Income Value Corporate bonds $ $ $ $ U.S. government agency securities Asset backed securities Certificates of deposit — — Commercial paper — Total available-for-sale securities $ $ $ $ Available-for-sale securities at December 31, 2014 consisted of the following: December 31, 2014 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income Income Value Corporate bonds $ $ $ $ U.S. government agency securities Asset backed securities Commercial paper — — Total available-for-sale securities $ $ $ $ |
Changes in Accumulated Other Comprehensive Income (Loss) | Changes in Accumulated Other Comprehensive Income (Loss) The amounts recognized in accumulated other comprehensive income (loss) (AOCI) for the nine months ended September 30, 2015 were as follows (in thousands): Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive Adjustment on Securities Income (Loss) Balance at December 31, 2014 $ — $ $ Other comprehensive (loss) income before reclassifications Amounts reclassified from accumulated other comprehensive loss — Net current period change in accumulated other comprehensive income (loss) Balance at September 30, 2015 $ $ $ The amounts recognized in AOCI for the nine months ended September 30, 2014 were as follows (in thousands): Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive Adjustment on Securities Income (Loss) Balance at December 31, 2013 $ — $ $ Other comprehensive loss before reclassifications — Amounts reclassified from accumulated other comprehensive loss — Net current period change in accumulated other comprehensive loss — Balance at September 30, 2014 $ — $ $ Amounts reclassified from AOCI for the nine months ended September 30, 2015 were as follows (in thousands): Affected Line Item in the Nine Months Ended September 30, Details about AOCI Components Statement of Operations 2015 2014 Change in value of available-for-sale investments Sales and maturities of available-for-sale investments Investment income $ $ Total reclassifications $ $ |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of fixed assets are as follows: Estimated Asset Classification Useful Life Laboratory equipment 3 - 5 years Computer equipment and computer software 3 years Leasehold improvements Lesser of the remaining lease term or useful life Furniture and fixtures 3 years Buildings 30 years At September 30, 2015, the Company had $7.1 million of assets under construction which consisted of $4.6 million re lated to building and leasehold improvements , $1.6 million of capitalized costs related to software projects and $0.9 million of costs related to machinery and equipment. Depreciation will begin on these assets once they are placed into service. At September 30, 2015, the Company has incurred $2.2 million in building improvement costs, of which, $0.1 million has been paid through financing at the period end and an additional $1.3 million will be financed in October 2015. The Company expects to incur minimal costs to complete the leasehold improvements, machinery and equipment, and the software projects, and these projects are expected to be completed in 2015. |
Software Capitalization Policy | Software Capitalization Policy Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized, when the software is ready for its intended use, using the straight-line basis over the estimated economic useful life of the software. |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses. The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period: September 30, 2015 2014 Shares issuable upon exercise of stock options Shares issuable upon exercise of outstanding warrants(1) — Shares issuable upon the release of restricted stock awards Shares issuable upon the vesting of restricted stock awards related to licensing agreement — (1) At September 30, 2014, represents warrants to purchase 75,000 shares of common stock issued under a consulting agreement. |
Revenue Recognition | Revenue Recognition Laboratory Service Revenue. The Company’s r evenues are generated by the Cologuard® test. Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. The Company assesses whether the fee is fixed or determinable and if the collectability is reasonably assured based on the nature of the fee charged for the laboratory services delivered and whether there are existing contractual arrangements with customers, third-party commercial payors (insurance carriers and health plans) or coverage of the test by Centers for Medicare & Medicaid Services (CMS). In addition, when evaluating collectability, the Company considers factors such as collection experience for the healthcare industry, the financial standing of customers or third-party commercial payors, and whether it has sufficient collection history to reliably estimate a payor's individual payment patterns. A portion of laboratory service revenues earned by the Company will be initially recognized on a cash basis because the above criteria will not have been met at the time the test results are delivered. The Company generally bills third-party payors upon generation and delivery of a test result to the ordering physician following completion of a test. Patients may have out-of-pocket costs for amounts not covered by their insurance carrier and the Company bills the patient directly for these amounts in the form of co-pays and deductibles in accordance with their insurance carrier and health plans. Some third-party payors may not fully cover the Cologuard test under their reimbursement policies. Consequently, in such cases, the Company pursues reimbursement on a case-by-case basis directly from the patient. For laboratory services performed, where the collectability is not reasonably assured, the Company will continue to recognize revenues upon cash collection until it can reliably estimate the amount that will be ultimately collected for the Cologuard test. In order to begin to record revenue on an accrual basis in these scenarios, the Company expects to use at least several months of payment history, review the number of tests paid against the number of tests billed, and consider the payor's outstanding balance for unpaid tests to determine whether payments are being made for a consistently high percentage of tests billed and at appropriate amounts given the contracted or historical payment amount. With regard to Cologuard tests covered by Medicare, the national coverage determination for Cologuard was released by CMS on October 9, 2014 and for these tests, revenue is recognized on an accrual basis once the services have been performed as the price is fixed or determinable, and collectability is reasonably assured. The Company recognized approximately $ 12.6 million and $ 25.0 million in laboratory service revenue for the three and nine months ended September 30, 2015. License fees. License fees for the licensing of product rights are recorded as deferred revenue upon receipt of cash and recognized as revenue on a straight-line basis over the license period. As more fully described in the 2014 Form 10-K, in connection with the Company’s January 2009 strategic transaction with Genzyme Corporation, the Company deferred the initial $16.65 million in cash received at closing and amortized that up-front payment on a straight-line basis into revenue over the initial five-year collaboration period which ended in January 2014. In addition, in 2010 the Company received holdback amounts of $1.85 million, which were deferred at the time of receipt and were amortized on a straight-line basis into revenue over the then remaining term of the collaboration period. In addition, the Company deferred $1.53 million premium related to common stock purchased by Genzyme and amortized that amount on a straight-line basis into revenue over the initial five -year collaboration period which ended in January 2014. The Company did not recognize revenue in connection with the amortization of the up-front payments from Genzyme during the three and nine months ended September 30, 2015. The Company recognized approximately $0.3 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the nine months ended September 30, 2014. There was no license fee revenue recognized during the three months ended September 30, 2014. |
Inventory | Inventory Inventory is stated at the lower of cost or market value (net realizable value). The Company determines the cost of inventory using the first-in, first out method (FIFO). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and records a charge to cost of sales for such inventory as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value. Direct and indirect manufacturing costs incurred during process validation and for other research and development activities, which are not permitted to be sold, have been expensed to research and development. Inventory consist of the following (amount in thousands): September 30, December 31, 2015 2014 Raw materials $ $ Semi-finished and finished goods Total inventory $ $ |
Foreign Currency Translation | Foreign Currency Translation For the Company’s international subsidiaries, the local currency is the functional currency. Assets and liabilities of these subsidiaries are translated into United States dollars at the period-end exchange rate or historical rates as appropriate. Consolidated statements of operations amounts are translated at average exchange rates for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheet as a component of accumulated other comprehensive income in total Exact Sciences Corporation’s shareholders’ equity. Transaction gains and losses are included in the consolidated statement of operations in 2015. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and accompanying notes to the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of available-for-sale securities | Available-for-sale securities at September 30, 2015 consisted of the following: September 30, 2015 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income Income Value Corporate bonds $ $ $ $ U.S. government agency securities Asset backed securities Certificates of deposit — — Commercial paper — Total available-for-sale securities $ $ $ $ Available-for-sale securities at December 31, 2014 consisted of the following: December 31, 2014 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income Income Value Corporate bonds $ $ $ $ U.S. government agency securities Asset backed securities Commercial paper — — Total available-for-sale securities $ $ $ $ |
Schedule of amounts recognized in accumulated other comprehensive income (loss) (AOCI) | The amounts recognized in accumulated other comprehensive income (loss) (AOCI) for the nine months ended September 30, 2015 were as follows (in thousands): Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive Adjustment on Securities Income (Loss) Balance at December 31, 2014 $ — $ $ Other comprehensive (loss) income before reclassifications Amounts reclassified from accumulated other comprehensive loss — Net current period change in accumulated other comprehensive income (loss) Balance at September 30, 2015 $ $ $ The amounts recognized in AOCI for the nine months ended September 30, 2014 were as follows (in thousands): Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive Adjustment on Securities Income (Loss) Balance at December 31, 2013 $ — $ $ Other comprehensive loss before reclassifications — Amounts reclassified from accumulated other comprehensive loss — Net current period change in accumulated other comprehensive loss — Balance at September 30, 2014 $ — $ $ |
Schedule of amounts reclassified from accumulated other comprehensive income (loss) | Amounts reclassified from AOCI for the nine months ended September 30, 2015 were as follows (in thousands): Affected Line Item in the Nine Months Ended September 30, Details about AOCI Components Statement of Operations 2015 2014 Change in value of available-for-sale investments Sales and maturities of available-for-sale investments Investment income $ $ Total reclassifications $ $ |
Schedule of estimated useful lives of fixed assets | Estimated Asset Classification Useful Life Laboratory equipment 3 - 5 years Computer equipment and computer software 3 years Leasehold improvements Lesser of the remaining lease term or useful life Furniture and fixtures 3 years Buildings 30 years |
Schedule of potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | September 30, 2015 2014 Shares issuable upon exercise of stock options Shares issuable upon exercise of outstanding warrants(1) — Shares issuable upon the release of restricted stock awards Shares issuable upon the vesting of restricted stock awards related to licensing agreement — (1) At September 30, 2014, represents warrants to purchase 75,000 shares of common stock issued under a consulting agreement. |
Schedule of inventory | Inventory consist of the following (amount in thousands): September 30, December 31, 2015 2014 Raw materials $ $ Semi-finished and finished goods Total inventory $ $ |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
STOCK-BASED COMPENSATION | |
Schedule of valuation assumptions | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Option Plan Shares Risk-free interest rates (1) 2.01% 1.5% - 1.92% 1.96% - 2.01 % Expected term (in years) (1) 6 6.25 - 6.6 6 Expected volatility (1) 77.6% 67.1% - 73.2% 77.6% - 80.8% Dividend yield (1) 0% 0 % 0% Weighted average fair value per share of options granted during the period (1) $ 11.37 $ 15.81 $ 10.05 ESPP Shares Risk-free interest rates (2) (2) 0.25% - 0.6% 0.1% - 0.41% Expected term (in years) (2) (2) 0.5 - 2 0.5 - 2 Expected volatility (2) (2) 51.2% - 57.4% 42.5% - 49.5% Dividend yield (2) (2) 0 % 0% Weighted average fair value per share of stock purchase rights granted during the period (2) (2) $ 7.48 $ 3.76 (1) The Company did not grant options under its 2010 Option Plan during the period indicated. (2) The Company did not issue stock purchase rights under its 2010 Employee Stock Purchase Plan during the respective period. |
Summary of stock option activity under the Stock Plans | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (Years) Value(1) (Aggregate intrinsic value in thousands) Outstanding, December 31, 2014 $ Granted Exercised Forfeited Outstanding, September 30, 2015 $ $ Exercisable, September 30, 2015 $ $ Vested and expected to vest, September 30, 2015 $ $ (1) The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices that were lower than the $17.99 market price of the Company’s common stock at September 30, 2015. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 was $2.0 million and $1.4 million, respectively. |
Summary of restricted stock and restricted stock unit activity under the Stock Plans | Weighted Restricted Average Grant Shares Date Fair Value Outstanding, January 1, 2015 $ Granted Released Forfeited Outstanding, September 30, 2015 $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
Schedule of fair value measurements along with the level within the fair value hierarchy in which the fair value measurements fall | The following table presents the Company’s fair value measurements as of September 30, 2015 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands. Fair Value Measurement at September 30, 2015 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs Description September 30, 2015 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ $ $ — $ — Available-for-Sale Marketable securities Corporate bonds — — Asset backed securities — — U.S. government agency securities — — Commercial paper — — Certificates of deposit — — Total $ $ $ $ — The following table presents the Company’s fair value measurements as of December 31, 2014 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands. Fair Value Measurement at December 31, 2014 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs Description December 31, 2014 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ $ $ — $ — Corporate bonds — — Available-for-Sale Marketable securities Corporate bonds — — U.S. government agency securities — — Asset backed securities — — Commercial paper — — Total $ $ $ $ — |
Schedule of gross unrealized losses and fair values of investments in an unrealized loss position | September 30, 2015 Less than 12 months 12 months or greater Total (In thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Marketable Securities Corporate bonds $ $ $ — $ — $ $ U.S. government agency securities — — Asset backed securities Total $ $ $ $ $ $ |
Summary of contractual maturities available for the sale of investments in debt securities | The following summarizes contractual underlying maturities of the Company’s available-for-sale investments in debt securities at September 30, 2015 (in thousands): Due one year or less Due after one year through two years Description Cost Fair Value Cost Fair Value Marketable Securities U.S. government agency securities $ $ $ $ Corporate bonds Commercial paper — — Certificates of deposit — — Asset backed securities Total $ $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 9 Months Ended | ||
Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Restricted cash | $ 0 | $ 0 | |
Number of objectives of the entity's investment strategy | item | 2 | ||
Realized gains | $ 7,700 | $ 11,100 | |
Minimum contractual term of certain current investments which can be liquidated | 1 year | ||
Available-for-sale securities | |||
Amortized Cost | $ 311,891,000 | 224,740,000 | |
Gains in Accumulated Other Comprehensive Income | 166,000 | 46,000 | |
Losses in Accumulated Other Comprehensive Income | (70,000) | (161,000) | |
Estimated Fair Value | 311,987,000 | 224,625,000 | |
Realized losses | 0 | $ 0 | |
Corporate bonds | |||
Available-for-sale securities | |||
Amortized Cost | 209,953,000 | 141,239,000 | |
Gains in Accumulated Other Comprehensive Income | 113,000 | 21,000 | |
Losses in Accumulated Other Comprehensive Income | (39,000) | (136,000) | |
Estimated Fair Value | 210,027,000 | 141,124,000 | |
U. S. government agency securities | |||
Available-for-sale securities | |||
Amortized Cost | 7,056,000 | 18,687,000 | |
Gains in Accumulated Other Comprehensive Income | 7,000 | 8,000 | |
Losses in Accumulated Other Comprehensive Income | (1,000) | (7,000) | |
Estimated Fair Value | 7,062,000 | 18,688,000 | |
Asset backed securities | |||
Available-for-sale securities | |||
Amortized Cost | 89,306,000 | ||
Gains in Accumulated Other Comprehensive Income | 45,000 | ||
Losses in Accumulated Other Comprehensive Income | (30,000) | ||
Estimated Fair Value | 89,321,000 | ||
Certificates of deposit | |||
Available-for-sale securities | |||
Amortized Cost | 1,999,000 | 60,821,000 | |
Gains in Accumulated Other Comprehensive Income | 17,000 | ||
Losses in Accumulated Other Comprehensive Income | (18,000) | ||
Estimated Fair Value | 1,999,000 | 60,820,000 | |
Commercial paper | |||
Available-for-sale securities | |||
Amortized Cost | 3,577,000 | 3,993,000 | |
Gains in Accumulated Other Comprehensive Income | 1,000 | ||
Estimated Fair Value | $ 3,578,000 | $ 3,993,000 |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Changes in Accumulated Other Comprehensive Income (Loss) | ||
Beginning Balance | $ (115) | $ 125 |
Other comprehensive (loss) income before reclassifications | 283 | (106) |
Amounts reclassified from accumulated other comprehensive loss | (13) | (25) |
Net current period change in accumulated other comprehensive income (loss) | 270 | (131) |
Ending Balance | 155 | (6) |
Accumulated Translation Adjustment | ||
Changes in Accumulated Other Comprehensive Income (Loss) | ||
Other comprehensive (loss) income before reclassifications | 59 | |
Net current period change in accumulated other comprehensive income (loss) | 59 | |
Ending Balance | 59 | |
Accumulated Net Unrealized Investment Gain Loss | ||
Changes in Accumulated Other Comprehensive Income (Loss) | ||
Beginning Balance | (115) | 125 |
Other comprehensive (loss) income before reclassifications | 224 | (106) |
Amounts reclassified from accumulated other comprehensive loss | (13) | (25) |
Net current period change in accumulated other comprehensive income (loss) | 211 | (131) |
Ending Balance | $ 96 | $ (6) |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | $ (115) | $ 125 |
Other comprehensive (loss) income before reclassifications | 283 | (106) |
Amounts reclassified from accumulated other comprehensive loss | (13) | (25) |
Ending Balance | 155 | (6) |
Accumulated Translation Adjustment | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Other comprehensive (loss) income before reclassifications | 59 | |
Ending Balance | 59 | |
Accumulated Net Unrealized Investment Gain Loss | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (115) | 125 |
Other comprehensive (loss) income before reclassifications | 224 | (106) |
Amounts reclassified from accumulated other comprehensive loss | (13) | (25) |
Ending Balance | $ 96 | $ (6) |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Details about AOCI Components | ||||
Investment income | $ (365) | $ (160) | $ (780) | $ (392) |
Reclassification Out Of Accumulated Other Comprehensive Income (Loss) | ||||
Details about AOCI Components | ||||
Investment income | (13) | (25) | ||
Accumulated Net Unrealized Investment Gain Loss | Reclassification Out Of Accumulated Other Comprehensive Income (Loss) | ||||
Details about AOCI Components | ||||
Investment income | $ (13) | $ (25) |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Property and equipment | ||
Assets under construction | $ 7,066 | $ 1,552 |
Leasehold improvements | $ 6,454 | $ 5,937 |
Software Capitalization Policy | ||
Software development stages | item | 3 | |
Labratory equipment | Minimum | ||
Property and equipment | ||
Estimated Useful Life | 3 years | |
Labratory equipment | Maximum | ||
Property and equipment | ||
Estimated Useful Life | 5 years | |
Computer Equipment and Computer Software | ||
Property and equipment | ||
Estimated Useful Life | 3 years | |
Furniture and fixtures | ||
Property and equipment | ||
Estimated Useful Life | 3 years | |
Buildings | ||
Property and equipment | ||
Estimated Useful Life | 30 years | |
Assets under construction | $ 4,600 | |
Leasehold improvements | 2,200 | |
Building improvement costs financed at period end | 100 | |
Building improvement costs to be financed | 1,300 | |
Software Development | ||
Property and equipment | ||
Assets under construction | 1,600 | |
Machinery and Equipment | ||
Property and equipment | ||
Assets under construction | $ 900 |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 7,474,000 | 7,883,000 |
Additional disclosure | ||
Number of shares of common stock that can be purchased through issuance of warrants under a consulting agreement | 75,000 | |
Stock Options | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 5,091,000 | 6,207,000 |
Warrants | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 75,000 | |
Restricted Stock Awards | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 2,383,000 | 1,577,000 |
Restricted Stock Related To Licensing Agreement | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 24,000 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 7) - USD ($) $ in Thousands | Jan. 27, 2009 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2010 |
Revenue Recognition | |||||||
Laboratory service revenue | $ 12,632 | $ 25,017 | |||||
License fee revenue | $ 294 | ||||||
Gross Profit | 5,104 | $ (924) | 8,183 | (630) | |||
Inventory | |||||||
Raw materials | 1,746 | 1,019 | 1,746 | 1,019 | |||
Semi-finished and finished goods | 4,286 | 2,998 | 4,286 | 2,998 | |||
Total inventory | $ 6,032 | $ 4,017 | $ 6,032 | 4,017 | $ 4,017 | ||
Collaboration License And Purchase Agreement | Genzyme Corporation | |||||||
Revenue Recognition | |||||||
Amount of Deferred Revenue | $ 16,650 | ||||||
Amount subject to holdback | $ 1,850 | ||||||
Initial collaboration period | 5 years | ||||||
Amount of premium being amortized | $ 1,530 | ||||||
License fee revenue | $ 300 |
MAYO LICENSE AGREEMENT (Details
MAYO LICENSE AGREEMENT (Details) | Jul. 24, 2015shares | Jun. 11, 2009$ / sharesshares | Feb. 28, 2015USD ($)installment | Aug. 31, 2014USD ($) | Jun. 30, 2014shares | Sep. 30, 2011shares | Jun. 30, 2011USD ($) | Jun. 30, 2009item | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2009USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2012USD ($) |
Other Payments | ||||||||||||||
Charges incurred as part of the research collaboration | $ | $ 9,863,000 | $ 9,073,000 | $ 24,549,000 | $ 23,677,000 | ||||||||||
Amendments | ||||||||||||||
Number of shares of restricted stock granted as a consideration for the expanded license | 7,000,000 | |||||||||||||
MAYO Foundation | Warrant Covering One Million Shares | ||||||||||||||
Warrants | ||||||||||||||
Number of shares of common stock covered by warrants | 1,000,000 | |||||||||||||
MAYO Foundation | Warrant Covering Two Hundred Fifty Thousand Shares | ||||||||||||||
Warrants | ||||||||||||||
Warrants exercised, gross (in shares) | 250,000 | |||||||||||||
Licensing Agreements | ||||||||||||||
Amendments | ||||||||||||||
Extension period | 5 years | |||||||||||||
Licensing Agreements | MAYO Foundation | ||||||||||||||
Warrants | ||||||||||||||
Number of common stock purchase warrants granted | item | 2 | |||||||||||||
Other Payments | ||||||||||||||
Upfront payment | $ | $ 80,000 | |||||||||||||
Milestone payment contingent upon FDA approval | $ | $ 500,000 | $ 250,000 | ||||||||||||
Payments for research and development efforts | $ | 900,000 | 2,400,000 | 700,000 | |||||||||||
Estimated liability for research and development efforts | $ | $ 400,000 | $ 1,600,000 | 400,000 | $ 1,600,000 | ||||||||||
Amendments | ||||||||||||||
License fees payable in five annual installments | $ | $ 5,000,000 | |||||||||||||
Number of annual installments in which license fees are payable | installment | 5 | |||||||||||||
License fee annual installment | $ | $ 1,000,000 | |||||||||||||
License fee payments | $ | $ 1,000,000 | |||||||||||||
Initial research period | 12 months | |||||||||||||
Licensing Agreements | MAYO Foundation | Minimum | ||||||||||||||
Warrants | ||||||||||||||
Royalty payments | $ | $ 25,000 | $ 10,000 | ||||||||||||
Licensing Agreements | MAYO Foundation | Warrant Covering One Million Shares | ||||||||||||||
Warrants | ||||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 1.90 | |||||||||||||
Number of shares of common stock covered by warrants | 1,000,000 | |||||||||||||
Warrants exercised, gross (in shares) | 1,000,000 | |||||||||||||
Licensing Agreements | MAYO Foundation | Warrant Covering Two Hundred Fifty Thousand Shares | ||||||||||||||
Warrants | ||||||||||||||
Exercise price (in dollars per share) | $ / shares | $ 1.90 | |||||||||||||
Number of shares of common stock covered by warrants | 250,000 | |||||||||||||
Vesting period of warrant | 4 years | |||||||||||||
Warrants exercised, gross (in shares) | 80,000 | |||||||||||||
Warrants forfeited (in shares) | 10,587 | |||||||||||||
Warrants exercised, net of forfeiture (in shares) | 69,413 |
MD ANDERSON LICENSE AGREEMENT (
MD ANDERSON LICENSE AGREEMENT (Details) - MD Anderson License Agreement - USD ($) $ in Millions | Apr. 10, 2015 | Sep. 30, 2015 | Sep. 30, 2015 |
Agreements | |||
Maximum annual expense incurred by licensee in which the Company is obligated to reimburse | $ 1 | ||
Time period the maximum amount to be reimbursed for IVD Assay development costs (in years) | 2 years | ||
Estimated liability for IVD Assay development efforts | $ 0.5 | $ 0.5 | |
Payments for IVD Assay development costs | 0.3 | 0.3 | |
Quarterly fee required to be paid for the use of samples already collected prior to the effective date of the agreement | $ 0.3 | ||
Commercial sales of product to date | $ 0 | $ 0 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
STOCK-BASED COMPENSATION | ||||
Stock-based compensation expense | $ 4.9 | $ 4.1 | $ 13.1 | $ 8.6 |
STOCK-BASED COMPENSATION (Det33
STOCK-BASED COMPENSATION (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Jul. 24, 2015 | |
STOCK-BASED COMPENSATION | |||||||
Forfeiture rate (as a percent) | 4.99% | 4.99% | |||||
Additional disclosures | |||||||
Market price (in dollars per share) | $ 17.99 | $ 17.99 | $ 25.50 | ||||
Total intrinsic value of options exercised | $ 2,000 | $ 1,400 | |||||
Weighted Average Grant Date Fair Value | |||||||
Unrecognized compensation cost | $ 39,500 | $ 39,500 | |||||
Weighted average period for recognition of unrecognized compensation cost | 2 years 10 months 24 days | ||||||
Share based compensation expense | $ 4,900 | $ 4,100 | $ 13,100 | $ 8,600 | |||
Stock Options | |||||||
Valuation assumptions | |||||||
Risk-free interest rates (as a percent) | 2.01% | ||||||
Risk-free interest rates, minimum (as a percent) | 1.50% | 1.96% | |||||
Risk-free interest rates, maximum (as a percent) | 1.92% | 2.01% | |||||
Expected term | 6 years | 6 years | |||||
Expected volatility (as a percent) | 77.60% | ||||||
Expected volatility, minimum (as a percent) | 67.10% | ||||||
Expected volatility, maximum (as a percent) | 73.20% | ||||||
Dividend yield (as a percent) | 0.00% | 0.00% | |||||
Weighted average fair value per share of options granted during the period (in dollars per share) | $ 11.37 | $ 15.81 | $ 10.05 | ||||
Shares | |||||||
Outstanding at the beginning of the period (in shares) | 4,934,317 | ||||||
Granted (in shares) | 340,978 | ||||||
Exercised (in shares) | (141,615) | ||||||
Forfeited (in shares) | (42,236) | ||||||
Outstanding at the end of the period (in shares) | 5,091,444 | 5,091,444 | 4,934,317 | ||||
Exercisable at the end of the period (in shares) | 4,354,302 | 4,354,302 | |||||
Vested and expected to vest at the end of the period (in shares) | 5,054,661 | 5,054,661 | |||||
Weighted Average Exercise Price | |||||||
Outstanding at the beginning of the period (in dollars per share) | $ 3.63 | ||||||
Granted (in dollars per share) | 23.51 | ||||||
Exercised (in dollars per share) | 7.79 | ||||||
Forfeited (in dollars per share) | 16.78 | ||||||
Outstanding at the end of the period (in dollars per share) | $ 4.77 | 4.77 | $ 3.63 | ||||
Exercisable at the end of the period (in dollars per share) | 2.63 | 2.63 | |||||
Vested and expected to vest at the end of the period (in dollars per share) | $ 4.77 | $ 4.77 | |||||
Weighted Average Remaining Contractual Term | |||||||
Outstanding at the end of the period | 6 years | 5 years 2 months 12 days | |||||
Exercisable at the end of the period | 4 years 1 month 6 days | ||||||
Vested and expected to vest at the end of the period | 5 years 2 months 12 days | ||||||
Aggregate Intrinsic Value | |||||||
Outstanding at the end of the period | $ 69,314 | $ 69,314 | |||||
Exercisable at the end of the period | 66,868 | 66,868 | |||||
Vested and expected to vest at the end of the period | $ 67,495 | $ 67,495 | |||||
Stock Options | Minimum | |||||||
Valuation assumptions | |||||||
Expected term | 6 years 3 months | ||||||
Stock Options | Maximum | |||||||
Valuation assumptions | |||||||
Expected term | 6 years 7 months 6 days | ||||||
Employee Stock | |||||||
Valuation assumptions | |||||||
Risk-free interest rates, minimum (as a percent) | 0.25% | 0.10% | |||||
Risk-free interest rates, maximum (as a percent) | 0.60% | 0.41% | |||||
Expected volatility, minimum (as a percent) | 51.20% | 42.50% | |||||
Expected volatility, maximum (as a percent) | 57.40% | 49.50% | |||||
Dividend yield (as a percent) | 0.00% | 0.00% | |||||
Weighted average fair value per share of stock purchase rights granted during the period (in dollars per share) | $ 7.48 | $ 3.76 | |||||
Weighted Average Grant Date Fair Value | |||||||
Granted (in dollars per share) | $ 7.48 | $ 3.76 | |||||
Employee Stock | Minimum | |||||||
Valuation assumptions | |||||||
Expected term | 6 months | 6 months | |||||
Employee Stock | Maximum | |||||||
Valuation assumptions | |||||||
Expected term | 2 years | 2 years | |||||
Restricted Stock Awards And Restricted Stock Units RSU | |||||||
Valuation assumptions | |||||||
Weighted average fair value per share of stock purchase rights granted during the period (in dollars per share) | $ 23.93 | ||||||
Restricted Shares | |||||||
Outstanding at the beginning of the period (in shares) | 1,541,114 | ||||||
Granted (in shares) | 1,424,114 | ||||||
Released (in shares) | (478,249) | ||||||
Forfeited (in shares) | (104,397) | ||||||
Outstanding at the end of the period (in shares) | 2,382,582 | 2,382,582 | 1,541,114 | ||||
Weighted Average Grant Date Fair Value | |||||||
Outstanding at the beginning of the period (in dollars per share) | $ 13.86 | ||||||
Granted (in dollars per share) | 23.93 | ||||||
Released (in dollars per share) | 13.16 | ||||||
Forfeited (in dollars per share) | 16.01 | ||||||
Outstanding at the end of the period (in dollars per share) | $ 19.93 | $ 19.93 | $ 13.86 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Fair value measurements | ||||
Cash and cash equivalents | $ 31,522 | $ 58,131 | $ 27,829 | $ 12,851 |
Marketable securities | 311,987 | 224,625 | ||
Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Total | 343,509 | 282,756 | ||
Fair Value Inputs Level 1 | ||||
Fair value measurements | ||||
Total | 31,522 | 53,569 | ||
Fair Value Inputs Level 2 | ||||
Fair value measurements | ||||
Total | 311,987 | 229,187 | ||
Long-term debt | 3,500 | 1,000 | ||
Cash and Money Market | Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Cash and cash equivalents | 31,522 | 53,569 | ||
Cash and Money Market | Fair Value Inputs Level 1 | ||||
Fair value measurements | ||||
Cash and cash equivalents | 31,522 | 53,569 | ||
Corporate bonds | Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Cash and cash equivalents | 4,562 | |||
Marketable securities | 210,027 | 141,124 | ||
Corporate bonds | Fair Value Inputs Level 2 | ||||
Fair value measurements | ||||
Cash and cash equivalents | 4,562 | |||
Marketable securities | 210,027 | 141,124 | ||
U. S. government agency securities | Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Marketable securities | 7,062 | 18,688 | ||
U. S. government agency securities | Fair Value Inputs Level 2 | ||||
Fair value measurements | ||||
Marketable securities | 7,062 | 18,688 | ||
Asset backed securities | Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Marketable securities | 89,321 | 60,820 | ||
Asset backed securities | Fair Value Inputs Level 2 | ||||
Fair value measurements | ||||
Marketable securities | 89,321 | 60,820 | ||
Commercial Paper. | Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Marketable securities | 3,578 | 3,993 | ||
Commercial Paper. | Fair Value Inputs Level 2 | ||||
Fair value measurements | ||||
Marketable securities | 3,578 | $ 3,993 | ||
Certificates of deposit | Estimate Of Fair Value Fair Value Disclosure | ||||
Fair value measurements | ||||
Marketable securities | 1,999 | |||
Certificates of deposit | Fair Value Inputs Level 2 | ||||
Fair value measurements | ||||
Marketable securities | $ 1,999 |
FAIR VALUE (Details 2)
FAIR VALUE (Details 2) $ in Thousands | Sep. 30, 2015USD ($) |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | $ 117,890 |
Total fair value of available for sale securities in a continuous unrealized loss position for greater than twelve months | 4,736 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 122,626 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (70) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for greater than twelve months | (3) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (73) |
Contractual maturities of the available-for-sale investments in debt securities, Cost | |
Due in one year or less | 132,308 |
Due after one year through two years | 179,583 |
Contractual maturities of the available-for-sale investments in debt securities, Fair Value | |
Due in one year or less | 132,331 |
Due after one year through two years | 179,656 |
Corporate bonds | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 84,960 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 84,960 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (39) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (39) |
Contractual maturities of the available-for-sale investments in debt securities, Cost | |
Due in one year or less | 122,579 |
Due after one year through two years | 87,374 |
Contractual maturities of the available-for-sale investments in debt securities, Fair Value | |
Due in one year or less | 122,601 |
Due after one year through two years | 87,426 |
Asset backed securities | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 30,431 |
Total fair value of available for sale securities in a continuous unrealized loss position for greater than twelve months | 4,736 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 35,167 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (30) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for greater than twelve months | (3) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (33) |
Contractual maturities of the available-for-sale investments in debt securities, Cost | |
Due in one year or less | 1,654 |
Due after one year through two years | 87,652 |
Contractual maturities of the available-for-sale investments in debt securities, Fair Value | |
Due in one year or less | 1,654 |
Due after one year through two years | 87,667 |
U. S. government agency securities | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 2,499 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 2,499 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (1) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (1) |
Contractual maturities of the available-for-sale investments in debt securities, Cost | |
Due in one year or less | 2,499 |
Due after one year through two years | 4,557 |
Contractual maturities of the available-for-sale investments in debt securities, Fair Value | |
Due in one year or less | 2,499 |
Due after one year through two years | 4,563 |
Commercial Paper. | |
Contractual maturities of the available-for-sale investments in debt securities, Cost | |
Due in one year or less | 3,577 |
Contractual maturities of the available-for-sale investments in debt securities, Fair Value | |
Due in one year or less | 3,578 |
Certificates of deposit | |
Contractual maturities of the available-for-sale investments in debt securities, Cost | |
Due in one year or less | 1,999 |
Contractual maturities of the available-for-sale investments in debt securities, Fair Value | |
Due in one year or less | $ 1,999 |
NEW MARKET TAX CREDIT (Details)
NEW MARKET TAX CREDIT (Details) - New Market Tax Credit Program - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Disclosures related to New Market Tax Credit | ||||
Net proceeds received from financing arrangements | $ 2.4 | |||
Loan issued to a subsidiary of the Company by the Investor | $ 7.5 | 7.5 | ||
Loan transaction eliminated in Company's consolidated financial statements | 5.1 | 5.1 | ||
Fee related to not exercising the option to purchase certain real property under a specified agreement | $ 1.2 | |||
Amortization of contribution liability recognized as a decrease in expenses | $ 0.1 | $ 0.3 | ||
Land purchase option asset | 1.2 | 1.2 | ||
Land purchase option liability | 1.2 | 1.2 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Disclosures related to New Market Tax Credit | ||||
Debt issuance costs | 0.2 | |||
Investor | ||||
Disclosures related to New Market Tax Credit | ||||
Loan receivable issued to Investor | $ 5.1 | |||
Term of the loan receivable | 7 years | |||
Loan receivable interest rate (as a percent) | 2.74% | 2.74% | ||
Recapture (as a percentage) | 100.00% | |||
Recapture period | 7 years | |||
Investor | Variable Interest Entity, Primary Beneficiary | Long-term other liabilities | ||||
Disclosures related to New Market Tax Credit | ||||
Financing arrangement, amount outstanding | $ 2.4 | $ 2.1 | $ 2.4 | $ 2.1 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2009USD ($) | Nov. 30, 2009USD ($)item | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Long-term debt | ||||||
Long-term debt | $ 3,535,000 | $ 3,535,000 | $ 1,000,000 | |||
Amortization of deferred financing costs | 33,000 | |||||
Debt Agreement to Finance Building Purchase and Improvements | ||||||
Long-term debt | ||||||
Maximum funds available under debt agreement | $ 5,100,000 | |||||
Amount of funds allocated to the purchase price of the building under the debt agreement | $ 3,700,000 | |||||
Interest rate (as a percent) | 4.15% | |||||
Total amount of principal and interest payments to be paid through the maturity date of the debt agreement | $ 31,200 | |||||
Final principal and interest payment due under the debt agreement | 4,400,000 | |||||
Amount drawn on credit agreement | 100,000 | |||||
Remaining amount under credit agreement to be funded | 1,300,000 | 1,300,000 | ||||
Total debt outstanding | 3,800,000 | 3,800,000 | ||||
Current portion of long-term debt | 200,000 | 200,000 | ||||
Deferred financing costs | 70,400 | 70,400 | ||||
Amortization of deferred financing costs | $ 5,700 | 5,700 | ||||
Wisconsin Department of Commerce Loan | ||||||
Long-term debt | ||||||
Maximum funds available under debt agreement | $ 1,000,000 | |||||
Interest rate (as a percent) | 2.00% | |||||
Proceeds from long term debt | $ 1,000,000 | |||||
Number of new full time positions required to be created for reduction in principal amount by specified amount | item | 100 | |||||
Reduction in the principal amount for each new position created | $ 5,405 | |||||
Interest rate if job creation requirements are not met (as a percent) | 4.00% | |||||
Period for which both principal and interest payments are deferred | 5 years | |||||
Benefit associated with the expected loan forgiveness that has been recorded as an offset to operating expenses | $ 1,000,000 | |||||
Construction Loans | Debt Agreement to Finance Building Purchase and Improvements | ||||||
Long-term debt | ||||||
Maximum funds available under debt agreement | $ 1,400,000 |
WISCONSIN ECONOMIC DEVELOPMEN38
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDIT (Details) - Wisconsin Economic Development Tax Credit Agreement | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($)item | Sep. 30, 2015USD ($) | |
Agreements | |||
Refundable tax credits available, contingent on the Company expending $26.3 million in capital investments and establishing 758 full-time positions | $ 9,000,000 | ||
Capital investment expenditures over specified period, requirement to earn the refundable tax credits | $ 26,300,000 | ||
Full-time positions that must be created over a specified time period to earn the refundable tax credits | item | 758 | ||
Period over which the capital investment expenditures must be incurred and the creation of full-time positions must be completed | 7 years | ||
Refundable tax credits earned | $ 1,600,000 | $ 1,600,000 | |
Amortization of tax credits | 72,600 | 112,800 | |
Short-term other assets | |||
Agreements | |||
Refundable tax credit receivable | 200,000 | 200,000 | |
Long-term other assets | |||
Agreements | |||
Refundable tax credit receivable | 1,400,000 | 1,400,000 | |
Short-term other liabilities | |||
Agreements | |||
Refundable tax credit, offsetting liability | 300,000 | 300,000 | |
Long-term other liabilities | |||
Agreements | |||
Refundable tax credit, offsetting liability | $ 1,100,000 | $ 1,100,000 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | Jul. 24, 2015 | Sep. 30, 2015 | Sep. 30, 2014 |
ISSUANCES OF EQUITY | |||
Issuance of stock on underwritten public offering (in shares) | 7 | ||
Price of common stock (in dollars per share) | $ 25.50 | $ 17.99 | |
Net proceeds received from the offerings | $ 174,100 | $ 174,140 | $ 137,664 |
Underwriting discount and other stock issuance costs | $ 4,400 |