Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 4-May-15 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PIP | |
Entity Registrant Name | PHARMATHENE, INC | |
Entity Central Index Key | 1326190 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 63,792,026 |
UNAUDITED_CONDENSED_CONSOLIDAT
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $15,724,956 | $18,643,351 |
Billed accounts receivable | 5,973,988 | 110,656 |
Unbilled accounts receivable | 594,259 | 297,431 |
Prepaid expenses and other current assets | 446,240 | 199,194 |
Total current assets | 22,739,443 | 19,250,632 |
Property and equipment, net | 324,018 | 325,772 |
Other long-term assets and deferred costs | 53,384 | 53,384 |
Goodwill | 2,348,453 | 2,348,453 |
Total assets | 25,465,298 | 21,978,241 |
Current liabilities: | ||
Accounts payable | 536,994 | 391,396 |
Accrued expenses and other liabilities | 1,451,506 | 1,195,412 |
Accrued restructuring expenses | 1,927,877 | |
Current portion of long-term debt | 498,203 | 746,146 |
Other short-term liabilities | 72,674 | 70,326 |
Current portion of derivative instruments | 49,463 | 178,509 |
Total current liabilities | 4,536,717 | 2,581,789 |
Other long-term liabilities | 485,365 | 493,137 |
Derivative instruments, less current portion | 419,971 | 629,170 |
Total liabilities | 5,442,053 | 3,704,096 |
Stockholders' equity: | ||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 63,674,326 and 63,603,303 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 6,367 | 6,360 |
Additional paid-in-capital | 239,064,585 | 238,780,633 |
Accumulated other comprehensive loss | -227,782 | -229,528 |
Accumulated deficit | -218,819,925 | -220,283,320 |
Total stockholders' equity | 20,023,245 | 18,274,145 |
Total liabilities and stockholders' equity | $25,465,298 | $21,978,241 |
UNAUDITED_CONDENSED_CONSOLIDAT1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 63,674,326 | 63,603,303 |
Common stock, shares outstanding | 63,674,326 | 63,603,303 |
UNAUDITED_CONDENSED_CONSOLIDAT2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Contract revenue | $7,068,746 | $3,742,525 |
Operating expenses: | ||
Research and development | 1,613,627 | 3,427,000 |
General and administrative | 2,196,120 | 2,677,452 |
Restructuring expense | 2,060,809 | |
Depreciation | 37,106 | 39,939 |
Total operating expenses | 5,907,662 | 6,144,391 |
Income (loss) from operations | 1,161,084 | -2,401,866 |
Other income (expense): | ||
Interest expense, net | -25,325 | -69,872 |
Change in fair value of derivative instruments | 338,245 | 242,641 |
Other income | 9,196 | 362 |
Total other income | 322,116 | 173,131 |
Net income (loss) before income taxes | 1,483,200 | -2,228,735 |
Income tax provision | -19,805 | -29,705 |
Net income (loss) | 1,463,395 | -2,258,440 |
Net income (loss) attributable to common stockholders | $1,277,017 | ($2,258,440) |
Basic net income (loss) per share | $0.02 | ($0.04) |
Diluted net income (loss) per share | $0.02 | ($0.04) |
Weighted average shares used in calculation of basic net income (loss) per share | 63,633,290 | 53,044,119 |
Weighted average shares used in calculation of diluted net income (loss) per share | 63,979,859 | 53,044,119 |
UNAUDITED_CONDENSED_CONSOLIDAT3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ||
Net income (loss) | $1,463,395 | ($2,258,440) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 1,746 | -657 |
Comprehensive income (loss) | $1,465,141 | ($2,259,097) |
UNAUDITED_CONDENSED_CONSOLIDAT4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating activities | ||
Net income (loss) | $1,463,395 | ($2,258,440) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation expense | 199,627 | 528,878 |
Change in fair value of derivative instruments | -338,245 | -242,641 |
Depreciation expense | 37,106 | 39,939 |
Deferred income taxes | 19,805 | 29,705 |
Non-cash interest expense | 10,933 | 26,591 |
Gain on the disposal of property and equipment | -7,600 | -5,393 |
Changes in operating assets and liabilities: | ||
Billed accounts receivable | -5,863,332 | 1,427,113 |
Unbilled accounts receivable | -296,828 | 549,629 |
Prepaid expenses and other current assets | -253,779 | -178,704 |
Accounts payable | 146,740 | -656,373 |
Accrued restructuring expenses | 1,938,631 | |
Accrued expenses and other liabilities | 230,186 | -1,274,906 |
Deferred revenue | -279,462 | |
Net cash used in operating activities | -2,713,361 | -2,294,064 |
Investing activities | ||
Purchases of property and equipment | -35,352 | -37,050 |
Proceeds from the sale of property and equipment | 7,600 | 8,000 |
Net cash used in investing activities | -27,752 | -29,050 |
Financing activities | ||
Repayment of debt | -249,999 | -249,999 |
Net repayment of revolving credit agreement | -1,091,740 | |
Proceeds from issuance of common stock, net of offering costs | 84,332 | 2,719,184 |
Net cash (used in) provided by financing activities | -165,667 | 1,377,445 |
Effects of exchange rates on cash | -11,615 | -590 |
Decrease in cash and cash equivalents | -2,918,395 | -946,259 |
Cash and cash equivalents, at beginning of period | 18,643,351 | 10,480,979 |
Cash and cash equivalents, at end of period | 15,724,956 | 9,534,720 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | $14,849 | $43,287 |
Business_Liquidity_and_Organiz
Business, Liquidity and Organization | 3 Months Ended |
Mar. 31, 2015 | |
Business, Liquidity and Organization [Abstract] | |
Business, Liquidity and Organization | Note 1 – Business, Liquidity and Organization |
Since 2001, PharmAthene, Inc. (we, the Company) has been a biodefense company engaged in the development of next generation medical counter measures against biological and chemical threats. During this time, we have devoted substantial effort and resources to the development of the prevention and treatment of anthrax infection and nerve agent poisoning. | |
On March 9, 2015, our Board of Directors approved our realignment plan (the “Realignment Plan”) with the goal of preserving and maximizing, for the benefit of our stockholders, the value of any proceeds from the SIGA litigation and our existing biodefense assets. The plan eliminates approximately two-thirds of our workforce and is aimed at the preservation of cash and cash equivalents sufficient to finance our continued operations through a period of time expected to extend beyond the adjudication of SIGA's appeal. We intend to maintain sufficient resources and personnel so that we can seek partners, co-developers or acquirers for our biodefense programs and continue to execute under our government contract with the National Institutes of Allergy and Infectious Diseases (“NIAID”). The Company estimates total severance payments to executives and non-executives in connection with the Realignment Plan to amount to approximately $2.0 million (all of which was expensed and accrued as of March 31, 2015), with substantially all such severance expenses expected to be paid in 2015. | |
Historically, the company has performed under government contracts and grants and raised funds from investors (including additional debt and equity issued in 2015 and 2014) to sustain our operations. The Company has spent substantial funds in the research, development, clinical and preclinical testing in excess of revenues, to support the Company's product candidates and to market and sell its products. We have incurred losses in each year since inception, and have an accumulated deficit of $218.8 million. While we have undertaken efforts to reduce expenses, and expect that our operating expenses will continue to decrease as a result of our Realignment Plan, we expect continuing losses in the future. If we continue to incur losses and are not able to raise adequate funds to cover those losses, we may be required to cease operations. | |
As of March 31, 2015, our cash balance was $15.7 million, our accounts receivable balance (billed and unbilled) was $6.6 million, and our current liabilities were $4.5 million. Included in our accounts receivable were amounts billed to the Biomedical Advanced Research and Development Authority (“BARDA”) related to indirect costs incurred in previous years. All of our accounts receivables, including the BARDA receivables, were collected in April 2015. In addition, as of March 31, 2015, we had approximately $3.0 million of remaining availability under our controlled equity offering arrangement (see Note 5 – Stock Holders' Equity). We believe, based on the operating cash requirements and capital expenditures expected for 2015, the Company's cash on hand at March 31, 2015 is adequate to fund operations through at least the end of 2015. We currently owe GE Capital an aggregate of approximately $0.5 million under our Loan Agreement with them. This amount is payable at maturity in September 2015. | |
We can offer no assurances that we have correctly estimated the resources or personnel necessary to seek partners, co-developers or acquirers for our biodefense programs or execute under our NIAID contract. If a larger workforce or one with a different skillset is ultimately required to implement our Realignment Plan successfully, we may be unable to maximize the value of the SIGA litigation and our existing biodefense assets. In addition, executive officers who have served the Company for a combined 37 years have been terminated, and, with the exception of Mr. Richman's continued service on the Board, will no longer be available to guide the Company. We also cannot assure you that we have accurately estimated the cash and cash equivalents necessary to finance our operations until SIGA's appeal has been adjudicated and we have received SIGA's payment. If revenues from our NIAID contract are less than we anticipate, if operating expenses exceed our expectations or cannot be adjusted accordingly, or if we have underestimated the time it will take for us to prevail in SIGA's appeal, or enforce payment of or collect the damages award from SIGA, then our business, results of operations, financial condition and cash flows will be materially and adversely affected. | |
In addition, we may voluntarily elect to raise additional capital to strengthen our financial position. There can be no assurances that we would be successful in raising additional funds on acceptable terms or at all. Additional sales of common stock may be made at prices that are dilutive to existing stockholders. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies | ||||||||||||
Basis of Presentation | |||||||||||||
Our unaudited condensed consolidated financial statements include the accounts of PharmAthene, Inc. and its wholly-owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation. Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The condensed consolidated balance sheet at December 31, 2014 has been derived from audited consolidated financial statements at that date. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC. We currently operate in one business segment. | |||||||||||||
Use of Estimates | |||||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Our unaudited condensed consolidated financial statements include significant estimates for our share-based compensation and the value of our financial instruments, among other things. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates. | |||||||||||||
Foreign Currency Translation | |||||||||||||
The functional currency of our wholly owned foreign subsidiary is its local currency. Assets and liabilities of our foreign subsidiary are translated into United States dollars based on the exchange rate at the end of the reporting period. Income and expense items are translated at the weighted average exchange rates prevailing during the reporting period. Translation adjustments for subsidiaries that have not been sold, substantially liquidated or otherwise disposed of, are accumulated in other comprehensive loss, a component of stockholders' equity. Foreign currency translation adjustments are the sole component of accumulated other comprehensive loss at March 31, 2015 and December 31, 2014. Transaction gains or losses are included in the determination of net income (loss). | |||||||||||||
Cash and Cash Equivalents | |||||||||||||
Cash and cash equivalents are stated at market value. We consider all highly liquid investments with original maturities of three months or less to be cash equivalents, which, among other things, consist of investments in money market funds with financial institutions. The Company maintains cash balances with financial institutions in excess of insured limits. The Company does not anticipate any losses on such cash balances. | |||||||||||||
Revolving Line of Credit and Term Loan | |||||||||||||
As discussed further in Note 6- Financing Transactions, we entered into a loan agreement with General Electric Capital Corporation (“GE Capital”) in March 2012. As part of that agreement, we issued stock purchase warrants to GE Capital that expire in March 2022. The fair value of the warrants was charged to additional paid-in-capital, resulting in a debt discount to the term loan at the date of issuance. The debt discount and the financing costs incurred in connection with the agreement are being amortized over the term of the loan using the effective interest method and are included in interest expense in the unaudited condensed consolidated statements of operations. | |||||||||||||
Significant Customers and Accounts Receivable | |||||||||||||
Our primary customers are BARDA, NIAID, and the Department of Defense Chemical Biological Medical Systems (“CBMS”). As of March 31, 2015, the Company's receivable balances (both billed and unbilled) were comprised primarily of receivables from BARDA and NIAID. For the year ending December 31, 2014, the Company's billed and unbilled receivable balances were comprised solely of receivables from BARDA and CBMS. | |||||||||||||
Goodwill | |||||||||||||
Goodwill represents the excess of purchase price over the fair value of net identifiable assets associated with acquisitions. We review the recoverability of goodwill annually at the end of our fiscal year and whenever events or changes in circumstances indicate that it is more likely than not that impairment exists. Recoverability of goodwill is reviewed by comparing our market value (as measured by our stock price multiplied by the number of outstanding shares as of the end of the year) to the net book value of our equity. If our market value exceeds our net book value, no further analysis is required. We completed our annual impairment assessment of goodwill on December 31, 2014 and determined that there was no impairment as of that date. Changes in our business strategy or adverse changes in market conditions could impact the impairment analyses and require the recognition of an impairment charge equal to the excess of the carrying value over its estimated fair value. | |||||||||||||
Restructuring Expense | |||||||||||||
As a result of the Realignment Plan, we recorded approximately $2.1 million of restructuring expense during the quarter ended March 31, 2015, including approximately $2.0 million of related severance expense. | |||||||||||||
Financial Instruments | |||||||||||||
Our financial instruments, and/or embedded features contained in those instruments, often are classified as derivative liabilities and are recorded at their fair values. The determination of fair value of these instruments and features requires estimates and judgments. Some of our stock purchase warrants are considered to be derivative liabilities due to the presence of net settlement features and/or non-standard anti-dilution provisions; the fair value of our warrants is determined based on the Black-Scholes option pricing model. Use of the Black-Scholes option pricing model requires the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends. See Note 3- Fair Value Measurements for further details. | |||||||||||||
Revenue Recognition | |||||||||||||
We generate our revenue from different types of contractual arrangements: cost-plus-fee contracts and fixed price contracts. | |||||||||||||
Revenues on cost-plus-fee contracts are recognized in an amount equal to the costs incurred during the period plus an estimate of the applicable fee earned. The estimate of the applicable fee earned is determined by reference to the contract: if the contract defines the fee in terms of risk-based milestones and specifies the fees to be earned upon the completion of each milestone, then the fee is recognized when the related milestones are earned, as further described below; otherwise, we estimate the fee earned in a given period by using a proportional performance method based on costs incurred during the period as compared to total estimated project costs and application of the resulting fraction to the total project fee specified in the contract. | |||||||||||||
Under the milestone method of revenue recognition, milestone payments (including milestone payments for fees) contained in research and development arrangements are recognized as revenue when: (i) the milestones are achieved; (ii) no further performance obligations with respect to the milestone exist; (iii) collection is reasonably assured; and (iv) substantive effort was necessary to achieve the milestone. | |||||||||||||
Milestones are considered substantive if all of the following conditions are met: | |||||||||||||
• | it is commensurate with either our performance to meet the milestone or the enhancement of the value of the delivered item or items as a result of a specific outcome resulting from our performance to achieve the milestone, | ||||||||||||
• | it relates solely to past performance, and | ||||||||||||
• | the value of the milestone is reasonable relative to all the deliverables and payment terms (including other potential milestone consideration) within the arrangement. | ||||||||||||
If a milestone is deemed not to be substantive, the Company recognizes the portion of the milestone payment as revenue that correlates to work already performed using the proportional performance method; the remaining portion of the milestone payment is deferred and recognized as revenue as the Company completes its performance obligations. | |||||||||||||
Revenue on fixed price contracts (without substantive milestones as described above) is recognized on the percentage-of-completion method. The percentage-of-completion method recognizes income as the contract progresses (generally related to the costs incurred in providing the services required under the contract). The use of the percentage-of-completion method depends on the ability to make reasonable dependable estimates and the fact that circumstances may necessitate frequent revision of estimates does not indicate that the estimates are unreliable for the purpose for which they are used. | |||||||||||||
As a result of our revenue recognition policies and the billing provisions contained in our contracts, the timing of customer billings may differ from the timing of recognizing revenue. Amounts invoiced to customers in excess of revenue recognized are reflected on the balance sheet as deferred revenue. Amounts recognized as revenue in excess of amounts billed to customers are reflected on the balance sheet as unbilled accounts receivable. | |||||||||||||
Upon notice of termination of a contract from the government, all related termination costs are expensed. Revenue is recognized on the termination costs to the extent those costs are allowable and billable under the contract. Because the government may require an audit of incurred costs, revenue is recognized when the company is reasonably assured of collection. In March 2015, we recorded as revenue and invoiced the government $5.8 million costs incurred ranging from 2008 through 2013. | |||||||||||||
Share-Based Compensation | |||||||||||||
We expense the estimated fair value of share-based awards granted to employees, non-employee directors, and consultants under our stock compensation plans. The fair value of stock options granted to employees and non-employee directors is determined at the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of our stock price. The value of the award that is ultimately expected to vest is recognized as expense on a straight line basis over the employee's requisite service period. | |||||||||||||
The fair value of share-based awards granted to consultants is determined at the grant date using the Black-Scholes option pricing model and re-measured at each quarterly reporting date over their requisite service period. The value of awards that are ultimately expected to vest is recognized as expense on a straight-line basis over their requisite service period. | |||||||||||||
The fair value of restricted stock grants is determined based on the closing price of our common stock on the award date and is recognized as expense ratably over the requisite service period. | |||||||||||||
Share-based compensation expense recognized in the three months ended March 31, 2015 and 2014 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures at a rate of approximately 12%, based on historical forfeitures. | |||||||||||||
Share-based compensation expense for the three months ended March 31, 2015 and 2014 was: | |||||||||||||
Three months ended March 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Research and development | $ | 60,735 | $ | 189,917 | |||||||||
General and administrative | 192,633 | 338,961 | |||||||||||
Restructuring benefit | (53,741 | ) | - | ||||||||||
Total share-based compensation expense | $ | 199,627 | $ | 528,878 | |||||||||
As a result of the restructuring and termination of employees, we recognized approximately $75,000 of share-based compensation expense resulting from our agreement to extend the exercise period of the vested stock options for several of the executives who were terminated. In addition, approximately $129,000 of previously recognized share-based compensation expense was reversed for unvested stock options forfeited as a result of the restructuring and termination of employees. The $54,000 net reversal of share-based compensation expense is reflected in restructuring benefit in the above table. | |||||||||||||
During the three months ended March 31, 2015, we granted 12,000 options and 117,500 shares of restricted stock to employees. During the three months ended March 31, 2014, we granted 1,217,755 options to employees and consultants and made no restricted stock grants. At March 31, 2015, we had total unrecognized share-based compensation expense related to unvested awards of approximately $1.0 million net of estimated forfeitures, which we expect to recognize as expense over a weighted-average period of 2.6 years. | |||||||||||||
Income Taxes | |||||||||||||
We account for income taxes using the asset and liability approach, which requires the recognition of future tax benefits or liabilities on the temporary differences between the financial reporting and tax bases of our assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. We also recognize a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. Our policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense. As of March 31, 2015 and December 31, 2014, we had recognized a full valuation allowance since the likelihood of realization of our tax deferred assets does not meet the more likely than not threshold. | |||||||||||||
Income tax expense was $0.02 million and $0.03 million during the three months ended March 31, 2015 and 2014, respectively relating exclusively to the generation of a deferred tax liability associated with the tax amortization of goodwill, which is included as a component of other long-term liabilities on our condensed consolidated balance sheets. The income tax expense results from the difference between the treatment of goodwill for income tax purposes and for U.S. GAAP. | |||||||||||||
Basic and Diluted Net Loss Per Share | |||||||||||||
Income (loss) per share: Basic income (loss) per share is computed by dividing consolidated net income (loss) by the weighted average number of common shares outstanding during the period, excluding unvested restricted stock. | |||||||||||||
Our unvested restricted shares granted during the quarter contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; the calculation of basic and diluted earnings per share excludes from the numerator net income attributable to the unvested restricted shares, and excludes the impact of those shares from the denominator which is consistent with the two-class method in accordance with GAAP. | |||||||||||||
For periods of net income when the effects are not anti-dilutive, diluted earnings per share is computed by dividing our net income by the weighted average number of shares outstanding and the impact of all potential dilutive common shares, consisting primarily of stock options, unvested restricted stock and stock purchase warrants. The dilutive impact of our potentially dilutive common shares resulting from stock options and stock purchase warrants is determined by applying the treasury stock method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potentially dilutive common shares is anti-dilutive due to the net losses. | |||||||||||||
A reconciliation of the numerators and denominators of the basic and diluted per share computations for the three months ended March 31, 2015 is as follows (a reconciliation is not required for the 2014 quarter since the Company recorded a net loss for that period): | |||||||||||||
Three months ended | |||||||||||||
31-Mar-15 | |||||||||||||
Numerator | |||||||||||||
Net income | $ | 1,463,395 | |||||||||||
Net income allocated to participating securities | $ | (607 | ) | ||||||||||
Numerator for basic income per share | $ | 1,462,788 | |||||||||||
Incremental allocation of net income to participating securities | $ | 3 | |||||||||||
Change in fair value of dilutive warrants | $ | (185,774 | ) | ||||||||||
Numerator for diluted income per share | $ | 1,277,017 | |||||||||||
Denominator | |||||||||||||
Denominator for basic income per share Weighted average outstanding common shares | 63,633,290 | ||||||||||||
Dilutive effect of stock options | 327,020 | ||||||||||||
Dilutive effect of warrants | 19,550 | ||||||||||||
Denominator for diluted income per share | 63,979,859 | ||||||||||||
A total of approximately 4.9 million and 12.6 million potentially dilutive securities have been excluded in the calculation of diluted net income (loss) per share in the three months ended March 31, 2015 and 2014, respectively, because their inclusion would be anti-dilutive. | |||||||||||||
Recent Accounting Pronouncements | |||||||||||||
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers, or ASU 2014-09. Pursuant to this update an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this update are currently effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and are to be applied retrospectively, or on a modified retrospective basis. Early application is not permitted. On April 1, 2015, the FASB voted to propose to defer the effective date of ASU No. 2014-09 by one year. Under the proposal, ASU No. 2014-09 would be effective for fiscal years beginning after December 15, 2017, with early adoption permitted but not prior to the original effective date of annual periods beginning after December 15, 2016. The FASB plans to expose its decisions for a thirty day public comment period in a proposed ASU, which is expected to be issued during the second quarter of 2015. We are currently evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements. | |||||||||||||
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items, or ASU 2015-01. This update eliminates from GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement—Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. The Company concluded that the amendments in this update will not result in a loss of information because although the amendments will eliminate the requirements in Subtopic 225-20 for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We have not yet determined the impact of adoption on our consolidated financial statements. | |||||||||||||
In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest, or ASU 2015-03. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. We have not yet determined the impact of adoption on our consolidated financial statements. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||
Fair Value Measurements | Note 3 - Fair Value Measurements | ||||||||||||||||
The carrying amounts of our short term financial instruments, which primarily include cash and cash equivalents, accounts receivable (billed and unbilled), and accounts payable approximate their fair values due to their short term maturities. We define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We report assets and liabilities that are measured at fair value using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: | |||||||||||||||||
• | Level 1 — Quoted prices in active markets for identical assets or liabilities. | ||||||||||||||||
• | Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | ||||||||||||||||
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. | ||||||||||||||||
An asset's or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. | |||||||||||||||||
We have segregated our financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. We have no non-financial assets and liabilities that are measured at fair value on a recurring basis. | |||||||||||||||||
The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
As of March 31, 2015 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Balance | ||||||||||||||
Assets | |||||||||||||||||
Investment in money market funds(1) | $ | 6,429,534 | $ | - | $ | - | $ | 6,429,534 | |||||||||
Total investment in money market funds | $ | 6,429,534 | $ | - | $ | - | $ | 6,429,534 | |||||||||
Liabilities | |||||||||||||||||
Current portion of derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 49,463 | $ | 49,463 | |||||||||
Non-current portion of derivative instruments related to stock purchase warrants | - | - | 419,971 | 419,971 | |||||||||||||
Total derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 469,434 | $ | 469,434 | |||||||||
As of December 31, 2014 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Balance | ||||||||||||||
Assets | |||||||||||||||||
Investment in money market funds(1) | $ | 6,429,104 | $ | - | $ | - | $ | 6,429,104 | |||||||||
Total investment in money market funds | $ | 6,429,104 | $ | - | $ | - | $ | 6,429,104 | |||||||||
Liabilities | |||||||||||||||||
Current portion of derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 178,509 | $ | 178,509 | |||||||||
Non-current portion of derivative instruments related to stock purchase warrants | - | - | 629,170 | 629,170 | |||||||||||||
Total derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 807,679 | $ | 807,679 | |||||||||
-1 | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. | ||||||||||||||||
The following table sets forth a summary of changes in the fair value of the Company's Level 3 liabilities for the three months ended March 31, 2015 and 2014: | |||||||||||||||||
Balance as of | Unrealized | Balance as of | |||||||||||||||
December 31, | (Gains) | March 31, | |||||||||||||||
Description | 2014 | 2015 | 2015 | ||||||||||||||
Derivative liabilities related to stock purchase warrants | $ | 807,679 | $ | (338,245 | ) | $ | 469,434 | ||||||||||
Balance as of | Unrealized | Balance as of | |||||||||||||||
December 31, | (Gains) | March 31, | |||||||||||||||
Description | 2013 | 2014 | 2014 | ||||||||||||||
Derivative liabilities related to stock purchase warrants | $ | 1,740,235 | $ | (242,641 | ) | $ | 1,497,594 | ||||||||||
At March 31, 2015 and 2014, derivative liabilities are comprised of warrants to purchase 1,775,419 and 2,899,991 shares of common stock, respectively. The warrants are considered to be derivative liabilities due to the presence of net settlement features and/or non-standard anti-dilution provisions, and as a result, are recorded at fair value at each balance sheet date, with changes in fair value recorded in the accompanying unaudited condensed consolidated statements of operations. The fair value of our warrants is determined based on the Black-Scholes option pricing model. Use of the Black-Scholes option pricing model requires the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends. Changes in any of the assumptions related to the unobservable inputs identified above may change the stock purchase warrants' fair value; increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in the unobservable inputs generally result in decreases in fair value. Unrealized gains and losses on the fair value adjustments for these derivative instruments are classified in other income (expense) as the change in fair value of derivative instruments in the accompanying unaudited condensed consolidated statements of operations. | |||||||||||||||||
Quantitative Information about Level 3 Fair Value Measurements | |||||||||||||||||
Fair Value at March 31, 2015 | Valuation Technique | Unobservable Inputs | |||||||||||||||
$ | 469,434 | Black-Scholes option pricing model | Expected term | ||||||||||||||
Expected dividends | |||||||||||||||||
Anticipated volatility | |||||||||||||||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||||||||||||||
The Company measures its long-lived assets, including, property and equipment and goodwill, at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. (See Note 2- Summary of Significant Accounting Policies). As of March 31, 2015, the Company had no other assets or liabilities that were measured at fair value on a nonrecurring basis. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 4 - Commitments and Contingencies |
SIGA Litigation | |
In December 2006, we filed a complaint against SIGA in the Delaware Court of Chancery. The complaint alleged, among other things, that we have the exclusive right to license, development and marketing rights for SIGA's drug candidate, ArestvyrTM (Tecovirimat), pursuant to a merger agreement between the parties that was terminated in 2006. The complaint also alleged that SIGA failed to negotiate in good faith the terms of such a license pursuant to the terminated merger agreement with SIGA. | |
In September 2011, the Delaware Court of Chancery issued an opinion in the case finding that SIGA had breached certain contractual obligations to us upholding our claims of promissory estoppel, and awarding us damages. SIGA appealed aspects of the decision to the Delaware Supreme Court. In response, we cross-appealed other aspects of the decision. In May 2013, the Delaware Supreme Court issued its ruling on the appeal, affirming the Delaware Court of Chancery's finding that SIGA had breached certain contractual obligations to us, reversed its finding of promissory estoppel, and remanded the case back to the Delaware Court of Chancery to reconsider the remedy and award in light of the Delaware Supreme Court's opinion. | |
On August 8, 2014, the Delaware Court of Chancery issued a Memorandum Opinion and Order, or August 2014 Order, finding that we are entitled to receive lump sum expectation damages for the value of the Company's lost profits for Tecovirimat. In addition, the Delaware Court of Chancery found that the Company is entitled to receive pre-judgment interest and varying percentages of the Company's reasonable attorneys' and expert witness fees. On October 17, 2014, the Company and SIGA each filed opinions of our respective financial experts and Draft Orders and Judgments in accordance with the instructions of the August 2014 Order. | |
On September 16, 2014, SIGA announced that it filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. In connection therewith, SIGA filed with the Bankruptcy Court an affidavit indicating, among other things, that it expects to continue to perform under its contract with BARDA. SIGA's petition for bankruptcy initiated a process whereby its assets are protected from creditors, including us. | |
On January 7, 2015, the Delaware Court of Chancery issued a letter Opinion and Order, directing the Company to submit a Revised Proposed Judgment that reflects a lump sum award of approximately $113 million in contract expectation damages, plus pre-judgment interest on that amount from 2006 through the date of such order. In accordance with the instructions of the court, the Company submitted a draft Revised Proposed Judgment under seal on January 9, 2015. | |
On January 15, 2015, the Delaware Court of Chancery issued a Final Order and Judgment, finding that we are entitled to receive a lump sum award of $194.6 million, or the Total Judgment, comprised of (1) expectation damages of $113.1 million for the value of the Company's lost profits for Tecovirimat, also known as ST-246® (formerly referred to as “Arestvyr™” and referred to by SIGA in its recent SEC filings as “Tecovirimat”), plus (2) pre-judgment interest on that amount from 2006 and varying percentages of the Company's reasonable attorneys' and expert witness fees, totaling $81.5 million. Under the Final Order and Judgment, PharmAthene is also entitled to post-judgment simple interest. PharmAthene's entitlement to interest from and after SIGA's bankruptcy filing may be negatively impacted by the proceedings under the Bankruptcy Code. SIGA has filed a notice of appeal with the Delaware Supreme Court in which it challenges various findings of the Court of Chancery and seeks to set aside the Final Order and Judgment, and we have filed a notice of cross-appeal. As a result, the decision could be reversed, remanded or otherwise changed. | |
While we believe that we may have a right to receiving a significant amount under a possible damages award, because SIGA has filed a notice of appeal with the Delaware Supreme Court and because there can be no assurance that SIGA will not be successful in any such appeal, we have not yet recorded any amount due from SIGA in relation to this case. There can be no assurances if and when the Company will receive any payments from SIGA as a result of the Judgment. SIGA has stated publicly that it does not currently have cash sufficient to satisfy the award. It is also uncertain whether SIGA will have such cash in the future. PharmAthene's ability to collect the Judgment depends upon a number of factors, including SIGA's financial and operational success, which is subject to a number of significant risks and uncertainties (certain of which are outlined in SIGA's filings with the SEC), as to which we have limited knowledge and which we have no ability to control, mitigate or fully evaluate. For example, on December 24, 2014, SIGA announced that it expects to modify its contract with BARDA to reflect an increase in the provisional dosage of Tecovirimat and extended delivery schedule, subject to approval by the Bankruptcy Court. Furthermore, because SIGA has filed for protection under the federal bankruptcy laws, the Company is automatically stayed from taking any enforcement action in the Delaware Court of Chancery. By agreement of the parties, and with the approval of the Bankruptcy Court, the automatic stay has been lifted for the sole purpose of allowing the Delaware Court of Chancery to enter a money judgment and to allow the parties to exercise their appellate rights. The Company's ability to collect a money judgment from SIGA remains subject to further proceedings in the Bankruptcy Court. The Company has not recognized any potential proceeds from these actions in its financial statements to date. | |
Government Contracting | |
Payments to the Company on cost-plus-fee contracts are provisional. The accuracy and appropriateness of costs charged to U.S. Government contracts are subject to regulation, audit and possible disallowance by the Defense Contract Audit Agency (“DCAA”) and other government agencies such as BARDA. Accordingly, costs billed or billable to U.S. Government customers are subject to potential adjustment upon audit by such agencies. | |
We have agreed to rate provisions with DCAA for 2006, 2007 and 2008. In 2014, BARDA audited indirect costs or rates charged by us on the SparVax® contract for the years 2008 through 2013. As a result of the audit, in March of 2015, we were able to record revenue, and invoice BARDA for the amount, of $5.8 million in connection with these costs, all of which was collected in April 2015. | |
BARDA has notified us that we can anticipate, in 2015, an audit of our 2014 and 2015 costs related to the partial termination for convenience of the SparVax® contract. While we do not currently believe the results of this audit will have an adverse effect on the Company, we cannot provide assurances that it will not have such an effect. The Company has billed and recognized revenue using the provisional rates as defined in the contract. While the actual rates for 2014 which reflect the actual costs incurred by us, have been higher than the provisional rates, we have no assurance on either the amount of additional funds we may receive as a result of these higher rates or the amount of time it may take to recover these funds. The amount of any such funds is determined as a result of future audits by BARDA. | |
Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect the Company's financial condition or results of operations. Furthermore, contracts with the U.S. Government may be terminated or suspended by the U.S. Government at any time, with or without cause. Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect the Company's financial condition and/or results of operations. | |
Registration Rights Agreements | |
We entered into a Registration Rights Agreement with the investors who participated in the July 2009 private placement of convertible notes and related warrants. We subsequently filed two registration statements on Form S-3 with the SEC to register the resale of the shares issuable upon conversion of the convertible notes and exercise of the related warrants, which have been declared effective. We are obligated to maintain the registration statements effective until the date when such shares (and any other securities issued or issuable with respect to or in exchange for such shares) have been sold or are eligible for resale without restrictions under Rule 144. The convertible notes were converted or extinguished in 2010. The warrants expired on January 28, 2015. | |
Under the terms of the convertible notes, which were converted or extinguished in 2010, if after the 2nd consecutive business day (other than during an allowable blackout period) on which sales of all of the securities required to be included on the registration statement cannot be made pursuant to the registration statement (a “Maintenance Failure”), we will be required to pay to each selling stockholder a one-time payment of 1.0% of the aggregate principal amount of the convertible notes relating to the affected shares on the initial day of a Maintenance Failure. Our total maximum obligation under this provision at March 31, 2015, which is not probable of payment, would be approximately $0.2 million | |
Following a Maintenance Failure, we will also be required to make to each selling stockholder monthly payments of 1.0% of the aggregate principal amount of the convertible notes relating to the affected shares on every 30th day after the initial day of a Maintenance Failure, in each case prorated for shorter periods and until the failure is cured. Our total maximum obligation under this provision, which is not probable of payment, would be approximately $0.2 million for each month until the failure, if it occurs, is cured. | |
We have separate registration rights agreements with investors, under which we have obligations to keep the corresponding registration statements effective until the registrable securities (as defined in each agreement) have been sold, and under which we may have separate obligations to file registration statements in the future on either a demand or “piggy-back” basis or both. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Stockholders' Equity [Abstract] | |||||||||||
Stockholders' Equity | Note 5 - Stockholders' Equity | ||||||||||
Long-Term Incentive Plan | |||||||||||
In 2007, the Company's stockholders approved the 2007 Long-Term Incentive Compensation Plan (the “2007 Plan”) which provides for the granting of incentive and non-qualified stock options, stock appreciation rights, performance units, restricted stock awards and performance bonuses (collectively “awards”) to Company officers and employees. Additionally, the 2007 Plan authorizes the granting of non-qualified stock options and restricted stock awards to Company directors and to independent consultants. | |||||||||||
In 2008, our stockholders approved amendments to the 2007 Plan, increasing from 3.5 million shares to 4.6 million shares the maximum number of shares authorized for issuance under the plan and adding an evergreen provision pursuant to which the number of shares authorized for issuance under the plan would increase automatically in each year, beginning in 2009, in accordance with certain limits set forth in the 2007 Plan. Under the terms of the evergreen provision, the annual increases were to continue through 2015, subject, however, to an aggregate limitation on the number of shares that could be authorized for issuance pursuant to such increases. This aggregate limitation was reached on January 1, 2014, so that the number of shares authorized for issuance under the plan did not automatically increase on January 1, 2015. At March 31, 2015, there are approximately 10.3 million shares approved for issuance under the 2007 Plan, of which approximately 2.9 million shares are available for grant. The Board of Directors in conjunction with management determines who receives awards, the vesting conditions and the exercise price. Options may have a maximum term of ten years. | |||||||||||
Warrants | |||||||||||
At March 31, 2015 and March 31, 2014 there were warrants outstanding to purchase 1,922,781 and 5,620,128 shares of our common stock, respectively. | |||||||||||
Warrants to purchase 2,572,775 shares of common stock expired on January 28, 2015 without being exercised. The warrants were classified as equity. | |||||||||||
The warrants outstanding as of March 31, 2015, all of which are exercisable, were as follows: | |||||||||||
Number of Common Shares | Issue Date | Exercise Price | Expiration Date | ||||||||
Underlying Warrants As of | |||||||||||
31-Mar-15 | |||||||||||
100,778 | -1 | Mar-07 | $ | 3.97 | Mar-17 | ||||||
500,000 | -2 | Apr-10 | $ | 1.89 | Oct-15 | ||||||
903,996 | -2 | Jul-10 | $ | 1.63 | Jan-17 | ||||||
371,423 | -2 | Jun-11 | $ | 3.5 | Jun-16 | ||||||
46,584 | -1 | Mar-12 | $ | 1.61 | Mar-22 | ||||||
1,922,781 | |||||||||||
-1 | These warrants to purchase common stock are classified as equity. | ||||||||||
-2 | Because of the presence of net settlement provisions, these warrants to purchase common stock are classified as derivative liabilities. The fair value of these liabilities (See Note 3 – Fair Value Measurements ) is remeasured at the end of every reporting period and the change in fair value is reported in the accompanying unaudited condensed consolidated statements of operations as other income (expense). |
Financing_Transactions
Financing Transactions | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Financing Transactions [Abstract] | |||||
Financing Transactions | Note 6 – Financing Transactions | ||||
Controlled Equity Offering | |||||
On March 25, 2013, we entered into a controlled equity offering sales agreement with a sales agent, and filed with the SEC a prospectus supplement, dated March 25, 2013 to our prospectus dated July 27, 2011, or the 2011 Prospectus, pursuant to which we could offer and sell, from time to time, through the agent shares of our common stock having an aggregate offering price of up to $15.0 million. | |||||
On May 23, 2014, we entered into an amendment, or the 2014 Amendment, to the controlled equity offering sales agreement with the sales agent, pursuant to which we may offer and sell, from time to time, through the agent shares of our common stock having an aggregate offering price of up to an additional $15.0 million. On that day, we filed a prospectus supplement to the 2011 Prospectus for use in any sales of these additional shares of common stock through July 26, 2014, the date the underlying registration statement (File No. 333-175394) expired. As a result of this expiration, the 2011 Prospectus, as supplemented on March 25, 2013 and May 23, 2014, may no longer be used for the sale of shares of common stock under the controlled equity offering sales agreement, as amended. On May 23, 2014, we also filed a new universal shelf registration statement (File No. 333-196265) containing, among other things, a prospectus, or the 2014 Prospectus, for use in sales of the common stock under the 2014 Amendment. This registration statement was declared effective on May 30, 2014. Since the expiration of the 2011 Prospectus, all sales under the controlled equity offering sales agreement, as amended, are being effected under the 2014 Prospectus. | |||||
Under the controlled equity offering sales agreement, as amended, the agent may sell shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on NYSE MKT, or any other existing trading market for our common stock or to or through a market maker. Subject to the terms and conditions of that agreement, the agent will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of NYSE MKT, to sell shares from time to time based upon our instructions. We are not obligated to sell any shares under the arrangement. We are obligated to pay the agent a commission of 3.0% of the aggregate gross proceeds from each sale of shares under the arrangement. | |||||
As of March 31, 2015, shares having an aggregate offering price of $3.0 million remained available under the controlled equity offering sales agreement, as amended. During the quarter ended March 31, 2015, we did not sell any shares of our common stock under this arrangement. | |||||
Loan Agreement with GE Capital | |||||
On March 30, 2012, we entered into a Loan Agreement with GE Capital. The Loan Agreement provides for a senior secured debt facility including a $2.5 million term loan and a revolving line of credit of up to $5.0 million based on our outstanding qualified accounts receivable. On March 30, 2012, the term loan was funded for an aggregate amount of $2.5 million. | |||||
Under the terms of the revolving line of credit, the Company may draw down from the revolving line of credit up to 85% of qualified billed accounts receivable and 80% of qualified unbilled accounts receivable. As of March 31, 2015, the total amount available to draw was approximately $4.8 million, of which none was drawn and outstanding. | |||||
The fixed interest rate on the term loan is 10.14% per annum. The revolving line of credit has an adjustable interest rate based upon the 3-month London Interbank Offered Rate (“LIBOR”), with a floor of 1.5%, plus 5%. As of March 31, 2015, the interest rate was 6.5%. Both the term loan and the revolving line of credit mature in September 2015. Payments on the term loan were originally interest-only for the first 10 months (which was extended to 12 months pursuant to terms of the agreement); subsequently, the term loan began fully amortizing over its remaining term. Remaining principal payments on the term loan are scheduled as follows: | |||||
Year | Principal Payments | ||||
2015 | $ | 500,008 | |||
The term loan, net of discount less than $2,000, is recorded on the accompanying unaudited condensed consolidated balance sheet as of March 31, 2015 as follows: | |||||
Current portion of long-term debt | $ | 498,203 | |||
If we prepay the term loan and terminate the revolving line of credit prior to the scheduled maturity date, we are obligated to pay a prepayment premium equal to 2% of the then outstanding principal amount of the term loan. In addition, we are obligated to pay a final payment fee of 3% of the term loan balance. The final payment fee is being accrued and expensed over the term of the agreement, using the effective interest method and is included in other short-term liabilities on the unaudited condensed consolidated balance sheets. | |||||
Our obligations under the Loan Agreement are collateralized by a security interest in substantially all of our assets. While the security interest does not, except in limited circumstances, cover our intellectual property, it does cover any proceeds received by us from the use or sale of our intellectual property. | |||||
In connection with the Loan Agreement, we issued to GE Capital warrants to purchase 46,584 shares of the Company's common stock at an exercise price of $1.61 per share. The warrants are exercisable immediately and subject to customary and standard anti-dilution adjustments. The warrants are classified in equity and, as a result, the fair value of the warrants was charged to additional paid-in capital resulting in a debt discount at the date of issuance. The debt discount is being amortized over the term of the loan agreement using the effective interest method. Financing costs incurred in connection with this agreement are also being amortized over the term of the agreement using the effective interest method. | |||||
We currently owe GE Capital an aggregate of approximately $0.5 million under the GE Loan Agreement. As a result of the receipt of the notice that we received from BARDA on April 4, 2014 advising us of its decision to de-scope the current SparVax® anthrax vaccine contract through a partial termination for convenience, GE Capital could assert that there has occurred an event of default under the GE Loan Agreement, which would allow GE Capital to terminate the commitment and the loans under the GE Loan Agreement and declare any or all of the obligations thereunder to be immediately due and payable. We have not received notice from GE Capital that an event of default has occurred. | |||||
The Company determined that the fair value of the term loan approximated its carrying value as of March 31, 2015 based on market comparables and is in Level Two of the fair value hierarchy. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policy) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||
Our unaudited condensed consolidated financial statements include the accounts of PharmAthene, Inc. and its wholly-owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation. Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The condensed consolidated balance sheet at December 31, 2014 has been derived from audited consolidated financial statements at that date. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC. We currently operate in one business segment. | |||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Our unaudited condensed consolidated financial statements include significant estimates for our share-based compensation and the value of our financial instruments, among other things. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates. | |||||||||||||
Foreign Currency Translation | Foreign Currency Translation | ||||||||||||
The functional currency of our wholly owned foreign subsidiary is its local currency. Assets and liabilities of our foreign subsidiary are translated into United States dollars based on the exchange rate at the end of the reporting period. Income and expense items are translated at the weighted average exchange rates prevailing during the reporting period. Translation adjustments for subsidiaries that have not been sold, substantially liquidated or otherwise disposed of, are accumulated in other comprehensive loss, a component of stockholders' equity. Foreign currency translation adjustments are the sole component of accumulated other comprehensive loss at March 31, 2015 and December 31, 2014. Transaction gains or losses are included in the determination of net income (loss). | |||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||
Cash and cash equivalents are stated at market value. We consider all highly liquid investments with original maturities of three months or less to be cash equivalents, which, among other things, consist of investments in money market funds with financial institutions. The Company maintains cash balances with financial institutions in excess of insured limits. The Company does not anticipate any losses on such cash balances. | |||||||||||||
Revolving Line of Credit and Term Loan | Revolving Line of Credit and Term Loan | ||||||||||||
As discussed further in Note 6- Financing Transactions, we entered into a loan agreement with General Electric Capital Corporation (“GE Capital”) in March 2012. As part of that agreement, we issued stock purchase warrants to GE Capital that expire in March 2022. The fair value of the warrants was charged to additional paid-in-capital, resulting in a debt discount to the term loan at the date of issuance. The debt discount and the financing costs incurred in connection with the agreement are being amortized over the term of the loan using the effective interest method and are included in interest expense in the unaudited condensed consolidated statements of operations. | |||||||||||||
Significant Customers and Accounts Receivable | Significant Customers and Accounts Receivable | ||||||||||||
Our primary customers are BARDA, NIAID, and the Department of Defense Chemical Biological Medical Systems (“CBMS”). As of March 31, 2015, the Company's receivable balances (both billed and unbilled) were comprised primarily of receivables from BARDA and NIAID. For the year ending December 31, 2014, the Company's billed and unbilled receivable balances were comprised solely of receivables from BARDA and CBMS. | |||||||||||||
Goodwill | Goodwill | ||||||||||||
Goodwill represents the excess of purchase price over the fair value of net identifiable assets associated with acquisitions. We review the recoverability of goodwill annually at the end of our fiscal year and whenever events or changes in circumstances indicate that it is more likely than not that impairment exists. Recoverability of goodwill is reviewed by comparing our market value (as measured by our stock price multiplied by the number of outstanding shares as of the end of the year) to the net book value of our equity. If our market value exceeds our net book value, no further analysis is required. We completed our annual impairment assessment of goodwill on December 31, 2014 and determined that there was no impairment as of that date. Changes in our business strategy or adverse changes in market conditions could impact the impairment analyses and require the recognition of an impairment charge equal to the excess of the carrying value over its estimated fair value. | |||||||||||||
Restructuring Expense | Restructuring Expense | ||||||||||||
As a result of the Realignment Plan, we recorded approximately $2.1 million of restructuring expense during the quarter ended March 31, 2015, including approximately $2.0 million of related severance expense. | |||||||||||||
Financial Instruments | Financial Instruments | ||||||||||||
Our financial instruments, and/or embedded features contained in those instruments, often are classified as derivative liabilities and are recorded at their fair values. The determination of fair value of these instruments and features requires estimates and judgments. Some of our stock purchase warrants are considered to be derivative liabilities due to the presence of net settlement features and/or non-standard anti-dilution provisions; the fair value of our warrants is determined based on the Black-Scholes option pricing model. Use of the Black-Scholes option pricing model requires the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends. See Note 3- Fair Value Measurements for further details. | |||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||
We generate our revenue from different types of contractual arrangements: cost-plus-fee contracts and fixed price contracts. | |||||||||||||
Revenues on cost-plus-fee contracts are recognized in an amount equal to the costs incurred during the period plus an estimate of the applicable fee earned. The estimate of the applicable fee earned is determined by reference to the contract: if the contract defines the fee in terms of risk-based milestones and specifies the fees to be earned upon the completion of each milestone, then the fee is recognized when the related milestones are earned, as further described below; otherwise, we estimate the fee earned in a given period by using a proportional performance method based on costs incurred during the period as compared to total estimated project costs and application of the resulting fraction to the total project fee specified in the contract. | |||||||||||||
Under the milestone method of revenue recognition, milestone payments (including milestone payments for fees) contained in research and development arrangements are recognized as revenue when: (i) the milestones are achieved; (ii) no further performance obligations with respect to the milestone exist; (iii) collection is reasonably assured; and (iv) substantive effort was necessary to achieve the milestone. | |||||||||||||
Milestones are considered substantive if all of the following conditions are met: | |||||||||||||
• | it is commensurate with either our performance to meet the milestone or the enhancement of the value of the delivered item or items as a result of a specific outcome resulting from our performance to achieve the milestone, | ||||||||||||
• | it relates solely to past performance, and | ||||||||||||
• | the value of the milestone is reasonable relative to all the deliverables and payment terms (including other potential milestone consideration) within the arrangement. | ||||||||||||
If a milestone is deemed not to be substantive, the Company recognizes the portion of the milestone payment as revenue that correlates to work already performed using the proportional performance method; the remaining portion of the milestone payment is deferred and recognized as revenue as the Company completes its performance obligations. | |||||||||||||
Revenue on fixed price contracts (without substantive milestones as described above) is recognized on the percentage-of-completion method. The percentage-of-completion method recognizes income as the contract progresses (generally related to the costs incurred in providing the services required under the contract). The use of the percentage-of-completion method depends on the ability to make reasonable dependable estimates and the fact that circumstances may necessitate frequent revision of estimates does not indicate that the estimates are unreliable for the purpose for which they are used. | |||||||||||||
As a result of our revenue recognition policies and the billing provisions contained in our contracts, the timing of customer billings may differ from the timing of recognizing revenue. Amounts invoiced to customers in excess of revenue recognized are reflected on the balance sheet as deferred revenue. Amounts recognized as revenue in excess of amounts billed to customers are reflected on the balance sheet as unbilled accounts receivable. | |||||||||||||
Upon notice of termination of a contract from the government, all related termination costs are expensed. Revenue is recognized on the termination costs to the extent those costs are allowable and billable under the contract. Because the government may require an audit of incurred costs, revenue is recognized when the company is reasonably assured of collection. In March 2015, we recorded as revenue and invoiced the government $5.8 million costs incurred ranging from 2008 through 2013. | |||||||||||||
Share-Based Compensation | Share-Based Compensation | ||||||||||||
We expense the estimated fair value of share-based awards granted to employees, non-employee directors, and consultants under our stock compensation plans. The fair value of stock options granted to employees and non-employee directors is determined at the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of our stock price. The value of the award that is ultimately expected to vest is recognized as expense on a straight line basis over the employee's requisite service period. | |||||||||||||
The fair value of share-based awards granted to consultants is determined at the grant date using the Black-Scholes option pricing model and re-measured at each quarterly reporting date over their requisite service period. The value of awards that are ultimately expected to vest is recognized as expense on a straight-line basis over their requisite service period. | |||||||||||||
The fair value of restricted stock grants is determined based on the closing price of our common stock on the award date and is recognized as expense ratably over the requisite service period. | |||||||||||||
Share-based compensation expense recognized in the three months ended March 31, 2015 and 2014 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures at a rate of approximately 12%, based on historical forfeitures. | |||||||||||||
Share-based compensation expense for the three months ended March 31, 2015 and 2014 was: | |||||||||||||
Three months ended March 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Research and development | $ | 60,735 | $ | 189,917 | |||||||||
General and administrative | 192,633 | 338,961 | |||||||||||
Restructuring benefit | (53,741 | ) | - | ||||||||||
Total share-based compensation expense | $ | 199,627 | $ | 528,878 | |||||||||
As a result of the restructuring and termination of employees, we recognized approximately $75,000 of share-based compensation expense resulting from our agreement to extend the exercise period of the vested stock options for several of the executives who were terminated. In addition, approximately $129,000 of previously recognized share-based compensation expense was reversed for unvested stock options forfeited as a result of the restructuring and termination of employees. The $54,000 net reversal of share-based compensation expense is reflected in restructuring benefit in the above table. | |||||||||||||
During the three months ended March 31, 2015, we granted 12,000 options and 117,500 shares of restricted stock to employees. During the three months ended March 31, 2014, we granted 1,217,755 options to employees and consultants and made no restricted stock grants. At March 31, 2015, we had total unrecognized share-based compensation expense related to unvested awards of approximately $1.0 million net of estimated forfeitures, which we expect to recognize as expense over a weighted-average period of 2.6 years. | |||||||||||||
Income Taxes | Income Taxes | ||||||||||||
We account for income taxes using the asset and liability approach, which requires the recognition of future tax benefits or liabilities on the temporary differences between the financial reporting and tax bases of our assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. We also recognize a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. Our policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense. As of March 31, 2015 and December 31, 2014, we had recognized a full valuation allowance since the likelihood of realization of our tax deferred assets does not meet the more likely than not threshold. | |||||||||||||
Income tax expense was $0.02 million and $0.03 million during the three months ended March 31, 2015 and 2014, respectively relating exclusively to the generation of a deferred tax liability associated with the tax amortization of goodwill, which is included as a component of other long-term liabilities on our condensed consolidated balance sheets. The income tax expense results from the difference between the treatment of goodwill for income tax purposes and for U.S. GAAP. | |||||||||||||
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share | ||||||||||||
Income (loss) per share: Basic income (loss) per share is computed by dividing consolidated net income (loss) by the weighted average number of common shares outstanding during the period, excluding unvested restricted stock. | |||||||||||||
Our unvested restricted shares granted during the quarter contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; the calculation of basic and diluted earnings per share excludes from the numerator net income attributable to the unvested restricted shares, and excludes the impact of those shares from the denominator which is consistent with the two-class method in accordance with GAAP. | |||||||||||||
For periods of net income when the effects are not anti-dilutive, diluted earnings per share is computed by dividing our net income by the weighted average number of shares outstanding and the impact of all potential dilutive common shares, consisting primarily of stock options, unvested restricted stock and stock purchase warrants. The dilutive impact of our potentially dilutive common shares resulting from stock options and stock purchase warrants is determined by applying the treasury stock method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potentially dilutive common shares is anti-dilutive due to the net losses. | |||||||||||||
A reconciliation of the numerators and denominators of the basic and diluted per share computations for the three months ended March 31, 2015 is as follows (a reconciliation is not required for the 2014 quarter since the Company recorded a net loss for that period): | |||||||||||||
Three months ended | |||||||||||||
31-Mar-15 | |||||||||||||
Numerator | |||||||||||||
Net income | $ | 1,463,395 | |||||||||||
Net income allocated to participating securities | $ | (607 | ) | ||||||||||
Numerator for basic income per share | $ | 1,462,788 | |||||||||||
Incremental allocation of net income to participating securities | $ | 3 | |||||||||||
Change in fair value of dilutive warrants | $ | (185,774 | ) | ||||||||||
Numerator for diluted income per share | $ | 1,277,017 | |||||||||||
Denominator | |||||||||||||
Denominator for basic income per share Weighted average outstanding common shares | 63,633,290 | ||||||||||||
Dilutive effect of stock options | 327,020 | ||||||||||||
Dilutive effect of warrants | 19,550 | ||||||||||||
Denominator for diluted income per share | 63,979,859 | ||||||||||||
A total of approximately 4.9 million and 12.6 million potentially dilutive securities have been excluded in the calculation of diluted net income (loss) per share in the three months ended March 31, 2015 and 2014, respectively, because their inclusion would be anti-dilutive. | |||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers, or ASU 2014-09. Pursuant to this update an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this update are currently effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and are to be applied retrospectively, or on a modified retrospective basis. Early application is not permitted. On April 1, 2015, the FASB voted to propose to defer the effective date of ASU No. 2014-09 by one year. Under the proposal, ASU No. 2014-09 would be effective for fiscal years beginning after December 15, 2017, with early adoption permitted but not prior to the original effective date of annual periods beginning after December 15, 2016. The FASB plans to expose its decisions for a thirty day public comment period in a proposed ASU, which is expected to be issued during the second quarter of 2015. We are currently evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements. | |||||||||||||
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items, or ASU 2015-01. This update eliminates from GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement—Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. The Company concluded that the amendments in this update will not result in a loss of information because although the amendments will eliminate the requirements in Subtopic 225-20 for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We have not yet determined the impact of adoption on our consolidated financial statements. | |||||||||||||
In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest, or ASU 2015-03. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. We have not yet determined the impact of adoption on our consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||
Schedule of Share-based Compensation Expense | Share-based compensation expense for the three months ended March 31, 2015 and 2014 was: | ||||||||||||
Three months ended March 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Research and development | $ | 60,735 | $ | 189,917 | |||||||||
General and administrative | 192,633 | 338,961 | |||||||||||
Restructuring benefit | (53,741 | ) | - | ||||||||||
Total share-based compensation expense | $ | 199,627 | $ | 528,878 | |||||||||
Schedule of Basic and Diluted Earnings Per Share | A reconciliation of the numerators and denominators of the basic and diluted per share computations for the three months ended March 31, 2015 is as follows (a reconciliation is not required for the 2014 quarter since the Company recorded a net loss for that period): | ||||||||||||
Three months ended | |||||||||||||
31-Mar-15 | |||||||||||||
Numerator | |||||||||||||
Net income | $ | 1,463,395 | |||||||||||
Net income allocated to participating securities | $ | (607 | ) | ||||||||||
Numerator for basic income per share | $ | 1,462,788 | |||||||||||
Incremental allocation of net income to participating securities | $ | 3 | |||||||||||
Change in fair value of dilutive warrants | $ | (185,774 | ) | ||||||||||
Numerator for diluted income per share | $ | 1,277,017 | |||||||||||
Denominator | |||||||||||||
Denominator for basic income per share Weighted average outstanding common shares | 63,633,290 | ||||||||||||
Dilutive effect of stock options | 327,020 | ||||||||||||
Dilutive effect of warrants | 19,550 | ||||||||||||
Denominator for diluted income per share | 63,979,859 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value | The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis: | ||||||||||||||||
As of March 31, 2015 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Balance | ||||||||||||||
Assets | |||||||||||||||||
Investment in money market funds(1) | $ | 6,429,534 | $ | - | $ | - | $ | 6,429,534 | |||||||||
Total investment in money market funds | $ | 6,429,534 | $ | - | $ | - | $ | 6,429,534 | |||||||||
Liabilities | |||||||||||||||||
Current portion of derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 49,463 | $ | 49,463 | |||||||||
Non-current portion of derivative instruments related to stock purchase warrants | - | - | 419,971 | 419,971 | |||||||||||||
Total derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 469,434 | $ | 469,434 | |||||||||
As of December 31, 2014 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Balance | ||||||||||||||
Assets | |||||||||||||||||
Investment in money market funds(1) | $ | 6,429,104 | $ | - | $ | - | $ | 6,429,104 | |||||||||
Total investment in money market funds | $ | 6,429,104 | $ | - | $ | - | $ | 6,429,104 | |||||||||
Liabilities | |||||||||||||||||
Current portion of derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 178,509 | $ | 178,509 | |||||||||
Non-current portion of derivative instruments related to stock purchase warrants | - | - | 629,170 | 629,170 | |||||||||||||
Total derivative instruments related to stock purchase warrants | $ | - | $ | - | $ | 807,679 | $ | 807,679 | |||||||||
-1 | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. | ||||||||||||||||
Summary of Changes in Fair Value of Level 3 Liabilities | The following table sets forth a summary of changes in the fair value of the Company's Level 3 liabilities for the three months ended March 31, 2015 and 2014: | ||||||||||||||||
Balance as of | Unrealized | Balance as of | |||||||||||||||
December 31, | (Gains) | March 31, | |||||||||||||||
Description | 2014 | 2015 | 2015 | ||||||||||||||
Derivative liabilities related to stock purchase warrants | $ | 807,679 | $ | (338,245 | ) | $ | 469,434 | ||||||||||
Balance as of | Unrealized | Balance as of | |||||||||||||||
December 31, | (Gains) | March 31, | |||||||||||||||
Description | 2013 | 2014 | 2014 | ||||||||||||||
Derivative liabilities related to stock purchase warrants | $ | 1,740,235 | $ | (242,641 | ) | $ | 1,497,594 | ||||||||||
Schedule of Quantitative Information about Level 3 Fair Value Measurements | Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||
Fair Value at March 31, 2015 | Valuation Technique | Unobservable Inputs | |||||||||||||||
$ | 469,434 | Black-Scholes option pricing model | Expected term | ||||||||||||||
Expected dividends | |||||||||||||||||
Anticipated volatility |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Stockholders' Equity [Abstract] | |||||||||||
Summary of Warrants Outstanding | The warrants outstanding as of March 31, 2015, all of which are exercisable, were as follows: | ||||||||||
Number of Common Shares | Issue Date | Exercise Price | Expiration Date | ||||||||
Underlying Warrants As of | |||||||||||
31-Mar-15 | |||||||||||
100,778 | -1 | Mar-07 | $ | 3.97 | Mar-17 | ||||||
500,000 | -2 | Apr-10 | $ | 1.89 | Oct-15 | ||||||
903,996 | -2 | Jul-10 | $ | 1.63 | Jan-17 | ||||||
371,423 | -2 | Jun-11 | $ | 3.5 | Jun-16 | ||||||
46,584 | -1 | Mar-12 | $ | 1.61 | Mar-22 | ||||||
1,922,781 | |||||||||||
-1 | These warrants to purchase common stock are classified as equity. | ||||||||||
-2 | Because of the presence of net settlement provisions, these warrants to purchase common stock are classified as derivative liabilities. The fair value of these liabilities (See Note 3 – Fair Value Measurements ) is remeasured at the end of every reporting period and the change in fair value is reported in the accompanying unaudited condensed consolidated statements of operations as other income (expense). |
Financing_Transactions_Tables
Financing Transactions (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Financing Transactions [Abstract] | |||||
Principal Payments on the Term Loan | Year | Principal Payments | |||
2015 | $ | 500,008 | |||
Term Loan, Net of Debt Discount | The term loan, net of discount less than $2,000, is recorded on the accompanying unaudited condensed consolidated balance sheet as of March 31, 2015 as follows: | ||||
Current portion of long-term debt | $ | 498,203 |
Business_Liquidity_and_Organiz1
Business, Liquidity and Organization (Details) (USD $) | Mar. 31, 2015 | Mar. 09, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
Business, Liquidity and Organization [Abstract] | |||||
Expected severance cost | $2,000,000 | ||||
Accumulated deficit | -218,819,925 | -220,283,320 | |||
Cash and cash equivalents | 15,724,956 | 18,643,351 | 9,534,720 | 10,480,979 | |
Accounts receivable (billed and unbilled) | 6,600,000 | ||||
Liabilities current | 4,536,717 | 2,581,789 | |||
Additional Common Stock Aggregate Gross Sales available under the controlled equity offering arrangement | 3,000,000 | ||||
Current portion of long-term debt | $498,203 | $746,146 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Narrative) (Details) (USD $) | 3 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 09, 2015 | |
Significant Accounting Policies [Line Items] | ||||
Number of operating segment | 1 | |||
Restructuring expense | $2,060,809 | |||
Expected severance cost | 2,000,000 | |||
Share-based compensation expense, forfeitures rate | 12.00% | |||
Share-based compensation expense, extension of exercise period | 75,000 | |||
Share-based compensation, reversal from stock option forfeitures | 129,000 | |||
Net reversal of share-based compensation expense | 54,000 | |||
Stock options granted | 12,000 | 1,217,755 | ||
Restricted stock granted | 117,500 | |||
Unrecognized share-based compensation expense related to unvested awards, net of forfeitures | 1,000,000 | 1,000,000 | ||
Unrecognized share-based compensation expense related to unvested awards expected to be recognized in the period | 2 years 7 months 6 days | |||
Income tax expense | 19,805 | 29,705 | ||
Anti-dilutive securities excluded from computation of earnings per share | 4,900,000 | 12,600,000 | ||
Government Contract A [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Audited BARDA revenue | $5,800,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Schedule of Share-based Compensation Expense) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | $199,627 | $528,878 |
Research and development [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | 60,735 | 189,917 |
General and administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | 192,633 | 338,961 |
Restructuring benefit [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | ($53,741) |
Summary_of_Significant_Account5
Summary of Significant Account Policies (Schedule of Earnings Per Share) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator | ||
Net income | $1,463,395 | ($2,258,440) |
Net income allocated to participating securities | -607 | |
Numerator for basic income per share | 1,462,788 | |
Incremental allocation of net income to participating securities | 3 | |
Change in fair value of dilutive warrants | -185,774 | |
Numerator for diluted income per share | $1,277,017 | ($2,258,440) |
Denominator | ||
Denominator for basic income per share Weighted average outstanding common shares | 63,633,290 | 53,044,119 |
Dilutive effect of stock options | 327,020 | |
Dilutive effect of warrants | 19,550 | |
Denominator for diluted income per share | 63,979,859 | 53,044,119 |
Fair_Value_Measurements_Schedu
Fair Value Measurements (Schedule of Assets and Liabilities Measured at Fair Value) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
Liabilities | ||||
Non-current portion of derivative instruments related to stock purchase warrants | $419,971 | $629,170 | ||
Total derivative instruments related to stock purchase warrants | 469,434 | |||
Recurring [Member] | ||||
Assets | ||||
Investment in money market funds | 6,429,534 | [1] | 6,429,104 | [1] |
Total investment in money market funds | 6,429,534 | 6,429,104 | ||
Liabilities | ||||
Current portion of derivative instruments related to stock purchase warrants | 49,463 | 178,509 | ||
Non-current portion of derivative instruments related to stock purchase warrants | 419,971 | 629,170 | ||
Total derivative instruments related to stock purchase warrants | 469,434 | 807,679 | ||
Recurring [Member] | Level 1 [Member] | ||||
Assets | ||||
Investment in money market funds | 6,429,534 | [1] | 6,429,104 | [1] |
Total investment in money market funds | 6,429,534 | 6,429,104 | ||
Liabilities | ||||
Current portion of derivative instruments related to stock purchase warrants | ||||
Non-current portion of derivative instruments related to stock purchase warrants | ||||
Total derivative instruments related to stock purchase warrants | ||||
Recurring [Member] | Level 2 [Member] | ||||
Assets | ||||
Investment in money market funds | [1] | |||
Total investment in money market funds | ||||
Liabilities | ||||
Current portion of derivative instruments related to stock purchase warrants | ||||
Non-current portion of derivative instruments related to stock purchase warrants | ||||
Total derivative instruments related to stock purchase warrants | ||||
Recurring [Member] | Level 3 [Member] | ||||
Assets | ||||
Investment in money market funds | [1] | |||
Total investment in money market funds | ||||
Liabilities | ||||
Current portion of derivative instruments related to stock purchase warrants | 49,463 | 178,509 | ||
Non-current portion of derivative instruments related to stock purchase warrants | 419,971 | 629,170 | ||
Total derivative instruments related to stock purchase warrants | $469,434 | $807,679 | ||
[1] | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. |
Fair_Value_Measurements_Summar
Fair Value Measurements (Summary of Changes in Fair Value of Level 3 Liabilities) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Unrealized (Gains) | $338,245 | $242,641 |
Ending Balance | 469,434 | |
Level 3 [Member] | Warrants [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Beginning Balance | 807,679 | 1,740,235 |
Unrealized (Gains) | -338,245 | -242,641 |
Ending Balance | $469,434 | $1,497,594 |
Fair_Value_Measurements_Narrat
Fair Value Measurements (Narrative) (Details) (Level 3 [Member], Derivative Liabilities [Member]) | Mar. 31, 2015 | Mar. 31, 2014 |
Level 3 [Member] | Derivative Liabilities [Member] | ||
Fair Value Measurements [Line Items] | ||
Warrants to purchase common stock | 1,775,419 | 2,899,991 |
Fair_Value_Measurements_Schedu1
Fair Value Measurements (Schedule of Quantitative Information about Level 3 Fair Value Measurements) (Details) (USD $) | Mar. 31, 2015 |
Fair Value Measurements [Abstract] | |
Derivatives | $469,434 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | |
In Millions, unless otherwise specified | Jan. 15, 2015 | Jul. 31, 2009 | Mar. 31, 2015 | Apr. 30, 2015 | Jan. 07, 2015 |
Commitments and Contingencies [Line Items] | |||||
Amount of contract expectation damages | $113.10 | $113 | |||
Amount of award | 194.6 | ||||
Expert witness fees | 81.5 | ||||
Warrant expiration date | 28-Jan-15 | ||||
Initial Maximum Maintenance Failure Obligation [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Percentage of aggregate principal amount of convertible Notes | 1.00% | ||||
Aggregate principal amount of obligation | 0.2 | ||||
Every 30 days until failure is cured [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Percentage of aggregate principal amount of convertible Notes | 1.00% | ||||
Aggregate principal amount of obligation | 0.2 | ||||
BARDA [Member] | Subsequent Event [Member] | |||||
Commitments and Contingencies [Line Items] | |||||
Audited BARDA revenue | $5.80 |
Stockholders_Equity_Narrative_
Stockholders' Equity (Narrative) (Details) | 0 Months Ended | 3 Months Ended | |||
Jan. 28, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2008 | Dec. 31, 2007 | |
Stockholders Equity [Line Items] | |||||
Warrants issued to purchase shares of common stock | 1,922,781 | 5,620,128 | |||
Warrants [Member] | |||||
Stockholders Equity [Line Items] | |||||
Number of common shares expired underlying stock purchase warrants | 2,572,775 | ||||
2007 Long Term Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Common stock reserved | 4,600,000 | 3,500,000 | |||
Shares approved for issuance | 10,300,000 | ||||
Shares available for grant | 2,900,000 | ||||
Options award term | 10 years |
Stockholders_Equity_Schedule_o
Stockholders' Equity (Schedule of Warrants) (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2009 | Mar. 31, 2015 | Mar. 31, 2014 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number of Common Shares Underlying Warrants | 1,922,781 | 5,620,128 | ||
Expiration Date | 28-Jan-15 | |||
3.97 [Member] | Warrant [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number of Common Shares Underlying Warrants | 100,778 | [1] | ||
Issue Date | 1-Mar-07 | |||
Warrant, Exercise price | $3.97 | |||
Expiration Date | 1-Mar-17 | |||
1.89 [Member] | Derivative Instrument Warrants [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number of Common Shares Underlying Warrants | 500,000 | [2] | ||
Issue Date | 1-Apr-10 | |||
Warrant, Exercise price | $1.89 | |||
Expiration Date | 1-Oct-15 | |||
1.63 [Member] | Derivative Instrument Warrants [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number of Common Shares Underlying Warrants | 903,996 | [2] | ||
Issue Date | 1-Jul-10 | |||
Warrant, Exercise price | $1.63 | |||
Expiration Date | 1-Jan-17 | |||
3.50 [Member] | Derivative Instrument Warrants [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number of Common Shares Underlying Warrants | 371,423 | [2] | ||
Issue Date | 1-Jun-11 | |||
Warrant, Exercise price | $3.50 | |||
Expiration Date | 1-Jun-16 | |||
1.61 [Member] | Warrant [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number of Common Shares Underlying Warrants | 46,584 | [1] | ||
Issue Date | 1-Mar-12 | |||
Warrant, Exercise price | $1.61 | |||
Expiration Date | 1-Mar-22 | |||
[1] | These warrants to purchase common stock are classified as equity. | |||
[2] | Because of the presence of net settlement provisions, these warrants to purchase common stock are classified as derivative liabilities. The fair value of these liabilities (See Note 3 b Fair Value Measurements ) is remeasured at the end of every reporting period and the change in fair value is reported in the accompanying unaudited condensed consolidated statements of operations as other income (expense). |
Financing_Transactions_Control
Financing Transactions (Controlled Equity Offering) (Details) (USD $) | Mar. 31, 2015 | Mar. 25, 2013 | 23-May-14 |
In Millions, unless otherwise specified | |||
Equity Offering [Member] | |||
Equity Offering [Line Items] | |||
The maximum value of common stock issuable under the controlled equity offering arrangement | $15 | ||
Commission owed to sales agent, expressed as percentage of aggregate gross proceeds from each sale of shares of common stock | 3.00% | ||
Amount remaining available under controlled equity offering sale arrangement | 3 | ||
Amendment to the Controlled Equity Offering [Member] | |||
Equity Offering [Line Items] | |||
The maximum value of common stock issuable under the controlled equity offering arrangement | $15 |
Financing_Transactions_Loan_Ag
Financing Transactions (Loan Agreement with GE Capital) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 30, 2012 | |
Loans Payable [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, carrying amount | $2,500,000 | |
Fixed interest rate | 10.14% | |
Debt discount | 2,000 | |
Prepayment premium, if we prepay the term loan and terminate the revolving line of credit prior to the scheduled maturity date, percent | 2.00% | |
Final payment fee payable on term loan balance, percent | 3.00% | |
Warrants issued to purchase common stock, in connection with loan agreement | 46,584 | |
Warrant exercise price | $1.61 | |
Debt | 500,000 | |
Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | 5,000,000 | |
Line of credit facility borrowing capacity, qualified billed accounts receivable, percent | 85.00% | |
Line of credit facility borrowing capacity, qualified unbilled accounts receivable, percent | 80.00% | |
Current borrowing capacity | $4,800,000 | |
Adjustable interest rate, reference rate, floor percentage 1.5% | 1.50% | |
Loan payable, interest rate spread | 5.00% | |
Incremental borrowing rate used to calculate discount | 6.50% |
Financing_Transactions_Princip
Financing Transactions (Principal Payments on the Term Loan) (Details) (USD $) | Mar. 31, 2015 |
Financing Transactions [Abstract] | |
2015 | $500,008 |
Financing_Transactions_Term_Lo
Financing Transactions (Term Loan, Net of Debt Discount) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Financing Transactions [Abstract] | ||
Current portion of long-term debt | $498,203 | $746,146 |