Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 01, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Theravance Biopharma, Inc. | |
Entity Central Index Key | 1,583,107 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 47,851,848 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 148,363 | $ 112,707 |
Short-term marketable securities | 101,316 | 59,727 |
Accounts receivable, net of allowances of $1,238 and $758 at June 30, 2016 and December 31, 2015, respectively | 1,856 | 1,922 |
Receivables from collaborative arrangements | 35,080 | 35,232 |
Prepaid taxes | 3,150 | 12,764 |
Other prepaid and current assets | 3,550 | 5,115 |
Inventories | 9,810 | 10,005 |
Total current assets | 303,125 | 237,472 |
Property and equipment, net | 8,811 | 9,873 |
Long-term marketable securities | 52,316 | 42,860 |
Other investments | 8,000 | 8,000 |
Restricted cash | 833 | 833 |
Other assets | 1,403 | 1,078 |
Total assets | 374,488 | 300,116 |
Current liabilities: | ||
Accounts payable | 7,412 | 18,804 |
Accrued personnel-related expenses | 9,020 | 10,866 |
Accrued clinical and development expenses | 22,650 | 14,709 |
Other accrued liabilities | 4,913 | 4,947 |
Deferred revenue | 662 | 144 |
Total current liabilities | 44,657 | 49,470 |
Deferred rent | 4,369 | 4,598 |
Other long-term liabilities | 3,878 | 2,983 |
Commitments and contingencies (Note 9) | ||
Shareholders' equity | ||
Preferred shares, $0.00001 par value: 230 shares authorized, no shares issued or outstanding at June 30, 2016 and December 31, 2015, respectively | ||
Ordinary shares, $0.00001 par value: 200,000 shares authorized at June 30, 2016 and December 31, 2015; 47,853 and 37,981 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | ||
Additional paid-in capital | 732,334 | 564,691 |
Accumulated other comprehensive income (loss) | 181 | (70) |
Accumulated deficit | (410,931) | (321,556) |
Total shareholders' equity | 321,584 | 243,065 |
Total liabilities and shareholders' equity | $ 374,488 | $ 300,116 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Account receivable, allowance | $ 1,238 | $ 758 |
Preferred shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred shares, shares authorized | 230 | 230 |
Preferred shares, shares issued | 0 | 0 |
Preferred shares, outstanding shares | 0 | 0 |
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Ordinary shares, authorized shares | 200,000 | 200,000 |
Ordinary shares, shares issued | 47,853 | 37,981 |
Ordinary shares, outstanding shares | 47,853 | 37,981 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue: | ||||
Product sales | $ 5,359,000 | $ 2,124,000 | $ 8,670,000 | $ 3,404,000 |
Revenue from collaborative arrangements | 112,000 | 5,010,000 | 15,211,000 | 24,131,000 |
Total revenue | 5,471,000 | 7,134,000 | 23,881,000 | 27,535,000 |
Costs and expenses: | ||||
Cost of goods sold | 638,000 | 505,000 | 1,416,000 | 875,000 |
Research and development | 32,069,000 | 30,377,000 | 67,748,000 | 66,396,000 |
Selling, general and administrative | 20,261,000 | 21,545,000 | 43,857,000 | 43,293,000 |
Total costs and expenses | 52,968,000 | 52,427,000 | 113,021,000 | 110,564,000 |
Loss from operations | (47,497,000) | (45,293,000) | (89,140,000) | (83,029,000) |
Interest and other income | 308,000 | 204,000 | 495,000 | 414,000 |
Loss before income taxes | (47,189,000) | (45,089,000) | (88,645,000) | (82,615,000) |
Provision for income taxes | 36,000 | 2,514,000 | 730,000 | 7,463,000 |
Net loss | (47,225,000) | (47,603,000) | (89,375,000) | (90,078,000) |
Share-based compensation expense | $ 9,904,000 | $ 14,662,000 | $ 21,234,000 | $ 30,288,000 |
Net loss per share: | ||||
Basic and diluted net loss per share (in dollars per share) | $ (1.06) | $ (1.42) | $ (2.16) | $ (2.71) |
Shares used to compute basic and diluted net loss per share (in shares) | 44,407 | 33,532 | 41,366 | 33,183 |
Net unrealized gain (loss) on available-for-sale investments | $ 55,000 | $ (7,000) | $ 251,000 | $ 107,000 |
Total comprehensive loss | (47,170,000) | (47,610,000) | (89,124,000) | (89,971,000) |
Research and development | ||||
Costs and expenses: | ||||
Share-based compensation expense | 4,959,000 | 6,817,000 | 10,119,000 | 14,299,000 |
Selling, general and administrative | ||||
Costs and expenses: | ||||
Share-based compensation expense | $ 4,945,000 | $ 7,845,000 | $ 11,115,000 | $ 15,989,000 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Operating activities | ||
Net loss | $ (89,375) | $ (90,078) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,153 | 1,572 |
Share-based compensation | 21,234 | 30,289 |
Inventory write-down | 119 | 79 |
Excess tax benefits from share-based compensation | 0 | (240) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 66 | (516) |
Receivables from collaborative arrangements | 152 | (23,647) |
Prepaid taxes | 9,614 | (3,024) |
Other prepaid and current assets | 1,566 | (1,286) |
Inventories | 157 | 359 |
Other assets | 711 | (511) |
Accounts payable | (10,757) | (3,770) |
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities | 5,732 | (13,208) |
Deferred rent | (229) | (255) |
Deferred revenue | 905 | 385 |
Other long-term liabilities | 508 | 723 |
Net cash used in operating activities | (58,444) | (103,128) |
Investing activities | ||
Purchases of property and equipment | (1,322) | (1,367) |
Purchases of marketable securities | (91,382) | (11,059) |
Maturities of marketable securities | 40,514 | 95,879 |
Net cash (used in) provided by investing activities | (52,190) | 83,453 |
Financing activities | ||
Net proceeds from sale of ordinary shares | 145,224 | 27,310 |
Proceeds from ESPP purchases | 1,944 | 0 |
Proceeds from option exercise | 1,346 | 0 |
Excess tax benefits from share-based compensation | 0 | 240 |
Repurchase of shares to satisfy tax withholding | (2,224) | 0 |
Net cash provided by financing activities | 146,290 | 27,550 |
Net increase in cash and cash equivalents | 35,656 | 7,875 |
Cash and cash equivalents at beginning of period | 112,707 | 89,215 |
Cash and cash equivalents at end of period | 148,363 | 97,090 |
Supplemental disclosure of cash flow information | ||
Cash (received) paid for income taxes, net | $ (9,488) | $ 7,273 |
Description of Operations and S
Description of Operations and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Description of Operations and Summary of Significant Accounting Policies | |
Description of Operations and Summary of Significant Accounting Policies | 1. Description of Operations and Summary of Significant Accounting Policies Description of Operations Theravance Biopharma, Inc. (“Theravance Biopharma”, the “Company”, or “we” and other similar pronouns) is a diversified biopharmaceutical company with the core purpose of creating medicines that make a difference in the lives of patients suffering from serious illness. Our pipeline of internally discovered product candidates includes potential best-in-class medicines to address the unmet needs of patients being treated for serious conditions primarily in the acute care setting. VIBATIV ® (telavancin), our first commercial product, is a once-daily dual-mechanism antibiotic approved in the U.S., Europe and certain other countries for certain difficult-to-treat infections. Revefenacin (TD-4208) is a long-acting muscarinic antagonist (“LAMA”) being developed as a potential once-daily, nebulized treatment for chronic obstructive pulmonary disease (“COPD”). Our neprilysin (“NEP”) inhibitor program is designed to develop selective NEP inhibitors for the treatment of a range of major cardiovascular and renal diseases, including acute and chronic heart failure, hypertension and chronic kidney diseases such as diabetic nephropathy. Our research efforts are focused in the areas of inflammation and immunology, with the goal of designing medicines that provide targeted drug delivery to tissues in the lung and gastrointestinal tract in order to maximize patient benefit and minimize risk. The first program to emerge from this research is designed to develop GI-targeted pan-Janus kinases (“JAK”) inhibitors for the treatment of a range of inflammatory intestinal diseases. In addition, we have an economic interest in future payments that may be made by Glaxo Group Limited or one of its affiliates (“GSK”) pursuant to its agreements with Innoviva, Inc. (“Innoviva”) (known as Theravance, Inc. prior to January 7, 2016) relating to certain drug development programs, including the Closed Triple (the combination of fluticasone furoate, umeclidinium, and vilanterol), currently in development for the treatment of COPD and asthma. Basis of Presentation The Company’s condensed consolidated financial information as of June 30, 2016, and the three and six months ended June 30, 2016 and 2015 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which we consider necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2015 financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on March 11, 2016. Significant Accounting Policies There have been no material revisions in our significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-19’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. ASU 2014-09 was initially to be effective for interim and annual reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14 which delays the effective date of ASU 2014-09 by one year and allows for early adoption as of the original effective date. In March 2016, the FASB issued ASU 2016-08 which clarifies certain principal versus agent considerations under Topic 606 . In April 2016, the FASB issued ASU 2016-10 which clarifies Topic 606’s implementation guidance on identifying performance obligations in a contract and determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-12 which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The effective dates of ASU 2016-08, ASU 2016-10, and ASU 2016-12 are the same as the new effective date of ASU 2014-09 which is for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted as of the original effective date of ASU 2014-09. We currently do not anticipate an early adoption of the new revenue standards, and we are currently evaluating the impact that the adoption of the new revenue standards will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) . ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718) (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as equity or liabilities, an option to recognize gross share compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for all interim and annual reporting periods beginning after December 15, 2016 with early adoption permitted. We are currently evaluating the potential impact that the adoption of ASU 2016-09 will have on our consolidated financial statements and related disclosures. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815) (“ASU 2016-11”). With respect to Revenue Recognition ( Topic 605), ASU 2016-11 rescinds various standards codified as part of Revenue Recognition (Topic 605) in relation to the future adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . These rescissions include changes to topics pertaining to revenue and expense recognition for freight services in process, accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. ASU 2016-11 was effective immediately upon issuance and will be adopted when we adopt ASU 2014-09. We are currently evaluating the impact that the adoption of ASU 2016-11, specific to Topic 605 , will have on our consolidated financial statements and related disclosures. We do not believe ASU 2016-11, specific to Topic 815 , will have any material impact on our consolidated financial statements and related disclosures. |
Net Loss per Share
Net Loss per Share | 6 Months Ended |
Jun. 30, 2016 | |
Net Loss per Share | |
Net Loss per Share | 2. Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding, less ordinary shares subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding, less ordinary shares subject to forfeiture, plus all additional ordinary shares that would have been outstanding, assuming dilutive potential common shares had been issued for other dilutive securities. For the three and six months ended June 30, 2016 and 2015, diluted and basic net loss per share was identical since potential common shares were excluded from the calculation, as their effect was anti-dilutive. Anti-Dilutive Securities The following common equivalent shares were not included in the computation of diluted net loss per share because their effect was anti-dilutive: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Share issuances under equity incentive plan and ESPP Restricted shares |
Collaborative Arrangements
Collaborative Arrangements | 6 Months Ended |
Jun. 30, 2016 | |
Collaborative Arrangements | |
Collaborative Arrangements | 3. Collaborative Arrangements Revenue from Collaborative Arrangements We recognized the following revenues from our collaborative arrangements: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Mylan $ $ $ $ R-Pharm SciClone Pharmaceuticals Other Total revenue from collaborative arrangements $ $ $ $ Mylan Development and Commercialization Agreement In January 2015, we established a strategic collaboration with Mylan Ireland Limited (“Mylan”) for the development and, subject to regulatory approval, commercialization of revefenacin (TD-4208), our investigational LAMA in development for the treatment of COPD. We entered into this collaboration to expand the breadth of our revefenacin development program and extend our commercial reach beyond the acute care setting where we currently market VIBATIV. In the first quarter of 2015, upfront payments totaling $19.2 million from Mylan were allocated to the license and committee participation deliverables based on the relative selling price method. The $19.2 million consisted of the initial payment of $15.0 million in cash and the $4.2 million premium related to the equity investment, which represents the difference between the closing price on January 30, 2015 and the issued price of $18.918 per share. For the six months ended June 30, 2015, we recognized $19.1 million in revenue from the Mylan collaborative arrangement related primarily to the license and technological know-how delivered in the first quarter of 2015. For the three months ended June 30, 2016, we recognized $25,000 for the amortization of previously deferred revenue. For the six months ended June 30, 2016, we recognized $15.1 million in revenue, primarily related to the $15.0 million milestone payment received from Mylan for the achievement of 50% enrollment in the Phase 3 twelve-month safety study. Takeda Collaborative Arrangement In June 2016, we entered into a License and Collaboration Agreement (the “Takeda Agreement”) with Millennium Pharmaceuticals, Inc. (“Millennium”), in order to establish a collaboration for the development and commercialization of TD-8954, a selective 5-HT4 receptor agonist. Prior to the Takeda Agreement, the Company has developed TD-8954 for potential use in the treatment of gastrointestinal motility disorders, including short-term intravenous use for enteral feeding intolerance (“EFI”) to achieve early nutritional adequacy in critically ill patients at high nutritional risk, an indication for which the compound received U.S. Food and Drug Administration (“FDA”) Fast Track Designation. Millennium is an indirect wholly-owned subsidiary of Takeda Pharmaceutical Company Limited (TSE: 4502) (collectively with Millennium, “Takeda”). Under the terms of the Takeda Agreement, Takeda will be responsible for worldwide development and commercialization of TD-8954. We will receive an upfront cash payment of $15 million and will be eligible to receive success based development, regulatory and sales milestone payments by Takeda. The first $110 million of potential milestones are associated with the development, regulatory and commercial launch milestones for EFI or other intravenously dosed indications. We will also be eligible to receive a tiered royalty on worldwide net sales by Takeda at percentage royalty rates ranging from low double-digits to mid-teens. The transactions contemplated by the Takeda Agreement closed in the third quarter, following the expiration of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”). Upon closing and the subsequent transfer of the license and technical know-how, we have the right to receive an upfront payment of $15 million. Reimbursement of R&D Costs Under certain collaborative arrangements, we are entitled to reimbursement of certain R&D costs. Our policy is to account for the reimbursement payments by our collaboration partners as reductions to R&D expense. The following table summarizes the reductions to R&D expenses related to the reimbursement payments: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Mylan $ $ $ $ Alfa Wassermann SciClone — — R-Pharm Total reduction to R&D expense $ $ $ $ |
Available-for-Sale Securities a
Available-for-Sale Securities and Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Available-for-Sale Securities and Fair Value Measurements. | |
Available-for-Sale Securities and Fair Value Measurements | 4. Available-for-Sale Securities and Fair Value Measurements Our available-for-sale securities include: Fair Value Hierarchy Estimated Fair Value (In thousands) Level June 30, 2016 December 31, 2015 U.S. government securities Level 1 $ $ U.S. government agency securities Level 2 Corporate notes Level 2 Commercial paper Level 2 Marketable securities (including commercial paper classified as cash equivalents) Money market funds Level 1 Total $ $ The estimated fair value of marketable securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Net unrealized gains and losses were $0.2 million at June 30, 2016 and immaterial at December 31, 2015. At June 30, 2016, all of the marketable securities had contractual maturities within two years and the weighted average maturity of the marketable securities was approximately eight months. There were no transfers between Level 1 and Level 2 during the periods presented and there have been no changes to our valuation techniques during the three and six months ended June 30, 2016. We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We have determined that the gross unrealized losses on our marketable securities at June 30, 2016 were temporary in nature. All marketable securities with unrealized losses at June 30, 2016 have been in a loss position for less than twelve months. At June 30, 2016, our accumulated other comprehensive income (loss) on our condensed consolidated balance sheets consisted of net unrealized gains on available-for-sale investments. During the three and six months ended June 30, 2016, we did not sell any of our marketable securities. Restricted cash pertained to certain lease agreements and letters of credit where we have pledged cash and cash equivalents as collateral. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2016 | |
Inventories | |
Inventories | 5. Inventories Inventory consists of the following: (In thousands) June 30, 2016 December 31, 2015 Raw materials $ $ Work-in-process — Finished goods Total inventories $ $ |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Share-Based Compensation. | |
Share-Based Compensation | 6. Share-Based Compensation Share-Based Compensation Expense Allocation The allocation of share-based compensation expense included in the condensed consolidated statements of operations was as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Research and development $ $ $ $ Selling, general and administrative Total share-based compensation expense $ $ $ $ Total share-based compensation expense capitalized to inventory was not material for any of the periods presented. Performance-Contingent Awards In the first quarter of 2016, the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) approved the grant of 1,575,000 performance-contingent restricted share awards (“RSAs”) and 135,000 performance contingent restricted share units (“RSUs”) to senior management. These grants have dual triggers of vesting based upon the achievement of certain performance conditions over a five-year timeframe from 2016 to 2020 and continued employment, both of which must be satisfied in order for the awards to vest. Expense associated with these awards would be recognized during the years 2016 to 2020 depending on the probability of meeting the performance conditions. Compensation expense relating to awards subject to performance conditions is recognized if it is considered probable that the performance goals will be achieved. The probability of achievement will be reassessed at each reporting period. In August 2016, the Compensation Committee determined not to award credit for a performance condition that occurred in the second quarter of 2016, which for accounting purposes is treated as a modification of the vesting conditions of all outstanding awards. As a result of the modification, the vesting of the first tranche of the awards changed from probable of achievement to improbable. The vesting of the second and third tranches of the awards is still considered improbable of achievement. As a result of the modification, there is a new measurement date for the second and third tranches of the awards as of the modification date. While the total number of shares under the award did not change, the remeasurement of the awards results in a higher potential compensation charge for the awards because our share price had increased since the original measurement date. The revised maximum potential expense associated with the awards could be up to approximately $38.9 million (allocated as $16.7 million for research and development expense and $22.2 million for selling, general and administrative expense) if all of the performance conditions are achieved. In the second quarter of 2016, we recognized $0.7 million in share-based compensation expense related to our assessment of the probability that the performance conditions associated with the first tranche of these awards were considered to be probable of vesting. As of June 30, 2016, we determined that the remaining second and third tranches were improbable of vesting and, as a result, no compensation expense related to these tranches has been recognized for the quarter. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Income Taxes | 7. Income Taxes The income tax provision was $36,000 and $0.7 million for the three and six months ended June 30, 2016, respectively, although we incurred operating losses on a consolidated basis. The provision for income tax was primarily due to uncertain tax positions taken with respect to transfer pricing. No provision for income taxes has been recognized on undistributed earnings of our foreign subsidiaries because we consider such earnings to be indefinitely reinvested. We follow the accounting guidance related to accounting for income taxes which requires that a company reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. At June 30, 2016, our deferred tax assets were offset in full by a valuation allowance. We record liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. We include any applicable interest and penalties within the provision for income taxes in the condensed consolidated statements of operations. The difference between the Irish statutory rate and our effective tax rate is primarily due to the valuation allowance on deferred tax assets and the liabilities recorded for the uncertain tax position related to transfer pricing and tax credits. Our future income tax expense may be affected by such factors as changes in tax laws, our business, regulations, tax rates, interpretation of existing laws or regulations, the impact of accounting for share-based compensation, the impact of accounting for business combinations, our international organization, shifts in the amount of income before tax earned in the U.S. as compared with other regions in the world, and changes in overall levels of income before tax. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity | |
Shareholders' Equity | 8. Shareholders’ Equity Ordinary Shares Issuance under At-the-Market Agreement Pursuant to a sales agreement with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”), we may issue and sell up to $50 million of our ordinary shares pursuant to an at-the-market offering program (“ATM Agreement”), under our shelf registration statement on Form S-3 effective in July 2015. Under the ATM Agreement, we pay Cantor Fitzgerald a commission rate of up to 3.0% of the gross proceeds from the sale of our ordinary shares. We engaged in sales of our ordinary shares under the ATM Agreement from March 17, 2016 to April 8, 2016. During this period, we sold approximately 770,000 shares at an average market price of $19.53 per share, resulting in aggregate net proceeds after offering costs of approximately $14.3 million. For the three and six months ended June 30, 2016, we sold approximately 490,000 and 770,000 shares, respectively. Public Offering of Ordinary Shares On May 4, 2016, we closed the sale of an aggregate of 5,479,750 of our ordinary shares, $0.00001 par value, at a public offering price of $21.00 per share. The shares were issued pursuant to a prospectus supplement filed with the SEC on April 28, 2016, in connection with a takedown from our shelf registration statement on Form S-3. We received net offering proceeds of approximately $107.9 million after deducting the underwriting discount and estimated offering expenses. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Guarantees and Indemnifications We indemnify our officers and directors for certain events or occurrences, subject to certain limits. We believe the fair value of these indemnification agreements is minimal. Accordingly, we have not recognized any liabilities relating to these agreements as of June 30, 2016. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events | |
Subsequent Events | 10. Subsequent Events Takeda Collaborative Arrangement The transactions contemplated by the Takeda Agreement closed in the third quarter, following the expiration of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”). Upon closing and the subsequent transfer of the license and technical know-how, we have the right to receive an upfront payment of $15 million. |
Description of Operations and16
Description of Operations and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Description of Operations and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company’s condensed consolidated financial information as of June 30, 2016, and the three and six months ended June 30, 2016 and 2015 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which we consider necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2015 financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on March 11, 2016. |
Significant Accounting Policies | Significant Accounting Policies There have been no material revisions in our significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-19’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. ASU 2014-09 was initially to be effective for interim and annual reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14 which delays the effective date of ASU 2014-09 by one year and allows for early adoption as of the original effective date. In March 2016, the FASB issued ASU 2016-08 which clarifies certain principal versus agent considerations under Topic 606 . In April 2016, the FASB issued ASU 2016-10 which clarifies Topic 606’s implementation guidance on identifying performance obligations in a contract and determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-12 which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The effective dates of ASU 2016-08, ASU 2016-10, and ASU 2016-12 are the same as the new effective date of ASU 2014-09 which is for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted as of the original effective date of ASU 2014-09. We currently do not anticipate an early adoption of the new revenue standards, and we are currently evaluating the impact that the adoption of the new revenue standards will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) . ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718) (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as equity or liabilities, an option to recognize gross share compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for all interim and annual reporting periods beginning after December 15, 2016 with early adoption permitted. We are currently evaluating the potential impact that the adoption of ASU 2016-09 will have on our consolidated financial statements and related disclosures. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815) (“ASU 2016-11”). With respect to Revenue Recognition ( Topic 605), ASU 2016-11 rescinds various standards codified as part of Revenue Recognition (Topic 605) in relation to the future adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . These rescissions include changes to topics pertaining to revenue and expense recognition for freight services in process, accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. ASU 2016-11 was effective immediately upon issuance and will be adopted when we adopt ASU 2014-09. We are currently evaluating the impact that the adoption of ASU 2016-11, specific to Topic 605 , will have on our consolidated financial statements and related disclosures. We do not believe ASU 2016-11, specific to Topic 815 , will have any material impact on our consolidated financial statements and related disclosures. |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Net Loss per Share | |
Schedule of anti-dilutive securities | Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Share issuances under equity incentive plan and ESPP Restricted shares |
Collaborative Arrangements (Tab
Collaborative Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Collaborative Arrangements | |
Schedule of revenue recognized from collaborative arrangements | Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Mylan $ $ $ $ R-Pharm SciClone Pharmaceuticals Other Total revenue from collaborative arrangements $ $ $ $ |
Summary of reductions to R&D costs related to the reimbursement payments | Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Mylan $ $ $ $ Alfa Wassermann SciClone — — R-Pharm Total reduction to R&D expense $ $ $ $ |
Available-for-Sale Securities19
Available-for-Sale Securities and Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Available-for-Sale Securities and Fair Value Measurements. | |
Schedule of available-for-sale securities | Fair Value Hierarchy Estimated Fair Value (In thousands) Level June 30, 2016 December 31, 2015 U.S. government securities Level 1 $ $ U.S. government agency securities Level 2 Corporate notes Level 2 Commercial paper Level 2 Marketable securities (including commercial paper classified as cash equivalents) Money market funds Level 1 Total $ $ |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventories | |
Schedule of inventories | (In thousands) June 30, 2016 December 31, 2015 Raw materials $ $ Work-in-process — Finished goods Total inventories $ $ |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Share-Based Compensation. | |
Schedule of share-based compensation expense included in the condensed consolidated statements of operations | Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Research and development $ $ $ $ Selling, general and administrative Total share-based compensation expense $ $ $ $ |
Net Loss per Share (Details)
Net Loss per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 4,798 | 6,944 | 4,905 | 4,664 |
Share issuances under equity incentive plan and ESPP | ||||
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 3,310 | 6,684 | 3,417 | 4,404 |
RSAs | ||||
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 1,488 | 260 | 1,488 | 260 |
Collaborative Arrangements - Re
Collaborative Arrangements - Revenue from Collaborative Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Collaborative Arrangements | ||||
Total revenue from collaborative arrangements | $ 112 | $ 5,010 | $ 15,211 | $ 24,131 |
Mylan | ||||
Collaborative Arrangements | ||||
Total revenue from collaborative arrangements | 25 | 25 | 15,051 | 19,124 |
R-Pharm | ||||
Collaborative Arrangements | ||||
Total revenue from collaborative arrangements | 18 | 2,009 | 27 | 2,031 |
SciClone Pharmaceuticals | ||||
Collaborative Arrangements | ||||
Total revenue from collaborative arrangements | 2 | 2,950 | 4 | 2,950 |
Other | ||||
Collaborative Arrangements | ||||
Total revenue from collaborative arrangements | $ 67 | $ 26 | $ 129 | $ 26 |
Collaborative Arrangements - De
Collaborative Arrangements - Development and Commercialization Agreement (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Feb. 28, 2015 | |
Collaborative Arrangements | ||||||
Revenue from collaborative arrangements | $ 112,000 | $ 5,010,000 | $ 15,211,000 | $ 24,131,000 | ||
Mylan | ||||||
Collaborative Arrangements | ||||||
Revenue from collaborative arrangements | 25,000 | $ 25,000 | 15,051,000 | $ 19,124,000 | ||
Amortization of previously deferred revenue | $ 25,000 | |||||
Milestone payment(s) received | $ 15,000,000 | |||||
Achievement in enrollment (as a percent) | 50.00% | |||||
Mylan | Purchase Agreement | ||||||
Collaborative Arrangements | ||||||
Share Price | $ 18.918 | |||||
Premium proceeds from sale of ordinary shares | $ 4,200,000 | |||||
Mylan | Development and Commercialization Agreement | ||||||
Collaborative Arrangements | ||||||
Initial cash payment | 15,000,000 | |||||
Payments received | $ 19,200,000 |
Collaborative Arrangements - Ta
Collaborative Arrangements - Takeda Collaborative Arrangement (Details) - Takeda Collaborative Arrangement - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Jun. 30, 2016 | Sep. 30, 2016 | |
Collaborative Arrangements | ||
Required upfront payment | $ 15 | |
Potential milestones associated with development, regulatory and commercial launch milestones for EFI | $ 110 | |
Subsequent Events. | ||
Collaborative Arrangements | ||
Required upfront payment | $ 15 |
Collaborative Arrangements - 26
Collaborative Arrangements - Reimbursement of R&D Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Total reduction to R&D expense | $ 28,682 | $ 12,254 | $ 61,053 | $ 16,808 |
Mylan | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Total reduction to R&D expense | 25,971 | 11,610 | 57,144 | 15,742 |
Alfa Wassermann | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Total reduction to R&D expense | 2,601 | 367 | 3,786 | 789 |
SciClone Pharmaceuticals | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Total reduction to R&D expense | 98 | 0 | 98 | 0 |
R-Pharm | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Total reduction to R&D expense | $ 12 | $ 277 | $ 25 | $ 277 |
Available-for-Sale Securities27
Available-for-Sale Securities and Fair Value Measurements (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Marketable securities | ||
Marketable securities (including commercial paper classified as cash equivalents) | $ 212,708 | $ 102,587 |
Total | 283,981 | 171,713 |
Net unrealized gains and losses | $ 200 | |
Maturity period for marketable securities | ||
Maximum contractual maturity period | 2 years | |
Weighted average contractual maturity period | 8 months | |
Fair value transfers | ||
Fair value of assets transferred from Level 1 to Level 2 | $ 0 | |
Fair value of assets transferred from Level 2 to Level 1 | 0 | |
Fair value of liabilities transferred from Level1 to Level2 | 0 | |
Fair value of liabilities transferred from Level 2 to Level 1 | 0 | |
Level 1 | ||
Marketable securities | ||
Money market funds | 71,273 | 69,126 |
U.S. government securities | Level 1 | ||
Marketable securities | ||
Marketable securities (including commercial paper classified as cash equivalents) | 52,227 | 47,043 |
U.S. government agencies securities | Level 2 | ||
Marketable securities | ||
Marketable securities (including commercial paper classified as cash equivalents) | 44,381 | 31,465 |
Corporate notes | Level 2 | ||
Marketable securities | ||
Marketable securities (including commercial paper classified as cash equivalents) | 24,173 | 19,089 |
Commercial paper | Level 2 | ||
Marketable securities | ||
Marketable securities (including commercial paper classified as cash equivalents) | $ 91,927 | $ 4,990 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Inventories | ||
Raw materials | $ 5,811 | $ 6,869 |
Work-in-process | 1,838 | 0 |
Finished goods | 2,161 | 3,136 |
Total inventories | $ 9,810 | $ 10,005 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Aug. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2016 | |
Share-Based Compensation | ||||||
Share-based compensation expense | $ 9,904 | $ 14,662 | $ 21,234 | $ 30,288 | ||
Research and development | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | 4,959 | 6,817 | 10,119 | 14,299 | ||
Selling, general and administrative | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | 4,945 | $ 7,845 | $ 11,115 | $ 15,989 | ||
Performance-Contingent | First tranche | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | 700 | |||||
Performance-Contingent | Second and third tranches | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | $ 0 | |||||
Performance-Contingent | Potential planned | Research and development | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | $ 16,700 | |||||
Performance-Contingent | Potential planned | Selling, general and administrative | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | 22,200 | |||||
Performance-Contingent | Senior management | ||||||
Share-Based Compensation | ||||||
Vesting period | 5 years | |||||
RSAs | Performance-Contingent | Senior management | ||||||
Share-Based Compensation | ||||||
Shares approved for grant (in shares) | 1,575,000 | |||||
RSUs | Performance-Contingent | Senior management | ||||||
Share-Based Compensation | ||||||
Shares approved for grant (in shares) | 135,000 | |||||
Maximum | Performance-Contingent | Potential planned | ||||||
Share-Based Compensation | ||||||
Share-based compensation expense | $ 38,900 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Taxes | ||||
Provision for income taxes | $ 36,000 | $ 2,514,000 | $ 730,000 | $ 7,463,000 |
Provision for income taxes on undistributed earnings | $ 0 | $ 0 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | May 04, 2016 | Apr. 08, 2016 | Jul. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Shareholders' Equity | |||||||
Net proceeds from sale of ordinary shares | $ 145,224 | $ 27,310 | |||||
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||
At-the-Market Agreement | |||||||
Shareholders' Equity | |||||||
Sale of ordinary shares (in shares) | 770,000 | 490,000 | 770,000 | ||||
Net proceeds from sale of ordinary shares | $ 14,300 | ||||||
At-the-Market Agreement | Average | |||||||
Shareholders' Equity | |||||||
Share price (in dollars per share) | $ 19.53 | ||||||
Prospectus supplement filed with SEC on April 28, 2016 | |||||||
Shareholders' Equity | |||||||
Sale of ordinary shares (in shares) | 5,479,750 | ||||||
Share price (in dollars per share) | $ 21 | ||||||
Net proceeds from sale of ordinary shares | $ 107,900 | ||||||
Ordinary shares, par value (in dollars per share) | $ 0.00001 | ||||||
Cantor Fitzgerald & Co | At-the-Market Agreement | Maximum | |||||||
Shareholders' Equity | |||||||
Net proceeds from sale of ordinary shares | $ 50,000 | ||||||
Sales agent and underwriter commission rate (as a percent) | 3.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Takeda Collaborative Arrangement - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Jun. 30, 2016 | Sep. 30, 2016 | |
Subsequent Events | ||
Required upfront payment | $ 15 | |
Subsequent Events. | ||
Subsequent Events | ||
Required upfront payment | $ 15 |