Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 07, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | APVO | |
Entity Registrant Name | APTEVO THERAPEUTICS INC. | |
Entity Central Index Key | 1,671,584 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 22,669,405 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 7,228 | $ 7,095 |
Short-term investments | 37,503 | 73,688 |
Accounts receivable | 6,145 | 2,141 |
Inventories | 2,970 | 1,028 |
Prepaid expenses | 4,863 | 4,022 |
Other current assets | 7,138 | 6,710 |
Restricted cash | 400 | 400 |
Total current assets | 66,247 | 95,084 |
Restricted cash, net of current portion | 12,447 | 10,000 |
Property and equipment, net | 5,638 | 5,843 |
Intangible assets, net | 5,665 | 6,080 |
Total assets | 89,997 | 117,007 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 9,535 | 7,350 |
Accrued compensation | 2,685 | 4,626 |
Sales rebates and discounts payable | 953 | 623 |
Current portion of long-term debt | 4,167 | 3,333 |
Other short-term liabilities | 762 | 2,578 |
Total current liabilities | 18,102 | 18,510 |
Long-term debt, net | 15,400 | 15,728 |
Other liabilities | 465 | 734 |
Total liabilities | 33,967 | 34,972 |
Stockholders' equity: | ||
Preferred stock: $0.001 par value; 15,000,000 shares authorized, zero shares issued or outstanding | ||
Common stock: $0.001 par value; 500,000,000 shares authorized; 22,667,873 and 21,605,716 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 23 | 22 |
Additional paid-in capital | 156,760 | 155,837 |
Accumulated other comprehensive loss | (36) | (105) |
Accumulated deficit | (100,717) | (73,719) |
Total stockholders' equity | 56,030 | 82,035 |
Total liabilities and stockholders' equity | $ 89,997 | $ 117,007 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 22,667,873 | 21,605,716 |
Common stock, shares outstanding | 22,667,873 | 21,605,716 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 6,826 | $ 3,526 | $ 10,897 | $ 5,668 |
Costs and expenses: | ||||
Cost of product sales | 2,534 | 2,968 | 4,315 | 1,241 |
Research and development | 9,713 | 6,787 | 17,912 | 12,660 |
Selling, general and administrative | 7,023 | 8,420 | 14,616 | 18,547 |
Loss from operations | (12,444) | (14,649) | (25,946) | (26,780) |
Other expense from continuing operations | (711) | (514) | (1,118) | (920) |
Loss before income taxes | (13,155) | (15,163) | (27,064) | (27,700) |
Benefit from income taxes | 996 | 1,819 | ||
Net loss from continuing operations | (13,155) | (14,167) | (27,064) | (25,881) |
Discontinued operations (Note 2): | ||||
Income from discontinued operations, before income taxes | 11 | 3,974 | 65 | 6,566 |
Income tax expense | (996) | (1,819) | ||
Income from discontinued operations | 11 | 2,978 | 65 | 4,747 |
Net loss | $ (13,144) | $ (11,189) | $ (26,999) | $ (21,134) |
Basic net loss per share: | ||||
Net loss from continuing operations | $ (0.58) | $ (0.67) | $ (1.21) | $ (1.23) |
Net income from discontinued operations | 0.14 | 0.22 | ||
Net loss | $ (0.58) | $ (0.53) | $ (1.21) | $ (1.01) |
Weighted-average shares used to compute per share calculations | 22,588,334 | 21,265,599 | 22,308,356 | 21,012,760 |
Product sales | ||||
Revenues: | ||||
Total revenues | $ 6,826 | $ 3,512 | $ 10,897 | $ 5,626 |
Collaborations | ||||
Revenues: | ||||
Total revenues | $ 14 | $ 42 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (13,144) | $ (11,189) | $ (26,999) | $ (21,134) |
Other comprehensive loss: | ||||
Unrealized gain (loss) on available-for-sale investments, net | 47 | (6) | 69 | (14) |
Total comprehensive loss | $ (13,097) | $ (11,195) | $ (26,930) | $ (21,148) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating Activities | ||
Net loss | $ (26,999) | $ (21,134) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 1,166 | 2,779 |
Depreciation and amortization | 1,187 | 1,716 |
Non-cash interest expense | 506 | 459 |
Other | (28) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,004) | (1,232) |
Inventories | (1,942) | (1,467) |
Prepaid expenses and other current assets | (1,360) | (301) |
Accounts payable, accrued compensation and other liabilities | (1,510) | (5,139) |
Assets and liabilities held for sale | (217) | |
Net cash used in operating activities | (32,984) | (24,536) |
Investing Activities | ||
Proceeds from the maturity of investments | 52,843 | 29,189 |
Cash received from sale of Hyperimmune Business | 65 | |
Purchases of property and equipment | (567) | (970) |
Purchases of investments | (16,534) | (10,279) |
Net cash provided by investing activities | 35,807 | 17,940 |
Financing Activities | ||
Settlement of contribution receivable from former parent | 20,000 | |
Common stock issued upon exercise of stock options | 564 | |
Payment of tax liability for vested equity awards | (807) | (811) |
Net cash (used in) provided by financing activities | (243) | 19,189 |
Increase in cash, cash equivalents, and restricted cash | 2,580 | 12,593 |
Cash, cash equivalents, and restricted cash at beginning of period | 17,495 | 10,076 |
Cash, cash equivalents, and restricted cash at end of period | $ 20,075 | $ 22,669 |
Nature of Business and Signific
Nature of Business and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Business and Significant Accounting Policies | Note 1. Nature of Business and Significant Accounting Policies Organization and Basis of Presentation Aptevo Therapeutics Inc. (Aptevo, we, us, or the Company) is a biotechnology company focused on novel oncology (cancer) and hematology (blood disease) therapeutics to meaningfully improve patients’ lives. Our core technology is the ADAPTIR (modular protein technology) platform. We currently have one revenue-generating product in the area of hematology, IXINITY, as well as various investigational stage product candidates in the areas of immuno-oncology and autoimmune and inflammatory diseases. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). These condensed consolidated financial statements include all adjustments, which include normal recurring adjustments, necessary for the fair presentation of the Company’s financial position. We are currently trading on the Nasdaq Global Market under the symbol “APVO.” On September 28, 2017, Aptevo completed the sale of its hyperimmune business which consisted of the following products: WinRho ® SDF for autoimmune platelet disorder and hemolytic disease of the newborn; HepaGam B ® for the prevention of Hepatitis B following liver transplantation and for treatment following hepatitis B exposure; and VARIZIG ® for treatment following exposure to varicella zoster virus for individuals with compromised immune systems (Hyperimmune Business) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Accounts Receivable Aptevo records accounts receivable net of an allowance for doubtful accounts based upon its assessment of collectability, and of applicable discounts. Aptevo performs ongoing credit evaluations of its customers and generally does not require collateral. Revenue Recognition Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customers. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and identify, as a performance obligation, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Product Revenue, Net Aptevo has one marketed commercial product, IXINITY, a coagulation factor IX (recombinant) therapeutic indicated in adults and children 12 years of age and older with hemophilia B for control and prevention of bleeding episodes, and management of bleeding during operations. We sell IXINITY to a limited number of specialty distributors in the United States, collectively, our customers. These customers subsequently resell IXINITY to health care providers and patients. Revenue from product sales are recognized when the customer obtains control of the IXINITY product. Our customers provide us with a new order for every purchase of goods. This incorporates the terms and conditions of the contract, including pricing. Acceptance of the order is the point at which we are obligated to provide the product, and we have determined that each order represents a unique performance obligation. Product revenue is recorded at the amount we expect to receive, which is net of any rebates or chargebacks. Reserves for Variable Consideration We have identified the following fees, discounts and rebates that result in consideration being variable: chargebacks, distributor and Government Purchasing Organizations (GPO) fees, government rebates, return rights, and patient assistance. As part of determining variable consideration we noted that although the distributors are our customers, there are additional indirect customers in the distribution chain to whom we make payments. These indirect customers are not customers; however, unless a distinct good or service is provided to us, payments to these indirect customers need to be accounted for as a reduction in the transaction price, and therefore constitute an element of variable consideration, under Topic 606. Further, if material, we would also account for returns as variable consideration. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. We have established reserves for the following types of variable consideration: Chargebacks: We make payments to customers (in the form of credit memos) which are based on the difference between the price paid by the distributor and contracted prices paid by the authorized customers of the distributor. Specialty pharmacies, GPOs and other smaller specialty distributors buy the product from the distributors at prices agreed to in contracts with us, or if they are eligible, at government established prices (PHS/Medicaid/Medicare/VA prices). When the distributor sells the product at contracted prices lower than their acquisition price, the distributor is allowed to charge the difference between their price and the contract price paid by their customer to Aptevo. We referred to this as a “Chargeback”. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by Customers, and we generally issue credits for such amounts within a few weeks of the Customer’s notification to us of the resale. Reserves for chargebacks consist of credits we expect to issue for units that remain in the distribution channel inventories at each reporting period end that we expect will be sold to qualified healthcare providers, and chargebacks that Customers have claimed but for which we have not yet issued a credit. Distribution and Data Fees – We pay fees (in the form of direct payments) to the distributors and some GPOs (indirect customers) for distribution of the products and for transmission of data. Fees owed to our distributors is based on their purchases and is calculated as a direct percent of quarterly purchases. Although fees can vary from distributor to distributor, the fees associated with a specific sale is known at the time of the sale. Fees owed to GPOs are determined based on history, and other factors such as contracting strategy or a shift in sales to certain channels which may impact the provider mix. Government Rebates: Certain sales by the specialty pharmacies and GPOs are to qualified PHS/Medicaid/Medicare/VA and other government patients. We have contracts with these agencies that require rebates for sales made under these programs. We estimate our Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included in accrued expenses on the consolidated balance sheet. For Medicare, we also estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel inventories at period end. Commercial Rebates: We currently offer the option to receive a rebate based on volume thresholds. This discount is estimated at the time of the sale and is based on the terms of the Customer agreements. There are minimum volume requirements in order to receive this rebate, which varies per Customer. Cash Discounts: All customers have the option to receive a cash discount for early payment. Currently cash discounts are two-percent of the invoice amount if the payment is made within ten days. Patient Assistance: All patients are eligible for the IXINITY Savings Program, which provides for up to $12,000 annual benefit to assist with co-payments. Historically, this has been insignificant to our revenue as the total benefit provided since sales of IXINITY commenced in 2015 has been less than $0.1 million. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at period end. Returns: If product is damaged in shipment (either observable or hidden), or the incorrect number of units was shipped (for example, if the customer ordered 1 unit and 10 were shipped) these are allowable returns under our Return Policy (a component of the distributor agreements). However, as product is generally received by the distributors within 1 business day, and product damage is usually noted upon inspection, we would not recognize revenue on those shipments as part of our normal revenue recognition process. To date there has not been any such damaged product and we expect any such issues to be rare; however, if returns were to become significant a reserve estimate would be developed and accounted for as a reduction of revenue. See Note 11 – Revenue Reserves for additional information. Reclassifications Our financial statements reflect all adjustments that we consider to be necessary for the fair presentation of our results, due to changes in accounting policies, sale of our Hyperimmune Business, and the reclassification of restricted cash. Income Taxes Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and research and development tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Aptevo’s ability to realize deferred tax assets depends upon future taxable income as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. Aptevo considers future taxable income and ongoing tax planning strategies in assessing the need for valuation allowances. In general, if Aptevo determines that it is more likely than not to realize more than the recorded amounts of net deferred tax assets in the future, Aptevo will reverse all or a portion of the valuation allowance established against its deferred tax assets, resulting in a decrease to the provision for income taxes in the period in which the determination is made. Likewise, if Aptevo determines that it is not more likely than not to realize all or part of the net deferred tax asset in the future, Aptevo will establish a valuation allowance against deferred tax assets, with an offsetting increase to the provision for income taxes, in the period in which the determination is made. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, Aptevo makes certain estimates and assumptions, in (1) calculating Aptevo’s income tax expense, deferred tax assets and deferred tax liabilities, (2) determining any valuation allowance recorded against deferred tax assets and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. Aptevo’s estimates and assumptions may differ significantly from tax benefits ultimately realized. New Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short term leases) at the commencement date. Lessor accounting under ASU 2016-02 is largely unchanged. ASU 2016-02 is effective for annual and interim periods beginning on or after December 15, 2018 and early adoption is permitted. Under ASU 2016-02, lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Lessees and lessors may not apply a full retrospective transition approach. The ASU will be effective for Aptevo starting on January 1, 2019 and we will apply the practical expedients thereby continuing to account for leases that commenced before the effective date in accordance with previous GAAP. We are continuing to evaluate the impact of the application of this ASU on our condensed consolidated financial statements and disclosures. We expect to recognize right of use assets and lease liabilities, primarily for our office building lease . In December 2017, the SEC issued Staff Accounting Bulletin (SAB) 118 to address the application of U.S. GAAP in situations in which a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act (the Tax Reform Act) which was signed into law on December 22, 2017. In March 2018, the FASB issued ASU 2018-05, which amended ASC 740 to incorporate the requirements of SAB 118. We recognized the provisional tax impacts of the Tax Reform Act in the fourth quarter of 2017. During the first six months of 2018, we did not receive any additional information regarding these provisional calculations. As a result, we continue to anticipate finalizing our analysis in connection with the completion of our tax return for 2017 to be filed in 2018. In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The new standard is effective on January 1, 2019, and early adoption is permitted, including in interim periods, and should be applied to all new awards granted after the date of adoption. We are currently assessing the potential impact this ASU will have on our consolidated results of operations, financial position, and cash flows. Recently Adopted Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has subsequently issued a number of amendments to ASU 2014-09. We adopted this standard effective January 1, 2018 on a modified retrospective basis. The new standard as amended, provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, included industry-specific guidance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted cash. This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents when reconciling the beginning-of and ending-of period total amounts shown on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We adopted this standard effective January 1, 2018. Upon adoption of this standard, we applied the retrospective transition method for each period presented. As a result of this adoption we adjusted our consolidated statement of cash flows to include $10.4 million of restricted cash at December 31, 2017 and $12.8 million in restricted cash at June 30, 2018. See Note 5 – Cash, cash equivalents, and restricted cash for additional information. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies the classification and presentation of eight specific cash flow issues in the statement of cash flows. We adopted this standard effective January 1, 2018. Adoption of this standard had no impact on our condensed consolidated statements of cash flows or related disclosures. |
Sale of Hyperimmune Business
Sale of Hyperimmune Business | 6 Months Ended |
Jun. 30, 2018 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Sale of Hyperimmune Business | Note 2. Sale of Hyperimmune Business On August 31, 2017, Aptevo entered into a sale agreement with Saol International Limited (Saol) whereby Aptevo agreed to sell its Hyperimmune Business At the closing of the sale, Saol paid an amount equal to $65.0 million, including $3.3 million which was deposited in an escrow account for the purposes of satisfying any indemnification claims brought by Saol pursuant to the LLC purchase agreement. In addition, Aptevo may receive (1) an additional potential milestone payment totaling up to $7.5 million related to the achievement of certain gross profit milestones and (2) up to $2.0 million related to collection of certain accounts receivable after the closing. The net gain on sale of the Hyperimmune Business Hyperimmune Business The following table represents the components attributable to the Hyperimmune Business presented as income from discontinued operations in the unaudited condensed consolidated statements of operations (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Revenues: Product sales $ — $ 7,238 $ — $ 12,506 Total revenues — 7,238 — 12,506 Costs and expenses: Cost of product sales — 2,929 — 5,143 Research and development — 1 — 41 Selling, general and administrative — 334 — 756 Income from operations — 3,974 — 6,566 Other income 11 — 65 — Income from discontinued operations, before income taxes 11 — 65 — Income tax expense — — — (1,819 ) Income from discontinued operations $ 11 $ 3,974 $ 65 $ 4,747 In the first half of 2018, we recorded $0.1 million due to the collection of certain accounts receivable transferred to Saol during the sale. Amortization for the Hyperimmune Business was $0.3 million for the three months ended June 30, 2017, and $0.6 million for the six months ended June 30, 2017. There was no depreciation, capital expenditures or other significant operating or investing non-cash items for the three and six months ended June 30, 2018. |
Collaboration Agreement
Collaboration Agreement | 6 Months Ended |
Jun. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Collaboration Agreement | Note 3. Collaboration Agreements Alligator On July 20, 2017, our wholly owned subsidiary Aptevo Research and Development LLC (Aptevo R&D), entered into a collaboration and option agreement (Collaboration Agreement) with Alligator Bioscience AB (Alligator), pursuant to which Aptevo and Alligator will collaboratively develop ALG.APV-527, a lead bispecific antibody candidate simultaneously targeting 4-1BB (CD137), a member of the TNFR superfamily of a costimulatory receptor found on activated T-cells, and 5T4, a tumor antigen widely overexpressed in a number of different types of cancer. This product candidate is built on our novel ADAPTIR platform, which is designed to expand on the utility and effectiveness of therapeutic antibodies. Under this Collaboration Agreement, Alligator also granted to Aptevo a time-limited option to enter into a second agreement with Alligator for the joint development of a separate bispecific antibody. In accordance with the terms of the Collaboration Agreement, the parties intend to develop the lead bispecific antibody candidate targeting 4-1BB (CD137) and 5T4 through the completion of Phase II clinical trials in accordance with an agreed upon development plan and budget. Subject to certain exceptions for Aptevo’s manufacturing and platform technologies, the parties will jointly own intellectual property generated in the performance of the development activities under the Collaboration Agreement. Following the completion of the anticipated development activities under the Collaboration Agreement, the parties intend to seek a third-party commercialization partner for this product candidate, or, in certain circumstances, may elect to enter into a second agreement granting rights to either Aptevo R&D or Alligator to allow such party to continue the development and commercialization of this product candidate. Under the terms of this Collaboration Agreement, the parties intend to share revenue received from a third-party commercialization partner equally, or, if the development costs are not equally shared under this Collaboration Agreement, in proportion to the development costs borne by each party. The Collaboration Agreement also contains several points in development at which either party may elect to “opt-out” (i.e., terminate without cause) and, following a termination notice period, cease paying development costs for this product candidate, which would be borne fully by the continuing party. Following an opt-out by a party, the continuing party will be granted exclusive rights to continue the development and commercialization of the product candidate, subject to a requirement to pay a percentage of revenue received from any future commercialization partner for this product, or, if the continuing party elects to self-commercialize, tiered royalties on the net sales of the product by the continuing party ranging from the low to mid-single digits, based on the point in development at which the ‘opt-out’ occurs. The parties have also agreed on certain technical criteria or ‘stage gates’ related to the development of this product candidate that, if not met, will cause an automatic termination and wind-down of this Collaboration Agreement and the activities thereunder, provided that the parties do not agree to continue. The Collaboration Agreement contains industry standard termination rights, including for material breach following a specified cure period, and in the case of a party’s insolvency. We assessed the arrangement in accordance with Topic 606 and concluded that the contract counterparty, Alligator, is not a customer. As such the arrangement is not in the scope of Topic 606 and is instead treated as a collaborative agreement under Topic 808. For the six months ended June 30, 2018, we incurred a higher share of the research and development costs than those of Alligator which netted to $0.1 million and is reflected as a reduction in our research and development expenses. MorphoSys In August 2014, Aptevo entered into a collaboration agreement with MorphoSys AG (MorphoSys Agreement) for the joint development of MOR209/ES414, a targeted immunotherapeutics protein, which activates host T-cell immunity specifically against cancer cells expressing prostate specific membrane antigen, an antigen commonly overexpressed on prostate cancer cells. Effective August 31, 2017, MorphoSys terminated the MorphoSys Agreement. As a result of the termination, Aptevo has no ongoing obligation related to this agreement. For the three and six months ended June 30, 2017, the MorphoSys Agreement related revenue was less than $0.1 million and the related total deferred revenue balance was $3.7 million as of June 30, 2017. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 4. Fair Value Measurements The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety. The three levels of the hierarchy are as follows: Level 1— Quoted prices in active markets for identical assets and liabilities; Level 2— Inputs other than quoted prices in active markets that are either directly or indirectly observable; and 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. The Company’s financial assets measured at fair value consisted of the following as of June 30, 2018 and December 31, 2017: June 30, 2018 (in thousands) Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 14,269 $ — $ — $ 14,269 Corporate bonds — 8,563 — 8,563 US government and agency debt securities — 14,956 — 14,956 Foreign government and agency debt securities — 13,984 — 13,984 Total assets $ 14,269 $ 37,503 $ — $ 51,772 December 31, 2017 (in thousands) Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 10,997 $ — $ — $ 10,997 Corporate bonds — 16,443 — 16,443 US government and agency debt securities — 33,300 — 33,300 Foreign government and agency debt securities — 23,945 — 23,945 Total assets $ 10,997 $ 73,688 $ — $ 84,685 If quoted market prices in active markets for identical assets are not available to determine fair value, then the Company uses quoted prices of similar instruments and other significant inputs derived from observable market data obtained from third-party data providers. These investments are included in Level 2 and consist of debt securities of U.S government agencies and corporate bonds. There were no transfers between Levels 1 and 2 during the three-month and six-month periods ended June 30, 2018. |
Cash, Cash Equivalents, and Res
Cash, Cash Equivalents, and Restricted Cash | 6 Months Ended |
Jun. 30, 2018 | |
Cash And Cash Equivalents [Abstract] | |
Cash, Cash Equivalents, and Restricted Cash | Note 5. Cash, Cash Equivalents, and Restricted Cash The Company’s cash equivalents are highly liquid investments with a maturity of 90 days or less at the date of purchase and include time deposits and investments in money market funds with commercial banks and financial institutions. Restricted cash, current portion, includes $0.4 million maintained in depository as collateral for corporate credit cards. In addition, we have long-term restricted cash of $10.0 million related to the minimum cash covenant included in the Company’s Credit and Security Agreement (the Credit Agreement) with MidCap Financial Trust, and $2.4 million securing letters of credit. The following table shows our cash, cash equivalents and restricted cash, both current and long-term portion as of June 30, 2018 and December 31, 2017: June 30, December 31, (in thousands) 2018 2017 Cash $ 4,163 $ 6,098 Cash equivalents 3,065 997 Restricted cash, current portion 400 400 Restricted cash, included in other long-term assets 12,447 10,000 Total cash, cash equivalents, and restricted cash $ 20,075 $ 17,495 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Investments | Note 6. Investments Investments are classified as available-for-sale securities and are carried at fair value with unrealized temporary holding gains and losses included in other comprehensive income or loss and as a net amount in accumulated other comprehensive income or loss until such gains and losses are realized. We did not recognize any realized gains or losses in net income during the three and six months ended June 30, 2018. Available-for-sale securities are written down to fair value through income whenever it is necessary to reflect other than temporary impairments. We have determined that the unrealized losses on our marketable securities as of June 30, 2018 were temporary in nature, and currently do not intend to sell these securities before recovery of their amortized cost basis. All short-term investments are limited to a final maturity of less than one year from the reporting date. Our money market funds as of June 30, 2018 and December 31, 2017, are inclusive of $10.0 million in restricted cash. June 30, 2018 (in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding (Losses) Fair Value Cash equivalents: Money market fund $ 14,269 $ — $ — $ 14,269 Total cash equivalents $ 14,269 $ — $ — $ 14,269 Short-term investments: Corporate bonds $ 8,569 $ — $ (6 ) $ 8,563 US government and agency debt securities 14,968 — (12 ) 14,956 Foreign government and agency debt securities 14,002 — (18 ) 13,984 Total short-term investments $ 37,539 $ — $ (36 ) $ 37,503 December 31, 2017 (in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding (Losses) Fair Value Cash equivalents: Money market fund $ 10,997 $ — $ — $ 10,997 Total cash equivalents $ 10,997 $ — $ — $ 10,997 Short-term investments: Corporate bonds $ 16,455 $ — $ (12 ) $ 16,443 US government and agency debt securities $ 33,331 — (31 ) $ 33,300 Foreign government and agency debt securities 24,007 — (62 ) 23,945 Total short-term investments $ 73,793 $ — $ (105 ) $ 73,688 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 7. Inventories Inventories consist of the following: June 30, December 31, (in thousands) 2018 2017 Raw materials and supplies $ 46 $ 56 Work-in-process 2,860 482 Finished goods 64 490 Total inventories $ 2,970 $ 1,028 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 8. Debt On August 4, 2016, we entered into a Credit and Security Agreement (Credit Agreement), with MidCap Financial Trust. The original Credit Agreement provided us with up to $35.0 million of available borrowing capacity composed of two tranches of $20.0 million and $15.0 million. The first tranche of $20.0 million was made available to us, and drawn, on the closing date of the Credit Agreement. On September 28, 2017, we and MidCap Financial Trust entered into a second amendment to the Credit Agreement in order to accommodate the sale of the Hyperimmune Business under the LLC purchase agreement, and to reflect changes in the remaining business as a result of such sale. Pursuant to the second Amendment, the agent and the lenders consented to the LLC purchase agreement and the consummation of the sale transaction, released the agent’s liens on the assets transferred to one of our subsidiaries prior to the sale, and agreed that no prepayment of the term loans under the credit agreement would be required as a result the sale. As part of the second amendment, the agent and the lenders agreed that: (i) the commitments of the lenders to make the remaining $15.0 million tranche of loans under the credit agreement were terminated, (ii) the covenant levels set forth in the minimum net commercial product revenue covenant were revised, (iii) a new covenant requiring us to maintain a minimum $10.0 million unrestricted cash balance, and (iv) the date on which the term loans begin to amortize would be extended to February 1, 2019 if we achieved net commercial product revenues of $16.0 million for the twelve month period ending June 30, 2018 and maintain such level of net commercial product revenues for each quarter prior to February 1, 2019 thereafter. As we achieved net commercial product revenues of $16.2 million for the twelve month period ending June 30, 2018, our principal repayments have been deferred to February 1, 2019. On February 23, 2018, we entered into a third Amendment with the agent and lenders to amend certain provisions of the Credit Agreement in order to permit us to maintain a cash collateral account as security for our reimbursement obligations, in respect of certain letters of credit to be issued for our account. On August 6, 2018, we entered into an Amended and Restated Credit and Security Agreement (Amended Credit Agreement) amending the terms of our original $20 million term loan agreement with MidCap. Under the Amended Credit Agreement, the timeline for us to begin making principal repayments has been extended to February 1, 2020, with an opportunity for further deferral through August 1, 2020. The amount of restricted cash that we are required to maintain on our balance sheet has been reduced from $10 million to $5 million. The obligations under the Amended Credit Agreement will mature on February 1, 2023. Amounts drawn under the Amended Credit Agreement continue to accrue interest at a rate of LIBOR plus 7.60% per annum. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 9. Net Loss per Share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period. We utilize the control number concept in the computation of diluted earnings per share to determine whether potential common stock instruments are dilutive. The control number used is loss from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories. Therefore, no dilutive effect has been recognized in the calculation of income from discontinued operations per share. Common stock equivalents include stock options and unvested RSUs. The following table presents the computation of basic and diluted net loss per share (in thousands, except share and per share amounts): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Net loss $ (13,144 ) $ (11,189 ) $ (26,999 ) $ (21,134 ) Basic net income (loss) per share: Net loss from continuing operations $ (0.58 ) $ (0.67 ) $ (1.21 ) $ (1.23 ) Net income from discontinued operations $ — $ 0.14 $ — $ 0.22 Net loss $ (0.58 ) $ (0.53 ) $ (1.21 ) $ (1.01 ) Weighted-average shares used to compute per share calculations 22,588,334 21,265,599 22,308,356 21,012,760 The following table represents all potentially dilutive shares, which were all anti-dilutive and therefore excluded from the calculation of diluted net loss per share: For the Six Months Ended June 30, (in thousands) 2018 2017 Outstanding options to purchase common stock 3,371 3,020 Unvested RSUs 147 1,450 |
Equity
Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Equity | Note 10. Equity C ommon Stock For the six months ended June 30, 2018, we received proceeds $0.6 million upon the exercise of stock options which resulted in the issuance of 254,086 shares of common stock. For the six months ended June 30, 2017 there was no proceeds from the exercise of stock options and no issuance of shares of common stock. C onverted Equity Awards Incentive Plan In connection with the spin-off from Emergent BioSolutions, Inc. (Emergent) in August 2016, we adopted the Converted Equity Awards Incentive Plan (Converted Plan) and outstanding equity awards of Emergent held by Aptevo employees were converted into or replaced with equity awards of Aptevo (Conversion Awards) under the Converted Plan and were adjusted to maintain the economic value before and after the distribution date using the relative fair market value of the Emergent and Aptevo common stock based on the closing prices as of August 1, 2016. A total of 1.3 million shares of Aptevo common stock have been authorized for issuance under the Converted Plan. Options issued as Conversion Awards were priced according to the Converted Plan. RSUs issued as part of the Converted Plan provide for the issuance of a share of Aptevo’s stock at no cost to the holder. 2016 Stock Incentive Plan On August 1, 2016, the Company adopted the 2016 Stock Incentive Plan (2016 SIP). A total of 3.1 million shares of Aptevo common stock have been authorized for issuance under the 2016 SIP in the form of equity stock options. Stock options under the 2016 SIP generally vest pro rata over a three-year period and terminate ten years from the grant date, though the specific terms of each grant are determined individually. The Company’s executive officers and certain other employees may be awarded options with different vesting criteria, and options granted to non-employee directors also vest over a three-year period. Option exercise prices for new options granted by the Company equal the closing price of the Company’s common stock on the Nasdaq Global Market on the date of grant. RSUs issued under the 2016 SIP provide for the issuance of a share of the Company’s common stock at no cost to the holder. RSUs granted to employees under the 2016 SIP generally provide for time-based vesting over an eighteen-month to three-year period, although certain employees may be awarded RSUs with different time-based vesting criteria. Prior to vesting, RSUs granted under the 2016 SIP do not have dividend equivalent rights, do not have voting rights and the shares underlying the RSUs are not considered issued or outstanding. The equity compensation awards granted by the Company generally vest only if the employee is employed by the Company (or in the case of directors, the director continues to serve on the Board) on the vesting date. On May 31, 2017, at the 2017 Annual Meeting of Stockholders (Annual Meeting), the Company’s stockholders approved the amendment and restatement of the Company’s 2016 SIP (Restated 2016 Plan) to, among other things, increase the number of authorized shares issuable by 1.3 million shares of Aptevo common stock. The Restated 2016 Plan was previously approved, subject to stockholder approval, by the Board of Directors of the Company. 2018 Stock Incentive Plan On June 1, 2018, at the 2018 Annual Meeting, the Company’s stockholders approved a new 2018 Stock Incentive Plan (2018 SIP), which replaces the Restated 2016 Plan on a go-forward basis. All stock options, RSUs or other equity awards granted subsequent to June 1, 2018 will be issued out of the 2018 SIP which has 2.9 million shares of Aptevo common stock authorized for issuance. The 2018 Plan became effective immediately upon stockholder approval at the Annual Meeting. Any shares subject to outstanding stock awards granted under the 2016 SIP that (a) expire or terminate for any reason prior to exercise or settlement; (b) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company; or (c) otherwise would have returned to the 2016 SIP for future grant pursuant to the terms of the 2016 Plan (such shares, the “Returning Shares”) will immediately be added to the share reserve under the 2018 SIP as and when such shares become Returning Shares, up to a maximum of 3,711,620 shares. The 2018 SIP was previously approved, subject to stockholder approval, by the Board of Directors of the Company. As of June 30, 2018, there are 2.8 million shares available to be granted under the 2018 SIP. Stock options under the 2018 SIP generally vest pro rata over a three-year period and terminate ten years from the grant date, though the specific terms of each grant are determined individually. The Company’s executive officers and certain other employees may be awarded options with different vesting criteria, and options granted to non-employee directors also vest over a three-year period. Option exercise prices for new options granted by the Company equal the closing price of the Company’s common stock on the Nasdaq Global Market on the date of grant. Stock-Based Compensation Expense Stock-based compensation expense includes amortization of stock options and RSUs granted to employees and non-employees and has been reported in our Condensed Consolidated Statements of Operations as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, (in thousands) 2018 2017 2018 2017 Research and development $ 178 $ 544 $ 505 $ 1,236 Selling, general and administrative 271 556 661 1,543 Total stock-based compensation expense $ 449 $ 1,100 $ 1,166 $ 2,779 The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. The Company recognizes the compensation expense over the vesting period. Stock Options Aptevo utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted. Set forth below are the assumptions used in valuing the stock options granted: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Expected dividend yield 0.00% 0.00% 0.00% 0.00% Expected volatility 75.00% 75.00% 75.00% 75.00% Risk-free interest rate 2.78% 1.88% 2.73% 1.91% Expected average life of options 6 years 6 years 6 years 6 years Management has applied an estimated forfeiture rate of 10% for the periods presented. The following is a summary of option activity for the six months ended June 30, 2018: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Term Aggregate Intrinsic Value Balance at December 31, 2017 2,819,344 $ 2.41 — $ 5,134,379 Granted 895,538 3.53 — — Exercised (224,574 ) 2.16 — 501,819 Forfeited (119,210 ) 2.45 — 215,668 Outstanding at June 30, 2018 3,371,098 $ 2.72 7.45 $ 7,714,961 Exercisable at June 30, 2018 1,473,520 $ 2.46 5.37 $ 3,727,720 As of June 30, 2018, we had $2.7 million of unrecognized compensation expense related to options expected to vest over a weighted average period of 2.3 years. The weighted average remaining contractual life of outstanding and exercisable options is 7.3 years. The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing stock price of Aptevo’s common stock on the last trading day of June 2018 and the exercise price, multiplied by the number of in the money options) that would have been received by the option holders had all the option holders exercised their options on the last trading day of the quarter. Restricted Stock Units The following is a summary of RSU activity for the six months ended June 30, 2018: Number of Units Weighted Average Fair Value per Unit Aggregate Fair Value Balance at December 31, 2017 1,211,487 $ 2.91 $ 5,136,705 Vested (1,049,524 ) 2.90 3,471,683 Forfeited (15,313 ) 2.96 47,560 Outstanding at June 30, 2018 146,650 $ 2.98 $ 731,784 Expected to Vest 135,979 $ 2.95 $ 678,536 As of June 30, 2018, we had $0.2 million of unrecognized compensation expense related to RSUs expected to vest over a period of 0.7 years. The fair value of each RSU has been determined to be the closing trading price of the Company’s common shares on the date of grant as quoted on the Nasdaq Global Market. |
Revenue Reserves
Revenue Reserves | 6 Months Ended |
Jun. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Reserves | Note 11. Revenue Reserves The following table summarizes activity in each of our product revenue allowance and reserve categories for the six month period ending June 30, 2018: (in thousands) Chargebacks and Rebates Distribution Fees, Cash Discounts and Patient Assistance Balance at December 31, 2017 $ (428 ) $ (240 ) Provision related to current period sales (812 ) (907 ) Credit or payments made during the period 676 634 Balance at June 30, 2018 $ (564 ) $ (513 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12. Income Taxes On December 22, 2017, the President of the United States signed into law Public Law No. 115-97, commonly referred to as the Tax Reform Act, following its passage by the United States Congress. The Tax Act made significant changes to U.S. federal income tax laws, including reduction of the corporate tax rate from 35.0% to 21.0%, limitation of the deduction for net operating losses to 80.0% of current year taxable income and elimination of net operating loss carrybacks, one-time taxation of offshore earning at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions. On December 22, 2017, Staff Accounting Bulletin No. 118, or SAB 118, was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. Additional work is necessary for a more detailed analysis of the deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense within the measurement period. |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 13. Subsequent Event On August 6, 2018, we entered into the Amended Credit Agreement amending the terms of its original $20 million term loan agreement with MidCap. Under the Amended Credit Agreement, the timeline for us to begin making principal repayments has been extended to February 1, 2020, with an opportunity for further deferral through August 1, 2020. The amount of restricted cash that we are required to maintain on our balance sheet has been reduced from $10 million to $5 million. The obligations under the Amended Credit Agreement will mature on February 1, 2023. |
Nature of Business and Signif20
Nature of Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Accounts Receivable | Accounts Receivable Aptevo records accounts receivable net of an allowance for doubtful accounts based upon its assessment of collectability, and of applicable discounts. Aptevo performs ongoing credit evaluations of its customers and generally does not require collateral. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customers. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and identify, as a performance obligation, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Product Revenue, Net Aptevo has one marketed commercial product, IXINITY, a coagulation factor IX (recombinant) therapeutic indicated in adults and children 12 years of age and older with hemophilia B for control and prevention of bleeding episodes, and management of bleeding during operations. We sell IXINITY to a limited number of specialty distributors in the United States, collectively, our customers. These customers subsequently resell IXINITY to health care providers and patients. Revenue from product sales are recognized when the customer obtains control of the IXINITY product. Our customers provide us with a new order for every purchase of goods. This incorporates the terms and conditions of the contract, including pricing. Acceptance of the order is the point at which we are obligated to provide the product, and we have determined that each order represents a unique performance obligation. Product revenue is recorded at the amount we expect to receive, which is net of any rebates or chargebacks. Reserves for Variable Consideration We have identified the following fees, discounts and rebates that result in consideration being variable: chargebacks, distributor and Government Purchasing Organizations (GPO) fees, government rebates, return rights, and patient assistance. As part of determining variable consideration we noted that although the distributors are our customers, there are additional indirect customers in the distribution chain to whom we make payments. These indirect customers are not customers; however, unless a distinct good or service is provided to us, payments to these indirect customers need to be accounted for as a reduction in the transaction price, and therefore constitute an element of variable consideration, under Topic 606. Further, if material, we would also account for returns as variable consideration. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. We have established reserves for the following types of variable consideration: Chargebacks: We make payments to customers (in the form of credit memos) which are based on the difference between the price paid by the distributor and contracted prices paid by the authorized customers of the distributor. Specialty pharmacies, GPOs and other smaller specialty distributors buy the product from the distributors at prices agreed to in contracts with us, or if they are eligible, at government established prices (PHS/Medicaid/Medicare/VA prices). When the distributor sells the product at contracted prices lower than their acquisition price, the distributor is allowed to charge the difference between their price and the contract price paid by their customer to Aptevo. We referred to this as a “Chargeback”. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by Customers, and we generally issue credits for such amounts within a few weeks of the Customer’s notification to us of the resale. Reserves for chargebacks consist of credits we expect to issue for units that remain in the distribution channel inventories at each reporting period end that we expect will be sold to qualified healthcare providers, and chargebacks that Customers have claimed but for which we have not yet issued a credit. Distribution and Data Fees – We pay fees (in the form of direct payments) to the distributors and some GPOs (indirect customers) for distribution of the products and for transmission of data. Fees owed to our distributors is based on their purchases and is calculated as a direct percent of quarterly purchases. Although fees can vary from distributor to distributor, the fees associated with a specific sale is known at the time of the sale. Fees owed to GPOs are determined based on history, and other factors such as contracting strategy or a shift in sales to certain channels which may impact the provider mix. Government Rebates: Certain sales by the specialty pharmacies and GPOs are to qualified PHS/Medicaid/Medicare/VA and other government patients. We have contracts with these agencies that require rebates for sales made under these programs. We estimate our Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included in accrued expenses on the consolidated balance sheet. For Medicare, we also estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel inventories at period end. Commercial Rebates: We currently offer the option to receive a rebate based on volume thresholds. This discount is estimated at the time of the sale and is based on the terms of the Customer agreements. There are minimum volume requirements in order to receive this rebate, which varies per Customer. Cash Discounts: All customers have the option to receive a cash discount for early payment. Currently cash discounts are two-percent of the invoice amount if the payment is made within ten days. Patient Assistance: All patients are eligible for the IXINITY Savings Program, which provides for up to $12,000 annual benefit to assist with co-payments. Historically, this has been insignificant to our revenue as the total benefit provided since sales of IXINITY commenced in 2015 has been less than $0.1 million. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at period end. Returns: If product is damaged in shipment (either observable or hidden), or the incorrect number of units was shipped (for example, if the customer ordered 1 unit and 10 were shipped) these are allowable returns under our Return Policy (a component of the distributor agreements). However, as product is generally received by the distributors within 1 business day, and product damage is usually noted upon inspection, we would not recognize revenue on those shipments as part of our normal revenue recognition process. To date there has not been any such damaged product and we expect any such issues to be rare; however, if returns were to become significant a reserve estimate would be developed and accounted for as a reduction of revenue. See Note 11 – Revenue Reserves for additional information. |
Reclassification | Reclassifications Our financial statements reflect all adjustments that we consider to be necessary for the fair presentation of our results, due to changes in accounting policies, sale of our Hyperimmune Business, and the reclassification of restricted cash. |
Income Taxes | Income Taxes Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and research and development tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Aptevo’s ability to realize deferred tax assets depends upon future taxable income as well as the limitations discussed below. For financial reporting purposes, a deferred tax asset must be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized prior to expiration. Aptevo considers future taxable income and ongoing tax planning strategies in assessing the need for valuation allowances. In general, if Aptevo determines that it is more likely than not to realize more than the recorded amounts of net deferred tax assets in the future, Aptevo will reverse all or a portion of the valuation allowance established against its deferred tax assets, resulting in a decrease to the provision for income taxes in the period in which the determination is made. Likewise, if Aptevo determines that it is not more likely than not to realize all or part of the net deferred tax asset in the future, Aptevo will establish a valuation allowance against deferred tax assets, with an offsetting increase to the provision for income taxes, in the period in which the determination is made. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, Aptevo makes certain estimates and assumptions, in (1) calculating Aptevo’s income tax expense, deferred tax assets and deferred tax liabilities, (2) determining any valuation allowance recorded against deferred tax assets and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. Aptevo’s estimates and assumptions may differ significantly from tax benefits ultimately realized. |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short term leases) at the commencement date. Lessor accounting under ASU 2016-02 is largely unchanged. ASU 2016-02 is effective for annual and interim periods beginning on or after December 15, 2018 and early adoption is permitted. Under ASU 2016-02, lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Lessees and lessors may not apply a full retrospective transition approach. The ASU will be effective for Aptevo starting on January 1, 2019 and we will apply the practical expedients thereby continuing to account for leases that commenced before the effective date in accordance with previous GAAP. We are continuing to evaluate the impact of the application of this ASU on our condensed consolidated financial statements and disclosures. We expect to recognize right of use assets and lease liabilities, primarily for our office building lease . In December 2017, the SEC issued Staff Accounting Bulletin (SAB) 118 to address the application of U.S. GAAP in situations in which a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act (the Tax Reform Act) which was signed into law on December 22, 2017. In March 2018, the FASB issued ASU 2018-05, which amended ASC 740 to incorporate the requirements of SAB 118. We recognized the provisional tax impacts of the Tax Reform Act in the fourth quarter of 2017. During the first six months of 2018, we did not receive any additional information regarding these provisional calculations. As a result, we continue to anticipate finalizing our analysis in connection with the completion of our tax return for 2017 to be filed in 2018. In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The new standard is effective on January 1, 2019, and early adoption is permitted, including in interim periods, and should be applied to all new awards granted after the date of adoption. We are currently assessing the potential impact this ASU will have on our consolidated results of operations, financial position, and cash flows. |
Recently Adopted Standards | Recently Adopted Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has subsequently issued a number of amendments to ASU 2014-09. We adopted this standard effective January 1, 2018 on a modified retrospective basis. The new standard as amended, provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, included industry-specific guidance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted cash. This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents when reconciling the beginning-of and ending-of period total amounts shown on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We adopted this standard effective January 1, 2018. Upon adoption of this standard, we applied the retrospective transition method for each period presented. As a result of this adoption we adjusted our consolidated statement of cash flows to include $10.4 million of restricted cash at December 31, 2017 and $12.8 million in restricted cash at June 30, 2018. See Note 5 – Cash, cash equivalents, and restricted cash for additional information. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies the classification and presentation of eight specific cash flow issues in the statement of cash flows. We adopted this standard effective January 1, 2018. Adoption of this standard had no impact on our condensed consolidated statements of cash flows or related disclosures. |
Sale of Hyperimmune Business (T
Sale of Hyperimmune Business (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Summary of Components Attributable to Hyperimmune Business Presented as Income from Discontinued Operations in Unaudited Condensed Consolidated Statements of Operations | The following table represents the components attributable to the Hyperimmune Business presented as income from discontinued operations in the unaudited condensed consolidated statements of operations (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Revenues: Product sales $ — $ 7,238 $ — $ 12,506 Total revenues — 7,238 — 12,506 Costs and expenses: Cost of product sales — 2,929 — 5,143 Research and development — 1 — 41 Selling, general and administrative — 334 — 756 Income from operations — 3,974 — 6,566 Other income 11 — 65 — Income from discontinued operations, before income taxes 11 — 65 — Income tax expense — — — (1,819 ) Income from discontinued operations $ 11 $ 3,974 $ 65 $ 4,747 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets Measured at Fair Value | The Company’s financial assets measured at fair value consisted of the following as of June 30, 2018 and December 31, 2017: June 30, 2018 (in thousands) Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 14,269 $ — $ — $ 14,269 Corporate bonds — 8,563 — 8,563 US government and agency debt securities — 14,956 — 14,956 Foreign government and agency debt securities — 13,984 — 13,984 Total assets $ 14,269 $ 37,503 $ — $ 51,772 December 31, 2017 (in thousands) Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 10,997 $ — $ — $ 10,997 Corporate bonds — 16,443 — 16,443 US government and agency debt securities — 33,300 — 33,300 Foreign government and agency debt securities — 23,945 — 23,945 Total assets $ 10,997 $ 73,688 $ — $ 84,685 |
Cash, Cash Equivalents, and R23
Cash, Cash Equivalents, and Restricted Cash (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cash And Cash Equivalents [Abstract] | |
Schedule of Cash, Cash Equivalents and Restricted Cash, Both Current and Long-term Portion | The following table shows our cash, cash equivalents and restricted cash, both current and long-term portion as of June 30, 2018 and December 31, 2017: June 30, December 31, (in thousands) 2018 2017 Cash $ 4,163 $ 6,098 Cash equivalents 3,065 997 Restricted cash, current portion 400 400 Restricted cash, included in other long-term assets 12,447 10,000 Total cash, cash equivalents, and restricted cash $ 20,075 $ 17,495 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of short-term investments | All short-term investments are limited to a final maturity of less than one year from the reporting date. June 30, 2018 (in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding (Losses) Fair Value Cash equivalents: Money market fund $ 14,269 $ — $ — $ 14,269 Total cash equivalents $ 14,269 $ — $ — $ 14,269 Short-term investments: Corporate bonds $ 8,569 $ — $ (6 ) $ 8,563 US government and agency debt securities 14,968 — (12 ) 14,956 Foreign government and agency debt securities 14,002 — (18 ) 13,984 Total short-term investments $ 37,539 $ — $ (36 ) $ 37,503 December 31, 2017 (in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding (Losses) Fair Value Cash equivalents: Money market fund $ 10,997 $ — $ — $ 10,997 Total cash equivalents $ 10,997 $ — $ — $ 10,997 Short-term investments: Corporate bonds $ 16,455 $ — $ (12 ) $ 16,443 US government and agency debt securities $ 33,331 — (31 ) $ 33,300 Foreign government and agency debt securities 24,007 — (62 ) 23,945 Total short-term investments $ 73,793 $ — $ (105 ) $ 73,688 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following: June 30, December 31, (in thousands) 2018 2017 Raw materials and supplies $ 46 $ 56 Work-in-process 2,860 482 Finished goods 64 490 Total inventories $ 2,970 $ 1,028 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Income (Loss) per Share | The following table presents the computation of basic and diluted net loss per share (in thousands, except share and per share amounts): For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Net loss $ (13,144 ) $ (11,189 ) $ (26,999 ) $ (21,134 ) Basic net income (loss) per share: Net loss from continuing operations $ (0.58 ) $ (0.67 ) $ (1.21 ) $ (1.23 ) Net income from discontinued operations $ — $ 0.14 $ — $ 0.22 Net loss $ (0.58 ) $ (0.53 ) $ (1.21 ) $ (1.01 ) Weighted-average shares used to compute per share calculations 22,588,334 21,265,599 22,308,356 21,012,760 |
Summary of Potentially Dilutive Shares Excluded from Calculation of Net Loss Per Share | The following table represents all potentially dilutive shares, which were all anti-dilutive and therefore excluded from the calculation of diluted net loss per share: For the Six Months Ended June 30, (in thousands) 2018 2017 Outstanding options to purchase common stock 3,371 3,020 Unvested RSUs 147 1,450 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Summary of Stock-based Compensation Expense Includes Amortization of Stock Options and Restricted Stock Units Granted | Stock-based compensation expense includes amortization of stock options and RSUs granted to employees and non-employees and has been reported in our Condensed Consolidated Statements of Operations as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, (in thousands) 2018 2017 2018 2017 Research and development $ 178 $ 544 $ 505 $ 1,236 Selling, general and administrative 271 556 661 1,543 Total stock-based compensation expense $ 449 $ 1,100 $ 1,166 $ 2,779 |
Assumptions used in Valuing the Stock Options Granted under Black-Scholes Valuation Model | Aptevo utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted. Set forth below are the assumptions used in valuing the stock options granted: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Expected dividend yield 0.00% 0.00% 0.00% 0.00% Expected volatility 75.00% 75.00% 75.00% 75.00% Risk-free interest rate 2.78% 1.88% 2.73% 1.91% Expected average life of options 6 years 6 years 6 years 6 years |
Summary of Stock Option Activity | The following is a summary of option activity for the six months ended June 30, 2018: Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Term Aggregate Intrinsic Value Balance at December 31, 2017 2,819,344 $ 2.41 — $ 5,134,379 Granted 895,538 3.53 — — Exercised (224,574 ) 2.16 — 501,819 Forfeited (119,210 ) 2.45 — 215,668 Outstanding at June 30, 2018 3,371,098 $ 2.72 7.45 $ 7,714,961 Exercisable at June 30, 2018 1,473,520 $ 2.46 5.37 $ 3,727,720 |
Summary of RSU Activity | The following is a summary of RSU activity for the six months ended June 30, 2018: Number of Units Weighted Average Fair Value per Unit Aggregate Fair Value Balance at December 31, 2017 1,211,487 $ 2.91 $ 5,136,705 Vested (1,049,524 ) 2.90 3,471,683 Forfeited (15,313 ) 2.96 47,560 Outstanding at June 30, 2018 146,650 $ 2.98 $ 731,784 Expected to Vest 135,979 $ 2.95 $ 678,536 |
Revenue Reserves (Tables)
Revenue Reserves (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Product Revenue Allowance and Reserve Categories | The following table summarizes activity in each of our product revenue allowance and reserve categories for the six month period ending June 30, 2018: (in thousands) Chargebacks and Rebates Distribution Fees, Cash Discounts and Patient Assistance Balance at December 31, 2017 $ (428 ) $ (240 ) Provision related to current period sales (812 ) (907 ) Credit or payments made during the period 676 634 Balance at June 30, 2018 $ (564 ) $ (513 ) |
Nature of Business and Signif29
Nature of Business and Significant Accounting Policies - Additional Information (Details) | 6 Months Ended | |
Jun. 30, 2018USD ($)Product | Dec. 31, 2017USD ($) | |
Nature Of Business [Line Items] | ||
Number of revenue-generating product | Product | 1 | |
ASU 2016-18 | ||
Nature Of Business [Line Items] | ||
Restricted cash | $ 12,800,000 | $ 10,400,000 |
Maximum | ||
Nature Of Business [Line Items] | ||
Maximum eligible annual benefit under the program | 12,000 | |
Maximum amount of benefit provided to customers | $ 100,000 |
Sale of Hyperimmune Business -
Sale of Hyperimmune Business - Additional Information (Details) - Hyperimmune Business - USD ($) | Sep. 28, 2017 | Aug. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||||
Business sale agreement date | Aug. 31, 2017 | |||||
Business sale completion date | Sep. 28, 2017 | |||||
Cash payment received | $ 65,000,000 | |||||
Escrow receivable | 3,300,000 | |||||
Net gain on sale of business | 52,700,000 | |||||
Receivables amount recorded in other income from discontinued operations | $ 11,000 | $ 65,000 | ||||
Collection of certain accounts receivable transferred to Saol | 100,000 | |||||
Amortization | $ 300,000 | $ 600,000 | ||||
Depreciation | 0 | 0 | ||||
Capital expenditures | 0 | 0 | ||||
Other non-cash operating activities | 0 | 0 | ||||
Other non-cash investing activities | $ 0 | $ 0 | ||||
Maximum | ||||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||||
Additional potential milestone payment related to gross profit | 7,500,000 | |||||
Additional potential milestone payment related to accounts receivable | $ 2,000,000 |
Sale of Hyperimmune Business 31
Sale of Hyperimmune Business - Summary of Components Attributable to Hyperimmune Business Presented as Income from Discontinued Operations in Unaudited Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Costs and expenses: | ||||
Income from discontinued operations, before income taxes | $ 11 | $ 3,974 | $ 65 | $ 6,566 |
Income tax expense | (996) | (1,819) | ||
Income from discontinued operations | 11 | 2,978 | 65 | 4,747 |
Hyperimmune Business | ||||
Revenues: | ||||
Product sales | 7,238 | 12,506 | ||
Total revenues | 7,238 | 12,506 | ||
Costs and expenses: | ||||
Cost of product sales | 2,929 | 5,143 | ||
Research and development | 1 | 41 | ||
Selling, general and administrative | 334 | 756 | ||
Income from operations | 3,974 | 6,566 | ||
Other income | 11 | 65 | ||
Income from discontinued operations, before income taxes | 11 | 65 | ||
Income tax expense | (1,819) | |||
Income from discontinued operations | $ 11 | $ 3,974 | $ 65 | $ 4,747 |
Collaboration Agreement - Addit
Collaboration Agreement - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items] | ||||
Reduction in research and development expense | $ 100,000 | |||
Revenue | $ 6,826,000 | $ 3,526,000 | $ 10,897,000 | $ 5,668,000 |
MorphoSys Agreement | ||||
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items] | ||||
Deferred revenue | 3,700,000 | 3,700,000 | ||
MorphoSys Agreement | Maximum | ||||
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items] | ||||
Revenue | $ 100,000 | $ 100,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Assets Measured at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Financial Assets: | ||
Assets fair value | $ 51,772 | $ 84,685 |
Money Market Funds | ||
Financial Assets: | ||
Assets fair value | 14,269 | 10,997 |
Corporate Bonds | ||
Financial Assets: | ||
Assets fair value | 8,563 | 16,443 |
US Government and Agency Debt Securities | ||
Financial Assets: | ||
Assets fair value | 14,956 | 33,300 |
Foreign Government and Agency Debt Securities | ||
Financial Assets: | ||
Assets fair value | 13,984 | 23,945 |
Level 1 | ||
Financial Assets: | ||
Assets fair value | 14,269 | 10,997 |
Level 1 | Money Market Funds | ||
Financial Assets: | ||
Assets fair value | 14,269 | 10,997 |
Level 2 | ||
Financial Assets: | ||
Assets fair value | 37,503 | 73,688 |
Level 2 | Corporate Bonds | ||
Financial Assets: | ||
Assets fair value | 8,563 | 16,443 |
Level 2 | US Government and Agency Debt Securities | ||
Financial Assets: | ||
Assets fair value | 14,956 | 33,300 |
Level 2 | Foreign Government and Agency Debt Securities | ||
Financial Assets: | ||
Assets fair value | $ 13,984 | $ 23,945 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | Jun. 30, 2018USD ($) |
Fair Value Disclosures [Abstract] | |
Fair value assets, level 1 to level 2 transfers | $ 0 |
Fair value assets, level 2 to level 1 transfers | $ 0 |
Cash, Cash Equivalents, and R35
Cash, Cash Equivalents, and Restricted Cash - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Restricted Cash And Cash Equivalents Items [Line Items] | ||
Restricted cash, current portion | $ 400 | $ 400 |
Long-term restricted cash | $ 12,447 | $ 10,000 |
Maximum | ||
Restricted Cash And Cash Equivalents Items [Line Items] | ||
Cash equivalents, maturity period | 90 days | |
Letter of Credit | ||
Restricted Cash And Cash Equivalents Items [Line Items] | ||
Long-term restricted cash | $ 2,400 | |
Collateral for Corporate Credit Cards | ||
Restricted Cash And Cash Equivalents Items [Line Items] | ||
Restricted cash, current portion | 400 | |
Covenant of MidCap Loan Agreement | ||
Restricted Cash And Cash Equivalents Items [Line Items] | ||
Long-term restricted cash | $ 10,000 |
Cash, Cash Equivalents, and R36
Cash, Cash Equivalents, and Restricted Cash - Schedule of Cash, Cash Equivalents and Restricted Cash, Both Current and Long-term Portion (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Cash And Cash Equivalents [Abstract] | ||||
Cash | $ 4,163 | $ 6,098 | ||
Cash equivalents | 3,065 | 997 | ||
Restricted cash, current portion | 400 | 400 | ||
Restricted cash, included in other long-term assets | 12,447 | 10,000 | ||
Total cash, cash equivalents, and restricted cash | $ 20,075 | $ 17,495 | $ 22,669 | $ 10,076 |
Investments - Additional Inform
Investments - Additional Information (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule Of Available For Sale Securities [Line Items] | ||
Restricted cash, included in other long-term assets | $ 12,447 | $ 10,000 |
Money Market Funds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Restricted cash, included in other long-term assets | $ 10,000 | $ 10,000 |
Investments - Schedule of Short
Investments - Schedule of Short-term Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Short-term Investments | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 37,539 | $ 73,793 |
Gross Unrealized Holding Gains | 0 | |
Gross Unrealized Holding (Losses) | (36) | (105) |
Fair Value | 37,503 | 73,688 |
Short-term Investments | Corporate Bonds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 8,569 | 16,455 |
Gross Unrealized Holding Gains | 0 | |
Gross Unrealized Holding (Losses) | (6) | (12) |
Fair Value | 8,563 | 16,443 |
Short-term Investments | US Government and Agency Debt Securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 14,968 | 33,331 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding (Losses) | (12) | (31) |
Fair Value | 14,956 | 33,300 |
Short-term Investments | Foreign Government and Agency Debt Securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 14,002 | 24,007 |
Gross Unrealized Holding (Losses) | (18) | (62) |
Fair Value | 13,984 | 23,945 |
Cash Equivalents | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 14,269 | 10,997 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding (Losses) | 0 | 0 |
Fair Value | 14,269 | 10,997 |
Cash Equivalents | Money Market Fund | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 14,269 | 10,997 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding (Losses) | 0 | 0 |
Fair Value | $ 14,269 | $ 10,997 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Adjustments [Abstract] | ||
Raw materials and supplies | $ 46 | $ 56 |
Work-in-process | 2,860 | 482 |
Finished goods | 64 | 490 |
Total inventories | $ 2,970 | $ 1,028 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Aug. 06, 2018 | Sep. 28, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | Aug. 04, 2016 |
Line Of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 35,000,000 | ||||||||
Cash funding committed by Emergent in connection with spin-off | 20,000,000 | ||||||||
Unrestricted cash balance | $ 4,163,000 | $ 4,163,000 | $ 4,163,000 | $ 6,098,000 | |||||
Net commercial product revenue, date to be achieved | Jun. 30, 2018 | ||||||||
Net commercial product revenue requirements to be maintained | The date on which the term loans begin to amortize would be extended to February 1, 2019 if we achieved net commercial product revenues of $16.0 million for the twelve month period ending June 30, 2018 and maintain such level of net commercial product revenues for each quarter prior to February 1, 2019 thereafter. | ||||||||
Revenue | 6,826,000 | $ 3,526,000 | $ 10,897,000 | $ 5,668,000 | |||||
Restricted cash | $ 12,447,000 | $ 12,447,000 | 12,447,000 | $ 10,000,000 | |||||
Subsequent Event | Amended Credit Agreement | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 20,000,000 | ||||||||
Line of credit, repayment begin date | Feb. 1, 2020 | ||||||||
Line of credit, repayment deferral begin date | Aug. 1, 2020 | ||||||||
Restricted cash | $ 5,000,000 | ||||||||
Credit agreeemnt, matuirity date | Feb. 1, 2023 | ||||||||
Credit agreement reference rate for the variable rate | LIBOR | ||||||||
Credit agreement basis spread on variable rate | 7.60% | ||||||||
Credit Facility First Tranche | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | 20,000,000 | ||||||||
Credit Facility Second Tranche | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity | $ 15,000,000 | ||||||||
Prepayment of term loans | $ 0 | ||||||||
Terminated maximum borrowing capacity | $ 15,000,000 | ||||||||
Term loans extended amortization date based on net commercial product revenues recognized | Feb. 1, 2019 | ||||||||
Net commercial product revenue required to be achieved on trailing twelve month basis | $ 16,000,000 | ||||||||
Principal repayments date deferred upon achievement of net commercial product revenues | Feb. 1, 2019 | ||||||||
Credit Facility Second Tranche | Net Commercial Product | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Revenue | $ 16,200,000 | ||||||||
Credit Facility Second Tranche | Minimum | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Unrestricted cash balance | $ 10,000,000 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (13,144) | $ (11,189) | $ (26,999) | $ (21,134) |
Basic net income (loss) per share: | ||||
Net loss from continuing operations | $ (0.58) | $ (0.67) | $ (1.21) | $ (1.23) |
Net income from discontinued operations | 0.14 | 0.22 | ||
Net loss | $ (0.58) | $ (0.53) | $ (1.21) | $ (1.01) |
Weighted-average shares used to compute per share calculations | 22,588,334 | 21,265,599 | 22,308,356 | 21,012,760 |
Net Loss Per Share - Summary of
Net Loss Per Share - Summary of Potentially Dilutive Shares Excluded from Calculation of Net Loss Per Share (Details) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Outstanding Options to Purchase Common Stock | ||
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||
Anti-dilutive shares excluded from calculation of diluted net loss per share | 3,371 | 3,020 |
Unvested RSUs | ||
Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||
Anti-dilutive shares excluded from calculation of diluted net loss per share | 147 | 1,450 |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) | Jun. 01, 2018 | Aug. 01, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | May 31, 2017 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Proceeds upon exercise of stock options | $ 564,000 | ||||
RSUs | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized compensation expense | $ 200,000 | ||||
Expected vesting period | 8 months 12 days | ||||
Stock Option | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock issued upon exercise of stock options | 224,574 | ||||
Estimated forfeiture rate | 10.00% | ||||
Unrecognized compensation expense | $ 2,700,000 | ||||
Options expected to vest, weighted average period | 2 years 3 months 18 days | ||||
Options outstanding and exercisable weighted average remaining contractual life | 7 years 3 months 18 days | ||||
2016 Stock Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock authorized for issuance under Stock Plan | 3,100,000 | ||||
Stock plan vesting period | 3 years | ||||
Stock plan termination period | 10 years | ||||
2016 Stock Incentive Plan | RSUs | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Increase of authorized shares issuable | 1,300,000 | ||||
2016 Stock Incentive Plan | RSUs | Minimum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock plan vesting period | 18 months | ||||
2016 Stock Incentive Plan | RSUs | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock plan vesting period | 3 years | ||||
2016 Stock Incentive Plan | Non-employee Directors | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock plan vesting period | 3 years | ||||
2018 Stock Incentive Plan | RSUs | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock authorized for issuance under Stock Plan | 2,900,000 | ||||
Stock plan vesting period | 3 years | ||||
Stock plan termination period | 10 years | ||||
Maximum number of returning shares from old plan to be add to shares reserve | 3,711,620 | ||||
Number of shares available for grant | 2,800,000 | ||||
2018 Stock Incentive Plan | Non-employee Directors | RSUs | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock plan vesting period | 3 years | ||||
Common Stock | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Proceeds upon exercise of stock options | $ 600,000 | $ 0 | |||
Common stock issued upon exercise of stock options | 254,086 | 0 | |||
Common Stock | Converted Equity Awards Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock authorized for issuance under Stock Plan | 1,300,000 |
Equity - Summary of Stock-based
Equity - Summary of Stock-based Compensation Expense Includes Amortization of Stock Options and Restricted Stock Units Granted (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 449 | $ 1,100 | $ 1,166 | $ 2,779 |
Research and Development | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | 178 | 544 | 505 | 1,236 |
Selling, General and Administrative | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 271 | $ 556 | $ 661 | $ 1,543 |
Equity - Assumptions used in Va
Equity - Assumptions used in Valuing the Stock Options Granted under Black-Scholes Valuation Model (Details) - Stock Option | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility | 75.00% | 75.00% | 75.00% | 75.00% |
Risk-free interest rate | 2.78% | 1.88% | 2.73% | 1.91% |
Expected average life of options | 6 years | 6 years | 6 years | 6 years |
Equity - Summary of Stock Optio
Equity - Summary of Stock Option Activity (Details) - Outstanding Options to Purchase Common Stock | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares, Outstanding, Beginning balance | shares | 2,819,344 |
Number of Shares, Granted | shares | 895,538 |
Number of Shares, Exercised | shares | (224,574) |
Number of Shares, Forfeited | shares | (119,210) |
Number of Shares, Outstanding, Ending balance | shares | 3,371,098 |
Number of Shares, Exercisable | shares | 1,473,520 |
Weighted-Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 2.41 |
Weighted-Average Exercise Price, Granted | $ / shares | 3.53 |
Weighted-Average Exercise Price, Exercised | $ / shares | 2.16 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 2.45 |
Weighted-Average Exercise Price, Outstanding, Ending balance | $ / shares | 2.72 |
Weighted-Average Exercise Price, Exercisable | $ / shares | $ 2.46 |
Weighted-Average Remaining Term, Outstanding | 7 years 5 months 12 days |
Weighted-Average Remaining Term, Exercisable | 5 years 4 months 13 days |
Aggregate Intrinsic Value, Outstanding, Beginning balance | $ | $ 5,134,379 |
Aggregate Intrinsic Value, Exercised | $ | 501,819 |
Aggregate Intrinsic Value, Forfeited | $ | 215,668 |
Aggregate Intrinsic Value, Outstanding, Ending balance | $ | 7,714,961 |
Aggregate Intrinsic Value, Exercisable | $ | $ 3,727,720 |
Equity - Summary of Restricted
Equity - Summary of Restricted Stock Activity (Details) - RSUs $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Units, Outstanding, Beginning balance | shares | 1,211,487 |
Number of Units, Vested | shares | (1,049,524) |
Number of Units, Forfeited | shares | (15,313) |
Number of Units, Outstanding, Ending balance | shares | 146,650 |
Number of Units, Expected to Vest | shares | 135,979 |
Weighted Average Fair Value per Unit, Outstanding Beginning Balance | $ / shares | $ 2.91 |
Weighted Average Fair Value per Unit, Vested | $ / shares | 2.90 |
Weighted Average Fair Value per Unit, Forfeited | $ / shares | 2.96 |
Weighted Average Fair Value per Unit, Outstanding Ending Balance | $ / shares | 2.98 |
Weighted Average Fair Value per Unit, Expected to Vest | $ / shares | $ 2.95 |
Aggregate Fair Value, Outstanding, Beginning balance | $ | $ 5,136,705 |
Aggregate Fair Value, Vested | $ | 3,471,683 |
Aggregate Fair Value, Forfeited | $ | 47,560 |
Aggregate Fair Value, Outstanding, Ending balance | $ | 731,784 |
Aggregate Fair Value, Expected to Vest | $ | $ 678,536 |
Revenue Reserves - Summary of P
Revenue Reserves - Summary of Product Revenue Allowance and Reserve Categories (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Chargebacks and Rebates | |
Valuation And Qualifying Accounts Disclosure [Line Items] | |
Begining balance | $ (428) |
Provision related to current period sales | (812) |
Credit or payments made during the period | 676 |
Ending balance | (564) |
Distribution Fees, Cash Discounts and Patient Assistance | |
Valuation And Qualifying Accounts Disclosure [Line Items] | |
Begining balance | (240) |
Provision related to current period sales | (907) |
Credit or payments made during the period | 634 |
Ending balance | $ (513) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate, percent | 21.00% | 35.00% |
Limitation of taxable income for NOL carryforward percentage | 80.00% | |
Tax cuts and jobs act description | On December 22, 2017, the President of the United States signed into law Public Law No. 115-97, commonly referred to as the Tax Reform Act, following its passage by the United States Congress. The Tax Act made significant changes to U.S. federal income tax laws, including reduction of the corporate tax rate from 35.0% to 21.0%, limitation of the deduction for net operating losses to 80.0% of current year taxable income and elimination of net operating loss carrybacks, one-time taxation of offshore earning at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions. |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Details) - USD ($) | Aug. 06, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Aug. 04, 2016 |
Subsequent Event [Line Items] | ||||
Line of credit, original term loan | $ 35,000,000 | |||
Restricted cash | $ 12,447,000 | $ 10,000,000 | ||
Amended Credit Agreement | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Line of credit, original term loan | $ 20,000,000 | |||
Line of credit, repayment begin date | Feb. 1, 2020 | |||
Line of credit, repayment deferral begin date | Aug. 1, 2020 | |||
Restricted cash | $ 5,000,000 | |||
Credit agreeemnt, matuirity date | Feb. 1, 2023 |