Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jul. 31, 2014 | Sep. 05, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'PEREGRINE PHARMACEUTICALS INC | ' |
Entity Central Index Key | '0000704562 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Jul-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--04-30 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 179,505,424 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2015 | ' |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $73,256,000 | $77,490,000 |
Trade and other receivables, net | 1,391,000 | 1,332,000 |
Inventories | 5,998,000 | 5,530,000 |
Prepaid expenses and other current assets, net | 883,000 | 1,419,000 |
Total current assets | 81,528,000 | 85,771,000 |
Property and equipment, net | 3,647,000 | 2,447,000 |
Other assets | 2,432,000 | 2,327,000 |
TOTAL ASSETS | 87,607,000 | 90,545,000 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable | 5,080,000 | 2,434,000 |
Accrued clinical trial and related fees | 1,887,000 | 4,433,000 |
Accrued payroll and related costs | 2,654,000 | 3,837,000 |
Deferred revenue, current portion | 4,670,000 | 5,241,000 |
Customer deposits | 6,226,000 | 5,760,000 |
Other current liabilities | 606,000 | 502,000 |
Total current liabilities | 21,123,000 | 22,207,000 |
Deferred revenue, less current portion | 0 | 292,000 |
Other long-term liabilities | 892,000 | 347,000 |
Commitments and contingencies | ' | ' |
STOCKHOLDERS' EQUITY: | ' | ' |
Preferred stock - $0.001 par value; authorized 5,000,000 shares; issued and outstanding - 1,175,000 and 775,000, respectively | 1,000 | 1,000 |
Common stock-$0.001 par value; authorized 325,000,000 shares; issued and outstanding - 179,216,032 and 178,871,164, respectively | 179,000 | 179,000 |
Additional paid-in-capital | 481,807,000 | 470,785,000 |
Accumulated deficit | -416,395,000 | -403,266,000 |
Total stockholders' equity | 65,592,000 | 67,699,000 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $87,607,000 | $90,545,000 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock par value (in Dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 1,175,000 | 775,000 |
Preferred stock, shares outstanding | 1,175,000 | 775,000 |
Common stock par value (in Dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 325,000,000 | 325,000,000 |
Common stock, shares issued | 179,216,032 | 178,871,164 |
Common stock, shares outstanding | 179,216,032 | 178,871,164 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
REVENUES: | ' | ' |
Contract manufacturing revenue | $5,496,000 | $4,581,000 |
License revenue | 0 | 107,000 |
Total revenues | 5,496,000 | 4,688,000 |
COSTS AND EXPENSES: | ' | ' |
Cost of contract manufacturing | 3,583,000 | 2,670,000 |
Research and development | 10,201,000 | 5,304,000 |
Selling, general and administrative | 4,883,000 | 4,334,000 |
Total costs and expenses | 18,667,000 | 12,308,000 |
LOSS FROM OPERATIONS | -13,171,000 | -7,620,000 |
OTHER INCOME (EXPENSE): | ' | ' |
Interest and other income | 42,000 | 21,000 |
Interest and other expense | 0 | -1,000 |
NET LOSS | -13,129,000 | -7,600,000 |
COMPREHENSIVE LOSS | -13,129,000 | -7,600,000 |
Series E preferred stock accumulated dividends | -1,028,000 | 0 |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | ($14,157,000) | ($7,600,000) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 179,118,255 | 149,393,630 |
BASIC AND DILUTED LOSS PER COMMON SHARE | ($0.08) | ($0.05) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($13,129,000) | ($7,600,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Share-based compensation | 1,776,000 | 1,593,000 |
Depreciation and amortization | 277,000 | 257,000 |
Changes in operating assets and liabilities: | ' | ' |
Trade and other receivables, net | -59,000 | -610,000 |
Inventories | -468,000 | -1,340,000 |
Prepaid expenses and other current assets, net | 536,000 | 74,000 |
Other non-current assets | -29,000 | 0 |
Accounts payable | 2,518,000 | -661,000 |
Accrued clinical trial and related fees | -2,546,000 | -322,000 |
Accrued payroll and related expenses | -1,183,000 | -311,000 |
Deferred revenue | -863,000 | -7,000 |
Customer deposits | 466,000 | 469,000 |
Other accrued expenses and current liabilities | 108,000 | 357,000 |
Other long-term liabilities | -47,000 | -23,000 |
Net cash used in operating activities | -12,643,000 | -8,124,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Property and equipment acquisitions | -1,349,000 | -27,000 |
Decrease (increase) in other assets | 516,000 | -223,000 |
Net cash used in investing activities | -833,000 | -250,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from issuance of common stock, net of issuance costs of $14,000 and $491,000, respectively | 421,000 | 14,706,000 |
Proceeds from issuance of Series E preferred stock, net of issuance costs of $516,000 | 9,484,000 | 0 |
Proceeds from exercise of stock options, net of issuance costs of $3,000 and nil, respectively | 112,000 | 84,000 |
Dividends paid on preferred stock | -771,000 | 0 |
Principal payments on capital leases | -4,000 | -20,000 |
Net cash provided by financing activities | 9,242,000 | 14,770,000 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | -4,234,000 | 6,396,000 |
CASH AND CASH EQUIVALENTS, beginning of period | 77,490,000 | 35,204,000 |
CASH AND CASH EQUIVALENTS, end of period | 73,256,000 | 41,600,000 |
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' |
Accounts payable for purchase of property and equipment | 128,000 | 0 |
Lease incentives | $592,000 | $0 |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Common Stock | ' | ' |
Stock Issuance costs | $14,000 | $491,000 |
Series E Preferred Stock [Member] | ' | ' |
Stock Issuance costs | 516,000 | ' |
Stock Options | ' | ' |
Stock Issuance costs | $3,000 | $0 |
1_ORGANIZATION_AND_BUSINESS_DE
1. ORGANIZATION AND BUSINESS DESCRIPTION | 3 Months Ended |
Jul. 31, 2014 | |
Organization And Business Description | ' |
1. ORGANIZATION AND BUSINESS DESCRIPTION | ' |
Peregrine Pharmaceuticals, Inc. (“Peregrine” or “Company”) is a biopharmaceutical company with a portfolio of novel drug candidates in clinical trials focused on the treatment and diagnosis of cancer. Our lead immunotherapy candidate, bavituximab, is in Phase III development for the treatment of second-line non-small cell lung cancer (the “SUNRISE trial”) along with several investigator-sponsored trials evaluating other treatment combinations and additional oncology indications. In addition, we are also evaluating our lead molecular imaging agent, 124I-PGN650, in an exploratory clinical trial for the imaging of multiple solid tumor types. Peregrine also has in-house manufacturing capabilities through its wholly-owned subsidiary Avid Bioservices, Inc. (“Avid”), a Contract Manufacturing Organization (“CMO”) that provides development and biomanufacturing services for Peregrine and its third-party clients. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||
Jul. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||
Basis of Presentation | |||
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) related to quarterly reports on Form 10-Q. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for a complete set of financial statements. These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2014. The condensed consolidated balance sheet at April 30, 2014, has been derived from audited financial statements at that date. The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operations for the periods presented, with such adjustments consisting only of normal recurring adjustments. Results of operations for interim periods covered by this quarterly report on Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year. | |||
The interim unaudited condensed consolidated financial statements include the accounts of Peregrine and Avid. All intercompany accounts and transactions have been eliminated in the interim unaudited condensed consolidated financial statements. | |||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts, as well as disclosures of commitments and contingencies in the financial statements and accompanying notes. Actual results could differ from those estimates. | |||
Adoption of Recent Accounting Pronouncements | |||
Effective May 1, 2014, we adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 requires entities to present in the financial statements an unrecognized tax benefit, or a portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except to the extent such items are not available or not intended to be used at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position. In such instances, the unrecognized tax benefit is required to be presented in the financial statements as a liability and not be combined with deferred tax assets. The adoption ASU No. 2013-11 did not have a material impact on our consolidated financial statements | |||
Pending Adoption of Recent Accounting Pronouncements | |||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606): Revenue from Contracts with Customers, which guidance in this update will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance when it becomes effective. ASU No. 2014-09 affects any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principal of ASU No. 2014-09 is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, which will be our fiscal year 2018 (or May 1, 2017), and entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Early adoption is prohibited. We are currently in the process of evaluating the impact of adoption of ASU No. 2014-09 on our consolidated financial statements and related disclosures. | |||
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU No. 2014-14 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU No. 2014-14 provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. ASU No. 2014-14 is effective for annual reporting periods ending after December 15, 2016, which will be our fiscal year ending April 30, 2017, and to annual and interim periods thereafter. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of ASU No. 2014-15 on our consolidated financial statements and related disclosures. | |||
Liquidity and Financial Condition | |||
At July 31, 2014, we had $73,256,000 in cash and cash equivalents. We have expended substantial funds on the research and development of our product candidates, and funding the operations of Avid. As a result, we have historically experienced negative cash flows from operations since our inception and we expect negative cash flows from operations to continue for the foreseeable future. Therefore, unless and until we are able to generate sufficient revenues from Avid’s contract manufacturing services and/or from the sale and/or licensing of our product candidates under development, we expect such negative cash flows to continue in the foreseeable future. | |||
Our ability to continue to fund our clinical trials and development efforts is highly dependent on the amount of cash and cash equivalents on hand combined with our ability to raise additional capital to support our future operations through one or more methods, including but not limited to, raising additional capital in the equity markets, securing debt financing, licensing or partnering our product candidates in development, or generating additional revenue from Avid. | |||
Historically, we have funded a significant portion of our operations through the issuance of equity. During the three months ended July 31, 2014, we raised $10,000,000 in aggregate gross proceeds from the sale of our 10.50% Series E Convertible Preferred Stock (the “Series E Preferred Stock”) under an At Market Issuance Sales Agreement (Note 6) and raised an additional $435,000 in aggregate gross proceeds from the sale of shares of our common stock under a separate At Market Sales Issuance Agreement (Note 6). With these proceeds, we currently estimate that we have sufficient cash resources to meet our anticipated cash needs to fund our operations through at least the next twelve months based on our current projections, which include projected costs associated with our Phase III SUNRISE trial, projected cash outflows for the payment of dividends on our Series E Preferred Stock, projected cash inflows under signed contracts with existing customers of Avid and assuming we raise no additional capital from the capital markets or other potential sources. | |||
Our ability to raise additional capital in the equity markets to fund our clinical trials and development efforts in future years is dependent on a number of factors, including, but not limited to, the market demand for our common stock and/or Series E Preferred Stock. The market demand or liquidity of our common stock and/or Series E Preferred Stock is subject to a number of risks and uncertainties, including but not limited to, negative economic conditions, adverse market conditions, adverse clinical trial results and significant delays in one or more clinical trials. If our ability to access the capital markets becomes severely restricted, it could have a negative impact on our business plans, including our clinical trial programs and other research and development activities. In addition, even if we are able to raise additional capital, it may not be at a price or on terms that are favorable to us. | |||
While we will continue to explore these potential opportunities, we may not be successful in (i) raising additional capital in the equity markets, (ii) securing debt financing, (iii) licensing or partnering our products in development, or (iv) generating additional revenue from Avid, to complete the research, development, and clinical testing of our product candidates. | |||
Concentrations of Credit Risk and Customer Base | |||
Financial instruments that potentially subject us to a significant concentration of credit risk consist of cash and cash equivalents and trade receivables. We maintain our cash balances primarily with one major commercial bank and our deposits held with the bank exceed the amount of government insurance limits provided on our deposits. We are exposed to credit risk in the event of default by the major commercial bank holding our cash balances to the extent of the cash amount recorded on the accompanying interim unaudited condensed consolidated balance sheet. | |||
Our trade receivables from amounts billed for contract manufacturing services provided by Avid have historically been derived from a small customer base. Most contracts require up-front payments and installment payments during the service period. We perform periodic evaluations of the financial condition of our ongoing customers and generally do not require collateral, but we can terminate any contract if a material default occurs. As of July 31, 2014 and April 30, 2014, approximately 100% and 99% of our trade receivables, respectively, represent amounts due from two customers. | |||
In addition, contract manufacturing revenue generated by Avid has historically been derived from a small customer base (Note 9). These customers typically do not enter into long-term contracts because their need for drug supply depends on a variety of factors, including the drug’s stage of development, their financial resources, and, with respect to commercial drugs, demand for the drug in the market. Our future results of operations could be adversely affected if revenue from any one of our primary customers is significantly reduced or eliminated. | |||
Revenue Recognition | |||
We currently derive revenue from two sources: (i) contract manufacturing services provided by Avid, and (ii) licensing revenue related to agreements associated with Peregrine’s technologies under development. | |||
We recognize revenue in accordance with the authoritative guidance for revenue recognition. We recognize revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. We also comply with the authoritative guidance for revenue recognition regarding arrangements with multiple deliverables. | |||
Contract Manufacturing Revenue | |||
Revenue associated with contract manufacturing services provided by Avid is recognized once the service has been rendered and/or upon shipment (or passage of title) of the product to the customer. On occasion, we recognize revenue on a “bill-and-hold” basis in accordance with the authoritative guidance. Under “bill-and-hold” arrangements, revenue is recognized once the product is complete and ready for shipment, title and risk of loss has passed to the customer, management receives a written request from the customer for “bill-and-hold” treatment, the product is segregated from other inventory, and no further performance obligations exist. | |||
In addition, we also follow the authoritative guidance when reporting revenue as gross when we act as a principal versus reporting revenue as net when we act as an agent. For transactions in which we act as a principal, have discretion to choose suppliers, bear credit and inventory risk and perform a substantive part of the services, revenue is recorded at the gross amount billed to a customer and costs associated with these reimbursements are reflected as a component of cost of sales for contract manufacturing services. | |||
Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue in the accompanying interim unaudited condensed consolidated financial statements. We also record a provision for estimated contract losses, if any, in the period in which they are determined. | |||
License Revenue | |||
Revenue associated with licensing agreements primarily consists of non-refundable upfront license fees, non-refundable annual license fees and milestone payments. Non-refundable upfront license fees received under license agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. If a licensing agreement has multiple elements, we analyze each element of our licensing agreements and consider a variety of factors in determining the appropriate method of revenue recognition of each element. | |||
Multiple Element Arrangements. Prior to the adoption of ASU No. 2009-13 on May 1, 2011, if a license agreement has multiple element arrangements, we analyze and determine whether the deliverables, which often include performance obligations, can be separated or whether they must be accounted for as a single unit of accounting in accordance with the authoritative guidance. Under multiple element arrangements, we recognize revenue for delivered elements only when the delivered element has stand-alone value and we have objective and reliable evidence of fair value for each undelivered element. If the fair value of any undelivered element included in a multiple element arrangement cannot be objectively determined, the arrangement would then be accounted for as a single unit of accounting, and revenue is recognized over the estimated period of when the performance obligation(s) are performed. | |||
In addition, under certain circumstances, when there is objective and reliable evidence of the fair value of the undelivered items in an arrangement, but no such evidence for the delivered items, we utilize the residual method to allocate the consideration received under the arrangement. Under the residual method, the amount of consideration allocated to delivered items equals the total arrangement consideration less the aggregate fair value of the undelivered items, and revenue is recognized upon delivery of the undelivered items based on the relative fair value of the undelivered items. | |||
For new licensing agreements or material modifications of existing licensing agreements entered into after May 1, 2011, we follow the provisions of ASU No. 2009-13. If a licensing agreement includes multiple elements, we identify which deliverables represent separate units of accounting, and then determine how the arrangement consideration should be allocated among the separate units of accounting, which may require the use of significant judgment. | |||
If a licensing agreement includes multiple elements, a delivered item is considered a separate unit of accounting if both of the following criteria are met: | |||
1 | The delivered item has value to the licensing partner on a standalone basis based on the consideration of the relevant facts and circumstances for each agreement; | ||
2 | If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the Company’s control. | ||
Arrangement consideration is allocated at the inception of the agreement to all identified units of accounting based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (“VSOE”) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, we use our best estimate of the selling price for the deliverable. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement. | |||
Milestone Payments. Effective May 1, 2011, we adopted on a prospective basis the Milestone Method under ASU No. 2010-17 for new licensing agreements or material modifications of existing licensing agreements entered into after May 1, 2011. Under the Milestone Method, we recognize consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: | |||
1 | The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone; | ||
2 | The consideration relates solely to past performance; and | ||
3 | The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. | ||
A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company. | |||
The provisions of ASU No. 2010-17 do not apply to contingent consideration for which payment is either contingent solely upon the passage of time or the result of a counterparty’s performance. We will assess the nature of, and appropriate accounting for, these payments on a case-by-case basis in accordance with the applicable authoritative guidance for revenue recognition. | |||
Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue in the accompanying interim unaudited condensed consolidated financial statements. | |||
Fair Value Measurements | |||
We determine fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures for all assets and liabilities within the scope of this guidance. This guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy: | |||
· | Level 1 – Quoted prices in active markets for identical assets or liabilities. | ||
· | Level 2 – Observable inputs other than quoted prices included in Level 1, such as assets or liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. | ||
· | Level 3 – Unobservable inputs that are supported by little or no market activity and significant to the overall fair value measurement. | ||
As of July 31, 2014 and April 30, 2014, we do not have any Level 2 or Level 3 financial assets or liabilities and our cash and cash equivalents, which are primarily invested in money market funds with one major commercial bank, are carried at fair value based on quoted market prices for identical securities (Level 1 input). | |||
Customer Deposits | |||
Customer deposits primarily represent advance billings and/or payments received from Avid’s third-party customers prior to the initiation of contract manufacturing services. | |||
Research and Development Expenses | |||
Research and development expenses primarily include (i) payroll and related costs, including share-based compensation, associated with research and development personnel, (ii) costs related to clinical trials and preclinical testing of our technologies under development, (iii) costs to develop and manufacture the product candidates, including raw materials and supplies, product testing, depreciation, and facility related expenses, (iv) expenses for research services provided by universities and contract laboratories, including sponsored research funding, and (v) other research and development expenses. Research and development expenses are charged to expense as incurred when these expenditures relate to our research and development efforts and have no alternative future uses. | |||
Clinical trial costs are a significant component of our research and development expenses. We have a history of contracting with third parties that perform various clinical trial activities on our behalf in the ongoing development of our product candidates. The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow. Expenses related to clinical trials are accrued based on our estimates and/or representations from third parties (including clinical research organizations) regarding services performed. If the contracted amounts are modified (for instance, as a result of changes in the clinical trial protocol or scope of work to be performed), we modify our accruals accordingly on a prospective basis. Revisions in the scope of a contract are charged to expense in the period in which the facts that give rise to the revision become reasonably certain. There were no material adjustments for a change in estimate to research and development expenses in the accompanying interim unaudited condensed consolidated financial statements for the three months ended July 31, 2014 and 2013. | |||
Under certain research and development agreements, we are obligated to make certain advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research and development activities and are deferred and capitalized as prepaid research and development expenses. These advance payments are recognized as an expense in the period the related goods are delivered or the related services are performed. We assess our prepaid research and development expenses for impairment when events or changes in circumstances indicate that the carrying amount of the prepaid expense may not be recoverable or provide future economic benefit. | |||
In addition, under certain in-licensing agreements associated with the research and development of our product candidates, we are obligated to pay certain milestone payments based on potential clinical development and regulatory milestones. These milestone payments have no alternative future uses (in other research and development projects or otherwise) and therefore have no separate economic values and are expensed as research and development costs at the time the costs are incurred. We have no in-licensed product candidates that have alternative future uses in research and development projects or otherwise. | |||
Share-based Compensation | |||
We account for stock options and other share-based awards granted under our equity compensation plans in accordance with the authoritative guidance for share-based compensation. The estimated fair value of share-based payments to employees in exchange for services is measured at the grant date, using a fair value based method, and is recognized as expense on a straight-line basis over the requisite service periods. Share-based compensation expense recognized during the period is based on the value of the portion of the share-based payment that is ultimately expected to vest during the period. | |||
In addition, we periodically grant stock options and other share-based awards to non-employee consultants, which we account for in accordance with the authoritative guidance for share-based compensation. The cost of non-employee services received in exchange for share-based awards are measured based on either the fair value of the consideration received or the fair value of the share-based award issued, whichever is more reliably measurable. In addition, guidance requires share-based compensation related to unvested options and awards issued to non-employees to be recalculated at the end of each reporting period based upon the fair market value on that date until the share-based award has vested, and any cumulative catch-up adjustment to share-based compensation resulting from the re-measurement is recognized in the current period. See Note 7 for further discussion regarding share-based compensation. | |||
Basic and Dilutive Net Loss Per Common Share | |||
Basic net loss per common share is computed by dividing our net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period excluding the dilutive effects of stock options, common shares expected to be issued under our employee stock purchase plan, warrants, and Series E Preferred Stock outstanding during the period. Diluted net loss per common share is computed by dividing our net loss attributable to common stockholders by the sum of the weighted average number of common shares outstanding during the period plus the potential dilutive effects of stock options, common shares expected to be issued under our employee stock purchase plan, warrants, and Series E Preferred Stock outstanding during the period. Net loss attributable to common stockholders represents our net loss plus Series E Preferred Stock accumulated dividends. Series E Preferred Stock accumulated dividends include dividends declared for the period (regardless of whether or not the dividends have been paid) and dividends accumulated for the period (regardless of whether or not the dividends have been declared). | |||
The potential dilutive effect of stock options, common shares expected to be issued under our employee stock purchase plan, and warrants outstanding during the period was calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive effect of Series E Preferred Stock outstanding during the period was calculated using the if-converted method assuming the conversion of Series E Preferred Stock as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. Because the impact of stock options, common shares expected to be issued under our employee stock purchase plan, warrants, and Series E Preferred Stock are anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share amounts for the three months ended July 31, 2014 and 2013. | |||
The calculation of weighted average diluted shares outstanding excludes the dilutive effect of outstanding stock options, common shares expected to be issued under our employee stock purchase plan, and warrants, to purchase up to an aggregate of 5,026,166 and 4,426,459 shares of common stock for the three months ended July 31, 2014 and 2013, respectively, since their impact are anti-dilutive during periods of net loss. | |||
The calculation of weighted average diluted shares outstanding also excludes weighted average outstanding stock options and warrants to purchase up to an aggregate of 4,885,058 and 5,933,036 shares of common stock for the three months ended July 31, 2014 and 2013, respectively, as their exercise prices were greater than the average market price of our common stock during the respective periods, resulting in an anti-dilutive effect. In addition, weighted average shares of 8,159,545, assuming the issuance of common stock upon conversion of outstanding Series E Preferred Stock for the three months ended July 31, 2014, were also excluded from the calculation of weighted average diluted shares outstanding as the conversion price was greater than the average market price during the period, resulting in an anti-dilutive effect. There were no shares of Series E Preferred Stock outstanding during the three months ended July 31, 2013. | |||
3_TRADE_AND_OTHER_RECEIVABLES
3. TRADE AND OTHER RECEIVABLES | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
3. TRADE AND OTHER RECEIVABLES | ' | ||||||||
Trade and other receivables, net, consists of the following at July 31, 2014 and April 30, 2014: | |||||||||
July 31, | April 30, | ||||||||
2014 | 2014 | ||||||||
Trade receivables(1) | $ | 1,324,000 | $ | 1,219,000 | |||||
Other receivables, net | 67,000 | 113,000 | |||||||
Trade and other receivables, net | $ | 1,391,000 | $ | 1,332,000 | |||||
______________ | |||||||||
-1 | Represents amounts billed for contract manufacturing services provided by Avid. | ||||||||
We continually monitor our allowance for doubtful accounts for all receivables. We apply judgment in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts based on various factors, such as, the aging of accounts receivable balances, historical experience, and the financial condition of our customers. Based on our analysis of our receivables as of July 31, 2014 and April 30, 2014, we determined an allowance for doubtful accounts of $6,000 and $13,000, respectively, was necessary with respect to our other receivables, and no allowance was necessary with respect to our trade receivables. |
4_PROPERTY_AND_EQUIPMENT
4. PROPERTY AND EQUIPMENT | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
4. PROPERTY AND EQUIPMENT | ' | ||||||||
Property and equipment, net, consists of the following at July 31, 2014 and April 30, 2014: | |||||||||
July 31, | April 30, | ||||||||
2014 | 2014 | ||||||||
Leasehold improvements | $ | 1,538,000 | $ | 1,538,000 | |||||
Laboratory equipment | 5,913,000 | 5,646,000 | |||||||
Furniture, fixtures, office equipment and software | 3,889,000 | 2,679,000 | |||||||
11,340,000 | 9,863,000 | ||||||||
Less accumulated depreciation and amortization | (7,693,000 | ) | (7,416,000 | ) | |||||
Property and equipment, net | $ | 3,647,000 | $ | 2,447,000 | |||||
Depreciation and amortization expense for three months ended July 31, 2014 and 2013 was $277,000 and $257,000, respectively. |
5_INVENTORIES
5. INVENTORIES | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
5. INVENTORIES | ' | ||||||||
Inventories are stated at the lower of cost or market and primarily include raw materials, direct labor and overhead costs (work-in-process) associated with our wholly-owned subsidiary, Avid. Cost is determined by the first-in, first-out method. Inventories consist of the following at July 31, 2014 and April 30, 2014: | |||||||||
July 31, | April 30, | ||||||||
2014 | 2014 | ||||||||
Raw materials | $ | 2,725,000 | $ | 2,370,000 | |||||
Work-in-process | 3,273,000 | 3,160,000 | |||||||
Total inventories | $ | 5,998,000 | $ | 5,530,000 |
6_STOCKHOLDERS_EQUITY
6. STOCKHOLDERS' EQUITY | 3 Months Ended | ||
Jul. 31, 2014 | |||
Equity [Abstract] | ' | ||
6. STOCKHOLDERS' EQUITY | ' | ||
Sales of Common and Preferred Stock | |||
Our ability to continue our clinical trials and development efforts is highly dependent on the amount of cash and cash equivalents on hand combined with our ability to raise additional capital to support our future operations through one or more methods, including but not limited to, issuing additional equity. | |||
With respect to financing our operations through the issuance of equity, the following is a summary of our financing activity during the three months ended July 31, 2014. | |||
Common Stock | |||
On December 27, 2012, we entered into an At Market Sales Issuance Agreement (“December 2012 AMI Agreement”) with MLV & Co. LLC (“MLV”), pursuant to which we may sell shares of our common stock through MLV, as agent, for aggregate gross proceeds of up to $75,000,000, in registered transactions from our shelf registration statement on Form S-3 (File No. 333-180028), which was declared effective by the SEC on April 12, 2012. During the three months ended July 31, 2014, we sold 226,700 shares of common stock at market prices under the December 2012 AMI Agreement for aggregate gross proceeds of $435,000 before deducting commissions and other issuance costs of $14,000. As of July 31, 2014, aggregate gross proceeds of up to $5,769,000 remained available under the December 2012 AMI Agreement. | |||
On June 13, 2014, we entered into an At Market Issuance Sales Agreement (“June 2014 AMI Agreement”), with MLV, pursuant to which we may sell shares of our common stock through MLV, as agent, for aggregate gross proceeds of up to $25,000,000, in registered transactions from our shelf registration statement on Form S-3 (File No. 333-180028). As of July 31, 2014, we had not sold any shares of common stock under the June 2014 AMI Agreement. | |||
Preferred Stock | |||
On June 13, 2014, we entered into a separate At Market Issuance Sales Agreement (“Series E AMI Agreement”) with MLV, pursuant to which we may issue and sell shares of our Series E Preferred Stock through MLV, as agent, for aggregate gross proceeds of up to $30,000,000, in registered transactions from our shelf registration statement on Form S-3 (File No. 333-193113), which was declared effective by the SEC on January 16, 2014. During the three months ended July 31, 2014, we sold 400,000 shares of our Series E Preferred Stock at market prices under the Series E AMI Agreement for aggregate gross proceeds of $10,000,000 before deducting commission and other issuance costs of $516,000. As of July 31, 2014, aggregate gross proceeds of up to $20,000,000 remained available under the Series E AMI Agreement. | |||
In addition, the Series E Preferred Stock is classified as permanent equity in accordance with FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities from Equity. | |||
Series E Preferred Stock Rights and Preferences | |||
The rights and preferences of the Series E Preferred Stock include: | |||
(i) The holders are entitled to receive a 10.50% per annum cumulative quarterly dividend, payable in cash, on or about the 1st day of each of January, April, July, and October; | |||
(ii) The dividend may increase to a penalty rate of 12.50% if: (a) we fail to pay dividends for any four consecutive or nonconsecutive quarterly dividend periods, or (b) once the Series E Preferred Stock becomes initially eligible for listing on a national securities exchange, we fail, for 180 or more consecutive days, to maintain such listing; | |||
(iii) Following a change of control of the Company (as defined in the Certificate of Designations) by a person or entity, we (or the acquiring entity) may, at our option, redeem the Series E Preferred Stock, in whole but not in part, within 120 days after the date on which the change of control has occurred for cash, at the redemption price; | |||
(iv) We may not redeem the Series E Preferred Stock prior to February 11, 2017 (except following a change of control) and, on and after February 11, 2017, we may redeem the Series E Preferred Stock for cash at our option, from time to time, in whole or in part, at the redemption price; | |||
(v) The redemption price is $25.00 per share, plus any accrued and unpaid dividends (whether or not earned or declared) to, but excluding, the redemption date; | |||
(vi) The liquidation preference is $25.00 per share, plus any accrued and unpaid dividends (whether or not earned or declared); | |||
(vii) The Series E Preferred Stock has no stated maturity date or mandatory redemption and is senior to all of the Company’s other securities; | |||
(viii) There is a general conversion right with respect to the Series E Preferred Stock with an initial conversion price of $3.00, a special conversion right upon a change of control, and a market trigger conversion at our option in the event of Market Trigger (as defined in the Certificate of Designations); and | |||
(ix) The holders of the Series E Preferred Stock have no voting rights, except as defined in the Certificate of Designations. | |||
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Certificate of Designations which was filed as Exhibit 3.11 to the Company’s Form 8-A filed with the SEC on February 12, 2014 and is incorporated herein by reference. | |||
Series E Preferred Stock Dividend | |||
On June 10, 2014, our Board of Directors declared a quarterly cash dividend of $0.65625 per share on our Series E Preferred Stock. The dividend payment is equivalent to an annualized 10.50% per share, based on the $25.00 per share stated liquidation preference, accruing from April 1, 2014 through June 30, 2014. The cash dividend of $771,000 was paid on July 1, 2014 to holders of the Series E Preferred Stock of record on June 20, 2014. | |||
Shares of Common Stock Authorized and Reserved for Future Issuance | |||
We are authorized to issue up to 325,000,000 shares of our common stock. As of July 31, 2014, 179,216,032 shares of our common stock were issued and outstanding. In addition, our common stock outstanding as of July 31, 2014 excluded the following shares of common stock reserved for future issuance: | |||
· | 25,297,851 shares of common stock reserved for issuance under outstanding option grants and available for issuance under our stock incentive plans; | ||
· | 2,940,509 shares of common stock reserved for and available for issuance under our Employee Stock Purchase Plan; | ||
· | 273,280 shares of common stock issuable upon exercise of outstanding warrants; and | ||
· | 34,075,000 shares of common stock issuable upon conversion of our outstanding Series E Preferred Stock (1). | ||
_____________ | |||
-1 | The Series E Preferred Stock is convertible into shares of common stock at a conversion price of $3.00 per share. If all outstanding Series E Preferred Stock were converted at the $3.00 per share conversion price, the holders of Series E Preferred Stock would receive an aggregate of 9,791,666 shares of our common stock. However, we have reserved the maximum number of shares of our common stock that could be issued upon a change of control event assuming our shares of common stock are acquired for consideration of $0.855 per share or less. In this scenario, each outstanding share of Series E Preferred Stock could be converted into 29 shares of common stock, as further described in the Certificate of Designations, filed as Exhibit 3.11 to the Company’s Form 8-A filed with the SEC on February 12, 2014. |
7_EQUITY_COMPENSATION_PLANS
7. EQUITY COMPENSATION PLANS | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
7. EQUITY COMPENSATION PLANS | ' | ||||||||
Stock Incentive Plans | |||||||||
As of July 31, 2014, we had an aggregate of 25,297,851 shares of common stock reserved for issuance under our stock incentive plans, of which, 21,069,179 shares were subject to outstanding options and 4,228,672 shares were available for future grants of share-based awards. | |||||||||
The following summarizes our stock option transaction activity for the three months ended July 31, 2014: | |||||||||
Stock Options | Shares | Weighted Average | |||||||
Exercisable Price | |||||||||
Outstanding, May 1, 2014 | 17,165,333 | $ 1.58 | |||||||
Granted | 4,187,470 | $ 1.75 | |||||||
Exercised | (118,168 | ) | $ 0.97 | ||||||
Canceled or expired | (165,456 | ) | $ 3.72 | ||||||
Outstanding, July 31, 2014 | 21,069,179 | $ 1.60 | |||||||
Employee Stock Purchase Plan | |||||||||
We have reserved a total of 5,000,000 shares of common stock to be purchased under our 2010 Employee Stock Purchase Plan (the “ESPP”), of which 2,940,509 shares of common stock remain available for purchase as of July 31, 2014. The ESPP allows eligible employees on a voluntary basis to purchase shares of our common stock directly from the Company. Under the ESPP, we will sell shares to participants at a price equal to the lesser of 85% of the fair market value of our common stock at the (i) beginning of a six-month offering period or (ii) at the end of the six-month offering period. The ESPP provides for two six-month offering periods each year; the first offering period will begin on the first trading day on or after each November 1; the second offering period will begin on the first trading day on or after each May 1. No shares were purchased under the ESPP during the three months ended July 31, 2014 as the current six-month offering period ends on October 31, 2014. | |||||||||
Share-Based Compensation | |||||||||
Total share-based compensation expense is included in the accompanying interim unaudited condensed consolidated statements of operations as follows: | |||||||||
Three Months Ended | |||||||||
July 31, | |||||||||
2014 | 2013 | ||||||||
Cost of contract manufacturing | $ | 24,000 | $ | 24,000 | |||||
Research and development | 743,000 | 741,000 | |||||||
Selling, general and administrative | 1,009,000 | 828,000 | |||||||
Total share-based compensation expense | $ | 1,776,000 | $ | 1,593,000 | |||||
Share-based compensation from: | |||||||||
Stock options | $ | 1,697,000 | $ | 1,503,000 | |||||
Employee stock purchase plan | 79,000 | 90,000 | |||||||
$ | 1,776,000 | $ | 1,593,000 | ||||||
As of July 31, 2014, the total estimated unrecognized compensation cost related to non-vested stock options was $7,786,000. This cost is expected to be recognized over a weighted average vesting period of 1.43 years based on current assumptions. |
8_WARRANTS
8. WARRANTS | 3 Months Ended |
Jul. 31, 2014 | |
Warrants and Rights Note Disclosure [Abstract] | ' |
8. WARRANTS | ' |
No warrants were issued or exercised during the three months ended July 31, 2014. As of July 31, 2014, warrants to purchase 273,280 shares of our common stock at an exercise price of $2.47 were outstanding and are exercisable through August 30, 2018. |
9_SEGMENT_REPORTING
9. SEGMENT REPORTING | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
9. SEGMENT REPORTING | ' | ||||||||
Our business is organized into two reportable operating segments and both operate in the U.S. Peregrine is engaged in the research and development of monoclonal antibodies for the treatment and diagnosis of cancer. Avid is engaged in providing contract manufacturing services for Peregrine and third-party customers on a fee-for-service basis. | |||||||||
The accounting policies of the operating segments are the same as those described in Note 2. We evaluate the performance of our contract manufacturing services segment based on gross profit or loss from third-party customers. However, our products in the research and development segment are not evaluated based on gross profit or loss, but rather based on scientific progress of the technologies. As such, gross profit or loss is only provided for our contract manufacturing services segment in the below table. All revenues shown below are derived from transactions with third-party customers. | |||||||||
Segment information is summarized as follows: | |||||||||
Three Months Ended July 31, | |||||||||
2014 | 2013 | ||||||||
Contract manufacturing services revenue | $ | 5,496,000 | $ | 4,581,000 | |||||
Cost of contract manufacturing services | 3,583,000 | 2,670,000 | |||||||
Gross profit | 1,913,000 | 1,911,000 | |||||||
Revenue from products in research and development | – | 107,000 | |||||||
Research and development expense | (10,201,000 | ) | (5,304,000 | ) | |||||
Selling, general and administrative expense | (4,883,000 | ) | (4,334,000 | ) | |||||
Other income, net | 42,000 | 20,000 | |||||||
Net loss | $ | (13,129,000 | ) | $ | (7,600,000 | ) | |||
Revenue generated from our contract manufacturing services segment was derived from a limited number of customers. The percentages below represent revenue derived from each customer as a percentage of total contract manufacturing services revenue: | |||||||||
Three Months Ended July 31, | |||||||||
2014 | 2013 | ||||||||
United States (one customer) | 100% | 93% | |||||||
Other customers | – | 7 | |||||||
Total | 100% | 100% | |||||||
Revenue generated from our products in our research and development segment during the three months ended July 31, 2013 was directly related to license revenue recognized under licensing agreements with an unrelated entity. |
10_COMMITMENTS_AND_CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jul. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
11. COMMITMENTS AND CONTINGENCIES | ' |
In the ordinary course of business, we are at times subject to various legal proceedings and disputes. We make provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions are reviewed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. Although the ultimate resolution of these various matters cannot be determined at this time, we do not believe that such matters, individually or in the aggregate, will have a material adverse effect on our consolidated results of operations, cash flows, or financial condition. | |
Securities Related Class Action Lawsuit | |
On September 28, 2012, three complaints were filed in the U.S. District Court for the Central District of California against us and certain of our executive officers and one consultant (collectively, the “Defendants”) on behalf of certain purchasers of our common stock. The complaints have been brought as purported stockholder class actions, and, in general, include allegations that Defendants violated (i) Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder and (ii) Section 20(a) of the Exchange Act, by making materially false and misleading statements regarding the interim results of our bavituximab Phase II second-line NSCLC trial, thereby artificially inflating the price of our common stock. The plaintiffs are seeking unspecified monetary damages and other relief. On February 5, 2013, the court consolidated the related actions with the low-numbered case (captioned Anderson v. Peregrine Pharmaceuticals, Inc., et al., Case No. 12-cv-1647-PSG (FMOx)). After the court issued two separate orders granting the Defendants’ two separate motions to dismiss, on May 1, 2014, the court issued a third order granting Defendants’ motion to dismiss the plaintiff’s amended complaint with prejudice. On May 29, 2014, the plaintiff filed a notice of appeal with respect to the court’s order granting Defendants’ motion to dismiss. Lead plaintiff’s opening brief with respect to the appeal is due on November 10, 2014 and the Defendants’ answering brief is due on December 10, 2014. We believe that the class action lawsuit is without merit and intend to vigorously defend the action, including seeking dismissal of any amended complaint. | |
Derivative Litigation | |
On May 9, 2013, an alleged shareholder filed, purportedly on behalf of the Company, a derivative lawsuit, captioned Roy v. Steven W. King, et al., Case No. 13-cv-0741-PSG (RNBx), in the U.S. District Court for the Central District of California against certain of our executive officers and directors. The complaint asserts claims for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment arising from substantially similar factual allegations as those asserted in the consolidated securities class action lawsuit, described above (the “Securities Class Action”). This case was subsequently transferred to the same court and judge handling the Securities Class Action lawsuit. On May 31, 2013, the judge issued an order administratively closing the case and inviting the parties to move to re-open after the final resolution of defendants’ motions to dismiss in the Securities Class Action. | |
On October 10, 2013, a derivative and class action complaint, captioned Michaeli v. Steven W. King, et al., C.A. No. 8994-VCL, was filed in the Court of Chancery of the State of Delaware against certain of our executive officers and directors. The complaint alleges that the Company’s directors and executives breached their respective fiduciary duties in connection with certain purportedly improper compensation decisions made by the Company’s Board of Directors during the past three fiscal years, including: (i) the grant of a stock option to Mr. King on May 4, 2012; (ii) the non-routine broad-based stock option grant to the Company’s directors, executives, all other employees and certain consultants on December 27, 2012; and (iii) the payment, during the past three fiscal years, of compensation to the Company’s non-employee directors. In addition, the complaint alleges that the Company’s directors breached their fiduciary duty of candor by filing and seeking stockholder action on the basis of an allegedly materially false and misleading proxy statement for the Company’s 2013 annual meeting of stockholders. The defendants filed their answer to the complaint on February 5, 2014. We believe that the derivative and class action complaint are without merit and intend to vigorously defend the action. | |
Other Legal Matters | |
On September 24, 2012, we filed a lawsuit, captioned Peregrine Pharmaceuticals, Inc. v. Clinical Supplies Management, Inc., Case No. 8:12-cv-01608 JST(AN) (C.D. Cal), against Clinical Supplies Management, Inc. (“CSM”), in the U.S. District Court for the Central District of California. In 2010, we had contracted with CSM as our third-party vendor responsible for distribution of the blinded investigational product used in our bavituximab Phase IIb second-line NSCLC trial. As part of the routine collection of data in advance of an end-of-Phase II meeting with regulatory authorities, we discovered major discrepancies between some patient sample test results and patient treatment code assignments. Consequently, we filed this lawsuit against CSM alleging breach of contract, negligence and negligence per se arising from CSM’s performance of its contracted services. We are seeking monetary damages. On March 7, 2013, we and CSM submitted to the court a proposed stipulation pursuant to which the lawsuit would be stayed for up to 120 days during which time we and CSM would participate in an alternative dispute resolution process, pursuant to our contract with CSM. The proposed stipulation was approved by the court on March 8, 2013. On June 26, 2013, we and CSM engaged in an alternative dispute resolution session that did not result in any resolution of our dispute. The aforementioned stay expired on July 6, 2013. We granted CSM until July 19, 2013 to file an answer to our complaint, which CSM did on July 11, 2013. The parties appeared in court in February 2014 for a scheduling conference at which the court scheduled the trial to commence in April 2015. On June 5, 2014, CSM filed with the court a Notice of Motion and Motion for Partial Summary Judgment seeking partial summary judgment on our claims for damages on the grounds that the limitation of liability clauses contained in our master services agreement with CSM are valid and enforceable. Our opposition to CSM’s motion was filed with the court on June 23, 2104, and the hearing on the motion was held on July 28, 2014. On July 30, 2014, the court issued its order holding that the limitation of liability clause did not apply to our claims for active negligence, negligent misrepresentation and constructive fraud, but did apply to our causes of action for breach of contract, passive negligence and negligence per se. | |
11_SUBSEQUENT_EVENT
11. SUBSEQUENT EVENT | 3 Months Ended |
Jul. 31, 2014 | |
Subsequent Events [Abstract] | ' |
11. SUBSEQUENT EVENT | ' |
On September 8, 2014, our Board of Directors declared a quarterly cash dividend of $0.65625 per share on our Series E Preferred Stock. The dividend payment is equivalent to an annualized 10.50% per share, based on the $25.00 per share stated liquidation preference, accruing from July 1, 2014 through September 30, 2014. The cash dividend is payable on October 1, 2014 to holders of the Series E Preferred Stock of record on September 19, 2014. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||
Jul. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Basis of Presentation | ' | ||
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) related to quarterly reports on Form 10-Q. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for a complete set of financial statements. These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2014. The condensed consolidated balance sheet at April 30, 2014, has been derived from audited financial statements at that date. The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operations for the periods presented, with such adjustments consisting only of normal recurring adjustments. Results of operations for interim periods covered by this quarterly report on Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year. | |||
The interim unaudited condensed consolidated financial statements include the accounts of Peregrine and Avid. All intercompany accounts and transactions have been eliminated in the interim unaudited condensed consolidated financial statements. | |||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts, as well as disclosures of commitments and contingencies in the financial statements and accompanying notes. Actual results could differ from those estimates. | |||
Adoption of Recent Accounting Pronouncements | ' | ||
Effective May 1, 2014, we adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 requires entities to present in the financial statements an unrecognized tax benefit, or a portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except to the extent such items are not available or not intended to be used at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position. In such instances, the unrecognized tax benefit is required to be presented in the financial statements as a liability and not be combined with deferred tax assets. The adoption ASU No. 2013-11 did not have a material impact on our consolidated financial statements | |||
Pending Adoption of Recent Accounting Pronouncements | ' | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606): Revenue from Contracts with Customers, which guidance in this update will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance when it becomes effective. ASU No. 2014-09 affects any entity that enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principal of ASU No. 2014-09 is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, which will be our fiscal year 2018 (or May 1, 2017), and entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Early adoption is prohibited. We are currently in the process of evaluating the impact of adoption of ASU No. 2014-09 on our consolidated financial statements and related disclosures. | |||
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU No. 2014-14 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU No. 2014-14 provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. ASU No. 2014-14 is effective for annual reporting periods ending after December 15, 2016, which will be our fiscal year ending April 30, 2017, and to annual and interim periods thereafter. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of ASU No. 2014-15 on our consolidated financial statements and related disclosures. | |||
Liquidity and Financial Condition | ' | ||
At July 31, 2014, we had $73,256,000 in cash and cash equivalents. We have expended substantial funds on the research and development of our product candidates, and funding the operations of Avid. As a result, we have historically experienced negative cash flows from operations since our inception and we expect negative cash flows from operations to continue for the foreseeable future. Therefore, unless and until we are able to generate sufficient revenues from Avid’s contract manufacturing services and/or from the sale and/or licensing of our product candidates under development, we expect such negative cash flows to continue in the foreseeable future. | |||
Our ability to continue to fund our clinical trials and development efforts is highly dependent on the amount of cash and cash equivalents on hand combined with our ability to raise additional capital to support our future operations through one or more methods, including but not limited to, raising additional capital in the equity markets, securing debt financing, licensing or partnering our product candidates in development, or generating additional revenue from Avid. | |||
Historically, we have funded a significant portion of our operations through the issuance of equity. During the three months ended July 31, 2014, we raised $10,000,000 in aggregate gross proceeds from the sale of our 10.50% Series E Convertible Preferred Stock (the “Series E Preferred Stock”) under an At Market Issuance Sales Agreement (Note 6) and raised an additional $435,000 in aggregate gross proceeds from the sale of shares of our common stock under a separate At Market Sales Issuance Agreement (Note 6). With these proceeds, we currently estimate that we have sufficient cash resources to meet our anticipated cash needs to fund our operations through at least the next twelve months based on our current projections, which include projected costs associated with our Phase III SUNRISE trial, projected cash outflows for the payment of dividends on our Series E Preferred Stock, projected cash inflows under signed contracts with existing customers of Avid and assuming we raise no additional capital from the capital markets or other potential sources. | |||
Our ability to raise additional capital in the equity markets to fund our clinical trials and development efforts in future years is dependent on a number of factors, including, but not limited to, the market demand for our common stock and/or Series E Preferred Stock. The market demand or liquidity of our common stock and/or Series E Preferred Stock is subject to a number of risks and uncertainties, including but not limited to, negative economic conditions, adverse market conditions, adverse clinical trial results and significant delays in one or more clinical trials. If our ability to access the capital markets becomes severely restricted, it could have a negative impact on our business plans, including our clinical trial programs and other research and development activities. In addition, even if we are able to raise additional capital, it may not be at a price or on terms that are favorable to us. | |||
While we will continue to explore these potential opportunities, we may not be successful in (i) raising additional capital in the equity markets, (ii) securing debt financing, (iii) licensing or partnering our products in development, or (iv) generating additional revenue from Avid, to complete the research, development, and clinical testing of our product candidates. | |||
Concentrations of Credit Risk and Customer Base | ' | ||
Financial instruments that potentially subject us to a significant concentration of credit risk consist of cash and cash equivalents and trade receivables. We maintain our cash balances primarily with one major commercial bank and our deposits held with the bank exceed the amount of government insurance limits provided on our deposits. We are exposed to credit risk in the event of default by the major commercial bank holding our cash balances to the extent of the cash amount recorded on the accompanying interim unaudited condensed consolidated balance sheet. | |||
Our trade receivables from amounts billed for contract manufacturing services provided by Avid have historically been derived from a small customer base. Most contracts require up-front payments and installment payments during the service period. We perform periodic evaluations of the financial condition of our ongoing customers and generally do not require collateral, but we can terminate any contract if a material default occurs. As of July 31, 2014 and April 30, 2014, approximately 100% and 99% of our trade receivables, respectively, represent amounts due from two customers. | |||
In addition, contract manufacturing revenue generated by Avid has historically been derived from a small customer base (Note 9). These customers typically do not enter into long-term contracts because their need for drug supply depends on a variety of factors, including the drug’s stage of development, their financial resources, and, with respect to commercial drugs, demand for the drug in the market. Our future results of operations could be adversely affected if revenue from any one of our primary customers is significantly reduced or eliminated | |||
Revenue Recognition | ' | ||
We currently derive revenue from two sources: (i) contract manufacturing services provided by Avid, and (ii) licensing revenue related to agreements associated with Peregrine’s technologies under development. | |||
We recognize revenue in accordance with the authoritative guidance for revenue recognition. We recognize revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. We also comply with the authoritative guidance for revenue recognition regarding arrangements with multiple deliverables. | |||
Contract Manufacturing Revenue | |||
Revenue associated with contract manufacturing services provided by Avid is recognized once the service has been rendered and/or upon shipment (or passage of title) of the product to the customer. On occasion, we recognize revenue on a “bill-and-hold” basis in accordance with the authoritative guidance. Under “bill-and-hold” arrangements, revenue is recognized once the product is complete and ready for shipment, title and risk of loss has passed to the customer, management receives a written request from the customer for “bill-and-hold” treatment, the product is segregated from other inventory, and no further performance obligations exist. | |||
In addition, we also follow the authoritative guidance when reporting revenue as gross when we act as a principal versus reporting revenue as net when we act as an agent. For transactions in which we act as a principal, have discretion to choose suppliers, bear credit and inventory risk and perform a substantive part of the services, revenue is recorded at the gross amount billed to a customer and costs associated with these reimbursements are reflected as a component of cost of sales for contract manufacturing services. | |||
Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue in the accompanying interim unaudited condensed consolidated financial statements. We also record a provision for estimated contract losses, if any, in the period in which they are determined. | |||
License Revenue | |||
Revenue associated with licensing agreements primarily consists of non-refundable upfront license fees, non-refundable annual license fees and milestone payments. Non-refundable upfront license fees received under license agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. If a licensing agreement has multiple elements, we analyze each element of our licensing agreements and consider a variety of factors in determining the appropriate method of revenue recognition of each element. | |||
Multiple Element Arrangements. Prior to the adoption of ASU No. 2009-13 on May 1, 2011, if a license agreement has multiple element arrangements, we analyze and determine whether the deliverables, which often include performance obligations, can be separated or whether they must be accounted for as a single unit of accounting in accordance with the authoritative guidance. Under multiple element arrangements, we recognize revenue for delivered elements only when the delivered element has stand-alone value and we have objective and reliable evidence of fair value for each undelivered element. If the fair value of any undelivered element included in a multiple element arrangement cannot be objectively determined, the arrangement would then be accounted for as a single unit of accounting, and revenue is recognized over the estimated period of when the performance obligation(s) are performed. | |||
In addition, under certain circumstances, when there is objective and reliable evidence of the fair value of the undelivered items in an arrangement, but no such evidence for the delivered items, we utilize the residual method to allocate the consideration received under the arrangement. Under the residual method, the amount of consideration allocated to delivered items equals the total arrangement consideration less the aggregate fair value of the undelivered items, and revenue is recognized upon delivery of the undelivered items based on the relative fair value of the undelivered items. | |||
For new licensing agreements or material modifications of existing licensing agreements entered into after May 1, 2011, we follow the provisions of ASU No. 2009-13. If a licensing agreement includes multiple elements, we identify which deliverables represent separate units of accounting, and then determine how the arrangement consideration should be allocated among the separate units of accounting, which may require the use of significant judgment. | |||
If a licensing agreement includes multiple elements, a delivered item is considered a separate unit of accounting if both of the following criteria are met: | |||
1 | The delivered item has value to the licensing partner on a standalone basis based on the consideration of the relevant facts and circumstances for each agreement; | ||
2 | If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the Company’s control. | ||
Arrangement consideration is allocated at the inception of the agreement to all identified units of accounting based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (“VSOE”) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, we use our best estimate of the selling price for the deliverable. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. Changes in the allocation of the sales price between delivered and undelivered elements can impact revenue recognition but do not change the total revenue recognized under any agreement. | |||
Milestone Payments. Effective May 1, 2011, we adopted on a prospective basis the Milestone Method under ASU No. 2010-17 for new licensing agreements or material modifications of existing licensing agreements entered into after May 1, 2011. Under the Milestone Method, we recognize consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: | |||
1 | The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone; | ||
2 | The consideration relates solely to past performance; and | ||
3 | The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. | ||
A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company. | |||
The provisions of ASU No. 2010-17 do not apply to contingent consideration for which payment is either contingent solely upon the passage of time or the result of a counterparty’s performance. We will assess the nature of, and appropriate accounting for, these payments on a case-by-case basis in accordance with the applicable authoritative guidance for revenue recognition. | |||
Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue in the accompanying interim unaudited condensed consolidated financial statements. | |||
Fair Value Measurements | ' | ||
We determine fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures for all assets and liabilities within the scope of this guidance. This guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy: | |||
· | Level 1 – Quoted prices in active markets for identical assets or liabilities. | ||
· | Level 2 – Observable inputs other than quoted prices included in Level 1, such as assets or liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. | ||
· | Level 3 – Unobservable inputs that are supported by little or no market activity and significant to the overall fair value measurement. | ||
As of July 31, 2014 and April 30, 2014, we do not have any Level 2 or Level 3 financial assets or liabilities and our cash and cash equivalents, which are primarily invested in money market funds with one major commercial bank, are carried at fair value based on quoted market prices for identical securities (Level 1 input). | |||
Customer Deposits | ' | ||
Customer deposits primarily represent advance billings and/or payments received from Avid’s third-party customers prior to the initiation of contract manufacturing services. | |||
Research and Development Expenses | ' | ||
Research and development expenses primarily include (i) payroll and related costs, including share-based compensation, associated with research and development personnel, (ii) costs related to clinical trials and preclinical testing of our technologies under development, (iii) costs to develop and manufacture the product candidates, including raw materials and supplies, product testing, depreciation, and facility related expenses, (iv) expenses for research services provided by universities and contract laboratories, including sponsored research funding, and (v) other research and development expenses. Research and development expenses are charged to expense as incurred when these expenditures relate to our research and development efforts and have no alternative future uses. | |||
Clinical trial costs are a significant component of our research and development expenses. We have a history of contracting with third parties that perform various clinical trial activities on our behalf in the ongoing development of our product candidates. The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow. Expenses related to clinical trials are accrued based on our estimates and/or representations from third parties (including clinical research organizations) regarding services performed. If the contracted amounts are modified (for instance, as a result of changes in the clinical trial protocol or scope of work to be performed), we modify our accruals accordingly on a prospective basis. Revisions in the scope of a contract are charged to expense in the period in which the facts that give rise to the revision become reasonably certain. There were no material adjustments for a change in estimate to research and development expenses in the accompanying interim unaudited condensed consolidated financial statements for the three months ended July 31, 2014 and 2013. | |||
Under certain research and development agreements, we are obligated to make certain advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research and development activities and are deferred and capitalized as prepaid research and development expenses. These advance payments are recognized as an expense in the period the related goods are delivered or the related services are performed. We assess our prepaid research and development expenses for impairment when events or changes in circumstances indicate that the carrying amount of the prepaid expense may not be recoverable or provide future economic benefit. | |||
In addition, under certain in-licensing agreements associated with the research and development of our product candidates, we are obligated to pay certain milestone payments based on potential clinical development and regulatory milestones. These milestone payments have no alternative future uses (in other research and development projects or otherwise) and therefore have no separate economic values and are expensed as research and development costs at the time the costs are incurred. We have no in-licensed product candidates that have alternative future uses in research and development projects or otherwise | |||
Share-based Compensation | ' | ||
We account for stock options and other share-based awards granted under our equity compensation plans in accordance with the authoritative guidance for share-based compensation. The estimated fair value of share-based payments to employees in exchange for services is measured at the grant date, using a fair value based method, and is recognized as expense on a straight-line basis over the requisite service periods. Share-based compensation expense recognized during the period is based on the value of the portion of the share-based payment that is ultimately expected to vest during the period. | |||
In addition, we periodically grant stock options and other share-based awards to non-employee consultants, which we account for in accordance with the authoritative guidance for share-based compensation. The cost of non-employee services received in exchange for share-based awards are measured based on either the fair value of the consideration received or the fair value of the share-based award issued, whichever is more reliably measurable. In addition, guidance requires share-based compensation related to unvested options and awards issued to non-employees to be recalculated at the end of each reporting period based upon the fair market value on that date until the share-based award has vested, and any cumulative catch-up adjustment to share-based compensation resulting from the re-measurement is recognized in the current period. See Note 7 for further discussion regarding share-based compensation. | |||
Basic and Dilutive Net Loss Per Common Share | ' | ||
Basic net loss per common share is computed by dividing our net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period excluding the dilutive effects of stock options, common shares expected to be issued under our employee stock purchase plan, warrants, and Series E Preferred Stock outstanding during the period. Diluted net loss per common share is computed by dividing our net loss attributable to common stockholders by the sum of the weighted average number of common shares outstanding during the period plus the potential dilutive effects of stock options, common shares expected to be issued under our employee stock purchase plan, warrants, and Series E Preferred Stock outstanding during the period. Net loss attributable to common stockholders represents our net loss plus Series E Preferred Stock accumulated dividends. Series E Preferred Stock accumulated dividends include dividends declared for the period (regardless of whether or not the dividends have been paid) and dividends accumulated for the period (regardless of whether or not the dividends have been declared). | |||
The potential dilutive effect of stock options, common shares expected to be issued under our employee stock purchase plan, and warrants outstanding during the period was calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive effect of Series E Preferred Stock outstanding during the period was calculated using the if-converted method assuming the conversion of Series E Preferred Stock as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. Because the impact of stock options, common shares expected to be issued under our employee stock purchase plan, warrants, and Series E Preferred Stock are anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share amounts for the three months ended July 31, 2014 and 2013. | |||
The calculation of weighted average diluted shares outstanding excludes the dilutive effect of outstanding stock options, common shares expected to be issued under our employee stock purchase plan, and warrants, to purchase up to an aggregate of 5,026,166 and 4,426,459 shares of common stock for the three months ended July 31, 2014 and 2013, respectively, since their impact are anti-dilutive during periods of net loss. | |||
The calculation of weighted average diluted shares outstanding also excludes weighted average outstanding stock options and warrants to purchase up to an aggregate of 4,885,058 and 5,933,036 shares of common stock for the three months ended July 31, 2014 and 2013, respectively, as their exercise prices were greater than the average market price of our common stock during the respective periods, resulting in an anti-dilutive effect. In addition, weighted average shares of 8,159,545, assuming the issuance of common stock upon conversion of outstanding Series E Preferred Stock for the three months ended July 31, 2014, were also excluded from the calculation of weighted average diluted shares outstanding as the conversion price was greater than the average market price during the period, resulting in an anti-dilutive effect. There were no shares of Series E Preferred Stock outstanding during the three months ended July 31, 2013. |
3_TRADE_AND_OTHER_RECEIVABLES_
3. TRADE AND OTHER RECEIVABLES (Tables) | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade and other receivables | ' | ||||||||
July 31, | April 30, | ||||||||
2014 | 2014 | ||||||||
Trade receivables(1) | $ | 1,324,000 | $ | 1,219,000 | |||||
Other receivables, net | 67,000 | 113,000 | |||||||
Trade and other receivables, net | $ | 1,391,000 | $ | 1,332,000 |
4_PROPERTY_AND_EQUIPMENT_Table
4. PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
July 31, | April 30, | ||||||||
2014 | 2014 | ||||||||
Leasehold improvements | $ | 1,538,000 | $ | 1,538,000 | |||||
Laboratory equipment | 5,913,000 | 5,646,000 | |||||||
Furniture, fixtures, office equipment and software | 3,889,000 | 2,679,000 | |||||||
11,340,000 | 9,863,000 | ||||||||
Less accumulated depreciation and amortization | (7,693,000 | ) | (7,416,000 | ) | |||||
Property and equipment, net | $ | 3,647,000 | $ | 2,447,000 |
5_INVENTORIES_Tables
5. INVENTORIES (Tables) | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of inventories | ' | ||||||||
July 31, | April 30, | ||||||||
2014 | 2014 | ||||||||
Raw materials | $ | 2,725,000 | $ | 2,370,000 | |||||
Work-in-process | 3,273,000 | 3,160,000 | |||||||
Total inventories | $ | 5,998,000 | $ | 5,530,000 |
7_EQUITY_COMPENSATION_PLANS_Ta
7. EQUITY COMPENSATION PLANS (Tables) | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Schedule of stock option transaction activity | ' | ||||||||
Stock Options | Shares | Weighted Average | |||||||
Exercisable Price | |||||||||
Outstanding, May 1, 2014 | 17,165,333 | $ 1.58 | |||||||
Granted | 4,187,470 | $ 1.75 | |||||||
Exercised | (118,168 | ) | $ 0.97 | ||||||
Canceled or expired | (165,456 | ) | $ 3.72 | ||||||
Outstanding, July 31, 2014 | 21,069,179 | $ 1.60 | |||||||
Share-based compensation expense | ' | ||||||||
Three Months Ended | |||||||||
July 31, | |||||||||
2014 | 2013 | ||||||||
Cost of contract manufacturing | $ | 24,000 | $ | 24,000 | |||||
Research and development | 743,000 | 741,000 | |||||||
Selling, general and administrative | 1,009,000 | 828,000 | |||||||
Total share-based compensation expense | $ | 1,776,000 | $ | 1,593,000 | |||||
Share-based compensation from: | |||||||||
Stock options | $ | 1,697,000 | $ | 1,503,000 | |||||
Employee stock purchase plan | 79,000 | 90,000 | |||||||
$ | 1,776,000 | $ | 1,593,000 |
9_SEGMENT_REPORTING_Tables
9. SEGMENT REPORTING (Tables) | 3 Months Ended | ||||||||
Jul. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Segment information | ' | ||||||||
Three Months Ended July 31, | |||||||||
2014 | 2013 | ||||||||
Contract manufacturing services revenue | $ | 5,496,000 | $ | 4,581,000 | |||||
Cost of contract manufacturing services | 3,583,000 | 2,670,000 | |||||||
Gross profit | 1,913,000 | 1,911,000 | |||||||
Revenue from products in research and development | – | 107,000 | |||||||
Research and development expense | (10,201,000 | ) | (5,304,000 | ) | |||||
Selling, general and administrative expense | (4,883,000 | ) | (4,334,000 | ) | |||||
Other income, net | 42,000 | 20,000 | |||||||
Net loss | $ | (13,129,000 | ) | $ | (7,600,000 | ) | |||
Customer Revenue | ' | ||||||||
Three Months Ended July 31, | |||||||||
2014 | 2013 | ||||||||
United States (one customer) | 100% | 93% | |||||||
Other customers | – | 7 | |||||||
Total | 100% | 100% | |||||||
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Common Stock | ' | ' |
Gross proceeds from issuance of equity | 435,000 | ' |
Preferred Stock | ' | ' |
Gross proceeds from issuance of equity | 10,000,000 | ' |
Options ESPP Warrants | ' | ' |
Antidilutive shares excluded from calculation of weighted average diluted shares outstanding | 5,026,166 | 4,426,459 |
Options and Warrants | ' | ' |
Antidilutive shares excluded from calculation of weighted average diluted shares outstanding | 4,885,058 | 5,933,036 |
3_TRADE_AND_OTHER_RECEIVABLES_1
3. TRADE AND OTHER RECEIVABLES (Details) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Receivables [Abstract] | ' | ' |
Trade receivables | $1,324,000 | $1,219,000 |
Other receivables, net | 67,000 | 113,000 |
Trade and other receivables, net | $1,391,000 | $1,332,000 |
3_TRADE_AND_OTHER_RECEIVABLES_2
3. TRADE AND OTHER RECEIVABLES (Details Narrative) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Receivables [Abstract] | ' | ' |
Allowance for doubtful accounts | $6,000 | $13,000 |
4_PROPERTY_AND_EQUIPMENT_Detai
4. PROPERTY AND EQUIPMENT (Details) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Property, Plant and Equipment [Abstract] | ' | ' |
Leasehold improvements | $1,538,000 | $1,538,000 |
Laboratory equipment | 5,913,000 | 5,646,000 |
Furniture, fixtures, office equipment and software | 3,889,000 | 2,679,000 |
Property, gross | 11,340,000 | 9,863,000 |
Less accumulated depreciation and amortization | -7,693,000 | -7,416,000 |
Property and equipment, net | $3,647,000 | $2,447,000 |
4_PROPERTY_AND_EQUIPMENT_Detai1
4. PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation and amortization | $277,000 | $257,000 |
5_INVENTORIES_Details
5. INVENTORIES (Details) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Inventory Disclosure [Abstract] | ' | ' |
Raw materials | $2,725,000 | $2,370,000 |
Work-in-process | 3,273,000 | 3,160,000 |
Total inventories | $5,998,000 | $5,530,000 |
6_STOCKHOLDERS_EQUITY_Details_
6. STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Cash dividend declared, per share | $0.66 | ' |
Cash dividend paid | $771,000 | $0 |
December 2012 AMI Agreement | ' | ' |
Stock issued, shares issued | 226,700 | ' |
Stock issued, gross proceeds | 435,000 | ' |
Stock issuance costs | 14,000 | ' |
Aggregate gross proceeds remaining | 5,769,000 | ' |
June 2014 AMI Agreement | ' | ' |
Aggregate gross proceeds remaining | 25,000,000 | ' |
Series E AMI Agreement | ' | ' |
Stock issued, shares issued | 400,000 | ' |
Stock issued, gross proceeds | 10,000,000 | ' |
Stock issuance costs | 516,000 | ' |
Aggregate gross proceeds remaining | $20,000,000 | ' |
7_EQUITY_COMPENSATION_PLANS_De
7. EQUITY COMPENSATION PLANS (Details - Option activity) (USD $) | 3 Months Ended |
Jul. 31, 2014 | |
Number of Options | ' |
Number of Options Outstanding, Beginning | 17,165,333 |
Number of Options Granted | 4,187,470 |
Number of Options Exercised | -118,168 |
Number of Options Cancelled or Expired | -165,456 |
Number of Options Outstanding, Ending | 21,069,179 |
Weighted Average Exercise Price | ' |
Weighted Average Exercise Price Outstanding, Beginning | $1.58 |
Weighted Average Exercise Price Granted | $1.75 |
Weighted Average Exercise Price Exercised | $0.97 |
Weighted Average Exercise Price Canceled | $3.72 |
Weighted Average Exercise Price Outstanding, Ending | $1.60 |
7_EQUITY_COMPENSATION_PLANS_De1
7. EQUITY COMPENSATION PLANS (Details - Share based compensation) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Share based compensation | $1,776,000 | $1,593,000 |
Cost of contract manufacturing | ' | ' |
Share based compensation | 24,000 | 24,000 |
Research and development | ' | ' |
Share based compensation | 743,000 | 741,000 |
Selling, general and administrative | ' | ' |
Share based compensation | 1,009,000 | 828,000 |
Stock Options | ' | ' |
Share based compensation | 1,697,000 | 1,503,000 |
Employee Stock Purchase Plan | ' | ' |
Share based compensation | $79,000 | $90,000 |
11_SEGMENT_REPORTING_Details
11. SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Segment Reporting [Abstract] | ' | ' |
Contract manufacturing services revenue | $5,496,000 | $4,581,000 |
Cost of contract manufacturing services | 3,583,000 | 2,670,000 |
Gross profit | 1,913,000 | 1,911,000 |
Revenue from products in research and development | 0 | 107,000 |
Research and development expense | -10,201,000 | -5,304,000 |
Selling, general and administrative expense | -4,883,000 | -4,334,000 |
Other income, net | 42,000 | 20,000 |
Net loss | ($13,129,000) | ($7,600,000) |
11_SEGMENT_REPORTING_Details_P
11. SEGMENT REPORTING (Details - Percentage breakdown) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Customer revenue as a percentage of revenue | 100.00% | 100.00% |
United States (One Customer) | ' | ' |
Customer revenue as a percentage of revenue | 100.00% | 93.00% |
Other Customers | ' | ' |
Customer revenue as a percentage of revenue | 0.00% | 7.00% |