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SECURITIES AND EXCHANGE COMMISSION
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 93-0979187 | |
(State or other jurisdiction | (I.R.S. Employer | |
of incorporation or organization) | Identification No.) | |
157 Technology Drive | ||
Irvine, California | 92618 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large Accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyþ | |||
(Do not check if a smaller reporting company) |
Class | Outstanding at May 13, 2009 | |
Common Stock, $.001 par value | 32,995,887 |
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Exhibit 2.1 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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(Unaudited)
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
(In Thousands, Except Share and Per | ||||||||
Share Data) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | ||||||||
Unrestricted Cash | $ | 4,065 | $ | 9,860 | ||||
Restricted Cash (Note 2) | 10,000 | — | ||||||
Total cash and cash equivalents | 14,065 | 9,860 | ||||||
Marketable securities | 49,833 | 68,226 | ||||||
Accounts receivable-trade, net | 6,306 | 5,002 | ||||||
Inventory | 1,894 | 1,841 | ||||||
Prepaid expenses and other current assets | 736 | 693 | ||||||
Total current assets | 72,834 | 85,622 | ||||||
Property and equipment, net | 1,818 | 1,782 | ||||||
ZEVALIN related intangible assets, net | 36,092 | 37,042 | ||||||
Other assets | 104 | 289 | ||||||
Total assets | $ | 110,848 | $ | 124,735 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued obligations | $ | 8,221 | $ | 5,627 | ||||
Accrued compensation | 1,921 | 2,956 | ||||||
Note payable in connection with ZEVALIN Acquisition | 10,000 | 7,500 | ||||||
Current portion of deferred revenue and other credits | 8,500 | 8,500 | ||||||
Accrued drug development costs | 4,798 | 3,449 | ||||||
Total current liabilities | 33,440 | 28,032 | ||||||
Capital lease obligations, net of current portion | 89 | 95 | ||||||
Deferred revenue and other credits, net of current portion | 31,785 | 33,929 | ||||||
ZEVALIN related contingent obligations | 4,998 | 8,798 | ||||||
Total liabilities | 70,312 | 70,854 | ||||||
Commitments and contingencies (Note 5) | ||||||||
Minority interest in consolidated entity | — | 14,262 | ||||||
Stockholders’ Equity: | ||||||||
Preferred Stock, par value $0.001 per share, 5,000,000 shares authorized: | ||||||||
Series B Junior participating preferred stock, 1,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||
Series E Convertible voting preferred stock, 2,000 shares authorized, stated value $10,000 per share, $0.8 million aggregate liquidation value; 68 shares issued and outstanding at March 31, 2009 and December 31, 2008 | 419 | 419 | ||||||
Common stock, par value $0.001 per share, 100,000,000 shares authorized; Issued and outstanding, 32,547,700 and 32,166,316 shares at March 31, 2009 and December 31, 2008 | 33 | 32 | ||||||
Additional paid-in capital | 297,208 | 296,531 | ||||||
Accumulated other comprehensive loss | (531 | ) | (146 | ) | ||||
Accumulated deficit | (256,593 | ) | (257,217 | ) | ||||
Total stockholders’ equity | 40,536 | 39,619 | ||||||
Total liabilities and stockholders’ equity | $ | 110,848 | $ | 124,735 | ||||
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(Unaudited)
Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, 2009 | March 31, 2008 | |||||||
(In Thousands, Except Share and Per | ||||||||
Share Data) | ||||||||
Revenues | ||||||||
License and contract revenue | $ | 2,125 | $ | — | ||||
Product sales | 12,038 | — | ||||||
Total revenues | $ | 14,163 | $ | — | ||||
Operating expenses: | ||||||||
Cost of product sold | $ | 1,834 | $ | — | ||||
Research and development | 5,654 | 6,382 | ||||||
Amortization of purchased intangibles | 950 | — | ||||||
Selling, general and administrative | 6,351 | 2,585 | ||||||
Total operating expenses | 14,789 | 8,967 | ||||||
Loss from operations | (626 | ) | (8,967 | ) | ||||
Other income, net | 104 | 301 | ||||||
Loss before minority interest in consolidated entities | (522 | ) | (8,666 | ) | ||||
Minority interest in net loss of consolidated entities | 1,146 | — | ||||||
Net income (loss) | $ | 624 | $ | (8,666 | ) | |||
Net income (loss) per share | ||||||||
Basic | $ | 0.02 | $ | (0.28 | ) | |||
Diluted | $ | 0.02 | $ | (0.28 | ) | |||
Weighted average common shares: | ||||||||
Basic | 32,439,523 | 31,271,281 | ||||||
Diluted | 32,644,425 | 31,271,281 | ||||||
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(Unaudited)
Three Months Ended | ||||||||
March 31, 2009 | March 31, 2008 | |||||||
(In Thousands, Except Share and Per | ||||||||
Share Data) | ||||||||
Cash Flows From Operating Activities: | ||||||||
Net Income (loss) | $ | 624 | $ | (8,666 | ) | |||
Adjustments to reconcile net loss to net cash from / (used in) operating activities: | ||||||||
Amortization of deferred revenue | (2,125 | ) | — | |||||
Depreciation and amortization | 136 | 87 | ||||||
Share-based compensation expense | 968 | 1,731 | ||||||
Fair value of common stock issued in connection with drug license | 185 | 305 | ||||||
Minority interest in consolidated entities | (1,146 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts Receivable | (1,304 | ) | 107 | |||||
Inventory | (53 | ) | (562 | ) | ||||
Prepaid expenses and other assets | 148 | 188 | ||||||
Accounts payable and accrued obligations | 3,942 | (170 | ) | |||||
Accrued compensation and related taxes | (1,035 | ) | (107 | ) | ||||
Deferred revenue and other credits | (25 | ) | (30 | ) | ||||
Net cash provided by (used in) operating activities | 315 | (7,117 | ) | |||||
Cash Flows From Investing Activities: | ||||||||
Net sales of marketable securities | 18,112 | 10,151 | ||||||
Investment in ZEVALIN acquisition | (14,050 | ) | — | |||||
Restricted Cash in escrow for ZEVALIN acquisition | (10,000 | ) | — | |||||
Purchases of property and equipment | (172 | ) | (138 | ) | ||||
Net cash provided by (used in) investing activities | (6,110 | ) | 10,013 | |||||
Cash Flows From Financing Activities: | ||||||||
Net cash provided by financing activities | — | — | ||||||
Net increase (decrease) in cash and cash equivalents | (5,795 | ) | 2,896 | |||||
Cash and cash equivalents, beginning of period | 9,860 | 1,141 | ||||||
Cash and cash equivalents, end of period | $ | 4,065 | $ | 4,037 | ||||
Supplemental Cash Flow Information: | ||||||||
Interest paid | $ | 7 | — | |||||
Income taxes paid | $ | 45 | — | |||||
Schedule of Non-Cash Investing and Financing Activities: | ||||||||
Fair value of common stock issued in connection with drug license | $ | 185 | 305 | |||||
Fair value of restricted stock granted employees and directors | $ | 182 | 223 | |||||
Fair value of stock issued to match employee 401k contributions | $ | 108 | 61 | |||||
Preferred stock dividends paid with common stock | $ | — | — | |||||
Fair value of equity awarded to consultants and placement agents | $ | 111 | 72 | |||||
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March 31, 2009
(Unaudited)
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Level 1: | Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. | |
Level 2: | Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. | |
Level 3: | Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
Fair Value Measurements at March 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash & equivalents | $ | 4,065 | $ | — | $ | — | $ | 4,065 | ||||||||
U.S. Treasury T-Bills | 6,052 | — | — | 6,052 | ||||||||||||
Money Market Currency Funds | 6,530 | — | — | 6,530 | ||||||||||||
FDIC insured bank CDs | 12,207 | — | — | 12,207 | ||||||||||||
Medium term Corporate Notes | 2,252 | — | — | 2,252 | ||||||||||||
U.S. Treasury Backed Securities | 22,792 | — | — | 22,792 | ||||||||||||
Funds held in escrow | 10,000 | — | — | 10,000 | ||||||||||||
Other Securities | 40 | — | — | 40 | ||||||||||||
$ | 63,938 | $ | — | $ | — | $ | 63,938 | |||||||||
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March 31, 2009 | ||||||||||||
Gross Carrying | Accumulated | Net Carrying | ||||||||||
Amount | Amortization | Amount | ||||||||||
Developed technology | $ | 23,100 | $ | (660 | ) | $ | 22,440 | |||||
Core technology | 14,100 | (447 | ) | 13,653 | ||||||||
Acquired in-process research and development | 4,700 | (4,700 | ) | — | ||||||||
Total intangible assets | $ | 41,900 | $ | (5,807 | ) | $ | 36,093 | |||||
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Three-Months | Three-Months | |||||||
Ended | Ended | |||||||
March 31, 2009 | March 31, 2008 | |||||||
Net income (loss) | $ | 624 | $ | (8,666 | ) | |||
Less: | ||||||||
Preferred dividends paid in cash or stock | — | — | ||||||
Income (loss) attributable to common stockholders | $ | 624 | $ | (8,666 | ) | |||
Weighted average shares: | ||||||||
Basic | 32,439,523 | 31,271,281 | ||||||
Dilutive preferred shares | 136,000 | — | ||||||
Dilutive options | 68,902 | — | ||||||
Diluted | 32,644,425 | 31,271,281 | ||||||
Net income (loss) per share: | ||||||||
Basic | $ | 0.02 | $ | (0.28 | ) | |||
Diluted | $ | 0.02 | $ | (0.28 | ) | |||
Three months ended | ||||||||
March 31, 2009 | March 31, 2008 | |||||||
Research and development | $ | 480 | $ | 1,108 | ||||
General and administrative | 488 | 623 | ||||||
Total share based charges | $ | 968 | $ | 1,731 | ||||
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March 31, | December 31, | |||||||
2009 | 2008 | |||||||
($ in ’000’s) | ||||||||
Accounts receivable gross | $ | 10,799 | $ | 9,926 | ||||
Allowances for discounts, chargebacks and returns | (4,343 | ) | (4,774 | ) | ||||
Allowances for doubtful accounts | (150 | ) | (150 | ) | ||||
Accounts Receivable, net of allowances | $ | 6,306 | $ | 5,002 | ||||
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
($ in ’000’s) | ($ in ’000’s) | |||||||
Finished Goods | $ | 1,345 | $ | 1,492 | ||||
Work In Process | 145 | 312 | ||||||
Raw Materials | 429 | 68 | ||||||
Less: reserve for inventory allowances | (25 | ) | (31 | ) | ||||
$ | 1,894 | $ | 1,841 | |||||
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Operating | Capital Lease | |||||||
March 31, 2009 | Lease Commitments | Commitments | ||||||
Amounts In Thousands | ||||||||
2009 (Remainder of year) | $ | 120 | $ | 38 | ||||
2010 | 2 | 51 | ||||||
2011 | — | 50 | ||||||
2012 | — | 46 | ||||||
2013 | — | — | ||||||
Thereafter | — | — | ||||||
$ | 122 | $ | 185 | |||||
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Conversion of Series E preferred shares | 136,000 | |||
Exercise of stock options | 7,823,122 | |||
Exercise of warrants | 5,444,555 | |||
Total shares of common stock reserved for future issuances | 13,403,677 | |||
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Weighted | Weighted | Aggregate | ||||||||||||||
Common | Average | Average | Intrinsic | |||||||||||||
Stock | Exercise | Remaining Term | Value | |||||||||||||
Options | Price | (In Years) | (In Thousands) | |||||||||||||
Outstanding at beginning of year | $ | 7,115,772 | $ | 4.80 | ||||||||||||
Granted | 765,850 | 1.50 | ||||||||||||||
Expired | (20,625 | ) | 4.38 | |||||||||||||
Forfeited | (37,875 | ) | 2.94 | |||||||||||||
Outstanding, at the end of period | 7,823,122 | $ | 4.48 | 6.37 | $ | 230 | ||||||||||
Vested and expected to vest, at end of period | 7,442,167 | $ | 4.54 | 6.31 | $ | 206 | ||||||||||
Exercisable, at the end of period | 5,582,210 | $ | 4.96 | 5.95 | $ | 92 | ||||||||||
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Weighted | ||||||||
Restricted | Average | |||||||
Stock | Grant date | |||||||
Awards | Fair Value | |||||||
Nonvested at beginning of period | 377,500 | $ | 3.04 | |||||
Granted | 200,000 | 1.47 | ||||||
Vested | (155,000 | ) | 2.35 | |||||
Forfeited | — | — | ||||||
Nonvested at the end of period | 422,500 | $ | 2.55 | |||||
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• | our ability to successfully develop, obtain regulatory approvals for and market our products; | ||
• | our ability to generate and maintain sufficient cash resources to fund our business; | ||
• | our ability to enter into strategic alliances with partners for manufacturing, development and commercialization; | ||
• | efforts of our development partners; | ||
• | the ability of our manufacturing partners to meet our timelines; | ||
• | our ability to identify new product candidates; | ||
• | the timing and/or results of pending or future clinical trials; | ||
• | competition in the marketplace for our drugs; | ||
• | actions by the FDA and other regulatory agencies; and | ||
• | demand and market acceptance for our approved products; |
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We are a commercial stage biopharmaceutical company committed to developing and commercializing innovative therapies with a focus primarily in the areas of hematology-oncology and urology. We have a fully developed commercial infrastructure that is responsible for the sales and marketing of two drugs in the United States, namely Fusilev and Zevalin. Our lead developmental drug is apaziquone, which is presently being studied in two large Phase 3 clinical trials for bladder cancer under a strategic collaboration with Allergan Inc.
• | FUSILEV™ (levoleucovorin) for injection (“FUSILEV”): A PDUFA target date of October 2009 has been established by the FDA for a decision regarding the approval of our October 2008 sNDA filing for advanced metastatic colorectal cancer which is currently under review by the FDA. We also expect expanded uptake of FUSILEV in community practices and institutions, if the approval for colorectal cancer is received from the FDA. |
• | ZEVALIN® ([90Y]-ibritumomab tiuxetan) (“ZEVALIN”):. In December 2008, the FDA accepted for filing and review, and granted priority review status for RIT’s sBLA for the use of ZEVALIN as first-line therapy for patients with B-cell follicular NHL. A PDUFA target date of July 2, 2009 was established by the FDA for a decision regarding this sBLA which, if approved, will allow for the label to address a substantially larger patient population. We also continue to work towards establishing reimbursement standards with the Centers for Medicare and Medicaid Services (“CMS”) for ZEVALIN. |
• | Apaziquone (EOquin® in bladder cancer): We continue to enroll patients into the two trials at sites in the United States and Canada and expect enrollment in both trials to be completed by the end of 2009. We also plan to initiate trials by the end of the year in BCG-failure bladder cancer. |
• | We expect to continue to evaluate additional promising drug product candidates, as well as marketed products, for opportunistic acquisition or license. |
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• | the continued commercialization of FUSILEV and ZEVALIN; |
• | continued patient enrollment in our 2 phase 3 Apaziquone clinical trials at anticipated rates; and |
• | continued positive results from our preclinical studies and clinical trials. |
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Less than | After | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
Contractual Obligations (1) | ||||||||||||||||||||
Capital Lease Obligations (2) | $ | 185 | $ | 38 | $ | 101 | $ | 46 | — | |||||||||||
Operating Lease Obligations (3) | 122 | 120 | 2 | — | — | |||||||||||||||
Purchase Obligations (4) | 17,236 | 11,857 | 4,287 | 1,092 | — | |||||||||||||||
Contingent Milestone Obligations (5) | 84,241 | 14,021 | 4,523 | 7,023 | $ | 58,674 | ||||||||||||||
Total | $ | 101,784 | $ | 26,036 | $ | 8,913 | $ | 8,161 | $ | 58,674 | ||||||||||
(1) | The table of contractual and commercial obligations excludes contingent payments that we may become obligated to pay upon the occurrence of future events whose outcome is not readily predictable, such as obligations pursuant to employment agreements. | |
(2) | The capital lease obligations are related to leased office equipment. | |
(3) | The operating lease obligations are primarily for the facility lease for our corporate office, which extends through June 2009. | |
(4) | Purchase obligations represent the amount of open purchase orders and contractual commitments to vendors for products and services that have not been delivered, or rendered, as of March 31, 2009. Over 90% of the purchase obligations consist of expenses associated with clinical trials and related costs for Apaziquone and ZEVALIN for each of the periods presented. | |
(5) | Milestone obligations are payable contingent upon successfully reaching certain development and regulatory milestones. While the amounts included in the table above represent all of our potential cash development and regulatory milestone obligations as of March 31, 2009, given the unpredictability of the drug development process, and the impossibility of predicting the success of current and future clinical trials, the timelines estimated above do not represent a forecast of when payment milestones will actually be reached, if at all. Rather, they assume that all development and regulatory milestones under all of our license agreements are successfully met, and represent our best estimates of the timelines. In the event that the milestones are met, we believe it is likely that the increase in the potential value of the related drug product will significantly exceed the amount of the milestone obligation. |
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Exhibit No. | Description | ||
2.1 | + # | Limited Liability Company Interest Assignment Agreement, dated as of March 15, 2009, by and between the Registrant and Cell Therapeutics, Inc. (Schedules and similar attachments omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish supplementally a copy of any omitted schedules or similar attachments to the Securities and Exchange Commission upon request.) | |
31.1 | + | Certification of Principal Executive Officer, pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | + | Certification of Principal Financial Officer, pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | + | Certification of Principal Executive Officer; as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | + | Certification of Principal Financial Officer; as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
# | Confidential portions omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended. | |
+ | Filed herewith. |
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SPECTRUM PHARMACEUTICALS, INC. | ||||
Date: May 15, 2009 | By: | /s/ Shyam K. Kumaria | ||
Shyam K. Kumaria, | ||||
Vice President, Finance (Authorized Signatory and Principal Financial and Accounting Officer) | ||||
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Exhibit No. | Description | ||
2.1 | + # | Limited Liability Company Interest Assignment Agreement, dated as of March 15, 2009, by and between the Registrant and Cell Therapeutics, Inc. (Schedules and similar attachments omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish supplementally a copy of any omitted schedules or similar attachments to the Securities and Exchange Commission upon request.) | |
31.1 | + | Certification of Principal Executive Officer, pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | + | Certification of Principal Financial Officer, pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | + | Certification of Principal Executive Officer; as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | + | Certification of Principal Financial Officer; as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
# | Confidential portions omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended. | |
+ | Filed herewith. |
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