Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Dec. 31, 2014 | Jan. 29, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | IMMUNOGEN INC | |
Entity Central Index Key | 855654 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -24 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 86,107,851 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
ASSETS | ||
Cash and cash equivalents | $106,604 | $142,261 |
Accounts receivable | 3,109 | 1,896 |
Unbilled revenue | 578 | 1,329 |
Inventory | 1,919 | 2,950 |
Prepaid and other current assets | 2,153 | 2,320 |
Total current assets | 114,363 | 150,756 |
Property and equipment, net of accumulated depreciation | 14,128 | 14,349 |
Other assets | 49 | 213 |
Total assets | 128,540 | 165,318 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts payable | 5,613 | 4,819 |
Accrued compensation | 4,679 | 6,865 |
Other accrued liabilities | 7,606 | 6,668 |
Current portion of deferred lease incentive | 639 | 528 |
Current portion of deferred revenue | 1,106 | 2,374 |
Total current liabilities | 19,643 | 21,254 |
Deferred lease incentive, net of current portion | 6,547 | 5,679 |
Deferred revenue, net of current portion | 20,978 | 58,969 |
Other long-term liabilities | 3,902 | 3,717 |
Total liabilities | 51,070 | 89,619 |
Commitments and contingencies (Note E) | ||
Shareholders' equity: | ||
Preferred stock, $0.01 par value; authorized 5,000 shares; no shares issued and outstanding | ||
Common stock, $0.01 par value; authorized 150,000 shares; issued and outstanding 86,081 and 85,903 shares as of December 31, 2014 and June 30, 2014, respectively | 861 | 859 |
Additional paid-in capital | 733,387 | 722,971 |
Accumulated deficit | -656,778 | -648,131 |
Total shareholders' equity | 77,470 | 75,699 |
Total liabilities and shareholders' equity | $128,540 | $165,318 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
In Thousands, except Per Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, authorized shares | 150,000 | 150,000 |
Common stock, issued shares | 86,081 | 85,903 |
Common stock, outstanding shares | 86,081 | 85,903 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Revenues: | ||||
License and milestone fees | $41,417 | $25,678 | $47,651 | $38,845 |
Royalty revenue | 4,625 | 2,335 | 8,791 | 4,388 |
Research and development support | 832 | 1,922 | 1,608 | 3,912 |
Clinical materials revenue | 1,426 | 125 | 3,453 | 133 |
Total revenues | 48,300 | 30,060 | 61,503 | 47,278 |
Operating Expenses: | ||||
Research and development | 27,647 | 20,862 | 55,665 | 42,891 |
General and administrative | 6,872 | 5,447 | 13,967 | 11,973 |
Total operating expenses | 34,519 | 26,309 | 69,632 | 54,864 |
Income (loss) from operations | 13,781 | 3,751 | -8,129 | -7,586 |
Other income, net | -146 | 62 | -518 | 172 |
Net income (loss) | 13,635 | 3,813 | -8,647 | -7,414 |
Basic and diluted net income (loss) per common share (in dollars per share) | $0.16 | $0.04 | ($0.10) | ($0.09) |
Basic weighted average common shares outstanding (in shares) | 85,935 | 85,431 | 85,904 | 85,221 |
Dilutive impact of potential common shares (in shares) | 730 | 1,845 | ||
Diluted weighted average common shares outstanding (in shares) | 86,665 | 87,276 | 85,904 | 85,221 |
Total comprehensive income (loss) | $13,635 | $3,813 | ($8,647) | ($7,414) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Cash flows from operating activities: | ||
Net loss | ($8,647) | ($7,414) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Depreciation and amortization | 2,818 | 2,307 |
Loss (gain) on sale/disposal of fixed assets | -7 | 20 |
Gain on forward contracts | -2 | |
Stock and deferred share unit compensation | 9,102 | 8,548 |
Deferred rent | 127 | -37 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -1,213 | -3,818 |
Unbilled revenue | 751 | 217 |
Inventory | 1,031 | -2,305 |
Prepaid and other current assets | 167 | 260 |
Other assets | 164 | -183 |
Accounts payable | 794 | -686 |
Accrued compensation | -2,186 | -1,991 |
Other accrued liabilities | 708 | -676 |
Deferred revenue | -39,259 | -15,869 |
Proceeds from landlord for tenant improvements | 1,267 | |
Net cash used for operating activities | -34,383 | -21,629 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -2,590 | -2,297 |
Payments (proceeds) from settlement of forward contracts | -1 | |
Net cash used for investing activities | -2,590 | -2,298 |
Cash flows from financing activities: | ||
Proceeds from stock options exercised | 1,316 | 7,055 |
Net cash provided by financing activities | 1,316 | 7,055 |
Net change in cash and cash equivalents | -35,657 | -16,872 |
Cash and cash equivalents, beginning balance | 142,261 | 194,960 |
Cash and cash equivalents, ending balance | $106,604 | $178,088 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 6 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Summary of Significant Accounting Policies | A.Summary of Significant Accounting Policies | |||||||||||||
Basis of Presentation | ||||||||||||||
The accompanying unaudited consolidated financial statements at December 31, 2014 and June 30, 2014 and for the three and six months ended December 31, 2014 and 2013 include the accounts of ImmunoGen, Inc., or the Company, and its wholly owned subsidiaries, ImmunoGen Securities Corp. and ImmunoGen Europe Limited. The consolidated financial statements include all of the adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the Company’s financial position in accordance with accounting principles generally accepted in the U.S. for interim financial information. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenditures during the reported periods. The results of the interim periods are not necessarily indicative of the results for the entire year. Accordingly, the interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2014. | ||||||||||||||
Subsequent Events | ||||||||||||||
The Company has evaluated all events or transactions that occurred after December 31, 2014 up through the date the Company issued these financial statements. In January 2015, Novartis initiated Phase I, first-in-human clinical testing of its cKit-targeting ADC product candidate, LOP628, triggering a $5 million development milestone payment to the Company. The Company did not have any other material recognizable or unrecognizable subsequent events during this period. | ||||||||||||||
Revenue Recognition | ||||||||||||||
The Company enters into licensing and development agreements with collaborative partners for the development of monoclonal antibody-based anticancer therapeutics. The terms of these agreements contain multiple deliverables which may include (i) licenses, or options to obtain licenses, to the Company’s antibody-drug conjugate, or ADC, technology, (ii) rights to future technological improvements, (iii) research activities to be performed on behalf of the collaborative partner, (iv) delivery of cytotoxic agents and (v) the manufacture of preclinical or clinical materials for the collaborative partner. Payments to the Company under these agreements may include upfront fees, option fees, exercise fees, payments for research activities, payments for the manufacture of preclinical or clinical materials, payments based upon the achievement of certain milestones and royalties on product sales. The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 605-25, “Revenue Recognition—Multiple-Element Arrangements,” and ASC Topic 605-28, “Revenue Recognition—Milestone Method,” in accounting for these agreements. In order to account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the collaborator. 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. | ||||||||||||||
At December 31, 2014, the Company had the following two types of agreements with the parties identified below: | ||||||||||||||
· | Development and commercialization licenses, which provide the party with the right to use the Company’s ADC technology and/or certain other intellectual property to develop compounds to a specified antigen target: | |||||||||||||
Amgen (four exclusive single-target licenses(1)) | ||||||||||||||
Bayer HealthCare (one exclusive single-target license) | ||||||||||||||
Biotest (one exclusive single-target license) | ||||||||||||||
-1 | Amgen has sublicensed one of its exclusive single-target licenses to Oxford BioTherapeutics Ltd. | |||||||||||||
Lilly (three exclusive single-target licenses) | ||||||||||||||
Novartis (five exclusive single-target licenses and one license to two related targets: one target on an exclusive basis and the second target on a non-exclusive basis) | ||||||||||||||
Roche, through its Genentech unit (five exclusive single-target licenses) | ||||||||||||||
Sanofi (one exclusive single-target license and one exclusive license to multiple individual targets) | ||||||||||||||
· | Research license/option agreement for a defined period of time to secure development and commercialization licenses to use the Company’s ADC technology to develop anticancer compounds to specified targets on established terms (referred to herein as right-to-test agreements): | |||||||||||||
Sanofi | ||||||||||||||
CytomX | ||||||||||||||
There are no performance, cancellation, termination or refund provisions in any of the arrangements that contain material financial consequences to the Company. | ||||||||||||||
Development and Commercialization Licenses | ||||||||||||||
The deliverables under a development and commercialization license agreement generally include the license to the Company’s ADC technology with respect to a specified antigen target, and may also include deliverables related to rights to future technological improvements, research activities to be performed on behalf of the collaborative partner and the manufacture of preclinical or clinical materials for the collaborative partner. | ||||||||||||||
Generally, development and commercialization licenses contain non-refundable terms for payments and, depending on the terms of the agreement, provide that the Company will (i) at the collaborator’s request, provide research services at negotiated prices which are generally consistent with what other third parties would charge, (ii) at the collaborator’s request, manufacture and provide to it preclinical and clinical materials or deliver cytotoxic agents at negotiated prices which are generally consistent with what other third parties would charge, (iii) earn payments upon the achievement of certain milestones and (iv) earn royalty payments, generally until the later of the last applicable patent expiration or 10 to 12 years after product launch. In the case of Kadcyla®, however, the royalty term, on a country-by-country basis, is 10 years after product launch, which may be extended an additional two years, for a maximum royalty term of 12 years, depending on patent protection as of the end of the initial 10-year royalty term. Royalty rates may vary over the royalty term depending on the Company’s intellectual property rights and/or the presence of comparable competing products. The Company may provide technical assistance and share any technology improvements with its collaborators during the term of the collaboration agreements. The Company does not directly control when or whether any collaborator will request research or manufacturing services, achieve milestones or become liable for royalty payments. As a result, the Company cannot predict when or if it will recognize revenues in connection with any of the foregoing. | ||||||||||||||
In determining the units of accounting, management evaluates whether the license has stand-alone value from the undelivered elements to the collaborative partner based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research capabilities of the partner and the availability of ADC technology research expertise in the general marketplace. If the Company concludes that the license has stand-alone value and therefore will be accounted for as a separate unit of accounting, the Company then determines the estimated selling prices of the license and all other units of accounting based on market conditions, similar arrangements entered into by third parties, and entity-specific factors such as the terms of the Company’s previous collaborative agreements, recent preclinical and clinical testing results of therapeutic products that use the Company’s ADC technology, the Company’s pricing practices and pricing objectives, the likelihood that technological improvements will be made, and, if made, will be used by the Company’s collaborators and the nature of the research services to be performed on behalf of its collaborators and market rates for similar services. | ||||||||||||||
Upfront payments on development and commercialization licenses are deferred if facts and circumstances dictate that the license does not have stand-alone value. Prior to the adoption of Accounting Standards Update (ASU) No. 2009-13, “Revenue Arrangements with Multiple Deliverables” on July 1, 2010, the Company determined that its licenses lacked stand-alone value and were combined with other elements of the arrangement and any amounts associated with the license were deferred and amortized over a certain period, which the Company refers to as the Company’s period of substantial involvement. The determination of the length of the period over which to defer revenue is subject to judgment and estimation and can have an impact on the amount of revenue recognized in a given period. Historically the Company’s involvement with the development of a collaborator’s product candidate has been significant at the early stages of development, and lessens as it progresses into clinical trials. Also, as a drug candidate gets closer to commencing pivotal testing the Company’s collaborators have sought an alternative site to manufacture their products, as the Company’s facility does not produce pivotal or commercial drug product. Accordingly, the Company generally estimates this period of substantial involvement to begin at the inception of the collaboration agreement and conclude at the end of non-pivotal Phase II testing. The Company believes this period of substantial involvement is, depending on the nature of the license, on average six and one-half years. Quarterly, the Company reassesses its periods of substantial involvement over which the Company amortizes its upfront license fees and makes adjustments as appropriate. In the event a collaborator elects to discontinue development of a specific product candidate under a development and commercialization license, but retains its right to use the Company’s technology to develop an alternative product candidate to the same target or a target substitute, the Company would cease amortization of any remaining portion of the upfront fee until there is substantial preclinical activity on another product candidate and its remaining period of substantial involvement can be estimated. In the event that a development and commercialization license were to be terminated, the Company would recognize as revenue any portion of the upfront fee that had not previously been recorded as revenue, but was classified as deferred revenue, at the date of such termination. | ||||||||||||||
Subsequent to the adoption of ASU No. 2009-13, the Company determined that its research licenses lack stand-alone value and are considered for aggregation with the other elements of the arrangement and accounted for as one unit of accounting. | ||||||||||||||
Upfront payments on development and commercialization licenses may be recognized upon delivery of the license if facts and circumstances dictate that the license has stand-alone value from the undelivered elements, which generally include rights to future technological improvements, research services, delivery of cytotoxic agents and the manufacture of preclinical and clinical materials. | ||||||||||||||
The Company recognizes revenue related to research services that represent separate units of accounting as they are performed, as long as there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collection of the related receivable is probable. The Company recognizes revenue related to the rights to future technological improvements over the estimated term of the applicable license. | ||||||||||||||
The Company may also provide cytotoxic agents to its collaborators or produce preclinical and clinical materials at negotiated prices which are generally consistent with what other third parties would charge. The Company recognizes revenue on cytotoxic agents and on preclinical and clinical materials when the materials have passed all quality testing required for collaborator acceptance and title and risk of loss have transferred to the collaborator. Arrangement consideration allocated to the manufacture of preclinical and clinical materials in a multiple-deliverable arrangement is below the Company’s full cost, and the Company’s full cost is not expected to ever be below its contract selling prices for its existing collaborations. During the six months ended December 31, 2014, the difference between the Company’s full cost to manufacture preclinical and clinical materials on behalf of its collaborators as compared to total amounts received from collaborators for the manufacture of preclinical and clinical materials was $5.5 million. There were no sales of manufactured preclinical or clinical materials during the six months ended December 31, 2013. The majority of the Company’s costs to produce these preclinical and clinical materials are fixed and then allocated to each batch based on the number of batches produced during the period. Therefore, the Company’s costs to produce these materials are significantly impacted by the number of batches produced during the period. The volume of preclinical and clinical materials the Company produces is directly related to the number of clinical trials the Company and its collaborators are preparing for or currently have underway, the speed of enrollment in those trials, the dosage schedule of each clinical trial and the time period such trials last. Accordingly, the volume of preclinical and clinical materials produced, and therefore the Company’s per-batch costs to manufacture these preclinical and clinical materials, may vary significantly from period to period. | ||||||||||||||
The Company may also produce research material for potential collaborators under material transfer agreements. Additionally, the Company performs research activities, including developing antibody specific conjugation processes, on behalf of its collaborators and potential collaborators during the early evaluation and preclinical testing stages of drug development. The Company records amounts received for research materials produced or services performed as a component of research and development support revenue. The Company also develops conjugation processes for materials for later-stage testing and commercialization for certain collaborators. The Company is compensated at negotiated rates and may receive milestone payments for developing these processes which are recorded as a component of research and development support revenue. | ||||||||||||||
The Company’s development and commercialization license agreements have milestone payments which for reporting purposes are aggregated into three categories: (i) development milestones, (ii) regulatory milestones, and (iii) sales milestones. Development milestones are typically payable when a product candidate initiates or advances into different clinical trial phases. Regulatory milestones are typically payable upon submission for marketing approval with the U.S. Food and Drug Administration, or FDA, or other countries’ regulatory authorities or on receipt of actual marketing approvals for the compound or for additional indications. Sales milestones are typically payable when annual sales reach certain levels. | ||||||||||||||
At the inception of each agreement that includes milestone payments, the Company evaluates whether each milestone is substantive and at risk to both parties on the basis of the contingent nature of the milestone. This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity’s performance to achieve the milestone, or (2) 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, (b) the consideration relates solely to past performance and (c) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. The Company evaluates factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. | ||||||||||||||
Non-refundable development and regulatory milestones that are expected to be achieved as a result of the Company’s efforts during the period of substantial involvement are considered substantive and are recognized as revenue upon the achievement of the milestone, assuming all other revenue recognition criteria are met. Milestones that are not considered substantive because we do not contribute effort to the achievement of such milestones are generally achieved after the period of substantial involvement and are recognized as revenue upon achievement of the milestone, as there are no undelivered elements remaining and no continuing performance obligations, assuming all other revenue recognition criteria are met. | ||||||||||||||
Under the Company’s development and commercialization license agreements, the Company receives royalty payments based upon its licensees’ net sales of covered products. Generally, under these agreements the Company is to receive royalty reports and payments from its licensees approximately one quarter in arrears, that is, generally in the second month of the quarter after the licensee has sold the royalty-bearing product or products. The Company recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. As such, the Company generally recognizes royalty revenues in the quarter reported to the Company by its licensees, or one quarter following the quarter in which sales by the Company’s licensees occurred. | ||||||||||||||
Right-to-Test Agreements | ||||||||||||||
The Company’s right-to-test agreements provide collaborators the right to (a) test the Company’s ADC technology for a defined period of time through a research, or right-to-test, license, (b) take a defined number of options, for a defined period of time, to specified targets and (c) upon exercise an option, secure or “take” a license to develop and commercialize products for the specified targets on established terms. Under these agreements, fees may be due to the Company (i) at the inception of the arrangement (referred to as “upfront” fees or payments), (ii) upon taking an option with respect to a specific target (referred to as option fees or payments earned, if any, when the option is “taken”), (iii) upon the exercise of a previously taken option to acquire a development and commercialization license(s) (referred to as exercise fees or payments earned, if any, when the development and commercialization license is “taken”), or (iv) some combination of all of these fees. | ||||||||||||||
The accounting for right-to-test agreements is dependent on the nature of the options granted to the collaborative partner. Options are considered substantive if, at the inception of a right-to-test agreement, the Company is at risk as to whether the collaborative partner will choose to exercise the options to secure development and commercialization licenses. Factors that are considered in evaluating whether options are substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the agreement without exercising the options, the cost to exercise the options relative to the total upfront consideration, and the additional financial commitments or economic penalties imposed on the collaborator as a result of exercising the options. | ||||||||||||||
For right-to-test agreements where the options to secure development and commercialization licenses to the Company’s ADC technology are considered substantive, the Company does not consider the development and commercialization licenses to be a deliverable at the inception of the agreement. For those right-to-test agreements entered into prior to the adoption of ASU No. 2009-13 where the options to secure development and commercialization licenses are considered substantive, the Company has deferred the upfront payments received and recognizes this revenue over the period during which the collaborator could elect to take options for development and commercialization licenses. These periods are specific to each collaboration agreement. If a collaborator takes an option to acquire a development and commercialization license under these agreements, any substantive option fee is deferred and recognized over the life of the option, generally 12 to 18 months. If a collaborator exercises an option and takes a development and commercialization license to a specific target, the Company attributes the exercise fee to the development and commercialization license. Upon exercise of an option to acquire a development and commercialization license, the Company would also attribute any remaining deferred option fee to the development and commercialization license and apply the multiple-element revenue recognition criteria to the development and commercialization license and any other deliverables to determine the appropriate revenue recognition, which will be consistent with the Company’s accounting policy for upfront payments on single-target licenses. In the event a right-to-test agreement were to be terminated, the Company would recognize as revenue any portion of the upfront fee that had not previously been recorded as revenue, but was classified as deferred revenue, at the date of such termination. None of the Company’s right-to-test agreements entered into subsequent to the adoption of ASU No. 2009-13 has been determined to contain substantive options. | ||||||||||||||
For right-to-test agreements where the options to secure development and commercialization licenses to the Company’s ADC technology are not considered substantive, the Company considers the development and commercialization licenses to be a deliverable at the inception of the agreement and applies the multiple-element revenue recognition criteria to determine the appropriate revenue recognition. None of the Company’s right-to-test agreements entered into prior to the adoption of ASU No. 2009-13 has been determined to contain non-substantive options. | ||||||||||||||
The Company does not directly control when or if any collaborator will exercise its options for development and commercialization licenses. As a result, the Company cannot predict when or if it will recognize revenues in connection with any of the foregoing. | ||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
Fair value is defined under ASC Topic 820, “Fair Value Measurements and Disclosures,” as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy to measure fair value which is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: | ||||||||||||||
· | Level 1 - Quoted prices in active markets for identical assets or liabilities. | |||||||||||||
· | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||
· | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||||||
As of December 31, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. The following table represents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2014 (in thousands): | ||||||||||||||
Fair Value Measurements at December 31, 2014 Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | Inputs | |||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Cash and cash equivalents | $ | 106,604 | $ | 106,604 | $ | — | $ | — | ||||||
As of June 30, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. The following table represents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2014 (in thousands): | ||||||||||||||
Fair Value Measurements at June 30, 2014 Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | Inputs | |||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Cash, cash equivalents and restricted cash | $ | 142,261 | $ | 142,261 | $ | — | $ | — | ||||||
The fair value of the Company’s cash equivalents is based primarily on quoted prices from active markets. | ||||||||||||||
Unbilled Revenue | ||||||||||||||
The majority of the Company’s unbilled revenue at December 31, 2014 and June 30, 2014 represents research funding earned prior to those dates based on actual resources utilized under the Company’s agreements with various collaborators. | ||||||||||||||
Inventory | ||||||||||||||
Inventory costs relate to clinical trial materials being manufactured for sale to the Company’s collaborators. Inventory is stated at the lower of cost or market as determined on a first-in, first-out (FIFO) basis. | ||||||||||||||
Inventory at December 31, 2014 and June 30, 2014 is summarized below (in thousands): | ||||||||||||||
December 31, | June 30, | |||||||||||||
2014 | 2014 | |||||||||||||
Raw materials | $ | 644 | $ | 437 | ||||||||||
Work in process | 1,275 | 2,513 | ||||||||||||
Total | $ | 1,919 | $ | 2,950 | ||||||||||
Raw materials inventory consists entirely of DM1 and DM4, proprietary cell-killing agents the Company developed as part of its ADC technology. The Company considers more than a twelve month supply of raw materials that is not supported by firm, fixed orders and/or projections from its collaborators to be excess and establishes a reserve to reduce to zero the value of any such excess raw material inventory with a corresponding charge to research and development expense. In accordance with this policy, the Company recorded $392,000 and $205,000 of expense related to excess inventory during the six-month periods ended December 31, 2014 and 2013, respectively. The Company recorded $55,000 and $70,000 of expense related to excess inventory during the three-month periods ended December 31, 2014 and 2013, respectively. | ||||||||||||||
Work in process inventory consists of conjugate manufactured for sale to the Company’s collaborators to be used in preclinical and clinical studies. All conjugate is made to order at the request of the collaborators and subject to the terms and conditions of respective supply agreements. As such, no reserve for work in process inventory is required. | ||||||||||||||
Computation of Net Income (Loss) per Common Share | ||||||||||||||
Basic and diluted net income (loss) per share is calculated based upon the weighted average number of common shares outstanding during the period. During periods of income, participating securities are allocated a proportional share of income determined by dividing total weighted average participating securities by the sum of the total weighted average common shares and participating securities (the “two-class method”). The Company’s restricted stock participate in any dividends declared by the Company and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to participating securities since they have no contractual obligation to share in the losses of the Company. The impact of applying the two-class method was not material. Diluted (loss) income per share is computed after giving consideration to the dilutive effect of stock options that are outstanding during the period, except where such non-participating securities would be anti-dilutive. | ||||||||||||||
The Company’s common stock equivalents, as calculated in accordance with the treasury-stock method, are shown in the following table (in thousands): | ||||||||||||||
Three Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Options outstanding to purchase common stock and unvested restricted stock | 10,241 | 8,616 | ||||||||||||
Common stock equivalents under treasury stock method | 730 | 1,845 | ||||||||||||
Potentially dilutive securities representing 7.9 million and 3.2 million shares of common stock for the three-month periods ended December 31, 2014 and 2013, respectively, and 7.1 and 1.7. million shares of common stock for the six-month periods ended December 31, 2014 and 2013, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. The Company’s common stock equivalents have not been included in any net loss per share calculation because their effect is anti-dilutive due to the Company’s net loss position. | ||||||||||||||
Stock-Based Compensation | ||||||||||||||
As of December 31, 2014, the Company is authorized to grant future awards under one employee share-based compensation plan, which is the ImmunoGen, Inc. 2006 Employee, Director and Consultant Equity Incentive Plan, or the 2006 Plan. At the annual meeting of shareholders on November 11, 2014, an amendment to the 2006 Plan was approved and an additional 5,500,000 shares were authorized for issuance under this plan. As amended, the 2006 Plan provides for the issuance of Stock Grants, the grant of Options and the grant of Stock-Based Awards for up to 17,500,000 shares of the Company’s common stock, as well as 1,676,599 shares of common stock which represent awards granted under the previous stock option plan, the ImmunoGen, Inc. Restated Stock Option Plan, or the Former Plan, that were forfeited, expired or were cancelled without delivery of shares of common stock or which resulted in the forfeiture of shares of common stock back to the Company between November 11, 2006 and June 30, 2014. Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options vest at various periods of up to four years and may be exercised within ten years of the date of grant. | ||||||||||||||
The stock-based awards are accounted for under ASC Topic 718, “Compensation—Stock Compensation.” Pursuant to Topic 718, the estimated grant date fair value of awards is charged to the statement of operations and comprehensive loss over the requisite service period, which is the vesting period. Such amounts have been reduced by an estimate of forfeitures of all unvested awards. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model with the assumptions noted in the following table. As the Company has not paid dividends since inception, nor does it expect to pay any dividends for the foreseeable future, the expected dividend yield assumption is zero. Expected volatility is based exclusively on historical volatility data of the Company’s stock. The expected term of stock options granted is based exclusively on historical data and represents the period of time that stock options granted are expected to be outstanding. The expected term is calculated for and applied to one group of stock options as the Company does not expect substantially different exercise or post-vesting termination behavior among its option recipients. The risk-free rate of the stock options is based on the U.S. Treasury rate in effect at the time of grant for the expected term of the stock options. | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Dividend | None | None | None | None | ||||||||||
Volatility | 60.95% | 60.44% | 60.87% | 60.44% | ||||||||||
Risk-free interest rate | 1.81% | 1.92% | 1.88% | 1.72% | ||||||||||
Expected life (years) | 6.3 | 6.3 | 6.3 | 6.3 | ||||||||||
Using the Black-Scholes option-pricing model, the weighted average grant date fair values of options granted during the three months ended December 31, 2014 and 2013 were $5.77 and $8.76 per share, respectively, and $6.24 and $10.64 per share for options granted during the six months ended December 31, 2014 and 2013, respectively. | ||||||||||||||
Stock compensation expense related to stock options and restricted stock awards granted under the 2006 Plan was $3.6 million and $8.9 million during the three and six months ended December 31, 2014, respectively, compared to stock compensation expense of $3.7 million and $8.4 million for the three and six months ended December 31, 2013, respectively. As of December 31, 2014, the estimated fair value of unvested employee awards was $24.9 million, net of estimated forfeitures. The weighted-average remaining vesting period for these awards is approximately two years. | ||||||||||||||
During the six months ended December 31, 2014, holders of options issued under the Company’s equity plans exercised their rights to acquire an aggregate of approximately 177,000 shares of common stock at prices ranging from $3.19 to $9.88 per share. The total proceeds to the Company from these option exercises were approximately $1.3 million. | ||||||||||||||
Financial Instruments and Concentration of Credit Risk | ||||||||||||||
The Company’s cash equivalents consist of money market funds with underlying investments primarily being U.S. Government-issued securities and high quality, short-term commercial paper. All of the Company’s cash and cash equivalents are maintained with three financial institutions in the U.S. The Company uses a Euro-denominated bank account to manage the foreign currency exposures that exist as part of our ongoing business operations. Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the value of transactions, anticipated transactions and balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. | ||||||||||||||
Segment Information | ||||||||||||||
During the six months ended December 31, 2014, the Company continued to operate in one operating segment which is the business of discovery of monoclonal antibody-based anticancer therapeutics. | ||||||||||||||
The percentages of revenues recognized from significant customers of the Company in the three and six months ended December 31, 2014 and 2013 are included in the following table: | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
Collaborative Partner: | 2014 | 2013 | 2014 | 2013 | ||||||||||
Lilly | 35% | 2% | 28% | 19% | ||||||||||
Novartis | 54% | 64% | 44% | 43% | ||||||||||
Roche | 10% | 24% | 14% | 30% | ||||||||||
Sanofi | 0% | 1% | 10% | 1% | ||||||||||
There were no other customers of the Company with significant revenues in the three and six months ended December 31, 2014 and 2013. | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In May 2014, the FASB issued Accounting Standards Update 2014-9, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. This update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting beginning after December 15, 2016, including interim periods within the year of adoption, and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard is effective for the Company on July 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on our financial statements and related disclosures. | ||||||||||||||
In August 2014, the FASB issued Accounting Standards Update 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. This new standard gives a company’s management the final responsibilities to decide whether there’s substantial doubt about the company’s ability to continue as a going concern and to provide related footnote disclosures. The standard provides guidance to management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that companies commonly provide in their footnotes. Under the new standard, management must decide whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the company’s ability to continue as a going concern within one year after the date that the financial statements are issued, or within one year after the date that the financial statements are available to be issued when applicable. This guidance is effective for annual reporting beginning after December 15, 2016, including interim periods within the year of adoption, with early application permitted. Accordingly, the standard is effective for the Company on July 1, 2017. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. | ||||||||||||||
Collaborative_Agreements
Collaborative Agreements | 6 Months Ended |
Dec. 31, 2014 | |
Collaborative Agreements | |
Collaborative Agreements | B.Collaborative Agreements |
Roche | |
In May 2000, the Company granted Genentech, now a unit of Roche, an exclusive license to use the Company’s maytansinoid ADC technology with antibodies, such as trastuzumab, or other proteins that target HER2. Under the terms of this agreement, Roche has exclusive worldwide rights to develop and commercialize maytansinoid ADC compounds targeting HER2. The ADC marketed by Roche as Kadcyla was developed under this agreement. Roche is responsible for the manufacturing, product development and marketing of Kadcyla and any other products resulting from the agreement. The Company received a $2 million non-refundable upfront payment from Roche upon execution of the agreement. The Company is also entitled to receive up to a total of $44 million in milestone payments, plus royalties on the commercial sales of Kadcyla or any other resulting products. Total milestones are categorized as follows: development milestones—$13.5 million; and regulatory milestones—$30.5 million. Through December 31, 2014, the Company has received and recognized $13.5 million and $20.5 million in development and regulatory milestone payments, respectively, related to Kadcyla, including two $5 million regulatory milestone payments in connection with marketing approval of Kadcyla in Japan and in the EU. Based on an evaluation of the effort contributed to the achievement of these milestones, the Company determined these milestones were not substantive. In consideration that there were no undelivered elements remaining, no continuing performance obligations and all other revenue recognition criteria had been met, the Company recognized the $10 million non-refundable payments as revenue upon achievement of the milestones, which is included in license and milestone fees for the six months ended December 31, 2013, $5 million of which is included in license and milestone fees for the three months ended December 31, 2013. The next potential milestone the Company will be entitled to receive will be a $5 million regulatory milestone for marketing approval of Kadcyla for a first extended indication as defined in the agreement. Based on an evaluation of the effort contributed towards the achievement of this future milestone, the Company determined this milestone is not substantive. | |
The Company receives royalty reports and payments related to sales of Kadcyla from Roche one quarter in arrears. In accordance with the Company’s revenue recognition policy, $4.6 million of royalties on net sales of Kadcyla for the three-month period ended September 30, 2014 were recorded and included in royalty revenue for the three months ended December 31, 2014 and $8.8 million of royalties on net sales of Kadcyla for the six-month period ended September 30, 2014 were included in royalty revenue for the six months ended December 31, 2014 compared to $2.3 million of royalties on net sales of Kadcyla for the three-month period ended September 30, 2013 which is included in royalty revenue for the three months ended December 31, 2013 and $4.4 million of royalties on net sales of Kadcyla for the six-month period ended September 30, 2013 which is included in royalty revenue for the six months ended December 31, 2013. | |
Amgen | |
Under a now-expired right-to-test agreement, in September 2009, November 2009 and December 2012, Amgen took three exclusive development and commercialization licenses, for which the Company received an exercise fee of $1 million for each license taken. In May 2013, Amgen took one non-exclusive development and commercialization license, for which the Company received an exercise fee of $500,000. In October 2013, the non-exclusive license was amended and converted to an exclusive license, for which Amgen paid an additional $500,000 fee to the Company. Amgen has sublicensed its rights under this license to Oxford BioTherapeutics Ltd. For each development and commercialization license taken, the Company is entitled to receive up to a total of $34 million in milestone payments, plus royalties on the commercial sales of any resulting products. The total milestones per license are categorized as follows: development milestones—$9 million; regulatory milestones—$20 million; and sales milestones—$5 million. Amgen (or its sublicensee(s)) is responsible for the manufacturing, product development and marketing of any products resulting from these development and commercialization licenses. | |
Since a deliverable to the original right-to-test agreement was determined to be materially modified at the time the non-exclusive license was converted to exclusive in October 2013, the Company accounted for the multiple-element agreement in accordance with ACS 605-25 (as amended by ASU No. 2009-13). As a result, all of the deferred revenue recorded on the date of the modification and the new consideration received as part of the modification was allocated to all of the remaining deliverables at the time of amendment of the right-to-test agreement based on the estimated selling price of each element. The remaining amount represents consideration for previously delivered elements and was recognized upon the execution of the modification. | |
The outstanding licenses, including the exclusive license delivered upon the signing of the amendment, contain the rights to future technological improvements as well as options to purchase materials and research and development services. The Company concluded that additional materials and research and development services would be paid at a contractual price equal to the estimated selling price based estimated prices that would be charged by third parties for similar services. The estimated selling price of the right to technological improvements is the Company’s best estimate of selling price and was determined by estimating the probability that technological improvements will be made and the probability that such technological improvements made will be used by Amgen. In estimating these probabilities, we considered factors such as the technology that is the subject of the development and commercialization licenses, our history of making technological improvements, and when such improvements, if any, were likely to occur relative to the stage of development of any product candidates pursuant to the development and commercialization licenses. The Company’s estimate of probability considered the likely period of time that any improvements would be utilized, which was estimated to be ten years following delivery of a commercialization and development license. The value of any technological improvements made available after this ten year period was considered to be de minimis due to the significant additional costs that would be incurred to incorporate such technology into any existing product candidates. The estimate of probability was multiplied by the estimated selling price of the development and commercialization licenses and the resulting cash flow was discounted at a rate of 13%, representing the Company’s estimate of its cost of capital at the time of amendment of the right-to-test agreement. | |
The $430,000 determined to be the estimated selling price of the future technological improvements is being recognized as revenue ratably over the period the Company is obligated to make available any technological improvements, which is equivalent to the estimated term of the agreement. The Company estimates the term of a development and commercialization license to be approximately 25 years, which reflects management’s estimate of the time necessary to develop and commercialize products pursuant to the license plus the estimated royalty term. The Company reassesses the estimated term at the end of each reporting period. | |
After accounting for the undelivered elements at the estimated selling price, the Company had $2.2 million of remaining allocable consideration which was determined to represent consideration for the previously delivered elements, including the exclusive license that was delivered upon the execution of the modification. This amount was recorded as revenue and is included in license and milestone fees for the three and six months ended December 31, 2013. | |
In November 2011, the IND applications to the FDA for two compounds, AMG 595 and AMG 172, developed under the 2009 development and commercialization licenses became effective, which triggered two $1 million milestone payments to the Company. The next potential milestone the Company will be entitled to receive for each of these compounds under the 2009 development and commercialization licenses will be a development milestone for the first dosing of a patient in a Phase II clinical trial, which will result in a $3 million payment being due. The next potential milestones the Company will be entitled to receive under the December 2012 and May 2013 development and commercialization licenses will be a $1 million development milestone for an IND becoming effective. At the time of execution of each of these development and commercialization licenses, there was significant uncertainty as to whether these milestones would be achieved. In consideration of this, as well as the Company’s past involvement in the research and manufacturing of these product candidates, these milestones were deemed substantive. | |
Sanofi | |
In July 2003, the Company entered into a broad collaboration agreement with Sanofi (formerly Aventis) to discover, develop and commercialize antibody-based products. The collaboration agreement provides Sanofi with worldwide development and commercialization rights to new antibody-based products directed to targets that are included in the collaboration, including the exclusive right to use the Company’s maytansinoid ADC technology in the creation of products developed to these targets. The product candidates (targets) as of December 31, 2014 in the collaboration include SAR3419 (CD19), SAR650984 (CD38), SAR566658 (CA6), SAR408701 (CEACAM5) and one earlier-stage compound. | |
The Company is entitled to receive milestone payments potentially totaling $21.5 million, per target, plus royalties on the commercial sales of any resulting products. The total milestones are categorized as follows: development milestones—$7.5 million; and regulatory milestones—$14 million. Through December 31, 2014, the Company has received and recognized an aggregate of $20.5 million in milestone payments for compounds covered under this agreement now or in the past, including a $3 million development milestone related to initiation of a Phase IIb clinical trial (as defined in the agreement) for SAR650984 and a $1 million development milestone related to initiation of a Phase I clinical trial for SAR408701which are included in license and milestone fee revenue for the six months ended December 31, 2014. The next potential milestone the Company will be entitled to receive for each of SAR566658 and SAR408701 will be a development milestone for initiation of a Phase IIb clinical trial (as defined in the agreement), which will result in each case in a $3 million payment being due. The next potential milestone the Company will be entitled to receive with respect to both SAR3419 and SAR650984 will be a development milestone for initiation of a Phase III clinical trial, which will result in each case in a $3 million payment being due. The next potential milestone the Company will be entitled to receive for the unidentified target will be a development milestone for commencement of a Phase I clinical trial, which will result in a $1 million payment being due. At the time of execution of this agreement, there was significant uncertainty as to whether these milestones would be achieved. In consideration of this, as well as the Company’s past involvement in the research and manufacturing of these product candidates, these milestones were deemed substantive. | |
In December 2006, the Company entered into a right-to-test agreement with Sanofi. The agreement provides Sanofi with the right to (a) test the Company’s maytansinoid ADC technology with Sanofi’s antibodies to targets under a right-to-test, or research, license, (b) take exclusive options, with certain restrictions, to specified targets for specified option periods and (c) upon exercise of those options, take exclusive licenses to use the Company’s maytansinoid ADC technology to develop and commercialize products directed to the specified targets on terms agreed upon at the inception of the right-to-test agreement. Sanofi no longer has the right to take additional options under the agreement, although multiple outstanding options remain in effect for the remainder of their respective option periods. For each development and commercialization license taken, the Company is entitled to receive an exercise fee of $2 million and up to a total of $30 million in milestone payments, plus royalties on the commercial sales of any resulting products. The total milestones are categorized as follows: development milestones—$10 million; and regulatory milestones—$20 million. Sanofi is responsible for the manufacturing, product development and marketing of any products resulting from the agreement. | |
In December 2013, Sanofi took its first exclusive development and commercialization license under the right-to-test agreement, for which the Company received an exercise fee of $2 million and was recognizing this amount as revenue ratably over the Company’s estimated period of its substantial involvement. The Company had previously estimated this development period would conclude at the end of non-pivotal Phase II testing. During the current period, the Company determined it will not be substantially involved in the development and commercialization of the product based on Sanofi’s current plans to develop and manufacture the product without the assistance of the Company. As a result of this determination, the Company recognized the balance of the upfront exercise fee during the first quarter of fiscal 2015. This change in estimate results in an increase to license and milestone fees of $1.7 million for the six months ended December 31, 2014 compared to amounts that would have been recognized pursuant to the Company’s previous estimate. The next payment the Company could receive would either be a $2 million development milestone payment with the initiation of a Phase I clinical trial under the first development and commercialization license taken, or a $2 million exercise fee for the execution of a second license. At the time of execution of this agreement, there was significant uncertainty as to whether the milestone related to initiation of a Phase I clinical trial under the first development and commercialization license would be achieved. In consideration of this, as well as the Company’s expected involvement in the research and manufacturing of these product candidates, this milestone was deemed substantive. | |
Novartis | |
Novartis had the right to take six exclusive development and commercialization licenses under a right-to-test agreement established in October 2010, and took these licenses prior to the expiration of the agreement in October 2014. The Company received a $45 million upfront payment in connection with the execution of the right-to-test agreement in 2010, and for each development and commercialization license taken for a specific target, the Company received an exercise fee of $1 million and is entitled to receive up to a total of $199.5 million in milestone payments, plus royalties on the commercial sales of any resulting products. The total milestones are categorized as follows: development milestones—$22.5 million; regulatory milestones—$77 million; and sales milestones—$100 million. The initial three-year term of the right-to-test agreement was extended by Novartis in October 2013 for an additional one-year period by payment of a $5 million fee to the Company. The Company also is entitled to receive payments for research and development activities performed on behalf of Novartis. Novartis is responsible for the manufacturing, product development and marketing of any products resulting from this agreement. | |
In March 2013, the Company and Novartis amended the right-to-test agreement so that Novartis could take a license to develop and commercialize products directed at two undisclosed, related targets, one target licensed on an exclusive basis and the other target initially licensed on a non-exclusive basis. The target licensed on a non-exclusive basis may no longer be converted to an exclusive target due to the expiration of the right-to-test agreement. The Company received a $3.5 million fee in connection with the execution of the amendment to the agreement. The Company may be required to credit this fee against future milestone payments if Novartis discontinues the development of a specified product under certain circumstances. | |
In connection with the amendment, in March 2013, Novartis took the license referenced above under the right-to-test agreement, as amended, enabling it to develop and commercialize products directed at the two targets. The Company received a $1 million upfront fee with the execution of this license. Additionally, the execution of this license provides the Company the opportunity to receive milestone payments totaling $199.5 million (development milestones—$22.5 million; regulatory milestones—$77 million; and sales milestones—$100 million) or $238 million (development milestones—$22.5 million; regulatory milestones—$115.5 million; and sales milestones—$100 million), depending on the composition of any resulting products. | |
In October 2013 and November 2013, Novartis took its second and third exclusive licenses to single targets, and in October 2014, took three remaining exclusive licenses, each triggering a $1 million payment to the Company and the opportunity to receive milestone payments totaling $199.5 million, as outlined above, plus royalties on the commercial sales of any resulting products. In January 2015, Novartis initiated Phase I, first-in-human clinical testing of its cKit-targeting ADC product candidate, LOP628, triggering a $5 million development milestone payment to the Company. The next payment the Company could receive would be either a $7.5 million development milestone for commencement of a Phase II clinical trial under this license or a $5 million development milestone for commencement of a Phase I clinical trial under any of its other five licenses. At the time of execution of these agreements, there was significant uncertainty as to whether these milestones would be achieved. In consideration of this, as well as the Company’s past involvement in the research and manufacturing of these product candidates, these milestones were deemed substantive. Additionally, the Company is entitled to receive royalties on product sales, if any. | |
In accordance with ACS 605-25 (as amended by ASU No. 2009-13), the Company identified all of the deliverables at the inception of the right-to-test agreement and subsequently when amended. The significant deliverables were determined to be the right-to-test, or research, license, the development and commercialization licenses, rights to future technological improvements, and the research services. The options to obtain development and commercialization licenses in the right-to-test agreement were determined not to be substantive and, as a result, the exclusive development and commercialization licenses were considered deliverables at the inception of the right-to-test agreement. Factors that were considered in determining the options were not substantive included (i) the overall objective of the agreement was for Novartis to obtain development and commercialization licenses, (ii) the size of the exercise fee of $1 million for each development and commercialization license obtained is not significant relative to the $45 million upfront payment that was due at the inception of the right-to-test agreement, (iii) the limited economic benefit that Novartis could obtain from the right-to-test agreement unless it exercised its options to obtain development and commercialization licenses, and (iv) the lack of economic penalties as a result of exercising the options. | |
The Company has determined that the research license together with the development and commercialization licenses represent one unit of accounting as the research license does not have stand-alone value from the development and commercialization licenses due to the lack of transferability of the research license and the limited economic benefit Novartis would derive if they did not obtain any development and commercialization licenses. The Company has also determined that this unit of accounting does have stand-alone value from the rights to future technological improvements and the research services. The rights to future technological improvements and the research services are considered separate units of accounting as each of these was determined to have stand-alone value. The rights to future technological improvements have stand-alone value as Novartis would be able to use those items for their intended purpose without the undelivered elements. The research services have stand-alone value as similar services are sold separately by other vendors. | |
The estimated selling prices for the development and commercialization licenses are the Company’s best estimate of selling price and were determined based on market conditions, similar arrangements entered into by third parties, including the Company’s understanding of pricing terms offered by its competitors for single-target development and commercialization licenses that utilize ADC technology, and entity-specific factors such as the pricing terms of the Company’s previous single-target development and commercialization licenses, recent preclinical and clinical testing results of therapeutic products that use the Company’s ADC technology, and the Company’s pricing practices and pricing objectives. The estimated selling price of the right to technological improvements is the Company’s best estimate of selling price and was determined by estimating the probability that technological improvements will be made and the probability that such technological improvements made will be used by Novartis. In estimating these probabilities, we considered factors such as the technology that is the subject of the development and commercialization licenses, our history of making technological improvements, and when such improvements, if any, were likely to occur relative to the stage of development of any product candidates pursuant to the development and commercialization licenses. The Company’s estimate of probability considered the likely period of time that any improvements would be utilized, which was estimated to be ten years following delivery of a commercialization and development license. The value of any technological improvements made available after this ten year period was considered to be de minimis due to the significant additional costs that would be incurred to incorporate such technology into any existing product candidates. The estimate of probability was multiplied by the estimated selling price of the development and commercialization licenses and the resulting cash flow was discounted at a rate of 16%, representing the Company’s estimate of its cost of capital at the time. The estimated selling price of the research services was based on third-party evidence given the nature of the research services to be performed for Novartis and market rates for similar services. | |
Upon payment of the extension fee in October 2013, the total arrangement consideration of $60.2 million (which comprises the $45 million upfront payment, the amendment fee of $3.5 million, the $5 million extension fee, the exercise fee for each license, and the expected fees for the research services to be provided under the remainder of the arrangement) was reallocated to the deliverables based on the relative selling price method as follows: $55 million to the delivered and undelivered development and commercialization licenses; $4.5 million to the rights to future technological improvements; and $710,000 to the research services. The Company recorded $17.2 million of the $55 million of the arrangement consideration outlined above for the two development and commercialization licenses taken by Novartis in October 2013 and November 2013, which is included in license and milestone fee revenue for the three and six months ended December 31, 2013, and $25.7 million for the three development and commercialization licenses taken in October 2014, which is included in license and milestone fee revenue for the three and six months ended December 31, 2014. The Company also recorded a cumulative catch-up of $1 million for the license delivered in March 2013 and the delivered portion of the license covering future technological improvements, which is included in license and milestone fee revenue for the three and six months ended December 31, 2013. | |
Since execution of the first development and commercialization license taken in March 2013, the amount of the total arrangement consideration allocated to future technological improvements is being recognized as revenue ratably over the period the Company is obligated to make available any technological improvements, which is equivalent to the estimated term of the agreement. The Company estimates the term of a development and commercialization license to be approximately 25 years, which reflects management’s estimate of the time necessary to develop and commercialize products pursuant to the license plus the estimated royalty term. The Company reassesses the estimated term at the end of each reporting period. The Company will recognize research services revenue as the related services are delivered. | |
Lilly | |
Eli Lilly and Company (Lilly) had the right to take three exclusive development and commercialization licenses under a right-to-test agreement established in December 2011, and took these licenses prior to the expiration of the agreement in December 2014. The Company received a $20 million upfront payment in connection with the execution of the right-to-test agreement in 2011. Under the terms of this right-to-test agreement, the first license had no associated exercise fee, and the second and third licenses each had a $2 million exercise fee. The first development and commercialization license was taken in August 2013 and the agreement was amended in December 2013 to provide Lilly with an extension provision and retrospectively include a $2 million exercise fee for the first license in lieu of the fee due for either the second or third license. The second and third licenses were taken in December 2014, with one including the $2 million exercise fee and the other not. Under the two licenses with the $2 million exercise fee, the Company is entitled to receive up to a total of $199 million in milestone payments, plus royalties on the commercial sales of any resulting products. Under the license taken in December 2014 without the exercise fee, the Company is entitled to receive up to a total of $200.5 million in milestone payments, plus royalties on the commercial sales of any resulting products. The total milestones are categorized as follows: development milestones—$29 million for the two development and commercialization licenses with the $2 million exercise fee, and $30.5 million for the one development and commercialization license with no exercise fee; regulatory milestones—$70 million in all cases; and sales milestones—$100 million in all cases. The next payment the Company could receive would be a $5 million development milestone payment with the initiation of a Phase I clinical trial under any of these three development and commercialization licenses taken. At the time of execution of this agreement, there was significant uncertainty as to whether these milestones related to initiation of a Phase I clinical trial under the development and commercialization licenses would be achieved. In consideration of this, as well as the Company’s expected involvement in the research and manufacturing of these product candidates, these milestones were deemed substantive. The Company also is entitled to receive payments for delivery of cytotoxic agents to Lilly and research and development activities performed on behalf of Lilly. Lilly is responsible for the manufacturing, product development and marketing of any products resulting from this collaboration. | |
In accordance with ASC 605-25 (as amended by ASU No. 2009-13), the Company identified all of the deliverables at the inception of the right-to-test agreement. The significant deliverables were determined to be the right-to-test, or research, license, the exclusive development and commercialization licenses, rights to future technological improvements, delivery of cytotoxic agents and the research services. The options to obtain development and commercialization licenses in the right-to-test agreement were determined not to be substantive and, as a result, the exclusive development and commercialization licenses were considered deliverables at the inception of the right-to-test agreement. Factors that were considered in determining the options were not substantive included (i) the overall objective of the agreement was for Lilly to obtain development and commercialization licenses, (ii) the size of the exercise fees of $2 million for each development and commercialization license taken beyond the first license is not significant relative to the $20 million upfront payment that was due at the inception of the right-to-test agreement, (iii) the limited economic benefit that Lilly could obtain from the right-to-test agreement unless it exercised its options to obtain development and commercialization licenses, and (iv) the lack of economic penalties as a result of exercising the options. | |
The Company has determined that the research license together with the development and commercialization licenses represent one unit of accounting as the research license does not have stand-alone value from the development and commercialization licenses due to the lack of transferability of the research license and the limited economic benefit Lilly would derive if they did not obtain any development and commercialization licenses. The Company has also determined that this unit of accounting has stand-alone value from the rights to future technological improvements, the delivery of cytotoxic agents and the research services. The rights to future technological improvements, delivery of cytotoxic agents and the research services are considered separate units of accounting as each of these was determined to have stand-alone value. The rights to future technological improvements have stand-alone value as Lilly would be able to use those items for their intended purpose without the undelivered elements. The research services and cytotoxic agents have stand-alone value as similar services and products are sold separately by other vendors. | |
The estimated selling prices for the development and commercialization licenses are the Company’s best estimate of selling price and were determined based on market conditions, similar arrangements entered into by third parties, including pricing terms offered by our competitors for single-target development and commercialization licenses that utilize antibody-drug conjugate technology, and entity-specific factors such as the pricing terms of the Company’s previous single-target development and commercialization licenses, recent preclinical and clinical testing results of therapeutic products that use the Company’s ADC technology, and the Company’s pricing practices and pricing objectives. The estimated selling price of the rights to technological improvements is the Company’s best estimate of selling price and was determined by estimating the probability that technological improvements will be made, and the probability that technological improvements made will be used by Lilly. In estimating these probabilities, we considered factors such as the technology that is the subject of the development and commercialization licenses, our history of making technological improvements, and when such improvements, if any, were likely to occur relative to the stage of development of any product candidates pursuant to the development and commercialization licenses. The company’s estimate of probability considered the likely period of time that any improvements would be utilized, which was estimated to be ten years following delivery of a commercialization and development license. The value of any technological improvements made available after this ten year period was considered to be de minimis due to the significant additional costs that would be incurred to incorporate such technology into any existing product candidates. The estimate of probability was multiplied by the estimated selling price of the development and commercialization licenses and the resulting cash flow was discounted at a rate of 16%, representing the Company’s estimate of its cost of capital at the time. The estimated selling price of the cytotoxic agent was based on third-party evidence given market rates for the manufacture of such cytotoxic agents. The estimated selling price of the research services was based on third-party evidence given the nature of the research services to be performed for Lilly and market rates for similar services. | |
The total arrangement consideration of $28.2 million (which comprises the $20 million upfront payment, the exercise fee, if any, for each license, the expected fees for the research services to be provided and the cytotoxic agent to be delivered under the arrangement) was allocated to the deliverables based on the relative selling price method as follows: $23.5 million to the development and commercialization licenses; $0.6 million to the rights to future technological improvements, $0.8 million to the sale of cytotoxic agent; and $3.3 million to the research services. Upon execution of the development and commercialization license taken by Lilly in August 2013, the Company recorded $7.8 million of the $23.5 million of the arrangement consideration outlined above, which is included in license and milestone fee revenue for the six month period ended December 31, 2013. With this first development and commercialization license taken, the amount of the total arrangement consideration allocated to future technological improvements will commence to be recognized as revenue ratably over the period the Company is obligated to make available any technological improvements, which is the equivalent to the estimated term of the license. The Company estimates the term of a development and commercialization license to be approximately 25 years, which reflects management’s estimate of the time necessary to develop and commercialize therapeutic products pursuant to the license plus the estimated royalty term. The Company will reassess the estimated term at each subsequent reporting period. Upon execution of two development and commercialization licenses taken by Lilly in December 2014, the Company recognized as license revenue the remaining $15.6 million of arrangement consideration allocated to the development and commercialization licenses. The Company will recognize research services revenue and revenue from the delivery of cytotoxic agents as the related services and cytotoxic agents are delivered. | |
For additional information related to these agreements, as well as the Company’s other significant collaborative agreements, please read Note C, Agreements to our consolidated financial statements included within the Company’s 2014 Form 10-K. | |
Capital_Stock
Capital Stock | 6 Months Ended |
Dec. 31, 2014 | |
Capital Stock | |
Capital Stock | C.Capital Stock |
2001 Non-Employee Director Stock Plan | |
During the three and six months ended December 31, 2014, the Company recorded approximately $29,000 and $37,000 in expense reduction related to stock units outstanding under the Company’s 2001 Non-Employee Director Stock Plan, or the 2001 Plan, compared to $15,000 and $12,000 in expense reduction recorded during the three and six months ended December 31, 2013. The value of the stock units are classified as a liability and adjusted to market value at each reporting period as the redemption amount of stock units for this plan will be paid in cash. No stock units have been issued under the 2001 Plan subsequent to June 30, 2004. | |
Compensation Policy for Non-Employee Directors | |
On November 12, 2013, the Board amended the Compensation Policy for Non-Employee Directors to make certain changes to the compensation of its non-employee directors, including an increase in the fees paid in cash to the non-employee directors. Under the terms of the amended policy, the redemption amount of deferred share units issued will continue to be paid in shares of common stock of the Company on the date a director ceases to be a member of the Board. Annual retainers vest quarterly over approximately one year from the date of grant, contingent upon the individual remaining a director of ImmunoGen as of each vesting date. The number of deferred share units awarded is now fixed per the plan on the date of the award and is no longer based on the market price of the Company’s common stock on the date of the award. All unvested deferred stock awards will automatically vest immediately prior to the occurrence of a change of control. | |
In addition to the deferred share units, the Non-Employee Directors are now also entitled to receive a fixed number of stock options instead of a fixed grant date fair value of options, determined using the Black-Scholes option pricing model measured on the date of grant, which would be the date of the annual meeting of shareholders. These options vest quarterly over approximately one year from the date of grant. Any new directors will receive a pro-rated award, depending on their date of election to the Board. The directors received a total of 80,000, 80,000 and 41,805 stock options in the six months ended December 31, 2014, and fiscal years 2014 and 2013, respectively, and the related compensation expense for the three and six months ended December 31, 2014 and 2013 is included in the amounts discussed in the “Stock-Based Compensation” section of footnote A above. | |
During the three and six months ended December 31, 2014, the Company recorded approximately $118,000 and $236,000 in compensation expense, respectively, related to deferred share units issued and outstanding under the Company’s Compensation Policy for Non-Employee Directors, compared to $100,000 and $197,000 in compensation expense recorded during the three and six months ended December 31, 2013. | |
Cash_and_Cash_Equivalents
Cash and Cash Equivalents | 6 Months Ended |
Dec. 31, 2014 | |
Cash and Cash Equivalents | |
Cash and Cash Equivalents | D.Cash and Cash Equivalents |
As of December 31, 2014 and June 30, 2014, the Company held $106.6 million and $142.3 million, respectively, in cash and money market funds consisting principally of U.S. Government-issued securities and high quality, short-term commercial paper which were classified as cash and cash equivalents. | |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies | |||||
Commitments and Contingencies | E.Commitments and Contingencies | ||||
Leases | |||||
Effective July 27, 2007, the Company entered into a lease agreement with Intercontinental Fund III for the rental of approximately 89,000 square feet of laboratory and office space at 830 Winter Street, Waltham, MA through March 2020. The Company uses this space for its corporate headquarters and other operations. In December 2013, the Company modified its lease agreement at 830 Winter Street, Waltham, MA to include approximately 19,000 square feet of additional office space through 2020, concurrent with the remainder of the original lease term. As part of the lease amendment, the Company will receive a construction allowance of approximately $746,000 to build out office space to the Company’s specifications. The Company obtained physical control of the additional space to begin construction in January 2014. In April, 2014, the Company again modified its lease agreement at this site to extend the lease to 2026. The Company may extend the lease for two additional terms of five years. As part of this lease amendment, the Company will receive a construction allowance of approximately $1.1 million to build out office space to the Company’s specifications. The Company is required to pay certain operating expenses for the leased premises subject to escalation charges for certain expense increases over a base amount. The Company entered into a sublease in December 2009 for 14,100 square feet of this space in Waltham through January 2015; however, the Company and the sublessee agreed to end the lease term effective December 31, 2014. | |||||
Effective April 2012, the Company entered into a sublease agreement for the rental of 7,310 square feet of laboratory and office space at 830 Winter Street, Waltham, MA from Histogenics Corporation. The term of the sublease is for three years and the Company is required to pay certain operating expenses for the leased premises subject to escalation charges for certain expense increases over a base amount. | |||||
The Company also leases manufacturing and office space at 333 Providence Highway, Norwood, MA under an agreement through 2018 with an option to extend the lease for an additional term of five years. The Company is required to pay certain operating expenses for the leased premises subject to escalation charges for certain expense increases over a base amount. | |||||
Effective April 2013, the Company entered into a lease agreement with River Ridge Limited Partnership for the rental of 7,507 square feet of additional office space at 100 River Ridge Drive, Norwood, MA. The initial term of the lease is for five years and two months commencing in July 2013 with an option for the Company to extend the lease for an additional term of five years. The Company is required to pay certain operating expenses for the leased premises subject to escalation charges for certain expense increases over a base amount. The Company entered into a sublease in December 2014 for this space, effective January 2015 through July 2018. | |||||
The minimum rental commitments for the Company’s facilities, including real estate taxes and other expenses, for the next five fiscal years and thereafter under the non-cancelable operating lease agreements discussed above are as follows (in thousands): | |||||
2015 (six months remaining) | $ | 3,532 | |||
2016 | 6,926 | ||||
2017 | 6,942 | ||||
2018 | 7,048 | ||||
2019 | 6,237 | ||||
Thereafter | 43,900 | ||||
Total minimum lease payments | $ | 74,585 | |||
Total minimum rental payments from sublease | (425 | ) | |||
Total minimum lease payments, net | $ | 74,160 | |||
There are no obligations under capital leases as of December 31, 2014, as all of the capital leases were single payment obligations which have all been made. | |||||
Collaborations | |||||
The Company is contractually obligated to make potential future success-based development, regulatory or sales milestone payments in conjunction with certain collaborative agreements. These payments are contingent upon the occurrence of certain future events and, given the nature of these events, it is unclear when, if ever, the Company may be required to pay such amounts. Further, the timing of any future payment is not reasonably estimable. As of December 31, 2014, the maximum amount that may be payable in the future under the Company’s current collaborative agreements is $162 million, $1.4 million of which is reimbursable by a third party under a separate agreement. | |||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Basis of Presentation | ||||||||||||||
Basis of Presentation | ||||||||||||||
The accompanying unaudited consolidated financial statements at December 31, 2014 and June 30, 2014 and for the three and six months ended December 31, 2014 and 2013 include the accounts of ImmunoGen, Inc., or the Company, and its wholly owned subsidiaries, ImmunoGen Securities Corp. and ImmunoGen Europe Limited. The consolidated financial statements include all of the adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of the Company’s financial position in accordance with accounting principles generally accepted in the U.S. for interim financial information. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The preparation of interim financial statements requires the use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenditures during the reported periods. The results of the interim periods are not necessarily indicative of the results for the entire year. Accordingly, the interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2014. | ||||||||||||||
Subsequent Events | Subsequent Events | |||||||||||||
The Company has evaluated all events or transactions that occurred after December 31, 2014 up through the date the Company issued these financial statements. In January 2015, Novartis initiated Phase I, first-in-human clinical testing of its cKit-targeting ADC product candidate, LOP628, triggering a $5 million development milestone payment to the Company. The Company did not have any other material recognizable or unrecognizable subsequent events during this period. | ||||||||||||||
Revenue Recognition | ||||||||||||||
Revenue Recognition | ||||||||||||||
The Company enters into licensing and development agreements with collaborative partners for the development of monoclonal antibody-based anticancer therapeutics. The terms of these agreements contain multiple deliverables which may include (i) licenses, or options to obtain licenses, to the Company’s antibody-drug conjugate, or ADC, technology, (ii) rights to future technological improvements, (iii) research activities to be performed on behalf of the collaborative partner, (iv) delivery of cytotoxic agents and (v) the manufacture of preclinical or clinical materials for the collaborative partner. Payments to the Company under these agreements may include upfront fees, option fees, exercise fees, payments for research activities, payments for the manufacture of preclinical or clinical materials, payments based upon the achievement of certain milestones and royalties on product sales. The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 605-25, “Revenue Recognition—Multiple-Element Arrangements,” and ASC Topic 605-28, “Revenue Recognition—Milestone Method,” in accounting for these agreements. In order to account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the collaborator. 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. | ||||||||||||||
At December 31, 2014, the Company had the following two types of agreements with the parties identified below: | ||||||||||||||
· | Development and commercialization licenses, which provide the party with the right to use the Company’s ADC technology and/or certain other intellectual property to develop compounds to a specified antigen target: | |||||||||||||
Amgen (four exclusive single-target licenses(1)) | ||||||||||||||
Bayer HealthCare (one exclusive single-target license) | ||||||||||||||
Biotest (one exclusive single-target license) | ||||||||||||||
-1 | Amgen has sublicensed one of its exclusive single-target licenses to Oxford BioTherapeutics Ltd. | |||||||||||||
Lilly (three exclusive single-target licenses) | ||||||||||||||
Novartis (five exclusive single-target licenses and one license to two related targets: one target on an exclusive basis and the second target on a non-exclusive basis) | ||||||||||||||
Roche, through its Genentech unit (five exclusive single-target licenses) | ||||||||||||||
Sanofi (one exclusive single-target license and one exclusive license to multiple individual targets) | ||||||||||||||
· | Research license/option agreement for a defined period of time to secure development and commercialization licenses to use the Company’s ADC technology to develop anticancer compounds to specified targets on established terms (referred to herein as right-to-test agreements): | |||||||||||||
Sanofi | ||||||||||||||
CytomX | ||||||||||||||
There are no performance, cancellation, termination or refund provisions in any of the arrangements that contain material financial consequences to the Company. | ||||||||||||||
Development and Commercialization Licenses | ||||||||||||||
The deliverables under a development and commercialization license agreement generally include the license to the Company’s ADC technology with respect to a specified antigen target, and may also include deliverables related to rights to future technological improvements, research activities to be performed on behalf of the collaborative partner and the manufacture of preclinical or clinical materials for the collaborative partner. | ||||||||||||||
Generally, development and commercialization licenses contain non-refundable terms for payments and, depending on the terms of the agreement, provide that the Company will (i) at the collaborator’s request, provide research services at negotiated prices which are generally consistent with what other third parties would charge, (ii) at the collaborator’s request, manufacture and provide to it preclinical and clinical materials or deliver cytotoxic agents at negotiated prices which are generally consistent with what other third parties would charge, (iii) earn payments upon the achievement of certain milestones and (iv) earn royalty payments, generally until the later of the last applicable patent expiration or 10 to 12 years after product launch. In the case of Kadcyla®, however, the royalty term, on a country-by-country basis, is 10 years after product launch, which may be extended an additional two years, for a maximum royalty term of 12 years, depending on patent protection as of the end of the initial 10-year royalty term. Royalty rates may vary over the royalty term depending on the Company’s intellectual property rights and/or the presence of comparable competing products. The Company may provide technical assistance and share any technology improvements with its collaborators during the term of the collaboration agreements. The Company does not directly control when or whether any collaborator will request research or manufacturing services, achieve milestones or become liable for royalty payments. As a result, the Company cannot predict when or if it will recognize revenues in connection with any of the foregoing. | ||||||||||||||
In determining the units of accounting, management evaluates whether the license has stand-alone value from the undelivered elements to the collaborative partner based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research capabilities of the partner and the availability of ADC technology research expertise in the general marketplace. If the Company concludes that the license has stand-alone value and therefore will be accounted for as a separate unit of accounting, the Company then determines the estimated selling prices of the license and all other units of accounting based on market conditions, similar arrangements entered into by third parties, and entity-specific factors such as the terms of the Company’s previous collaborative agreements, recent preclinical and clinical testing results of therapeutic products that use the Company’s ADC technology, the Company’s pricing practices and pricing objectives, the likelihood that technological improvements will be made, and, if made, will be used by the Company’s collaborators and the nature of the research services to be performed on behalf of its collaborators and market rates for similar services. | ||||||||||||||
Upfront payments on development and commercialization licenses are deferred if facts and circumstances dictate that the license does not have stand-alone value. Prior to the adoption of Accounting Standards Update (ASU) No. 2009-13, “Revenue Arrangements with Multiple Deliverables” on July 1, 2010, the Company determined that its licenses lacked stand-alone value and were combined with other elements of the arrangement and any amounts associated with the license were deferred and amortized over a certain period, which the Company refers to as the Company’s period of substantial involvement. The determination of the length of the period over which to defer revenue is subject to judgment and estimation and can have an impact on the amount of revenue recognized in a given period. Historically the Company’s involvement with the development of a collaborator’s product candidate has been significant at the early stages of development, and lessens as it progresses into clinical trials. Also, as a drug candidate gets closer to commencing pivotal testing the Company’s collaborators have sought an alternative site to manufacture their products, as the Company’s facility does not produce pivotal or commercial drug product. Accordingly, the Company generally estimates this period of substantial involvement to begin at the inception of the collaboration agreement and conclude at the end of non-pivotal Phase II testing. The Company believes this period of substantial involvement is, depending on the nature of the license, on average six and one-half years. Quarterly, the Company reassesses its periods of substantial involvement over which the Company amortizes its upfront license fees and makes adjustments as appropriate. In the event a collaborator elects to discontinue development of a specific product candidate under a development and commercialization license, but retains its right to use the Company’s technology to develop an alternative product candidate to the same target or a target substitute, the Company would cease amortization of any remaining portion of the upfront fee until there is substantial preclinical activity on another product candidate and its remaining period of substantial involvement can be estimated. In the event that a development and commercialization license were to be terminated, the Company would recognize as revenue any portion of the upfront fee that had not previously been recorded as revenue, but was classified as deferred revenue, at the date of such termination. | ||||||||||||||
Subsequent to the adoption of ASU No. 2009-13, the Company determined that its research licenses lack stand-alone value and are considered for aggregation with the other elements of the arrangement and accounted for as one unit of accounting. | ||||||||||||||
Upfront payments on development and commercialization licenses may be recognized upon delivery of the license if facts and circumstances dictate that the license has stand-alone value from the undelivered elements, which generally include rights to future technological improvements, research services, delivery of cytotoxic agents and the manufacture of preclinical and clinical materials. | ||||||||||||||
The Company recognizes revenue related to research services that represent separate units of accounting as they are performed, as long as there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collection of the related receivable is probable. The Company recognizes revenue related to the rights to future technological improvements over the estimated term of the applicable license. | ||||||||||||||
The Company may also provide cytotoxic agents to its collaborators or produce preclinical and clinical materials at negotiated prices which are generally consistent with what other third parties would charge. The Company recognizes revenue on cytotoxic agents and on preclinical and clinical materials when the materials have passed all quality testing required for collaborator acceptance and title and risk of loss have transferred to the collaborator. Arrangement consideration allocated to the manufacture of preclinical and clinical materials in a multiple-deliverable arrangement is below the Company’s full cost, and the Company’s full cost is not expected to ever be below its contract selling prices for its existing collaborations. During the six months ended December 31, 2014, the difference between the Company’s full cost to manufacture preclinical and clinical materials on behalf of its collaborators as compared to total amounts received from collaborators for the manufacture of preclinical and clinical materials was $5.5 million. There were no sales of manufactured preclinical or clinical materials during the six months ended December 31, 2013. The majority of the Company’s costs to produce these preclinical and clinical materials are fixed and then allocated to each batch based on the number of batches produced during the period. Therefore, the Company’s costs to produce these materials are significantly impacted by the number of batches produced during the period. The volume of preclinical and clinical materials the Company produces is directly related to the number of clinical trials the Company and its collaborators are preparing for or currently have underway, the speed of enrollment in those trials, the dosage schedule of each clinical trial and the time period such trials last. Accordingly, the volume of preclinical and clinical materials produced, and therefore the Company’s per-batch costs to manufacture these preclinical and clinical materials, may vary significantly from period to period. | ||||||||||||||
The Company may also produce research material for potential collaborators under material transfer agreements. Additionally, the Company performs research activities, including developing antibody specific conjugation processes, on behalf of its collaborators and potential collaborators during the early evaluation and preclinical testing stages of drug development. The Company records amounts received for research materials produced or services performed as a component of research and development support revenue. The Company also develops conjugation processes for materials for later-stage testing and commercialization for certain collaborators. The Company is compensated at negotiated rates and may receive milestone payments for developing these processes which are recorded as a component of research and development support revenue. | ||||||||||||||
The Company’s development and commercialization license agreements have milestone payments which for reporting purposes are aggregated into three categories: (i) development milestones, (ii) regulatory milestones, and (iii) sales milestones. Development milestones are typically payable when a product candidate initiates or advances into different clinical trial phases. Regulatory milestones are typically payable upon submission for marketing approval with the U.S. Food and Drug Administration, or FDA, or other countries’ regulatory authorities or on receipt of actual marketing approvals for the compound or for additional indications. Sales milestones are typically payable when annual sales reach certain levels. | ||||||||||||||
At the inception of each agreement that includes milestone payments, the Company evaluates whether each milestone is substantive and at risk to both parties on the basis of the contingent nature of the milestone. This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity’s performance to achieve the milestone, or (2) 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, (b) the consideration relates solely to past performance and (c) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. The Company evaluates factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. | ||||||||||||||
Non-refundable development and regulatory milestones that are expected to be achieved as a result of the Company’s efforts during the period of substantial involvement are considered substantive and are recognized as revenue upon the achievement of the milestone, assuming all other revenue recognition criteria are met. Milestones that are not considered substantive because we do not contribute effort to the achievement of such milestones are generally achieved after the period of substantial involvement and are recognized as revenue upon achievement of the milestone, as there are no undelivered elements remaining and no continuing performance obligations, assuming all other revenue recognition criteria are met. | ||||||||||||||
Under the Company’s development and commercialization license agreements, the Company receives royalty payments based upon its licensees’ net sales of covered products. Generally, under these agreements the Company is to receive royalty reports and payments from its licensees approximately one quarter in arrears, that is, generally in the second month of the quarter after the licensee has sold the royalty-bearing product or products. The Company recognizes royalty revenues when it can reliably estimate such amounts and collectability is reasonably assured. As such, the Company generally recognizes royalty revenues in the quarter reported to the Company by its licensees, or one quarter following the quarter in which sales by the Company’s licensees occurred. | ||||||||||||||
Right-to-Test Agreements | ||||||||||||||
The Company’s right-to-test agreements provide collaborators the right to (a) test the Company’s ADC technology for a defined period of time through a research, or right-to-test, license, (b) take a defined number of options, for a defined period of time, to specified targets and (c) upon exercise an option, secure or “take” a license to develop and commercialize products for the specified targets on established terms. Under these agreements, fees may be due to the Company (i) at the inception of the arrangement (referred to as “upfront” fees or payments), (ii) upon taking an option with respect to a specific target (referred to as option fees or payments earned, if any, when the option is “taken”), (iii) upon the exercise of a previously taken option to acquire a development and commercialization license(s) (referred to as exercise fees or payments earned, if any, when the development and commercialization license is “taken”), or (iv) some combination of all of these fees. | ||||||||||||||
The accounting for right-to-test agreements is dependent on the nature of the options granted to the collaborative partner. Options are considered substantive if, at the inception of a right-to-test agreement, the Company is at risk as to whether the collaborative partner will choose to exercise the options to secure development and commercialization licenses. Factors that are considered in evaluating whether options are substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the agreement without exercising the options, the cost to exercise the options relative to the total upfront consideration, and the additional financial commitments or economic penalties imposed on the collaborator as a result of exercising the options. | ||||||||||||||
For right-to-test agreements where the options to secure development and commercialization licenses to the Company’s ADC technology are considered substantive, the Company does not consider the development and commercialization licenses to be a deliverable at the inception of the agreement. For those right-to-test agreements entered into prior to the adoption of ASU No. 2009-13 where the options to secure development and commercialization licenses are considered substantive, the Company has deferred the upfront payments received and recognizes this revenue over the period during which the collaborator could elect to take options for development and commercialization licenses. These periods are specific to each collaboration agreement. If a collaborator takes an option to acquire a development and commercialization license under these agreements, any substantive option fee is deferred and recognized over the life of the option, generally 12 to 18 months. If a collaborator exercises an option and takes a development and commercialization license to a specific target, the Company attributes the exercise fee to the development and commercialization license. Upon exercise of an option to acquire a development and commercialization license, the Company would also attribute any remaining deferred option fee to the development and commercialization license and apply the multiple-element revenue recognition criteria to the development and commercialization license and any other deliverables to determine the appropriate revenue recognition, which will be consistent with the Company’s accounting policy for upfront payments on single-target licenses. In the event a right-to-test agreement were to be terminated, the Company would recognize as revenue any portion of the upfront fee that had not previously been recorded as revenue, but was classified as deferred revenue, at the date of such termination. None of the Company’s right-to-test agreements entered into subsequent to the adoption of ASU No. 2009-13 has been determined to contain substantive options. | ||||||||||||||
For right-to-test agreements where the options to secure development and commercialization licenses to the Company’s ADC technology are not considered substantive, the Company considers the development and commercialization licenses to be a deliverable at the inception of the agreement and applies the multiple-element revenue recognition criteria to determine the appropriate revenue recognition. None of the Company’s right-to-test agreements entered into prior to the adoption of ASU No. 2009-13 has been determined to contain non-substantive options. | ||||||||||||||
The Company does not directly control when or if any collaborator will exercise its options for development and commercialization licenses. As a result, the Company cannot predict when or if it will recognize revenues in connection with any of the foregoing. | ||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
Fair value is defined under ASC Topic 820, “Fair Value Measurements and Disclosures,” as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy to measure fair value which is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: | ||||||||||||||
· | Level 1 - Quoted prices in active markets for identical assets or liabilities. | |||||||||||||
· | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||
· | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||||||
As of December 31, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. The following table represents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2014 (in thousands): | ||||||||||||||
Fair Value Measurements at December 31, 2014 Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | Inputs | |||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Cash and cash equivalents | $ | 106,604 | $ | 106,604 | $ | — | $ | — | ||||||
As of June 30, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. The following table represents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2014 (in thousands): | ||||||||||||||
Fair Value Measurements at June 30, 2014 Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | Inputs | |||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Cash, cash equivalents and restricted cash | $ | 142,261 | $ | 142,261 | $ | — | $ | — | ||||||
The fair value of the Company’s cash equivalents is based primarily on quoted prices from active markets. | ||||||||||||||
Unbilled Revenue | ||||||||||||||
Unbilled Revenue | ||||||||||||||
The majority of the Company’s unbilled revenue at December 31, 2014 and June 30, 2014 represents research funding earned prior to those dates based on actual resources utilized under the Company’s agreements with various collaborators. | ||||||||||||||
Inventory | ||||||||||||||
Inventory | ||||||||||||||
Inventory costs relate to clinical trial materials being manufactured for sale to the Company’s collaborators. Inventory is stated at the lower of cost or market as determined on a first-in, first-out (FIFO) basis. | ||||||||||||||
Inventory at December 31, 2014 and June 30, 2014 is summarized below (in thousands): | ||||||||||||||
December 31, | June 30, | |||||||||||||
2014 | 2014 | |||||||||||||
Raw materials | $ | 644 | $ | 437 | ||||||||||
Work in process | 1,275 | 2,513 | ||||||||||||
Total | $ | 1,919 | $ | 2,950 | ||||||||||
Raw materials inventory consists entirely of DM1 and DM4, proprietary cell-killing agents the Company developed as part of its ADC technology. The Company considers more than a twelve month supply of raw materials that is not supported by firm, fixed orders and/or projections from its collaborators to be excess and establishes a reserve to reduce to zero the value of any such excess raw material inventory with a corresponding charge to research and development expense. In accordance with this policy, the Company recorded $392,000 and $205,000 of expense related to excess inventory during the six-month periods ended December 31, 2014 and 2013, respectively. The Company recorded $55,000 and $70,000 of expense related to excess inventory during the three-month periods ended December 31, 2014 and 2013, respectively. | ||||||||||||||
Work in process inventory consists of conjugate manufactured for sale to the Company’s collaborators to be used in preclinical and clinical studies. All conjugate is made to order at the request of the collaborators and subject to the terms and conditions of respective supply agreements. As such, no reserve for work in process inventory is required. | ||||||||||||||
Computation of Net Loss per Common Share | ||||||||||||||
Computation of Net Income (Loss) per Common Share | ||||||||||||||
Basic and diluted net income (loss) per share is calculated based upon the weighted average number of common shares outstanding during the period. During periods of income, participating securities are allocated a proportional share of income determined by dividing total weighted average participating securities by the sum of the total weighted average common shares and participating securities (the “two-class method”). The Company’s restricted stock participate in any dividends declared by the Company and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, no loss is allocated to participating securities since they have no contractual obligation to share in the losses of the Company. The impact of applying the two-class method was not material. Diluted (loss) income per share is computed after giving consideration to the dilutive effect of stock options that are outstanding during the period, except where such non-participating securities would be anti-dilutive. | ||||||||||||||
The Company’s common stock equivalents, as calculated in accordance with the treasury-stock method, are shown in the following table (in thousands): | ||||||||||||||
Three Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Options outstanding to purchase common stock and unvested restricted stock | 10,241 | 8,616 | ||||||||||||
Common stock equivalents under treasury stock method | 730 | 1,845 | ||||||||||||
Potentially dilutive securities representing 7.9 million and 3.2 million shares of common stock for the three-month periods ended December 31, 2014 and 2013, respectively, and 7.1 and 1.7 million shares of common stock for the six-month periods ended December 31, 2014 and 2013, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. The Company’s common stock equivalents have not been included in any net loss per share calculation because their effect is anti-dilutive due to the Company’s net loss position. | ||||||||||||||
Stock-Based Compensation | ||||||||||||||
Stock-Based Compensation | ||||||||||||||
As of December 31, 2014, the Company is authorized to grant future awards under one employee share-based compensation plan, which is the ImmunoGen, Inc. 2006 Employee, Director and Consultant Equity Incentive Plan, or the 2006 Plan. At the annual meeting of shareholders on November 11, 2014, an amendment to the 2006 Plan was approved and an additional 5,500,000 shares were authorized for issuance under this plan. As amended, the 2006 Plan provides for the issuance of Stock Grants, the grant of Options and the grant of Stock-Based Awards for up to 17,500,000 shares of the Company’s common stock, as well as 1,676,599 shares of common stock which represent awards granted under the previous stock option plan, the ImmunoGen, Inc. Restated Stock Option Plan, or the Former Plan, that were forfeited, expired or were cancelled without delivery of shares of common stock or which resulted in the forfeiture of shares of common stock back to the Company between November 11, 2006 and June 30, 2014. Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options vest at various periods of up to four years and may be exercised within ten years of the date of grant. | ||||||||||||||
The stock-based awards are accounted for under ASC Topic 718, “Compensation—Stock Compensation.” Pursuant to Topic 718, the estimated grant date fair value of awards is charged to the statement of operations and comprehensive loss over the requisite service period, which is the vesting period. Such amounts have been reduced by an estimate of forfeitures of all unvested awards. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model with the assumptions noted in the following table. As the Company has not paid dividends since inception, nor does it expect to pay any dividends for the foreseeable future, the expected dividend yield assumption is zero. Expected volatility is based exclusively on historical volatility data of the Company’s stock. The expected term of stock options granted is based exclusively on historical data and represents the period of time that stock options granted are expected to be outstanding. The expected term is calculated for and applied to one group of stock options as the Company does not expect substantially different exercise or post-vesting termination behavior among its option recipients. The risk-free rate of the stock options is based on the U.S. Treasury rate in effect at the time of grant for the expected term of the stock options. | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Dividend | None | None | None | None | ||||||||||
Volatility | 60.95% | 60.44% | 60.87% | 60.44% | ||||||||||
Risk-free interest rate | 1.81% | 1.92% | 1.88% | 1.72% | ||||||||||
Expected life (years) | 6.3 | 6.3 | 6.3 | 6.3 | ||||||||||
Using the Black-Scholes option-pricing model, the weighted average grant date fair values of options granted during the three months ended December 31, 2014 and 2013 were $5.77 and $8.76 per share, respectively, and $6.24 and $10.64 per share for options granted during the six months ended December 31, 2014 and 2013, respectively. | ||||||||||||||
Stock compensation expense related to stock options and restricted stock awards granted under the 2006 Plan was $3.6 million and $8.9 million during the three and six months ended December 31, 2014, respectively, compared to stock compensation expense of $3.7 million and $8.4 million for the three and six months ended December 31, 2013, respectively. As of December 31, 2014, the estimated fair value of unvested employee awards was $24.9 million, net of estimated forfeitures. The weighted-average remaining vesting period for these awards is approximately two years. | ||||||||||||||
During the six months ended December 31, 2014, holders of options issued under the Company’s equity plans exercised their rights to acquire an aggregate of approximately 177,000 shares of common stock at prices ranging from $3.19 to $9.88 per share. The total proceeds to the Company from these option exercises were approximately $1.3 million. | ||||||||||||||
Financial Instruments and Concentration of Credit Risk | ||||||||||||||
Financial Instruments and Concentration of Credit Risk | ||||||||||||||
The Company’s cash equivalents consist of money market funds with underlying investments primarily being U.S. Government-issued securities and high quality, short-term commercial paper. All of the Company’s cash and cash equivalents are maintained with three financial institutions in the U.S. The Company uses a Euro-denominated bank account to manage the foreign currency exposures that exist as part of our ongoing business operations. Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the value of transactions, anticipated transactions and balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. | ||||||||||||||
Segment Information | ||||||||||||||
Segment Information | ||||||||||||||
During the six months ended December 31, 2014, the Company continued to operate in one operating segment which is the business of discovery of monoclonal antibody-based anticancer therapeutics. | ||||||||||||||
The percentages of revenues recognized from significant customers of the Company in the three and six months ended December 31, 2014 and 2013 are included in the following table: | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
Collaborative Partner: | 2014 | 2013 | 2014 | 2013 | ||||||||||
Lilly | 35% | 2% | 28% | 19% | ||||||||||
Novartis | 54% | 64% | 44% | 43% | ||||||||||
Roche | 10% | 24% | 14% | 30% | ||||||||||
Sanofi | 0% | 1% | 10% | 1% | ||||||||||
There were no other customers of the Company with significant revenues in the three and six months ended December 31, 2014 and 2013. | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In May 2014, the FASB issued Accounting Standards Update 2014-9, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. This update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting beginning after December 15, 2016, including interim periods within the year of adoption, and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard is effective for the Company on July 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on our financial statements and related disclosures. | ||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Summary of Significant Accounting Policies | ||||||||||||||
Schedule of assets that are required to be measured at fair value on a recurring basis | ||||||||||||||
As of December 31, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. The following table represents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2014 (in thousands): | ||||||||||||||
Fair Value Measurements at December 31, 2014 Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | Inputs | |||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Cash and cash equivalents | $ | 106,604 | $ | 106,604 | $ | — | $ | — | ||||||
As of June 30, 2014, the Company held certain assets that are required to be measured at fair value on a recurring basis. The following table represents the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2014 (in thousands): | ||||||||||||||
Fair Value Measurements at June 30, 2014 Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||||
Active Markets for | Observable Inputs | Unobservable | ||||||||||||
Identical Assets | Inputs | |||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Cash, cash equivalents and restricted cash | $ | 142,261 | $ | 142,261 | $ | — | $ | — | ||||||
Schedule of inventory | ||||||||||||||
Inventory at December 31, 2014 and June 30, 2014 is summarized below (in thousands): | ||||||||||||||
December 31, | June 30, | |||||||||||||
2014 | 2014 | |||||||||||||
Raw materials | $ | 644 | $ | 437 | ||||||||||
Work in process | 1,275 | 2,513 | ||||||||||||
Total | $ | 1,919 | $ | 2,950 | ||||||||||
Schedule of common stock equivalents, as calculated in accordance with the treasury-stock method | ||||||||||||||
The Company’s common stock equivalents, as calculated in accordance with the treasury-stock method, are shown in the following table (in thousands): | ||||||||||||||
Three Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
Options outstanding to purchase common stock and unvested restricted stock | 10,241 | 8,616 | ||||||||||||
Common stock equivalents under treasury stock method | 730 | 1,845 | ||||||||||||
Schedule of weighted-average assumptions used to estimate the fair value of each stock option | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Dividend | None | None | None | None | ||||||||||
Volatility | 60.95% | 60.44% | 60.87% | 60.44% | ||||||||||
Risk-free interest rate | 1.81% | 1.92% | 1.88% | 1.72% | ||||||||||
Expected life (years) | 6.3 | 6.3 | 6.3 | 6.3 | ||||||||||
Schedule of percentage of revenues recognized from significant customers | Three Months Ended | Six Months Ended | ||||||||||||
December 31, | December 31, | |||||||||||||
Collaborative Partner: | 2014 | 2013 | 2014 | 2013 | ||||||||||
Lilly | 35% | 2% | 28% | 19% | ||||||||||
Novartis | 54% | 64% | 44% | 43% | ||||||||||
Roche | 10% | 24% | 14% | 30% | ||||||||||
Sanofi | 0% | 1% | 10% | 1% | ||||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 6 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies | |||||
Minimum rental commitments for the next five fiscal years and thereafter under the non-cancelable operating lease agreements | |||||
The minimum rental commitments for the Company’s facilities, including real estate taxes and other expenses, for the next five fiscal years and thereafter under the non-cancelable operating lease agreements discussed above are as follows (in thousands): | |||||
2015 (six months remaining) | $ | 3,532 | |||
2016 | 6,926 | ||||
2017 | 6,942 | ||||
2018 | 7,048 | ||||
2019 | 6,237 | ||||
Thereafter | 43,900 | ||||
Total minimum lease payments | $ | 74,585 | |||
Total minimum rental payments from sublease | (425 | ) | |||
Total minimum lease payments, net | $ | 74,160 | |||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 40 Months Ended | 1 Months Ended | 2 Months Ended | 1 Months Ended | 13 Months Ended | 1 Months Ended | ||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2009 | Sep. 30, 2009 | Dec. 31, 2012 | 31-May-13 | Dec. 31, 2014 | Aug. 31, 2013 | Nov. 30, 2013 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2010 | Dec. 31, 2013 | Jan. 31, 2015 | |
item | item | item | item | item | item | item | |||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of types of licensing and development agreements with collaborative partners | 2 | ||||||||||||||||
License and milestone fees | $41,417,000 | $25,678,000 | $47,651,000 | $38,845,000 | |||||||||||||
Development and Commercialization License | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Average involvement period over which the upfront payments on single-target licenses are amortized | 6 years 6 months | ||||||||||||||||
Difference between the full cost to manufacture and amounts received from collaborators for preclinical and clinical materials | 5,500,000 | 0 | |||||||||||||||
Number of types of milestone payments under collaborative arrangements | 3 | ||||||||||||||||
Number of quarters in arrear for revenue recognition | 1 | ||||||||||||||||
Development and Commercialization License | Minimum | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Period to earn royalty payments | 10 years | ||||||||||||||||
Development and Commercialization License | Maximum | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Period to earn royalty payments | 12 years | ||||||||||||||||
Development and Commercialization License | Kadcyla | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Extended period to earn royalty payments | 2 years | ||||||||||||||||
Development and Commercialization License | Kadcyla | Minimum | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Period to earn royalty payments | 10 years | ||||||||||||||||
Development and Commercialization License | Kadcyla | Maximum | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Period to earn royalty payments | 12 years | ||||||||||||||||
Right-to-test agreement | Minimum | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Average period over which upfront payments are deferred and recognized | 12 months | ||||||||||||||||
Right-to-test agreement | Maximum | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Average period over which upfront payments are deferred and recognized | 18 months | ||||||||||||||||
Amgen | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 4 | 3 | |||||||||||||||
License exercise fee | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||||
License and milestone fees | 2,200,000 | 2,200,000 | |||||||||||||||
Amgen | Development and Commercialization License | Non-exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 1 | ||||||||||||||||
License exercise fee | 500,000 | ||||||||||||||||
Bayer HealthCare | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 1 | ||||||||||||||||
Biotest | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 1 | ||||||||||||||||
Lilly | Development and Commercialization License | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
License and milestone fees | 15,600,000 | 7,800,000 | |||||||||||||||
Lilly | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 3 | ||||||||||||||||
Novartis | Development and Commercialization License | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 2 | ||||||||||||||||
License and milestone fees | 25,700,000 | 17,200,000 | 25,700,000 | 17,200,000 | |||||||||||||
Novartis | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 5 | 3 | 5 | ||||||||||||||
Number of licenses to two related targets | 1 | ||||||||||||||||
Number of related targets | 2 | ||||||||||||||||
Novartis | Right-to-test agreement | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 6 | ||||||||||||||||
Roche | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 5 | ||||||||||||||||
Sanofi | Development and Commercialization License | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
License exercise fee | 2,000,000 | ||||||||||||||||
License and milestone fees | 1,700,000 | ||||||||||||||||
Sanofi | Development and Commercialization License | Exclusive license | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
Number of single-target licenses | 1 | ||||||||||||||||
Number of licenses to multiple individual targets | 1 | ||||||||||||||||
Subsequent event | Novartis | LOP628 | |||||||||||||||||
Summary of Significant Accounting Policies | |||||||||||||||||
License and milestone fees | $5,000,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (Recurring basis, USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Total | ||
Fair value hierarchy for the Company's financial assets measured at fair value | ||
Cash, cash equivalents and restricted cash | $106,604 | $142,261 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair value hierarchy for the Company's financial assets measured at fair value | ||
Cash, cash equivalents and restricted cash | $106,604 | $142,261 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Inventory | |||||
Raw materials | $644,000 | $644,000 | $437,000 | ||
Work in process | 1,275,000 | 1,275,000 | 2,513,000 | ||
Total | 1,919,000 | 1,919,000 | 2,950,000 | ||
Minimum supply period of raw materials that is not supported by firm, fixed orders and/or projections from collaborators considered to expense inventory | 12 months | ||||
Charges to research and development expense related to raw material inventory identified as excess | $55,000 | $70,000 | $392,000 | $205,000 | |
Computation of Net Income (Loss) per Common Share | |||||
Options outstanding to purchase common stock and unvested restricted stock (in shares) | 10,241,000 | 8,616,000 | |||
Common stock equivalents under treasury stock method (in shares) | 730,000 | 1,845,000 | |||
Potentially dilutive securities excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive (in shares) | 7,900,000 | 3,200,000 | 7,100,000 | 1,700,000 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | |||
Nov. 11, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 11, 2014 | |
item | ||||||
Additional disclosure for options | ||||||
Cash received for exercise of stock options | $1,316,000 | $7,055,000 | ||||
Financial Instruments and Concentration of Credit Risk | ||||||
Number of financial institutions in the U.S. in which cash and cash equivalents are primarily maintained | 3 | |||||
2006 Plan | ||||||
Stock-Based Compensation | ||||||
Number of employee share-based compensation plans | 1 | |||||
Additional number of shares authorized for issuance | 5,500,000 | |||||
Common stock authorized for issuance (in shares) | 17,500,000 | 17,500,000 | ||||
Number of shares of common stock added to the Plan from the Former Plan | 1,676,599 | |||||
Additional disclosure for options | ||||||
Stock compensation expense | 3,600,000 | 3,700,000 | 8,900,000 | 8,400,000 | ||
Estimated fair value of unvested employee awards, net of estimated forfeitures | 24,900,000 | |||||
Weighted average vesting period of unvested employee awards | 2 years 6 months | |||||
2006 Plan | Stock options | ||||||
Weighted-average assumptions used to estimate the fair value of each stock option | ||||||
Number of group of awards for which expected term is calculated for and applied | 1 | |||||
Dividend (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | ||
Volatility (as a percent) | 60.95% | 60.44% | 60.87% | 60.44% | ||
Risk-free interest rate (as a percent) | 1.81% | 1.92% | 1.88% | 1.72% | ||
Expected life | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 3 months 18 days | ||
Weighted-average grant date fair values of options granted (in dollars per share) | $5.77 | $8.76 | $6.24 | $10.64 | ||
Additional disclosure for options | ||||||
Stock options exercised (in shares) | 177,000 | |||||
Cash received for exercise of stock options | $1,300,000 | |||||
2006 Plan | Stock options | Maximum | ||||||
Stock-Based Compensation | ||||||
Vesting period | 4 years | |||||
Exercise period | 10 years | |||||
Additional disclosure for options | ||||||
Exercised (in dollars per share) | $9.88 | |||||
2006 Plan | Stock options | Minimum | ||||||
Additional disclosure for options | ||||||
Exercised (in dollars per share) | $3.19 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting | ||||
Number of operating segments | 1 | |||
Lilly | Revenue | ||||
Collaborative Partner: | ||||
Percentages of revenue recognized | 35.00% | 2.00% | 28.00% | 19.00% |
Novartis | Revenue | ||||
Collaborative Partner: | ||||
Percentages of revenue recognized | 54.00% | 64.00% | 44.00% | 43.00% |
Roche | Revenue | ||||
Collaborative Partner: | ||||
Percentages of revenue recognized | 10.00% | 24.00% | 14.00% | 30.00% |
Sanofi | Revenue | ||||
Collaborative Partner: | ||||
Percentages of revenue recognized | 0.00% | 1.00% | 10.00% | 1.00% |
Collaborative_Agreements_Detai
Collaborative Agreements (Details) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 176 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | 31-May-00 | Dec. 31, 2014 | |
Collaborative Agreements disclosures | ||||||
Amount of arrangement consideration included in license and milestone fees | $41,417,000 | $25,678,000 | $47,651,000 | $38,845,000 | ||
Royalties on net sales of Kadcyla | 4,625,000 | 2,335,000 | 8,791,000 | 4,388,000 | ||
Roche | Development and Commercialization License | Kadcyla | ||||||
Collaborative Agreements disclosures | ||||||
Payments received under collaboration agreement | 2,000,000 | |||||
Period in arrears to receive royalty reports and payments related to sales of Kadcyla | 3 months | |||||
Royalties on net sales of Kadcyla | 4,600,000 | 2,300,000 | 8,800,000 | 4,400,000 | ||
Roche | Development and Commercialization License | Kadcyla | Maximum | ||||||
Collaborative Agreements disclosures | ||||||
Potential milestone payments | 44,000,000 | |||||
Roche | Development and Commercialization License | Kadcyla | Development milestones | ||||||
Collaborative Agreements disclosures | ||||||
Payments received under collaboration agreement | 13,500,000 | |||||
Potential milestone payments | 13,500,000 | |||||
Roche | Development and Commercialization License | Kadcyla | Regulatory milestones | ||||||
Collaborative Agreements disclosures | ||||||
Payments received under collaboration agreement | 20,500,000 | |||||
Potential milestone payments | 5,000,000 | 5,000,000 | 30,500,000 | 5,000,000 | ||
Roche | Development and Commercialization License | Kadcyla | Regulatory milestones in Japan | ||||||
Collaborative Agreements disclosures | ||||||
Payments received under collaboration agreement | 5,000,000 | |||||
Amount of arrangement consideration included in license and milestone fees | $5,000,000 | $10,000,000 | ||||
Number of milestone payments received | 2 |
Collaborative_Agreements_Detai1
Collaborative Agreements (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 40 Months Ended | 1 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2011 | Oct. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2009 | Sep. 30, 2009 | Dec. 31, 2012 | 31-May-13 | |
item | item | item | |||||||||
Collaborative Agreements disclosures | |||||||||||
Amount of arrangement consideration included in license and milestone fees | $41,417,000 | $25,678,000 | $47,651,000 | $38,845,000 | |||||||
Costs related to the research and development services | 27,647,000 | 20,862,000 | 55,665,000 | 42,891,000 | |||||||
Amgen | Future Technological Improvements | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Remaining arrangement consideration to be recognized as license revenue | 430,000 | 430,000 | |||||||||
Amgen | Development and Commercialization License | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Potential milestone payments | 34,000,000 | ||||||||||
Estimated utilization period after commercialization | 10 years | ||||||||||
Discount rate (as a percent) | 13.00% | ||||||||||
Estimated term of development and commercialization license | 25 years | ||||||||||
Amgen | Development and Commercialization License | Phase II clinical trial | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Potential milestone payments | 3,000,000 | 3,000,000 | |||||||||
Amgen | Development and Commercialization License | IND application effective | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Potential milestone payments | 1,000,000 | 1,000,000 | |||||||||
Fee received per license | 1,000,000 | ||||||||||
Number of compounds under development and commercialization licenses | 2 | ||||||||||
Number of milestone payments received | 2 | ||||||||||
Amgen | Development and Commercialization License | Development milestones | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Potential milestone payments | 9,000,000 | ||||||||||
Amgen | Development and Commercialization License | Regulatory milestones | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Potential milestone payments | 20,000,000 | ||||||||||
Amgen | Development and Commercialization License | Sales milestones | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Potential milestone payments | 5,000,000 | ||||||||||
Amgen | Development and Commercialization License | Exclusive license | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Amount of arrangement consideration included in license and milestone fees | 2,200,000 | 2,200,000 | |||||||||
Number of single-target licenses | 4 | 3 | |||||||||
Fee received per license | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||
Fee received on conversion of non-exclusive license agreement to an exclusive license | 500,000 | ||||||||||
Amgen | Development and Commercialization License | Non-exclusive license | |||||||||||
Collaborative Agreements disclosures | |||||||||||
Number of single-target licenses | 1 | ||||||||||
Fee received per license | $500,000 |
Collaborative_Agreements_Detai2
Collaborative Agreements (Details 3) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 138 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2006 | Jul. 31, 2003 | |
Collaborative Agreements disclosures | ||||||||
License and milestone fees | $41,417,000 | $25,678,000 | $47,651,000 | $38,845,000 | ||||
Sanofi | Development and Commercialization License | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 2,000,000 | 2,000,000 | 2,000,000 | 30,000,000 | 21,500,000 | |||
License exercise fee, per license | 2,000,000 | |||||||
Fee received per license | 2,000,000 | |||||||
Payments received under collaboration agreement | 20,500,000 | |||||||
License and milestone fees | 1,700,000 | |||||||
Sanofi | Development and Commercialization License | Development milestones | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 2,000,000 | 2,000,000 | 2,000,000 | 10,000,000 | 7,500,000 | |||
Sanofi | Development and Commercialization License | Regulatory milestones | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 20,000,000 | 14,000,000 | ||||||
Sanofi | Development and Commercialization License | SAR650984 | Development milestones | Phase IIb clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 3,000,000 | |||||||
Sanofi | Development and Commercialization License | SAR650984 | Development milestones | Phase III clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 3,000,000 | 3,000,000 | 3,000,000 | |||||
Sanofi | Development and Commercialization License | SAR566658 | Development milestones | Phase IIb clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 3,000,000 | 3,000,000 | 3,000,000 | |||||
Sanofi | Development and Commercialization License | SAR3419 | Development milestones | Phase III clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 3,000,000 | 3,000,000 | 3,000,000 | |||||
Sanofi | Development and Commercialization License | SAR408701 | Development milestones | Phase IIb clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | 3,000,000 | 3,000,000 | 3,000,000 | |||||
Sanofi | Development and Commercialization License | SAR408701 | Development milestones | Phase I clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 1,000,000 | |||||||
Sanofi | Development and Commercialization License | Undisclosed Target | Development milestones | Phase I clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments | $1,000,000 | $1,000,000 | $1,000,000 |
Collaborative_Agreements_Detai3
Collaborative Agreements (Details 4) (USD $) | 3 Months Ended | 6 Months Ended | 37 Months Ended | 1 Months Ended | 2 Months Ended | 1 Months Ended | 13 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 31, 2013 | Jan. 31, 2015 | Oct. 31, 2013 | Mar. 31, 2013 | Oct. 31, 2010 | Nov. 30, 2013 | Oct. 31, 2014 | Nov. 30, 2013 | Oct. 31, 2014 | |
item | item | item | |||||||||||
Collaborative Agreements disclosures | |||||||||||||
Amount of arrangement consideration included in license and milestone fees | $41,417,000 | $25,678,000 | $47,651,000 | $38,845,000 | |||||||||
Costs related to the research and development services | 27,647,000 | 20,862,000 | 55,665,000 | 42,891,000 | |||||||||
Novartis | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Payments received under collaboration agreement | 60,200,000 | ||||||||||||
Novartis | LOP628 | Subsequent event | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Amount of arrangement consideration included in license and milestone fees | 5,000,000 | ||||||||||||
Novartis | Right-to-test agreement | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Term of agreement | 3 years | ||||||||||||
Term of extension of the agreement | 1 year | ||||||||||||
Payments for extension of agreement | 5,000,000 | ||||||||||||
Payments received under collaboration agreement | 1,000,000 | 45,000,000 | |||||||||||
Payments received under collaboration agreement in connection with amended agreement | 3,500,000 | ||||||||||||
Novartis | Right-to-test agreement | Undisclosed Target | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Number of pre-defined and related undisclosed targets | 2 | ||||||||||||
Novartis | Right-to-test agreement | Exclusive license | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Number of development and commercialization licenses taken | 6 | ||||||||||||
Novartis | Right-to-test agreement | Exclusive license | Undisclosed Target | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Number of pre-defined and related undisclosed targets | 1 | ||||||||||||
Novartis | Development and Commercialization License | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Payments received under collaboration agreement | 55,000,000 | ||||||||||||
License exercise fee, per license | 1,000,000 | ||||||||||||
Potential milestone payments | 199,500,000 | 199,500,000 | |||||||||||
Number of development and commercialization licenses taken | 2 | ||||||||||||
Potential milestone payments under second option | 238,000,000 | ||||||||||||
Amount of arrangement consideration included in license and milestone fees | 25,700,000 | 17,200,000 | 25,700,000 | 17,200,000 | |||||||||
Cumulative catch-up amount included in license and milestone fees | 1,000,000 | 1,000,000 | |||||||||||
Estimated utilization period after commercialization | 10 years | ||||||||||||
Discount rate (as a percent) | 16.00% | ||||||||||||
Estimated term of development and commercialization license | 25 years | ||||||||||||
Novartis | Development and Commercialization License | Phase I clinical trial | LOP628 | Subsequent event | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Proceeds from License Fees Received | 5,000,000 | ||||||||||||
Novartis | Development and Commercialization License | Development milestones | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Potential milestone payments | 22,500,000 | 22,500,000 | |||||||||||
Potential milestone payments under second option | 22,500,000 | ||||||||||||
Novartis | Development and Commercialization License | Regulatory milestones | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Potential milestone payments | 77,000,000 | 77,000,000 | |||||||||||
Potential milestone payments under second option | 115,500,000 | ||||||||||||
Novartis | Development and Commercialization License | Sales milestones | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Potential milestone payments | 100,000,000 | 100,000,000 | |||||||||||
Potential milestone payments under second option | 100,000,000 | ||||||||||||
Novartis | Development and Commercialization License | Future Technological Improvements | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Payments received under collaboration agreement | 4,500,000 | ||||||||||||
Novartis | Development and Commercialization License | Research Services | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Payments received under collaboration agreement | 710,000 | ||||||||||||
Novartis | Development and Commercialization License | Exclusive license | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Payments received under collaboration agreement | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||
Potential milestone payments | 199,500,000 | 199,500,000 | 199,500,000 | 199,500,000 | 199,500,000 | 199,500,000 | |||||||
Number of development and commercialization licenses taken | 5 | 3 | 5 | ||||||||||
Number of pre-defined and related undisclosed targets | 2 | ||||||||||||
Novartis | Development and Commercialization License | Exclusive license | Phase I clinical trial | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Potential milestone payments | 5,000,000 | 5,000,000 | |||||||||||
Novartis | Development and Commercialization License | Exclusive license | Phase II clinical trial | |||||||||||||
Collaborative Agreements disclosures | |||||||||||||
Potential milestone payments | $7,500,000 | $7,500,000 |
Collaborative_Agreements_Detai4
Collaborative Agreements (Details 5) (USD $) | 3 Months Ended | 6 Months Ended | 37 Months Ended | 1 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2011 | Dec. 31, 2014 | Aug. 31, 2013 | |
Collaborative Agreements disclosures | ||||||||
Amount of arrangement consideration included in license and milestone fees | $41,417,000 | $25,678,000 | $47,651,000 | $38,845,000 | ||||
Costs related to the research and development services | 27,647,000 | 20,862,000 | 55,665,000 | 42,891,000 | ||||
Lilly | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 28,200,000 | |||||||
Lilly | Sales milestones | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 800,000 | |||||||
Lilly | Future Technological Improvements | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 600,000 | |||||||
Lilly | Research Services | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 3,300,000 | |||||||
Lilly | Right-to-test agreement | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 20,000,000 | |||||||
Lilly | Right-to-test agreement | No exercise fee | ||||||||
Collaborative Agreements disclosures | ||||||||
License exercise fee, per subsequent license | 0 | |||||||
Lilly | Right-to-test agreement | Exercise fee of $2 million | ||||||||
Collaborative Agreements disclosures | ||||||||
License exercise fee, per subsequent license | 2,000,000 | |||||||
Lilly | Development and Commercialization License | ||||||||
Collaborative Agreements disclosures | ||||||||
Payments received under collaboration agreement | 23,500,000 | |||||||
Estimated utilization period after commercialization | 10 years | |||||||
Discount rate (as a percent) | 16.00% | |||||||
Amount of arrangement consideration included in license and milestone fees | 15,600,000 | 7,800,000 | ||||||
Estimated term of development and commercialization license | 25 years | |||||||
Lilly | Development and Commercialization License | No exercise fee | Maximum | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | 200,500,000 | |||||||
Lilly | Development and Commercialization License | Exercise fee of $2 million | ||||||||
Collaborative Agreements disclosures | ||||||||
License exercise fee, per subsequent license | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | ||
Lilly | Development and Commercialization License | Exercise fee of $2 million | Maximum | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | 199,000,000 | |||||||
Lilly | Development and Commercialization License | Development milestones | No exercise fee | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | 30,500,000 | |||||||
Lilly | Development and Commercialization License | Development milestones | Exercise fee of $2 million | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | 29,000,000 | |||||||
Lilly | Development and Commercialization License | Development milestones | Phase I clinical trial | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | 5,000,000 | 5,000,000 | 5,000,000 | 5,000,000 | ||||
Lilly | Development and Commercialization License | Regulatory milestones | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | 70,000,000 | |||||||
Lilly | Development and Commercialization License | Sales milestones | ||||||||
Collaborative Agreements disclosures | ||||||||
Potential milestone payments for each subsequent license | $100,000,000 | |||||||
Exclusive license | Lilly | Development and Commercialization License | ||||||||
Collaborative Agreements disclosures | ||||||||
Number of development and commercialization licenses taken | 3 |
Capital_Stock_Details
Capital Stock (Details) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
2001 Director Plan | Stock options | ||||||
Stock-Based Compensation | ||||||
Stock compensation expense | $29,000 | ($15,000) | $37,000 | ($12,000) | ||
Stock units issued (in shares) | 0 | |||||
Compensation Policy for Non-Employee Directors | Stock options | ||||||
Stock-Based Compensation | ||||||
Vesting period | 1 year | |||||
Stock options granted to directors (in shares) | 80,000 | 80,000 | 41,805 | |||
Compensation Policy for Non-Employee Directors | Deferred share units | ||||||
Stock-Based Compensation | ||||||
Stock compensation expense | $118,000 | $100,000 | $236,000 | $197,000 | ||
Vesting period | 1 year |
Cash_and_Cash_Equivalents_Deta
Cash and Cash Equivalents (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents | $106,604 | $142,261 | $178,088 | $194,960 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | 6 Months Ended | 1 Months Ended | ||||
Apr. 30, 2014 | Apr. 30, 2012 | Dec. 31, 2014 | Apr. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2009 | Jul. 27, 2007 | |
item | sqft | sqft | sqft | sqft | sqft | ||
Minimum rental commitments under the non-cancelable operating lease agreements | |||||||
2015 (six months remaining) | 3,532,000 | ||||||
2016 | 6,926,000 | ||||||
2017 | 6,942,000 | ||||||
2018 | 7,048,000 | ||||||
2019 | 6,237,000 | ||||||
Thereafter | 43,900,000 | ||||||
Total minimum lease payments | 74,585,000 | ||||||
Total minimum rental payments from sublease | -425,000 | ||||||
Total minimum lease payments, net | 74,160,000 | ||||||
Obligations under capital leases | 0 | ||||||
Collaborations | |||||||
Potential milestone payable | 162,000,000 | ||||||
Amount reimbursable by a third party | 1,400,000 | ||||||
830 Winter Street, Waltham, MA | |||||||
Operating leases | |||||||
Area of space leased (in square feet) | 89,000 | ||||||
Additional area of space leased (in square feet) | 19,000 | ||||||
Construction allowance receivable | $1,100,000 | $746,000 | |||||
Number of additional terms for which lease agreement can be extended | 2 | ||||||
Additional term period for which lease agreement can be extended | 5 years | ||||||
Area of property covered under sublease agreement (in square feet) | 7,310 | 14,100 | |||||
Additional period for which sublease agreement can be extended | 3 years | ||||||
333 Providence Hwy, Norwood MA | |||||||
Operating leases | |||||||
Additional term period for which lease agreement can be extended | 5 years | ||||||
100 River Ridge Drive, Norwood, MA | |||||||
Operating leases | |||||||
Area of space leased (in square feet) | 7,507 | ||||||
Initial lease term period | 5 years 2 months | ||||||
Additional term period for which lease agreement can be extended | 5 years |