Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 24, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'INCYTE CORP | ' |
Entity Central Index Key | '0000879169 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 161,119,554 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $272,122 | $224,057 |
Marketable securities-available-for-sale | 19,052 | 4,361 |
Accounts receivable, net | 33,197 | 70,951 |
Inventory | 359 | 278 |
Prepaid expenses and other current assets | 9,013 | 9,867 |
Total current assets | 333,743 | 309,514 |
Inventory | 14,948 | 8,475 |
Property and equipment, net | 6,201 | 6,348 |
Intangible and other assets, net | 2,508 | 6,082 |
Total assets | 357,400 | 330,419 |
Current liabilities: | ' | ' |
Accounts payable | 18,212 | 13,961 |
Accrued compensation | 17,957 | 22,899 |
Interest payable | 6,087 | 4,750 |
Accrued and other current liabilities | 41,739 | 28,385 |
Deferred revenue-Collaborative agreements | 25,503 | 66,079 |
Total current liabilities | 109,498 | 136,074 |
Convertible senior notes | 187,136 | 322,043 |
Convertible subordinated note | ' | 9,033 |
Other liabilities | 3,392 | ' |
Deferred revenue-Collaborative agreements | 28,583 | 38,226 |
Total liabilities | 328,609 | 505,376 |
Stockholders' equity (deficit): | ' | ' |
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding as of September 30, 2013 and December 31, 2012 | ' | ' |
Common stock, $0.001 par value; 400,000,000 shares authorized; 160,881,043 and 133,462,185 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | 161 | 133 |
Additional paid-in capital | 1,720,788 | 1,476,922 |
Accumulated other comprehensive gain | 2,008 | 1,878 |
Accumulated deficit | -1,694,166 | -1,653,890 |
Total stockholders' equity (deficit) | 28,791 | -174,957 |
Total liabilities and stockholders'equity (deficit) | $357,400 | $330,419 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Condensed Consolidated Balance Sheets | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 160,881,043 | 133,462,185 |
Common stock, shares outstanding | 160,881,043 | 133,462,185 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues: | ' | ' | ' | ' |
Product revenues, net | $60,201 | $43,695 | $162,589 | $92,700 |
Product royalty revenues | 8,184 | ' | 19,893 | ' |
Contract revenues | 16,737 | 16,737 | 75,211 | 90,211 |
Other revenues | 1 | 60 | 182 | 302 |
Total revenues | 85,123 | 60,492 | 257,875 | 183,213 |
Costs and expenses: | ' | ' | ' | ' |
Cost of product revenues | 155 | 31 | 463 | 58 |
Research and development | 71,704 | 50,079 | 185,417 | 150,627 |
Selling, general and administrative | 26,447 | 20,520 | 71,956 | 61,634 |
Total costs and expenses | 98,306 | 70,630 | 257,836 | 212,319 |
Income (loss) from operations | -13,183 | -10,138 | 39 | -29,106 |
Interest and other income, net | 385 | 27 | 829 | 393 |
Interest expense | -7,699 | -11,573 | -29,720 | -34,293 |
Debt exchange expense | -1,491 | ' | -11,262 | ' |
Loss before income taxes | -21,988 | -21,684 | -40,114 | -63,006 |
Provision for income taxes | 49 | 26 | 162 | 93 |
Net loss | ($22,037) | ($21,710) | ($40,276) | ($63,099) |
Basic and diluted net loss per share: (in dollars per share) | ($0.14) | ($0.17) | ($0.28) | ($0.49) |
Shares used in computing basic and diluted net loss per share (in shares) | 155,067 | 130,851 | 143,899 | 129,093 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Loss (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Condensed Consolidated Statements of Comprehensive Loss | ' | ' | ' | ' |
Net loss | ($22,037) | ($21,710) | ($40,276) | ($63,099) |
Other comprehensive gain: | ' | ' | ' | ' |
Unrealized gain on marketable securities, net of tax | 15 | 429 | 130 | 507 |
Other comprehensive gain | 15 | 429 | 130 | 507 |
Comprehensive loss | ($22,022) | ($21,281) | ($40,146) | ($62,592) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 |
Pfizer convertible subordinated note due 2014 | 4.75% convertible senior notes due 2015 | |||
Cash flows from operating activities: | ' | ' | ' | ' |
Net loss | ($40,276) | ($63,099) | ' | ' |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' | ' | ' |
Depreciation and amortization of debt discounts | 20,355 | 22,214 | ' | ' |
Stock-based compensation | 28,577 | 29,426 | ' | ' |
Debt exchange expense | 11,262 | ' | ' | ' |
Changes in operating assets and liabilities: | ' | ' | ' | ' |
Accounts receivable | 37,754 | -10,125 | ' | ' |
Prepaid expenses and other assets | 2,644 | 8,370 | ' | ' |
Inventory | -6,554 | -1,672 | ' | ' |
Accounts payable | 4,251 | -2,175 | ' | ' |
Accrued and other current liabilities | 13,075 | -3,220 | ' | ' |
Deferred revenue - Product revenues | ' | -2,332 | ' | ' |
Deferred revenue - Collaborative agreements | -50,219 | -50,209 | ' | ' |
Net cash provided by (used in) operating activities | 20,869 | -72,822 | ' | ' |
Cash flows from investing activities: | ' | ' | ' | ' |
Capital expenditures | -2,236 | -1,909 | ' | ' |
Purchases of marketable securities | -15,024 | ' | ' | ' |
Sales and maturities of marketable securities | -203 | 421 | ' | ' |
Net cash used in investing activities | -17,463 | -1,488 | ' | ' |
Cash flows from financing activities: | ' | ' | ' | ' |
Proceeds from issuance of common stock under stock plans | 55,921 | 40,229 | ' | ' |
Cash paid in connection with exchange of 4.75% convertible senior notes due 2015 | -11,262 | ' | ' | ' |
Net cash provided by financing activities | 44,659 | 40,229 | ' | ' |
Net increase (decrease) in cash and cash equivalents | 48,065 | -34,081 | ' | ' |
Cash and cash equivalents at beginning of period | 224,057 | 273,164 | ' | ' |
Cash and cash equivalents at end of period | 272,122 | 239,083 | ' | ' |
Supplemental Schedule of Cash Flow Information | ' | ' | ' | ' |
Interest paid | 9,500 | 9,500 | ' | ' |
Income taxes paid | 140 | 1 | ' | ' |
Non-cash reclassification to additional paid in capital in connection with conversion/exchange of debt instruments | ' | ' | $9,373 | $149,915 |
Organization_and_business
Organization and business | 9 Months Ended |
Sep. 30, 2013 | |
Organization and business | ' |
Organization and business | ' |
1. Organization and business | |
Incyte Corporation (“Incyte,” “we,” “us,” “our” or the “Company”) is a biopharmaceutical company focused on developing and commercializing proprietary small molecule drugs for oncology and inflammation. Our pipeline includes compounds in various stages, ranging from preclinical to late stage development, and a commercialized product, JAKAFI® (ruxolitinib). |
Summary_of_significant_account
Summary of significant accounting policies | 9 Months Ended |
Sep. 30, 2013 | |
Summary of significant accounting policies | ' |
Summary of significant accounting policies | ' |
2. Summary of significant accounting policies | |
Basis of presentation | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The condensed consolidated balance sheet as of September 30, 2013 and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three and nine months ended September 30, 2013 and 2012, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2012 has been derived from audited financial statements. | |
Although we believe that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. | |
Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. | |
Revenue Recognition. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Revenues are deferred for fees received before earned or until no further obligations exist. We exercise judgment in determining that collectability is reasonably assured or that services have been delivered in accordance with the arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer. | |
Product Revenues | |
Our product revenues consist of U.S. sales of JAKAFI and are recognized once we meet all four revenue recognition criteria described above. In November 2011, we began shipping JAKAFI to our specialty pharmacy customers, which in turn dispense JAKAFI to patients in fulfillment of prescriptions. From November 2011 to June 2012, as JAKAFI was a new and novel product, the first approved treatment for intermediate or high-risk myelofibrosis, and the first commercial product for Incyte, we determined we could not reasonably assess potential product returns. As a result of our inability to initially estimate product returns, the price of JAKAFI was not deemed fixed or determinable, and we deferred the recognition of revenues on product shipments of JAKAFI until the product was shipped by our specialty pharmacy customers to patients. | |
Based on our actual experience with product returns through the three months ended September 30, 2012, we had the ability to estimate product returns and the price of JAKAFI is now deemed fixed or determinable. As a result, during the three months ended September 30, 2012, we began to recognize revenue for product sales of JAKAFI at the time the product was received by our specialty pharmacy customers. | |
We recognize revenues for product received by our specialty pharmacy customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, patient assistance programs, and Medicare Part D coverage gap reimbursements. Product shipping and handling costs are included in cost of product revenues. | |
Customer Credits: Our specialty pharmacy customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. We expect our specialty pharmacy customers will earn prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. Service fees are also deducted from total product sales as they are earned. | |
Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. Our estimates for expected utilization of rebates are based on data received from our specialty pharmacy customers. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment. | |
Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty pharmacy, or an intermediary distributor. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty pharmacy or distributor, in turn, charges back to us the difference between the price initially paid by the specialty pharmacy or distributor and the discounted price paid to the specialty pharmacy or distributor by the customer. The allowance for chargebacks is based on known sales to contracted customers. | |
Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Our estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from our specialty pharmacy customers. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment. | |
Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. We accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third- party administrators. | |
Product Royalty Revenues | |
Royalty revenues on commercial sales for ruxolitinib (marketed as JAKAVI® outside the United States) by Novartis Pharmaceutical International Ltd. (“Novartis”) are based on net sales of licensed products in licensed territories as provided by Novartis. We recognize royalty revenues in the period the sales occur. | |
Contract and License Revenues | |
Under agreements involving multiple deliverables, services and/or rights to use assets that we entered into prior to January 1, 2011, the multiple elements are divided into separate units of accounting when certain criteria are met, including whether the delivered items have stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. When separate units of accounting exist, consideration is allocated among the separate elements based on their respective fair values. The determination of fair value of each element is based on objective evidence from historical sales of the individual elements by us to other customers. If such evidence of fair value for each undelivered element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value for each undelivered element does exist or until all elements of the arrangement are delivered. When elements are specifically tied to a separate earnings process, revenue is recognized when the specific performance obligation tied to the element is completed. When revenues for an element are not specifically tied to a separate earnings process, they are recognized ratably over the term of the agreement. We assess whether a substantive milestone exists at the inception of our agreements. For all milestones within our arrangements that are considered substantive, we recognize revenue upon the achievement of the associated milestone. If a milestone is not considered substantive, we would recognize the applicable milestone payment over the remaining period of performance under the arrangement. Further information about our collaborative arrangements can be found below in Note 6, License Agreements. As of September 30, 2013, all remaining potential milestones under our collaborative arrangements are considered substantive. | |
On January 1, 2011, updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements we may enter into on or after January 1, 2011. This updated guidance (i) relates to whether multiple deliverables exist, how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated; (ii) requires companies to allocate revenues in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and (iii) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method. During three and nine months ended September 30, 2013, we did not enter into any agreements that are subject to this updated guidance. If we enter into an agreement with multiple deliverables after January 1, 2011 or amend existing agreements, this updated guidance could have a material effect on our financial statements. | |
Inventory | |
Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. We began capitalizing inventory in mid-November 2011 once the U.S. Food and Drug Administration (“FDA”) approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of JAKAFI have been recorded as research and development expense in our statements of operations. As a result, inventory balances and cost of product revenue for the next several quarters will reflect a lower average per unit cost of materials. | |
The raw materials and work-in-process inventory is not subject to expiration and the shelf life for finished goods inventory is 24 or 36 months from the start of manufacturing of the finished goods. We evaluate for potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life. We build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. We classify inventory as current on the consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months. |
Fair_value_of_financial_instru
Fair value of financial instruments | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Fair value of financial instruments | ' | |||||||||||||
Fair value of financial instruments | ' | |||||||||||||
3. Fair value of financial instruments | ||||||||||||||
Financial Accounting Standards Board (“FASB”) accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: | ||||||||||||||
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. | ||||||||||||||
Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities. | ||||||||||||||
Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement. | ||||||||||||||
Our marketable securities consist of investments in U.S. Treasury notes, other U.S. government agency and non-agency mortgage-backed securities and a certificate of deposit that are classified as available-for-sale. | ||||||||||||||
At September 30, 2013 and December 31, 2012, our Level 2 mortgage-backed securities are valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of instruments. | ||||||||||||||
The following fair value hierarchy table presents information about each major category of our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2013 (in thousands): | ||||||||||||||
Fair Value Measurement at Reporting Date Using: | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||
Active Markets for | Observable | Unobservable | September 30, 2013 | |||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash and cash equivalents | $ | 272,122 | $ | — | $ | — | $ | 272,122 | ||||||
Certificate of deposit | 15,024 | — | — | 15,024 | ||||||||||
Mortgage-backed securities | — | 4,028 | — | 4,028 | ||||||||||
Total assets | $ | 287,146 | $ | 4,028 | $ | — | $ | 291,174 | ||||||
The following fair value hierarchy table presents information about each major category of our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 (in thousands): | ||||||||||||||
Fair Value Measurement at Reporting Date Using: | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||
Active Markets for | Observable | Unobservable | December 31, 2012 | |||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash and cash equivalents | $ | 224,057 | $ | — | $ | — | $ | 224,057 | ||||||
Mortgage-backed securities | — | 4,361 | — | 4,361 | ||||||||||
Total assets | $ | 224,057 | $ | 4,361 | $ | — | $ | 228,418 | ||||||
The following is a summary of our marketable securities portfolio as of September 30, 2013 and December 31, 2012, respectively. | ||||||||||||||
Amortized | Net | Net | Estimated Fair | |||||||||||
Cost | Unrealized | Unrealized | Value | |||||||||||
Gains | Losses | |||||||||||||
(in thousands) | ||||||||||||||
September 30, 2013 | ||||||||||||||
Certificate of deposit | $ | 15,024 | $ | — | $ | — | $ | 15,024 | ||||||
Mortgage backed securities | 2,020 | 2,008 | — | 4,028 | ||||||||||
$ | 17,044 | $ | 2,008 | $ | — | $ | 19,052 | |||||||
December 31, 2012 | ||||||||||||||
Mortgage backed securities | $ | 2,483 | $ | 1,878 | $ | — | $ | 4,361 | ||||||
$ | 2,483 | $ | 1,878 | $ | — | $ | 4,361 | |||||||
Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity. |
Concentration_of_Credit_Risk
Concentration of Credit Risk | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Concentration of Credit Risk | ' | |||||||||
Concentration of Credit Risk | ' | |||||||||
4. Concentration of Credit Risk | ||||||||||
In December 2009, we entered into a license, development and commercialization agreement with Eli Lilly and Company (“Lilly”). In November 2009, we entered into a collaboration and license agreement with Novartis. The concentration of credit risk related to our collaborative partners is as follows: | ||||||||||
Percentage of Total | Percentage of Total | |||||||||
Contract Revenues for the | Contract Revenues for the | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Collaboration Partner A | 81 | % | 81 | % | 87 | % | 89 | % | ||
Collaboration Partner B | 19 | % | 19 | % | 13 | % | 11 | % | ||
Collaboration Partner A and Collaboration Partner B comprised in the aggregate 30% and 73% of the accounts receivable balance as of September 30, 2013 and December 31, 2012, respectively. | ||||||||||
In November 2011, we began commercialization and distribution of JAKAFI to a limited number of specialty pharmacies. Our product revenues are concentrated in a limited number of specialty pharmacy customers. The concentration of credit risk related to our specialty pharmacy customers is as follows: | ||||||||||
Percentage of Total Net | Percentage of Total Net | |||||||||
Product Revenues for the | Product Revenues for the | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Customer A | 29 | % | 28 | % | 29 | % | 29 | % | ||
Customer B | 15 | % | 20 | % | 17 | % | 22 | % | ||
Customer C | 12 | % | 16 | % | 11 | % | 16 | % | ||
Customer D | 10 | % | 16 | % | 11 | % | 15 | % | ||
We are exposed to risks associated with extending credit to specialty pharmacy customers related to the sale of products. Customer A, Customer B, Customer C and Customer D comprised in the aggregate 48% and 17% of the accounts receivable balance as of September 30, 2013 and December 31, 2012, respectively. |
Inventory
Inventory | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Inventory | ' | |||||||
Inventory | ' | |||||||
5. Inventory | ||||||||
Our inventory balance consists of the following: | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Raw materials | $ | 591 | $ | 591 | ||||
Work-in-process | 14,357 | 7,884 | ||||||
Finished goods | 359 | 278 | ||||||
15,307 | 8,753 | |||||||
Inventories—current | 359 | 278 | ||||||
Inventories—non-current | $ | 14,948 | $ | 8,475 | ||||
Inventories, stated at the lower of cost or market, consist of raw materials, work in process and finished goods. At September 30, 2013, $0.4 million of inventory was classified as current on the consolidated balance sheets as we expect this inventory to be consumed for commercial use within the next twelve months. At September 30, 2013, $14.9 million of inventory was classified as non-current on the consolidated balance sheets as we did not expect this inventory to be consumed for commercial use within the next twelve months. We obtain a number of inventory components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a single source supplier, the deterioration of its relationship with a single source supplier, or any unilateral violation of the contractual terms under which we are supplied components by a single source supplier could adversely affect our total revenues and gross margins. | ||||||||
The raw materials and work-in-process inventory is not subject to expiration and the shelf life for finished goods inventory is 24 or 36 months from the start of manufacturing of the finished goods. We evaluate for potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life. We build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. |
License_agreements
License agreements | 9 Months Ended |
Sep. 30, 2013 | |
License agreements | ' |
License agreements | ' |
6. License agreements | |
Novartis | |
In November 2009, we entered into a Collaboration and License Agreement with Novartis. Under the terms of the agreement, Novartis received exclusive development and commercialization rights outside of the United States to our JAK inhibitor ruxolitinib and certain back-up compounds for hematologic and oncology indications, including all hematological malignancies, solid tumors and myeloproliferative diseases. We retained exclusive development and commercialization rights to JAKAFI (ruxolitinib) in the United States and in certain other indications. Novartis also received worldwide exclusive development and commercialization rights to our c-MET inhibitor compound INCB28060 and certain back-up compounds in all indications. We retained options to co-develop and to co-promote INCB28060 in the United States. | |
Under this agreement, we received an upfront payment and immediate milestone payment totaling $210.0 million and were initially eligible to receive up to $1.1 billion in milestone payments across multiple indications upon the achievement of pre-specified events, including up to $162.0 million for the achievement of development milestones, up to $450.0 million for the achievement of regulatory milestones and up to $500.0 million for the achievement of commercialization milestones. During the three months ended June 30, 2013, we recognized and received a $25.0 million development milestone payment under this agreement based on the formal initiation by Novartis of a Phase II clinical trial evaluating c-MET inhibitor INCB28060. | |
In 2012, we recognized and received a $40.0 million regulatory milestone payment under this agreement for the achievement of a predefined milestone for the European Union regulatory approval of Jakavi. In 2011, we recognized and received a $15.0 million development milestone payment under this agreement for the achievement of a predefined milestone in the Phase I dose-escalation trial for INCB28060 in patients with solid tumors and a $10.0 million regulatory milestone payment for the JAKAFI approval in the United States. We determined the 2013, 2012 and 2011 milestones to be substantive as their achievement required substantive efforts by us and were at risk until the milestones were ultimately achieved. We also are eligible to receive tiered, double-digit royalties ranging from the upper-teens to the mid-twenties on future ruxolitinib net sales outside of the United States. In addition, should Novartis receive reimbursement and pricing approval for ruxolitinib in a specified number of countries, we will be obligated to pay to Novartis tiered royalties in the low single digits on future ruxolitinib net sales within the United States. Each company is responsible for costs relating to the development and commercialization of the JAK inhibitor compound in its respective territories, with costs of collaborative studies shared equally. Novartis is responsible for all costs relating to the development and commercialization of the c-MET inhibitor compound after the initial Phase I clinical trial, which has been completed. | |
The Novartis agreement will continue on a program-by-program basis until Novartis has no royalty payment obligations with respect to such program or, if earlier, the termination of the agreement or any program in accordance with the terms of the agreement. Royalties are payable by Novartis on a product-by-product and country-by-country basis until the latest to occur of (1) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (2) the expiration of regulatory exclusivity for the licensed product in such country and (3) a specified period from first commercial sale in such country of the licensed product by Novartis or its affiliates or sublicensees. The agreement may be terminated in its entirety or on a program-by-program basis by Novartis for convenience. The agreement may also be terminated by either party under certain other circumstances, including material breach. | |
We determined that there were two deliverables under the agreement: (i) the ex U.S. license for ruxolitinib and (ii) our obligations in connection with our participation on the joint development committee for myelofibrosis and polycythemia vera/ essential thrombocythemia. We concluded that these deliverables should be accounted for as a single unit of accounting and the $150.0 million upfront payment received in December 2009 and the immediate $60.0 million milestone payment received in January 2010 should be recognized on a straight line basis through December 2013 when we estimate we will complete our obligations in connection with our participation on the joint development committee, our estimated performance period under the agreement. We have no further substantive obligations to Novartis after the completion of our obligations in connection with the joint development committee. | |
At December 31, 2009, we recorded $10.9 million of reimbursable costs incurred prior to the effective date of the agreement as deferred revenue on the condensed consolidated balance sheet. These costs will be recognized on a straight line basis through December 2013 consistent with the aforementioned upfront and milestone payments. Future reimbursable costs incurred after the effective date of the agreement with Novartis will be recorded net against the related research and development expenses. At September 30, 2013 and December 31, 2012, $1.8 million and $2.1 million, respectively, of reimbursable costs were included in accounts receivable on the condensed consolidated balance sheets. Research and development expenses for the three and nine months ended September 30, 2013 were net of $1.7 million and $3.6 million, respectively, of costs reimbursed by Novartis. Research and development expenses for each of the three and nine months ended September 30, 2012 were net of $2.5 million and $3.0 million, respectively, of costs reimbursed by Novartis. | |
Contract revenue under the Novartis agreement was $13.5 million and $65.6 million for the three and nine months ended September 30, 2013, respectively, and included a $25.0 million milestone payment for INCB28060 that was earned in the three months ended June 30, 2013. Contract revenue under the Novartis agreement was $13.5 million and $80.6 million for the three and nine months ended September 30, 2012, respectively, and included a $40.0 million milestone payment for the achievement of a predefined milestone for the European Union regulatory approval of Jakavi that was earned in the three months ended June 30, 2012. | |
Lilly | |
In December 2009, we entered into a License, Development and Commercialization Agreement with Lilly. Under the terms of the agreement, Lilly received exclusive worldwide development and commercialization rights to our JAK inhibitor baricitinib, and certain back-up compounds for inflammatory and autoimmune diseases. We received an upfront payment of $90.0 million, and were initially eligible to receive up to $665.0 million in substantive milestone payments across multiple indications upon the achievement of pre-specified events, including up to $150.0 million for the achievement of development milestones, up to $365.0 million for the achievement of regulatory milestones and up to $150.0 million for the achievement of commercialization milestones. In 2012, we recognized a $50.0 million development milestone under this agreement for the achievement of a predefined milestone for the initiation of the rheumatoid arthritis Phase III program for baricitinib. In 2010, we recognized and received a $30.0 million development milestone payment based upon the initial three month data in the Phase IIa clinical trial of baricitinib for the treatment of rheumatoid arthritis and a $19.0 million development milestone payment for the Phase IIb clinical trial initiation of baricitinib for the treatment of rheumatoid arthritis. We determined the 2012 and 2010 milestones to be substantive as their achievement required substantive efforts by us and was at risk until the milestones were ultimately achieved. We also could receive tiered, double-digit royalty payments on future global net sales with rates ranging up to 20% if the product is successfully commercialized. | |
We retained options to co-develop our JAK inhibitors with Lilly on a compound-by-compound and indication-by-indication basis. Lilly will be responsible for all costs relating to the development and commercialization of the compounds unless we elect to co-develop any compounds or indications. If we elect to co-develop any compounds and/or indications, we would be responsible for funding 30% of the associated future global development costs from the initiation of a Phase IIb trial through regulatory approval. We would receive an incremental royalty rate increase across all tiers resulting in effective royalty rates ranging up to the high twenties on potential future global net sales for compounds and/or indications that we elect to co-develop. We also retained an option to co-promote products in the United States. In July 2010, we elected to co-develop baricitinib with Lilly in rheumatoid arthritis and we are responsible for funding 30% of the associated future global development costs for this indication from the initiation of the Phase IIb trial through regulatory approval. We have retained certain mechanisms to give us cost protection as baricitinib advances in clinical development. We can defer our portion of co-development study costs by indication if they exceed a predetermined level. This deferment would be credited against future milestones or royalties and we would still be eligible for the full incremental royalties related to the co-development option. In addition, even if we have started co-development funding for any indication, we can at any time opt out and stop future co-development cost sharing. If we elect to do this we would still be eligible for our base royalties plus an incremental pro-rated royalty commensurate with our contribution to the total co-development cost for those indications for which we co-funded. The Lilly agreement will continue until Lilly no longer has any royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms. Royalties are payable by Lilly on a product-by-product and country-by-country basis until the latest to occur of (1) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (2) the expiration of regulatory exclusivity for the licensed product in such country and (3) a specified period from first commercial sale in such country of the licensed product by Lilly or its affiliates or sublicensees. The agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach. | |
We determined that there were two deliverables under the agreement: (i) the worldwide license and (ii) our obligations in connection with a co-development option. We concluded that these deliverables should be accounted for as a single unit of accounting and the $90.0 million upfront payment should be recognized on a straight line basis as revenue through December 2016, our estimated performance period under the agreement. Reimbursable costs incurred after the effective date with Lilly will be recorded net against the related research and development expenses. | |
Contract revenue under the Lilly agreement was $3.2 million and $9.6 million for each of the three and nine months ended September 30, 2013 and 2012, respectively. |
Stock_compensation
Stock compensation | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
Stock compensation | ' | |||||||||||||||||
Stock compensation | ' | |||||||||||||||||
7. Stock compensation | ||||||||||||||||||
We recorded $9.5 million and $28.6 million of stock compensation expense in our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2013, respectively. We recorded $9.5 million and $29.4 million of stock compensation expense in our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2012, respectively. | ||||||||||||||||||
Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $6.4 million, $19.6 million, $6.4 million and $19.6 million for the three and nine months ended September 30, 2013 and 2012, respectively. Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $3.1 million, $9.0 million, $3.1 million and $9.8 million for the three and nine months ended September 30, 2013 and 2012, respectively. | ||||||||||||||||||
We utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions: | ||||||||||||||||||
Employee Stock Options | Employee Stock Purchase Plan | |||||||||||||||||
For the | For the | For the | For the | |||||||||||||||
Three | Nine | Three | Nine | |||||||||||||||
Months | Months | Months | Months | |||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||
Average risk-free interest rates | 1.05 | % | 0.46 | % | 0.59 | % | 0.48 | % | 0.27 | % | 0.25 | % | 0.27 | % | 0.25 | % | ||
Average expected life (in years) | 4.34 | 4.13 | 4.25 | 3.87 | 0.5 | 0.5 | 0.5 | 0.5 | ||||||||||
Volatility | 47 | % | 50 | % | 47 | % | 57 | % | 51 | % | 53 | % | 51 | % | 53 | % | ||
Weighted-average fair value (in dollars) | 12.18 | 8.59 | 7.34 | 7.84 | 3.81 | 3.84 | 3.81 | 3.84 | ||||||||||
The risk-free interest rate is derived from the U.S. Federal Reserve rate in effect at the time of grant. The expected life calculation is based on the observed and expected time to the exercise of options by our employees based on historical exercise patterns for similar type options. Expected volatility is based on the historical volatility of our common stock over the period commensurate with the expected life of the options. A dividend yield of zero is assumed based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. | ||||||||||||||||||
Based on our historical experience, we have assumed an annualized forfeiture rate of 5% for our options. Under the true-up provisions of the stock based compensation guidance, we will record additional expense if the actual forfeiture rate is lower than we estimated, and will record a recovery of prior expense if the actual forfeiture is higher than we estimated. | ||||||||||||||||||
Total compensation cost of options granted but not yet vested, as of September 30, 2013, was $27.5 million, which is expected to be recognized over the vesting period of 3 years. | ||||||||||||||||||
The following table summarizes activity under all stock option plans: | ||||||||||||||||||
Shares | Number | Weighted | ||||||||||||||||
Available for | Outstanding | Average | ||||||||||||||||
Grant | Exercise | |||||||||||||||||
Price per | ||||||||||||||||||
Share | ||||||||||||||||||
Balance at December 31, 2012 | 5,406,277 | 21,816,611 | $ | 12.05 | ||||||||||||||
Additional authorized | 5,200,000 | — | — | |||||||||||||||
Options granted | (5,215,500 | ) | 5,215,500 | 19.21 | ||||||||||||||
Options exercised | — | (5,524,527 | ) | 9.61 | ||||||||||||||
Options cancelled | 441,305 | (441,589 | ) | 17.46 | ||||||||||||||
Balance at September 30, 2013 | 5,832,082 | 21,065,995 | $ | 14.36 | ||||||||||||||
Exercisable, September 30, 2013 | — | 12,911,434 | $ | 11.71 |
Debt
Debt | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Debt | ' | |||||||||||||
Debt | ' | |||||||||||||
8. Debt | ||||||||||||||
The carrying amount and fair value of our convertible notes are as follows (in thousands): | ||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
Pfizer convertible subordinated note due 2014 | $ | — | $ | — | $ | 9,033 | $ | 13,573 | ||||||
4.75% convertible senior notes due 2015 | 187,136 | 955,974 | 322,043 | 798,040 | ||||||||||
$ | 187,136 | $ | 955,974 | $ | 331,076 | $ | 811,613 | |||||||
In May, June and September 2013, we entered into separately negotiated agreements with certain holders of our 4.75% Convertible Senior Notes due 2015 (the “4.75% Senior Notes”) pursuant to which such holders agreed to exchange $180,988,000 in aggregate principal amount of 4.75% Senior Notes for the shares of our common stock into which such 4.75% Senior Notes were convertible, aggregating 20,625,403 shares, and $11.3 million in cash. The net carrying value of the converted 4.75% Senior Notes and related accrued interest was reclassified to additional paid in capital on the condensed consolidated balance sheets upon conversion of the 4.75% Senior Notes and the related cash payment was recorded as debt exchange expense on the condensed consolidated statements of operations. Also, in August 2013, the holder of the Pfizer convertible subordinated note due 2014 (the “Pfizer Note”) elected to convert the $10.0 million principal amount into 1,025,641 shares of common stock. | ||||||||||||||
The fair values of the 4.75% Senior Notes are based on quoted prices in an active market and, therefore, these convertible senior notes are classified within Level 1 in the fair value hierarchy. The fair value of the Pfizer Note is based on a fair value model that incorporates both observable and unobservable inputs, including the quoted price of our common stock and an estimated discount rate, and, therefore, the Pfizer Note is classified as Level 3 in the fair value hierarchy. |
Net_loss_per_share
Net loss per share | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Net loss per share | ' | |||||
Net loss per share | ' | |||||
9. Net loss per share | ||||||
The following potential common shares were excluded from the calculations as their effect would be anti-dilutive: | ||||||
Nine months ended | ||||||
September 30, | ||||||
2013 | 2012 | |||||
Stock options | 21,065,995 | 22,165,802 | ||||
Common shares issuable upon conversion of 4.75% Senior Notes(1) | 24,958,298 | 45,584,040 | ||||
Common shares issuable upon conversion of Pfizer Note due 2013(2) | — | 1,461,496 | ||||
Common shares issuable upon conversion of Pfizer Note due 2014 (3) | — | 1,025,641 | ||||
Total potential common shares excluded from diluted net loss per share computation | 46,024,293 | 70,236,979 | ||||
(1) In May, June and September 2013, we entered into separately negotiated agreements with certain holders of the 4.75% Senior Notes to convert $181.0 million principal amount into 20,625,403 shares of common stock. | ||||||
(2) In December 2012, the holder of the Pfizer Note due 2013 elected to convert the $10.0 million principal amount into 1,461,496 shares of common stock. | ||||||
(3) In August 2013, the holder of the Pfizer Note due 2014 elected to convert the $10.0 million principal amount into 1,025,641 shares of common stock. |
Grant_Agreement
Grant Agreement | 9 Months Ended |
Sep. 30, 2013 | |
Grant Agreement | ' |
Grant Agreement | ' |
10. Grant Agreement | |
In April 2013, the Company entered into a grant agreement with the state of Delaware under which the Company is entitled to receive a grant of up to approximately $11.0 million primarily related to the retention and expansion of its workforce in the state of Delaware. The Company received $5.0 million of the proceeds for this grant in the nine months ended September30, 2013 and expects to receive the remaining proceeds by the end of 2013. The $5.0 million of cash received during the nine months ended September 30, 2013 was recorded within other liabilities on the condensed consolidated balance sheets and is being recognized ratably within interest and other income, net on the condensed consolidated statements of operations over the estimated performance period of the grant. |
Lease_Agreement
Lease Agreement | 9 Months Ended |
Sep. 30, 2013 | |
Lease Agreement | ' |
Lease Agreement | ' |
11. Lease Agreement | |
In April 2013, the Company entered into a contingent new 15 year facility lease agreement for approximately 190,000 square feet of laboratory and office space in Wilmington, Delaware. The lease agreement was conditioned on a number of contingencies that had to be resolved prior to the lease agreement becoming effective, including the landlord’s ability to design the build-out of the facility based on a targeted construction budget and the landlord’s ability to secure funding for its obligations in connection with the build-out of the facility. | |
The lease agreement became effective in October 2013 upon resolution of these contingencies and the Company expects the facility to be available for occupancy in late 2014. The future minimum lease payments over the 15 year lease term are approximately $80.0 million subject to finalization of the facility build-out budget. The Company expects to account for the lease as a direct financing arrangement whereby over the construction period, the Company will record the full cost of the facility as a capital asset with a corresponding liability, net of approximately $10.0 million of improvements to be paid for by the Company during the construction period. In addition, the Company has posted with the landlord’s financial institution a $15.0 million letter of credit for the facility lease. This amount will be recorded as restricted cash on the condensed consolidated balance sheets and will be reduced over a period of time during the duration of the lease. The letter of credit could be subject to accelerated reductions if the Company meets certain pre-defined financial targets. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Contingencies | ' |
Contingencies | ' |
12. Contingencies | |
In March and April 2013, two lawsuits were filed in the United States District Court for the District of Delaware against the Company, its chief executive officer, its former chief commercial officer, and its chief drug development and medical officer. The complaints each allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a purported class of purchasers of the Company’s stock between April 26, 2012 and August 1, 2012. In general, the complaints allege that the defendants issued materially false or misleading statements concerning the Company’s business and prospects relating to the commercial launch of JAKAFI. The complaints seek damages in an unspecified amount, equitable relief of an unspecified nature, and costs and expenses of litigation. The Company believes it has meritorious defenses and intends to vigorously defend itself against these lawsuits. The Company is unable to estimate the possible loss or range of loss, if any, at this time. |
Summary_of_significant_account1
Summary of significant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Summary of significant accounting policies | ' |
Revenue Recognition | ' |
Revenue Recognition. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Revenues are deferred for fees received before earned or until no further obligations exist. We exercise judgment in determining that collectability is reasonably assured or that services have been delivered in accordance with the arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer. | |
Product Revenues | |
Our product revenues consist of U.S. sales of JAKAFI and are recognized once we meet all four revenue recognition criteria described above. In November 2011, we began shipping JAKAFI to our specialty pharmacy customers, which in turn dispense JAKAFI to patients in fulfillment of prescriptions. From November 2011 to June 2012, as JAKAFI was a new and novel product, the first approved treatment for intermediate or high-risk myelofibrosis, and the first commercial product for Incyte, we determined we could not reasonably assess potential product returns. As a result of our inability to initially estimate product returns, the price of JAKAFI was not deemed fixed or determinable, and we deferred the recognition of revenues on product shipments of JAKAFI until the product was shipped by our specialty pharmacy customers to patients. | |
Based on our actual experience with product returns through the three months ended September 30, 2012, we had the ability to estimate product returns and the price of JAKAFI is now deemed fixed or determinable. As a result, during the three months ended September 30, 2012, we began to recognize revenue for product sales of JAKAFI at the time the product was received by our specialty pharmacy customers. | |
We recognize revenues for product received by our specialty pharmacy customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, patient assistance programs, and Medicare Part D coverage gap reimbursements. Product shipping and handling costs are included in cost of product revenues. | |
Customer Credits: Our specialty pharmacy customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. We expect our specialty pharmacy customers will earn prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. Service fees are also deducted from total product sales as they are earned. | |
Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. Our estimates for expected utilization of rebates are based on data received from our specialty pharmacy customers. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment. | |
Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty pharmacy, or an intermediary distributor. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty pharmacy or distributor, in turn, charges back to us the difference between the price initially paid by the specialty pharmacy or distributor and the discounted price paid to the specialty pharmacy or distributor by the customer. The allowance for chargebacks is based on known sales to contracted customers. | |
Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Our estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from our specialty pharmacy customers. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment. | |
Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. We accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third- party administrators. | |
Product Royalty Revenues | |
Royalty revenues on commercial sales for ruxolitinib (marketed as JAKAVI® outside the United States) by Novartis Pharmaceutical International Ltd. (“Novartis”) are based on net sales of licensed products in licensed territories as provided by Novartis. We recognize royalty revenues in the period the sales occur. | |
Contract and License Revenues | |
Under agreements involving multiple deliverables, services and/or rights to use assets that we entered into prior to January 1, 2011, the multiple elements are divided into separate units of accounting when certain criteria are met, including whether the delivered items have stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. When separate units of accounting exist, consideration is allocated among the separate elements based on their respective fair values. The determination of fair value of each element is based on objective evidence from historical sales of the individual elements by us to other customers. If such evidence of fair value for each undelivered element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value for each undelivered element does exist or until all elements of the arrangement are delivered. When elements are specifically tied to a separate earnings process, revenue is recognized when the specific performance obligation tied to the element is completed. When revenues for an element are not specifically tied to a separate earnings process, they are recognized ratably over the term of the agreement. We assess whether a substantive milestone exists at the inception of our agreements. For all milestones within our arrangements that are considered substantive, we recognize revenue upon the achievement of the associated milestone. If a milestone is not considered substantive, we would recognize the applicable milestone payment over the remaining period of performance under the arrangement. Further information about our collaborative arrangements can be found below in Note 6, License Agreements. As of September 30, 2013, all remaining potential milestones under our collaborative arrangements are considered substantive. | |
On January 1, 2011, updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements we may enter into on or after January 1, 2011. This updated guidance (i) relates to whether multiple deliverables exist, how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated; (ii) requires companies to allocate revenues in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and (iii) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method. During three and nine months ended September 30, 2013, we did not enter into any agreements that are subject to this updated guidance. If we enter into an agreement with multiple deliverables after January 1, 2011 or amend existing agreements, this updated guidance could have a material effect on our financial statements. | |
Inventory | ' |
Inventory | |
Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. We began capitalizing inventory in mid-November 2011 once the U.S. Food and Drug Administration (“FDA”) approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of JAKAFI have been recorded as research and development expense in our statements of operations. As a result, inventory balances and cost of product revenue for the next several quarters will reflect a lower average per unit cost of materials. | |
The raw materials and work-in-process inventory is not subject to expiration and the shelf life for finished goods inventory is 24 or 36 months from the start of manufacturing of the finished goods. We evaluate for potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life. We build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. We classify inventory as current on the consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months. |
Fair_value_of_financial_instru1
Fair value of financial instruments (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Fair value of financial instruments | ' | |||||||||||||
Schedule of fair value of assets and liabilities measured on recurring basis | ' | |||||||||||||
The following fair value hierarchy table presents information about each major category of our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2013 (in thousands): | ||||||||||||||
Fair Value Measurement at Reporting Date Using: | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||
Active Markets for | Observable | Unobservable | September 30, 2013 | |||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash and cash equivalents | $ | 272,122 | $ | — | $ | — | $ | 272,122 | ||||||
Certificate of deposit | 15,024 | — | — | 15,024 | ||||||||||
Mortgage-backed securities | — | 4,028 | — | 4,028 | ||||||||||
Total assets | $ | 287,146 | $ | 4,028 | $ | — | $ | 291,174 | ||||||
The following fair value hierarchy table presents information about each major category of our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 (in thousands): | ||||||||||||||
Fair Value Measurement at Reporting Date Using: | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||
Active Markets for | Observable | Unobservable | December 31, 2012 | |||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||
Cash and cash equivalents | $ | 224,057 | $ | — | $ | — | $ | 224,057 | ||||||
Mortgage-backed securities | — | 4,361 | — | 4,361 | ||||||||||
Total assets | $ | 224,057 | $ | 4,361 | $ | — | $ | 228,418 | ||||||
Summary of marketable securities portfolio | ' | |||||||||||||
Amortized | Net | Net | Estimated Fair | |||||||||||
Cost | Unrealized | Unrealized | Value | |||||||||||
Gains | Losses | |||||||||||||
(in thousands) | ||||||||||||||
September 30, 2013 | ||||||||||||||
Certificate of deposit | $ | 15,024 | $ | — | $ | — | $ | 15,024 | ||||||
Mortgage backed securities | 2,020 | 2,008 | — | 4,028 | ||||||||||
$ | 17,044 | $ | 2,008 | $ | — | $ | 19,052 | |||||||
December 31, 2012 | ||||||||||||||
Mortgage backed securities | $ | 2,483 | $ | 1,878 | $ | — | $ | 4,361 | ||||||
$ | 2,483 | $ | 1,878 | $ | — | $ | 4,361 |
Concentration_of_Credit_Risk_T
Concentration of Credit Risk (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Concentration of Credit Risk | ' | |||||||||
Schedule of concentration of credit risk related to collaborative partners | ' | |||||||||
Percentage of Total | Percentage of Total | |||||||||
Contract Revenues for the | Contract Revenues for the | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Collaboration Partner A | 81 | % | 81 | % | 87 | % | 89 | % | ||
Collaboration Partner B | 19 | % | 19 | % | 13 | % | 11 | % | ||
Schedule of concentration of credit risk related to specialty pharmacy customers | ' | |||||||||
Percentage of Total Net | Percentage of Total Net | |||||||||
Product Revenues for the | Product Revenues for the | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Customer A | 29 | % | 28 | % | 29 | % | 29 | % | ||
Customer B | 15 | % | 20 | % | 17 | % | 22 | % | ||
Customer C | 12 | % | 16 | % | 11 | % | 16 | % | ||
Customer D | 10 | % | 16 | % | 11 | % | 15 | % |
Inventory_Tables
Inventory (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Inventory | ' | |||||||
Schedule of inventory | ' | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
(in thousands) | ||||||||
Raw materials | $ | 591 | $ | 591 | ||||
Work-in-process | 14,357 | 7,884 | ||||||
Finished goods | 359 | 278 | ||||||
15,307 | 8,753 | |||||||
Inventories—current | 359 | 278 | ||||||
Inventories—non-current | $ | 14,948 | $ | 8,475 |
Stock_compensation_Tables
Stock compensation (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||
Stock compensation | ' | |||||||||||||||||
Schedule of valuation assumptions used for valuation of fair value of stock compensation granted | ' | |||||||||||||||||
Employee Stock Options | Employee Stock Purchase Plan | |||||||||||||||||
For the | For the | For the | For the | |||||||||||||||
Three | Nine | Three | Nine | |||||||||||||||
Months | Months | Months | Months | |||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||
Average risk-free interest rates | 1.05 | % | 0.46 | % | 0.59 | % | 0.48 | % | 0.27 | % | 0.25 | % | 0.27 | % | 0.25 | % | ||
Average expected life (in years) | 4.34 | 4.13 | 4.25 | 3.87 | 0.5 | 0.5 | 0.5 | 0.5 | ||||||||||
Volatility | 47 | % | 50 | % | 47 | % | 57 | % | 51 | % | 53 | % | 51 | % | 53 | % | ||
Weighted-average fair value (in dollars) | 12.18 | 8.59 | 7.34 | 7.84 | 3.81 | 3.84 | 3.81 | 3.84 | ||||||||||
Schedule of activity summarized under all stock option plans | ' | |||||||||||||||||
Shares | Number | Weighted | ||||||||||||||||
Available for | Outstanding | Average | ||||||||||||||||
Grant | Exercise | |||||||||||||||||
Price per | ||||||||||||||||||
Share | ||||||||||||||||||
Balance at December 31, 2012 | 5,406,277 | 21,816,611 | $ | 12.05 | ||||||||||||||
Additional authorized | 5,200,000 | — | — | |||||||||||||||
Options granted | (5,215,500 | ) | 5,215,500 | 19.21 | ||||||||||||||
Options exercised | — | (5,524,527 | ) | 9.61 | ||||||||||||||
Options cancelled | 441,305 | (441,589 | ) | 17.46 | ||||||||||||||
Balance at September 30, 2013 | 5,832,082 | 21,065,995 | $ | 14.36 | ||||||||||||||
Exercisable, September 30, 2013 | — | 12,911,434 | $ | 11.71 |
Debt_Tables
Debt (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Debt | ' | |||||||||||||
Schedule of carrying amount and fair value of Convertible Notes | ' | |||||||||||||
The carrying amount and fair value of our convertible notes are as follows (in thousands): | ||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
Pfizer convertible subordinated note due 2014 | $ | — | $ | — | $ | 9,033 | $ | 13,573 | ||||||
4.75% convertible senior notes due 2015 | 187,136 | 955,974 | 322,043 | 798,040 | ||||||||||
$ | 187,136 | $ | 955,974 | $ | 331,076 | $ | 811,613 |
Net_loss_per_share_Tables
Net loss per share (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Net loss per share | ' | |||||
Schedule of antidilutive securities excluded from the computation of earnings per share | ' | |||||
Nine months ended | ||||||
September 30, | ||||||
2013 | 2012 | |||||
Stock options | 21,065,995 | 22,165,802 | ||||
Common shares issuable upon conversion of 4.75% Senior Notes(1) | 24,958,298 | 45,584,040 | ||||
Common shares issuable upon conversion of Pfizer Note due 2013(2) | — | 1,461,496 | ||||
Common shares issuable upon conversion of Pfizer Note due 2014 (3) | — | 1,025,641 | ||||
Total potential common shares excluded from diluted net loss per share computation | 46,024,293 | 70,236,979 | ||||
(1) In May, June and September 2013, we entered into separately negotiated agreements with certain holders of the 4.75% Senior Notes to convert $181.0 million principal amount into 20,625,403 shares of common stock. | ||||||
(2) In December 2012, the holder of the Pfizer Note due 2013 elected to convert the $10.0 million principal amount into 1,461,496 shares of common stock. | ||||||
(3) In August 2013, the holder of the Pfizer Note due 2014 elected to convert the $10.0 million principal amount into 1,025,641 shares of common stock. |
Summary_of_significant_account2
Summary of significant accounting policies (Details) | 9 Months Ended |
Sep. 30, 2013 | |
Revenue Recognition | ' |
Percentage of Medicare Part D insurance coverage gap mandate to be funded by manufacturers | 50.00% |
Inventory | ' |
Shelf life for finished goods inventory, minimum | '24 months |
Shelf life for finished goods inventory, maximum | '36 months |
Fair_value_of_financial_instru2
Fair value of financial instruments (Details) (Fair value measured on a recurring basis, USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Fair value measurement at reporting date using: Quoted prices in active markets for identical assets (Level 1) | ' | ' |
Fair value of financial instruments | ' | ' |
Cash and cash equivalents | $272,122 | $224,057 |
Certificate of deposit | 15,024 | ' |
Total assets | 287,146 | 224,057 |
Fair value measurement at reporting date using: Significant other observable inputs (Level 2) | ' | ' |
Fair value of financial instruments | ' | ' |
Mortgage backed securities | 4,028 | 4,361 |
Total assets | 4,028 | 4,361 |
Fair Value | ' | ' |
Fair value of financial instruments | ' | ' |
Cash and cash equivalents | 272,122 | 224,057 |
Certificate of deposit | 15,024 | ' |
Mortgage backed securities | 4,028 | 4,361 |
Total assets | $291,174 | $228,418 |
Fair_value_of_financial_instru3
Fair value of financial instruments (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Summary of marketable security portfolio | ' | ' |
Amortized Cost | $17,044 | $2,483 |
Net Unrealized Gains | 2,008 | 1,878 |
Estimated Fair Value | 19,052 | 4,361 |
Certificate of deposit | ' | ' |
Summary of marketable security portfolio | ' | ' |
Amortized Cost | 15,024 | ' |
Estimated Fair Value | 15,024 | ' |
Mortgage backed securities | ' | ' |
Summary of marketable security portfolio | ' | ' |
Amortized Cost | 2,020 | 2,483 |
Net Unrealized Gains | 2,008 | 1,878 |
Estimated Fair Value | $4,028 | $4,361 |
Concentration_of_Credit_Risk_D
Concentration of Credit Risk (Details) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | |
Total Contract Revenues | Total Contract Revenues | Total Contract Revenues | Total Contract Revenues | Total Contract Revenues | Total Contract Revenues | Total Contract Revenues | Total Contract Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Total Net Product Revenues | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | |
Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Customer Concentration | Credit Concentration | Credit Concentration | Credit Concentration | Credit Concentration | |
Collaboration Partner A | Collaboration Partner A | Collaboration Partner A | Collaboration Partner A | Collaboration Partner B | Collaboration Partner B | Collaboration Partner B | Collaboration Partner B | Customer A | Customer A | Customer A | Customer A | Customer B | Customer B | Customer B | Customer B | Customer C | Customer C | Customer C | Customer C | Customer D | Customer D | Customer D | Customer D | Collaboration Partner A and Collaboration Partner B | Collaboration Partner A and Collaboration Partner B | Customer A, B, C and D | Customer A, B, C and D | |
Concentration of risk | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of concentration risk | 81.00% | 81.00% | 87.00% | 89.00% | 19.00% | 19.00% | 13.00% | 11.00% | 29.00% | 28.00% | 29.00% | 29.00% | 15.00% | 20.00% | 17.00% | 22.00% | 12.00% | 16.00% | 11.00% | 16.00% | 10.00% | 16.00% | 11.00% | 15.00% | 30.00% | 73.00% | 48.00% | 17.00% |
Inventory_Details
Inventory (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Inventory | ' | ' |
Raw materials | $591 | $591 |
Work-in-process | 14,357 | 7,884 |
Finished goods | 359 | 278 |
Total inventories | 15,307 | 8,753 |
Inventories - current | 359 | 278 |
Inventories - non -current | $14,948 | $8,475 |
Shelf life for finished goods inventory, minimum | '24 months | ' |
Shelf life for finished goods inventory, maximum | '36 months | ' |
License_agreements_Details
License agreements (Details) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Jan. 31, 2010 | Dec. 31, 2009 | Nov. 30, 2009 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Nov. 30, 2009 | Nov. 30, 2009 | Nov. 30, 2009 | Nov. 30, 2009 | Jun. 30, 2013 | Dec. 31, 2011 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Jul. 31, 2010 | Dec. 31, 2009 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2009 | Dec. 31, 2010 | Dec. 31, 2010 | Dec. 31, 2012 | Dec. 31, 2009 | Dec. 31, 2009 | |
Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | Collaboration and License Agreement with Novartis | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | License, Development and Commercialization Agreement with Lilly | |||||
deliverable | Pre-specified events | Development milestones | Regulatory milestones | Commercialized milestones | LY3009104(INCB28060) | LY3009104(INCB28060) | JAKAFI (ruxolitinib) | JAKAFI (ruxolitinib) | JAKAFI (ruxolitinib) | deliverable | Maximum | Pre-specified events | Development milestones | Development milestones | Development milestones | Development milestones | Regulatory milestones | Commercialized milestones | |||||||||||||||||
Maximum | Maximum | Maximum | Maximum | Development milestones | Development milestones | Regulatory milestones | Regulatory milestones | Regulatory milestones | Maximum | Maximum | Phase IIa | Phase IIb | Phase III | Maximum | Maximum | ||||||||||||||||||||
License agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Upfront and immediate milestone payment to be received under license agreement | ' | ' | ' | ' | ' | ' | $210,000,000 | ' | ' | ' | ' | ' | $1,100,000,000 | $162,000,000 | $450,000,000 | $500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $665,000,000 | $150,000,000 | ' | ' | ' | $365,000,000 | $150,000,000 |
Amount recognized and received for the achievement of a predefined milestone | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,000,000 | 15,000,000 | 40,000,000 | 40,000,000 | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30,000,000 | 19,000,000 | 50,000,000 | ' | ' |
Royalty payment obligations | ' | ' | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of deliverables under license agreement | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Upfront payment received under license agreement | ' | ' | ' | ' | ' | 150,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Immediate milestone payment received under license agreement | ' | ' | ' | ' | 60,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reimbursable costs recorded as deferred revenue | ' | ' | ' | ' | ' | 10,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reimbursable costs included in accounts receivable | ' | ' | ' | ' | ' | ' | ' | 1,800,000 | ' | 1,800,000 | ' | 2,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Research and development expenses reimbursed | ' | ' | ' | ' | ' | ' | ' | 1,700,000 | 2,500,000 | 3,600,000 | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contract revenues | $16,737,000 | $16,737,000 | $75,211,000 | $90,211,000 | ' | ' | ' | $13,500,000 | $13,500,000 | $65,600,000 | $80,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,200,000 | $3,200,000 | $9,600,000 | $9,600,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Range of royalty payments on future global net sales, upper range (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20.00% | ' | ' | ' | ' | ' | ' | ' |
Associated future global development costs from the initiation of a Phase IIb trial, if elected to co-develop, percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30.00% | 30.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock_compensation_Details
Stock compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Stock compensation | ' | ' | ' | ' |
Stock compensation expense | $9.50 | $9.50 | $28.60 | $29.40 |
Weighted-average fair value assumptions | ' | ' | ' | ' |
Valuation method | ' | ' | 'Black-Scholes valuation model | ' |
Research and development expense | ' | ' | ' | ' |
Stock compensation | ' | ' | ' | ' |
Stock compensation expense | 6.4 | 6.4 | 19.6 | 19.6 |
Selling, general and administrative expense | ' | ' | ' | ' |
Stock compensation | ' | ' | ' | ' |
Stock compensation expense | 3.1 | 3.1 | 9 | 9.8 |
Employee Stock Purchase Plan | ' | ' | ' | ' |
Weighted-average fair value assumptions | ' | ' | ' | ' |
Average risk-free interest rates (as a percent) | 0.27% | 0.25% | 0.27% | 0.25% |
Average expected life | '6 months | '6 months | '6 months | '6 months |
Volatility (as a percent) | 51.00% | 53.00% | 51.00% | 53.00% |
Weighted-average fair value (in dollars per share) | $3.81 | $3.84 | $3.81 | $3.84 |
Employee Stock Options | ' | ' | ' | ' |
Weighted-average fair value assumptions | ' | ' | ' | ' |
Average risk-free interest rates (as a percent) | 1.05% | 0.46% | 0.59% | 0.48% |
Average expected life | '4 years 4 months 2 days | '4 years 1 month 17 days | '4 years 3 months | '3 years 10 months 13 days |
Volatility (as a percent) | 47.00% | 50.00% | 47.00% | 57.00% |
Weighted-average fair value (in dollars per share) | $12.18 | $8.59 | $7.34 | $7.84 |
Dividend yield (as a percent) | ' | ' | 0.00% | ' |
Assumed annualized forfeiture rate (as a percent) | ' | ' | 5.00% | ' |
Unrecognized compensation | ' | ' | ' | ' |
Unrecognized compensation cost for nonvested option (in dollars) | $27.50 | ' | $27.50 | ' |
Vesting period of recognition of the unrecognized compensation cost of nonvested awards | ' | ' | '3 years | ' |
Stock_compensation_Details_2
Stock compensation (Details 2) (Stock options, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Stock options | ' |
Shares Available For Grant | ' |
Outstanding at the beginning of the period (in shares) | 5,406,277 |
Additional authorized (in shares) | 5,200,000 |
Options granted (in shares) | -5,215,500 |
Options cancelled (in shares) | 441,305 |
Outstanding at the end of the period (in shares) | 5,832,082 |
Number of Shares Outstanding | ' |
Outstanding at the beginning of the period (in shares) | 21,816,611 |
Options granted (in shares) | 5,215,500 |
Options exercised (in shares) | -5,524,527 |
Options cancelled (in shares) | -441,589 |
Outstanding at the end of the period (in shares) | 21,065,995 |
Exercisable at the end of period (in shares) | 12,911,434 |
Shares Subject to Outstanding Options, Weighted Average Exercise Price | ' |
Outstanding at the beginning of the period (in dollars per share) | $12.05 |
Options granted (in dollars per share) | $19.21 |
Options exercised (in dollars per share) | $9.61 |
Options cancelled (in dollars per share) | $17.46 |
Outstanding at the end of the period (in dollars per share) | $14.36 |
Exercisable at the end of the period (in dollars per share) | $11.71 |
Debt_Details
Debt (Details) (USD $) | 9 Months Ended | 5 Months Ended | 1 Months Ended | ||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Aug. 31, 2013 | |
Carrying Amount | Carrying Amount | Fair Value | Fair Value | Pfizer convertible subordinated note due 2014 | Pfizer convertible subordinated note due 2014 | 4.75% convertible senior notes due 2015 | 4.75% convertible senior notes due 2015 | 4.75% convertible senior notes due 2015 | 4.75% convertible senior notes due 2015 | 4.75% convertible senior notes due 2015 | 4.75% convertible senior notes due 2015 | Pfizer convertible subordinated note due 2013 | |||
Carrying Amount | Fair Value | Carrying Amount | Carrying Amount | Fair Value | Fair Value | ||||||||||
Convertible Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate of debt (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 4.75% | 4.75% | ' | ' | ' | ' | ' |
Convertible subordinated notes | ' | $9,033,000 | ' | ' | ' | ' | $9,033,000 | $13,573,000 | ' | ' | ' | ' | ' | ' | ' |
Convertible senior notes | 187,136,000 | 322,043,000 | ' | ' | ' | ' | ' | ' | ' | ' | 187,136,000 | 322,043,000 | 955,974,000 | 798,040,000 | ' |
Long-term debt, noncurrent | ' | ' | 187,136,000 | 331,076,000 | 955,974,000 | 811,613,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate principal amount of notes that can be converted into common stock | ' | ' | ' | ' | ' | ' | ' | ' | 180,988,000 | ' | ' | ' | ' | ' | 10,000,000 |
Common stock issued in conversion of notes (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 20,625,403 | ' | ' | ' | ' | ' | 1,025,641 |
Cash used to fund redemption of notes | $11,262,000 | ' | ' | ' | ' | ' | ' | ' | $11,300,000 | ' | ' | ' | ' | ' | ' |
Net_loss_per_share_Details
Net loss per share (Details) (USD $) | 9 Months Ended | 5 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2012 | Aug. 31, 2013 | Sep. 30, 2012 | |
Stock options | Stock options | 4.75% Senior Notes | 4.75% Senior Notes | 4.75% Senior Notes | Pfizer Note due 2013 | Pfizer Note due 2013 | Pfizer Note due 2014 | Pfizer Note due 2014 | |||
Anti-dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate of debt (as a percent) | ' | ' | ' | ' | 4.75% | 4.75% | 4.75% | ' | ' | ' | ' |
Potential common shares excluded from diluted net loss per share computation | 46,024,293 | 70,236,979 | 21,065,995 | 22,165,802 | ' | 24,958,298 | 45,584,040 | ' | 1,461,496 | ' | 1,025,641 |
Aggregate principal amount of notes to be converted | ' | ' | ' | ' | $181,000,000 | ' | ' | $10,000,000 | ' | $10,000,000 | ' |
Common stock issued in conversion of notes (in shares) | ' | ' | ' | ' | 20,625,403 | ' | ' | 1,461,496 | ' | 1,025,641 | ' |
Grant_Agreement_Details
Grant Agreement (Details) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Apr. 30, 2013 |
Grant Agreement | ' | ' |
Maximum grant receivable related to retention and expansion of workforce | ' | $11 |
Proceeds from grant related to retention and expansion of workforce | $5 | ' |
Lease_Agreement_Details
Lease Agreement (Details) (USD $) | 1 Months Ended | 9 Months Ended |
In Millions, unless otherwise specified | Apr. 30, 2013 | Sep. 30, 2013 |
sqft | ||
Lease Agreement | ' | ' |
Term of lease | '15 years | ' |
Area of laboratory and office building on lease (in square feet) | 190,000 | ' |
Minimum lease payments over the lease term | ' | $80 |
Improvements cost payable under direct financing arrangement | ' | 10 |
Letter of credit for posted for lease facility | ' | $15 |
Contingencies_Details
Contingencies (Details) | 2 Months Ended |
Apr. 30, 2013 | |
item | |
Contingencies | ' |
Number of lawsuits filed | 2 |