Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 23, 2015 | Jun. 30, 2014 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | MNKD | ||
Entity Registrant Name | MANNKIND CORP | ||
Entity Central Index Key | 899460 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 408,837,603 | ||
Entity Public Float | $2,616,079,653 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $120,841 | $70,790 |
Receivables from collaboration | 50,436 | |
Inventory | 9,670 | |
Prepaid expenses and other current assets | 20,206 | 5,485 |
Total current assets | 201,153 | 76,275 |
Property and equipment - net | 192,127 | 176,557 |
State research and development credit exchange receivable - net of current portion | 311 | 298 |
Other assets | 848 | 5,516 |
Total | 394,439 | 258,646 |
Current liabilities: | ||
Accounts payable | 7,394 | 3,860 |
Accrued expenses and other current liabilities | 26,206 | 21,634 |
Facility financing obligation | 72,995 | 102,300 |
Senior convertible notes | 99,355 | |
Deferred payments from collaboration | 197,403 | |
Total current liabilities | 403,353 | 127,794 |
Senior convertible notes | 98,439 | |
Note payable to principal stockholder | 49,521 | 49,521 |
Other liabilities | 15,335 | 13,605 |
Total liabilities | 468,209 | 289,359 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Undesignated preferred stock, $0.01 par value - 10,000,000 shares authorized; no shares issued or outstanding at December 31, 2014 and 2013 | ||
Common stock, $0.01 par value - 550,000,000 shares authorized at December 31, 2014 and 2013, respectively; 406,059,089 and 369,391,972 shares issued and outstanding at December 31, 2014 and 2013, respectively | 4,061 | 3,697 |
Additional paid-in capital | 2,416,967 | 2,261,996 |
Accumulated other comprehensive income (loss) | -14 | -4 |
Accumulated deficit | -2,494,784 | -2,296,402 |
Total stockholders' deficit | -73,770 | -30,713 |
Total | $394,439 | $258,646 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Undesignated preferred stock, par value | $0.01 | $0.01 |
Undesignated preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Undesignated preferred stock, shares issued | 0 | 0 |
Undesignated preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 550,000,000 | 550,000,000 |
Common stock, shares issued | 406,059,089 | 369,391,972 |
Common stock, shares outstanding | 406,059,089 | 369,391,972 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenue | $35 | ||
Operating expenses: | |||
Research and development | 100,244 | 109,719 | 101,522 |
General and administrative | 79,383 | 59,682 | 45,473 |
Total operating expenses | 179,627 | 169,401 | 146,995 |
Loss from operations | -179,627 | -169,401 | -146,960 |
Other income (expense) | 1,679 | -635 | -1,191 |
Interest expense on note payable to principal stockholder | -2,894 | -6,309 | -10,491 |
Interest expense on notes | -17,549 | -15,153 | -11,139 |
Interest income | 9 | 8 | 7 |
Loss before benefit for income taxes | -198,382 | -191,490 | -169,774 |
Income tax benefit | 408 | ||
Net loss | ($198,382) | ($191,490) | ($169,366) |
Net loss per share - basic and diluted | ($0.51) | ($0.64) | ($0.94) |
Shares used to compute basic and diluted net loss per share | 385,229 | 299,591 | 180,855 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net loss | ($198,382) | ($191,490) | ($169,366) |
Other comprehensive loss: | |||
Cumulative translation (loss) gain | -10 | 2 | -2 |
Unrealized gain (loss) on investments: | |||
Less: reclassification adjustment for gains (losses) included in net loss | -48 | ||
Net unrealized gain (loss) on investments | -48 | ||
Other comprehensive loss | -10 | 2 | -50 |
Comprehensive loss | ($198,392) | ($191,488) | ($169,416) |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' (Deficit) (USD $) | Total | Common Stock | Additional Paid-in Capital | Other Comprehensive Income (Loss) | Deficit Accumulated During the Development Stage |
In Thousands, except Share data | |||||
Beginning Balance at Dec. 31, 2011 | ($313,652) | $1,315 | $1,620,535 | $44 | ($1,935,546) |
Beginning Balance (in shares) at Dec. 31, 2011 | 131,523,000 | ||||
Exercise of stock options (in shares) | 3,000 | ||||
Exercise of stock options | 9 | 9 | |||
Issuance of common shares from the release of restricted stock units (in shares) | 886,000 | ||||
Issuance of common shares from the release of restricted stock units | -906 | 9 | -915 | ||
Issuance of common shares pursuant to underwritten public offerings (in shares) | 81,938,000 | ||||
Issuance of common shares pursuant to underwritten public offerings | 166,864 | 819 | 166,045 | ||
Conversion of notes payable (in shares) | 71,250,000 | ||||
Conversion of notes payable | 184,537 | 713 | 183,824 | ||
Fair value of forward purchase contracts | 1,237 | 1,237 | |||
Issuance of common shares pursuant to litigation settlement (in shares) | 225,000 | ||||
Issuance of common shares pursuant to litigation settlement | 438 | 2 | 436 | ||
Commitment to deliver common shares pursuant to litigation settlement to additional paid-in capital | 6,056 | 6,056 | |||
Issuance of common shares under Employee Stock Purchase Plan (in shares) | 422,260 | 211,000 | |||
Issuance of common shares under Employee Stock Purchase Plan | 862 | 2 | 860 | ||
Stock-based compensation | 13,292 | 13,292 | |||
Unrealized gain/(loss) on foreign currency translation | -2 | -2 | |||
Reclassification adjustment for gains (losses) included in net loss | -48 | -48 | |||
Net loss | -169,366 | -169,366 | |||
Ending Balance at Dec. 31, 2012 | -110,679 | 2,860 | 1,991,379 | -6 | -2,104,912 |
Ending Balance (in shares) at Dec. 31, 2012 | 286,035,000 | ||||
Exercise of stock options (in shares) | 880,000 | ||||
Exercise of stock options | 2,270 | 9 | 2,261 | ||
Issuance of common shares from the release of restricted stock units (in shares) | 1,870,000 | ||||
Issuance of common shares from the release of restricted stock units | -4,801 | 20 | -4,821 | ||
Issuance of common shares pursuant to warrant exercises (in shares) | 66,353,000 | ||||
Issuance of common shares pursuant to warrant exercises | 172,149 | 664 | 171,485 | ||
Issuance of common shares pursuant to debt conversions by Deerfield (in Shares) | 1,095,000 | ||||
Issuance of common shares pursuant to debt conversions by Deerfield | 5,501 | 12 | 5,489 | ||
Issuance of common stock (in shares) | 9,824,000 | ||||
Issuance of common stock | 48,888 | 99 | 48,789 | ||
Issuance of common shares pursuant to litigation settlement (in shares) | 2,778,000 | ||||
Issuance of common shares pursuant to litigation settlement | 28 | -28 | |||
Issuance of common shares under Employee Stock Purchase Plan (in shares) | 463,290 | 557,000 | |||
Issuance of common shares under Employee Stock Purchase Plan | 1,263 | 5 | 1,258 | ||
Stock-based compensation | 45,186 | 45,186 | |||
Unrealized gain/(loss) on foreign currency translation | 2 | 2 | |||
Commitment to deliver common shares pursuant to Deerfield conversion to additional paid-in capital | 998 | 998 | |||
Net loss | -191,490 | -191,490 | |||
Ending Balance at Dec. 31, 2013 | -30,713 | 3,697 | 2,261,996 | -4 | -2,296,402 |
Ending Balance (in shares) at Dec. 31, 2013 | 369,392,000 | ||||
Exercise of stock options (in shares) | 3,250,149 | 3,251,000 | |||
Exercise of stock options | 10,978 | 35 | 10,943 | ||
Issuance of common shares from the release of restricted stock units (in shares) | 3,996,000 | ||||
Issuance of common shares from the release of restricted stock units | -26,908 | 38 | -26,946 | ||
Issuance of common shares pursuant to warrant exercises (in shares) | 11,575,000 | ||||
Issuance of common shares pursuant to warrant exercises | 27,779 | 115 | 27,664 | ||
Issuance of common shares pursuant to debt conversions by Deerfield (in Shares) | 17,521,000 | ||||
Issuance of common shares pursuant to debt conversions by Deerfield | 93,501 | 174 | 93,327 | ||
Issuance of common shares under Employee Stock Purchase Plan (in shares) | 305,076 | 324,000 | |||
Issuance of common shares under Employee Stock Purchase Plan | 1,363 | 2 | 1,361 | ||
Remeasurement of performance based grants pursuant to the modification of terms | 22,962 | 22,962 | |||
Stock-based compensation | 25,660 | 25,660 | |||
Unrealized gain/(loss) on foreign currency translation | -10 | -10 | |||
Net loss | -198,382 | -198,382 | |||
Ending Balance at Dec. 31, 2014 | ($73,770) | $4,061 | $2,416,967 | ($14) | ($2,494,784) |
Ending Balance (in shares) at Dec. 31, 2014 | 406,059,000 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | ($198,382) | ($191,490) | ($169,366) |
Adjustments to reconcile net loss to net cash provide by (used in) operating activities: | |||
Depreciation and accretion | 18,575 | 14,057 | 14,402 |
Stock-based compensation expense | 48,622 | 45,186 | 13,292 |
Loss (gain) on sale, abandonment/disposal or impairment of property and equipment | 97 | 817 | 682 |
Loss on available-for-sale securities | 117 | ||
Write-off of derivative liability | -363 | ||
Fair value of forward purchase contract | 1,237 | ||
Common shares issued pursuant to litigation settlement | 438 | ||
Commitment to deliver common shares pursuant to litigation settlement | 6,056 | ||
Other, net | -10 | 2 | -2 |
Changes in assets and liabilities: | |||
State research and development credit exchange receivable | -13 | 466 | -290 |
Inventory | -9,670 | ||
Receivables from collaboration | -50,436 | ||
Prepaid expenses and other current assets | -14,721 | -965 | -1,545 |
Other assets | -615 | ||
Accounts payable | 3,622 | -1,071 | 44 |
Accrued expenses and other current liabilities | 2,276 | 3,675 | 15,075 |
Deferred cash payments from collaboration | 200,436 | ||
Other liabilities | 2,915 | 591 | |
Net cash provided by (used in) operating activities | 4,086 | -128,732 | -119,860 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | -24,097 | -7,987 | -637 |
Proceeds from sale of property and equipment | 77 | ||
Net cash used in investing activities | -24,097 | -7,987 | -560 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Issuance of common stock and warrants, net of issuance costs | 40,120 | 52,421 | 167,735 |
Exercise of warrants for common stock | 94,147 | ||
Payment of 2013 notes | -115,000 | ||
Proceeds from issuance of facility financing obligation & milestone rights | 40,000 | 119,500 | |
Facility financing obligation & milestone rights issuance costs | -598 | ||
Payment of milestone rights | -3,150 | ||
Borrowings on notes payable to principal stockholder | 12,750 | ||
Payment of employment taxes related to vested restricted stock units | -26,908 | -4,801 | -906 |
Net cash provided by financing activities | 70,062 | 145,669 | 179,579 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 50,051 | 8,950 | 59,159 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 70,790 | 61,840 | 2,681 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 120,841 | 70,790 | 61,840 |
SUPPLEMENTAL CASH FLOWS DISCLOSURES: | |||
Interest paid in cash, net of amounts capitalized to Construction in progress | 11,218 | 13,452 | 9,755 |
Issuance of common stock pursuant to debt conversion by Deerfield | 93,500 | 6,500 | |
Non-cash construction in progress and property and equipment | 1,768 | 856 | 4,072 |
Capitalization of interest on note payable to principal stockholder | 7,886 | 14,219 | |
Reduction of principal on note payable to principal stockholder upon issuance of common stock and exercise of warrants | 78,000 | 184,537 | |
Forward purchase contracts contribution to additional paid-in capital | 29,317 | ||
Reclassification of forward purchase contracts to additional paid-in capital | 28,080 | ||
Reclassification of Collaboration loan facility obligation | 3,034 | ||
Less portion of commitment asset | |||
Adjustments to reconcile net loss to net cash provide by (used in) operating activities: | |||
Write-off Tranche B Commitment Asset | 1,753 | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from issuance of facility financing obligation & milestone rights | $20,000 |
Description_of_business_and_ba
Description of business and basis of presentation | 12 Months Ended |
Dec. 31, 2014 | |
Description of business and basis of presentation | 1. Description of business and basis of presentation |
Business — MannKind Corporation and subsidiaries (the “Company”) is a biopharmaceutical company focused on the discovery and development of therapeutic products for diseases such as diabetes. Our only approved product, AFREZZA, (insulin human [rDNA origin]) inhalation powder , is a rapid-acting inhaled insulin that was approved by the U.S. Food and Drug Administration (the “FDA”) on June 27, 2014 to improve glycemic control in adult patients with diabetes. | |
Basis of Presentation — The Company’s primary activities since incorporation have been establishing its facilities, recruiting personnel, conducting research and development, business development, business and financial planning, and raising capital. It is costly to develop therapeutic products and conduct clinical studies for these products. As of and for the year ended December 31, 2014, the Company has reported an accumulated deficit of $2.5 billion and has reported negative cash flow from operations since inception. | |
At December 31, 2014, the Company’s capital resources consisted of cash and cash equivalents of $120.8 million. The Company expects to continue to incur significant expenditures to support commercial manufacturing of AFREZZA and the development of other product candidates. In addition, the Company’s 5.75% Senior Convertible Notes due 2015 (the “2015 notes”) in the aggregate principal amount of $100.0 million have a maturity date of August 15, 2015, and payment on the outstanding amount is due in full on that date (see Note 8 – Senior convertible notes). The facility agreement (the “Facility Agreement”) with Deerfield Private Design Fund II, L.P. (“Deerfield Private Design Fund”) and Deerfield Private Design International II, L.P. (collectively, “Deerfield”) and the First Amendment to Facility Agreement and Registration Rights Agreement (the “First Amendment”) additional sales of an additional tranche of notes (the “Tranche B notes”) (see Note 17 – Facility Agreement) contains a financial covenant that requires the Company’s cash and cash equivalents, which include available borrowings under this Loan Arrangement, on the last day of each fiscal quarter to not be less than $25.0 million. Should the holders of the notes not elect to convert such notes into the Company’s common stock prior to their due date, the Company intends to refinance the 2015 notes or raise additional funds to settle the 2015 notes. Although the Company believes that it can refinance the 2015 notes or obtain alternative financing to settle the 2015 notes, inherent uncertainty in achieving its projected cashflows and refinancing of the 2015 notes raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. | |
On August 11, 2014, we executed a license and collaboration agreement (the “Sanofi License Agreement”) with Sanofi-Aventis Deutschland GmbH (which subsequently assigned its rights and obligations under the agreement to Sanofi-Aventis U.S. LLC (“Sanofi”)), pursuant to which Sanofi is responsible for global commercial, regulatory and development activities for AFREZZA. The Sanofi License Agreement became effective on September 23, 2014. We manufacture AFREZZA at our manufacturing facility in Danbury, Connecticut to supply Sanofi’s demand for the product. In addition, we and Sanofi are planning to collaborate to expand manufacturing capacity to meet global demand as necessary. | |
Under the Sanofi License Agreement, Sanofi paid us an up-front cash payment of $150.0 million in the third quarter of 2014. As of December 31, 2014, we have earned and recorded as Receivables from collaboration an additional $50.0 million in milestone payments in connection with the satisfaction of specified manufacturing milestones. Such payments were received subsequent to year end. We are also eligible to receive up to $725.0 million in additional milestone payments under the Sanofi License Agreement if certain development, regulatory and sales milestones are achieved. In addition, worldwide profits and losses, which are determined based on the difference between the net sales of AFREZZA and the costs and expenses incurred by us and Sanofi that are specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of AFREZZA, will be shared 65% by Sanofi and 35% by the us. As a result of the loss share provision, and because we do not have the ability to estimate the amount of costs that would potentially be incurred related to the Sanofi License Agreement, the amount of up-front cash payment or milestone payments that could be recognized as revenue is not fixed or determinable. In connection with the Sanofi License Agreement, an affiliate of Sanofi provided us with a secured loan facility (the “Sanofi Loan Facility”) of up to $175.0 million to fund our share of net losses under the Sanofi License Agreement. | |
Additional funding sources that are, or in certain circumstances may be available to the Company, include approximately $30.1 million principal amount of available borrowings under its loan arrangement ( the “Loan Arrangement”) with The Mann Group LLC (“The Mann Group”) (see note 7 – Related-party arrangements), potential proceeds from the exercise of warrants issued in its February 2012 public offering of approximately $19.5 million, and the Company’s at-the-market issuance sales agreements which allow the Company to sell up to $50.0 million in common stock. The Company cannot provide assurances that its plans will not change or that changed circumstances will not result in the depletion of its capital resources more rapidly than it currently anticipates. The Company may need to raise additional capital, whether through a sale of equity or debt securities, a strategic business collaboration with a pharmaceutical company, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to continue the development and commercialization of AFREZZA and other product candidates and to support its other ongoing activities. However, the Company cannot provide assurances that such additional capital will be available on acceptable terms or at all. | |
Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. | |
Segment Information — In accordance with Accounting Standards Codification (“ASC”) 280-10-50 Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as one segment operating in the United States of America. |
Summary_of_significant_account
Summary of significant accounting policies | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Summary of significant accounting policies | 2. Summary of significant accounting policies | |||
Financial Statement Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies, and in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. The more significant estimates reflected in these accompanying financial statements involve assessing long-lived assets for impairment, accrued expenses, including clinical study expenses, valuation of forward purchase contracts, valuation of the facility financing obligation, commitment asset, milestone rights, valuation of stock-based compensation and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. | ||||
License and Collaboration and Supply agreements — Pursuant to the Sanofi License Agreement and the Sanofi Supply Agreement, we granted to Sanofi exclusive, worldwide licenses to certain of our patents, trademarks and know-how for the development and commercialization of AFREZZA and retained the right to be the exclusive manufacturer and supplier of AFREZZA until specified conditions are met upon which a portion of the manufacturing activities may be assumed by Sanofi. The terms of the Sanofi License Agreement provide for consideration to us in the form of a non-refundable up-front payment, product sales, manufacturing, regulatory and sales milestone payments and profit and loss sharing. | ||||
We analyze consideration received under the provisions of ASC 605, Revenue Recognition, to determine whether the consideration, or a portion thereof, could be recognized as revenue. ASC 605 provides that revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collection is reasonably assured. | ||||
In arrangements involving the delivery of more than one element, each required deliverable is evaluated to determine whether it qualifies as a separate unit of accounting. This determination is generally based on whether the deliverable has “stand-alone value” to the customer. The arrangement’s consideration that is fixed and determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence of selling price and (iii) best estimate of selling price (BESP). The BESP reflects our best estimate of what the selling price would be if the deliverable was regularly sold by us on a stand-alone basis. In general, the consideration allocated to each unit of accounting is recognized as the related goods or services are delivered, limited to the consideration that is not contingent upon future deliverables. | ||||
The assessment of multiple element arrangements requires judgment in order to determine the appropriate units of accounting and the points in time that, or periods over which, revenue should be recognized. Given that, as of December 31, 2014, we did not have the ability to estimate the amount of costs that would potentially be incurred under the loss share provision related to the Sanofi License Agreement and the Sanofi Supply Agreement, we believe the fixed and determinable fee requirement for revenue recognition was not met. | ||||
Cash and Cash Equivalents — The Company considers all highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase, that are readily convertible into cash to be cash equivalents. As of December 31, 2014 and 2013, cash equivalents were comprised of cash and money market accounts with maturities less than 90 days from the date of purchase. | ||||
Concentration of Credit Risk — Financial instruments which potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. Cash and cash equivalents consist of interest-bearing accounts, which are regularly monitored by management and held in high credit quality institutions. | ||||
State Research and Development Credit Exchange Receivable — The State of Connecticut provides certain companies with the opportunity to exchange certain research and development income tax credit carryforwards for cash in exchange for foregoing the carryforward of the research and development credits. The program provides for an exchange of research and development income tax credits for cash equal to 65% of the value of corporation tax credit available for exchange. Estimated amounts receivable under the program are recorded as a reduction of research and development expenses. | ||||
Prepaid expenses and other current assets — Prepaid expenses and other current assets primarily consist of prepaid expenses for goods and services to be received. As of December 31, 2014, prepaid and other current assets had a balance of $20.2 million, mainly comprised of a $15.0 million prepayment for 2015 quantities of insulin, and prepaid insurance. | ||||
On July 31, 2014, the Company entered into a Supply Agreement (the “Supply Agreement”) with Amphastar France Pharmaceuticals S.A.S., a French corporation (“Amphastar”), pursuant to which Amphastar will manufacture for and supply to the Company certain quantities of recombinant human insulin for use in AFREZZA. Under the terms of the Supply Agreement, Amphastar will be responsible for manufacturing the insulin in accordance with the Company’s specifications and agreed-upon quality standards. The Company has agreed to purchase annual minimum quantities of insulin under the Supply Agreement of an aggregate total of approximately €120.1 million for calendar years 2015 through 2019. The remaining annual minimum quantities will be €23.2 million for 2015 and €23.3 million for the years ended December 31, 2016 through 2019. The Company may request to purchase additional quantities of insulin over such annual minimum quantities. As part of the Supply Agreement, the Company paid a $15.0 million deposit to Amphastar as prepayment for 2015 quantities of insulin. | ||||
Unless earlier terminated, the term of the Insulin Supply Agreement expires on December 31, 2019 and can be renewed for additional, successive two year terms upon 12 months’ written notice given prior to the end of the initial term or any additional two year term. The Company and Amphastar each have normal and customary termination rights, including termination for material breach that is not cured within a specific time frame or in the event of liquidation, bankruptcy or insolvency of the other party. In addition, the Company may terminate the Supply Agreement upon two years’ prior written notice to Amphastar without cause or upon 30 days’ prior written notice to Amphastar if a controlling regulatory authority withdraws approval for AFREZZA, provided, however, in the event of a termination pursuant to either of the latter two scenarios, the provisions of the Supply Agreement require the Company to pay the full amount of all unpaid purchase commitments due over the initial term within 60 calendar days of the effective date of such termination. | ||||
Sale of intellectual property — On July 18, 2014, the Company entered into an assignment agreement with a third party whereby the third party acquired all proprietary rights, technology and know-how that related to a small molecule inhibitor compound and all pre-clinical data and results related thereto. Under the terms of the assignment agreement, the Company received total consideration of $9.3 million and incurred $1.4 million in expense for a net amount of $7.9 million recorded as other income. | ||||
Milestone Rights — On July 1 2013, in conjunction with the execution of the Facility Agreement, the Company issued Milestone Rights to Deerfield whereby the Company agreed to provide Deerfield with pre-specified Milestone Payments upon the achievement of 13 specific Milestone Events related to the commercial release and future cumulative net sales of AFREZZA®. The Company analyzed the Milestone Rights under the provisions of ASC 815 and determined that the agreement does not meet the definition of a freestanding derivative. Since the Company has not elected to apply the fair value option to the Milestone Rights Purchase Agreement, the Company recorded the Milestone Rights at their estimated fair value and accounted for the Milestone Rights as a liability by applying the indexed debt guidance contained in paragraphs ASC 470-10-25-3 and 35-4. | ||||
The initial fair value estimate of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones and discounted to present value using a selected market discount rate. The expected timing and probability of achieving the milestones was developed with consideration given to both internal data, such as progress made to date and assessment of criteria required for achievement, and external data, such as market research studies. The discount rate was selected based on an estimation of required rate of returns for similar investment opportunities using available market data. The Milestone Rights liability will be remeasured as the specified milestone events are achieved. Specifically, as each milestone event is achieved, the portion of the initially recorded Milestone Rights liability that pertains to the milestone event being achieved, will be remeasured to the amount of the specified related milestone payment. The resulting change in the balance of the Milestone Rights liability due to remeasurement will be recorded in our Statement of Operations as interest expense. Furthermore, the Milestone Rights liability will be reduced upon the settlement of each milestone payment. As a result, each milestone payment would be effectively allocated between a reduction of the recorded Milestone Rights liability and an expense representing a return on a portion of the Milestone Rights liability paid to the investor for the achievement of the related milestone event (see Note 17). | ||||
Commitment Asset — In connection with the issuance of the Tranche 1 notes and the Milestone Rights, the Company recorded a commitment asset (the “Commitment Asset”) on July 1, 2013. As a result of the First Amendment, the Company recorded an additional Tranche B notes commitment asset (the “Tranche B Commitment Asset”) with an estimated fair value equal to $2.9 million. The Commitment Asset is derecognized and recorded as a debt discount on the 2019 notes and Tranche B notes, when issued and amortized, using the effective interest rate method over the life of the respective notes. Prior to derecognition occurring, the Company monitors the Commitment Asset on an ongoing basis to determine whether an impairment indicator is present that would result in a full or partial write down of the Commitment Asset as a result of events that may lead to the subsequent tranches of notes not being issued. At December 31, 2014, Deerfield had purchased all four tranches of 2019 notes in the aggregate principal amount of $160.0 million, purchased $20.0 million aggregate principal amount of Tranche B notes in accordance with the provisions of the Facility Agreement, and wrote off the remaining portion of the Tranche B Commitment Asset. At December 31, 2014 the carrying value of the Commitment Assets was zero. | ||||
Fair Value of Financial Instruments — The Company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements. The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: | ||||
Level 1 – Quoted prices for identical instruments in active markets. | ||||
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | ||||
Level 3 – Significant inputs to the valuation model are unobservable. | ||||
The carrying amounts reflected in the consolidated balance sheets for cash equivalents, other current assets, accounts payable, and accrued expenses and other current liabilities, approximate fair value due to their relatively short maturities. | ||||
Inventories — Inventories are stated at the lower of cost or market. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s products based on management’s judgment that future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company’s products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company will record a charge to write down such unmarketable inventory to its estimated realizable value. | ||||
Property and Equipment — Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the term of the lease or the service lives of the improvements, whichever is shorter. Maintenance and repairs are expensed as incurred. Assets under construction are not depreciated until placed into service. | ||||
Impairment of Long-Lived Assets — The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable in accordance with ASC 360-10-35 Property Plant and Equipment. Assets are considered to be impaired if the carrying value may not be recoverable based upon management’s assessment of the following events or changes in circumstances: | ||||
• | significant changes in the Company’s strategic business objectives and utilization of the assets; | |||
• | a determination that the carrying value of such assets cannot be recovered through undiscounted cash flows; | |||
• | loss of legal ownership or title to the assets; | |||
• | a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; or | |||
• | the impact of significant negative industry or economic trends. | |||
If the Company believes an asset to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Any write-downs would be treated as permanent reductions in the carrying amount of the asset and an operating loss would be recognized. No asset impairment was recognized during the years ended December 31, 2014, 2013, and 2012, respectively. | ||||
Income Taxes — The provisions for federal, foreign, state, and local income taxes are calculated on pre-tax income based on current tax law and include the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce net deferred income tax assets to amounts that are more likely than not to be realized. | ||||
Income tax positions are considered for uncertainty in accordance with ASC 740-10-25 Income Taxes, The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no liabilities for uncertain income tax positions have been recorded. If a tax position does not meet the minimum statutory threshold to avoid payment of penalties, the Company recognizes an expense for the amount of the penalty in the period the tax position is claimed in the tax return of the Company. The Company recognizes interest accrued related to unrecognized tax benefits in income tax expense, if any. Penalties, if probable and reasonably estimable, are recognized as a component of income tax expense. | ||||
Significant management judgment is involved in determining the provision for income taxes, deferred tax assets, deferred tax liabilities, and any valuation allowance recorded against deferred tax assets. Due to uncertainties related to the realization of the Company’s deferred tax assets as a result of its history of operating losses, a valuation allowance has been established against the total deferred tax asset balance. The valuation allowance is based on management’s estimates of taxable income by jurisdiction in which the Company operates and the period over which deferred tax assets will be recoverable. In the event that actual results differ from these estimates or the Company adjusts these estimates in future periods, a change in the valuation allowance may be needed, which could materially impact the Company’s financial position and results of operations. | ||||
Contingencies — Contingencies are recorded in accordance with ASC 450 Contingencies. Accordingly, the Company records a loss contingency for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals represent management’s best estimate of probable loss. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates. These revisions in the estimates of the potential liabilities could have a material impact on our consolidated results of operations and financial position. | ||||
Stock-Based Compensation — As of December 31, 2014, the Company had three active stock-based compensation plans, which are described more fully in Note 12. The Company accounts for all share-based payments to employees, including grants of stock awards and the compensatory elements of the employee stock purchase plan in accordance with ASC 718. ASC 718 Compensation — Stock Compensation (“ASC 718”) requires all share-based payments to employees, including grants of stock options, restricted stock units, performance-based awards and the compensatory elements of employee stock purchase plans, to be recognized in the statement of operations based upon the fair value of the awards at the grant date. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options and the compensatory elements of employee stock purchase plans. Option valuation models require the input of assumptions, including the expected life of the stock-based awards, the estimated stock price volatility, the risk-free interest rate, and the expected dividend yield. Beginning in the third quarter of 2014, the Company began to assess both historical and implied volatility in order to determine its estimated volatility rate. Implied volatility is now considered due to the change in the Company’s business, which occurred with the approval for the sale of AFREEZA. The expected volatility assumption is based on an assessment of the historical volatility and the implied volatility of the Company’s common stock, derived from an analysis of historical traded and quoted options on the Company’s common stock. Restricted stock units are valued based on the market price on the grant date. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period. | ||||
Warrants — The Company has issued warrants to purchase shares of its common stock. Warrants have been accounted for within equity in accordance with the provisions of ASC 815-40, Contracts in an Entity’s Own Stock, previously EITF Issue No. 00-19: Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. | ||||
Forward Contracts — The Company has entered into agreements with The Mann Group whereby the Company agreed to sell and The Mann Group agreed to purchase common stock and/or warrants. These agreements have been accounted for as forward contracts, having met the definition of derivative instruments in accordance with the provisions of ASC 815 Derivatives and Hedging. The Company determines the fair value of the forward contract upon its issuance, records fair value adjustments of the forward contract to Other income (expense) during the reporting period and through the settlement of the forward contract, and reclassifies the forward contract to equity upon settlement of the forward contract. In the years ended December 31, 2014 and 2013, there were no forward purchase contracts. | ||||
Comprehensive Loss — Other comprehensive loss is recorded in accordance with ASC 220-10-45 Comprehensive Income, which requires that all components of comprehensive loss be reported in the financial statements in the period in which they are recognized. Other comprehensive loss includes certain changes in stockholders’ equity that are excluded from net income. Specifically, the Company includes unrealized gains and losses on its available-for-sale securities and cumulative translation gains and losses in other comprehensive loss. | ||||
Research and Development Expenses — Research and development expenses consist of costs associated with the clinical trials of the Company’s product candidates, manufacturing supplies and other development materials, including raw material purchases of insulin, compensation and other expenses for research and development personnel, costs for consultants and related contract research, facility costs, and depreciation. Research and development costs, which are net of any tax credit exchange recognized for the Connecticut state research and development credit exchange program, are expensed as incurred consistent with ASC 730-10 Research and Development. The Company began commercial manufacturing in the latter part of the fourth quarter of 2014. As such, commercial manufacturing costs incurred in the fourth quarter and included in research and development as expenses are immaterial for the year ended December 31, 2014. | ||||
Clinical Trial Expenses — Clinical trial expenses, which are reflected in research and development expenses in the accompanying statements of operations, result from obligations under contracts with vendors, consultants, and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The appropriate level of trial expenses are reflected in the Company’s financial statements by matching period expenses with period services and efforts expended. These expenses are recorded according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. Clinical trial accrual estimates are determined through discussions with internal clinical personnel and outside service providers as to the progress or state of completion of trials, or the services completed. Service provider status is then compared to the contractually obligated fee to be paid for such services. During the course of a clinical trial, the Company may adjust the rate of clinical expense recognized if actual results differ from management’s estimates. | ||||
Interest Expense — Interest costs are expensed as incurred, except to the extent such interest is related to construction in progress, in which case interest is capitalized. Interest expense, net of interest capitalized, for the years ended December 31, 2014, 2013 and 2012 was $20.4 million, $21.5 million, and $21.6 million, respectively. Interest costs capitalized for the years ended December 31, 2014, 2013, and 2012 were $0.8 million, $0.4 million, and $0.3 million, respectively. | ||||
Net Loss Per Share of Common Stock — Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the sum of the weighted-average number of common shares outstanding during the period plus the potential dilutive effect of stock options, restricted stock units, warrants, and shares that could be issued upon conversion of the senior convertible notes outstanding during the period calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share for the years ended December 31, 2014, 2013, and 2012. | ||||
Recently Issued Accounting Standards — From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. | ||||
In May 2014, a new standard was issued related to revenue recognition, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard will replace most of the existing revenue recognition standards in U.S. GAAP when it becomes effective on January 1, 2017. Early adoption is not permitted. The new standard allows for either “full retrospective” adoption, whereby the new standard is applied to each prior reporting period presented or “modified retrospective” adoption, whereby the new standard is only applied to the most current period presented with the cumulative effect of the change recognized at the date of the initial application. The Company is assessing the potential impact of the new standard on its consolidated statements of financial position and results of operations and comprehensive income (loss) and has not yet selected a transition method. | ||||
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification. In addition, the ASU: (a) adds an example disclosure in Topic 275, Risks and Uncertainties, to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities; and (b) removes an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity. The presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company early adopted ASU 2014-10 resulting in the elimination of certain presentation and disclosure requirements previously required by topic 915. | ||||
On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter; early adoption is permitted. The Company is evaluating the impact the adoption of ASU 2014-15 will have on its consolidated financial statements. |
State_research_and_development
State research and development credit exchange receivable | 12 Months Ended |
Dec. 31, 2014 | |
State research and development credit exchange receivable | 3. State research and development credit exchange receivable |
The State of Connecticut provides certain companies with the opportunity to exchange certain research and development income tax credit carryforwards for cash in exchange for forgoing the carryforward of the research and development income tax credits. The program provides for an exchange of research and development income tax credits for cash equal to 65% of the value of corporation tax credit available for exchange. Estimated amounts receivable under the program are recorded as a reduction of research and development expenses. During the years ended December 31, 2014, 2013 and 2012, research and development expenses were offset by $816,000, $282,000, and $289,000, respectively. |
Inventories
Inventories | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventories | 4. Inventories | ||||||||
Inventories consist of the following (in thousands): | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 4,856 | $ | — | |||||
Work-in-process | 4,719 | — | |||||||
Finished goods | 95 | — | |||||||
Total inventories | $ | 9,670 | $ | — | |||||
Property_and_equipment
Property and equipment | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Property and equipment | 5. Property and equipment | ||||||||||||
Property and equipment consist of the following (dollar amounts in thousands): | |||||||||||||
Estimated | December 31, | ||||||||||||
Useful | |||||||||||||
Life | |||||||||||||
(Years) | 2014 | 2013 | |||||||||||
Land | — | $ | 5,273 | $ | 5,273 | ||||||||
Buildings | 39-40 | 54,948 | 54,948 | ||||||||||
Building improvements | May-40 | 114,131 | 114,099 | ||||||||||
Machinery and equipment | 15-Mar | 80,919 | 82,189 | ||||||||||
Furniture, fixtures and office equipment | 10-May | 5,015 | 5,046 | ||||||||||
Computer equipment and software | 3 | 10,465 | 11,289 | ||||||||||
Leasehold improvements | 4 | 17 | 17 | ||||||||||
Construction in progress | 39,580 | 14,756 | |||||||||||
310,348 | 287,617 | ||||||||||||
Less accumulated depreciation and amortization | (118,221 | ) | (111,060 | ) | |||||||||
Total property and equipment, net | $ | 192,127 | $ | 176,557 | |||||||||
Leasehold improvements are amortized over four years which is the shorter of the term or the service lives of the improvements. Depreciation and amortization expense related to property and equipment for the years ended December 31, 2014, 2013, and 2012, was $9.8 million, $11.5 million, and $13.0 million, respectively. |
Accrued_expenses_and_other_cur
Accrued expenses and other current liabilities | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued expenses and other current liabilities | 6. Accrued expenses and other current liabilities | ||||||||
Accrued expenses and other current liabilities are comprised of the following (in thousands): | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Salary and related expenses | $ | 14,928 | $ | 12,193 | |||||
Research and clinical trial costs | — | 1,311 | |||||||
Accrued interest | 2,396 | 2,082 | |||||||
Construction in progress | 1,343 | 342 | |||||||
Other | 7,539 | 5,706 | |||||||
Accrued expenses and other current liabilities | $ | 26,206 | $ | 21,634 | |||||
Relatedparty_arrangements
Related-party arrangements | 12 Months Ended |
Dec. 31, 2014 | |
Related-party arrangements | 7. Related-party arrangements |
In October 2007, the Company entered into a $350.0 million loan arrangement with its principal stockholder. The Loan Arrangement has been amended from time to time. In February 2009, the promissory note underlying the Loan Arrangement was revised as a result of the principal stockholder being licensed as a finance lender under the California Finance Lenders Law. Accordingly, the lender was revised to The Mann Group. Until January 1, 2013, interest on outstanding principal amounts accrued at a fixed rate equal to the one-year LIBOR rate as reported by the Wall Street Journal on the date of such advance plus 3% per annum. Based on the amended terms of the agreement, the rate was fixed at 5.84% going forward. On October 31, 2013, the promissory note was amended to, among other things, extend the maturity date of the loan to January 5, 2020, extend the date through which the Company can borrow under the Loan Arrangement to December 31, 2019, increase the aggregate borrowing amount under the Loan Arrangement from $350.0 million to $370.0 million, provide that repayments or cancellations of principal under the Loan Arrangement will not be available for reborrowing and to cancel $78.0 million of principal indebtedness under the Loan Arrangement as payment for the aggregate exercise price of warrants, in accordance with the Common Stock and Warrant Purchase Agreement entered into with The Mann Group on October 18, 2012 (the “Mann Group Warrants”). In addition, the Company and The Mann Group agreed to capitalize into principal $7.9 million of accrued interest that became due and payable upon cancellation of the $78.0 million of principal indebtedness. | |
As of December 31, 2014, the total principal amount outstanding under the Loan Arrangement was $49.5 million, and the amount available for future borrowings was $30.1 million. Interest, at a fixed rate of 5.84%, is due and payable quarterly in arrears on the first day of each calendar quarter for the preceding quarter, or at such other time as the Company and The Mann Group mutually agree. All or any portion of accrued and unpaid interest that becomes due and payable may be paid-in-kind and capitalized as additional borrowings at any time and has been classified as non-current. As of December 31, 2014, the Company had accrued $3.5 million of interest in long term other liabilities related to the Loan Arrangement. The Mann Group can require the Company to prepay up to $200.0 million in advances that have been outstanding for at least 12 months (less approximately $105.0 million aggregate principal amount that has been cancelled in connection with two common stock purchase agreements). If The Mann Group exercises this right, the Company will have 90 days after The Mann Group provides written notice (or the number of days to maturity of the note if less than 90 days) to prepay such advances. However, pursuant to a letter agreement entered into in August 2010, The Mann Group has agreed to not require the Company to prepay amounts outstanding under the amended and restated promissory note if the prepayment would require the Company to use its working capital resources. In addition, The Mann Group entered into a subordination agreement with Deerfield pursuant to which The Mann Group agreed with Deerfield not to demand or accept any payment under the Loan Arrangement until the Company’s payment obligations to Deerfield under the Facility Agreement have been satisfied in full. Subject to the foregoing, in the event of a default under our loan arrangement with The Mann Group, all unpaid principal and interest either becomes immediately due and payable or may be accelerated at The Mann Group’s option, and the interest rate will increase to the one-year LIBOR rate calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum. All borrowings under the Loan Arrangement are unsecured. The Loan Arrangement contains no financial covenants. | |
As of December 31, 2014 and 2013, the Company had accrued and unpaid interest of $3.5 million and $0.6 million, in long term other liabilities respectively, which related to the amount outstanding and had $30.1 million of available borrowings. Interest expense on the Company’s note payable to our principal stockholder for the years ended December 31, 2014, 2013, and 2012 was $2.9 million, $6.3 million, and $10.5 million, respectively. | |
In connection with certain meetings of the Company’s board of directors and on other occasions when the Company’s business necessitated air travel for the Company’s principal stockholder and other Company employees, the Company utilized the principal stockholder’s private aircraft, and the Company paid the charter company that manages the aircraft on behalf of the Company’s majority shareholder approximately $79,000, $82,000, and $200,000, respectively, for the years ended December 31, 2014, 2013, and 2012 on the basis of the corresponding cost of commercial airfare. | |
The Company has entered into indemnification agreements with each of its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate of incorporation and amended and restated bylaws (see Note 13). |
Senior_convertible_notes
Senior convertible notes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Senior convertible notes | 8. Senior convertible notes | ||||||||
Senior convertible notes consist of the following (in thousands): | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
2015 notes | |||||||||
Principal amount | $ | 100,000 | $ | 100,000 | |||||
Unaccreted debt issuance cost | (645 | ) | (1,561 | ) | |||||
Net carrying amount | $ | 99,355 | $ | 98,439 | |||||
On August 18, 2010, the Company completed a Rule 144A offering of $100.0 million aggregate principal amount of 2015 notes. The 2015 notes are governed by the terms of an indenture dated as of August 24, 2010 (the “2015 Note Indenture”). The 2015 notes bear interest at the rate of 5.75% per year on the principal amount, payable in cash semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2011. In connection with the 2015 notes, the Company had accrued interest of $2.4 million as of December 31, 2014 and December 31, 2013. The 2015 notes are general, unsecured, senior obligations of the Company and effectively rank junior in right of payment to all of the Company’s secured debt, to the extent of the value of the assets securing such debt and to the debt and all other liabilities of the Company’s subsidiaries. The maturity date of the 2015 notes is August 15, 2015 and payment is due in full on that date for unconverted securities. Holders of the 2015 notes may convert, at any time prior to the close of business on the business day immediately preceding the stated maturity date, any outstanding principal into shares of the Company’s common stock at an initial conversion rate of 147.0859 shares per $1,000 principal amount, which is equal to a conversion price of approximately $6.80 per share, subject to adjustment. Except in certain circumstances, if the Company undergoes a fundamental change: (1) the Company will pay a make-whole premium on the 2015 notes converted in connection with a fundamental change by increasing the conversion rate on such 2015 notes, which amount, if any, will be based on the Company’s common stock price and the effective date of the fundamental change, and (2) each holder of 2015 notes will have the option to require the Company to repurchase all or any portion of such holder’s 2015 notes at a repurchase price of 100% of the principal amount of the 2015 notes to be repurchased plus accrued and unpaid interest, if any. The Company may elect to redeem some or all of the 2015 notes if the closing stock price has equaled 150% of the conversion price for at least 20 of the 30 consecutive trading days ending on the trading day before the Company’s redemption notice. The redemption price will equal 100% of the principal amount of the 2015 notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a make-whole payment equal to the sum of the present values of the remaining scheduled interest payments through and including August 15, 2015 (other than interest accrued up to, but excluding, the redemption date). The Company will be obligated to make the make-whole payment on all the 2015 notes called for redemption and converted during the period from the date the Company mailed the notice of redemption to and including the redemption date. The Company may elect to make the make-whole payment in cash or shares of its common stock, subject to certain limitations. Under the terms of the 2015 Note Indenture, the conversion option can be net-share settled and the maximum number of shares that could be required to be delivered under the contract, including the make-whole shares, is fixed and less than the number of authorized and unissued shares less the maximum number of shares that could be required to be delivered during the contract period under other existing commitments. Applying the Company’s sequencing policy, the Company performed an analysis at the time of the offering of the 2015 notes and each reporting date since and has concluded that the number of available authorized shares at the time of the offering and each subsequent reporting date was sufficient to deliver the number of shares that could be required to be delivered during the contract period under existing commitments. | |||||||||
The Company incurred approximately $4.2 million in issuance costs which are recorded as an offset to the 2015 notes in the accompanying consolidated balance sheets. These costs are being accreted to interest expense using the effective interest method over the term of the 2015 notes. | |||||||||
The 2015 notes provide that upon an acceleration of certain indebtedness, including the 2019 notes and the Tranche B notes described in Note 17, the holders may elect to accelerate the Company’s repayment obligations under the 2015 notes if such acceleration is not cured, waived, rescinded or annulled. There can be no assurance that the holders would not choose to exercise these rights in the event such events were to occur. | |||||||||
Accretion of debt issuance expense in connection with the 2015 notes during the years ended December 31, 2014, 2013, and 2012 was $0.9 million, $0.9 million, and $0.8 million, respectively. |
Collaboration_arrangement
Collaboration arrangement | 12 Months Ended |
Dec. 31, 2014 | |
Collaboration arrangement | 9. Collaboration arrangement |
On August 11, 2014, the Company and Sanofi entered into a license and collaboration agreement, which became effective on September 23, 2014. Under the terms of the Sanofi License Agreement, the Company granted to Sanofi exclusive, worldwide licenses to certain of the Company’s patents, trademarks and know-how for the development and commercialization of AFREZZA. Under the terms of the Sanofi License Agreement, Sanofi has the exclusive right and responsibility to develop AFREZZA worldwide, subject to certain development activities that will be performed by the Company. Sanofi will also be obligated to use commercially reasonable efforts to file for, obtain and maintain marketing approvals for AFREZZA in certain major markets and countries. In addition, Sanofi will have exclusive, worldwide rights to commercialize AFREZZA and will be obligated to use commercially reasonable efforts to market, promote and commercialize AFREZZA in all countries in the world where regulatory approval for AFREZZA has been received. Pursuant to the terms of a supply agreement that the Company entered into with Sanofi concurrently with the Sanofi License Agreement, the Company will be responsible for the manufacture and supply to Sanofi of its requirements of AFREZZA. | |
Under the Sanofi License Agreement, Sanofi paid the Company an up-front cash payment of $150.0 million in the third quarter of 2014. If certain manufacturing, regulatory and sales milestones are achieved, the Company will also be eligible to receive up to $775.0 million in milestone payments, of which $75.0 million relates to certain development and manufacturing milestone events, $50.0 million relates to the filing and completion of regulatory approvals and $650.0 million relates to the achievement of certain product sales milestones. As of December 31, 2014, the Company earned and recorded a total of $50.0 million in milestone payments in connection with the satisfaction of manufacturing milestones specified in the Sanofi agreement, which were received subsequent to December 31, 2014. In addition, worldwide profits and losses, which are determined based on the difference between the net sales of AFREZZA and the costs and expenses incurred by the Company and Sanofi that are specifically attributable or related to the development, improvement, regulatory filings, manufacturing, and commercialization of AFREZZA will be shared 65% by Sanofi and 35% by the Company. In accordance with the terms of the Sanofi License Agreement, profit and loss sharing commenced in the fourth quarter of 2014. | |
In conjunction with the Sanofi License Agreement, on August 11, 2014, we entered into the Sanofi Supply Agreement which provides that the Company will be the exclusive manufacturer and supplier of AFREZZA until the specified conditions are met, upon which a portion of the manufacturing activities may be assumed by Sanofi. | |
On September 23, 2014, the Company entered into the Sanofi Loan Facility, consisting of a senior secured revolving promissory note (the “Note”) and a guaranty and security agreement (the “Security Agreement”) with an affiliate of Sanofi which provides the Company with a secured loan facility of up to $175.0 million to fund the Company’s share of net losses under the Sanofi License Agreement. In the event of certain future defaults under the Sanofi Loan facility agreement for which we are not able to obtain waivers, the lender under the Sanofi Loan Facility may accelerate all of our repayment obligations, and take control of our pledged assets, potentially requiring us to renegotiate the terms of our indebtedness on terms less favorable to us, or to immediately cease operations. | |
The obligations of the Company under the Sanofi Loan Facility are guaranteed by the Company’s wholly-owned subsidiary, MannKind LLC, and are secured by a first priority security interest in certain insulin inventory located in the United States and any contractual rights and obligations pursuant to which the Company purchases or has purchased such insulin, and a second priority security interest in the Company’s assets that secure the Company’s obligations under the Facility Agreement, as amended. In addition, the Company granted to Sanofi, as additional security for the obligations under the Sanofi Loan Facility, a first priority mortgage on the Company’s facility in Valencia, California. | |
Advances under the Sanofi Loan Facility bear interest at a rate of 8.5% per annum and are payable in-kind and compounded quarterly and added to the outstanding principal balance under the Sanofi Loan Facility. The Company is required to make mandatory prepayments on the outstanding loans under the Sanofi Loan Facility from its share of any Profits (as defined in the Sanofi License Agreement) under the Sanofi License Agreement within 30 days of receipt of its share of any such Profits. No advances may be made under the Sanofi Loan Agreement if Deerfield has commenced enforcement proceedings in connection with an event of default under the Facility Agreement. | |
The outstanding principal of all loans under the Sanofi Loan Facility, if not prepaid, will become due and payable on September 23, 2024 unless accelerated pursuant to the terms of the Sanofi Loan Facility. Additionally, if the Company sells its Valencia facility, the Company is required to prepay the loans under the Sanofi Loan Facility in an amount equal to 100% of the net cash proceeds of the sale within five business days of receipt. | |
The Sanofi Loan Facility includes customary representations, warranties and covenants by the Company, including restrictions on its ability to incur additional indebtedness, grant certain liens and make certain changes to its organizational documents. Events of default under the Sanofi Loan Facility include: the Company’s failure to timely make payments due under the Sanofi Loan Facility; inaccuracies in the Company’s representations and warranties to the noteholder; the Company’s failure to comply with any of its covenants under any of the Sanofi Loan Facility or certain other related security agreements and documents entered into in connection with the Sanofi Loan Facility, subject to a cure period with respect to most covenants; the Company’s insolvency or the occurrence of certain bankruptcy-related events; termination by Sanofi of the Sanofi License Agreement as a result of the Company’s breach of the Sanofi License Agreement; and the failure of any material provision under any of the Sanofi Loan Facility or certain other related security agreements and documents entered into in connection with the Sanofi Loan Facility to remain in full force and effect. If one or more events of default occurs and is continuing, Sanofi may terminate its obligation to make advances under the Sanofi Loan Facility, and, if certain specified events of default (including the Company’s failure to timely make payments due under the Sanofi Loan Facility; the Company’s failure to comply with the negative covenants under the Sanofi Loan Facility limiting the Company’s ability to incur additional indebtedness or grant certain liens; the Company’s insolvency or the occurrence of certain bankruptcy-related events; termination by Sanofi of the Sanofi License Agreement as a result of the Company’s breach of the non-compete provisions of the Sanofi License Agreement; or the failure of any material provision under any of the Sanofi Loan Facility or certain other related security agreements and documents entered into in connection with the Sanofi Loan Facility to remain in full force and effect) occur and are continuing, the noteholder may accelerate all of the Company’s repayment obligations under the Sanofi Loan Facility and otherwise exercise any of its remedies as a secured creditor. There can be no assurance that the noteholder would not choose to exercise these rights in the event such events were to occur. | |
The Company analyzed the up-front cash payment of $150.0 million under the provisions of ASC 605, Revenue Recognition, to determine whether the up-front cash payment, or a portion thereof, could be recognized as revenue. ASC 605 provides that revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collection is reasonably assured. In addition, revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether the delivered element has stand-alone value to the customer. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price of each deliverable and the appropriate revenue recognition principles are applied to each unit. | |
The assessment of multiple element arrangements requires judgment in order to determine the appropriate units of accounting and the points in time that, or periods over which, revenue should be recognized. Under the terms of the Sanofi License Agreement, Sanofi Supply Agreement and the Sanofi Loan Facility the Company determined that the arrangement contained significant deliverables including (i) licenses to develop and commercialize AFREZZA and to use the Company’s trademarks, (ii) development activities, and (iii) manufacture and supply services for AFREZZA. Due to the proprietary nature of the manufacturing services being provided by the Company, the Company determined that all of the significant deliverables should be combined into a single unit of accounting. The Company believes that the manufacturing services are proprietary due to the fact that over the past twelve years, the Company has developed proprietary knowledge and patented equipment and tools that are used in the manufacturing process of AFREZZA. Due to the complexities of particle formulation and the specialized knowledge and equipment needed to handle the AFREZZA powder, neither Sanofi nor any third-party contract manufacturing organization currently possesses the capability of manufacturing AFREZZA. | |
In order for revenue to be recognized, the seller’s price to the buyer must be fixed and determinable. Given that as of December 31, 2014, the Company did not have the ability to estimate the amount of costs that would potentially be incurred under the loss share provision related to the Sanofi License Agreement and the Sanofi Supply Agreement, the Company believes this requirement for revenue recognition has not been met. | |
As such, the Company did not recognize any revenue pursuant to the Sanofi License Agreement the Sanofi Supply Agreement for the year ended December 31, 2014. The Company recorded the $150.0 million up-front payment and $50.0 million milestone receivable as deferred payments from collaboration. As of December 31, 2014, the Company’s portion of the loss sharing was $3.0 million, which resulted in the reclassification from current deferred payments from collaboration to other long term liabilities. Subsequent to December 31, 2014 the Company borrowed $3.0 million under the Sanofi Loan Facility to finance the portion of the Company’s loss. | |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value of Financial Instruments | 10. Fair Value of Financial Instruments | ||||||||||||||||
The carrying amounts of financial instruments, which include cash equivalents and accounts payable, approximate their fair values due to their relatively short maturities. The fair value of the note payable to our principal stockholder cannot be reasonably estimated as the Company would not be able to obtain a similar credit arrangement in the current economic environment. | |||||||||||||||||
As of December 31, 2014 and 2013, the Company held $120.8 million and $70.8 million, respectively of cash and cash equivalents, consisting of money market funds of $118.5 million and $67.7 million, respectively, and the remaining funds in non-interest bearing checking accounts. The fair value of these money market funds was determined by using quoted prices for identical investments in an active market (Level 1 in the fair value hierarchy). | |||||||||||||||||
The following is a summary of the carrying values and estimated fair values of the 2015 notes and the facility financing obligation (i.e., the 2019 notes and Trance B notes) (in millions): | |||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
Carrying | Estimated | Carrying | Estimated | ||||||||||||||
value | fair value | value | fair value | ||||||||||||||
2015 notes | $ | 99.4 | $ | 102.9 | $ | 98.4 | $ | 102.2 | |||||||||
Facility financing obligation | $ | 73 | $ | 75.1 | $ | 102.3 | $ | 107 | |||||||||
Senior convertible notes | |||||||||||||||||
The estimated fair value of the 2015 notes was calculated based on model derived valuations whose inputs were observable, such as the Company’s stock price, and non-observable, such as the Company’s long-term historical volatility, which was estimated to be 55% (Level 3 in the fair value hierarchy) in 2014 compared to the 65% in 2013. As there is no current observable market for the 2015 notes, the Company determined the estimated fair value using a convertible bond valuation model within a lattice framework. The convertible bond valuation model combined expected cash outflows with market-based assumptions regarding risk-adjusted yields, stock price volatility and recent price quotes and trading information regarding Company issued debt instruments and shares of common stock into which the 2015 notes are convertible. | |||||||||||||||||
Facility financing agreement | |||||||||||||||||
As discussed in Note 17 — Facility Agreement, in connection with the Facility Agreement, the Company issued 2019 notes and Milestone Rights and recorded the Commitment Asset on July 1, 2013. In addition, on February 28, 2014, the Company entered into the First Amendment, and recorded the Tranche B Commitment Asset, which represented the increase in borrowing capacity that the Company received as consideration for the modifications made to the Facility Agreement and the Tranche 1 notes and Tranche 3 notes. As there is no current observable market for the 2019 notes or Tranche B notes, the Company determined the estimated fair value using a bond valuation model based on a discounted cash flow methodology. The bond valuation model combined expected cash flows associated with principal repayment and interest based on the contractual terms of the debt agreement discounted to present value using a selected market discount rate of 12.4% at December 31, 2014 for the 2019 notes and a selected market discount rate of 11.9% at the inception of the Tranche B notes (Level 3 in the fair value hierarchy). On December 31, 2014, the market discount rate was recalculated at 12.3%, 12.2%, and 11.8% for the Tranche 1 notes, the Tranche 4 notes and the Tranche B notes, respectively. The Tranche 2 and Tranche 3 notes were fully converted by the end of the first quarter of 2014. On December 31, 2013, the market discount rate for Tranche 1 notes was 12.7%. | |||||||||||||||||
The estimated fair value of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones discounted to present value using a selected market discount rate (Level 3 in the fair value hierarchy). The expected timing and probability of achieving the milestones, starting in 2014, was developed with consideration given to both internal data, such as progress made to date and assessment of criteria required for achievement, and external data, such as market research studies. The discount rate (15.0%) was selected based on an estimation of required rate of returns for similar investment opportunities using available market data. As of December 31, 2014, the carrying value of the Milestone Rights is $13.1 million with an estimated fair value of $27.9 million. | |||||||||||||||||
The fair value of the Commitment Asset was estimated using the income approach by estimating the fair value of the future tranches using a market debt rate (12.0%) commensurate with the risk of the future tranches and the fair value of the cash expected to be received by the Company and assessing the probability of the commitments being funded in the future based on the operational hurdles required for funding being met (Level 3 in the fair value hierarchy). | |||||||||||||||||
The fair value of the Tranche B Commitment Asset was estimated using a discounted cash flow analysis under the income approach. Specifically, the fair value was determined by estimating the fair value of the future tranche using a market yield (11.8%) commensurate with the risk of the future tranche and the fair value of the cash expected to be received by the Company and assessing the probability of the commitment being funded in the future based on the operational hurdles required for funding being met as well as consideration of alternative funding options (Level 3 in the fair value hierarchy). As of the date it was recorded, the Tranche B Commitment Asset was valued at $2.9 million. | |||||||||||||||||
On May 6, 2014, Deerfield purchased $20.0 million aggregate principal amount of Tranche B notes in accordance with the provisions of the Facility Agreement, as amended. Accordingly, the $1.2 million portion of the Commitment Asset associated with the $20.0 million purchased was derecognized and recorded as debt discount on the Tranche B notes. | |||||||||||||||||
At December 31, 2014, as Deerfield had purchased all four tranches of 2019 notes in the aggregate principal amount of $160.0 million, purchased $20.0 million aggregate principal amount of Tranche B notes in accordance with the provisions of the Facility Agreement, and wrote off the remaining portion of the Tranche B Commitment Asset. As such, at December 31, 2014 the carrying value of the Commitment Assets was zero. | |||||||||||||||||
There were no material re-measurements to fair value during the twelve months ended December 31, 2014 and 2013 of financial assets and liabilities that are not measured at fair value on a recurring basis. There were no transfers of assets or liabilities between the fair value measurement levels during the twelve months ended December 31, 2014, 2013, and 2012. | |||||||||||||||||
Derivatives | |||||||||||||||||
Four embedded features that required bifurcation and separate accounting were identified in the facility financing obligation and the Company determined should be bundled together as a single, compound embedded derivative, bifurcated from the host contract, and accounted for at fair value, with changes in fair value being recorded in the Statement of Operations. The four embedded derivatives contained in the facility financing obligation were the Conversion Option, Major Transaction Put Option, Acceleration upon a Legal Judgment against the Company in Excess of $100,000, and Tax Gross-Up. The four embedded features were evaluated together as a single compound derivative to determine the fair value of the derivative. The estimated fair value of the embedded derivative was calculated using Level 3 inputs and by applying a cumulative probability percentage to the values derived from a Black-Karasinski lattice model for the major transaction put option (0.8%), the conversion option feature (0.0%), and the acceleration upon a legal judgment against the Company in excess of $100,000 feature (0.1%). The Tax Gross-Up feature was evaluated using a Level 2 analysis based on the withholding requirements (i.e., the tax laws) on interest payments between the US and the British Virgin Islands and was determined to be de minimus. As of December 31, 2014 and 2013, management determined the impact of the valuation of the embedded derivative was immaterial (see Note 17). | |||||||||||||||||
The Company’s derivative financial instruments are not designated as hedging instruments, and gains or losses resulting from changes in the fair value are reported in other income (expense), in the consolidated statements of operations. Derivative financial instruments are recognized as other assets or other current liabilities in the financial statements and measured at fair value. | |||||||||||||||||
The estimated fair values in connection with the February 2012 The Mann Group Common Stock Purchase Agreement (“The February 2012 Forward Purchase Contract”) and the October 2012 The Mann Group Common Stock and Warrant Purchase Agreement (“The October 2012 Forward Purchase Contract”) was based on forward purchase contract valuations (Level 3 in the fair value hierarchy) (see Note 11). | |||||||||||||||||
The following roll-forward provides a summary of the changes in fair value of the Company’s Level 3 forward purchase contracts during the year ended December 31, 2012 (in thousands): | |||||||||||||||||
The February 2012 | The October 2012 | Total | |||||||||||||||
Forward Purchase | Forward Purchase | ||||||||||||||||
Contract | Contract | ||||||||||||||||
Beginning Balance | $ | — | $ | — | $ | — | |||||||||||
Issuance | 1,080 | 28,237 | 29,317 | ||||||||||||||
Adjustments to fair value included in other income (expense) | 12,011 | (13,248 | ) | (1,237 | ) | ||||||||||||
Transfers to additional paid-in-capital | (13,091 | ) | (14,989 | ) | (28,080 | ) | |||||||||||
Ending Balance | $ | — | $ | — | $ | — | |||||||||||
Common_and_preferred_stock
Common and preferred stock | 12 Months Ended |
Dec. 31, 2014 | |
Common and preferred stock | 11. Common and preferred stock |
The Company is authorized to issue 550,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.01 per share, issuable in one or more series designated by the Company’s board of directors. No other class of capital stock is authorized. As of December 31, 2014 and 2013, 406,059,089 and 369,391,972 shares of common stock, respectively, were issued and outstanding and no shares of preferred stock were outstanding. | |
Included in the common stock outstanding as of December 31, 2014, 2013 and 2012 are 9,000,000 shares of common stock loaned to Bank of America under a share lending agreement in connection with the offering of the $100.0 million aggregate principal amount of 2015 notes (see Note 8). Bank of America is obligated to return the borrowed shares (or, in certain circumstances, the cash value thereof) to the Company on or about the 45th business day following the date as of which the entire principal amount of the 2015 notes ceases to be outstanding, subject to extension or acceleration in certain circumstances or early termination at Bank of America’s option. The Company did not receive any proceeds from the sale of the borrowed shares by Bank of America, but the Company did receive a nominal lending fee of $0.01 per share from Bank of America for the use of borrowed shares. | |
On February 8, 2012, the Company sold 35,937,500 units in an underwritten public offering, including 4,687,500 units sold pursuant to the full exercise of an over-allotment option granted to the underwriters, with each unit consisting of one share of common stock and a warrant to purchase 0.6 of a share of common stock. All of the securities were offered by the Company at a combined price to the public of $2.40 per unit and the underwriters purchased the units at a price of $2.256 per unit. Net proceeds from this offering were approximately $80.6 million, excluding any warrant exercises. The 21,562,500 shares of common stock underlying the warrants are exercisable at $2.40 per share and expire four years from the date of the issuance. The shares of common stock and warrants are immediately separable and were issued separately. Concurrent with the February 2012 underwritten public offering, the Company entered into a common stock purchase agreement with The Mann Group, pursuant to which the Company agreed to sell and The Mann Group agreed to purchase 31,250,000 shares of the Company’s restricted common stock at a price of $2.47 per share, the closing of which was subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Clearance”), and the Company’s receipt of stockholder approval to increase the authorized number of shares of our common stock. In June 2012, following HSR Clearance and the Company’s receipt of such stockholder approval, The Mann Group purchased $77.2 million worth of restricted shares of common stock which were paid through the cancellation of principal indebtedness under the amended loan arrangement with The Mann Group (see Note 7). For the twelve months ended December 31, 2014, the Company received $27.8 million in proceeds from the exercise of the February 2012 public offering warrants, with $19.5 million remaining unexercised. | |
The Company concluded that The Mann Group common stock purchase agreement represented a contingent forward purchase contract that met the definition of a derivative instrument in accordance with ASC 815. Of the 31,250,000 shares issuable pursuant to the common stock purchase agreement, the portion of the derivative instrument representing 14.7 million shares were recorded as equity (“Equity Portion”) as they met the criteria for equity classification under ASC 815-40 Derivatives and Hedging, Contracts in an Entity’s Own Stock. The remaining 16.5 million shares (“Non-Equity Portion”) required classification outside of equity as the Company did not have sufficient available shares at the time of issuance. The Company revalued the Non-Equity Portion of the forward purchase contract at each reporting date and recorded a fair value adjustment within “Other income (expense)”. At the time of issuance, the fair value of the forward purchase contract was $2.0 million. The Equity Portion of $0.9 million was classified as equity, and the Non-Equity Portion of $1.1 million was initially recorded to “Prepaid expenses and other current assets.” | |
On May 17, 2012, the Company’s stockholders approved an increase in its authorized shares of common stock from 250,000,000 to 350,000,000. Accordingly, the shares of common stock needed to consummate The Mann Group common stock purchase agreement dated February 2, 2012 became available. As of May 17, 2012, the fair value of the Non-Equity Portion was $13.1 million. As a result of receiving stockholder approval of the increase in authorized shares, the Non-Equity Portion met the criteria for equity classification. Consequently, the Company reclassified the $13.1 million from “Prepaid expenses and other current assets” to “Additional paid-in capital.” | |
The fair value of the forward purchase contract was highly sensitive to the discount applied for lack of marketability and the stock price, and changes in this discount and/or the stock price caused the value of the forward purchase contract to change significantly. As of and for the year ended December 31, 2012, the Company recognized the change in fair value of $12.0 million in “Other income (expense).” The Company revalued the Non-Equity Portion using a forward contract valuation formula, in which the forward contract was estimated to be equal to the valuation date stock price of $2.40 at issuance and $1.69 at May 17, 2012 minus the strike price discounted to the valuation date using a risk-free rate of 0.08% at issuance and 0.18% at May 17, 2012. As the shares which would be received upon settlement were unregistered, the Company applied a discount for lack of marketability of 2.57% at issuance and 0.42% at May 17, 2012 based on quantitative put models, adjusted to take into account qualitative factors, including the fact that the Company’s stock was publicly traded and the fact that there was no contractual restriction on the unregistered shares being registered. | |
In October 2012, pursuant to a previously filed Shelf Registration, which was declared effective by the SEC on September 24, 2012, the Company sold in an underwritten public offering 40,000,000 shares of its common stock, together with warrants to purchase up to 30,000,000 shares of the Company’s common stock. In addition, the Company sold pursuant to the full exercise of an over-allotment option granted to the underwriters, an additional 6,000,000 shares of common stock, together with warrants to purchase up to an aggregate of 4,500,000 shares of common stock. All of the securities were sold together with a warrant for a combined purchase price of $2.00 per unit. The shares of common stock and warrants are immediately separable and were issued separately. Net proceeds from this offering were approximately $86.3 million (after deducting discounts and commissions to the underwriters and offering expenses), excluding any future proceeds from the exercise of the warrants. Each warrant entitles the holder to purchase 0.75 of a share of common stock. The warrants were exercisable at $2.60 per share and expired in October 2013. The Company received $89.7 million in proceeds from the exercise of such warrants prior to their expiration. | |
Concurrently with the underwritten public offering, the Company entered into a Common Stock and Warrant Purchase agreement, in which the Company was required to issue and sell and The Mann Group was obligated to purchase 40,000,000 restricted shares of the Company’s common stock and 40,000,000 warrants to purchase up to an aggregate of 30,000,000 restricted shares of the Company’s common stock in a separate private placement. The restricted shares were sold to The Mann Group at $2.59 per share (the consolidated closing bid price of the Company’s common stock on October 17, 2012), and the warrants were sold to The Mann Group at a purchase price of $0.125 for each share of the Company’s common stock underlying the warrants, in exchange for cancellation of outstanding principal under the $350.0 million amended and restated promissory note with The Mann Group. The restricted shares and warrants were sold to The Mann Group for an aggregate purchase price of $107.4 million. Following receipt of stockholder approval, in December 2012, to increase the Company’s authorized shares of common stock from 350,000,000 to 550,000,000, the Common Stock and Warrant Purchase agreement was consummated, and the shares of common stock and warrants were issued to The Mann Group. | |
On the date the Common Stock and Warrant Purchase agreement was entered into with The Mann Group, the Company did not have a sufficient number of authorized, unissued and available common shares to satisfy their commitments under this agreement. The Company characterized the Common Stock and Warrant Purchase agreement as a forward contract, in accordance with ASC 815-40, to deliver a single unit comprising 40,000,000 shares of restricted common stock and 40,000,000 warrants to purchase 30,000,000 shares of restricted common stock that should be classified as assets or liabilities accounted for at fair value. | |
At the time of issuance, the Company determined the fair value of the forward contract to be $28.2 million and recorded a current asset. On December 20, 2012, the date at which a sufficient number of authorized and unissued common shares became available following approval by the stockholders to increase its authorized shares of common stock, the Company re-valued the forward contract and recorded a fair value adjustment to “Other income (expense)” of $13.2 million expense. Therefore, having met the criteria for equity classification, the Company reclassified the remaining balance of the forward contract of $15.0 million to additional paid in capital. In addition, the Company performed an analysis of the warrants to determine their appropriate classification once the forward contract settled and concluded that the warrants should be classified within equity. | |
The fair value of the forward purchase contract was highly sensitive to the discount applied for lack of marketability and the stock price, and changes in this discount and/or the stock price caused the value of the Forward Contract to change significantly. The value of the derivative instrument was calculated using a forward contract valuation formula in which the forward contract was estimated to be equal to the valuation date stock price minus the strike price discounted to the valuation date using a risk-free rate of 0.11% at issuance on October 18, 2012 and 0.00% at closing on December 20, 2012. As the shares which would be received upon settlement are currently unregistered, the Company applied a discount for lack of marketability of 2.3% at October 18, 2012 and 1.5% at December 20, 2012 to reflect this lack of marketability based on quantitative put models, adjusted to take into account qualitative factors, including the fact that the Company’s stock is publicly traded and the fact that there is no contractual restriction on the unregistered shares being registered. | |
The Company then determined that upon the settlement of the forward contracts, the common stock and warrants represent freestanding financial instruments and should be initially recorded at their relative fair values based on the total consideration received. The total consideration received equaled the $107.4 million principal amount of indebtedness cancelled less the recorded value of the forward contracts on December 20, 2012, the date immediately before settlement. |
Net_loss_per_common_share
Net loss per common share | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Net loss per common share | 12. Net loss per common share | ||||||||||||
Basic net loss per share excludes dilution for potentially dilutive securities and is computed by dividing loss by the weighted average number of common shares outstanding during the period excluding the shares loaned under the share lending arrangement (see Note 11). As of December 31, 2014, 2013 and 2012, 9,000,000 shares of the Company’s common stock, which were loaned to a share borrower pursuant to the terms of a share lending agreement, as described in Note 11, were issued and are outstanding, and holders of the borrowed shares have all the rights of a holder of the Company’s common stock. However, because the share borrower must return all borrowed shares to the Company (or, in certain circumstances, the cash value thereof), the borrowed shares are not considered outstanding for the purpose of computing and reporting basic or diluted earnings (loss) per share. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potentially dilutive securities are excluded from the computation of diluted net loss per share for all of the periods presented in the accompanying statements of operations because the reported net loss in each of these periods results in their inclusion being antidilutive. Antidilutive securities, which consist of stock options, restricted stock units, warrants, and shares that could be issued upon conversion of the senior convertible notes, that are not included in the diluted net loss per share calculation and exclude the 9,000,000 shares of the Company’s common stock loaned under the share lending arrangement as of December 31, 2014, 2013 and 2012. | |||||||||||||
Potentially dilutive securities outstanding are summarized as follows: | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Exercise of common stock options | 21,541,664 | 24,237,940 | 18,674,539 | ||||||||||
Conversion of senior convertible notes into common stock | 17,323,080 | 25,415,366 | 19,826,113 | ||||||||||
Exercise of common stock warrants | 9,987,876 | 19,706,240 | 86,062,440 | ||||||||||
Vesting of restricted stock units | 2,610,720 | 9,115,821 | 3,761,031 | ||||||||||
51,463,340 | 78,475,367 | 128,324,123 | |||||||||||
Stock_award_plans
Stock award plans | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stock award plans | 13. Stock award plans | ||||||||||||
On May 23, 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”) as the successor to and continuation of the 2004 Equity Incentive Plan (the “2004 Plan”). The 2013 Plan consists of 21.5 million newly requested shares and the number of unallocated shares remaining available for grant for new awards under the 2004 Plan. The 2013 Plan provides for the granting of stock awards including stock options and restricted stock units, to employees, directors and consultants. The Plan also provides for the automatic, non-discretionary grant of options to the Company’s non-employee directors. No additional awards will be granted under the 2004 Plan or under the 2004 Non-Employee Directors’ Stock Option Plan (the “NED Plan”) as all future awards will be made out of the 2013 Plan. | |||||||||||||
As of December 31, 2014, the Company has two active stock-based compensation plans — the 2013 Plan and the 2004 Employee Stock Purchase Plan (the “ESPP”). The following table summarizes information about the Company’s stock-based award plans as of December 31, 2014: | |||||||||||||
Outstanding | Outstanding | Shares Available | |||||||||||
Options | Restricted | for | |||||||||||
Stock Units | Future Issuance | ||||||||||||
2004 Equity Incentive Plan | 13,629,994 | 1,219,915 | — | ||||||||||
2013 Equity Incentive Plan | 7,380,839 | 1,390,805 | 15,506,488 | ||||||||||
2004 Non-Employee Directors’ Stock Option Plan | 530,831 | — | — | ||||||||||
Total | 21,541,664 | 2,610,720 | 15,506,488 | ||||||||||
In March 2004, the Company’s board of directors approved the ESPP, which became effective upon the closing of the Company’s initial public offering. Initially, the aggregate number of shares that could be sold under the 2004 Plan was 2,000,000 shares of common stock. On January 1 of each year, for a period of ten years beginning January 1, 2005, the share reserve automatically increases by the lesser of: 700,000 shares, 1% of the total number of shares of common stock outstanding on that date, or an amount as may be determined by the board of directors. However, under no event can the annual increase cause the total number of shares reserved under the ESPP to exceed 10% of the total number of shares of capital stock outstanding on December 31 of the prior year. On January 1, 2012, 2013 and 2014 the ESPP share reserve was increased by 700,000, 700,000 and 700,000 shares, respectively. As of December 31, 2014, 3,073,931 shares were available for issuance under the ESPP. For the years ended December 31, 2012, 2013 and 2014 the Company sold 422,260, 463,290 and 305,076 shares, respectively, of its common stock to employees participating in the ESPP. The ESPP purchase for the period ending December 31, 2014 was initiated prior to year end but did not settle until January 5, 2015. As a result, the shares sold are reflected in the ESPP share reserves but is excluded from common stock outstanding as of December 31, 2014. | |||||||||||||
The Company’s board of directors determines eligibility, vesting schedules and exercise prices for stock awards granted under the 2013 Plan. Options and other stock awards under the 2013 Plan expire not more than ten years from the date of the grant and are exercisable upon vesting. Stock options generally vest over four years. Current stock option grants vest and become exercisable at the rate of 25% after one year and ratably on a monthly basis over a period of 36 months thereafter. Restricted stock units generally vest at a rate of 25% per year over four years with consideration satisfied by service to the Company. Performance-based awards vest upon achieving pre-determined performance milestones, which are expected to occur over periods ranging from 11 months to 96 months from the date of grant. Only one milestone had not yet been achieved as of December 31, 2014, but is considered probable at such date. The 2013 Plan provides for full acceleration of vesting if an employee is terminated within three months of a change in control, as defined in the 2013 Plan. Subsequent to December 31, 2014, the company achieved the last performance-based milestone on February 3, 2015. | |||||||||||||
In accordance with ASC 718, share-based payment transactions are recognized as compensation cost based on the fair value of the instrument on the date of grant. The Company accounts for non-employee stock-based compensation expense based on the estimated fair value of the options, which is determined using the Black-Scholes option valuation model and amortizes such expense on a straight-line basis over the service period for time-based awards and over the expected dates of achievement for performance-based awards. These awards are subject to re-measurement until service is complete. As of December 31, 2014, there were options to purchase 552,516 shares of common stock outstanding to consultants. | |||||||||||||
During the years ended December 31, 2014, 2013 and 2012 the Company recorded stock-based compensation expense related to its stock award plans and the ESPP of $48.6 million, $45.2 million, and $13.3 million, respectively. | |||||||||||||
On June 30, 2014, the Company modified certain performance grants to allow 124 employees to withhold in excess of the minimum statutory requirements for specific performance-based restricted stock units at the employee’s discretion through December 31, 2014. The modification resulted in the reclassification of these performance grants from equity awards to liability awards, which require re-measurement at the end of each reporting period through settlement. For the year ended December 31, 2014, the reclassification and re-measurement of these performance-based restricted stock units through settlement resulted in an increase in stock-based compensation expense of $23.0 million. | |||||||||||||
Total stock-based compensation expense recognized in the accompanying statements of operations is as follows (in thousands): | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Employee-related | $ | 48,622 | $ | 45,181 | $ | 13,224 | |||||||
Consultant-related | — | 5 | 68 | ||||||||||
Total | $ | 48,622 | $ | 45,186 | $ | 13,292 | |||||||
Total stock-based compensation expense recognized in the accompanying statements of operations is included in the following categories (in thousands): | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Research and development | $ | 22,357 | $ | 20,409 | $ | 6,167 | |||||||
General and administrative | 26,265 | 24,777 | 7,125 | ||||||||||
Total | $ | 48,622 | $ | 45,186 | $ | 13,292 | |||||||
The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options. The expected term of an option granted is based on combining historical exercise data with expected weighted time outstanding. Expected weighted time outstanding is calculated by assuming the settlement of outstanding awards is at the midpoint between the remaining weighted average vesting date and the expiration date. | |||||||||||||
Beginning in the third quarter of 2014, the Company began to assess both historical and implied volatility in order to determine its estimated volatility rate. Implied volatility is now considered due to the change in the Company’s business, which occurred with the approval for the sale of AFREEZA. The Company has selected risk-free interest rates based on U.S. Treasury securities with an equivalent expected term in effect on the date the options were granted. Additionally, the Company uses historical data and management judgment to estimate stock option exercise behavior and employee turnover rates to estimate the number of stock option awards that will eventually vest. The Company calculated the fair value of employee stock options granted during the years ended December 31, 2014, 2013 and 2012 using the following assumptions: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Risk-free interest rate | 1.64% — 2.11% | 0.94% — 1.82% | 0.32% —1.16% | ||||||||||
Expected lives | 5.77 — 6.09 years | 2.64 — 5.77 years | 1.4 — 6.1 years | ||||||||||
Volatility | 73.98% — 84.85% | 75.83% — 86.26% | 70% — 84% | ||||||||||
Dividends | — | — | — | ||||||||||
The following table summarizes information about stock options outstanding: | |||||||||||||
Number | Weighted | Aggregate | |||||||||||
of | Average | Intrinsic | |||||||||||
Shares | Exercise | Value ($000) | |||||||||||
Price | |||||||||||||
per Share | |||||||||||||
Outstanding at January 1, 2014 | 24,237,940 | 4.35 | $ | 40,972 | |||||||||
Granted | 1,326,800 | 7.21 | |||||||||||
Exercised | (3,250,149 | ) | 3.37 | ||||||||||
Forfeit | (417,223 | ) | 4.54 | ||||||||||
Expired | (355,704 | ) | 12.48 | ||||||||||
Outstanding at December 31, 2014 | 21,541,664 | 4.53 | $ | 33,495 | |||||||||
Vested and expected to vest at December 31, 2014 | 21,307,827 | 4.52 | $ | 33,253 | |||||||||
Exercisable at December 31, 2014 | 18,439,472 | 4.42 | $ | 30,356 | |||||||||
The weighted average grant date fair value of the stock options granted during the years ended December 31, 2014, 2013 and 2012 was $4.76, $3.26, and $0.99 per option, respectively. The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $14.9 million, $3.1 million, and $1,000, respectively. Intrinsic value is measured using the fair market value at the date of exercise (for options exercised) or at December 31 (for outstanding options), less the applicable exercise price. | |||||||||||||
Cash received from the exercise of options during the years ended December 31, 2014, 2013 and 2012 was approximately $11.0 million, $2.3 million, and $9,200, respectively. The weighted-average remaining contractual terms for options outstanding, vested and expected to vest, and exercisable at December 31, 2014 was 7.07 years, 7.06 years and 6.83 years, respectively. | |||||||||||||
A summary of restricted stock unit activity for the year ended December 31, 2014 is presented below: | |||||||||||||
Number | Weighted | ||||||||||||
of | Average | ||||||||||||
Shares | Grant Date | ||||||||||||
Fair Value | |||||||||||||
per Share | |||||||||||||
Outstanding at January 1, 2014 | 9,115,821 | $ | 3.9 | ||||||||||
Granted | 954,127 | $ | 7.14 | ||||||||||
Vested | (6,982,707 | ) | $ | 3.83 | |||||||||
Forfeited | (476,521 | ) | $ | 4.3 | |||||||||
Outstanding at December 31, 2014 | 2,610,720 | $ | 5.2 | ||||||||||
The total restricted stock units expected to vest as of December 31, 2014 was 2,386,061 with a weighted average grant date fair value of $5.23. The total intrinsic value of restricted stock units expected to vest as of December 31, 2014 was $12.5 million. Intrinsic value of restricted stock units expected to vest is measured using the closing share price at December 31, 2014. | |||||||||||||
Total intrinsic value of restricted stock units vested during the years ended December 31, 2014, 2013 and 2012 was $62.7 million, $13.9 million and $2.9 million, respectively. Intrinsic value of restricted stock units vested is measured using the closing share price on the day prior to the vest date. The total grant date fair value of restricted stock units vested during the years ended December 31, 2014, 2013 and 2012 was $36.4 million, $14.9 million and $3.0 million, respectively. | |||||||||||||
As of December 31, 2014, there was $9.0 million and $10.6 million of unrecognized compensation expense related to options and restricted stock units, respectively, which is expected to be recognized over the weighted average vesting period of 2.9 years. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period. As of December 31, 2014, all milestones are considered probable of achievement. |
Commitments_and_contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and contingencies | 14. Commitments and contingencies |
Operating Leases — The Company leases certain facilities and equipment under various operating leases, which expire at various dates through 2014 and beyond. Future payments are deemed insignificant. | |
Rent expense under all operating leases, including office space and equipment, for the years ended December 31, 2014, 2013, and 2012 was approximately $737,000, $645,000, and $675,000 respectively. | |
Leases — The Company’s capital leases were not material for the years ended December 31, 2014, 2013 and 2012. | |
Guarantees and Indemnifications — In the ordinary course of its business, the Company makes certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. The Company has not recorded any liability for these indemnities in the accompanying consolidated balance sheets. However, the Company accrues for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable. No such losses have been recorded to date. | |
Litigation — The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. As of December 31, 2014, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company and no accrual has been recorded. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations. In accordance with ASC 450 Contingencies, the Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s policy is to accrue for legal expenses in connection with legal proceeding and claims as they are incurred. | |
Contingencies — In connection with the Facility Agreement, on July 1, 2013 the Company also entered into a Milestone Rights Purchase Agreement (the “Milestone Agreement”) with Deerfield Private Design Fund and Horizon Santé FLML SÁRL (collectively, the “Milestone Purchasers”), pursuant to which the Company sold the Milestone Purchasers certain rights (the “Milestone Rights”) to receive payments of up to $90.0 million upon the occurrence of specified strategic and sales milestones, including the first commercial sale of an AFREZZA product in the United States and the achievement of specified net sales figures (see Note 17 – Facility Agreement). |
Employee_benefit_plans
Employee benefit plans | 12 Months Ended |
Dec. 31, 2014 | |
Employee benefit plans | 15. Employee benefit plans |
The Company administers a 401(k) Savings Retirement Plan (the “MannKind Retirement Plan”) for its employees. For the years ended December 31, 2014, 2013 and 2012, the Company contributed $623,000, $533,000 and $571,000 respectively, to the MannKind Retirement Plan. |
Income_taxes
Income taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income taxes | 16. Income taxes | ||||||||||||
There is no provision for income taxes because the Company has incurred operating losses since inception. At December 31, 2014, the Company has concluded that it is more likely than not that the Company may not realize the benefit of its deferred tax assets due to its history of losses. Accordingly, the net deferred tax assets have been fully reserved. The provision for income taxes consists of the following (in thousands): | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Current | |||||||||||||
U.S. federal | $ | — | $ | — | $ | — | |||||||
U.S. state | — | — | — | ||||||||||
Non-U.S. | — | — | — | ||||||||||
Total current | — | — | — | ||||||||||
Deferred | |||||||||||||
U.S. federal | 57,873 | 59,379 | 51,540 | ||||||||||
U.S. state | 7,631 | 7,470 | 9,199 | ||||||||||
Non-U.S. | — | — | — | ||||||||||
Valuation Allowance | (65,504 | ) | (66,849 | ) | (60,739 | ) | |||||||
Total deferred | — | — | — | ||||||||||
Total | $ | — | $ | — | $ | — | |||||||
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when uncertainty exists as to whether all or a portion of the net deferred tax assets will be realized. Components of the net deferred tax asset as of December 31, 2014 and 2013 are approximately as follows (in thousands): | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carryforwards | $ | 699,997 | $ | 653,896 | |||||||||
Research and development credits | 73,227 | 70,091 | |||||||||||
Capitalized research | 28,516 | 30,421 | |||||||||||
Payments from collaboration | 19,217 | — | |||||||||||
Milestone Rights | 5,321 | 6,608 | |||||||||||
Accrued expenses | 768 | 3,578 | |||||||||||
Non-qualified stock option expense | 43,691 | 41,219 | |||||||||||
Capitalized patent costs | 8,624 | 7,811 | |||||||||||
Other | 131 | 837 | |||||||||||
Depreciation | 3,010 | 2,539 | |||||||||||
Total net deferred tax assets | 882,502 | 817,000 | |||||||||||
Valuation allowance | (882,502 | ) | (817,000 | ) | |||||||||
Net deferred tax assets | $ | — | $ | — | |||||||||
As a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities does not include certain deferred tax assets as of December 31, 2014 that arose directly from tax deductions related to equity compensation which are greater than the compensation recognized for financial reporting. Equity would be increased by $18.3 million if and when such deferred tax assets are ultimately realized. The Company use ASC 740 ordering when determining when excess tax benefits have been realized. | |||||||||||||
The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2014, 2013 and 2012: | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Federal tax benefit rate | 35 | % | 35 | % | 35 | % | |||||||
State tax benefit, net of federal benefit | — | — | — | ||||||||||
Permanent items | 0.9 | — | — | ||||||||||
Intercompany transfer of intellectual property | (4.1 | ) | (4.3 | ) | (4.0 | ) | |||||||
Valuation allowance | (31.8 | ) | (30.7 | ) | (31.0 | ) | |||||||
Effective income tax rate | 0 | % | 0 | % | 0 | % | |||||||
As required by ASC 740 Income Taxes (“ASC 740”), formerly FASB Statement No. 109 Accounting for Income Taxes, management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Management has concluded, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of its deferred tax assets. Accordingly, the net deferred tax assets have been fully reserved. Management reevaluates the positive and negative evidence on an annual basis. During the years ended December 31, 2014, 2013 and 2012, the change in the valuation allowance was $65.5 million, $66.8 million and $60.7 million, respectively, for income taxes. | |||||||||||||
At December 31, 2014, the Company had federal and state net operating loss carryforwards of approximately $1.8 billion and $1.4 billion available, respectively, to reduce future taxable income and which will expire at various dates beginning in 2018 and 2015, respectively. As a result of the Company’s initial public offering, an ownership change within the meaning of Internal Revenue Code Section 382 occurred in August 2004. As a result, federal net operating loss and credit carry forwards of approximately $216.0 million are subject to an annual use limitation of approximately $13.0 million. The annual limitation is cumulative and therefore, if not fully utilized in a year can be utilized in future years in addition to the Section 382 limitation for those years. The federal net operating losses generated subsequent to the Company’s initial public offering in August 2004 are currently not subject to any such limitation as there have been no ownership changes since August 2004 within the meaning of Internal Revenue Code Section 382. At December 31, 2014, the Company had research and development credits of $48.0 million and $39.0 million for federal and state purposes, respectively. The federal credits begin to expire in 2024, and the state credits may be carried forward indefinitely. | |||||||||||||
The Company has evaluated the impact of ASC 740, previously FIN 48 Accounting for Uncertainty in Income Taxes, on its financial statements, which was effective beginning January 1, 2007. The evaluation of a tax position in accordance with this guidance is a two-step process. The first step is recognition: the enterprise determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the enterprise should presume that the position will be examined by the appropriate taxing authority that would have full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no liabilities for uncertain income tax positions have been recorded. Tax years since 2002 remain subject to examination by the major tax jurisdictions in which the Company is subject to tax. |
Facility_Agreement
Facility Agreement | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Facility Agreement | 17. Facility Agreement | ||||||||
Under the Facility Agreement, which was initially entered into in 2013 between the Company and Deerfield, the Company borrowed a total of $180.0 million through the issuance of multiple tranches of notes during 2013 and 2014. In addition to the $6.5 million of principal that was converted during 2013, Deerfield elected to convert an additional $93.5 million of principal into shares of the Company’s common stock during 2014 which was recorded net of discount and debt issuance costs of $6.8 million. | |||||||||
The Facility Agreement principal repayment schedule is comprised of payments beginning on the third anniversary of each issued tranche commencing on July 1, 2016 and ending December 9, 2019, for a total amount of $80.0 million. There are no principal payments to be made for the year ended December 31, 2015. Future principal payments for the years ended December 31, 2016, 2017, 2018, and 2019 are $5.0 million, $20.0 million, $20.0 million, and $35.0 million, respectively. | |||||||||
As of December 31, 2014, the total principal amount outstanding related to the 2019 notes is $60.0 million with a fixed interest rate of 9.75% and $20.0 million debt related to the Tranche B notes at a fixed interest rate of 8.75%. | |||||||||
In conjunction with the Facility Agreement, we entered into a Milestone Rights Agreement with Deerfield which requires us to make contingent payments to Deerfield, totaling up to $90.0 million, upon the Company achieving specified commercialization milestones. We calculated a fair value of $16.3 million related to the Milestone Payments and recorded it as a Milestone Rights liability which will be reduced as the various Milestones are met. During 2014, the Milestone Rights liability was reduced by $3.1 million upon the Company achieving the first milestone and as of December 31, 2014, the remaining $13.1 million has been allocated between a $4.2 million current Milestone Rights liability in other current liabilities and an $8.9 million long-term Milestone Rights liability in other liabilities. | |||||||||
In addition, as of December 31, 2013, we had a commitment asset balance of $5.2 million. During 2014, the commitment asset fair value increased by $2.9 million due to Deerfield’s commitment to lend additional funds under the Tranche B notes and decreased by $6.3 million due to the issuance of Tranche 4 notes and Tranche B notes. The remaining $1.8 million commitment asset balance was written-off by the Company, upon expiration of access to further borrowings. | |||||||||
Accretion of debt issuance cost and debt discount in connection with the Deerfield financing during the year ended December 31, 2014 and 2013 are as follows (in thousands): | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Accretion expense- debt issuance cost | $ | 326 | $ | 42 | |||||
Accretion expense- debt discount | $ | 7,550 | $ | 1,113 | |||||
On July 1, 2013, the Company entered into the Facility Agreement providing for the sale of up to $160.0 million of 2019 notes to Deerfield in four equal tranches of $40.0 million principal amount. The 2019 notes accrue interest at a rate of 9.75% per annum until maturity in 2019 or their earlier repayment, repurchase, or conversion. As of December 31, 2014, Deerfield had purchased the four tranches of 2019 notes in the aggregate principal amount of $160.0 million. | |||||||||
On February 28, 2014, the Company entered into the First Amendment, which modified the terms of the Facility Agreement to provide for the issuance of Tranche B notes to Deerfield. Pursuant to the terms of the First Amendment and the subsequent occurrence of certain events specified in the First Amendment, prior to December 30, 2014, the Company may request that Deerfield purchase up to $90.0 million aggregate principal amount of Tranche B notes. The Tranche B notes initially accrued interest at the rate of 9.75% per year on the outstanding principal amount, subject to reduction to 8.75% if the Company entered into a collaboration with a third party to commercialize AFREZZA. Pursuant to the terms of the First Amendment, the interest rate was subsequently reduced to 8.75% on September 23, 2014 following completion of the U.S. Federal Trade Commission’s review of the transactions contemplated by the Sanofi License Agreement under the Hart-Scott-Rodino Act and the completion of documentation related to the $175.0 million secured loan facility being provided to the Company. The interest on the outstanding principal amount of notes under the Facility Agreement is payable in cash quarterly in arrears on the last business day of March, June, September and December of each year. The Company is required to repay 25% of the original principal amount of any Tranche B notes on the third, fourth, fifth and sixth anniversaries of the applicable issue dates of such notes, provided that the entire outstanding principal amount of all Tranche B notes will become due and payable no later than December 31, 2019. The Tranche B notes can be prepaid without penalty or premium commencing two years after issuance thereof. On May 6, 2014, Deerfield purchased an aggregate principal amount of $20.0 million in Tranche B notes in accordance with the provisions of the Facility Agreement, as amended. | |||||||||
The Facility Agreement includes customary representations, warranties and covenants, including, a restriction on the incurrence of additional indebtedness, and a financial covenant which requires the Company’s cash and cash equivalents, which includes available borrowings on the principal stockholder note, on the last day of each fiscal quarter to not be less than $25.0 million. As discussed in Note 1 — Basis of Presentation, the Company will need to raise additional capital to support its current operating plans. Due to the uncertainties related to maintaining sufficient resources to comply with the aforementioned covenant, the 2019 notes have been classified as current liabilities in the accompanying balance sheet as of December 31, 2014. In the event of non-compliance, there can be no assurances that the holders of the 2019 notes will not exercise remedies available to them, which may include, among other things, the issuance of a notice of acceleration. | |||||||||
In addition, pursuant to the First Amendment, the outstanding first tranche of 2019 notes (the “Tranche 1 notes”) and third tranche of 2019 notes (the “Tranche 3 notes”) held by Deerfield were amended and restated to permit Deerfield to convert up to an additional $60.0 million principal amount under such 2019 notes into the Company’s common stock after the effective date of the First Amendment. The Company also agreed to register for resale up to 12,000,000 shares of the Company’s common stock issuable upon conversion of the outstanding 2019 notes, as amended and restated, as of the date of the First Amendment. In March 2014, Deerfield elected to convert the full $40.0 million of outstanding principal amount of the Tranche 3 notes and $12.5 million principal amount of the Tranche 1 notes. In April 2014, Deerfield elected to convert the remaining $7.5 million principal amount of the Tranche 1 notes. | |||||||||
On August 11, 2014, the Company entered into a second amendment to the Facility Agreement to permit the incurrence of additional secured debt under the Sanofi Loan Facility. In the event of certain future defaults under the foregoing agreements for which we are not able to obtain waivers, the holders of the 2019 notes and Tranche B notes may accelerate all of our repayment obligations, and take control of our pledged assets, potentially requiring us to renegotiate the terms of our indebtedness on terms less favorable to us, or to immediately cease operations. | |||||||||
Milestone Rights | |||||||||
In connection with the execution of the Facility Agreement, on July 1, 2013, the Company issued Milestone Rights to the Milestone Purchasers. The Milestone Rights provide the Milestone Purchasers certain rights to receive payments of up to $90.0 million upon the occurrence of specified strategic and sales milestones, including the first commercial sale of an AFREZZA product and the achievement of specified net sales figures. | |||||||||
The Milestone Agreement includes customary representations and warranties and covenants by the Company, including restrictions on transfers of intellectual property related to AFREZZA. The Milestone Rights are subject to acceleration in the event the Company transfers its intellectual property related to AFREZZA in violation of the terms of the Milestone Agreement. | |||||||||
The Company analyzed the Milestone Rights under the provisions of ASC 815 Derivatives and Hedging, and determined that the instruments do not meet the definition of a freestanding derivative. Since the Company has not elected to apply the fair value option to the Milestone Rights, the Company has initially recorded the Milestone Rights at their estimated fair value and accounted for the Milestone Rights as a liability by applying the indexed debt guidance contained in paragraphs ASC 470-10-25-3 and 35-4. | |||||||||
The initial fair value estimate of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones discounted to present value using a selected market discount rate. The Milestone Rights were initially recorded as a short-term liability equal to $3.2 million included in Accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet and a long term liability equal to $13.1 million included in Other liabilities. In determining the fair value of the Milestone Rights, the 13 individual milestone payments were adjusted for both (i) the expected timing and (ii) the probability of achieving the milestones, and then discounted to present value using a discount rate of 17.5%. Once the initial valuation of each specified milestone payment was determined, the individual milestone payments were then aggregated to arrive at a total fair value of $16.3 million. The discount rate was based on the estimated cost of equity which was derived using the capital asset pricing model. In addition, a 5% risk premium was added to the computation of the cost of equity to adjust for non-systemic risk factors, such as the Company’s lack of product diversification and history of financial losses, which were not captured in other model inputs. | |||||||||
As of December 31, 2014, the first milestone triggering event was achieved following the Company’s entry into the Sanofi License Agreement, which resulted in a $1.9 million incremental charge to interest expense due to the increase in carrying value of the liability to the required $5.0 million payment, which was paid to Deerfield pursuant to the terms of the Milestone Agreement. | |||||||||
The Milestone Rights liability will be remeasured as the specified milestone events are achieved. Specifically, as each milestone event is achieved, the portion of the initially recorded Milestone Rights liability that pertains to such milestone event being achieved will be remeasured to the amount of the related milestone payment. The resulting change in the balance of the Milestone Rights liability due to such remeasurement will be recorded in the Company’s Statement of Operations as interest expense. Furthermore, the Milestone Rights liability will be reduced upon each such milestone payment being paid. As a result, each milestone payment would be effectively allocated between a reduction of the initially recorded Milestone Rights liability and an expense representing a return on a portion of the Milestone Rights liability paid to the Milestone Purchasers for the achievement of the related milestone event. | |||||||||
The Company identified and evaluated a number of embedded features in the Milestone Rights to determine if they represented embedded derivatives requiring bifurcation and separate accounting pursuant to ASC 815. There were no features in the Milestone Rights that required bifurcation and separate accounting. | |||||||||
Commitment Asset | |||||||||
In connection with the issuance of the Tranche 1 notes and the Milestone Rights, the Company recorded a commitment asset (the “Commitment Asset”) on July 1, 2013. As a result of the First Amendment, the Company recorded an additional Tranche B notes commitment asset (the “Tranche B Commitment Asset”) with an estimated fair value equal to $2.9 million. The Commitment Asset is derecognized and recorded as a debt discount on the 2019 notes and Tranche B notes when issued and amortized using the effective interest rate method over the life of the respective notes. Prior to derecognition occurring, the Company monitors the Commitment Asset on an ongoing basis to determine whether an impairment indicator is present that would result in a full or partial write down of the Commitment Asset as a result of events that may lead to the subsequent tranches of notes not being issued. On December 30, 2014, the Company elected not to draw on the $70.0 million of funding remaining under the Facility Agreement, as amended, from the sale of the Tranche B notes. Consequently, the remaining carrying value of the Tranche B Commitment Asset of $1.8 million was written off and recorded as interest expense. | |||||||||
Amendment to the outstanding Tranche 1 notes and Tranche 3 notes | |||||||||
The amendment and restatement of the outstanding Tranche 1 notes and Tranche 3 notes, pursuant to the First Amendment, did not represent a troubled debt restructuring of the 2019 notes because the First Amendment did not result in Deerfield granting a concession to the Company. In addition, the First Amendment did not result in a substantial modification to the terms of the Tranche 1 notes and Tranche 3 notes. | |||||||||
The impact of the First Amendment to the Tranche 1 notes and Tranche 3 notes is being accounted for as a prospective yield adjustment. Specifically, the value of the Tranche B Commitment Asset was considered a fee received from the creditor as consideration for the First Amendment and is being amortized as an adjustment of interest expense over the remaining term of the Tranche 1 notes and Tranche 3 notes using the effective interest method. Further, the value of the Tranche B Commitment Asset, which decreased the amount of debt discount in the Tranche 1 notes and Tranche 3 notes, was allocated between the Tranche 1 notes and Tranche 3 notes in a manner that resulted in the Tranche 1 notes and Tranche 3 notes having a new effective interest rate of 11.63%. | |||||||||
Security Agreement | |||||||||
In connection with the Facility Agreement, the Company and its subsidiary, MannKind LLC, entered into a Guaranty and Security Agreement (the “Security Agreement”) with Deerfield and HS (collectively, the “Purchasers”), pursuant to which the Company and MannKind LLC each granted the Purchasers a security interest in substantially all of their respective assets, including respective intellectual property, accounts, receivables, equipment, general intangibles, inventory and investment property, and all of the proceeds and products of the foregoing. The Security Agreement includes customary covenants by the Company and MannKind LLC, remedies of the Purchasers and representations and warranties by the Company and MannKind LLC. The security interests granted by us and MannKind LLC will terminate upon repayment of the 2019 notes and tranche B notes, if applicable, in full. Our obligations under the Facility Agreement and the Milestone Agreement are also secured by certain mortgages on the Company’s facilities in Danbury, Connecticut and Valencia, California. | |||||||||
Embedded Derivatives | |||||||||
The Company identified and evaluated a number of embedded features in the notes issued under the Facility Agreement to determine if they represented embedded derivatives that are required to be separated from the notes and accounted for as freestanding instruments pursuant to ASC 815. In 2013, we analyzed the Tranche 1 notes, Tranche 2 notes, and Tranche 3 notes and identified embedded derivatives in each respective Tranche of notes which required separate accounting under ASC 815; however all of the embedded derivatives were determined to have a de minimis value. In addition, we issued the Tranche B and Tranche 4 notes during 2014 and performed a similar analysis on each respective Tranche of notes. Based on our analysis, we determined that the Tranche B notes contained embedded derivatives that required to be separated from the Tranche 4 notes; however such embedded derivatives were determined to have a de minimis value. | |||||||||
At December 31, 2014, all of the embedded derivatives identified in the Tranche 1 notes, Tranche B notes, and Tranche 4 notes were deemed to have a de minimis value. | |||||||||
Conversion Option | |||||||||
During 2014, Deerfield elected to convert a total of $93.5 million of principal, which consisted of $20.0 million, $33.5 million, and $40.0 million of Tranche 1 notes, Tranche 2 notes, and Tranche 3 notes, respectively, into an aggregate 17,323,080 shares of common stock. In conjunction with the conversion by Deerfield, we recorded an aggregate expense of $6.4 million for the difference between the principal amount of the notes converted and their carrying amount (which included unamortized discount and debt issuance costs) which consisted of $1.2 million, $3.0 million, and $2.2 million related to the Tranche 1 notes, Tranche 2 notes, and Tranche 3 notes, respectively. Further, upon Deerfield converting $40.0 million of Tranche 3 notes and $20.0 million of Tranche 1 notes, Deerfield has reached the conversion limits (i.e., “Applicable Limits”) with respect to the Facility Agreement and therefore, no additional amount of the 2019 notes is convertible. |
Selected_quarterly_financial_d
Selected quarterly financial data (unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Selected quarterly financial data (unaudited) | 18. Selected quarterly financial data (unaudited) | ||||||||||||||||
Summarized quarterly financial data for the years ended December 31, 2014 and 2013 are set forth in the following tables: | |||||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
2014 | |||||||||||||||||
Net loss | $ | (52,056 | ) | $ | (73,365 | ) | $ | (36,520 | ) | $ | (36,439 | ) | |||||
Net loss per share — basic and diluted | $ | (0.14 | ) | $ | (0.19 | ) | $ | (0.09 | ) | $ | (0.09 | ) | |||||
Weighted average common shares used to compute basic and diluted net loss per share | 368,784 | 380,770 | 394,163 | 396,793 | |||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
2013 | |||||||||||||||||
Net loss | $ | (40,965 | ) | $ | (46,124 | ) | $ | (50,818 | ) | $ | (53,582 | ) | |||||
Net loss per share — basic and diluted | $ | (0.15 | ) | $ | (0.16 | ) | $ | (0.17 | ) | $ | (0.16 | ) | |||||
Weighted average common shares used to compute basic and diluted net loss per share | 280,058 | 284,044 | 296,386 | 337,284 | |||||||||||||
Description_of_business_and_ba1
Description of business and basis of presentation (Policies) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Business | Business — MannKind Corporation and subsidiaries (the “Company”) is a biopharmaceutical company focused on the discovery and development of therapeutic products for diseases such as diabetes. Our only approved product, AFREZZA, (insulin human [rDNA origin]) inhalation powder , is a rapid-acting inhaled insulin that was approved by the U.S. Food and Drug Administration (the “FDA”) on June 27, 2014 to improve glycemic control in adult patients with diabetes. | |||
Basis of Presentation | Basis of Presentation — The Company’s primary activities since incorporation have been establishing its facilities, recruiting personnel, conducting research and development, business development, business and financial planning, and raising capital. It is costly to develop therapeutic products and conduct clinical studies for these products. As of and for the year ended December 31, 2014, the Company has reported an accumulated deficit of $2.5 billion and has reported negative cash flow from operations since inception. | |||
At December 31, 2014, the Company’s capital resources consisted of cash and cash equivalents of $120.8 million. The Company expects to continue to incur significant expenditures to support commercial manufacturing of AFREZZA and the development of other product candidates. In addition, the Company’s 5.75% Senior Convertible Notes due 2015 (the “2015 notes”) in the aggregate principal amount of $100.0 million have a maturity date of August 15, 2015, and payment on the outstanding amount is due in full on that date (see Note 8 – Senior convertible notes). The facility agreement (the “Facility Agreement”) with Deerfield Private Design Fund II, L.P. (“Deerfield Private Design Fund”) and Deerfield Private Design International II, L.P. (collectively, “Deerfield”) and the First Amendment to Facility Agreement and Registration Rights Agreement (the “First Amendment”) additional sales of an additional tranche of notes (the “Tranche B notes”) (see Note 17 – Facility Agreement) contains a financial covenant that requires the Company’s cash and cash equivalents, which include available borrowings under this Loan Arrangement, on the last day of each fiscal quarter to not be less than $25.0 million. Should the holders of the notes not elect to convert such notes into the Company’s common stock prior to their due date, the Company intends to refinance the 2015 notes or raise additional funds to settle the 2015 notes. Although the Company believes that it can refinance the 2015 notes or obtain alternative financing to settle the 2015 notes, inherent uncertainty in achieving its projected cashflows and refinancing of the 2015 notes raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. | ||||
On August 11, 2014, we executed a license and collaboration agreement (the “Sanofi License Agreement”) with Sanofi-Aventis Deutschland GmbH (which subsequently assigned its rights and obligations under the agreement to Sanofi-Aventis U.S. LLC (“Sanofi”)), pursuant to which Sanofi is responsible for global commercial, regulatory and development activities for AFREZZA. The Sanofi License Agreement became effective on September 23, 2014. We manufacture AFREZZA at our manufacturing facility in Danbury, Connecticut to supply Sanofi’s demand for the product. In addition, we and Sanofi are planning to collaborate to expand manufacturing capacity to meet global demand as necessary. | ||||
Under the Sanofi License Agreement, Sanofi paid us an up-front cash payment of $150.0 million in the third quarter of 2014. As of December 31, 2014, we have earned and recorded as Receivables from collaboration an additional $50.0 million in milestone payments in connection with the satisfaction of specified manufacturing milestones. Such payments were received subsequent to year end. We are also eligible to receive up to $725.0 million in additional milestone payments under the Sanofi License Agreement if certain development, regulatory and sales milestones are achieved. In addition, worldwide profits and losses, which are determined based on the difference between the net sales of AFREZZA and the costs and expenses incurred by us and Sanofi that are specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of AFREZZA, will be shared 65% by Sanofi and 35% by the us. As a result of the loss share provision, and because we do not have the ability to estimate the amount of costs that would potentially be incurred related to the Sanofi License Agreement, the amount of up-front cash payment or milestone payments that could be recognized as revenue is not fixed or determinable. In connection with the Sanofi License Agreement, an affiliate of Sanofi provided us with a secured loan facility (the “Sanofi Loan Facility”) of up to $175.0 million to fund our share of net losses under the Sanofi License Agreement. | ||||
Additional funding sources that are, or in certain circumstances may be available to the Company, include approximately $30.1 million principal amount of available borrowings under its loan arrangement ( the “Loan Arrangement”) with The Mann Group LLC (“The Mann Group”) (see note 7 – Related-party arrangements), potential proceeds from the exercise of warrants issued in its February 2012 public offering of approximately $19.5 million, and the Company’s at-the-market issuance sales agreements which allow the Company to sell up to $50.0 million in common stock. The Company cannot provide assurances that its plans will not change or that changed circumstances will not result in the depletion of its capital resources more rapidly than it currently anticipates. The Company may need to raise additional capital, whether through a sale of equity or debt securities, a strategic business collaboration with a pharmaceutical company, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to continue the development and commercialization of AFREZZA and other product candidates and to support its other ongoing activities. However, the Company cannot provide assurances that such additional capital will be available on acceptable terms or at all. | ||||
Principles of Consolidation | Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. | |||
Segment Information | Segment Information — In accordance with Accounting Standards Codification (“ASC”) 280-10-50 Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as one segment operating in the United States of America. | |||
Financial Statement Estimates | Financial Statement Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies, and in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. The more significant estimates reflected in these accompanying financial statements involve assessing long-lived assets for impairment, accrued expenses, including clinical study expenses, valuation of forward purchase contracts, valuation of the facility financing obligation, commitment asset, milestone rights, valuation of stock-based compensation and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. | |||
License and Collaboration and Supply agreements | License and Collaboration and Supply agreements — Pursuant to the Sanofi License Agreement and the Sanofi Supply Agreement, we granted to Sanofi exclusive, worldwide licenses to certain of our patents, trademarks and know-how for the development and commercialization of AFREZZA and retained the right to be the exclusive manufacturer and supplier of AFREZZA until specified conditions are met upon which a portion of the manufacturing activities may be assumed by Sanofi. The terms of the Sanofi License Agreement provide for consideration to us in the form of a non-refundable up-front payment, product sales, manufacturing, regulatory and sales milestone payments and profit and loss sharing. | |||
We analyze consideration received under the provisions of ASC 605, Revenue Recognition, to determine whether the consideration, or a portion thereof, could be recognized as revenue. ASC 605 provides that revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collection is reasonably assured. | ||||
In arrangements involving the delivery of more than one element, each required deliverable is evaluated to determine whether it qualifies as a separate unit of accounting. This determination is generally based on whether the deliverable has “stand-alone value” to the customer. The arrangement’s consideration that is fixed and determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence of selling price and (iii) best estimate of selling price (BESP). The BESP reflects our best estimate of what the selling price would be if the deliverable was regularly sold by us on a stand-alone basis. In general, the consideration allocated to each unit of accounting is recognized as the related goods or services are delivered, limited to the consideration that is not contingent upon future deliverables. | ||||
The assessment of multiple element arrangements requires judgment in order to determine the appropriate units of accounting and the points in time that, or periods over which, revenue should be recognized. Given that, as of December 31, 2014, we did not have the ability to estimate the amount of costs that would potentially be incurred under the loss share provision related to the Sanofi License Agreement and the Sanofi Supply Agreement, we believe the fixed and determinable fee requirement for revenue recognition was not met. | ||||
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company considers all highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase, that are readily convertible into cash to be cash equivalents. As of December 31, 2014 and 2013, cash equivalents were comprised of cash and money market accounts with maturities less than 90 days from the date of purchase. | |||
Concentration of Credit Risk | Concentration of Credit Risk — Financial instruments which potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. Cash and cash equivalents consist of interest-bearing accounts, which are regularly monitored by management and held in high credit quality institutions. | |||
State Research and Development Credit Exchange Receivable | State Research and Development Credit Exchange Receivable — The State of Connecticut provides certain companies with the opportunity to exchange certain research and development income tax credit carryforwards for cash in exchange for foregoing the carryforward of the research and development credits. The program provides for an exchange of research and development income tax credits for cash equal to 65% of the value of corporation tax credit available for exchange. Estimated amounts receivable under the program are recorded as a reduction of research and development expenses. | |||
Prepaid expenses and other current assets | Prepaid expenses and other current assets — Prepaid expenses and other current assets primarily consist of prepaid expenses for goods and services to be received. As of December 31, 2014, prepaid and other current assets had a balance of $20.2 million, mainly comprised of a $15.0 million prepayment for 2015 quantities of insulin, and prepaid insurance. | |||
On July 31, 2014, the Company entered into a Supply Agreement (the “Supply Agreement”) with Amphastar France Pharmaceuticals S.A.S., a French corporation (“Amphastar”), pursuant to which Amphastar will manufacture for and supply to the Company certain quantities of recombinant human insulin for use in AFREZZA. Under the terms of the Supply Agreement, Amphastar will be responsible for manufacturing the insulin in accordance with the Company’s specifications and agreed-upon quality standards. The Company has agreed to purchase annual minimum quantities of insulin under the Supply Agreement of an aggregate total of approximately €120.1 million for calendar years 2015 through 2019. The remaining annual minimum quantities will be €23.2 million for 2015 and €23.3 million for the years ended December 31, 2016 through 2019. The Company may request to purchase additional quantities of insulin over such annual minimum quantities. As part of the Supply Agreement, the Company paid a $15.0 million deposit to Amphastar as prepayment for 2015 quantities of insulin. | ||||
Unless earlier terminated, the term of the Insulin Supply Agreement expires on December 31, 2019 and can be renewed for additional, successive two year terms upon 12 months’ written notice given prior to the end of the initial term or any additional two year term. The Company and Amphastar each have normal and customary termination rights, including termination for material breach that is not cured within a specific time frame or in the event of liquidation, bankruptcy or insolvency of the other party. In addition, the Company may terminate the Supply Agreement upon two years’ prior written notice to Amphastar without cause or upon 30 days’ prior written notice to Amphastar if a controlling regulatory authority withdraws approval for AFREZZA, provided, however, in the event of a termination pursuant to either of the latter two scenarios, the provisions of the Supply Agreement require the Company to pay the full amount of all unpaid purchase commitments due over the initial term within 60 calendar days of the effective date of such termination. | ||||
Sale of intellectual property | Sale of intellectual property — On July 18, 2014, the Company entered into an assignment agreement with a third party whereby the third party acquired all proprietary rights, technology and know-how that related to a small molecule inhibitor compound and all pre-clinical data and results related thereto. Under the terms of the assignment agreement, the Company received total consideration of $9.3 million and incurred $1.4 million in expense for a net amount of $7.9 million recorded as other income. | |||
Milestone Rights | Milestone Rights — On July 1 2013, in conjunction with the execution of the Facility Agreement, the Company issued Milestone Rights to Deerfield whereby the Company agreed to provide Deerfield with pre-specified Milestone Payments upon the achievement of 13 specific Milestone Events related to the commercial release and future cumulative net sales of AFREZZA®. The Company analyzed the Milestone Rights under the provisions of ASC 815 and determined that the agreement does not meet the definition of a freestanding derivative. Since the Company has not elected to apply the fair value option to the Milestone Rights Purchase Agreement, the Company recorded the Milestone Rights at their estimated fair value and accounted for the Milestone Rights as a liability by applying the indexed debt guidance contained in paragraphs ASC 470-10-25-3 and 35-4. | |||
The initial fair value estimate of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones and discounted to present value using a selected market discount rate. The expected timing and probability of achieving the milestones was developed with consideration given to both internal data, such as progress made to date and assessment of criteria required for achievement, and external data, such as market research studies. The discount rate was selected based on an estimation of required rate of returns for similar investment opportunities using available market data. The Milestone Rights liability will be remeasured as the specified milestone events are achieved. Specifically, as each milestone event is achieved, the portion of the initially recorded Milestone Rights liability that pertains to the milestone event being achieved, will be remeasured to the amount of the specified related milestone payment. The resulting change in the balance of the Milestone Rights liability due to remeasurement will be recorded in our Statement of Operations as interest expense. Furthermore, the Milestone Rights liability will be reduced upon the settlement of each milestone payment. As a result, each milestone payment would be effectively allocated between a reduction of the recorded Milestone Rights liability and an expense representing a return on a portion of the Milestone Rights liability paid to the investor for the achievement of the related milestone event (see Note 17). | ||||
Commitment Asset | Commitment Asset — In connection with the issuance of the Tranche 1 notes and the Milestone Rights, the Company recorded a commitment asset (the “Commitment Asset”) on July 1, 2013. As a result of the First Amendment, the Company recorded an additional Tranche B notes commitment asset (the “Tranche B Commitment Asset”) with an estimated fair value equal to $2.9 million. The Commitment Asset is derecognized and recorded as a debt discount on the 2019 notes and Tranche B notes, when issued and amortized, using the effective interest rate method over the life of the respective notes. Prior to derecognition occurring, the Company monitors the Commitment Asset on an ongoing basis to determine whether an impairment indicator is present that would result in a full or partial write down of the Commitment Asset as a result of events that may lead to the subsequent tranches of notes not being issued. At December 31, 2014, Deerfield had purchased all four tranches of 2019 notes in the aggregate principal amount of $160.0 million, purchased $20.0 million aggregate principal amount of Tranche B notes in accordance with the provisions of the Facility Agreement, and wrote off the remaining portion of the Tranche B Commitment Asset. At December 31, 2014 the carrying value of the Commitment Assets was zero. | |||
Fair Value of Financial Instruments | Fair Value of Financial Instruments — The Company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements. The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: | |||
Level 1 – Quoted prices for identical instruments in active markets. | ||||
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | ||||
Level 3 – Significant inputs to the valuation model are unobservable. | ||||
The carrying amounts reflected in the consolidated balance sheets for cash equivalents, other current assets, accounts payable, and accrued expenses and other current liabilities, approximate fair value due to their relatively short maturities. | ||||
Inventories | Inventories — Inventories are stated at the lower of cost or market. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s products based on management’s judgment that future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company’s products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company will record a charge to write down such unmarketable inventory to its estimated realizable value. | |||
Property and Equipment | Property and Equipment — Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the term of the lease or the service lives of the improvements, whichever is shorter. Maintenance and repairs are expensed as incurred. Assets under construction are not depreciated until placed into service. | |||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable in accordance with ASC 360-10-35 Property Plant and Equipment. Assets are considered to be impaired if the carrying value may not be recoverable based upon management’s assessment of the following events or changes in circumstances: | |||
• | significant changes in the Company’s strategic business objectives and utilization of the assets; | |||
• | a determination that the carrying value of such assets cannot be recovered through undiscounted cash flows; | |||
• | loss of legal ownership or title to the assets; | |||
• | a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; or | |||
• | the impact of significant negative industry or economic trends. | |||
If the Company believes an asset to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Any write-downs would be treated as permanent reductions in the carrying amount of the asset and an operating loss would be recognized. No asset impairment was recognized during the years ended December 31, 2014, 2013 and 2012, respectively. | ||||
Income Taxes | Income Taxes — The provisions for federal, foreign, state, and local income taxes are calculated on pre-tax income based on current tax law and include the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce net deferred income tax assets to amounts that are more likely than not to be realized. | |||
Income tax positions are considered for uncertainty in accordance with ASC 740-10-25 Income Taxes, The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no liabilities for uncertain income tax positions have been recorded. If a tax position does not meet the minimum statutory threshold to avoid payment of penalties, the Company recognizes an expense for the amount of the penalty in the period the tax position is claimed in the tax return of the Company. The Company recognizes interest accrued related to unrecognized tax benefits in income tax expense, if any. Penalties, if probable and reasonably estimable, are recognized as a component of income tax expense. | ||||
Significant management judgment is involved in determining the provision for income taxes, deferred tax assets, deferred tax liabilities, and any valuation allowance recorded against deferred tax assets. Due to uncertainties related to the realization of the Company’s deferred tax assets as a result of its history of operating losses, a valuation allowance has been established against the total deferred tax asset balance. The valuation allowance is based on management’s estimates of taxable income by jurisdiction in which the Company operates and the period over which deferred tax assets will be recoverable. In the event that actual results differ from these estimates or the Company adjusts these estimates in future periods, a change in the valuation allowance may be needed, which could materially impact the Company’s financial position and results of operations. | ||||
Contingencies | Contingencies — Contingencies are recorded in accordance with ASC 450 Contingencies. Accordingly, the Company records a loss contingency for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals represent management’s best estimate of probable loss. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates. These revisions in the estimates of the potential liabilities could have a material impact on our consolidated results of operations and financial position. | |||
Stock-Based Compensation | Stock-Based Compensation — As of December 31, 2014, the Company had three active stock-based compensation plans, which are described more fully in Note 12. The Company accounts for all share-based payments to employees, including grants of stock awards and the compensatory elements of the employee stock purchase plan in accordance with ASC 718. ASC 718 Compensation — Stock Compensation (“ASC 718”) requires all share-based payments to employees, including grants of stock options, restricted stock units, performance-based awards and the compensatory elements of employee stock purchase plans, to be recognized in the statement of operations based upon the fair value of the awards at the grant date. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options and the compensatory elements of employee stock purchase plans. Option valuation models require the input of assumptions, including the expected life of the stock-based awards, the estimated stock price volatility, the risk-free interest rate, and the expected dividend yield. Beginning in the third quarter of 2014, the Company began to assess both historical and implied volatility in order to determine its estimated volatility rate. Implied volatility is now considered due to the change in the Company’s business, which occurred with the approval for the sale of AFREEZA. The expected volatility assumption is based on an assessment of the historical volatility and the implied volatility of the Company’s common stock, derived from an analysis of historical traded and quoted options on the Company’s common stock. Restricted stock units are valued based on the market price on the grant date. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period. | |||
Warrants | Warrants — The Company has issued warrants to purchase shares of its common stock. Warrants have been accounted for within equity in accordance with the provisions of ASC 815-40, Contracts in an Entity’s Own Stock, previously EITF Issue No. 00-19: Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. | |||
Forward Contracts | Forward Contracts — The Company has entered into agreements with The Mann Group whereby the Company agreed to sell and The Mann Group agreed to purchase common stock and/or warrants. These agreements have been accounted for as forward contracts, having met the definition of derivative instruments in accordance with the provisions of ASC 815 Derivatives and Hedging. The Company determines the fair value of the forward contract upon its issuance, records fair value adjustments of the forward contract to Other income (expense) during the reporting period and through the settlement of the forward contract, and reclassifies the forward contract to equity upon settlement of the forward contract. In the years ended December 31, 2014 and 2013, there were no forward purchase contracts. | |||
Comprehensive Loss | Comprehensive Loss — Other comprehensive loss is recorded in accordance with ASC 220-10-45 Comprehensive Income, which requires that all components of comprehensive loss be reported in the financial statements in the period in which they are recognized. Other comprehensive loss includes certain changes in stockholders’ equity that are excluded from net income. Specifically, the Company includes unrealized gains and losses on its available-for-sale securities and cumulative translation gains and losses in other comprehensive loss. | |||
Research and Development Expenses | Research and Development Expenses — Research and development expenses consist of costs associated with the clinical trials of the Company’s product candidates, manufacturing supplies and other development materials, including raw material purchases of insulin, compensation and other expenses for research and development personnel, costs for consultants and related contract research, facility costs, and depreciation. Research and development costs, which are net of any tax credit exchange recognized for the Connecticut state research and development credit exchange program, are expensed as incurred consistent with ASC 730-10 Research and Development. The Company began commercial manufacturing in the latter part of the fourth quarter of 2014. As such, commercial manufacturing costs incurred in the fourth quarter and included in research and development as expenses are immaterial for the year ended December 31, 2014. | |||
Clinical Trial Expenses | Clinical Trial Expenses — Clinical trial expenses, which are reflected in research and development expenses in the accompanying statements of operations, result from obligations under contracts with vendors, consultants, and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The appropriate level of trial expenses are reflected in the Company’s financial statements by matching period expenses with period services and efforts expended. These expenses are recorded according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. Clinical trial accrual estimates are determined through discussions with internal clinical personnel and outside service providers as to the progress or state of completion of trials, or the services completed. Service provider status is then compared to the contractually obligated fee to be paid for such services. During the course of a clinical trial, the Company may adjust the rate of clinical expense recognized if actual results differ from management’s estimates. | |||
Interest Expense | Interest Expense — Interest costs are expensed as incurred, except to the extent such interest is related to construction in progress, in which case interest is capitalized. Interest expense, net of interest capitalized, for the years ended December 31, 2014, 2013 and 2012 was $20.4 million, $21.5 million and $21.6 million, respectively. Interest costs capitalized for the years ended December 31, 2014, 2013, and 2012 were $0.8 million, $0.4 million, and $0.3 million, respectively. | |||
Net Loss Per Share of Common Stock | Net Loss Per Share of Common Stock — Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the sum of the weighted-average number of common shares outstanding during the period plus the potential dilutive effect of stock options, restricted stock units, warrants, and shares that could be issued upon conversion of the senior convertible notes outstanding during the period calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share for the years ended December 31, 2014, 2013 and 2012. | |||
Recently Issued Accounting Standards | Recently Issued Accounting Standards — From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. | |||
In May 2014, a new standard was issued related to revenue recognition, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard will replace most of the existing revenue recognition standards in U.S. GAAP when it becomes effective on January 1, 2017. Early adoption is not permitted. The new standard allows for either “full retrospective” adoption, whereby the new standard is applied to each prior reporting period presented or “modified retrospective” adoption, whereby the new standard is only applied to the most current period presented with the cumulative effect of the change recognized at the date of the initial application. The Company is assessing the potential impact of the new standard on its consolidated statements of financial position and results of operations and comprehensive income (loss) and has not yet selected a transition method. | ||||
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification. In addition, the ASU: (a) adds an example disclosure in Topic 275, Risks and Uncertainties, to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities; and (b) removes an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity. The presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company early adopted ASU 2014-10 resulting in the elimination of certain presentation and disclosure requirements previously required by topic 915. | ||||
On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter; early adoption is permitted. The Company is evaluating the impact the adoption of ASU 2014-15 will have on its consolidated financial statements. |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Components of Inventories | Inventories consist of the following (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 4,856 | $ | — | |||||
Work-in-process | 4,719 | — | |||||||
Finished goods | 95 | — | |||||||
Total inventories | $ | 9,670 | $ | — | |||||
Property_and_equipment_Tables
Property and equipment (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Property and equipment | Property and equipment consist of the following (dollar amounts in thousands): | ||||||||||||
Estimated | December 31, | ||||||||||||
Useful | |||||||||||||
Life | |||||||||||||
(Years) | 2014 | 2013 | |||||||||||
Land | — | $ | 5,273 | $ | 5,273 | ||||||||
Buildings | 39-40 | 54,948 | 54,948 | ||||||||||
Building improvements | May-40 | 114,131 | 114,099 | ||||||||||
Machinery and equipment | 15-Mar | 80,919 | 82,189 | ||||||||||
Furniture, fixtures and office equipment | 10-May | 5,015 | 5,046 | ||||||||||
Computer equipment and software | 3 | 10,465 | 11,289 | ||||||||||
Leasehold improvements | 4 | 17 | 17 | ||||||||||
Construction in progress | 39,580 | 14,756 | |||||||||||
310,348 | 287,617 | ||||||||||||
Less accumulated depreciation and amortization | (118,221 | ) | (111,060 | ) | |||||||||
Total property and equipment, net | $ | 192,127 | $ | 176,557 | |||||||||
Accrued_expenses_and_other_cur1
Accrued expenses and other current liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities are comprised of the following (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Salary and related expenses | $ | 14,928 | $ | 12,193 | |||||
Research and clinical trial costs | — | 1,311 | |||||||
Accrued interest | 2,396 | 2,082 | |||||||
Construction in progress | 1,343 | 342 | |||||||
Other | 7,539 | 5,706 | |||||||
Accrued expenses and other current liabilities | $ | 26,206 | $ | 21,634 | |||||
Senior_convertible_notes_Table
Senior convertible notes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Summary of Senior Convertible Notes | Senior convertible notes consist of the following (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
2015 notes | |||||||||
Principal amount | $ | 100,000 | $ | 100,000 | |||||
Unaccreted debt issuance cost | (645 | ) | (1,561 | ) | |||||
Net carrying amount | $ | 99,355 | $ | 98,439 | |||||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Summary of Carrying Values and Estimated Fair Values of Notes and Facility Financing Obligation | The following is a summary of the carrying values and estimated fair values of the 2015 notes and the facility financing obligation (i.e., the 2019 notes and Trance B notes) (in millions): | ||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
Carrying | Estimated | Carrying | Estimated | ||||||||||||||
value | fair value | value | fair value | ||||||||||||||
2015 notes | $ | 99.4 | $ | 102.9 | $ | 98.4 | $ | 102.2 | |||||||||
Facility financing obligation | $ | 73 | $ | 75.1 | $ | 102.3 | $ | 107 | |||||||||
Summary of Changes in Fair Value of Company's Level Three Forward Purchase Contracts | The following roll-forward provides a summary of the changes in fair value of the Company’s Level 3 forward purchase contracts during the year ended December 31, 2012 (in thousands): | ||||||||||||||||
The February 2012 | The October 2012 | Total | |||||||||||||||
Forward Purchase | Forward Purchase | ||||||||||||||||
Contract | Contract | ||||||||||||||||
Beginning Balance | $ | — | $ | — | $ | — | |||||||||||
Issuance | 1,080 | 28,237 | 29,317 | ||||||||||||||
Adjustments to fair value included in other income (expense) | 12,011 | (13,248 | ) | (1,237 | ) | ||||||||||||
Transfers to additional paid-in-capital | (13,091 | ) | (14,989 | ) | (28,080 | ) | |||||||||||
Ending Balance | $ | — | $ | — | $ | — | |||||||||||
Net_loss_per_common_share_Tabl
Net loss per common share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Potential Dilutive Securities Outstanding | Potentially dilutive securities outstanding are summarized as follows: | ||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Exercise of common stock options | 21,541,664 | 24,237,940 | 18,674,539 | ||||||||||
Conversion of senior convertible notes into common stock | 17,323,080 | 25,415,366 | 19,826,113 | ||||||||||
Exercise of common stock warrants | 9,987,876 | 19,706,240 | 86,062,440 | ||||||||||
Vesting of restricted stock units | 2,610,720 | 9,115,821 | 3,761,031 | ||||||||||
51,463,340 | 78,475,367 | 128,324,123 | |||||||||||
Stock_award_plans_Tables
Stock award plans (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stock Based Award Plans | The following table summarizes information about the Company’s stock-based award plans as of December 31, 2014: | ||||||||||||
Outstanding | Outstanding | Shares Available | |||||||||||
Options | Restricted | for | |||||||||||
Stock Units | Future Issuance | ||||||||||||
2004 Equity Incentive Plan | 13,629,994 | 1,219,915 | — | ||||||||||
2013 Equity Incentive Plan | 7,380,839 | 1,390,805 | 15,506,488 | ||||||||||
2004 Non-Employee Directors’ Stock Option Plan | 530,831 | — | — | ||||||||||
Total | 21,541,664 | 2,610,720 | 15,506,488 | ||||||||||
Stock Based Compensation Expense Recognized in Accompanying Statements of Operations | Total stock-based compensation expense recognized in the accompanying statements of operations is as follows (in thousands): | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Employee-related | $ | 48,622 | $ | 45,181 | $ | 13,224 | |||||||
Consultant-related | — | 5 | 68 | ||||||||||
Total | $ | 48,622 | $ | 45,186 | $ | 13,292 | |||||||
Stock Based Compensation Expense Recognized in Accompanying Statements of Operations by Category | Total stock-based compensation expense recognized in the accompanying statements of operations is included in the following categories (in thousands): | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Research and development | $ | 22,357 | $ | 20,409 | $ | 6,167 | |||||||
General and administrative | 26,265 | 24,777 | 7,125 | ||||||||||
Total | $ | 48,622 | $ | 45,186 | $ | 13,292 | |||||||
Assumptions Used to Calculate Fair Value of Employee Stock Options | The Company calculated the fair value of employee stock options granted during the years ended December 31, 2014, 2013 and 2012 using the following assumptions: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Risk-free interest rate | 1.64% — 2.11% | 0.94% — 1.82% | 0.32% —1.16% | ||||||||||
Expected lives | 5.77 — 6.09 years | 2.64 — 5.77 years | 1.4 — 6.1 years | ||||||||||
Volatility | 73.98% — 84.85% | 75.83% — 86.26% | 70% — 84% | ||||||||||
Dividends | — | — | — | ||||||||||
Summary of Stock Options Outstanding | The following table summarizes information about stock options outstanding: | ||||||||||||
Number | Weighted | Aggregate | |||||||||||
of | Average | Intrinsic | |||||||||||
Shares | Exercise | Value ($000) | |||||||||||
Price | |||||||||||||
per Share | |||||||||||||
Outstanding at January 1, 2014 | 24,237,940 | 4.35 | $ | 40,972 | |||||||||
Granted | 1,326,800 | 7.21 | |||||||||||
Exercised | (3,250,149 | ) | 3.37 | ||||||||||
Forfeit | (417,223 | ) | 4.54 | ||||||||||
Expired | (355,704 | ) | 12.48 | ||||||||||
Outstanding at December 31, 2014 | 21,541,664 | 4.53 | $ | 33,495 | |||||||||
Vested and expected to vest at December 31, 2014 | 21,307,827 | 4.52 | $ | 33,253 | |||||||||
Exercisable at December 31, 2014 | 18,439,472 | 4.42 | $ | 30,356 | |||||||||
Summary of Restricted Stock Unit Activity | A summary of restricted stock unit activity for the year ended December 31, 2014 is presented below: | ||||||||||||
Number | Weighted | ||||||||||||
of | Average | ||||||||||||
Shares | Grant Date | ||||||||||||
Fair Value | |||||||||||||
per Share | |||||||||||||
Outstanding at January 1, 2014 | 9,115,821 | $ | 3.9 | ||||||||||
Granted | 954,127 | $ | 7.14 | ||||||||||
Vested | (6,982,707 | ) | $ | 3.83 | |||||||||
Forfeited | (476,521 | ) | $ | 4.3 | |||||||||
Outstanding at December 31, 2014 | 2,610,720 | $ | 5.2 | ||||||||||
Income_taxes_Tables
Income taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Provision for Income Taxes | The provision for income taxes consists of the following (in thousands): | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Current | |||||||||||||
U.S. federal | $ | — | $ | — | $ | — | |||||||
U.S. state | — | — | — | ||||||||||
Non-U.S. | — | — | — | ||||||||||
Total current | — | — | — | ||||||||||
Deferred | |||||||||||||
U.S. federal | 57,873 | 59,379 | 51,540 | ||||||||||
U.S. state | 7,631 | 7,470 | 9,199 | ||||||||||
Non-U.S. | — | — | — | ||||||||||
Valuation Allowance | (65,504 | ) | (66,849 | ) | (60,739 | ) | |||||||
Total deferred | — | — | — | ||||||||||
Total | $ | — | $ | — | $ | — | |||||||
Components of Net Deferred Tax Asset | Components of the net deferred tax asset as of December 31, 2014 and 2013 are approximately as follows (in thousands): | ||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carryforwards | $ | 699,997 | $ | 653,896 | |||||||||
Research and development credits | 73,227 | 70,091 | |||||||||||
Capitalized research | 28,516 | 30,421 | |||||||||||
Payments from collaboration | 19,217 | — | |||||||||||
Milestone Rights | 5,321 | 6,608 | |||||||||||
Accrued expenses | 768 | 3,578 | |||||||||||
Non-qualified stock option expense | 43,691 | 41,219 | |||||||||||
Capitalized patent costs | 8,624 | 7,811 | |||||||||||
Other | 131 | 837 | |||||||||||
Depreciation | 3,010 | 2,539 | |||||||||||
Total net deferred tax assets | 882,502 | 817,000 | |||||||||||
Valuation allowance | (882,502 | ) | (817,000 | ) | |||||||||
Net deferred tax assets | $ | — | $ | — | |||||||||
Effective Income Tax Rate | The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2014, 2013 and 2012: | ||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Federal tax benefit rate | 35 | % | 35 | % | 35 | % | |||||||
State tax benefit, net of federal benefit | — | — | — | ||||||||||
Permanent items | 0.9 | — | — | ||||||||||
Intercompany transfer of intellectual property | (4.1 | ) | (4.3 | ) | (4.0 | ) | |||||||
Valuation allowance | (31.8 | ) | (30.7 | ) | (31.0 | ) | |||||||
Effective income tax rate | 0 | % | 0 | % | 0 | % | |||||||
Facility_Agreement_Tables
Facility Agreement (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accretion of Debt Issuance Cost and Debt Discount | Accretion of debt issuance cost and debt discount in connection with the Deerfield financing during the year ended December 31, 2014 and 2013 are as follows (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Accretion expense- debt issuance cost | $ | 326 | $ | 42 | |||||
Accretion expense- debt discount | $ | 7,550 | $ | 1,113 |
Selected_quarterly_financial_d1
Selected quarterly financial data (unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Selected Quarterly Financial Data | Summarized quarterly financial data for the years ended December 31, 2014 and 2013 are set forth in the following tables: | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
2014 | |||||||||||||||||
Net loss | $ | (52,056 | ) | $ | (73,365 | ) | $ | (36,520 | ) | $ | (36,439 | ) | |||||
Net loss per share — basic and diluted | $ | (0.14 | ) | $ | (0.19 | ) | $ | (0.09 | ) | $ | (0.09 | ) | |||||
Weighted average common shares used to compute basic and diluted net loss per share | 368,784 | 380,770 | 394,163 | 396,793 | |||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
2013 | |||||||||||||||||
Net loss | $ | (40,965 | ) | $ | (46,124 | ) | $ | (50,818 | ) | $ | (53,582 | ) | |||||
Net loss per share — basic and diluted | $ | (0.15 | ) | $ | (0.16 | ) | $ | (0.17 | ) | $ | (0.16 | ) | |||||
Weighted average common shares used to compute basic and diluted net loss per share | 280,058 | 284,044 | 296,386 | 337,284 | |||||||||||||
Recovered_Sheet1
Description of Business and Basis of Presentation - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | 3 Months Ended | |||||||
Dec. 31, 2014 | Feb. 28, 2014 | Aug. 11, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Aug. 18, 2010 | Dec. 30, 2014 | Sep. 23, 2014 | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Accumulated deficit | ($2,494,784,000) | ($2,296,402,000) | ||||||||
Cash and cash equivalents | 120,841,000 | 70,790,000 | 61,840,000 | 2,681,000 | ||||||
Amount available for future borrowings | 30,100,000 | |||||||||
Potential proceeds from the exercise of warrants from February 2012 public offering | 19,500,000 | |||||||||
Maximum | ATM Agreements | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Offering price of common stock under agreement | 50,000,000 | |||||||||
Senior convertible notes due August 15, 2015 | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Senior notes, effective interest rate | 5.75% | 5.75% | ||||||||
Debt facility principal amount | 100,000,000 | 100,000,000 | 100,000,000 | |||||||
Debt instrument maturity date | 15-Aug-15 | |||||||||
Senior convertible notes due December 31, 2019 | Maximum | Less portion of commitment asset | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Amount available for future borrowings | 70,000,000 | |||||||||
Deerfield | Senior convertible notes due December 31, 2019 | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Senior notes, effective interest rate | 975.00% | |||||||||
Debt facility principal amount | 60,000,000 | |||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Less portion of commitment asset | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Senior notes, effective interest rate | 875.00% | 9.75% | ||||||||
Debt facility principal amount | 20,000,000 | |||||||||
Debt instrument maturity date | 31-Dec-19 | |||||||||
Maximum secured loan facility | 175,000,000 | |||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Maximum | Less portion of commitment asset | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Debt facility principal amount | 90,000,000 | |||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Minimum | Facility Agreement | Less portion of commitment asset | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Available amount of credit facility under covenant restrictions | 25,000,000 | |||||||||
License and Collaboration Agreement with Sanofi | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Senior notes, effective interest rate | 8.50% | |||||||||
Up-front fee | 150,000,000 | |||||||||
Potential milestone payment | 725,000,000 | 775,000,000 | ||||||||
Profits and losses sharing percentage | 35.00% | 35.00% | ||||||||
Maximum secured loan facility | 175,000,000 | |||||||||
License and Collaboration Agreement with Sanofi | Sanofi-Aventis Deutschland GmbH | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Profits and losses sharing percentage | 65.00% | 65.00% | ||||||||
Maximum secured loan facility | 175,000,000 | |||||||||
License and Collaboration Agreement with Sanofi | Development and Manufacturing Milestone Events | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | ||||||||||
Milestone payments earned | 50,000,000 | |||||||||
Potential milestone payment | $75,000,000 |
Recovered_Sheet2
Summary Of Significant Accounting Policies - Additional Information (Detail) | 0 Months Ended | 12 Months Ended | ||||||||
Jul. 18, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jul. 01, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | 6-May-14 | |
USD ($) | USD ($) | USD ($) | USD ($) | EUR (€) | Senior convertible notes due December 31, 2019 | Senior convertible notes due December 31, 2019 | Senior convertible notes due December 31, 2019 | Senior convertible notes due December 31, 2019 | Senior convertible notes due December 31, 2019 | |
USD ($) | Deerfield | Deerfield | Deerfield | Deerfield | ||||||
USD ($) | Notes Issued in Four Equal Tranches | Less portion of commitment asset | Less portion of commitment asset | |||||||
USD ($) | USD ($) | USD ($) | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||
Maturity period of cash equivalents | 90 days or less at the time of purchase | |||||||||
Percentage of credit exchange receivable | 65.00% | |||||||||
Prepaid expenses and other current assets | $20,206,000 | $5,485,000 | ||||||||
Prepayment for 2015 quantities of insulin | 15,000,000 | |||||||||
Purchase obligation | 120,100,000 | |||||||||
Purchase obligation, due in 2015 | 23,200,000 | |||||||||
Purchase obligation, due in 2016 | 23,300,000 | |||||||||
Purchase obligation, due in 2017 | 23,300,000 | |||||||||
Purchase obligation, due in 2018 | 23,300,000 | |||||||||
Purchase obligation, due in 2019 | 23,300,000 | |||||||||
Supply Agreement expiration period | 31-Dec-19 | |||||||||
Supply Agreement renewal period | 2 years | |||||||||
Consideration received | 9,300,000 | |||||||||
Offset expense associated with intellectual property | 1,400,000 | |||||||||
Intellectual property sold, net | 7,900,000 | |||||||||
Commitment asset at fair value | 2,900,000 | 0 | 1,200,000 | |||||||
Debt facility principal amount | 160,000,000 | 20,000,000 | 20,000,000 | |||||||
Interest expense, net of interest capitalized | 20,400,000 | 21,500,000 | 21,600,000 | |||||||
Interest cost capitalized | $800,000 | $400,000 | $300,000 |
Recovered_Sheet3
State Research and Development Credit Exchange Receivable - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Accounts and Other Receivables [Line Items] | |||
Percentage of credit exchange receivable | 65.00% | ||
Estimated amounts receivable under program | $816,000 | $282,000 | $289,000 |
Components_of_Inventories_Deta
Components of Inventories (Detail) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Inventory [Line Items] | |
Raw materials | $4,856 |
Work-in-process | 4,719 |
Finished goods | 95 |
Total inventories | $9,670 |
Property_and_Equipment_Detail
Property and Equipment (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | $310,348 | $287,617 |
Less accumulated depreciation and amortization | -118,221 | -111,060 |
Total property and equipment, net | 192,127 | 176,557 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | 5,273 | 5,273 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | 54,948 | 54,948 |
Buildings | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 39 years | |
Buildings | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 40 years | |
Building Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | 114,131 | 114,099 |
Building Improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 5 years | |
Building Improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 40 years | |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | 80,919 | 82,189 |
Machinery and Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 3 years | |
Machinery and Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 15 years | |
Furniture, fixtures and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | 5,015 | 5,046 |
Furniture, fixtures and office equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 5 years | |
Furniture, fixtures and office equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 10 years | |
Computer Equipment and Software | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 3 years | |
Property and equipment - gross | 10,465 | 11,289 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 4 years | |
Property and equipment - gross | 17 | 17 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment - gross | $39,580 | $14,756 |
Property_and_Equipment_Additio
Property and Equipment - Additional Information (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Depreciation and Other Amortization Expenses [Line Items] | |||
Amortization period of lease hold improvements | 4 years | ||
Depreciation and amortization expense | $9.80 | $11.50 | $13 |
Recovered_Sheet4
Accrued Expenses and Other Current Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Salary and related expenses | $14,928 | $12,193 |
Research and clinical trial costs | 1,311 | |
Accrued interest | 2,396 | 2,082 |
Construction in progress | 1,343 | 342 |
Other | 7,539 | 5,706 |
Accrued expenses and other current liabilities | $26,206 | $21,634 |
RelatedParty_Arrangements_Addi
Related-Party Arrangements - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 31, 2013 | Oct. 31, 2007 | Feb. 28, 2009 | |
Related Party Transaction [Line Items] | ||||||
Principal amount outstanding under credit facility | $80,000,000 | |||||
Amount available for future borrowings | 30,100,000 | |||||
Accrued interest of related party debt | 3,500,000 | 600,000 | ||||
Available borrowings under loan agreement | 30,100,000 | 30,100,000 | ||||
Interest expense on note payable principal stockholder | 2,894,000 | 6,309,000 | 10,491,000 | |||
Expenses related to charter service on behalf of principal shareholder | 79,000 | 82,000 | 200,000 | |||
Principal stockholder | ||||||
Related Party Transaction [Line Items] | ||||||
Loan agreement with related party | 370,000,000 | 350,000,000 | ||||
Principal stockholder | Loan Arrangement | ||||||
Related Party Transaction [Line Items] | ||||||
Interest rate (LIBOR) | 3.00% | |||||
Description of variable rate interest | One-year LIBOR | |||||
Fixed borrowing rate | 5.84% | |||||
Accrued interest that became due and payable upon cancellation of the of principal indebtedness, to be capitalized | 3,500,000 | |||||
Principal amount outstanding under credit facility | 49,500,000 | |||||
Amount available for future borrowings | 30,100,000 | |||||
Fixed borrowing rate | 5.84% | |||||
Related party transaction prepayment period | 90 days | |||||
Aggregate principal amount cancelled | 105,000,000 | |||||
Principal stockholder | Loan Arrangement | Maximum | ||||||
Related Party Transaction [Line Items] | ||||||
Amount prepaid for cancellation of indebtedness | 200,000,000 | |||||
Principal stockholder | Loan Arrangement | Minimum | ||||||
Related Party Transaction [Line Items] | ||||||
Number of months advances outstanding | 12 months | |||||
Principal stockholder | Amended Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Promissory note maturity date | 5-Jan-20 | |||||
Principal indebtedness cancelled under the loan arrangement as payment for the aggregate exercise price of The Mann Group Warrants | 78,000,000 | |||||
Accrued interest that became due and payable upon cancellation of the of principal indebtedness, to be capitalized | $7,900,000 | |||||
Related Party Debt | Letter Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Description of variable rate interest | The interest rate will increase to the one-year LIBOR rate calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum. | |||||
Related Party Debt | Letter Agreement | LIBOR | ||||||
Related Party Transaction [Line Items] | ||||||
Interest rate (LIBOR) | 5.00% |
Summary_of_Senior_Convertible_
Summary of Senior Convertible Notes (Detail) (Senior convertible notes due August 15, 2015, USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 18, 2010 |
In Thousands, unless otherwise specified | |||
Senior convertible notes due August 15, 2015 | |||
Debt Instrument [Line Items] | |||
Principal amount | $100,000 | $100,000 | $100,000 |
Unaccreted debt issuance cost | -645 | -1,561 | |
Net carrying amount | $99,355 | $98,439 |
Senior_Convertible_Notes_Addit
Senior Convertible Notes - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 18, 2010 | |
D | ||||
Debt Instrument [Line Items] | ||||
Accretion of debt issuance costs | $900,000 | $900,000 | $800,000 | |
Senior convertible notes due August 15, 2015 | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 100,000,000 | 100,000,000 | 100,000,000 | |
Senior notes, effective interest rate | 5.75% | 5.75% | ||
Accrued interest payable | 2,400,000 | 2,400,000 | ||
No of convertible shares | 147.0859 | |||
Principal amount per share | $1,000 | |||
Conversion price of shares | $6.80 | |||
Percentage of repurchase price | 100.00% | |||
Percentage of conversion price equaling stock price | 150.00% | |||
Number of trading days | 20 | |||
Consecutive trading days | 30 days | |||
Debt Issuance Cost | $4,200,000 |
Collaborative_Arrangement_Addi
Collaborative Arrangement - Additional Information (Detail) (License and Collaboration Agreement with Sanofi, USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | |||
Sep. 23, 2014 | Aug. 11, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Sep. 23, 2014 | Aug. 11, 2014 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Up-front fee | $150,000,000 | |||||
Potential milestone payment | 775,000,000 | 725,000,000 | 775,000,000 | |||
Profits and losses sharing percentage | 35.00% | 35.00% | ||||
Maximum secured loan facility | 175,000,000 | 175,000,000 | ||||
Senior notes, effective interest rate | 8.50% | 8.50% | ||||
Prepayment of loan percentage of net cash proceeds sale | 100.00% | |||||
Deferred up-front Payment | 150,000,000 | |||||
Sanofi-Aventis Deutschland GmbH | ||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Profits and losses sharing percentage | 65.00% | 65.00% | ||||
Maximum secured loan facility | 175,000,000 | |||||
Deferred up-front Payment | 150,000,000 | |||||
Collaboration revenue recognized | 0 | |||||
Milestone receivable | 50,000,000 | |||||
Secured loan facility, amount borrowed | 3,000,000 | |||||
Loss sharing amount | 3,000,000 | |||||
Development and Manufacturing Milestone Events | ||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Potential milestone payment | 75,000,000 | 75,000,000 | ||||
Milestone payments earned | 50,000,000 | |||||
Regulatory Approvals | ||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Potential milestone payment | 50,000,000 | 50,000,000 | ||||
Product Sales Milestones | ||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Potential milestone payment | $650,000,000 | $650,000,000 |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments - Additional Information (Detail) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||
Dec. 20, 2012 | Oct. 18, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jul. 01, 2013 | Dec. 31, 2013 | Dec. 31, 2011 | 6-May-14 | |
Derivative | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Cash and cash equivalents | $120,841,000 | $70,790,000 | $61,840,000 | 120,841,000 | 70,790,000 | $2,681,000 | ||||
Cash equivalents, money market funds | 118,500,000 | 67,700,000 | 118,500,000 | 67,700,000 | ||||||
Company's longer-term historical volatility rate | 55.00% | 65.00% | ||||||||
Market discount rate | 1.50% | 2.30% | ||||||||
Carrying value of Milestone Rights | 468,209,000 | 289,359,000 | 468,209,000 | 289,359,000 | ||||||
Transfers of assets between fair value measurement | 0 | 0 | 0 | |||||||
Transfers of liabilities between fair value measurement | 0 | 0 | 0 | |||||||
Number of embedded derivatives contained in facility financing obligation | 4 | 4 | ||||||||
Major Transaction Put Option | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Estimated fair value of the embedded derivative , cumulative probability percentage | 0.80% | |||||||||
Conversion option feature | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Estimated fair value of the embedded derivative , cumulative probability percentage | 0.00% | |||||||||
Acceleration upon a Legal Judgment Against the Company in Excess of $100,000 | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Estimated fair value of the embedded derivative , cumulative probability percentage | 0.10% | |||||||||
Deerfield | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Facility arrangement amount to be paid in excess of legal judgment | 100,000 | |||||||||
Fair Value, Inputs, Level 3 | Milestone Rights Liability | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Fair value of Milestone Rights | 27,900,000 | 27,900,000 | ||||||||
Carrying value of Milestone Rights | 13,100,000 | 13,100,000 | ||||||||
Fair Value, Inputs, Level 3 | Income Approach Valuation Technique | Milestone Rights Liability | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Market discount rate | 15.00% | |||||||||
Fair Value, Inputs, Level 3 | Commitment Asset | Income Approach Valuation Technique | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Market discount rate | 12.00% | |||||||||
Senior convertible notes due December 31, 2019 | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Additional commitment asset | 2,900,000 | |||||||||
Senior convertible notes due December 31, 2019 | Deerfield | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Additional commitment asset | 0 | 0 | ||||||||
Senior convertible notes due December 31, 2019 | Deerfield | Less portion of commitment asset | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Additional commitment asset | 1,200,000 | |||||||||
Principal amount of notes purchased | 20,000,000 | 20,000,000 | 20,000,000 | |||||||
Senior convertible notes due December 31, 2019 | Deerfield | Notes Issued in Four Equal Tranches | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Principal amount of notes purchased | 160,000,000 | 160,000,000 | ||||||||
Senior convertible notes due December 31, 2019 | Fair Value, Inputs, Level 3 | Less portion of commitment asset | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Additional commitment asset | $2,900,000 | 2,900,000 | ||||||||
Percentage of market yield | 11.80% | 11.80% | ||||||||
Senior convertible notes due December 31, 2019 | Fair Value, Inputs, Level 3 | Income Approach Valuation Technique | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Market discount rate | 12.40% | |||||||||
Senior convertible notes due December 31, 2019 | Fair Value, Inputs, Level 3 | Income Approach Valuation Technique | Less portion of commitment asset | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Market discount rate | 11.80% | 11.90% | ||||||||
Senior convertible notes due December 31, 2019 | Fair Value, Inputs, Level 3 | Income Approach Valuation Technique | Tranche One | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Market discount rate | 12.30% | 12.70% | ||||||||
Senior convertible notes due December 31, 2019 | Fair Value, Inputs, Level 3 | Income Approach Valuation Technique | Fourth tranche | ||||||||||
Fair Value of Financial Instruments [Line Items] | ||||||||||
Market discount rate | 12.20% |
Summary_of_Carrying_Values_and
Summary of Carrying Values and Estimated Fair Values of Notes and Facility Financing Obligation (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Senior convertible notes due August 15, 2015 | ||
Convertible Debt [Line Items] | ||
Carrying value | $99,355,000 | $98,439,000 |
Estimated fair value | 102,900,000 | 102,200,000 |
Facility financing obligation | ||
Convertible Debt [Line Items] | ||
Carrying value | 73,000,000 | 102,300,000 |
Estimated fair value | $75,100,000 | $107,000,000 |
Changes_in_Fair_Value_of_Level
Changes in Fair Value of Level 3 Forward Purchase Contract (Detail) (Fair Value, Inputs, Level 3, USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2012 |
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | $0 |
Issuance | 29,317 |
Adjustments to fair value included in other income (expense) | -1,237 |
Transfers to additional paid-in-capital | -28,080 |
Ending Balance | 0 |
The February 2012 Forward Purchase Contract | |
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | 0 |
Issuance | 1,080 |
Adjustments to fair value included in other income (expense) | 12,011 |
Transfers to additional paid-in-capital | -13,091 |
Ending Balance | 0 |
The October 2012 Forward Purchase Contract | |
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | 0 |
Issuance | 28,237 |
Adjustments to fair value included in other income (expense) | -13,248 |
Transfers to additional paid-in-capital | -14,989 |
Ending Balance | $0 |
Common_and_Preferred_Stock_Add
Common and Preferred Stock - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||
Dec. 20, 2012 | Oct. 18, 2012 | 17-May-12 | Feb. 08, 2012 | Oct. 31, 2013 | Dec. 31, 2012 | Oct. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jun. 30, 2012 | Mar. 17, 2012 | Aug. 18, 2010 | |
Class of Stock [Line Items] | |||||||||||||
Common stock, shares authorized | 350,000,000 | 550,000,000 | 550,000,000 | 550,000,000 | 550,000,000 | ||||||||
Common stock, par value | $0.01 | $0.01 | |||||||||||
Undesignated preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||||||||||
Undesignated preferred stock, par value | $0.01 | $0.01 | |||||||||||
Common stock, shares issued | 369,391,972 | 406,059,089 | |||||||||||
Common stock, shares outstanding | 369,391,972 | 406,059,089 | |||||||||||
Common stock loaned under share lending agreement, shares | 9,000,000 | 9,000,000 | 9,000,000 | 9,000,000 | |||||||||
Nominal lending fee | $0.01 | ||||||||||||
Number of Unit Sold in an Underwritten public offering | 35,937,500 | ||||||||||||
Warrant to purchase of a share of common stock | 0.6 | ||||||||||||
Net proceeds from offering | $80,600,000 | ||||||||||||
Rate at which warrants are exercisable | $2.60 | ||||||||||||
Restricted Stock Agreed to be Purchased by Lender | 77,200,000 | ||||||||||||
Proceeds from exercise warrants | 89,700,000 | 94,147,000 | |||||||||||
Number of Shares that recorded the portion of the derivative instrument representing equity | 16,500,000 | ||||||||||||
Authorized shares under common stock purchase agreement | 250,000,000 | 350,000,000 | |||||||||||
Change in fair value recognized in other income | 12,000,000 | 12,000,000 | |||||||||||
Valuation of non-equity portion of forward contract | $1.69 | $2.40 | $2.40 | ||||||||||
Discount for lack of marketability | 0.42% | ||||||||||||
Underwritten public offering | 40,000,000 | ||||||||||||
Common Stock Purchase | 30,000,000 | ||||||||||||
Additional common stock shares issued | 6,000,000 | ||||||||||||
Additional Purchase Of Common Stock | 4,500,000 | ||||||||||||
Net proceeds from public offering | 86,300,000 | ||||||||||||
Warrant entitles the holder to purchase a share of common stock | 0.75 | ||||||||||||
Warrant expiration date | 2013-10 | ||||||||||||
Fair value assumption risk free rate | 0.00% | 0.11% | |||||||||||
Fair value input discount rate | 1.50% | 2.30% | |||||||||||
Current Asset | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Fair value of forward contract | 28,200,000 | ||||||||||||
Additional Paid-in Capital | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Fair value of forward contract | 15,000,000 | ||||||||||||
Other income (expense) | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Fair value of forward contract | 13,200,000 | ||||||||||||
Warrant | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Purchased Price of the units by underwriters | 2 | ||||||||||||
Other Than Equity | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Fair value of Non-Equity Portion | 13,100,000 | ||||||||||||
Risk Free Interest Rate | 0.18% | ||||||||||||
Warrant Liability | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of warrants are exercisable | 21,562,500 | ||||||||||||
Rate at which warrants are exercisable | $2.40 | ||||||||||||
Duration for Expiration of warrants | 4 years | ||||||||||||
Underwriters | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of Unit Sold in an Underwritten public offering | 4,687,500 | ||||||||||||
Purchased Price of the units by underwriters | 2.256 | ||||||||||||
Public | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Purchased Price of the units by underwriters | 2.4 | ||||||||||||
Public Offering | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Proceeds from exercise warrants | 27,800,000 | ||||||||||||
Warrants remained unexercised | 19,500,000 | ||||||||||||
Senior convertible notes due August 15, 2015 | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Principal amount | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||||
Private Placement | Warrant | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Underwritten public offering | 40,000,000 | ||||||||||||
Private Placement | Restricted Stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Underwritten public offering | 40,000,000 | ||||||||||||
Related Party | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Units sold composition description | Each unit consisting of one share of common stock and a warrant to purchase 0.6 of a share of common stock | ||||||||||||
Mann Group | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Common stock, shares outstanding | 31,250,000 | ||||||||||||
Restricted common stock price per share | $2.47 | ||||||||||||
Restricted Stock Agreed to be Purchased by Lender | 107,400,000 | ||||||||||||
Selling price of restricted shares | $2.59 | ||||||||||||
Amended and restated promissory note outstanding principal amount | 350,000,000 | ||||||||||||
Mann Group | Warrant | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Restricted warrants sale price | $0.13 | ||||||||||||
Mann Group | Forward Purchase Contracts | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Fair value of the forward purchase contract | 2,000,000 | ||||||||||||
Discount for lack of marketability | 2.57% | ||||||||||||
Mann Group | Forward Purchase Contracts | Equity Component | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Number of Shares that recorded the portion of the derivative instrument representing equity | 14,700,000 | ||||||||||||
Fair value of the forward purchase contract | 900,000 | ||||||||||||
Mann Group | Forward Purchase Contracts | Other Than Equity | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Fair value of the forward purchase contract | $1,100,000 | ||||||||||||
Risk Free Interest Rate | 0.08% |
Net_Loss_per_Common_Share_Addi
Net Loss per Common Share - Additional Information (Detail) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net Income Loss Per Common Share [Line Items] | |||
Companies common stock share outstanding | 9,000,000 | 9,000,000 | 9,000,000 |
Shares loaned under the share lending arrangement | 9,000,000 | 9,000,000 | 9,000,000 |
Potentially_Dilutive_Securitie
Potentially Dilutive Securities Outstanding (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities outstanding | 51,463,340 | 78,475,367 | 128,324,123 |
Stock Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities outstanding | 21,541,664 | 24,237,940 | 18,674,539 |
Convertible Debt Securities | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities outstanding | 17,323,080 | 25,415,366 | 19,826,113 |
Warrant | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities outstanding | 9,987,876 | 19,706,240 | 86,062,440 |
Restricted Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities outstanding | 2,610,720 | 9,115,821 | 3,761,031 |
Stock_Award_Plans_Additional_I
Stock Award Plans - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2004 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2014 | 23-May-13 | |
Employee | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share reserve | 700,000 | 700,000 | 700,000 | |||
Share of common stock outstanding | 1.00% | |||||
Shares sold to employees | 305,076 | 463,290 | 422,260 | |||
Stock option grants vest exercisable rate | 25.00% | |||||
Restricted stock vesting rate | 25.00% | |||||
Vesting period | 4 years | |||||
Options to purchase common stock | 21,541,664 | 24,237,940 | ||||
Stock based compensation expense related to stock award plans and the ESPP | $48,622,000 | $45,186,000 | $13,292,000 | |||
Number of employees allowed to withhold certain performance grants in excess of the minimum statutory requirements | 124 | |||||
Increase in stock-based compensation expense | 23,000,000 | |||||
Weighted average grant date fair value of the stock options granted | $4.76 | $3.26 | $0.99 | |||
Total intrinsic value of options exercised | 14,900,000 | 3,100,000 | 1,000 | |||
Cash received from the exercise of options | 11,000,000 | 2,300,000 | 9,200 | |||
Weighted-average remaining contractual term | 6 years 9 months 29 days | 7 years 22 days | 7 years 26 days | |||
Restricted stock units expected to vest | 2,386,061 | |||||
Weighted average grant date fair value | $5.23 | |||||
Total intrinsic value of restricted stock units expected to vest | 12,500,000 | |||||
Total intrinsic value of restricted stock units vested | 62,700,000 | 13,900,000 | 2,900,000 | |||
Fair value of restricted stock units vested | 36,400,000 | 14,900,000 | 3,000,000 | |||
Weighted average vesting period for unrecognized compensation cost | 2 years 10 months 24 days | |||||
Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved under ESPP | 10.00% | |||||
Performance mile stone period range | 96 months | |||||
Options granted expiry term | 10 years | |||||
Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance mile stone period range | 11 months | |||||
2013 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity incentive plan, shares | 21,500,000 | |||||
Options to purchase common stock | 7,380,839 | |||||
Employee Stock Purchase Plans | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved for issuance | 2,000,000 | 3,073,931 | ||||
Share reserve automatic increase each year | 700,000 | |||||
Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 36 months | |||||
Unrecognized compensation cost related to non vested stock options | 9,000,000 | |||||
Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 4 years | |||||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation cost related to non vested stock options | $10,600,000 | |||||
Consultant | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options to purchase common stock | 552,516 |
Stock_Based_Award_Plans_Detail
Stock Based Award Plans (Detail) | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding Options | 21,541,664 | 24,237,940 |
Outstanding Restricted Stock Units | 2,610,720 | 9,115,821 |
Shares Available for Future Issuance | 15,506,488 | |
2004 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding Options | 13,629,994 | |
Outstanding Restricted Stock Units | 1,219,915 | |
2013 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding Options | 7,380,839 | |
Outstanding Restricted Stock Units | 1,390,805 | |
Shares Available for Future Issuance | 15,506,488 | |
2004 Non Employee Directors Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding Options | 530,831 |
Stock_Based_Compensation_Expen
Stock Based Compensation Expense Recognized in Accompanying Statements of Operation (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation | $48,622 | $45,186 | $13,292 |
Employee | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation | 48,622 | 45,181 | 13,224 |
Consultant | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation | $5 | $68 |
Stock_Based_Compensation_Expen1
Stock Based Compensation Expense Recognized in Accompanying Statements of Operations by Category (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation | $48,622 | $45,186 | $13,292 |
Research And Development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation | 22,357 | 20,409 | 6,167 |
General and Administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation | $26,265 | $24,777 | $7,125 |
Fair_Value_of_Employee_Stock_O
Fair Value of Employee Stock Options Assumptions (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Risk free interest rate, minimum | 1.64% | 0.94% | 0.32% |
Risk free interest rate, maximum | 2.11% | 1.82% | 1.16% |
Volatility, minimum | 73.98% | 75.83% | 70.00% |
Volatility, maximum | 84.85% | 86.26% | 84.00% |
Dividends | 0.00% | 0.00% | 0.00% |
Minimum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Expected lives | 5 years 9 months 7 days | 2 years 7 months 21 days | 1 year 4 months 24 days |
Maximum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Expected lives | 6 years 1 month 2 days | 5 years 9 months 7 days | 6 years 1 month 6 days |
Summary_of_Stock_Options_Outst
Summary of Stock Options Outstanding (Detail) (USD $) | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 |
Number of Shares | |
Outstanding at January 1, 2014 | 24,237,940 |
Granted | 1,326,800 |
Exercised | -3,250,149 |
Forfeit | -417,223 |
Expired | -355,704 |
Outstanding at December 31, 2014 | 21,541,664 |
Vested and expected to vest at December 31, 2014 | 21,307,827 |
Exercisable at December 31, 2014 | 18,439,472 |
Weighted Average Exercise Price per Share | |
Outstanding at January 1, 2014 | $4.35 |
Granted | $7.21 |
Exercised | $3.37 |
Forfeit | $4.54 |
Expired | $12.48 |
Outstanding at December 31, 2014 | $4.53 |
Vested and expected to vest at December 31, 2014 | $4.52 |
Exercisable at December 31, 2014 | $4.42 |
Aggregate Intrinsic Value | |
Outstanding at January 1, 2014 | $40,972 |
Outstanding at December 31, 2014 | 33,495 |
Vested and expected to vest at December 31, 2014 | 33,253 |
Exercisable at December 31, 2014 | $30,356 |
Summary_of_Restricted_Stock_Un
Summary of Restricted Stock Unit Activity (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Number of shares | |
Outstanding at January 1, 2014 | 9,115,821 |
Granted | 954,127 |
Vested | -6,982,707 |
Forfeited | -476,521 |
Outstanding at December 31, 2014 | 2,610,720 |
Weighted average grant date fair value Per share | |
Outstanding at January 1, 2014 | $3.90 |
Granted | $7.14 |
Vested | $3.83 |
Forfeited | $4.30 |
Outstanding at December 31, 2014 | $5.20 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 01, 2013 | |
Commitments and Contingencies [Line Items] | ||||
Operating lease rent expenses | $737,000 | $645,000 | $675,000 | |
Deerfield | Milestone Rights Liability | Maximum | ||||
Commitments and Contingencies [Line Items] | ||||
Contingent liability for milestone payments | $90,000,000 |
Employee_Benefit_Plans_Additio
Employee Benefit Plans - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Employer contribution savings retirement plan | $623,000 | $533,000 | $571,000 |
Provision_for_Income_Taxes_Det
Provision for Income Taxes (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current | |||
U.S. federal | $0 | $0 | $0 |
U.S. state | 0 | 0 | 0 |
Non-U.S. | 0 | 0 | 0 |
Total current | 0 | 0 | 0 |
Deferred | |||
U.S. federal | 57,873 | 59,379 | 51,540 |
U.S. state | 7,631 | 7,470 | 9,199 |
Non-U.S. | 0 | 0 | 0 |
Valuation Allowance | -65,504 | -66,849 | -60,739 |
Total deferred | 0 | 0 | 0 |
Total | $0 | $0 | $0 |
Components_of_Net_Deferred_Tax
Components of Net Deferred Tax Asset (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ||
Net operating loss carryforwards | $699,997 | $653,896 |
Research and development credits | 73,227 | 70,091 |
Capitalized research | 28,516 | 30,421 |
Payments from collaboration | 19,217 | |
Milestone Rights | 5,321 | 6,608 |
Accrued expenses | 768 | 3,578 |
Non-qualified stock option expense | 43,691 | 41,219 |
Capitalized patent costs | 8,624 | 7,811 |
Other | 131 | 837 |
Depreciation | 3,010 | 2,539 |
Total net deferred tax assets | 882,502 | 817,000 |
Valuation allowance | -882,502 | -817,000 |
Net deferred tax assets | $0 | $0 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2004 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes [Line Items] | ||||
Amount Equity would be increased | $18,300,000 | |||
Change in the valuation allowance | 65,500,000 | 66,800,000 | 60,700,000 | |
Federal operating loss carryforwards | 1,800,000,000 | |||
State operating loss carryforwards | 1,400,000,000 | |||
Net operating loss carryforwards | 216,000,000 | |||
Net operating loss and credit carryforwards, annual use limitation | 13,000,000 | |||
Federal | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry-forwards, expiration year | 2018 | |||
Research and development credits subject to expiration | 48,000,000 | |||
Federal research and development credits begin to expire | 2024 | |||
State | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry-forwards, expiration year | 2015 | |||
Research and development credits not subject to expiration | $39,000,000 |
Effective_Income_Tax_Rate_Deta
Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Schedule Of Income Taxes [Line Items] | |||
Federal tax benefit rate | 35.00% | 35.00% | 35.00% |
State tax benefit, net of federal benefit | 0.00% | 0.00% | 0.00% |
Permanent items | 0.90% | ||
Intercompany transfer of intellectual property | -4.10% | -4.30% | -4.00% |
Valuation allowance | -31.80% | -30.70% | -31.00% |
Effective income tax rate | 0.00% | 0.00% | 0.00% |
Facility_Agreement_Additional_
Facility Agreement - Additional Information (Detail) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||
Dec. 20, 2012 | Oct. 18, 2012 | Dec. 31, 2014 | Dec. 30, 2014 | Jul. 01, 2013 | Feb. 28, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Apr. 30, 2014 | Sep. 23, 2014 | 6-May-14 | |
Tranche | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Facility Agreement, payment commencing date | 1-Jul-16 | ||||||||||
Facility Agreement, payment ending date | 9-Dec-19 | ||||||||||
Facility Agreement, total principle payment | $80,000,000 | ||||||||||
Facility Agreement, total principle payment in 2015 | 0 | ||||||||||
Facility Agreement, total principle payment in 2016 | 5,000,000 | ||||||||||
Facility Agreement, total principle payment in 2017 | 20,000,000 | ||||||||||
Facility Agreement, total principle payment in 2018 | 20,000,000 | ||||||||||
Facility Agreement, total principle payment in 2019 | 35,000,000 | ||||||||||
Short term liability | 72,995,000 | 102,300,000 | |||||||||
Commitment asset | 5,200,000 | ||||||||||
Discount rate | 1.50% | 2.30% | |||||||||
Funding remaining under the facility agreement | 30,100,000 | ||||||||||
Due to Deerfield's commitment to lend additional funds under the Tranche B notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Commitment asset fair value increase (decrease) | 2,900,000 | ||||||||||
Due to the issuance of Tranche 4 notes and Tranche B notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Commitment asset fair value increase (decrease) | -6,300,000 | ||||||||||
Senior convertible notes due December 31, 2019 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Commitment asset at fair value | 2,900,000 | ||||||||||
Senior convertible notes due December 31, 2019 | Less portion of commitment asset | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Commitment Asset written off | 1,800,000 | ||||||||||
Senior convertible notes due December 31, 2019 | Less portion of commitment asset | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Funding remaining under the facility agreement | 70,000,000 | ||||||||||
Deerfield | Milestone Rights Liability | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Contingent liability for milestone payments | 90,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Amount borrowed | 180,000,000 | ||||||||||
Aggregate principal amount of convertible notes | 93,500,000 | 60,000,000 | 6,500,000 | ||||||||
Expense recorded for the difference between the principal and carrying amount of the notes converted | 6,400,000 | ||||||||||
Debt facility principal amount | 60,000,000 | ||||||||||
Senior notes, effective interest rate | 975.00% | ||||||||||
Commitment asset at fair value | 0 | ||||||||||
Common shares issued upon conversion | 17,323,080 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Additional Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expense recorded for the difference between the principal and carrying amount of the notes converted | 6,800,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Common shares issuable upon conversion | 12,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Notes Issued in Four Equal Tranches | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt facility principal amount | 160,000,000 | ||||||||||
Senior notes, effective interest rate | 9.75% | ||||||||||
Number of equal tranches | 4 | ||||||||||
Debt facility periodic principal amount | 40,000,000 | ||||||||||
Principal amount of notes purchased | 160,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Tranche Three | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of convertible notes | 40,000,000 | 40,000,000 | |||||||||
Expense recorded for the difference between the principal and carrying amount of the notes converted | 2,200,000 | ||||||||||
Amount of common shares issued upon conversion | 40,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Tranche One | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of convertible notes | 20,000,000 | 12,500,000 | 7,500,000 | ||||||||
Expense recorded for the difference between the principal and carrying amount of the notes converted | 1,200,000 | ||||||||||
Amount of common shares issued upon conversion | 20,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Milestone Rights Liability | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Contingent liability for milestone payments | 1,900,000 | ||||||||||
Fair value of milestone rights | 16,300,000 | 16,300,000 | |||||||||
Short term liability | 3,100,000 | 3,200,000 | |||||||||
Long term liability | 13,100,000 | 13,100,000 | |||||||||
Current milestone rights liability in other current liabilities | 4,200,000 | ||||||||||
Long-term milestone rights liability in other liabilities | 8,900,000 | ||||||||||
Discount rate | 17.50% | ||||||||||
Risk premium | 5.00% | ||||||||||
Required payment pursuant to the terms of the Milestone Agreement | 5,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Milestone Rights Liability | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Contingent liability for milestone payments | 90,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Tranche One and Tranche Three | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior notes, effective interest rate | 11.63% | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Tranche Two | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount of convertible notes | 33,500,000 | ||||||||||
Expense recorded for the difference between the principal and carrying amount of the notes converted | 3,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Less portion of commitment asset | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt facility principal amount | 20,000,000 | ||||||||||
Senior notes, effective interest rate | 875.00% | 9.75% | |||||||||
Principal amount of notes purchased | 20,000,000 | 20,000,000 | |||||||||
Repayment as a percentage of original principal amount | 25.00% | ||||||||||
Debt instrument maturity date | 31-Dec-19 | ||||||||||
Maximum secured loan facility | 175,000,000 | ||||||||||
Commitment asset at fair value | 1,200,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Less portion of commitment asset | If the Company enters into a collaboration with a third party to commercialize AFFREZZA | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior notes, effective interest rate | 8.75% | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Less portion of commitment asset | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt facility principal amount | 90,000,000 | ||||||||||
Deerfield | Senior convertible notes due December 31, 2019 | Less portion of commitment asset | Minimum | Facility Agreement | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Available amount of credit facility under covenant restrictions | $25,000,000 |
Accretion_of_Debt_Issuance_Cos
Accretion of Debt Issuance Cost and Debt Discount in Connection with Deerfield Financing (Detail) (Deerfield, USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Deerfield | ||
Debt Instrument [Line Items] | ||
Accretion expense- debt issuance cost | $326 | $42 |
Accretion expense- debt discount | $7,550 | $1,113 |
Recovered_Sheet5
Selected Quarterly Financial Data (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Interim Reporting [Line Items] | |||||||||||
Net loss | ($36,439) | ($36,520) | ($73,365) | ($52,056) | ($53,582) | ($50,818) | ($46,124) | ($40,965) | ($198,382) | ($191,490) | ($169,366) |
Net loss per share - basic and diluted | ($0.09) | ($0.09) | ($0.19) | ($0.14) | ($0.16) | ($0.17) | ($0.16) | ($0.15) | ($0.51) | ($0.64) | ($0.94) |
Weighted average common shares used to compute basic and diluted net loss per share | 396,793 | 394,163 | 380,770 | 368,784 | 337,284 | 296,386 | 284,044 | 280,058 |