NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dynavax Technologies Corporation (“we,” “our,” “us,” “Dynavax” or the “Company”), a clinical-stage biopharmaceutical company, develops products to prevent and treat infectious and inflammatory diseases and cancer based on Toll-like Receptor (“TLR”) biology and its ability to modulate the innate immune system. Our lead product candidate is
HEPLISAV-B
TM
(also known as “HEPLISAV”), an investigational adult hepatitis B vaccine in Phase 3 clinical development.
In addition to HEPLISAV-B
, we are conducting clinical and preclinical programs that utilize our expertise in TLR biology. Our product candidates include both TLR agonists and TLR inhibitors. Our clinical stage programs include our autoimmune program partnered with GlaxoSmithKline (“GSK”), our asthma therapeutic program partnered with AstraZeneca AB (“AstraZeneca”), and our cancer immunotherapy program. We also are advancing preclinical development programs in adjuvant technology and TLR 7, 8, and 9 inhibition. We compete with pharmaceutical companies, biotechnology companies, academic institutions and research organizations in developing therapies to prevent or treat infectious and inflammatory diseases and cancer. We were incorporated in California in August 1996 under the name Double Helix Corporation, and we changed our name to Dynavax Technologies Corporation in September 1996. We reincorporated in Delaware in 2000.
Subsidiaries
In April 2006, we completed the acquisition of Rhein Biotech GmbH (“Rhein” or “Dynavax Europe”), a wholly-owned subsidiary in Düsseldorf, Germany. In October 2011, we formed Dynavax International, B.V., a wholly-owned subsidiary in Amsterdam, Netherlands.
2.
|
Summary of Significant Accounting Policies
|
Basis of Presentation
The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All significant intercompany accounts and transactions among the entities have been eliminated from the consolidated financial statements.
Liquidity and Financial Condition
We have incurred significant operating losses and negative cash flows from operations since our inception. As of December 31, 2013, we had cash, cash equivalents and marketable securities of $189.4 million. We currently estimate that we have sufficient cash resources to meet our anticipated cash needs through at least the next 12 months based on cash, cash equivalents and marketable securities on hand as of December 31, 2013 and anticipated revenues and funding from existing agr
eements.
We expect to continue to spend substantial funds in connection with the development and manufacturing of our product candidates, particularly HEPLISAV-B
, human clinical trials for our product candidates and additional applications and advancement of our technology. In order to continue these activities, we may need to raise additional funds. This may occur through strategic alliance and licensing arrangements and/or future public or private financings. Sufficient additional funding may not be available on acceptable terms, or at all. If adequate funds are not available in the future, we may need to delay, reduce the scope of or put on hold the HEPLISAV-B program or our other development programs while we seek strategic alternatives.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make informed
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ materially from these estimates.
45
Foreign Currency Translation
We consider the local currency to be the functional currency for our international subsidiary, Rhein. Accordingly, assets and liabilities denominated in foreign currencies are translated into U.S. dollars using the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing throughout the year. Currency translation adjustments arising from period to period are charged or credited to accumulated other comprehensive income (loss) in
stockholders’ equity. For the years ended December 31, 2013, 2012 and 2011, we reported an unrealized gain of $0.5 million, an unrealized gain of $0.4 million and an unrealized loss of $0.3 million, respectively. Realized gains and losses resulting from currency transactions are included in the consolidated statements of operations. For the years ended December 31, 2013, 2012 and 2011, we reported a loss of $0.2 million, a loss of $0.2 million and a gain of $0.2 million, respectively, resulting from currency transactions in our consolidated statements of operations.
Cash, Cash Equivalents and Marketable Securities
We consider all highly liquid investments purchased with an original maturity of three months or less and that can be liquidated without prior notice or penalty, to be cash equivalents. Management determines the appropriate classification of marketable securities at the time of purchase. We invest in short-term money market funds, U.S. government agency securities, U.S. treasury securities and municipal secur
ities. We believe these types of investments are subject to minimal credit and market risk. We do not invest in auction rate securities or securities collateralized by home mortgages, mortgage bank debt, or home equity loans.
We have classified our entire
investment portfolio as available-for-sale and available for use in current operations and accordingly have classified all investments as short-term. Available-for-sale securities are carried at fair value based on inputs that are observable, either directly or indirectly, such as quoted market prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the securities, with unrealized gains and losses included in accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses and declines in value, if any, judged to be other than temporary on available-for-sale securities are included in interest income or expense. The cost of securities sold is based on the specific identification method. Management assesses whether declines in the fair value of investment securities are other than temporary. In determining whether a decline is other than temporary, management considers the following factors:
·
|
Whether the investment has been in a continuous realized loss position for over 12 months;
|
·
|
the duration to maturity of our investments;
|
·
|
our intention and ability to hold the investments to maturity and if it is not more likely than not that we will be required to sell the investment before recovery of the amortized cost bases;
|
·
|
the credit rating, financial condition and near-term prospects of the issuer; and
|
·
|
the type of investments made.
|
To date, there have been no declines in fair value that have been iden
tified as other than temporary.
Concentration of Credit Risk and Other Risks and Uncertainties
We operate in one business segment, which is the discovery and development of biopharmaceutical products. We determine our segments based on the way we organize our business by making operating decisions and assessing performance. In fiscal years 2013, 2012 and 2011, 89%, 88% and 94% of our revenues were earned in the United States, respectively, and the
remaining revenues were earned in Germany. As of December 31, 2013 and 2012, 9% and 10%, respectively, of our long-lived assets were located in the United States and the remaining long-lived assets were located in Germany.
Financial instruments that are subject to concentration of credit risk consist primarily of cash equivalents, marketable securities and accounts receivable. Our policy is to invest cash in institutional money market funds and marketable securities of U.S. government and corporate issuer
s with high credit quality to limit the amount of credit exposure. We currently maintain a portfolio of cash equivalents and marketable securities in a variety of securities, including short-term money market funds, U.S. government agency securities, U.S. treasury securities and municipal securities. We have not experienced any losses on our cash equivalents and marketable securities.
Accounts receivable are recorded at invoice value. We review our exposure to accounts receivable, including the
requirement for allowances based on management’s judgment. We have not historically experienced any significant losses. We do not currently require collateral for any of our accounts receivable.
46
Our products will require approval from the U.S. Food and Drug Administration (“FDA”) and foreign regulatory agencies before commercial sales can commence. There can be no assurance that our products will receive any of these required approvals. The denial or delay o
f such approvals would have a material adverse impact on our business.
We have relied on a limited number of suppliers to produce oligonucleotides
for clinical trials and a single contract manufacturer to produce our first generation TLR 9 agonist, 1018 for HEPLISAV-B. The loss of our current supplier would have a significant effect on our ability to produce HEPLISAV-B for commercialization and development of our other product candidates. To date, we have manufactured only small quantities of oligonucleotides and 1018 ourselves for development purposes.
We are subject to risks common to companies in the biopharmaceutical industry, including, but not limited to, new technological innovations, clinical development risk, establishing appropriate commercial partnerships, protection of proprietary technology, compliance with government and environmental regulations, uncertainty of market acceptance of products, product liability, the volatility of our stock price and the need to obtain additional financing
.
Long-Lived Assets
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Repair and maintenance costs are charged to expense as incurred. Leasehold improvements in both of our facilities are amortized over the remaining life of the initial lease term or the estimated useful lives of the assets, whichever is shorter.
We evaluate the carrying value of long-lived assets, including intangible assets, whenever events or changes in business circumstances or our planned use of long-lived assets indicate
, based on undiscounted future operating cash flows, that their carrying amounts may not be fully recoverable or that their useful lives are no longer appropriate. When an indicator of impairment exists, long-lived assets are written down to their respective fair values. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Significant management judgment is required in the forecast of future operating results that are used in the preparation of expected undiscounted cash flows. No impairments of purchased intangible assets have been identified during the years presented.
Goodwill
Our goodwill balance relates to our April 2006 acquisition of Rhein. Goodwill was recorded as the excess purchase price over tangible and intangible assets acquired
and liabilities assumed based on their estimated fair value, by applying the acquisition method of accounting. Goodwill is not amortized but is subject to an annual impairment test which consists of a comparison of the fair value of the related reporting unit against its carrying amount including goodwill. If the carrying amount exceeds the fair value, impairment is calculated and recorded as a charge in the consolidated statements of operations. We determined that we have only one operating segment and there are no components of that operating segment that are deemed to be separate reporting units such that we have one reporting unit for purposes of our goodwill impairment testing. We evaluate goodwill for impairment on an annual basis and on an interim basis if events or changes in circumstances between annual impairment tests indicate that the asset might be impaired.
Revenue Recognition
Our revenues consist of amounts earned from collaborations, grants and fees from services and licenses. We enter into license and manufacturing agreements and collaborative research and development arrangements with pharmaceutical and biotechnology partners that may involve multiple deliverables. Our arrangements may include one or more of the following elements: upfront license payments, cost reimbursement for the performance of research and development activities, milestone
payments, other contingent payments, contract manufacturing service fees, royalties and license fees. Each deliverable in the arrangement is evaluated to determine whether it meets the criteria to be accounted for as a separate unit of accounting or whether it should be combined with other deliverables. In order to account for the multiple-element arrangements, the Company identifies the deliverables included within the arrangement and evaluates which deliverables represent separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. We recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured.
On January 1, 2011, we adopted on a prospective basis Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2009-13,
Multiple-Deliverable Revenue Arrangements
, which amends the criteria related to identifying separate units of accounting and provides guidance on whether multiple deliverables exist, how an arrangement should be separated and the consideration allocated.
47
Non-refundable upfront fees received for license and collaborative agreements entered into prior to January 1, 2011 and other payments under collaboration agreements where we have continuing performance obligations related to the payments are deferred and recognized over our expected performance period. Revenue is recognized on a ratable basis, unless we determine that another method is more appropriate, through the date at which our performance o
bligations are completed. Management makes its best estimate of the period over which we expect to fulfill our performance obligations, which may include clinical development activities. Given the uncertainties of research and development collaborations, significant judgment is required to determine the duration of the performance period. We recognize cost reimbursement revenue under collaborative agreements as the related research and development costs are incurred, as provided for under the terms of these agreements.
Contingent consideration received for the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is defined as an event having all of the following characteristics: (i) there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, (ii) the event can only be achieved based in whole or in part on either the entity’s performance or a specific outcome resulting from the entit
y’s performance and (iii) if achieved, the event would result in additional payments being due to the entity.
Our license and collaboration agreements with our partners provide for payments to be paid to us upon the achievement of development milestones. Given the challenges inherent in developing biologic products, there is substantial uncertainty whether any such milestones will be achieved at the time we entered into these agreements. In addition, we evaluate whether the development milestones meet the
criteria to be considered substantive. The conditions include: (i) the development work is contingent on either of the following: (a) the vendor’s performance to achieve the milestone or (b) the enhancement of the value of the deliverable item or items as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone; (ii) it relates solely to past performance and (iii) it is reasonable relative to all the deliverable and payment terms within the arrangement. As a result of our analysis, we consider our development milestones to be substantive and, accordingly, we expect to recognize as revenue future payments received from such milestones as we achieve each milestone.
Milestone payments that are contingent upon the achievement of substantive at-risk performance criteria are recognized in full upon achievement of those milestone events in accordance with the terms of the agreement and assuming all other revenue recognition criteria have been met. All revenue recognized to dat
e under our collaborative agreements has been nonrefundable.
Our license and collaboration agreements with certain partners also provide for contingent payments to be paid to us based solely upon the performance of our partner. For such contingent payments we expect to recognize the payments as revenue upon receipt, provided that collection is reasonably assured and the other revenue recognition criteria have been satisfied.
Revenues from manufacturing services are recognized upon meeting the criteria for substantial performance and acceptance by the customer.
Revenue from royalty payments is contingent on future sales activities by our licensees. As a result, we recognize royalty revenue when reported by our licensees and when collection is reasonably assured.
Revenue from government and private agency grants are recognized as the related research expenses are incurred and to the extent that funding is approved. Additionally, we recognize revenue based on the facilities and administrative cost rate reimbursable per the terms of the grant awards.
Research and Development Expenses and Accruals
Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services and non-cash stock-based compensation. Research and development costs are expensed as incurred. Amounts due under such arrangements may be either fixed fee or fee for service, and may include upfront payments, monthly payments and payments upon the completion of milestones or re
ceipt of deliverables. Non-refundable advance payments under agreements are capitalized and expensed as the related goods are delivered or services are performed.
48
We contract with third parties to perform various clinical trial activities in the on-going development of potential products. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows to our vendors. Payments under the contracts depend on factors such as the achievement of certain events, successful enrollment of patients, completion of portions of the clinical trial or similar conditions. Our accruals for clinical trials are b
ased on estimates of the services received and efforts expended pursuant to contracts with clinical trial centers and clinical research organizations. We may terminate these contracts upon written notice and we are generally only liable for actual effort expended by the organizations to the date of termination, although in certain instances we may be further responsible for termination fees and penalties. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to the Company at that time. There have been no material adjustments to the Company’s prior period accrued estimates for clinical trial activities through December 31, 2013.
Stock-Based Compensation
Stock-based compensation expense for stock options and other stock awards is estimated at the grant date based on the award’s fair value-based measurement and is recognized on a straight-line basis over the award’s vesting period, assuming
appropriate forfeiture rates. Our determination of the fair value-based measurement of stock options on the date of grant using an option-pricing model is affected by our stock price, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. In the future, as additional empirical evidence regarding these input estimates becomes available, we may change or refine our approach of deriving these input estimates. These changes could impact our fair value-based measurement of stock options granted in the future. Changes in the fair value-based measurement of stock awards could materially impact our operating results.
We selected the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value-based measurement of our stock options. The Black-Scholes model requires the use of highly subjective and complex assumptions which determine the fair value-based measurement of stock options, including the option’s expected term and the price volatility of the underlying stock. Our current estimate of volatility is based on the historical volatility of our stock price. To t
he extent volatility in our stock price increases in the future, our estimates of the fair value of options granted in the future could increase, thereby increasing stock-based compensation cost recognized in future periods. We derive the expected term assumption primarily based on our historical settlement experience, while giving consideration to options that have not yet completed a full life cycle. Stock-based compensation cost is recognized only for awards ultimately expected to vest. Our estimate of the forfeiture rate is based primarily on our historical experience. To the extent we revise this estimate in the future, our share-based compensation cost could be materially impacted in the quarter of revision, as well as in the following quarters.
Income Taxes
We account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Additionally, we assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. We have provided a full valuation allowance on our defer
red tax assets at December 31, 2013 and 2012 because we believe it is more likely than not that our deferred tax assets will not be realized as of December 31, 2013, and 2012.
We have no unrecognized tax benefits as of December 31, 2013, including no accrued amounts for interest and penalties. We do not anticipate that total unrecognized tax benefits will significantly change prior to December 31, 2014. Our policy will be to recognize interest and penalties related to income taxes, if any, as a component o
f general and administrative expense. We are subject to income tax examinations for U.S. federal and state income taxes from 1996 forward. We are subject to tax examination in Germany from 2010 forward.
Recent Accounting Pronouncements
Accounting Standards Update 2013-02
In February 2013, the FASB issued ASU 2013-02, “
Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income.”
This ASU expands the presentation of changes in accumulated other comprehensive income. The new guidance requires an entity to disaggregate the total change of each component of other comprehensive income either on the face of the statement of operations or as a separate disclosure in the financial statement footnotes. ASU 2013-02 is effective for fiscal years beginning after December 15, 2012. The Company adopted this guidance on a prospective basis in the first quarter of 2013 and the adoption did not have any impact on our financial position, results of operations or cash flows as there were no amounts reclassified out of accumulated other comprehensive (loss) income during the year ended December 31, 2013.
49
3.
|
Fair Value Measurements
|
The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and m
inimize the use of unobservable inputs. The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
·
|
Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities;
|
·
|
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
·
|
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions.
|
Recurring Fair Value Measurements
The following table represents the fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of December 31, 2013 and 2012 (in thousands):
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
$
|
20,013
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,013
|
|
U.S. government agency securities
|
|
-
|
|
|
|
167,597
|
|
|
|
-
|
|
|
|
167,597
|
|
Total
|
$
|
20,013
|
|
|
$
|
167,597
|
|
|
$
|
-
|
|
|
$
|
187,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
$
|
3,140
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,140
|
|
U.S. government agency securities
|
|
-
|
|
|
|
119,233
|
|
|
|
-
|
|
|
|
119,233
|
|
U.S. treasury securities
|
|
-
|
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
Municipal securities
|
|
-
|
|
|
|
715
|
|
|
|
-
|
|
|
|
715
|
|
Total
|
$
|
3,140
|
|
|
$
|
120,448
|
|
|
$
|
-
|
|
|
$
|
123,588
|
|
Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.
U.S. Government agency securities, U.S. treasury securities and municipal securities are measured at fair value using Level 2 inputs. We review trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third party data providers. These inputs repres
ent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.
50
4.
|
Cash, Cash Equivalents and Marketable Securities
|
The following is a summary of cash, cash equivalents and marketable securities as of December 31, 2013, and 2012 (in thousands):
|
Amortized Cost
|
|
|
Unrealized Gains
|
|
|
Unrealized Losses
|
|
|
Estimated Fair Value
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
1,766
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,766
|
|
Money market funds
|
|
20,013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,013
|
|
U.S. government agency securities
|
|
1,343
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,343
|
|
Total cash and cash equivalents
|
|
23,122
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,122
|
|
Marketable securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency securities
|
|
166,285
|
|
|
|
16
|
|
|
|
(47
|
)
|
|
|
166,254
|
|
Total marketable securities available-for-sale
|
|
166,285
|
|
|
|
16
|
|
|
|
(47
|
)
|
|
|
166,254
|
|
Total cash, cash equivalents and marketable securities
|
$
|
189,407
|
|
|
$
|
16
|
|
|
$
|
(47
|
)
|
|
$
|
189,376
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
1,542
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,542
|
|
Money market funds
|
|
3,140
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,140
|
|
Municipal securities
|
|
715
|
|
|
|
-
|
|
|
|
-
|
|
|
|
715
|
|
U.S. government agency securities
|
|
2,202
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,202
|
|
Total cash and cash equivalents
|
|
7,599
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,599
|
|
Marketable securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency securities
|
|
116,986
|
|
|
|
46
|
|
|
|
(1
|
)
|
|
|
117,031
|
|
U.S. treasury securities
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500
|
|
Total marketable securities available-for-sale
|
|
117,486
|
|
|
|
46
|
|
|
|
(1
|
)
|
|
|
117,531
|
|
Total cash, cash equivalents and marketable securities
|
$
|
125,085
|
|
|
$
|
46
|
|
|
$
|
(1
|
)
|
|
$
|
125,130
|
|
The maturities of our marketable securities available-for-sale are as follows (in thousands)
|
|
December 31, 2013
|
|
|
|
Amortized Cost
|
|
|
Estimated Fair Value
|
|
Mature in one year or less
|
|
$
|
93,691
|
|
|
$
|
93,701
|
|
Mature after one year through two years
|
|
|
72,594
|
|
|
|
72,553
|
|
|
|
$
|
166,285
|
|
|
$
|
166,254
|
|
We invest in short-term money market funds, U.S. government agency securities, U.S treasury securities and
municipal securities.
There were no realized gains or losses from the sale of marketable securities in the years ended December 31, 2013, 2012 and 2011. All of our investments are classified as short-term and available-for-sale, as we may not hold our investments until maturity.
51
5.
|
Property and Equipment
|
Property and equipment as of December 31, 2013, and 2012 consist of the following (in thousands):
|
Estimated Useful
Life
|
|
December 31,
|
|
|
(In years)
|
|
2013
|
|
|
2012
|
|
Manufacturing equipment
|
5-14
|
|
$
|
8,968
|
|
|
$
|
7,574
|
|
Lab equipment
|
5-13
|
|
|
7,227
|
|
|
|
6,755
|
|
Computer equipment
|
3
|
|
|
1,962
|
|
|
|
1,807
|
|
Furniture and fixtures
|
3
|
|
|
1,056
|
|
|
|
983
|
|
Leasehold improvements
|
5-7
|
|
|
6,048
|
|
|
|
5,445
|
|
Assets in progress
|
|
|
|
762
|
|
|
|
1,047
|
|
|
|
|
|
26,023
|
|
|
|
23,611
|
|
Less accumulated depreciation and amortization
|
|
|
|
(17,317
|
)
|
|
|
(15,646
|
)
|
Total
|
|
|
$
|
8,706
|
|
|
$
|
7,965
|
|
Depreciation and amortization expense on property and equipment was $1.3 million, $1.2 million and $1.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Intangible assets consisted primarily of manufacturing process and customer relationships related to our 2006 acquisition of Rhein. The manufacturing process derives from the methods for making proteins in Hansenula yeast, which is a process we use to make a key component in the production of hepatitis B vaccine. The customer relationships derive from Rhein’s ability to sell existing, in-process and future pro
ducts to its existing customers. Purchased intangible assets other than goodwill are amortized on a straight-line basis over their respective useful lives. The manufacturing process and customer relationships were amortized over their estimated useful lives of five years. Both the manufacturing process and customer relationships intangible assets were fully amortized as of the year ended December 31, 2011. Amortization of intangible assets was zero for the years ended December 31, 2013 and 2012, and $0.3 million for the year ended December 31, 2011.
7.
|
Current Accrued Liabilities
|
Current accrued liabilities as of December 31, 2013, and 2012 consist of the following (in thousands):
|
December 31,
|
|
|
2013
|
|
|
2012
|
|
Payroll and related expenses
|
$
|
3,639
|
|
|
$
|
4,538
|
|
Legal expenses
|
|
338
|
|
|
|
396
|
|
Third party research and development expenses
|
|
2,403
|
|
|
|
3,207
|
|
Other accrued liabilities
|
|
1,786
|
|
|
|
1,922
|
|
Total
|
$
|
8,166
|
|
|
$
|
10,063
|
|
On April 18, 2006, we, Symphony and Holdings entered into a transaction involving a series of related agreements providing for the advancement of certain of our immunostimulatory sequences-based programs for cancer, hepatitis B and hepatitis C therapy (collectively, the “Programs”). Pursuant to these agreements, Symphony formed SDI and invested $50 million to fund the Programs, and we licensed to Holdings our intellectual property rights related to the Programs, which were assigned to SDI. As a result of th
ese agreements, Symphony owned 100% of the equity of Holdings, which owned 100% of the equity of SDI.
52
In connection with the transaction described above, Holdings granted to us an exclusive purchase option that gave us the right, but not the obligation, to acquire the outstanding equity securities of SDI, which would result in our reacquisition of the intellectual property rights that we licensed to Holdings (the “Original Purchase Option”). In exchange for the Original Purchase Option, we granted Holdings
five-year warrants to purchase up to 2,000,000 shares of our common stock at an exercise price of $7.32 per share pursuant to a warrant purchase agreement (the “Original Warrants”), and granted certain registration rights to Holdings pursuant to a registration rights agreement. We also received an exclusive option to purchase either the hepatitis B or hepatitis C therapy program (the “Program Option”) during the first year of the arrangement. In April 2007, we exercised the Program Option for the hepatitis B program which resulted in the recognition of a $15 million liability to Symphony. We remained primarily responsible for the development of the cancer and hepatitis C therapy programs in accordance with a development plan and related development budgets that we agreed to with Holdings.
Prior to the acquisition of all of the outstanding equity of SDI on December 30, 2009, we consolidated the financial position and results of operations of SDI. In November 2009, we entered into an agreement with Holdings to modify the provisions of and to exercise the Original Purchase Option (the “Amended Purchase Option”). We completed the acquisition of all of the outstanding equity of SDI on December 30, 2009. In exchange for all of the outstanding equity of SDI, we iss
ued to Symphony and certain of its co-investors: (i) 13,000,000 shares of common stock (the “Shares”); (ii) 5-year warrants to purchase 2,000,000 shares of common stock with an exercise price of $1.94 per share (the “Warrants”); and (iii) a non-interest bearing note in the principal amount of $15 million, due December 31, 2012, payable in cash, our common stock or a combination thereof at our discretion, which obligation was previously payable solely in cash on April 18, 2011 (the “Note”). In addition, we agreed to contingent cash payments from us equal to 50% of the first $50 million from any upfront, pre-commercialization milestone or similar payments received by us from any agreement with any third party with respect to the development and/or commercialization of the cancer and hepatitis C therapies originally licensed to SDI. The Original Warrants held by Symphony were cancelled as part of this transaction.
We were obligated to make future contingent cash payments to the former Holdings shareholders related to certain payments received by us, if any, from future partnering agreements pertaining to our hepatitis C and cancer therapy programs. We estimated the valuation of this contingent liability using a discounted cash flow model. The discounted cash flo
w model was derived from management’s assumptions regarding the timing, amounts, and probability of potential upfront and milestone payments for the development and/or commercialization of the hepatitis C program based on transactions for similar stage programs by other companies. These cash flows were discounted at a rate of 16% for the fiscal year ended December 31, 2010.
Changes in the fair value of the contingent consideration liability were recognized in “other income (expense)” in the consolidated statements of operations in the period of the change. During the fiscal year ended December 31, 2010, we reduced the assumed probability of our receipt of upfront and milestone payments from a potential partnership and extended the timing of when these expec
ted receipts would occur. In addition, based on our assumptions regarding our beta and risk free interest rate used in the discounted cash flow model, the change in fair value of the contingent consideration liability resulted in other income of $2.2 million for the fiscal year ended December 31, 2010. During the year ended December 31, 2011, we determined that we would not receive any upfront or milestone payments from a potential partnership for our hepatitis C therapy program and, therefore, estimated the fair value of the liability to be zero as of December 31, 2011 resulting in other income of $0.8 million. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement.
We recorded the acquisition of all of the outstanding equity of SDI pursuant to the Amended Purchase Option as a return of equity to the noncontrolling interest. The acquisition was accounted for as a capital transaction that did not affect our consolidated net loss. H
owever, because the acquisition was accounted for as a capital transaction, the consideration paid in excess of the carrying value of the noncontrolling interest in SDI is treated as a deemed dividend at the time for purposes of reporting net loss and earnings per share.
The estimated fair values of the warrants transferred were calculated using the Black-Scholes valuation model.
We estimated the fair value of the Note using a net present value model with a discount rate of 17%. Imputed interest was recorded as interest expense over the term of the loan using the interest rate method. We paid in cash the $15 million principal balance of the Note on December 31, 2012.
The Shares and Warrants were subject to certain anti-dilution protection in the event that we issued other equity securities within six months from December 30, 2009. As a result of an equity offering completed in April 2010 prior to the expiration of the anti-dilution provision, Symphony received an additional 1,076,420 shares of common stock
(“April 2010 Shares”) and warrants to purchase 7,038,210 shares of common stock (“April 2010 Warrants”) having the same terms as the warrants sold in the offering, which have an exercise price of $1.50 per share and a term of five years. The Warrants issued on December 30, 2009 were cancelled upon the issuance of the April 2010 Warrants.
53
The fair value of the April 2010 Shares and incremental fair value of the April 2010 Warrants provided to Symphony, as measured upon issuance and remeasured at June 30, 2010, resulted in non-operating expense of $11.1 million in the second quarter of 2010. This also resulted in an increase of $9.5 million to the warrant liability and an increase of $1.6 million to additional paid in capital as of June 30, 2010. Following t
he expiration date of Symphony’s anti-dilution protection, on June 30, 2010, the value of the April 2010 Warrants of $12.0 million was reclassified into stockholders’ equity in the consolidated balance sheets. As of December 31, 2013, warrants to purchase 6,765,128 shares remained outstanding.
9
.
|
Commitments and Contingencies
|
We lease our facilities in Berkeley, California (“Berkeley Lease”) and Düsseldorf, Germany (“Düsseldorf Lease”) under operating leases that expire in June 2018 and March 2023, respectively. The Berkeley Lease provides for periods of escalating rent. The total cash payments over the life of the lease are divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease per
iod. We entered into sublease agreements under the Düsseldorf Lease for a certain portion of the leased space. The sublease income is offset against our rent expense.
During September 2013, we decided not to occupy a portion of our facility in Berkeley, California. As a result, we recorded a one-time estimated unoccupied facility expense of $0.9 million for the year ended December 31, 2013, representing the present value of the rent payments and other costs associated with the lease, net of estimated subl
ease income, for the remaining life of the operating lease.
Total net rent expense related to our operating leases for the years ended December 31, 2013, 2012 and 2011, was $1.9 million, $1.7 million and $1.7 million, respectively. Deferred rent was $0.6 million as of December 31, 2013 and 2012.
Future minimum payments under the non-cancelable portion of our operating leases at December 31, 2013, excluding payments from sublease payments, are as follows (in thousands):
Years ending December 31,
|
|
|
|
|
2014
|
|
$
|
2,233
|
|
2015
|
|
|
2,282
|
|
2016
|
|
|
2,333
|
|
2017
|
|
|
2,382
|
|
2018
|
|
|
1,351
|
|
Thereafter
|
|
|
2,499
|
|
Total
|
|
$
|
13,080
|
|
During the fourth quarter of 2004, we established a letter of credit with Silicon Valley Bank as security for our Berkeley Lease in the amount of $0.4 million. The letter of credit remained outstanding as of December 31, 2013, and is collateralized by a certificate of deposit for $0.4 million, which has been included in restricted cash in the consolidated balance shee
ts as of December 31, 2013 and 2012. Under the terms of the Berkeley Lease, if the total amount of our cash, cash equivalents and marketable securities falls below $20 million for a period of more than 30 consecutive days during the lease term, the amount of the required security deposit will increase to $1.1 million, until such time as our projected cash and cash equivalents will exceed $20 million for the remainder of the lease term, or until our actual cash and cash equivalents remains above $20 million for a period of 12 consecutive months.
We established a letter of credit with Deutsche Bank as security for our Düsseldorf Lease in the amount of approximately 0.2 million Euros. The letter of credit remained outstanding through December 31, 2013 and is collateralized by a certificate of deposit for 0.2
million Euros, which has been included in restricted cash in the consolidated balance sheets as of December 31, 2013 and 2012.
54
In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us to make payments to the contractual counterparties upon the occurrence of future events. In
addition, in the normal course of operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, we may be required to pay future up-front fees, milestones and royalties on net sales of products originating from the licensed technologies, if any, or other payments contingent upon the occurrence of future events that cannot reasonably be estimated.
We rely on research institutions, contract research organizations, clinical investigators as well as clinical and material manufacturers of our product candidates. As of December 31, 2013, under the terms of our agreements, we are obligated to make future payments as services are provided of approximately $4.5 million through 2015. These a
greements are terminable by us upon written notice. Generally, we are liable only for actual effort expended by the organizations at any point in time during the contract through the notice period.
Under the terms of our exclusive license agreements with the Regents of the University of California, as amended, for certain technology and related patent rights and materials, we pay annual license or maintenance fees and will be required to pay milestones and royalties on net sales
, if any, of certain products originating from the licensed technologies.
1
0
.
|
Collaborative Research, Development and License Agreements
|
GlaxoSmithKline
In December 2008, we entered into a worldwide strategic alliance with GSK to discover, develop and commercialize TLR inhibitors. Under the terms of the arrangement, we agreed to conduct research and early clinical development in up to four programs: the Lead TLR 7/9 program, a Follow-On TLR 7/9 program, and up to two other TLR programs. In 2011 we began development of a TLR 8 program as one of the two additional programs under the collaboration.
GSK subsequently returned all rights to this program to us.
We are currently conducting a Phase 1 clinical trial in the Lead TLR 7/9 program with DV1179 in systemic lupus erythematosus patients. The Company is not currently performing any activities on the Follow-On TLR 7/9 program. GSK has not yet chosen to initiate development of the remaining program under the agreement.
In December 2013, we amended our agreement with GSK to extend the research term until conclusion of the ongoing phase 1 study of DV1179. In addition, the exclusivity provisions of the agreement were modified, giving us rights to immediately begin preclinical and clinical research on inhibitors of TLR 7 and 9 (other than DV1179) for oncology indications.
GSK can exercise its exclusive option to license each program. If GSK exercises an option, GSK would carry out further development and commercialization of the corresponding products. If GSK exercises their option on the Lead TLR 7/9 program, then we are eligible to receive payments of up to approximately $125 million, comprised of contingent option
exercise payments and additional payments based on GSK’s achievement of certain development, regulatory and commercial objectives.
We are also eligible to receive up to $60 million if aggregate worldwide annual net sales milestones are achieved and tiered royalties ranging from the mid–single digit to mid-teens on sales of any products originating from the collaboration. We have retained an option to co-develop and co-promote one product under this agreement.
We received an initial payment of $10 million in 2008. The deliverables under this arrangement did not have stand-alone value and so did not qualify as separate units of accounting. In 2011, we earned and recognized $12 million in substantive development milestone payments related to the initiation o
f Phase I and proof-of-mechanism clinical trials of DV1179 in systemic lupus erythematosus patients. In 2011, we earned and recognized $3 million in substantive development milestone payments related to the initiation of development of the TLR 8 program.
Revenue from the initial payment from GSK was deferred and is being recognized over the expected period of performance under the agreement, initially estimated to be seven years. In the fourth quarter of 2013 we ree
valuated and revised the expected period of performance under the agreement from seven years to six years resulting in the recognition of $0.3 million of additional revenue in 2013.
55
The following table summarizes the revenues recognized under our agreement with GSK (in thousands):
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Initial payment
|
|
$
|
1,702
|
|
|
$
|
1,428
|
|
|
$
|
1,428
|
|
Milestone revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
Total
|
|
$
|
1,702
|
|
|
$
|
1,428
|
|
|
$
|
16,428
|
|
As of December 31, 2013 and 2012, deferred revenue relating to the initial payment was $2.5 million and $4.2 million, respectively.
Absent early termination, the agreement will expire when all of GSK’s payment obligations expire. Either party may terminate the agreement early upon written notice if the other party commits an uncured material breach of the agreement. Either party may terminate the agreement in the event of insolvency of the other party. GSK also has the option to terminate the agreement without cause upon prior written notice within a specified window of time dependent upon the stage of clinical development of the progra
ms.
AstraZeneca
In September 2006, we entered into a three-year research collaboration and license agreement with AstraZeneca for the discovery and development of TLR 9 agonist-based therapies for the treatment of asthma and chronic obstructive pulmonary disease.
In October 2011, we amended our agreement with AstraZeneca to provide that we will conduct initial clinical development of AZD1419. Under the terms of the amended agreement, AstraZeneca will fund all program expenses to cover the cost of development activities through Phase 2a, estimated to total approximately $20 million. We received an initial payment of $3 million to begin the clinical development program. In the first quarter of 2012, we received a $2.6 million payment to advance AZD1419 into
preclinical toxicology studies and these toxicology studies were completed in the third quarter of 2012. We and AstraZeneca have agreed to advance AZD1419 towards a Phase 1 clinical trial, which resulted in a development funding payment of $6 million, received in the fourth quarter of 2012. If AstraZeneca chooses to advance the program following completion of Phase 2a, we will receive a $20 million milestone payment and AstraZeneca will retain its rights to develop the candidate therapy and to commercialize the resulting asthma product. We are eligible to receive additional milestone payments, which we have determined to be substantive milestones, of up to approximately $100 million, based on the achievement of certain development and regulatory objectives. Additionally, upon commercialization, we are eligible to receive tiered royalties ranging from the mid to high single-digits based on product sales of any products originating from the collaboration. We have the option to co-promote in the United States products arising from the collaboration, if any. AstraZeneca has the right to sublicense its rights upon our prior consent.
Revenue from the initial payment was deferred and is being recognized over the expected period of performance under the agreement, which is approximately 50 months. Revenue from the development funding payment is being recognized as the development work is performed.
The following table summarizes the revenues earned under our agreement with AstraZeneca (in thousands):
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Initial payments
|
|
$
|
720
|
|
|
$
|
720
|
|
|
$
|
120
|
|
Performance of research activities
|
|
|
2,507
|
|
|
|
2,462
|
|
|
|
642
|
|
Total
|
|
$
|
3,227
|
|
|
$
|
3,182
|
|
|
$
|
762
|
|
As of December 31, 2013 and 2012, total deferred revenue from the initial payment and development funding payments was $4.8 million and $7.7 million, respectively.
Absent early termination, the agreement will expire when all of AstraZeneca’s payment obligations expire. AstraZeneca has the right to terminate the agreement at any time upon prior written notice and either party may terminate the agreement early upon written notice if the other party commits an uncured material breach of the agreement.
56
National Institutes of Health (“NIH”) and Other Funding
We have been awarded various grants from the NIH and the NIH’s National Institute of Allergy and Infectious Disease (“NIAID”) in order to fund research. The awards are related to specific research objectives and we earn revenue as the related research expenses are incurred. We have earned revenue during the periods ended December 31, 2013 and 2012 from the follo
wing awards:
·
|
September 2013, NIH awarded us $0.2 million to fund research in developing TLR antagonists for therapy of hepatic fibrosis and cirrhosis.
|
·
|
June 2012, NIH awarded us $0.6 million to fund research in screening for inhibitors of TLR 8 for treatment of autoimmune diseases.
|
·
|
May 2012, NIH awarded us $0.4 million to fund development of TLR 8 inhibitors for treatment of rheumatoid arthritis.
|
·
|
July 2011, NIH awarded us $0.6 million to fund research in preclinical models of skin autoimmune inflammation.
|
·
|
August 2010, NIAID awarded us a grant to take a systems biology approach to study the differences between individuals who do or do not respond to vaccination against the hepatitis B virus. This study will be one of several projects conducted under a grant to the Baylor Institute of Immunology Research in Dallas as part of the Human Immune Phenotyping Centers program. We have been awarded a total of $1.4 million under this grant.
|
·
|
July 2010, NIH awarded us $0.6 million to explore the feasibility of developing a universal vaccine to prevent infection by human papilloma virus.
|
·
|
September 2008, NIAID awarded us a five-year $17 million contract to develop our oligonucleotide technology using TLR 9 agonists as vaccine adjuvants. The contract supports adjuvant development for anthrax as well as other disease models.
|
The following table summarizes the revenues recognized under the various arrangements with the NIH and NIAID (in thousands):
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
NIAID contracts
|
|
$
|
4,103
|
|
|
$
|
3,571
|
|
|
$
|
2,730
|
|
All other NIH contracts
|
|
|
1,035
|
|
|
|
368
|
|
|
|
380
|
|
Total grant revenue
|
|
$
|
5,138
|
|
|
$
|
3,939
|
|
|
$
|
3,110
|
|
Basic net loss per share allocable to common stockholders
is calculated by dividing the net loss allocable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share allocable to common stockholders is computed by dividing the net loss allocable to common stockholders by the weighted-average number of common shares outstanding during the period and giving effect to all potentially dilutive common shares using the treasury-stock method. For purposes of this calculation, common stock subject to repurchase by us, outstanding stock options, stock awards, warrants and Series B Convertible Preferred Stock are considered to be potentially dilutive common shares and are only included in the calculation of diluted net loss per share allocable to common stockholders when their effect is dilutive.
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Basic and diluted net loss per share (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(66,720
|
)
|
|
|
(69,949
|
)
|
|
|
(48,597
|
)
|
Preferred stock deemed dividend
|
|
|
(8,469
|
)
|
|
|
-
|
|
|
|
-
|
|
Net loss allocable to common stockholders
|
|
$
|
(75,189
|
)
|
|
$
|
(69,949
|
)
|
|
$
|
(48,597
|
)
|
Denominator for basic and diluted net loss per share allocable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
196,275
|
|
|
|
170,469
|
|
|
|
125,101
|
|
Basic and diluted net loss per share allocable to common stockholders
|
|
$
|
(0.38
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.39
|
)
|
57
Outstanding warrants, stock options, Series B Convertible Preferred Stock
and stock subject to repurchase by us under stock awards were excluded from the calculation of net loss per share allocable to common stockholders as the effect of their inclusion would have been anti-dilutive.
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Outstanding securities not included in diluted net loss per share calculation (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and stock awards
|
|
|
17,040
|
|
|
|
15,561
|
|
|
|
11,101
|
|
Series B Convertible Preferred Stock (as converted to common stock)
|
|
|
43,430
|
|
|
|
-
|
|
|
|
-
|
|
Warrants
|
|
|
12,464
|
|
|
|
12,714
|
|
|
|
25,729
|
|
|
|
|
72,934
|
|
|
|
28,275
|
|
|
|
36,830
|
|
12.
|
Preferred Stock, Common Stock and Warrants
|
Authorized Shares
On May 29, 2013 the stockholders approved an increase in the number of authorized shares of common stock from 250,000,000 to 350,000,000.
The increase in authorized shares was effected pursuant to a Certificate of Amendment to the Sixth Amended and Restate
d Certificate of Incorporation (the "Certificate of Amendment"), filed with the Secretary of State of the State of Delaware on May 30, 2013.
Preferred Stock Outstanding
As of December 31, 2013 there were 5,000,000 shares of preferred stock authorized and 4
3,430 shares outstanding.
In October 2013 the Company sold 43,430 shares of $0.001 par value Series B Convertible Preferred Stock for a purchase price of $1,075 per share and gross proceeds of approximately $46.7 million in an underwritten public offering. After issuance costs of approximately $2.5 million, the net proceeds from the offering were approximately $44.2 million.
Each share of Series B Convertible Preferred Stock is convertible into 1,000 shares of common stock at any time at the holder’s option. However, the holder is prohibited from converting the Series B Convertible Preferred Stock into shares of common stock if, as a result of such conversion, the holder and its affiliates would own more than 9.98% of the total number of shares of common sto
ck then issued and outstanding. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series B Convertible Preferred Stock will receive a payment equal to $0.001 per share before any proceeds are distributed to the common stockholders. Shares of Series B Convertible Preferred Stock generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series B Convertible Preferred Stock is required to amend the terms of the Series B Convertible Preferred Stock. Holders of Series B Convertible Preferred Stock are not entitled to receive any dividends, unless and until specifically declared by the
Company’s board of directors. The Series B Convertible Preferred Stock ranks senior to the Company’s common stock as to distributions of assets upon the Company’s liquidation, dissolution or winding up, whether voluntarily or involuntarily. The Series B Convertible Preferred Stock may rank senior to, on parity with or junior to any class or series of the Company’s capital stock created in the future depending upon the specific terms of such future stock issuance.
The fair value of the common stock into which the Series B Convertible Preferred Stock is convertible exceeded the allocated purchase price of the Series B Convertible Preferred Stock by $8.5 million on the date of issuance, for which the Company recorded a deemed dividend. The Company recognized the deemed dividend equal to the number of shares of Series B Convertible Pref
erred Stock sold on October 30, 2013 multiplied by the difference between the value of the common stock and the Series B Convertible Preferred Stock conversion price per share on that date. The dividend was reflected as a one-time, non-cash, deemed dividend to the holders of Series B Convertible Preferred Stock on the date of issuance, which is the date the stock first became convertible.
58
Preferred Stock Rights
On November 4, 2008, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of our Common Stock, par value $0.001 per share (the “Common Shares”). The dividend was payable on November 17, 2008 to the stockholders of record on that date. Each Right entitles the registered holder to purch
ase from us one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share (the “Preferred Shares”), at a price of $6.00 per one one-hundredth of a Preferred Share, subject to adjustment. Upon the acquisition of, or announcement of the intent to acquire, 20 percent or more of our outstanding Common Shares by a person, entity or group of affiliated or associated persons (“Acquiring Person”), each holder of a Right, other than Rights held by the Acquiring Person, will have the right to purchase that number of Common Shares having a market value of two times the exercise price of the Right. If we are acquired in a merger or other business combination transaction or 50 percent or more of our assets or earning power are sold to an Acquiring Person, each holder of a Right will thereafter have the right to purchase, at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. The Rights plan is intended to maximize the value of the Company in the event of an unsolicited attempt to take over the Company in a manner or on terms not approved by the Company’s Board of Directors. The Rights will expire on November 17, 2018, unless the Rights are earlier redeemed or exchanged by the Company.
Common Stock Outstanding
In October 2013 we completed an underwritten public offering of 79,57
0,000 shares of our common stock to the public at $1.075 per share. The gross proceeds to us from this offering were approximately $85.5 million. After deducting issuance costs of approximately $4.5 million, the net proceeds from the offering were approximately $80.9 million.
On March 29, 2013, we entered into an At Market Issuance Sales Agreement (the “Agreement”) with MLV & Co. LLC (“MLV”) under which we may offer and sell our common stock having aggregate sales proceeds of up to $50,000,000 from time to time through MLV as our sales agent. Sales of our common stock through MLV, if any, will be made by means of ordinary brokers’ transactions on the NASDAQ Capital Market or otherwise at market prices prevailing at the time of sale, in block transactions, or as o
therwise agreed upon by us and MLV. MLV will use commercially reasonable efforts to sell our common stock from time to time, based upon instructions from us (including any price, time or size limits or other customary parameters or conditions we may impose). We will pay MLV a commission of up to 3.0% of the gross sales proceeds of any common stock sold through MLV under the Agreement. No sales of our common stock have taken place under this Agreement as of December 31, 2013.
On May 9, 2012, we completed an underwritten public offering of 17,500,000 shares of our common stock to the public at $4.25 per share. The net proceeds to us from this offering were $69.6 million, after deducting offering expenses.
On November 3, 2011, we completed an underwritten public offering of 27,600,000 shares of our common stock including 3,600,000 shares sold pursuant to the full exercise of an overallotment option previously granted to the underwriters at a price to the public of $2.50 per share. The net proceeds to us from t
his offering were $64.5 million, after deducting offering expenses.
On November 2, 2010, we completed an underwritten public offering of 26,450,000 shares of our common stock including 3,450,000 shares sold pursuant to the full exercise of an overallotment option previously granted to the underwriters at a price to the public of $1.70 per share. The net proceeds to us from this offering were $42.0 million, after deducting offering expenses.
On September 20, 2010, we entered into a Purchase Agreement with Aspire Capital, which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital was committed to purchase up to an aggregate of $30.0 million of shares of our common stock (the “Purchase Shares”) over the
25-month term of the Purchase Agreement. Under the Purchase Agreement, we agreed to pay Aspire Capital a commitment fee equal to 4% of $30 million in consideration for Aspire Capital’s obligation to purchase up to $30 million of our common stock. We paid this commitment fee of $1.2 million by the issuance of 600,000 shares of our common stock and this fee was recorded as a cost of raising capital and netted against the gross proceeds from the Purchase Agreement in September 2010. During 2010, we sold 2,350,000 shares of common stock to Aspire Capital for $3.3 million and during 2011 we sold 10,995,210 shares of common stock for $26.7 million, which totaled the proceeds available to us of $30 million under the Purchase Agreement.
On April 16, 2010, we completed an underwritten public offering resulting in net proceeds of $41.1 million, after deducting offering expenses of approximately $3.0 million, from the sale of 30,293,000 units at a per unit price of $1.4525. Each unit consisted of one share of common sto
ck and one warrant to purchase 0.5 of a share of common stock. Each warrant has an exercise price of $1.50 per share, and is exercisable for a period of five years from the date of issuance. From this offering, warrants to purchase an aggregate of 10,913,873 shares of our common stock were outstanding as of December 31, 2013 (including the warrants to purchase 6,765,128 shares provided to Symphony as described in Note 8 “Symphony Dynamo, Inc.”).
59
Warrants
In connection with a 2007 loan agreement that was subsequently terminated in 2008, we issued warrants to purchase up to
3,550,000 shares of our common stock as follows:
Warrant Issuance Date
|
|
Shares Issuable
(in thousands)
|
|
|
Expiration
Date
|
|
Exercise Price
per Share
|
|
|
Outstanding as of
December 31, 2013
(in thousands)
|
|
July 18, 2007
|
|
|
1,250
|
|
|
2/26/2014
|
|
$
|
5.13
|
|
|
|
1,250
|
|
October 18, 2007
|
|
|
1,300
|
|
|
2/26/2014
|
|
$
|
1.68
|
|
|
|
-
|
|
December 27, 2007
|
|
|
300
|
|
|
2/26/2014
|
|
$
|
5.65
|
|
|
|
300
|
|
December 27, 2007
|
|
|
700
|
|
|
2/26/2014
|
|
$
|
1.68
|
|
|
|
-
|
|
Total
|
|
|
3,550
|
|
|
|
|
|
|
|
|
|
1,550
|
|
As of December 31, 2013, warrants to purchase an aggregate of approximately 12,500,000 shares of our common stock were outstanding. The warrants are exercisable
at a weighted average price of $1.96 per share
. During the years ended December 31, 2013, and 2012, warrants were exercised to purchase an aggregate of approximately 250,000 and 13,000,000 shares, respectively, of our common stock.
13.
|
Equity Plans and Stock-Based Compensation
|
Stock Plans
As of December 31, 2013, we had three share-based compensation plans.
2004 Stock Incentive Plan (“2004 Plan”)
The 2004 Plan was adopted in January 2004 by the Board of Directors and stockholders and became effective on February 11, 2004. This plan provided for the issuance of up to 3,500,000 shares of our common stock plus an annual increase. Subsequently, we discontinued granting stock options under the 1997 Plan. Options under the 2004 Plan were granted for periods of up to ten years and the exercise price of all stock options granted under the 2004 Plan was at least equal to 100% of the fair market value of the common stock on the date of grant. If, however, incentive stock options were granted to an employee who owns stock possessing more than 10% of the voting power of all classes of the Company’s stock or the stock of any parent or subsidiary of the Company, the exercise price of any incentive stock option granted must equal at least 110% of the fair market value on the grant date and the maximum term of these incentive stock options must not exceed five years. The maximum term of an incentive stock option granted to any other participant must not exceed ten years. The 2004 Plan authorizes the issuance of various forms of stock-based awards including stock options, restricted stock, restricted stock units and other equity awards to employees, consultants and members of the board of directors. As of December 31, 2013, options to purchase 4,066,277 shares of common stock remained outstanding under the 2004 Plan.
2010 Employment Inducement Award Plan (“Inducement Plan”)
The Inducement Plan was adopted in January 2010 by our Board of Directors to induce qualified individuals to join Dynavax. This Inducement Plan provided for the issuance of up to 1,500,000 shares of our common stock and became effective on January 8, 2010. Stockholder approval of the Inducement Plan is not required under NASDAQ Marketplace Rule 5635(c)(4). As of December 31, 2013, options to purchase 743,625 shares of common stock
remained outstanding under the Inducement Plan.
60
2011 Equity Incentive Plan (“2011 Plan”)
The 2011 Plan was approved by the Company’s stockholders and adopted in January 2011. On May 29, 2013, the stockholders of the Company approved an amendment to the 2011 Plan to increase the number of shares of common stock authorized for issuance under the plan by 10,000,000. The 2011 Plan, as amended, provides for the issuance of up to 25,000,000 shares of our common stock to employees and non-employees of the Compa
ny and became effective on January 6, 2011. The 2011 Plan is administered by our Board of Directors, or a designated committee of the Board of Directors, and awards granted under the 2011 Plan have a term of 10 years unless earlier terminated by the Board of Directors. After the adoption of the 2011 Plan, no additional awards were granted under either the 2004 Plan or the Inducement Plan. As of January 6, 2011, all shares subject to awards outstanding under the 2004 Plan and Inducement Plan that expire or are forfeited will be included in the reserve for the 2011 Plan to the extent such shares would otherwise return to such plans. As of December 31, 2013, options to purchase 10,954,940 shares of common stock remained outstanding under the 2011 Plan. As of December 31, 2013, there were 13,666,964 shares of common stock reserved for issuance under the 2011 Plan.
Activity under our stock plans is set forth below:
|
|
Shares Underlying Outstanding Options (in thousands)
|
|
|
Weighted-Average Exercise Price Per Share
|
|
|
Weighted-Average Remaining Contractual Term (years)
|
|
|
Aggregate Intrinsic Value (in thousands)
|
|
Balance at December 31, 2012
|
|
|
13,806
|
|
|
$
|
3.38
|
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
5,614
|
|
|
|
2.69
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
(131
|
)
|
|
|
1.43
|
|
|
|
|
|
|
|
|
|
Options cancelled:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited (unvested)
|
|
|
(2,555
|
)
|
|
|
3.31
|
|
|
|
|
|
|
|
|
|
Options cancelled (vested)
|
|
|
(969
|
)
|
|
|
3.34
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013
|
|
|
15,765
|
|
|
|
3.17
|
|
|
|
5.26
|
|
|
$
|
1,427
|
|
Vested and expected to vest at December 31, 2013
|
|
|
15,765
|
|
|
|
3.17
|
|
|
|
5.26
|
|
|
$
|
1,427
|
|
Exercisable at December 31, 2013
|
|
|
10,628
|
|
|
|
3.36
|
|
|
|
3.61
|
|
|
$
|
1,289
|
|
The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was, $0.3 million, $2.7 million and $0.1 million, respectively. The total intrinsic value of exercised stock options is calculated based on the difference between the exercise price and the quoted market price of our common stock as of the close of the exercise date.
The total fair value of stock options vested during the years ended December 31, 2013, 2012 and 2011 was, $1
2.1 million, $9.6 million and $2.8 million, respectively.
Our non-vested stock awards are comprised of restricted stock units granted with performance-based vesting criteria. A summary of the status of non-vested restricted stock units as of December 31, 2013, and activities during 2013 is summarized as follows:
|
Number of Shares (In thousands)
|
|
|
Weighted-Average Grant-Date Fair Value
|
|
Non-vested as of December 31, 2012
|
|
1,755
|
|
|
$
|
4.23
|
|
Granted
|
|
250
|
|
|
$
|
1.23
|
|
Vested
|
|
(115
|
)
|
|
$
|
1.10
|
|
Forfeited or expired
|
|
(615
|
)
|
|
$
|
4.23
|
|
Non-vested as of December 31, 2013
|
|
1,275
|
|
|
$
|
3.93
|
|
Stock-based compensation expense related to restricted stock units was approximately $0.1 million for the year ended December 31, 2013. The aggregate intrinsic value of the restricted stock units outstanding as of December 31, 2013, based on our stock price on that date, was $2.5 million.
61
The weighted average grant-date fair value of restricted stock units granted during the years ended December 31, 2013 and 2012 was, $1.23 and $4.23, respectively. No restricted stock units were granted during 2011. The total fair value of restricted stock units vested during the years ended December 31, 2013,
2012, and 2011 was, $0.1 million, $0.2 million, and $0.8 million, respectively.
Stock-Based Compensation
Under our stock-based compensation plans, option awards generally vest over a four-year period contingent upon continuous service and expire ten years from the date of grant (or earlier upon termination of continuous service). The Company has also granted performance-based equity awards to certain of our employees under the 2011 Plan, the 2004 Plan and the Inducement Plan. As of December 31,
2013, 1,922,466 shares were outstanding related to options and restricted stock units subject to these performance-based vesting criteria. The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model and the following weighted-average assumptions:
|
|
Stock Options
|
|
|
Employee Stock Purchase Plan
|
|
|
|
Year Ended December 31,
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Weighted-average fair value
|
|
$
|
2.41
|
|
|
$
|
3.30
|
|
|
$
|
2.76
|
|
|
$
|
0.93
|
|
|
$
|
3.54
|
|
|
$
|
2.09
|
|
Risk-free interest rate
|
|
|
1.1
|
%
|
|
|
0.5
|
%
|
|
|
1.3
|
%
|
|
|
0.2
|
%
|
|
|
0.2
|
%
|
|
|
0.3
|
%
|
Expected life (in years)
|
|
|
5.9
|
|
|
|
4.2
|
|
|
|
4.0
|
|
|
|
1.3
|
|
|
|
1.1
|
|
|
|
1.2
|
|
Volatility
|
|
|
1.4
|
|
|
|
1.6
|
|
|
|
1.6
|
|
|
|
0.8
|
|
|
|
1.6
|
|
|
|
1.6
|
|
Expected volatility is based on historical volatility of our stock price. The expected life of options granted is estimated based on historical option exercise and employee termination data, while giving consideration to options that have not yet completed a full life cycle. Our senior management, who hold a majority of the options outstanding, and other employees were grouped and considered separately for v
aluation purposes. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is zero percent for all years and is based on our history and expectation of dividend payouts.
Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. For equity awards with time-based vesting, the fair value is amortized to expense on a straight-line basis over the vesting periods. For equity awards with performance-based vesting criteria, the fair value is amortized to expense when the achievement of the vesting criteria becomes probable.
We recognized the following amounts of stock-based compensation expense (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Employees and directors stock-based compensation expense
|
|
$
|
11,828
|
|
|
$
|
10,439
|
|
|
$
|
5,185
|
|
Non-employees stock-based compensation expense
|
|
|
512
|
|
|
|
-
|
|
|
|
4
|
|
Total
|
|
$
|
12,340
|
|
|
$
|
10,439
|
|
|
$
|
5,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Research and development
|
|
$
|
4,228
|
|
|
$
|
3,514
|
|
|
$
|
2,103
|
|
General and administrative
|
|
|
8,112
|
|
|
|
6,925
|
|
|
|
3,086
|
|
Total
|
|
$
|
12,340
|
|
|
$
|
10,439
|
|
|
$
|
5,189
|
|
Stock based compensation expense recognized in 2013 and 2012 includes $4.9 million related to employee severance arrangements and $0.5 million for awards to non-employees for the year ended December 31, 2013 and $1.5 million related to employee severance arrangements for the same period in 2012. During the year ended December 31, 2013, we recognized $1.3 million in additional stock-based compensation expense due to the modification of the terms of stock options for
five employees. During the year ended December 31, 2012, we recognized $0.7 million in additional stock-based compensation expense due to the modification of the terms of stock options for one employee.
62
As of December 31, 2013, the total unrecognized compensation cost related to non-vested stock options deemed probable of vesting, including all stock options with time-based vesting, net of estimated forfeitures, amounted to $10.3 million, which is expected to be recognized over the remaining weighted-avera
ge vesting period of 2.8 years. As of December 31, 2013, the total unrecognized compensation cost related to non-vested stock options not deemed probable of vesting, net of estimated forfeitures, amounted to $3.8 million.
As of December 31, 2013, the total unrecognized compensation cost related to shares of our common stock under the Purchase Plan, amounted to $0.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.4 years.
Employee Stock Purchase Plan
In January 2004, the Board of Directors and stockholders adopted the 2004 Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan provides for the purchase of common stock by eligible employees and became effective on February 11, 2004. The purc
hase price per share is the lesser of (i) 85% of the fair market value of the common stock on the commencement of the offer period (generally, the fifteenth day in February or August) or (ii) 85% of the fair market value of the common stock on the exercise date, which is the last day of a purchase period (generally, the fourteenth day in February or August).
As of December 31, 2013, 996,000 shares were approved for issuance under the Purchase Plan, subject to adjustment for a stock split, or any future stock dividend or other similar change in our common stock or capital structure. To date, employees have acquired 828,414 shares of our common stock under the Purchase Plan. As of December 31, 2013, 167,586 shares of our common stock remained available for fu
ture purchases.
14.
|
Employee Benefit Plan
|
We maintain a 401(k) Plan, which qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings. We may, at our discretion, contribute for the benefit of eligible employees. To date, we have not contributed to the 401(k) Plan
.
Consolidated income (loss) before provision for income taxes consisted of the following (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
U.S.
|
|
$
|
(67,004
|
)
|
|
$
|
(70,792
|
)
|
|
$
|
(49,990
|
)
|
Non U.S.
|
|
|
284
|
|
|
|
843
|
|
|
|
1,393
|
|
Total
|
|
$
|
(66,720
|
)
|
|
$
|
(69,949
|
)
|
|
$
|
(48,597
|
)
|
63
No income tax expense was recorded for the years ended December 31, 2013, 2012 and 2011 due to net operating loss carryforwards to offset the net income at Dynavax Europe and a valuation allowance which offsets the deferred tax assets. The difference between the consolidated income tax benefit and the amount computed by applying the federal statutory income tax rate to the consolidated loss before income taxes was as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Income tax benefit at federal statutory rate
|
|
$
|
(22,678
|
)
|
|
$
|
(23,650
|
)
|
|
$
|
(16,523
|
)
|
State tax
|
|
|
(178
|
)
|
|
|
(89
|
)
|
|
|
(2,586
|
)
|
Business credits
|
|
|
(2,515
|
)
|
|
|
-
|
|
|
|
(1,394
|
)
|
Deferred compensation charges
|
|
|
3,072
|
|
|
|
1,002
|
|
|
|
595
|
|
Change in valuation allowance
|
|
|
22,354
|
|
|
|
21,966
|
|
|
|
18,099
|
|
Change in foreign tax rates
|
|
|
-
|
|
|
|
-
|
|
|
|
(34
|
)
|
Change in the fair value measurements
|
|
|
-
|
|
|
|
-
|
|
|
|
286
|
|
Non-deductible debt discount
|
|
|
-
|
|
|
|
-
|
|
|
|
509
|
|
Deemed dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
273
|
|
Prior year true up
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other
|
|
|
(55
|
)
|
|
|
771
|
|
|
|
775
|
|
Total income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred tax assets and liabilities as of December 31, 2013 and 2012 consisted of the following (in thousands):
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carry forwards
|
|
$
|
147,655
|
|
|
$
|
127,529
|
|
Research tax credit carry forwards
|
|
|
21,336
|
|
|
|
18,163
|
|
Accruals and reserves
|
|
|
9,501
|
|
|
|
8,529
|
|
Capitalized research costs
|
|
|
10,662
|
|
|
|
12,757
|
|
Deferred revenue
|
|
|
2,486
|
|
|
|
2,180
|
|
Other
|
|
|
1,222
|
|
|
|
1,221
|
|
|
|
|
192,862
|
|
|
|
170,379
|
|
Less valuation allowance
|
|
|
(192,733
|
)
|
|
|
(170,232
|
)
|
Total deferred tax assets
|
|
|
129
|
|
|
|
147
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
(162
|
)
|
|
|
(86
|
)
|
Other
|
|
|
33
|
|
|
|
(61
|
)
|
Total deferred tax liabilities
|
|
|
(129
|
)
|
|
|
(147
|
)
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
The tax benefit of net operating losses, temporary differences and credit carryforwards is required to be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Because of our recent history of operating losses, management believes that reco
gnition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance. The valuation allowance increased by $22.5 million, $22.0 million and $18.1 million during the years ended December 31, 2013, 2012 and 2011, respectively. The amount of the valuation allowance for deferred tax assets associated with excess tax deductions from stock based compensation arrangements that will be allocated to contributed capital if the future tax benefits are subsequently recognized is $0.3 million.
We have not recorded deferred income taxes applicable to undistributed earnings of a foreign subsidiary that are indefinitely reinvested in foreign operations. Generally, such earnings become subject to U.S. tax upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of the deferred tax liability on such undistributed earnings.
As of December 31, 2013, we had federal net operating loss carryforwards of approximately $3
84.1 million, which will expire in the years 2018 through 2033 and federal research and development tax credits of approximately $13.8 million, which expire in the years 2018 through 2033.
64
As of December 31, 2013, we had
potential net operating loss carryforwards for California state income tax purposes of approximately $219.7 million, which expire in the years 2014 through 2033, and California state research and development tax credits of approximately $11.5 million which do not expire.
As of December 31, 2013, we had net operating loss carryforwards for foreign income tax purposes of approximately $27
.8 million, which do not expire.
The Tax Reform Act of 1986 limits the annual use of net operating loss and tax credit carryforwards in certain situations where changes occur in stock ownership of a company. In the event the Company has a change in ownership, as defined, the annual utilization of such carryforwards could be limited. Due to past e
quity issuances and changes in ownership of Dynavax common stock, we believe that our ability to use some of our net operating losses and tax credits in the future may be limited.
16.
|
Selected Quarterly Financial Data (Unaudited; in thousands, except per share amounts)
|
|
|
Year Ended December 31, 2013
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
Revenues
|
|
$
|
2,085
|
|
|
$
|
3,392
|
|
|
$
|
2,927
|
|
|
$
|
2,847
|
|
Net loss
|
|
$
|
(20,825
|
)
|
|
$
|
(17,164
|
)
|
|
$
|
(15,675
|
)
|
|
$
|
(13,056
|
)
|
Net loss allocable to common stockholders
|
|
$
|
(20,825
|
)
|
|
$
|
(17,164
|
)
|
|
$
|
(15,675
|
)
|
|
$
|
(21,525
|
)
|
Basic and diluted net loss per share allocable to common stockholders
|
|
$
|
(0.11
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
Shares used to compute basic and diluted net loss per share allocable to common stockholders
|
|
|
182,847
|
|
|
|
182,913
|
|
|
|
183,022
|
|
|
|
235,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2012
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
Revenues
|
|
$
|
2,350
|
|
|
$
|
2,684
|
|
|
$
|
2,874
|
|
|
$
|
1,806
|
|
Net loss
|
|
$
|
(16,505
|
)
|
|
$
|
(15,110
|
)
|
|
$
|
(17,791
|
)
|
|
$
|
(20,543
|
)
|
Net loss allocable to common stockholders
|
|
$
|
(16,505
|
)
|
|
$
|
(15,110
|
)
|
|
$
|
(17,791
|
)
|
|
$
|
(20,543
|
)
|
Basic and diluted net loss per share allocable to common stockholders
|
|
$
|
(0.11
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.11
|
)
|
Shares used to compute basic and diluted net loss per share allocable to common stockholders
|
|
|
155,431
|
|
|
|
167,697
|
|
|
|
177,870
|
|
|
|
180,685
|
|
17. Subsequent Events
In March, 2014 we announced a $5.4
million milestone payment and amendment of our AstraZeneca agreement to transfer responsibility for all clinical development to AstraZeneca following conclusion of the ongoing Phase 1 clinical trial of AZD1419.
65