|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
93-0979187
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
11500 South Eastern Avenue
|
Suite 240
|
Henderson
|
Nevada
|
89052
|
(Address of principal executive offices)
|
|
|
|
(Zip Code)
|
|
Large accelerated filer
|
|
☒
|
|
Accelerated filer
|
|
☐
|
Non-accelerated filer
|
|
☐
|
|
Smaller reporting company
|
|
☐
|
|
|
|
|
Emerging growth company
|
|
☐
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.001 par value
|
SPPI
|
The NASDAQ Global Select Market
|
Item
|
|
Page
|
|
PART I. FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements (unaudited):
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
PART II. OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 6.
|
||
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
118,251
|
|
|
$
|
157,480
|
|
Restricted cash
|
4,020
|
|
|
—
|
|
||
Marketable securities
|
160,134
|
|
|
46,508
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $67 and $67, respectively
|
2,542
|
|
|
29,873
|
|
||
Other receivables
|
10,229
|
|
|
3,698
|
|
||
Prepaid expenses and other assets
|
10,839
|
|
|
7,574
|
|
||
Discontinued operations, current assets (Note 11)
|
—
|
|
|
5,555
|
|
||
Total current assets
|
306,015
|
|
|
250,688
|
|
||
Property and equipment, net of accumulated depreciation
|
4,534
|
|
|
385
|
|
||
Other assets
|
8,277
|
|
|
7,188
|
|
||
Facility and equipment under lease
|
3,842
|
|
|
—
|
|
||
Discontinued operations, non-current assets (Note 11)
|
—
|
|
|
132,625
|
|
||
Total assets
|
$
|
322,668
|
|
|
$
|
390,886
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and other accrued liabilities
|
$
|
44,455
|
|
|
$
|
69,460
|
|
Accrued payroll and benefits
|
5,262
|
|
|
9,853
|
|
||
Contract liabilities
|
7,245
|
|
|
4,850
|
|
||
Discontinued operations, current liabilities (Note 11)
|
—
|
|
|
2,311
|
|
||
Total current liabilities
|
56,962
|
|
|
86,474
|
|
||
Deferred tax liabilities
|
—
|
|
|
1,469
|
|
||
Other long-term liabilities
|
10,923
|
|
|
5,650
|
|
||
Discontinued operations, non-current liabilities (Note 11)
|
—
|
|
|
14,031
|
|
||
Total liabilities
|
67,885
|
|
|
107,624
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 300,000,000 shares authorized; 112,684,387 and 110,525,141 issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
112
|
|
|
110
|
|
||
Additional paid-in capital
|
905,871
|
|
|
886,740
|
|
||
Accumulated other comprehensive loss
|
(3,764
|
)
|
|
(3,702
|
)
|
||
Accumulated deficit
|
(647,436
|
)
|
|
(599,886
|
)
|
||
Total stockholders’ equity
|
254,783
|
|
|
283,262
|
|
||
Total liabilities and stockholders’ equity
|
$
|
322,668
|
|
|
$
|
390,886
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues (Note 1(b))
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
17,230
|
|
|
16,391
|
|
|
33,182
|
|
|
33,007
|
|
||||
Research and development
|
16,982
|
|
|
16,595
|
|
|
38,868
|
|
|
29,960
|
|
||||
Total operating costs and expenses
|
34,212
|
|
|
32,986
|
|
|
72,050
|
|
|
62,967
|
|
||||
Loss from continuing operations
|
(34,212
|
)
|
|
(32,986
|
)
|
|
(72,050
|
)
|
|
(62,967
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income (expense), net
|
1,495
|
|
|
(242
|
)
|
|
2,556
|
|
|
(473
|
)
|
||||
Other income (expense), net
|
3,722
|
|
|
48,492
|
|
|
(7,563
|
)
|
|
58,463
|
|
||||
Total other income (expense)
|
5,217
|
|
|
48,250
|
|
|
(5,007
|
)
|
|
57,990
|
|
||||
(Loss) income from continuing operations before income taxes
|
(28,995
|
)
|
|
15,264
|
|
|
(77,057
|
)
|
|
(4,977
|
)
|
||||
Benefit (provision) for income taxes from continuing operations
|
212
|
|
|
(370
|
)
|
|
8,454
|
|
|
698
|
|
||||
(Loss) income from continuing operations
|
$
|
(28,783
|
)
|
|
$
|
14,894
|
|
|
$
|
(68,603
|
)
|
|
$
|
(4,279
|
)
|
Income (loss) from discontinued operations, net of income taxes (Note 11)
|
388
|
|
|
(1,150
|
)
|
|
21,053
|
|
|
2,205
|
|
||||
Net (loss) income
|
$
|
(28,395
|
)
|
|
$
|
13,744
|
|
|
$
|
(47,550
|
)
|
|
$
|
(2,074
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
(Loss) income per common share from continuing operations
|
$
|
(0.26
|
)
|
|
$
|
0.15
|
|
|
$
|
(0.63
|
)
|
|
$
|
(0.04
|
)
|
Income (loss) per common share from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.19
|
|
|
0.02
|
|
||||
Net (loss) income per common share
|
$
|
(0.26
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.43
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
(Loss) income per common share from continuing operations
|
$
|
(0.26
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.63
|
)
|
|
$
|
(0.04
|
)
|
Income (loss) per common share from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.19
|
|
|
0.02
|
|
||||
Net (loss) income per common share
|
$
|
(0.26
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.43
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
110,345,135
|
|
|
102,597,059
|
|
|
109,744,405
|
|
|
101,747,416
|
|
||||
Diluted
|
110,345,135
|
|
|
112,617,150
|
|
|
109,744,405
|
|
|
101,747,416
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(28,395
|
)
|
|
$
|
13,744
|
|
|
$
|
(47,550
|
)
|
|
$
|
(2,074
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain on available-for-sale securities, net of income tax expense of $33 thousand, $0, and $33 thousand, $0 for the three and six months ended June 30, 2019 and 2018, respectively.
|
100
|
|
|
—
|
|
|
100
|
|
|
—
|
|
||||
Foreign currency translation adjustments
|
228
|
|
|
(2,269
|
)
|
|
(162
|
)
|
|
(1,876
|
)
|
||||
Other comprehensive income (loss)
|
328
|
|
|
(2,269
|
)
|
|
(62
|
)
|
|
(1,876
|
)
|
||||
Total comprehensive (loss) income
|
$
|
(28,067
|
)
|
|
$
|
11,475
|
|
|
$
|
(47,612
|
)
|
|
$
|
(3,950
|
)
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Loss
|
|
Accumulated Deficit
|
|
Total
Stockholders' Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance as of December 31, 2018
|
110,525,141
|
|
|
$
|
110
|
|
|
$
|
886,740
|
|
|
$
|
(3,702
|
)
|
|
$
|
(599,886
|
)
|
|
$
|
283,262
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,155
|
)
|
|
(19,155
|
)
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(390
|
)
|
|
—
|
|
|
(390
|
)
|
|||||
Employee stock-based compensation expense
|
—
|
|
|
—
|
|
|
7,481
|
|
|
—
|
|
|
—
|
|
|
7,481
|
|
|||||
Issuance of common stock to 401(k) plan for employee match
|
47,347
|
|
|
—
|
|
|
519
|
|
|
—
|
|
|
—
|
|
|
519
|
|
|||||
Issuance of common stock upon exercise of stock options
|
146,785
|
|
|
—
|
|
|
831
|
|
|
—
|
|
|
—
|
|
|
831
|
|
|||||
RSA grants, net of forfeitures
|
259,539
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Issuance of common stock upon vesting of RSUs
|
233,760
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance as of March 31, 2019
|
111,212,572
|
|
|
$
|
111
|
|
|
$
|
895,571
|
|
|
$
|
(4,092
|
)
|
|
$
|
(619,041
|
)
|
|
$
|
272,549
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,395
|
)
|
|
(28,395
|
)
|
|||||
Other comprehensive income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
328
|
|
|
—
|
|
|
328
|
|
|||||
Employee stock-based compensation expense
|
—
|
|
|
—
|
|
|
4,814
|
|
|
—
|
|
|
—
|
|
|
4,814
|
|
|||||
Issuance of common stock to 401(k) plan for employee match
|
24,382
|
|
|
—
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|||||
Issuance of common stock for ESPP
|
60,606
|
|
|
—
|
|
|
444
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|||||
Issuance of common stock upon exercise of stock options
|
504,226
|
|
|
—
|
|
|
3,023
|
|
|
—
|
|
|
—
|
|
|
3,023
|
|
|||||
RSA grants, net of forfeitures
|
651,072
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Issuance of common stock upon vesting of RSUs
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common shares under an at-the-market sales agreement (Note 13)
|
221,529
|
|
|
—
|
|
|
1,814
|
|
|
—
|
|
|
—
|
|
|
1,814
|
|
|||||
Balance as of June 30, 2019
|
112,684,387
|
|
|
$
|
112
|
|
|
$
|
905,871
|
|
|
$
|
(3,764
|
)
|
|
$
|
(647,436
|
)
|
|
$
|
254,783
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Loss
|
|
Accumulated Deficit
|
|
Total
Stockholders' Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance as of December 31, 2017
|
100,742,735
|
|
|
$
|
100
|
|
|
$
|
837,347
|
|
|
$
|
15,999
|
|
|
$
|
(502,107
|
)
|
|
$
|
351,339
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,816
|
)
|
|
(15,816
|
)
|
|||||
Cumulative-effect adjustment of ASU 2016-01 adoption (Note 3(a))
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,211
|
)
|
|
17,211
|
|
|
—
|
|
|||||
Cumulative-effect adjustment of Topic 606 adoption (Note 2(i))
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,678
|
|
|
4,678
|
|
|||||
Foreign currency adjustment related to adoptions of ASU 2016-01 and Topic 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|
342
|
|
|||||
Other comprehensive income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
393
|
|
|
—
|
|
|
393
|
|
|||||
Employee stock-based compensation expense
|
—
|
|
|
—
|
|
|
4,144
|
|
|
—
|
|
|
—
|
|
|
4,144
|
|
|||||
Issuance of common stock to 401(k) plan for employee match
|
16,834
|
|
|
—
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|
334
|
|
|||||
Issuance of common stock upon exercise of stock options
|
5,793,413
|
|
|
6
|
|
|
41,417
|
|
|
—
|
|
|
—
|
|
|
41,423
|
|
|||||
RSA grants, net of forfeitures
|
614,035
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Retirement of RSAs and shares as part of stock option cashless exercises to satisfy employee tax withholdings
|
(3,463,873
|
)
|
|
(3
|
)
|
|
(62,541
|
)
|
|
—
|
|
|
—
|
|
|
(62,544
|
)
|
|||||
Issuance of common stock upon vesting of RSUs
|
200,652
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock upon exercise of warrants
|
31,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance as of March 31, 2018
|
103,935,398
|
|
|
$
|
103
|
|
|
$
|
820,701
|
|
|
$
|
(819
|
)
|
|
$
|
(495,692
|
)
|
|
$
|
324,293
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,744
|
|
|
13,744
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,269
|
)
|
|
—
|
|
|
(2,269
|
)
|
|||||
Employee stock-based compensation expense
|
—
|
|
|
—
|
|
|
4,461
|
|
|
—
|
|
|
—
|
|
|
4,461
|
|
|||||
Issuance of common stock to 401(k) plan for employee match
|
14,736
|
|
|
—
|
|
|
272
|
|
|
—
|
|
|
—
|
|
|
272
|
|
|||||
Issuance of common stock for ESPP
|
45,543
|
|
|
—
|
|
|
734
|
|
|
—
|
|
|
—
|
|
|
734
|
|
|||||
Issuance of common stock upon exercise of stock options
|
732,694
|
|
|
—
|
|
|
2,884
|
|
|
—
|
|
|
—
|
|
|
2,884
|
|
|||||
RSA grants, net of forfeitures
|
176,954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock upon exercise of warrants
|
225,278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance as of June 30, 2018
|
105,130,603
|
|
|
$
|
103
|
|
|
$
|
829,052
|
|
|
$
|
(3,088
|
)
|
|
$
|
(481,948
|
)
|
|
$
|
344,119
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Loss from continuing operations
|
$
|
(68,603
|
)
|
|
$
|
(4,279
|
)
|
Income from discontinued operations, net of income taxes (Note 11)
|
21,053
|
|
|
2,205
|
|
||
Net loss
|
(47,550
|
)
|
|
(2,074
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,400
|
|
|
13,993
|
|
||
Stock-based compensation (Note 4)
|
13,019
|
|
|
9,211
|
|
||
Gain on Commercial Product Portfolio Transaction (Note 11)
|
(33,644
|
)
|
|
—
|
|
||
Non-cash lease expense (Note 9(a))
|
874
|
|
|
—
|
|
||
Unrealized gain on available-for-sale securities (Note 3(a))
|
133
|
|
|
—
|
|
||
Amortization of discount on available-for-sale securities (Note 3(a))
|
(331
|
)
|
|
—
|
|
||
Income tax recognition on unrealized gain on available-for-sale securities
|
(33
|
)
|
|
—
|
|
||
Realized gain on sale of CASI stock (Note 7)
|
(2,674
|
)
|
|
—
|
|
||
Unrealized loss (gain) on marketable securities (Note 3(a))
|
11,758
|
|
|
(58,634
|
)
|
||
Unrealized gains from transactions denominated in foreign currency
|
(5
|
)
|
|
10
|
|
||
Deferred tax liabilities
|
(1,469
|
)
|
|
9
|
|
||
Change in fair value of contingent consideration (Note 9(b))
|
1,478
|
|
|
483
|
|
||
Accretion of debt discount on 2018 Convertible Notes, recorded to interest expense
|
—
|
|
|
1,079
|
|
||
Amortization of deferred financing costs on 2018 Convertible Notes, recorded to interest expense
|
—
|
|
|
124
|
|
||
Change in cash surrender value of corporate-owned life insurance policy
|
—
|
|
|
(5
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
27,314
|
|
|
5,087
|
|
||
Other receivables
|
(6,535
|
)
|
|
(781
|
)
|
||
Inventories
|
(2,037
|
)
|
|
816
|
|
||
Prepaid expenses and other assets
|
(3,164
|
)
|
|
1,167
|
|
||
Other assets
|
(1,087
|
)
|
|
3,451
|
|
||
Accounts payable and other accrued obligations
|
(33,438
|
)
|
|
(8,210
|
)
|
||
Accrued payroll and benefits
|
(4,592
|
)
|
|
(4,314
|
)
|
||
FOLOTYN development liability
|
(4
|
)
|
|
(195
|
)
|
||
Contract liabilities (Note 3(h))
|
2,395
|
|
|
—
|
|
||
Other long-term liabilities
|
1,843
|
|
|
(464
|
)
|
||
Net cash used in operating activities
|
(76,349
|
)
|
|
(39,247
|
)
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Proceeds from Commercial Product Portfolio Transaction (Note 1(b))
|
158,765
|
|
|
—
|
|
||
Proceeds from sale of CASI stock (Note 7)
|
5,074
|
|
|
—
|
|
||
Purchase of available-for-sale securities (Note 3(a))
|
(127,564
|
)
|
|
—
|
|
||
Purchases of property and equipment (Note 3(b))
|
(1,241
|
)
|
|
(46
|
)
|
||
Proceeds from redemption of corporate-owned life insurance policy
|
—
|
|
|
4,130
|
|
||
Net cash provided by investing activities
|
35,034
|
|
|
4,084
|
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Proceeds from employees for exercises of stock options
|
3,854
|
|
|
4,804
|
|
||
Proceeds from sale of common stock under an at-the-market sales agreement (Note 13)
|
1,814
|
|
|
—
|
|
||
Proceeds from sale of stock under our employee stock purchase plan
|
444
|
|
|
734
|
|
||
Proceeds from employees, for our remittance to tax authorities, upon vesting of restricted stock and exercises of stock options
|
—
|
|
|
4,645
|
|
||
Payments to tax authorities upon employees' surrender of restricted stock at vesting and exercises of stock options
|
—
|
|
|
(27,686
|
)
|
||
Net cash provided by (used in) financing activities
|
6,112
|
|
|
(17,503
|
)
|
||
Effect of exchange rates on cash, cash equivalents and restricted cash
|
(6
|
)
|
|
(286
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(35,209
|
)
|
|
(52,952
|
)
|
||
Cash, cash equivalents and restricted cash—beginning of period
|
157,480
|
|
|
227,323
|
|
||
Cash, cash equivalents and restricted cash—end of period
|
$
|
122,271
|
|
|
$
|
174,371
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for facility and equipment under lease
|
$
|
921
|
|
|
$
|
—
|
|
Cash paid for income taxes
|
$
|
33
|
|
|
$
|
27
|
|
Cash paid for interest
|
$
|
—
|
|
|
$
|
558
|
|
Noncash investing activities:
|
|
|
|
||||
Additions of property and equipment that remain in accounts payable (Note 3(b))
|
$
|
3,209
|
|
|
$
|
—
|
|
•
|
Poziotinib, a novel irreversible tyrosine kinase inhibitor under investigation for non-small cell lung cancer (“NSCLC”) tumors with various mutations; and
|
•
|
ROLONTIS, a novel long-acting granulocyte colony-stimulating (“G-CSF”) for chemotherapy-induced neutropenia.
|
•
|
Anti-CD20-IFNa, the first antibody-interferon fusion molecule directed against CD20 from this platform that is in Phase 1 development for treating relapsed or refractory Non-Hodgkin Lymphoma patients (including diffuse large b-cell lymphoma).
|
(1)
|
we ensure that we have an executed contract(s) with our customer that we believe is legally enforceable;
|
(2)
|
we identify the “performance obligations” in the respective contract;
|
(3)
|
we determine the “transaction price” for each performance obligation in the respective contract;
|
(4)
|
we allocate the transaction price to each performance obligation; and
|
(5)
|
we recognize revenue only when we satisfy each performance obligation.
|
•
|
When our licensee is responsible for the achievement of the regulatory milestone, we recognize revenue in full (for the contractual amount due from our licensee) in the period that the approval occurs (i.e., when the “performance obligation” is satisfied by our customer) under the “most likely amount” method. This revenue recognition remains “constrained” (i.e., not recognized) until regulatory approval occurs, given its inherent uncertainty and the requirement of a significant revenue reversal not being probable if achievement does not occur. At each reporting period, we re-evaluate the probability of milestone achievement and the associated revenue constraint; any resulting adjustments would be recorded on a cumulative catch-up basis, thus reflected in our financial statements in the period of adjustment.
|
•
|
When we are responsible for the achievement of a regulatory milestone, the “relative selling price method” is applied for purposes of allocating the transaction price to our performance obligations. In such case, we consider (i) the extent of our effort to achieve the milestone and/or the enhancement of the value of the delivered item(s) as a result of milestone achievement and (ii) if the milestone payment is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement. We have historically assessed the contractual value of these milestones upon their achievement to be identical to the allocation of value of our performance obligations and thus representing the “transaction price” for each milestone at contract inception. We recognize this revenue in the period that the regulatory approval occurs (i.e., when we complete the “performance obligation”) under the “most likely amount” method, and revenue recognition is otherwise “constrained” until regulatory approval occurs, given its inherent uncertainty and the requirement of a significant revenue reversal not being probable if achievement does not occur. At each reporting period, we re-evaluate the probability of milestone achievement and the associated revenue constraint; any resulting adjustments would be recorded on a cumulative catch-up basis, thus reflected in our financial statements in the period of adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Historical or Amortized Cost
|
|
Foreign Currency Translation
|
|
Unrealized Gains |
|
Fair Value |
|
Cash and Cash
Equivalents |
|
Marketable Securities
|
|
||||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities* (see Note 7)
|
$
|
8,710
|
|
|
$
|
(4,678
|
)
|
|
$
|
28,121
|
|
|
$
|
32,153
|
|
|
$
|
—
|
|
|
$
|
32,153
|
|
|
Money market funds
|
72,384
|
|
|
—
|
|
|
—
|
|
|
72,384
|
|
|
72,384
|
|
|
—
|
|
|
||||||
Government-related debt securities**
|
104,440
|
|
|
|
|
|
95
|
|
|
104,535
|
|
|
7,497
|
|
|
97,038
|
|
|
||||||
Corporate debt securities**
|
39,818
|
|
|
—
|
|
|
25
|
|
|
39,843
|
|
|
15,484
|
|
|
24,359
|
|
|
||||||
Bank deposits
|
22,886
|
|
|
—
|
|
|
—
|
|
|
22,886
|
|
|
22,886
|
|
|
—
|
|
|
||||||
Bank CDs
|
6,571
|
|
|
—
|
|
|
13
|
|
|
6,584
|
|
|
—
|
|
|
6,584
|
|
|
||||||
Total cash and cash equivalents and marketable securities
|
$
|
254,809
|
|
|
$
|
(4,678
|
)
|
|
$
|
28,254
|
|
|
$
|
278,385
|
|
|
$
|
118,251
|
|
|
$
|
160,134
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities* (see Note 7)
|
$
|
8,710
|
|
|
$
|
(2,168
|
)
|
|
$
|
39,880
|
|
|
$
|
46,422
|
|
|
$
|
—
|
|
|
$
|
46,422
|
|
|
Money market funds
|
142,745
|
|
|
—
|
|
|
—
|
|
|
142,745
|
|
|
142,745
|
|
|
—
|
|
|
||||||
Bank deposits
|
14,735
|
|
|
—
|
|
|
—
|
|
|
14,735
|
|
|
14,735
|
|
|
—
|
|
|
||||||
Bank CDs
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
||||||
Total cash and cash equivalents and marketable securities
|
$
|
166,276
|
|
|
$
|
(2,168
|
)
|
|
$
|
39,880
|
|
|
$
|
203,988
|
|
|
$
|
157,480
|
|
|
$
|
46,508
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Manufacturing equipment*
|
$
|
3,654
|
|
|
$
|
—
|
|
Computer hardware and software
|
3,449
|
|
|
3,079
|
|
||
Laboratory equipment
|
670
|
|
|
635
|
|
||
Office furniture
|
335
|
|
|
212
|
|
||
Leasehold improvements
|
2,957
|
|
|
2,957
|
|
||
Property and equipment, at cost
|
11,065
|
|
|
6,883
|
|
||
(Less): Accumulated depreciation
|
(6,531
|
)
|
|
(6,498
|
)
|
||
Property and equipment, net of accumulated depreciation
|
$
|
4,534
|
|
|
$
|
385
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Deposits
|
$
|
10,549
|
|
|
$
|
6,792
|
|
Prepaid insurance
|
290
|
|
|
782
|
|
||
Prepaid expenses and other assets
|
$
|
10,839
|
|
|
$
|
7,574
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Insurance receivable*
|
$
|
5,674
|
|
|
$
|
206
|
|
Other miscellaneous receivables (including Medicaid rebate credits and royalty receivables from licensees)
|
1,926
|
|
|
1,189
|
|
||
Secured promissory note (see Note 7)
|
1,528
|
|
|
1,525
|
|
||
Income tax receivable - current portion
|
632
|
|
|
643
|
|
||
Interest receivable from marketable securities (see Note 3(a))
|
414
|
|
|
—
|
|
||
Reimbursements due from development partners for incurred research and development expenses
|
55
|
|
|
135
|
|
||
Other receivables
|
$
|
10,229
|
|
|
$
|
3,698
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Key employee life insurance – cash surrender value associated with deferred compensation plan (Note 9(f))
|
$
|
7,410
|
|
|
$
|
6,274
|
|
Income tax receivable - non-current portion*
|
668
|
|
|
668
|
|
||
Research & development supplies and other
|
199
|
|
|
246
|
|
||
Other assets
|
$
|
8,277
|
|
|
$
|
7,188
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Office and research facilities
|
$
|
3,379
|
|
|
$
|
—
|
|
Office equipment
|
463
|
|
|
—
|
|
||
Facility and equipment under lease (Note 9(a))
|
$
|
3,842
|
|
|
$
|
—
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Trade accounts payable and other
|
$
|
33,593
|
|
|
$
|
44,919
|
|
Lease liability - current portion (Note 9(a))
|
642
|
|
|
—
|
|
||
Accrued commercial/Medicaid rebates
|
3,526
|
|
|
8,371
|
|
||
Accrued product royalty due to licensors
|
235
|
|
|
4,337
|
|
||
Allowance for product returns
|
5,309
|
|
|
5,171
|
|
||
Accrued data and distribution fees
|
753
|
|
|
3,248
|
|
||
Accrued GPO administrative fees
|
29
|
|
|
296
|
|
||
Accrued inventory management fees
|
368
|
|
|
388
|
|
||
Allowance for government chargebacks
|
—
|
|
|
2,730
|
|
||
Accounts payable and other accrued liabilities
|
$
|
44,455
|
|
|
$
|
69,460
|
|
|
Commercial/Medicaid Rebates and Government Chargebacks
|
|
Distribution, Data, Inventory and
GPO Administrative Fees |
|
Product Return Allowances
|
||||||
Balance as of December 31, 2017
|
$
|
10,358
|
|
|
$
|
5,727
|
|
|
$
|
4,045
|
|
Add: GTN accruals recorded for product sales
|
65,751
|
|
|
13,962
|
|
|
1,700
|
|
|||
(Less): Payments made and credits against GTN accruals
|
(65,008
|
)
|
|
(15,757
|
)
|
|
(574
|
)
|
|||
Balance as of December 31, 2018
|
$
|
11,101
|
|
|
$
|
3,932
|
|
|
$
|
5,171
|
|
Add: GTN accruals recorded for product sales
|
7,252
|
|
|
1,197
|
|
|
250
|
|
|||
(Less): Payments made and credits against GTN accruals
|
(14,827
|
)
|
|
(3,979
|
)
|
|
(112
|
)
|
|||
Balance as of June 30, 2019
|
$
|
3,526
|
|
|
$
|
1,150
|
|
|
$
|
5,309
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Customer deposit for EVOMELA supply in China territory (see Note 7)
|
$
|
7,245
|
|
|
$
|
4,850
|
|
Contract liabilities
|
$
|
7,245
|
|
|
$
|
4,850
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Deferred compensation liability (Note 9(f))
|
$
|
7,318
|
|
|
$
|
5,474
|
|
Lease liability - non-current portion (Note 9(a))
|
3,429
|
|
|
—
|
|
||
Other tax liabilities
|
176
|
|
|
176
|
|
||
Other long-term liabilities
|
$
|
10,923
|
|
|
$
|
5,650
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Selling, general and administrative
|
$
|
3,675
|
|
|
$
|
2,531
|
|
|
$
|
7,326
|
|
|
$
|
4,784
|
|
Research and development
|
1,344
|
|
|
650
|
|
|
2,289
|
|
|
1,281
|
|
||||
Total stock-based compensation
|
$
|
5,019
|
|
|
$
|
3,181
|
|
|
$
|
9,615
|
|
|
$
|
6,065
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic weighted average shares outstanding
|
110,345,135
|
|
|
102,597,059
|
|
|
109,744,405
|
|
|
101,747,416
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
2013 Convertible Notes (see Note 8)
|
—
|
|
|
3,854,959
|
|
|
—
|
|
|
—
|
|
||||
Common stock options
|
—
|
|
|
3,870,462
|
|
|
—
|
|
|
—
|
|
||||
Restricted stock awards
|
—
|
|
|
1,797,089
|
|
|
—
|
|
|
—
|
|
||||
Restricted stock units
|
—
|
|
|
245,214
|
|
|
—
|
|
|
—
|
|
||||
Common stock warrants
|
—
|
|
|
252,368
|
|
|
—
|
|
|
—
|
|
||||
Diluted average shares outstanding
|
110,345,135
|
|
|
112,617,151
|
|
|
109,744,405
|
|
|
101,747,416
|
|
||||
Net (loss) income as reported
|
$
|
(28,395
|
)
|
|
$
|
13,744
|
|
|
$
|
(47,550
|
)
|
|
$
|
(2,074
|
)
|
Interest attributable to 2013 Convertible Notes
|
—
|
|
|
886
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income for diluted earnings per share
|
$
|
(28,395
|
)
|
|
$
|
14,630
|
|
|
$
|
(47,550
|
)
|
|
$
|
(2,074
|
)
|
Net (loss) income per share – basic
|
$
|
(0.26
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.43
|
)
|
|
$
|
(0.02
|
)
|
Net (loss) income per share – diluted
|
$
|
(0.26
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.43
|
)
|
|
$
|
(0.02
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Common stock options
|
1,099,016
|
|
|
—
|
|
|
1,467,293
|
|
|
4,396,587
|
|
Restricted stock awards
|
1,790,556
|
|
|
—
|
|
|
1,790,556
|
|
|
1,797,089
|
|
Restricted stock units
|
385,919
|
|
|
—
|
|
|
385,919
|
|
|
245,214
|
|
2013 Convertible Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
3,854,959
|
|
Common stock warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
257,039
|
|
Total
|
3,275,491
|
|
|
—
|
|
|
3,643,768
|
|
|
10,550,888
|
|
|
June 30, 2019
Fair Value Measurements |
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Equity securities (Note 7)
|
$
|
32,153
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,153
|
|
|
Bank CDs
|
—
|
|
|
6,584
|
|
|
—
|
|
|
6,584
|
|
|
||||
Mutual funds
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
|
||||
Restricted cash
|
4,020
|
|
|
—
|
|
|
—
|
|
|
4,020
|
|
|
||||
Deferred compensation investments (life insurance cash surrender value (Note 3(e))
|
—
|
|
|
7,410
|
|
|
—
|
|
|
7,410
|
|
*
|
||||
Money market funds
|
72,384
|
|
|
—
|
|
|
—
|
|
|
72,384
|
|
|
||||
Government-related debt securities
|
59,776
|
|
|
44,759
|
|
|
—
|
|
|
104,535
|
|
|
||||
Corporate debt securities
|
—
|
|
|
39,843
|
|
|
—
|
|
|
39,843
|
|
|
||||
|
$
|
168,333
|
|
|
$
|
98,626
|
|
|
$
|
—
|
|
|
$
|
266,959
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation liability (Note 9(f))
|
$
|
—
|
|
|
$
|
7,433
|
|
|
$
|
—
|
|
|
$
|
7,433
|
|
*
|
|
$
|
—
|
|
|
$
|
7,433
|
|
|
$
|
—
|
|
|
$
|
7,433
|
|
|
|
December 31, 2018
Fair Value Measurements |
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Bank CDs
|
$
|
—
|
|
|
$
|
86
|
|
|
$
|
—
|
|
|
$
|
86
|
|
|
Money market funds
|
—
|
|
|
142,745
|
|
|
—
|
|
|
142,745
|
|
|
||||
Equity securities (Note 7)
|
46,422
|
|
|
—
|
|
|
—
|
|
|
46,422
|
|
|
||||
Mutual funds
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|
||||
Deferred compensation investments (life insurance cash surrender value (Note 3(e))
|
—
|
|
|
6,274
|
|
|
—
|
|
|
6,274
|
|
*
|
||||
|
$
|
46,422
|
|
|
$
|
149,183
|
|
|
$
|
—
|
|
|
$
|
195,605
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Deferred compensation liability (Note 9(f))
|
$
|
—
|
|
|
$
|
6,167
|
|
|
$
|
—
|
|
|
$
|
6,167
|
|
*
|
|
$
|
—
|
|
|
$
|
6,167
|
|
|
$
|
—
|
|
|
$
|
6,167
|
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||
Stated coupon interest expense
|
$
|
279
|
|
|
$
|
558
|
|
Amortization of debt issuance costs
|
62
|
|
|
124
|
|
||
Accretion of debt discount
|
545
|
|
|
1,079
|
|
||
Total
|
$
|
886
|
|
|
$
|
1,761
|
|
Effective interest rate
|
8.4
|
%
|
|
8.4
|
%
|
Operating Leases*
|
|
Condensed Consolidated Balance Sheet Caption
|
|
Balance as of June 30, 2019
|
||
Operating lease right-of-use assets - non-current
|
|
Facility and equipment under lease
|
|
$
|
3,842
|
|
|
|
|
|
|
||
Operating lease liabilities - current
|
|
Accounts payable and other accrued liabilities
|
|
$
|
642
|
|
Operating lease liabilities - non-current
|
|
Other long-term liabilities
|
|
3,429
|
|
|
Total operating lease liabilities
|
|
|
|
$
|
4,071
|
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Operating lease cost
|
|
$
|
459
|
|
|
$
|
851
|
|
Variable lease cost
|
|
108
|
|
|
215
|
|
||
Short-term lease cost
|
|
15
|
|
|
39
|
|
||
Total lease cost
|
|
$
|
582
|
|
|
$
|
1,105
|
|
|
|
Weighted Average Remaining Lease Term
|
|
Weighted Average Discount Rate
|
|
Operating leases as of June 30, 2019
|
|
3 years
|
|
7.8
|
%
|
Operating Leases - future payments
|
|
June 30, 2019
|
||
2019 (remaining)
|
|
$
|
775
|
|
2020
|
|
1,442
|
|
|
2021
|
|
1,465
|
|
|
2022
|
|
828
|
|
|
2023
|
|
87
|
|
|
Total future lease payments, undiscounted
|
|
$
|
4,597
|
|
Less: Implied interest
|
|
(526
|
)
|
|
Present value of operating lease payments
|
|
$
|
4,071
|
|
Operating Leases - future payments
|
|
December 31, 2018
|
||
2019
|
|
1,486
|
|
|
2020
|
|
1,441
|
|
|
2021
|
|
1,465
|
|
|
2022
|
|
828
|
|
|
2023 and thereafter
|
|
87
|
|
|
|
|
$
|
5,308
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Product sales, net***
|
|
$
|
(1,245
|
)
|
|
$
|
23,753
|
|
|
$
|
12,938
|
|
|
$
|
51,863
|
|
License fees and service revenue
|
|
—
|
|
|
415
|
|
|
290
|
|
|
2,799
|
|
||||
Total revenues
|
|
$
|
(1,245
|
)
|
|
$
|
24,168
|
|
|
$
|
13,228
|
|
|
$
|
54,662
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales (excluding amortization of intangible assets)
|
|
433
|
|
|
6,606
|
|
|
3,601
|
|
|
13,420
|
|
||||
Selling, general and administrative
|
|
(61
|
)
|
|
7,060
|
|
|
5,890
|
|
|
14,549
|
|
||||
Research and development
|
|
255
|
|
|
4,893
|
|
|
2,791
|
|
|
9,422
|
|
||||
Amortization of intangible assets
|
|
—
|
|
|
6,934
|
|
|
1,248
|
|
|
13,880
|
|
||||
Restructuring - employee severance (Note 12)****
|
|
(2,439
|
)
|
|
—
|
|
|
3,858
|
|
|
—
|
|
||||
Total operating costs and expenses
|
|
$
|
(1,812
|
)
|
|
$
|
25,493
|
|
|
$
|
17,388
|
|
|
$
|
51,271
|
|
Income (loss) from discontinued operations
|
|
$
|
567
|
|
|
$
|
(1,325
|
)
|
|
$
|
(4,160
|
)
|
|
$
|
3,391
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of contingent consideration
|
|
—
|
|
|
(192
|
)
|
|
(1,478
|
)
|
|
(483
|
)
|
||||
Gain on sale of Commercial Product Portfolio*
|
|
—
|
|
|
—
|
|
|
33,644
|
|
|
—
|
|
||||
Total other (expense) income
|
|
$
|
—
|
|
|
$
|
(192
|
)
|
|
$
|
32,166
|
|
|
$
|
(483
|
)
|
Income (loss) from discontinued operations before income taxes
|
|
567
|
|
|
(1,517
|
)
|
|
28,006
|
|
|
2,908
|
|
||||
(Provision) benefit for income taxes from discontinued operations**
|
|
(179
|
)
|
|
367
|
|
|
(6,953
|
)
|
|
(703
|
)
|
||||
Income (loss) from discontinued operations, net of income taxes
|
|
$
|
388
|
|
|
$
|
(1,150
|
)
|
|
$
|
21,053
|
|
|
$
|
2,205
|
|
|
|
December 31, 2018
|
||
Inventories
|
|
$
|
3,550
|
|
Prepaid expenses and other assets
|
|
2,005
|
|
|
Discontinued operations, current assets
|
|
$
|
5,555
|
|
|
|
|
||
Intangible assets, net of accumulated amortization
|
|
111,594
|
|
|
Goodwill
|
|
18,061
|
|
|
Other assets
|
|
2,970
|
|
|
Discontinued operations, non-current assets
|
|
$
|
132,625
|
|
|
|
|
||
FOLOTYN development liability
|
|
2,311
|
|
|
Discontinued operations, current liabilities
|
|
$
|
2,311
|
|
|
|
|
||
FOLOTYN development liability, less current portion
|
|
9,686
|
|
|
Acquisition-related contingent obligations
|
|
4,345
|
|
|
Discontinued operations, non-current liabilities
|
|
$
|
14,031
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
Depreciation and amortization
|
|
$
|
1,263
|
|
|
$
|
13,925
|
|
Stock-based compensation
|
|
$
|
3,404
|
|
|
$
|
3,146
|
|
Change in fair value of contingent consideration
|
|
$
|
1,311
|
|
|
$
|
291
|
|
Description of Financing Transaction
|
|
No. of Common Shares Issued
|
|
Proceeds Received
(Net of Broker Commissions and Fees )
|
|||
Common shares issued pursuant to the April 2019 ATM Agreement during the three months ended June 30, 2019
|
|
221,529
|
|
|
$
|
1,814
|
|
•
|
our ability to successfully develop, obtain regulatory approval, and market our products;
|
•
|
the approval, or timing of approval, of our products or new indications for our products by the U.S. Food and Drug Administration (the “FDA”) and other international regulatory agencies;
|
•
|
the timing and/or results of pending or future clinical trials, and our reliance on contract research organizations;
|
•
|
our ability to maintain sufficient cash resources to fund our business operations;
|
•
|
our competitors’ progress with their drug development programs, which could adversely impact the perceived or actual value of our in-development drugs;
|
•
|
the ability of our manufacturing partners to meet our product demands and timelines;
|
•
|
our ability to identify and acquire new product candidates and to successfully integrate those product candidates into our operations;
|
•
|
our ability to protect our intellectual property rights;
|
•
|
the impact of legislative or regulatory reform on the pricing for pharmaceutical products;
|
•
|
the impact of any litigation to which we are, or may become a party;
|
•
|
our ability, and that of our suppliers, development partners, and manufacturing partners, to comply with laws, regulations and standards that govern or affect the pharmaceutical and biotechnology industries; and
|
•
|
our ability to maintain the services of our key executives and other personnel.
|
•
|
Poziotinib, a novel irreversible tyrosine kinase inhibitor under investigation for non-small cell lung cancer (“NSCLC”) tumors with various mutations; and
|
•
|
ROLONTIS, a novel long-acting granulocyte colony-stimulating (“G-CSF”) for chemotherapy-induced neutropenia.
|
•
|
Anti-CD20-IFNa, the first antibody-interferon fusion molecule directed against CD20 from this platform that is in Phase 1 development for treating relapsed or refractory Non-Hodgkin Lymphoma patients (including diffuse large b-cell lymphoma).
|
•
|
In 44 evaluable patients with EGFR exon-20 mutations, the confirmed overall response rate was 43% and disease control rate was 90%. Median progression free survival was 5.5 months.
|
•
|
In evaluable patients with HER2 exon-20 mutations, the confirmed overall response rate was 42% and disease control rate was 83%. Median progression free survival was 5.1 months.
|
•
|
EGFR-related toxicities (including rash, diarrhea, and paronychia) were manageable and required dose reductions in 60% of patients. Discontinuation due to poor tolerance was rare (approximately 3% of patients).
|
•
|
Revenue recognition;
|
•
|
Income taxes;
|
•
|
Stock-based compensation; and
|
•
|
Litigation accruals (as required)
|
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
($ in thousands)
|
($ in thousands)
|
|||||||||||||
Revenues (Note 1(b))
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
|
17,230
|
|
|
16,391
|
|
|
33,182
|
|
|
33,007
|
|
||||
Research and development
|
|
16,982
|
|
|
16,595
|
|
|
38,868
|
|
|
29,960
|
|
||||
Total operating costs and expenses
|
|
34,212
|
|
|
32,986
|
|
|
72,050
|
|
|
62,967
|
|
||||
Loss from continuing operations
|
|
(34,212
|
)
|
|
(32,986
|
)
|
|
(72,050
|
)
|
|
(62,967
|
)
|
||||
Interest income (expense), net
|
|
1,495
|
|
|
(242
|
)
|
|
2,556
|
|
|
(473
|
)
|
||||
Other income (expense), net
|
|
3,722
|
|
|
48,492
|
|
|
(7,563
|
)
|
|
58,463
|
|
||||
(Loss) income from continuing operations before income taxes
|
|
(28,995
|
)
|
|
15,264
|
|
|
(77,057
|
)
|
|
(4,977
|
)
|
||||
Benefit (provision) for income taxes from continuing operations
|
|
212
|
|
|
(370
|
)
|
|
8,454
|
|
|
698
|
|
||||
(Loss) income from continuing operations
|
|
(28,783
|
)
|
|
14,894
|
|
|
(68,603
|
)
|
|
(4,279
|
)
|
||||
Income (loss) from discontinued operations, net of income taxes (Note 11)
|
|
388
|
|
|
(1,150
|
)
|
|
21,053
|
|
|
2,205
|
|
||||
Net (loss) income
|
|
$
|
(28,395
|
)
|
|
$
|
13,744
|
|
|
$
|
(47,550
|
)
|
|
$
|
(2,074
|
)
|
|
|
Three months ended June 30,
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
($ in millions)
|
|
|
|
|
|||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
|
$
|
17.2
|
|
|
$
|
16.4
|
|
|
$
|
0.8
|
|
|
4.9
|
%
|
Research and development
|
|
17.0
|
|
|
16.6
|
|
|
0.4
|
|
|
2.4
|
%
|
|||
Total operating costs and expenses
|
|
$
|
34.2
|
|
|
$
|
33.0
|
|
|
$
|
1.2
|
|
|
3.6
|
%
|
|
|
Three months ended June 30,
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
($ in millions)
|
|
|
|
|
|||||||||
Total other income
|
|
$
|
5.2
|
|
|
$
|
48.3
|
|
|
$
|
(43.1
|
)
|
|
(89.2
|
)%
|
|
|
Three months ended June 30,
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
($ in millions)
|
|
|
|
|
|||||||||
Benefit (provision) for income taxes from continuing operations
|
|
$
|
0.2
|
|
|
$
|
(0.4
|
)
|
|
$
|
0.6
|
|
|
150.0
|
%
|
|
|
Six months ended June 30,
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
($ in millions)
|
|
|
|
|
|||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
|
33.2
|
|
|
33.0
|
|
|
0.2
|
|
|
0.6
|
%
|
|||
Research and development
|
|
38.9
|
|
|
30.0
|
|
|
8.9
|
|
|
29.7
|
%
|
|||
Total operating costs and expenses
|
|
$
|
72.1
|
|
|
$
|
63.0
|
|
|
$
|
9.1
|
|
|
14.4
|
%
|
|
|
Six months ended June 30,
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
($ in millions)
|
|
|
|
|
|||||||||
Total other (expense) income
|
|
$
|
(5.0
|
)
|
|
$
|
58.0
|
|
|
$
|
(63.0
|
)
|
|
(108.6
|
)%
|
|
|
Six months ended June 30,
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
|
($ in millions)
|
|
|
|
|
|||||||||
Benefit for income taxes from continuing operations
|
|
$
|
8.5
|
|
|
$
|
0.7
|
|
|
$
|
7.8
|
|
|
—
|
%
|
|
June 30, 2019
|
|
December 31, 2018
|
|
June 30, 2018
|
||||||
|
(in thousands, except financial metrics data)
|
||||||||||
Cash, cash equivalents, marketable securities, and restricted cash
|
$
|
282,405
|
|
|
$
|
203,988
|
|
|
$
|
269,658
|
|
Accounts receivable, net
|
$
|
2,542
|
|
|
$
|
29,873
|
|
|
$
|
27,658
|
|
Total current assets
|
$
|
306,015
|
|
|
$
|
250,688
|
|
|
$
|
309,520
|
|
Total current liabilities
|
$
|
56,962
|
|
|
$
|
86,474
|
|
|
$
|
94,470
|
|
Working capital surplus (a)
|
$
|
249,053
|
|
|
$
|
164,214
|
|
|
$
|
215,050
|
|
Current ratio (b)
|
5.4
|
|
|
2.9
|
|
|
3.3
|
|
(a)
|
Total current assets at period end minus total current liabilities at period end.
|
(b)
|
Total current assets at period end divided by total current liabilities at period end.
|
•
|
the need for additional capital to fund future development programs;
|
•
|
the need for additional capital to fund strategic acquisitions;
|
•
|
the need for additional capital to fund licensing arrangements;
|
•
|
our requirement for additional information technology infrastructure and systems; and
|
•
|
adverse outcomes from potential litigation and the cost to defend such litigation.
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
Description
|
Form
|
Form No.
|
Exhibit
|
Filing Date
|
Filed Herewith
|
|
1.2
|
S-3ASR
|
333-230821
|
1.2
|
4/5/2019
|
|
||
2.11
|
8-K
|
001-35006
|
10.1
|
1/17/2019
|
|
||
3.1
|
8-K
|
001-35006
|
3.1
|
6/18/18
|
|
||
3.2
|
8-K
|
001-35006
|
3.1
|
3/29/2018
|
|
||
4.1
|
8-K
|
001-35006
|
4.1
|
12/13/2010
|
|
||
4.2
|
8-K
|
001-35006
|
4.1
|
10/13/2017
|
|
||
4.3
|
8-K
|
001-35006
|
4.1
|
3/29/2018
|
|
||
10.1
|
|
|
|
|
X
|
||
31.1
|
|
|
|
|
X
|
||
31.2
|
|
|
|
|
X
|
||
32.1
|
|
|
|
|
X
|
||
32.2
|
|
|
|
|
X
|
||
101.INS
|
XBRL Instance Document.
|
|
|
|
|
X
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
X
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
X
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
X
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
X
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
X
|
|
|
SPECTRUM PHARMACEUTICALS, INC.
|
|
|
|
|
|
Date:
|
August 9, 2019
|
By:
|
/s/ Kurt A. Gustafson
|
|
|
|
Kurt A. Gustafson
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Authorized Signatory and Principal Financial and Accounting Officer)
|
1.
|
EMPLOYMENT/TERM. The Company hereby employs Executive to perform the duties and responsibilities set forth below under Section 2 of this Agreement, and Executive hereby accepts such employment, in each case on the terms and conditions set forth in this Agreement. This Agreement shall have a term commencing on June 19, 2019, (the “Effective Date”) and ending on the five-year anniversary of the Effective Date, (the “Term”), unless earlier terminated pursuant to Section 4 of this Agreement.
|
2.
|
POSITION AND DUTIES.
|
a.
|
Description of Executive’s Position, Duties, Authorities, and Responsibilities. Executive shall serve as Executive Vice President and Chief Medical Officer of the Company, subject to the direction of the Chief Executive Officer. In such capacity, Executive shall (i) report to the Chief Executive Officer, (ii) devote his full professional time and attention, best efforts, energy and skills to the services required of him as an employee of the Company, except for paid time off taken in accordance with the Company’s policies and practices, and subject to the Company’s policies pertaining to reasonable periods of absence due to sickness, personal injury or other disability; (iii) use his best efforts to promote the interests of the Company; (iv) comply with all applicable governmental laws, rules and regulations and with all of the Company’s policies, rules and regulations applicable to employees of the Company; and (v) discharge his responsibilities in a diligent and faithful manner, consistent with sound business practices and in accordance with the Chief Executive Officer’s directives.
|
b.
|
Performance of Duties. Executive hereby accepts such employment and agrees to render the services described above in the manner described above. It is understood and agreed that Executive may not engage in other business activities during the Term, whether or not for profit or other pecuniary advantage; provided, however, that Executive may (i) make financial investments which do not involve his active participation, (ii) participate in charitable, educational, religious, civic, or other similar organizations and activities, and (iii) with the prior written consent of the Board of Directors of the Company (the “Board”), serve as an outside director on the board of directors of other corporations that are not affiliates or competitors of the Company or any of its affiliates, in any case to the extent that such activities collectively do not hinder or interfere with the performance of his duties under this Agreement, conflict with the policies of the Company concerning conflicts of interest or conflict with the businesses of the Company or any of its affiliates in any material way.
|
3.
|
COMPENSATION AND BENEFITS.
|
a.
|
Base Salary. As of the Effective Date, Executive’s base salary (the “Base Salary”) shall be $520,000 USD per year payable in periodic installments in accordance with the Company’s regular payroll practices as in effect from time to time. The Board or a duly authorized committee thereof will review the Base Salary on an annual basis and may increase, but never decrease, the Base Salary from time to time based on merit or such other considerations as the Board or a duly authorized committee thereof may deem appropriate; provided, however, the Company makes no assurances that the Base Salary will be increased during the Term. “Base Salary” shall mean the initial base salary or the then-current base salary as later approved by the Board.
|
b.
|
Bonus. Executive shall be eligible to receive an annual cash bonus in an amount up to 50% of Executive’s Base Salary for the fiscal year for which the annual cash bonus is being paid, as determined in the discretion of the Board or a duly authorized committee thereof, based on the performance of the Company and Executive relative to performance objectives or other metrics as the Board or a duly authorized committee thereof may deem appropriate. For the first calendar year in which this Agreement is effective, performance objectives or other metrics shall be established within 30 days of the Effective Date of this Agreement. Thereafter, performance objectives or other metrics shall be established within 60 days of the commencement of the calendar year.
|
c.
|
Pro Rata Bonus. Notwithstanding any other provision in this Agreement to the contrary, should Executive’s employment be terminated by the Company without Cause (as defined below) or by Executive for Good Reason (as defined below), prior to the end of a calendar year, then the Board shall determine the amount of the target bonus for such calendar year, and the Company shall pay Executive the pro rata amount of such target bonus based on the number of days Executive was employed by the Company during the calendar year divided by 365 days (the “Pro Rata Bonus”). Such Pro Rata Bonus shall be paid when bonuses are paid to other senior executives of the Company and within two and one-half months following the end of the calendar year in which Executive is terminated.
|
d.
|
Benefits and Vacation. Executive shall be eligible to participate in and receive the benefits under any deferred compensation plan, health, life, accident and disability insurance plans or programs, and any other employee benefit or fringe benefit plans or arrangements that the Company makes available generally to other senior executives of the Company, pursuant to the provisions of such plans, programs or arrangements as in effect from time to time. Executive shall be entitled to vacation and sick days in accordance with the policies of the Company for its employees generally, as in effect from time to time. The benefits described in this Section 3.d. are hereinafter referred to as the “Benefits”.
|
e.
|
Equity Incentive Compensation. Executive shall be eligible to receive grants, at the discretion of the Board or a duly authorized committee thereof, under any long-term equity-based incentive compensation plans established or maintained by the Company for its senior executive officers, in each case subject to the terms and conditions of the applicable plans and award documents with respect to such grants. The grants described in this Section 3.e. are hereinafter referred to as the “Equity Incentive Compensation”.
|
f.
|
Expenses. The Company shall pay or reimburse Executive for all reasonable, ordinary and necessary business expenses incurred or paid by Executive during the Term in the performance of Executive’s services under this Agreement in accordance with the applicable policies and procedures of the Company as in effect from time to time, upon the presentation of proper expense statements or such other supporting documentation as the Company may reasonably require.
|
g.
|
Auto Allowance. Company shall pay an automotive allowance of $1,150 per month to cover costs of business travel in a personal vehicle.
|
4.
|
TERMINATION, OTHER THAN FOLLOWING A CHANGE OF CONTROL.
|
a.
|
General. Executive’s employment may be terminated by either party at any time and for any reason; and upon termination of Executive’s employment, the Term shall end.
|
b.
|
Resignation without Good Reason. Executive shall be required to give the Company at least 60 days’ advance written notice (the “Resignation Notice Period”) of any voluntary resignation of Executive’s employment hereunder (other than resignation for Good Reason (as defined below), in which event the procedures under Section 5.c. shall apply). During the Resignation Notice Period, the Company in its sole discretion may elect to accelerate Executive’s date of termination of employment, it being understood that any such termination shall still be treated as a voluntary resignation without Good Reason (as defined below) for purposes of this Agreement. Even if Executive’s date of termination is accelerated, Executive shall be paid his Base Salary, and shall receive Benefits capable of being provided to persons who are not actively employed by the Company, as if he had worked through the end of the Resignation Notice Period. The Company reserves the right to require Executive not to be in the offices of the Company or any of its affiliates and/or not to undertake all or any of Executive’s duties and/or not to contact clients, colleagues or advisors of the Company or any of its affiliates during all or part of the Resignation Notice Period. During the Resignation Notice Period, Executive’s terms and conditions of service and duties of loyalty and confidentiality to the Company shall remain in full force and effect and, during any such Resignation Notice Period, Executive shall continue to perform as an employee in compliance with the terms of this Agreement and all other agreements applicable to Executive with respect to his service with the Company or any of its affiliates.
|
c.
|
Death. Executive’s employment hereunder shall terminate automatically on the date of his death.
|
d.
|
Disability. At the option of the Company, Executive’s employment hereunder may be terminated immediately upon Disability (as defined below) of Executive. For purposes of this Agreement, “Disability” means any physical or mental illness, impairment or incapacity which, in the good faith determination of the Board, has prevented Executive from performing the essential functions of his position hereunder for a period of 90 or more consecutive days (or for shorter periods totaling 120 days) during any period of 12 consecutive months.
|
e.
|
Termination for Cause. Notwithstanding any other provision of this Agreement, the Company may, at any time, immediately terminate Executive’s employment for Cause (as defined below). For purposes of this Agreement, “Cause” means the occurrence of any of the following by Executive: (i) fraud, misappropriation, embezzlement or acts of similar dishonesty, (ii) conviction of, or plea of nolo contendere to, a felony, (iii) excessive use of alcohol or illegal use of drugs in the workplace, (iv) gross negligence or intentional or willful misconduct by Executive in the performance of his duties, (v) breach of Executive’s duty of loyalty to the Company or diversion or usurpation of corporate opportunities properly belonging to the Company, (vi) the knowing breach of any Company confidentiality agreement to which Executive is a party, (vii) willful disregard of the Company’s policies and procedures, (viii) insubordination, (ix) willful failure to satisfactorily perform the duties of Executive’s position, (x) act or omission that would materially and adversely impact the business or reputation of the Company, or (xi) violation of any material provision of this Agreement or any other material provision of any other agreement between Executive and the Company; in each case, as determined by the Company in its sole discretion. The Company’s lack of immediate action with respect to
|
f.
|
Termination Without Cause. The Company may, at any time, immediately terminate Executive’s employment without Cause.
|
5.
|
COMPENSATION UPON TERMINATION. Following any termination of Executive’s employment (the date of such termination, “Termination Date”), the obligations of the Company to pay or provide Executive with compensation and benefits under Section 3 shall immediately cease, and the Company shall have no further obligations to Executive under this Agreement, except as otherwise required by law or provided for under this Section 5.
|
a.
|
Death or Disability. If, during the Term, Executive’s employment is terminated (i) by reason of Executive’s death or (ii) by the Company for Disability of Executive, the Company shall pay to Executive (or to his estate or designated beneficiary in the event of Executive’s death) (A) any unpaid Base Salary accrued through the Termination Date, (B) any unpaid Benefits accrued through the Termination Date to which Executive is entitled under any plans, programs or arrangements applicable to terminated employees in which Executive participates, and (C) a lump sum amount equal to two years of Executive’s Base Salary in effect as of the Termination Date; provided that, in the event Executive is terminated by the Company for Disability during the Change of Control Tail Period, such amount shall be paid monthly over a period of 24 months following such termination. Executive shall also immediately vest in all options, restricted stock and other Equity Incentive Compensation (as defined below), all of which shall be immediately available to exercise during the periods provided in the applicable plans and award documents granted to Executive. All payments under clause (C) of this Section 5.a. are conditioned upon Executive executing and delivering (and not revoking) within 90 days of the Termination Date a general waiver and release agreement in the form of Exhibit A, attached, or in a form and with substance satisfactory to the Company, that is no longer subject to revocation. If Executive is unable to execute and deliver such waiver and release agreement due to death or Disability, then the waiver and release agreement shall be executed and delivered by an authorized agent or representative of Executive and/or Executive’s estate. The payments described in clauses (A) and (C) above shall be made within 90 days (or by such earlier date as may be required by applicable law) following the Termination Date, and the payments described in clause (B) above shall be made in accordance with the provisions of the applicable plans, programs and arrangements maintained by the Company with respect to such payments or as otherwise required by applicable law.
|
b.
|
For Cause or Without Good Reason (not During the Change of Control Tail Period). If, during the Term (other than during the Change of Control Tail Period (as defined below)), Executive’s employment is terminated (i) by the Company for Cause or (ii) by Executive for any reason other than for Good Reason (as defined below), the Company shall pay to Executive (A) any unpaid Base Salary accrued through the Termination Date and (B) any unpaid Benefits accrued through the Termination Date to which Executive is entitled under any plans, programs or arrangements applicable to terminated employees in which Executive participates. The payments described in clause (A) above shall be made within 90 days (or by such earlier date as may be required by applicable law) following the Termination Date, and the payments described in clause (B) above shall be made in accordance with the provisions of the applicable plans, programs and arrangements maintained by the Company with respect to such payments or as otherwise required by applicable law.
|
c.
|
Without Cause or for Good Reason (not During the Change of Control Tail Period). If, during the Term (other than during the Change of Control Tail Period), Executive’s employment is terminated (i) by the Company without Cause or (ii) by Executive for Good Reason (as defined below), the Company shall pay to Executive (A) any unpaid Base Salary accrued through the Termination Date, (B) any unpaid Benefits accrued through the Termination Date to which Executive is entitled under any plans, programs or arrangements applicable to terminated employees in which Executive participates, and (C) the following severance benefits (the “Without Cause/For Good Reason Severance Benefits”): (a) two years of Executive’s Base Salary in effect as of the Termination Date and two times (2x) the previous year’s Bonus, in each case paid as a lump sum (b) 18 months of Company-paid continued coverage (COBRA) for Executive and his eligible dependents under the Company’s existing health and benefit plans. As part of the Without Cause/For Good Reason Severance Benefits, Executive shall also immediately vest in all options, restricted stock and other Equity Incentive Compensation (as defined below), all of which shall be immediately available to exercise during the periods provided in the applicable plans and award documents granted to Executive; provided, that, notwithstanding the foregoing, with respect to any options, restricted stock or other Equity Incentive Compensation that vest based on performance-based criteria (“Performance-Based Awards”), Executive shall vest in such Performance-Based Awards as part of the Without Cause/For Good Reason Severance Benefits pro rata based on the Executive’s target award for such Performance-Based Awards (irrespective of actual performance) and based on the number of days Executive was employed by the Company during the applicable performance period for such Performance-Based Awards divided by the total number of days in such performance period. All payments under clause (C) of this Section 5.c. are conditioned upon Executive executing and delivering (and not revoking) within 90 days of the Termination Date a general waiver and release agreement in the form of Exhibit A, attached, or in a form and with substance satisfactory to the Company, that is no longer subject to revocation; provided, further, that in order for Executive to terminate his employment for Good Reason (as defined below), (x) Executive must furnish written notice to the Company setting forth the facts and circumstances claimed to provide a basis for such resignation within 30 days following the occurrence of such facts and circumstances, (y) the Company shall have 30 days after its receipt of such written notice to cure such facts and circumstances in all material respects (and if so cured, then Executive shall not be permitted to resign for Good Reason (as defined below) in respect thereof), and (z) Executive must actually terminate his employment within 30 days following the expiration of the Company’s cure period set forth above. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following events, without the express consent of Executive, (1) a material diminution in Executive’s Base Salary or (2) a material diminution in Executive’s title, position, duties, authorities or responsibilities (other than temporarily while physically or mentally incapacitated or as required by applicable law). The payments described in clauses (A) and (C) above shall be made within 90 days (or by such earlier date as may be required by applicable law) following the Termination Date, and the payments described in clause (B) above shall be made in accordance with the provisions of the applicable plans, programs and arrangements maintained by the Company with respect to such payments or as otherwise required by applicable law.
|
d.
|
Termination During Change of Control Tail Period. In the event that Executive’s employment is terminated by the Company or by Executive during the Change of Control Tail Period for any reason other than a termination by reason of Executive’s death or by the Company for Disability of Executive, this Section 5
|
e.
|
Equity Incentive Compensation. Except in circumstances where termination is (i) by reason of Executive’s death or by the Company for Disability, (ii) by the Company without Cause, (iii) by Executive for Good Reason, or (iv) during the Change of Control Tail Period and subject to Section 6, upon termination of Executive’s employment during the Term, the Equity Incentive Compensation awarded to Executive shall forfeit or vest in accordance with the terms of the applicable plans and award documents with respect to such Equity Incentive Compensation, and shall be subject to such other terms and conditions of such plans and award documents that may apply as a result of such termination.
|
f.
|
Benefits. Notwithstanding anything in this Section 5 to the contrary, the Benefits to which Executive is entitled upon or by reason of the termination of his employment with the Company (including during the Change of Control Tail Period) shall be subject to, and shall be governed by, the terms and conditions of the applicable plans, programs and arrangements maintained by the Company with respect to such Benefits.
|
g.
|
Expiration of Term. Notwithstanding anything in this Section 5 to the contrary, the expiration of the Term by itself shall not entitle Executive to receipt of any payments under this Section 5.
|
6.
|
CHANGE OF CONTROL.
|
a.
|
Definition. “Change of Control” shall have the meaning prescribed to such phrase (or, if applicable, the phrase, “Change in Control”) in the 2018 Long-Term Incentive Plan of the Company, or the latest equity incentive award plan of the Company in effect from time to time. The Board shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change of Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change of Control and any incidental matters relating thereto.
|
b.
|
Executive’s Rights Upon a Change of Control. If there should occur a Change of Control of the Company (or any successor) and Executive’s employment is terminated by the Company without Cause or Executive terminates employment with, Good Reason during the Change of Control Tail Period, Executive shall receive the Without Cause/For Good Reason Severance Benefits, as if he had been terminated without Cause or had terminated for Good Reason under Section 5.c. of this Agreement; provided, that the two years of Executive’s Base Salary in effect as of the Termination Date, payable as part of the Without Cause/For Good Reason Severance Benefits, shall be paid monthly over a period of 24 months following such termination; provided further that all equity awards that would have been eligible to vest under Section 5.c. shall vest immediately upon consummation of a Change of Control; and provided further that Executive shall vest in all Performance-Based Awards as part of the Without Cause/For Good Reason Severance Benefits upon consummation of a Change of Control pro rata based on the Executive’s target award for such Performance-Based Awards (irrespective of actual performance) and based on the number of days Executive was employed by the Company before the Change of Control during the applicable performance period for such Performance-Based Awards divided by the total number of days in such performance period. All of the provisions of Section 5.c., including but not limited to the notice and cure provisions, shall apply in like manner under this Section 6.b.
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7.
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COOPERATION. Upon the receipt of reasonable notice from the Company (including outside counsel), Executive agrees that while employed by the Company and thereafter, Executive will respond and provide information with regard to matters in which Executive has knowledge as a result of Executive’s employment with the Company, and will provide reasonable assistance to the Company, its affiliates and their respective representatives in defense of all claims that may be made against the Company or its affiliates, and will assist the Company and its affiliates in the prosecution of all claims that may be made by the Company or its affiliates, to the extent that such claims may relate to the period of Executive’s employment with the Company. Executive agrees to promptly inform the Company if Executive becomes aware of any lawsuit involving such claims that may be filed or threatened against the Company or its affiliates. Executive also agrees to promptly inform the Company (to the extent that Executive is legally permitted to do so) if Executive is asked to assist in any investigation of the Company or its affiliates (or their actions), regardless of whether a lawsuit or other proceeding has then been filed against the Company or its affiliates with respect to such investigation, and shall not provide such assistance unless legally required. Upon presentation of appropriate documentation, the Company shall pay or reimburse Executive for all reasonable out-of-pocket travel, duplicating or telephonic expenses incurred by Executive in complying with this Section 7. For the first five hours of cooperation in any calendar month during the period of Cooperation, Executive shall provide the specified Cooperation services without hourly reimbursement. For each hour of Cooperation or part thereof after five hours, in any calendar month, Company shall reimburse Executive at the hourly rate determined by this fraction: (final Base Salary / 2,080 hours).
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8.
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ARBITRATION. The parties hereby agree to submit all disputes, claims and controversies (“Claims”) between the parties or related to or arising out of their employment relationship (except to the extent otherwise provided in that certain Employee Obligations Agreement, dated as of November 5, 2018, by and between the Company and Executive (the “Employee Obligations Agreement”), or that certain Indemnification Agreement, dated as of June 19, 2019, by and between the Company and Executive (the “Indemnification Agreement”)) to final, binding arbitration to the fullest extent permitted by law. The Federal Arbitration Act., 9 U.S.C. § 1 et seq., shall govern the interpretation and enforcement of this Section 8. The court and not the arbitrator will determine matters of enforceability of this Section 8.
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a.
|
Statute of Limitations. The statutory limitations period applicable to a Claim asserted in a civil action shall apply to any such Claim asserted in any arbitration proceeding under this Section 8. Arbitration is commenced for limitations purposes by submitting the matter to the arbitral forum.
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b.
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Individual Basis. All Claims that are subject to arbitration under this Section 8 must and will take place on an individual basis only.
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c.
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Venue. Binding arbitration under this Section 8 shall be conducted in California, unless required by law to be conducted elsewhere, in which case it shall be conducted where required by law.
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d.
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Applicable Rules. The arbitration proceeding, including discovery, shall be conducted in accordance with the Federal Arbitration Act, the JAMS Policy on Employment Arbitration Minimum Standards and the JAMS Employment Arbitration Rules and Procedures then in effect (the “JAMS Rules”). Executive understands that if he wishes to receive a copy of the JAMS Rules currently in effect, he may inform the Company in writing, and the Company will provide them to him before he executes this Agreement. Executive also understand that JAMS Rules are available online at http://www.jamsadr.com/rules-employment-arbitration/.
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e.
|
Arbitrator Selection. The arbitration shall be conducted before a neutral arbitrator selected by all parties in accordance with JAMS Rules. The parties may also agree on an arbitrator.
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f.
|
Cost Allocation. If required by applicable law, the Company shall pay all additional costs peculiar to the arbitration to the extent such costs would not otherwise be incurred in a court proceeding (for instance, the Company shall pay the arbitrator’s fees, and the JAMS administration and filing fees, to the extent such fees exceed court filing fees).
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g.
|
Attorneys’ Fees and Costs. Each party shall pay his or its own costs and attorneys’ fees except that the arbitrator shall award costs and attorneys’ fees to the prevailing party.
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h.
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Written Decision. The arbitrator shall follow applicable substantive law and, within 30 days after the conclusion of the arbitration, issue a written opinion setting forth the factual and legal bases for his or her decision.
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i.
|
Acknowledgement. EXECUTIVE UNDERSTANDS HE IS GIVING UP HIS RIGHT TO A JURY TRIAL BY ENTERING INTO THIS AGREEMENT. EXECUTIVE UNDERSTANDS HE IS GIVING UP HIS RIGHT TO COMMENCE OR PARTICIPATE IN A CLASS OR COLLECTIVE ACTION AND INSTEAD AGREES TO ARBITRATE ANY EMPLOYMENT-RELATED DISPUTE ON AN INDIVIDUAL BASIS ONLY TO THE MAXIMUM EXTENT PERMITTED BY LAW.
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9.
|
CODE SECTION 409A.
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a.
|
This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), including the exceptions thereto, and shall be construed and administered in accordance with such intent. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each separate payment or installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement in connection with a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.
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b.
|
Notwithstanding any other provision of this Agreement, if at the time of Executive’s termination of employment, he is a “specified employee,” determined in accordance with Section 409A, any payments and benefits provided under this Agreement that constitute “nonqualified deferred compensation” subject to Section 409A that are provided to Executive on account of his separation from service shall not be paid until the first payroll date to occur following the six-month anniversary of Executive’s termination date (“Specified Employee Payment Date”). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If Executive dies before the Specified Employee Payment Date, any delayed payments shall be paid to Executive’s estate in a lump sum within one week of Executive’s death.
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c.
|
To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following: (i) the amount of expenses eligible for
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d.
|
Whenever in this Agreement a payment or benefit is conditioned on Executive’s execution of a release of claims, such release must be executed, and all revocation periods shall have expired within 90 days after the Termination Date; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes “nonqualified deferred compensation” subject to Section 409A, and if such 90-day period begins in one calendar year and ends in the next calendar year, the payment or benefit shall not be made or commence before the second such calendar year, even if the release becomes irrevocable in the first such calendar year.
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10.
|
GENERAL PROVISIONS.
|
a.
|
Notices. All notices, requests, demands, statements, reports and other communications provided for by this Agreement shall be in writing (email being sufficient) and shall be sent by (i) certified mail, return receipt requested, postage prepaid, (ii) nationally recognized overnight delivery service, (iii) personal delivery or (iv) email. A notice shall be deemed to be given (x) if notice is delivered by certified mail or nationally recognized overnight delivery service, on the business day following the date of its mailing, (y) if such notice is delivered personally, upon delivery, or (z) if such notice is sent by email, upon sending. Each party may change his or its address for notices by giving notice in accordance herewith. All notices shall be addressed and mailed or delivered to the following addresses:
|
b.
|
Entire Agreement. This Agreement, the Employee Obligations Agreement, and the Indemnification Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, representations and understandings (whether written or oral) of the parties with respect to the subject matter hereof and thereof.
|
c.
|
Modification and Waiver. No amendment or variation of the terms of this Agreement shall be valid unless made in writing and signed by Executive and a duly authorized representative of the Company (other than Executive). A waiver of any term or condition of this Agreement shall not be construed as a general waiver by the Company. If one or more provisions of this Agreement are held to be illegal or unenforceable under applicable law, such illegal or unenforceable provision(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms.
|
d.
|
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its conflict of law principles, and any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of California.
|
e.
|
Assignment; Binding Effect. This Agreement is fully assignable and transferable by the Company, but any purported assignment or transfer by Executive is void. It is hereby agreed that Executive’s rights and obligations under this Agreement are personal and not assignable by Executive. This Agreement shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and permitted assigns of the parties. EXECUTIVE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS AND ACCEPTS THE OBLIGATIONS WHICH IT IMPOSES UPON EXECUTIVE WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO EXECUTIVE TO INDUCE EXECUTIVE TO SIGN THIS AGREEMENT. EXECUTIVE SIGNS THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT THE COMPANY WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY EXECUTIVE.
|
f.
|
Injunctive Relief. Executive agrees that any breach of this Agreement will cause irreparable harm to the Company for which damages would not be an adequate remedy, and, therefore, to the fullest extent permitted by applicable law, the Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond.
|
g.
|
Survival. This Agreement shall terminate upon the expiration of the Term; provided that the provisions of Sections 5 through 10 shall survive termination of this Agreement and termination of Executive’s employment regardless of the reason for such termination.
|
h.
|
Withholding. The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to applicable law.
|
By:
|
/s/ JOSEPH W. TURGEON
|
|
Joseph W. Turgeon
|
|
Chief Executive Officer
|
|
EXECUTIVE:
|
|
/s/ DR. FRANCOIS LEBEL
|
|
Dr. Francois Lebel
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Spectrum Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
August 9, 2019
|
/s/ JOSEPH W. TURGEON
|
|
Joseph W. Turgeon
|
|
President and Chief Executive Officer
|
|
(Chief Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Spectrum Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
August 9, 2019
|
/s/ Kurt A. Gustafson
|
|
Kurt A. Gustafson
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
Date:
|
August 9, 2019
|
By:
|
|
/s/ JOSEPH W. TURGEON
|
|
|
Name:
|
|
Joseph W. Turgeon
|
|
|
Title:
|
|
Chief Executive Officer and President
|
Date:
|
August 9, 2019
|
By:
|
|
/s/ Kurt A. Gustafson
|
|
|
Name:
|
|
Kurt A. Gustafson
|
|
|
Title:
|
|
Executive Vice President and Chief Financial Officer
|