FORM 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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EXELIXIS, INC.
(Exact name of registrant as specified in its charter)
|
Delaware
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04-3257395
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Large accelerated filer
|
|
ý
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Accelerated filer
|
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¨
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Non-accelerated filer
|
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
|
|
¨
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2015 |
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December 31, 2014*
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||||
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(unaudited)
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|
|||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
145,642
|
|
|
$
|
80,395
|
|
Short-term investments
|
52,169
|
|
|
63,890
|
|
||
Short-term restricted cash and investments
|
—
|
|
|
12,212
|
|
||
Trade and other receivables
|
3,470
|
|
|
4,882
|
|
||
Inventory
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2,121
|
|
|
2,381
|
|
||
Prepaid expenses and other current assets
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3,949
|
|
|
3,481
|
|
||
Total current assets
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207,351
|
|
|
167,241
|
|
||
Long-term investments
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81,600
|
|
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81,579
|
|
||
Long-term restricted cash and investments
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2,650
|
|
|
4,684
|
|
||
Property and equipment, net
|
1,448
|
|
|
2,432
|
|
||
Goodwill
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63,684
|
|
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63,684
|
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||
Other assets
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6,508
|
|
|
8,340
|
|
||
Total assets
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$
|
363,241
|
|
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$
|
327,960
|
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,256
|
|
|
$
|
6,413
|
|
Accrued clinical trial liabilities
|
29,788
|
|
|
41,545
|
|
||
Accrued compensation and benefits
|
3,725
|
|
|
3,350
|
|
||
Other accrued liabilities
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15,969
|
|
|
12,282
|
|
||
Current portion of convertible notes
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450
|
|
|
98,880
|
|
||
Current portion of loans payable
|
—
|
|
|
381
|
|
||
Current portion of restructuring
|
3,734
|
|
|
6,426
|
|
||
Deferred revenue
|
—
|
|
|
2,583
|
|
||
Total current liabilities
|
55,922
|
|
|
171,860
|
|
||
Long-term portion of convertible notes
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297,436
|
|
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182,395
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||
Long-term portion of loans payable
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80,000
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|
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80,000
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|
||
Long-term portion of restructuring
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2,230
|
|
|
4,365
|
|
||
Other long-term liabilities
|
1,881
|
|
|
4,169
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|
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Total liabilities
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437,469
|
|
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442,789
|
|
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Commitments
|
|
|
|
||||
Stockholders’ deficit:
|
|
|
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||||
Preferred stock
|
—
|
|
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—
|
|
||
Common stock, $0.001 par value; 400,000,000 shares authorized; issued and outstanding:
226,154,354 and 195,895,769 shares at September 30, 2015 and December 31, 2014, respectively |
225
|
|
|
196
|
|
||
Additional paid-in capital
|
1,818,988
|
|
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1,652,400
|
|
||
Accumulated other comprehensive loss
|
(41
|
)
|
|
(121
|
)
|
||
Accumulated deficit
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(1,893,400
|
)
|
|
(1,767,304
|
)
|
||
Total stockholders’ deficit
|
(74,228
|
)
|
|
(114,829
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
363,241
|
|
|
$
|
327,960
|
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*
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The condensed consolidated balance sheet as of December 31, 2014 has been derived from the audited financial statements as of that date.
|
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Net product revenues
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$
|
6,854
|
|
|
$
|
6,291
|
|
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$
|
24,234
|
|
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$
|
17,758
|
|
Contract revenues
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3,000
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
||||
Total revenues
|
9,854
|
|
|
6,291
|
|
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27,234
|
|
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17,758
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold
|
1,420
|
|
|
573
|
|
|
2,872
|
|
|
1,359
|
|
||||
Research and development
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26,091
|
|
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43,628
|
|
|
72,879
|
|
|
149,451
|
|
||||
Selling, general and administrative
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17,842
|
|
|
9,906
|
|
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40,162
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|
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41,063
|
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||||
Restructuring charge
|
282
|
|
|
3,758
|
|
|
1,142
|
|
|
4,135
|
|
||||
Total operating expenses
|
45,635
|
|
|
57,865
|
|
|
117,055
|
|
|
196,008
|
|
||||
Loss from operations
|
(35,781
|
)
|
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(51,574
|
)
|
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(89,821
|
)
|
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(178,250
|
)
|
||||
Other income (expense), net:
|
|
|
|
|
|
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||||||||
Interest income and other, net
|
276
|
|
|
1,296
|
|
|
146
|
|
|
3,786
|
|
||||
Interest expense
|
(12,059
|
)
|
|
(12,282
|
)
|
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(36,421
|
)
|
|
(36,125
|
)
|
||||
Total other income (expense), net
|
(11,783
|
)
|
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(10,986
|
)
|
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(36,275
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)
|
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(32,339
|
)
|
||||
Net loss
|
$
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(47,564
|
)
|
|
$
|
(62,560
|
)
|
|
$
|
(126,096
|
)
|
|
$
|
(210,589
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.22
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(1.09
|
)
|
Shares used in computing basic and diluted net loss per share
|
217,587
|
|
|
195,126
|
|
|
203,153
|
|
|
193,855
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net loss
|
$
|
(47,564
|
)
|
|
$
|
(62,560
|
)
|
|
$
|
(126,096
|
)
|
|
$
|
(210,589
|
)
|
Other comprehensive income (loss) (1)
|
133
|
|
|
(153
|
)
|
|
80
|
|
|
(122
|
)
|
||||
Comprehensive loss
|
$
|
(47,431
|
)
|
|
$
|
(62,713
|
)
|
|
$
|
(126,016
|
)
|
|
$
|
(210,711
|
)
|
(1)
|
Other comprehensive income (loss) consisted solely of unrealized losses or gains, net on available for sale securities arising during the periods presented. There were no reclassification adjustments to net loss resulting from realized losses or gains on the sale of securities and there was no income tax expense related to other comprehensive income (loss) during those periods.
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(126,096
|
)
|
|
$
|
(210,589
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,063
|
|
|
3,014
|
|
||
Stock-based compensation expense
|
15,420
|
|
|
8,454
|
|
||
Restructuring charge for property and equipment
|
—
|
|
|
667
|
|
||
Accretion of debt discount
|
20,194
|
|
|
21,826
|
|
||
Accrual of interest paid in kind
|
1,890
|
|
|
—
|
|
||
Gain on sale of business and other equity investment
|
(95
|
)
|
|
(838
|
)
|
||
Change in the fair value of warrants
|
549
|
|
|
(1,916
|
)
|
||
Other
|
1,338
|
|
|
3,602
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Trade and other receivables
|
1,034
|
|
|
(781
|
)
|
||
Inventory
|
259
|
|
|
(986
|
)
|
||
Prepaid expenses and other assets
|
(108
|
)
|
|
(2,834
|
)
|
||
Accounts payable, accrued compensation, and other accrued liabilities
|
(162
|
)
|
|
(11,600
|
)
|
||
Clinical trial liabilities
|
(11,757
|
)
|
|
10,144
|
|
||
Restructuring liability
|
(5,731
|
)
|
|
(2,705
|
)
|
||
Other long-term liabilities
|
(1,367
|
)
|
|
(756
|
)
|
||
Deferred revenue
|
(2,583
|
)
|
|
(131
|
)
|
||
Net cash used in operating activities
|
(106,152
|
)
|
|
(185,429
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(114
|
)
|
|
(452
|
)
|
||
Proceeds from sale of property and equipment
|
1,300
|
|
|
286
|
|
||
Proceeds from sale of business and other equity investment
|
95
|
|
|
838
|
|
||
Proceeds from maturities of restricted cash and investments
|
16,754
|
|
|
20,397
|
|
||
Purchase of restricted cash and investments
|
(2,616
|
)
|
|
(8,184
|
)
|
||
Proceeds from maturities of investments
|
130,341
|
|
|
212,506
|
|
||
Purchases of investments
|
(119,692
|
)
|
|
(109,237
|
)
|
||
Net cash provided by investing activities
|
26,068
|
|
|
116,154
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock, net
|
145,651
|
|
|
75,646
|
|
||
Proceeds from exercise of stock options and warrants
|
3,787
|
|
|
120
|
|
||
Proceeds from employee stock purchase plan
|
274
|
|
|
929
|
|
||
Principal payments on debt
|
(4,381
|
)
|
|
(11,333
|
)
|
||
Net cash provided by financing activities
|
145,331
|
|
|
65,362
|
|
||
Net increase (decrease) in cash and cash equivalents
|
65,247
|
|
|
(3,913
|
)
|
||
Cash and cash equivalents at beginning of period
|
80,395
|
|
|
103,978
|
|
||
Cash and cash equivalents at end of period
|
$
|
145,642
|
|
|
$
|
100,065
|
|
|
Employee
Severance
and Other Benefits
|
|
Facility
Charges |
|
Asset Sales
|
|
Legal and
Other Fees
|
|
Total
|
||||||||||
Restructuring liability as of December 31, 2014
|
$
|
1,290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47
|
|
|
$
|
1,337
|
|
Restructuring charge (recovery)
|
(150
|
)
|
|
1,542
|
|
|
(905
|
)
|
|
—
|
|
|
487
|
|
|||||
Cash (payments) receipts, net
|
(1,021
|
)
|
|
(1,020
|
)
|
|
1,284
|
|
|
—
|
|
|
(757
|
)
|
|||||
Other non-cash items
|
—
|
|
|
278
|
|
|
(379
|
)
|
|
3
|
|
|
(98
|
)
|
|||||
Restructuring liability as of September 30, 2015
|
$
|
119
|
|
|
$
|
800
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
969
|
|
|
|
Facility
Charges
|
||
Restructuring liability as of December 31, 2014
|
|
$
|
9,454
|
|
Restructuring charge
|
|
655
|
|
|
Cash payments
|
|
(5,439
|
)
|
|
Adjustments or non-cash credits
|
|
325
|
|
|
Restructuring liability as of September 30, 2015
|
|
$
|
4,995
|
|
|
September 30, 2015
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash and cash equivalents
|
$
|
145,642
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
145,642
|
|
Short-term investments
|
52,142
|
|
|
38
|
|
|
(11
|
)
|
|
52,169
|
|
||||
Long-term investments
|
81,559
|
|
|
43
|
|
|
(2
|
)
|
|
81,600
|
|
||||
Long-term restricted cash and investments
|
2,650
|
|
|
—
|
|
|
—
|
|
|
2,650
|
|
||||
Total cash and investments
|
$
|
281,993
|
|
|
$
|
81
|
|
|
$
|
(13
|
)
|
|
$
|
282,061
|
|
|
December 31, 2014
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash and cash equivalents
|
$
|
80,395
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80,395
|
|
Short-term investments
|
63,988
|
|
|
37
|
|
|
(135
|
)
|
|
63,890
|
|
||||
Short-term restricted cash and investments
|
12,105
|
|
|
107
|
|
|
—
|
|
|
12,212
|
|
||||
Long-term investments
|
81,600
|
|
|
1
|
|
|
(22
|
)
|
|
81,579
|
|
||||
Long-term restricted cash and investments
|
4,684
|
|
|
—
|
|
|
—
|
|
|
4,684
|
|
||||
Total cash and investments
|
$
|
242,772
|
|
|
$
|
145
|
|
|
$
|
(157
|
)
|
|
$
|
242,760
|
|
|
September 30, 2015
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
34,895
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,895
|
|
Commercial paper
|
140,144
|
|
|
—
|
|
|
—
|
|
|
140,144
|
|
||||
Corporate bonds
|
89,778
|
|
|
79
|
|
|
(13
|
)
|
|
89,844
|
|
||||
U.S. government sponsored entities
|
14,978
|
|
|
1
|
|
|
—
|
|
|
14,979
|
|
||||
Total investments
|
$
|
279,795
|
|
|
$
|
80
|
|
|
$
|
(13
|
)
|
|
$
|
279,862
|
|
|
December 31, 2014
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
23,376
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,376
|
|
Commercial paper
|
56,714
|
|
|
—
|
|
|
—
|
|
|
56,714
|
|
||||
Corporate bonds
|
143,444
|
|
|
35
|
|
|
(157
|
)
|
|
143,322
|
|
||||
U.S. government sponsored entities
|
12,105
|
|
|
107
|
|
|
—
|
|
|
12,212
|
|
||||
Municipal bonds
|
2,659
|
|
|
3
|
|
|
—
|
|
|
2,662
|
|
||||
Total investments
|
$
|
238,298
|
|
|
$
|
145
|
|
|
$
|
(157
|
)
|
|
$
|
238,286
|
|
|
Mature within One Year
|
|
After One Year through Two Years
|
|
Fair Value
|
||||||
Money market funds
|
$
|
34,895
|
|
|
$
|
—
|
|
|
$
|
34,895
|
|
Commercial paper
|
140,144
|
|
|
—
|
|
|
140,144
|
|
|||
Corporate bonds
|
60,658
|
|
|
29,186
|
|
|
89,844
|
|
|||
U.S. government sponsored entities
|
14,979
|
|
|
—
|
|
|
14,979
|
|
|||
Total investments
|
$
|
250,676
|
|
|
$
|
29,186
|
|
|
$
|
279,862
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
Raw materials
|
$
|
1,063
|
|
|
$
|
1,118
|
|
Work in process
|
2,203
|
|
|
2,845
|
|
||
Finished goods
|
745
|
|
|
559
|
|
||
Total
|
4,011
|
|
|
4,522
|
|
||
Less: non-current portion included in Other assets
|
(1,890
|
)
|
|
(2,141
|
)
|
||
Inventory
|
$
|
2,121
|
|
|
$
|
2,381
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
Convertible Senior Subordinated Notes due 2019
|
$
|
196,371
|
|
|
$
|
182,395
|
|
Secured Convertible Notes due 2018
|
101,515
|
|
|
98,880
|
|
||
Silicon Valley Bank term loan
|
80,000
|
|
|
80,000
|
|
||
Silicon Valley Bank line of credit
|
—
|
|
|
381
|
|
||
Total debt
|
377,886
|
|
|
361,656
|
|
||
Less: current portion
|
(450
|
)
|
|
(99,261
|
)
|
||
Long-term debt
|
$
|
377,436
|
|
|
$
|
262,395
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
Net carrying amount of the liability component
|
$
|
196,371
|
|
|
$
|
182,395
|
|
Unamortized discount of the liability component
|
91,129
|
|
|
105,105
|
|
||
Face amount of the 2019 Notes
|
$
|
287,500
|
|
|
$
|
287,500
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Stated coupon interest
|
$
|
3,054
|
|
|
$
|
3,055
|
|
|
$
|
9,164
|
|
|
$
|
9,198
|
|
Amortization of debt discount and debt issuance costs
|
4,951
|
|
|
4,502
|
|
|
14,505
|
|
|
13,194
|
|
||||
Total interest expense
|
$
|
8,005
|
|
|
$
|
7,557
|
|
|
$
|
23,669
|
|
|
$
|
22,392
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Stated coupon interest paid in cash
|
$
|
1,891
|
|
|
$
|
1,512
|
|
|
$
|
4,866
|
|
|
$
|
4,487
|
|
Amortization of debt discount, debt issuance costs and accrual of interest paid in kind
|
1,959
|
|
|
3,005
|
|
|
7,279
|
|
|
8,631
|
|
||||
Total interest expense
|
$
|
3,850
|
|
|
$
|
4,517
|
|
|
$
|
12,145
|
|
|
$
|
13,118
|
|
|
September 30, 2015
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money market funds
|
$
|
34,895
|
|
|
$
|
—
|
|
|
$
|
34,895
|
|
Commercial paper
|
—
|
|
|
140,144
|
|
|
140,144
|
|
|||
Corporate bonds
|
—
|
|
|
89,844
|
|
|
89,844
|
|
|||
U.S. government sponsored entities
|
—
|
|
|
14,979
|
|
|
14,979
|
|
|||
Total financial assets
|
$
|
34,895
|
|
|
$
|
244,967
|
|
|
$
|
279,862
|
|
|
December 31, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
23,376
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,376
|
|
Commercial paper
|
—
|
|
|
56,714
|
|
|
—
|
|
|
56,714
|
|
||||
Corporate bonds
|
—
|
|
|
143,322
|
|
|
—
|
|
|
143,322
|
|
||||
U.S. government sponsored entities
|
—
|
|
|
12,212
|
|
|
—
|
|
|
12,212
|
|
||||
Municipal bonds
|
—
|
|
|
2,662
|
|
|
—
|
|
|
2,662
|
|
||||
Total financial assets
|
$
|
23,376
|
|
|
$
|
214,910
|
|
|
$
|
—
|
|
|
$
|
238,286
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Warrants
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
921
|
|
|
$
|
921
|
|
Balance at December 31, 2014
|
$
|
921
|
|
Unrealized loss at final re-measurement of warrants on March 18, 2015,
included in Interest income and other, net
|
549
|
|
|
Transfer of warrants from Other long-term liabilities to Additional paid-in capital at their estimated fair value upon warrant repricing on March 18, 2015
|
(1,470
|
)
|
|
Balance at September 30, 2015
|
$
|
—
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
2019 Notes
|
$
|
196,371
|
|
|
$
|
355,638
|
|
|
$
|
182,395
|
|
|
$
|
156,889
|
|
Silicon Valley Bank term loan
|
$
|
80,000
|
|
|
$
|
79,884
|
|
|
$
|
80,000
|
|
|
$
|
79,943
|
|
Silicon Valley Bank line of credit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
381
|
|
|
$
|
381
|
|
•
|
When available, we value investments based on quoted prices for those financial instruments, which is a Level 1 input. Our remaining investments are valued using third-party pricing sources, which use observable market prices, interest rates and yield curves observable at commonly quoted intervals of similar assets as observable inputs for pricing, which is a Level 2 input.
|
•
|
The 2019 Notes are valued using a third-party pricing model that is based in part on average trading prices, which is a Level 2 input. The 2019 Notes are not marked-to-market and are shown at their initial fair value less the unamortized discount; the portion of the value allocated to the conversion option is included in Stockholders’ deficit on the accompanying Condensed Consolidated Balance Sheets.
|
•
|
We estimate the fair value of our other debt instruments, where possible, using the net present value of the payments. For the Silicon Valley Bank term loan and line of credit, we use an interest rate that is consistent with money-market rates that would have been earned on our non-interest-bearing compensating balances as our discount rate, which is a Level 2 input. For the Deerfield Notes, we used a discount rate of
15%
, which we estimate as our current borrowing rate for similar debt as of
September 30, 2015
, which is a Level 3 input.
|
•
|
The 2014 Deerfield Warrants were valued using a Monte Carlo simulation model until December 31, 2014 and the Black-Scholes Merton option pricing model on March 18, 2015. The expected life is based on the contractual terms of the 2014 Deerfield Warrants, and in certain simulations, assumes the
two
year extension that would result from our exercise of the Extension Option; as of and subsequent to September 30, 2014, we estimated that it was probable that we would exercise this
two
-year extension. We consider implied volatility as well as our historical volatility in developing our estimate of expected volatility. The fair value of the 2014 Deerfield Warrants was estimated using the following assumptions, which, except for risk-free interest rate, are Level 3 inputs (dollars in thousands):
|
|
March 18, 2015
|
|
December 31, 2014
|
||
|
|
|
|
||
Risk-free interest rate
|
0.87
|
%
|
|
1.07
|
%
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
Volatility
|
95
|
%
|
|
96
|
%
|
Average expected life
|
2.8 years
|
|
|
3.1 years
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Research and development expense
|
$
|
6,676
|
|
|
$
|
112
|
|
|
$
|
8,049
|
|
|
$
|
3,148
|
|
Selling, general and administrative expense
|
5,350
|
|
|
624
|
|
|
7,371
|
|
|
5,328
|
|
||||
Restructuring-related stock-based compensation (recovery) expense
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
||||
Total employee stock-based compensation expense
|
$
|
12,026
|
|
|
$
|
714
|
|
|
$
|
15,420
|
|
|
$
|
8,454
|
|
|
Stock Options
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Weighted average grant-date fair values
|
$
|
3.92
|
|
|
$
|
1.19
|
|
|
$
|
2.51
|
|
|
$
|
1.47
|
|
Assumptions:
|
|
|
|
|
|
|
|
||||||||
Risk-free interest rate
|
1.18
|
%
|
|
1.83
|
%
|
|
1.20
|
%
|
|
1.81
|
%
|
||||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||
Volatility
|
88
|
%
|
|
86
|
%
|
|
93
|
%
|
|
85
|
%
|
||||
Expected life
|
4.6 years
|
|
|
5.5 years
|
|
|
4.5 years
|
|
|
5.5 years
|
|
|
Employee Stock Purchase Plan
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Weighted average grant-date fair values
|
$
|
1.26
|
|
|
$
|
1.21
|
|
|
$
|
0.97
|
|
|
$
|
1.35
|
|
Assumptions:
|
|
|
|
|
|
|
|
||||||||
Risk-free interest rate
|
0.06
|
%
|
|
0.05
|
%
|
|
0.09
|
%
|
|
0.06
|
%
|
||||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||||
Volatility
|
107
|
%
|
|
68
|
%
|
|
101
|
%
|
|
66
|
%
|
||||
Expected life
|
6 months
|
|
|
6 months
|
|
|
6 months
|
|
|
6 months
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(47,564
|
)
|
|
$
|
(62,560
|
)
|
|
$
|
(126,096
|
)
|
|
$
|
(210,589
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Shares used in computing basic and diluted net loss per share
|
217,587
|
|
|
195,126
|
|
|
203,153
|
|
|
193,855
|
|
||||
Net loss per share, basic and diluted
|
$
|
(0.22
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(1.09
|
)
|
|
September 30
|
||||
|
2015
|
|
2014
|
||
Convertible Senior Subordinated Notes due 2019
|
54,118
|
|
|
54,118
|
|
Secured Convertible Notes due 2018
|
33,890
|
|
|
21,616
|
|
Outstanding stock options, unvested RSUs and ESPP contributions
|
31,331
|
|
|
34,243
|
|
2014 Deerfield Warrants
|
1,000
|
|
|
1,000
|
|
Total potentially dilutive shares
|
120,339
|
|
|
110,977
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Percentage of revenues earned in the United States
|
96
|
%
|
|
108
|
%
|
|
90
|
%
|
|
100
|
%
|
Percentage of revenues earned in the European Union
|
4
|
%
|
|
(8
|
)%
|
|
10
|
%
|
|
—
|
%
|
•
|
A Study of MEHD7945A and Cobimetinib (GDC-0973) in Patients with Locally Advanced or Metastatic Cancers with Mutant KRAS (NCT01986166);
|
•
|
A Phase 1b Study of MPDL3280A (an Engineered Anti-PDL1 Antibody) in Combination with Cobimetinib in Patients with Locally Advanced or Metastatic Solid Tumors (NCT01988896);
|
•
|
Trial of Vemurafenib/Cobimetinib with or without Bevacizumab in Patients with Stage IV BRAF V600 Mutant Melanoma (NCT01495988);
|
•
|
A Phase 1b Study of MPDL3280A (an Engineered Anti-PDL1 Antibody) in Combination with Vemurafenib (Zelboraf
®
) or Vemurafenib Plus Cobimetinib in Patients with Previously Untreated BRAF V600-Mutation Positive Metastatic Melanoma (NCT01656642);
|
•
|
A Study of Cobimetinib in Combination with Paclitaxel as First-line Treatment for Patients with Metastatic Triple-negative Breast Cancer (NCT02322814);
|
•
|
A Study of Neo-adjuvant Use of Vemurafenib Plus Cobimetinib for BRAF Mutant Melanoma with Palpable Lymph Node Metastases (NCT02036086);
|
•
|
A Phase II Study of Cobimetinib in Combination with Vemurafenib in Active Melanoma Brain Metastases (CoBRIM-B) (NCT02230306);
|
•
|
Neoadjuvant Vemurafenib + Cobimetinib in Melanoma: NEO-VC (NCT02303951);
|
•
|
Vemurafenib Plus Cobimetinib in Metastatic Melanoma (REPOSIT) (NCT02414750);
|
•
|
A Phase Ib, Open-Label, Dose-Escalation Study Of The Safety, Tolerability, and Pharmacokinetics of Cobimetinib and GDC-0994 In Patients with Locally Advanced or Metastatic Solid Tumors (NCT02457793);
|
•
|
A trial of Vemurafenib and Cobimetinib in Patients with Advanced BRAF V600 Mutant Melanoma (NCT2427893);
|
•
|
A Study of GDC-0973/XL518 in Patients With Solid Tumors (NCT00467779);
|
•
|
A Study to Evaluate the Pharmacokinetics and Safety of Cobimetinib in Volunteers With and Without Liver Damage (NCT02300025);
|
•
|
A Trial of Vemurafenib and Cobimetinib in Patients With Advanced BRAFV600 Mutant Melanoma (NCT02427893);
|
•
|
Evaluation of Vemurafenib and Cobimetinib Combination in BRAF Mutated Melanoma With Brain Metastasis (CONVERCE) (NCT02537600);
|
•
|
A Clinical Trial to Evaluate the Efficacy of Vemurafenib in Combination With Cobimetinib (Continuous and Intermittent) in BRAFV600-mutation Positive Patients With Unresectable Locally Advanced or Metastatic Melanoma (NCT02583516); and
|
•
|
A Study of Vemurafenib and GDC-0973 in Patients With BRAF-Mutation Positive Metastatic Melanoma (NCT01271803).
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Stated coupon interest paid in cash
|
$
|
1,891
|
|
|
$
|
1,512
|
|
|
$
|
4,866
|
|
|
$
|
4,487
|
|
Amortization of debt discount, debt issuance costs and accrual of interest paid in kind
|
1,959
|
|
|
3,005
|
|
|
7,279
|
|
|
8,631
|
|
||||
Total interest expense
|
$
|
3,850
|
|
|
$
|
4,517
|
|
|
$
|
12,145
|
|
|
$
|
13,118
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Gross product revenues
|
$
|
7,230
|
|
|
$
|
8,616
|
|
|
$
|
25,794
|
|
|
$
|
20,761
|
|
Discounts and allowances
|
(376
|
)
|
|
(2,325
|
)
|
|
(1,560
|
)
|
|
(3,003
|
)
|
||||
Net product revenues
|
6,854
|
|
|
6,291
|
|
|
24,234
|
|
|
17,758
|
|
||||
Contract revenues
|
3,000
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
||||
Total revenues
|
$
|
9,854
|
|
|
$
|
6,291
|
|
|
$
|
27,234
|
|
|
$
|
17,758
|
|
Dollar change
|
$
|
3,563
|
|
|
|
|
$
|
9,476
|
|
|
|
|
|||
Percentage change
|
57
|
%
|
|
|
|
53
|
%
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Collaboration agreements:
|
|
|
|
|
|
|
|
||||||||
Merck
|
$
|
3,000
|
|
|
$
|
—
|
|
|
$
|
3,000
|
|
|
$
|
—
|
|
Product sales:
|
|
|
|
|
|
|
|
||||||||
Diplomat Specialty Pharmacy
|
6,457
|
|
|
6,791
|
|
|
21,567
|
|
|
17,742
|
|
||||
Swedish Orphan Biovitrum (1)
|
397
|
|
|
(500
|
)
|
|
2,667
|
|
|
16
|
|
||||
Total revenues
|
$
|
9,854
|
|
|
$
|
6,291
|
|
|
$
|
27,234
|
|
|
$
|
17,758
|
|
Dollar change
|
$
|
3,563
|
|
|
|
|
|
$
|
9,476
|
|
|
|
|||
Percentage change
|
57
|
%
|
|
|
|
53
|
%
|
|
|
(1)
|
Revenues from Swedish Orphan Biovitrum for the three and nine months ended September 30, 2014 are net of a $1.8 million project management fee payable to our European distribution partner.
$1.0 million
of the
$1.8 million
we recorded represents amounts that would have been previously recorded had the cumulative revenue goal been determined to be probable in those periods.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of goods sold
|
$
|
1,420
|
|
|
$
|
573
|
|
|
$
|
2,872
|
|
|
$
|
1,359
|
|
Gross margin
|
79
|
%
|
|
91
|
%
|
|
88
|
%
|
|
92
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Research and development expenses
|
$
|
26,091
|
|
|
$
|
43,628
|
|
|
$
|
72,879
|
|
|
$
|
149,451
|
|
Dollar change
|
$
|
(17,537
|
)
|
|
|
|
$
|
(76,572
|
)
|
|
|
||||
Percentage change
|
(40
|
)%
|
|
|
|
(51
|
)%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Selling, general and administrative expenses
|
$
|
17,842
|
|
|
$
|
9,906
|
|
|
$
|
40,162
|
|
|
$
|
41,063
|
|
Dollar change
|
$
|
7,936
|
|
|
|
|
$
|
(901
|
)
|
|
|
||||
Percentage change
|
80
|
%
|
|
|
|
(2
|
)%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Restructuring charge
|
$
|
282
|
|
|
$
|
3,758
|
|
|
$
|
1,142
|
|
|
$
|
4,135
|
|
Dollar change
|
$
|
(3,476
|
)
|
|
|
|
$
|
(2,993
|
)
|
|
|
||||
Percentage change
|
(92
|
)%
|
|
|
|
(72
|
)%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Interest income and other, net
|
$
|
276
|
|
|
$
|
1,296
|
|
|
$
|
146
|
|
|
$
|
3,786
|
|
Interest expense
|
(12,059
|
)
|
|
(12,282
|
)
|
|
(36,421
|
)
|
|
(36,125
|
)
|
||||
Total other expense, net
|
$
|
(11,783
|
)
|
|
$
|
(10,986
|
)
|
|
$
|
(36,275
|
)
|
|
$
|
(32,339
|
)
|
Dollar change
|
$
|
(797
|
)
|
|
|
|
$
|
(3,936
|
)
|
|
|
||||
Percentage change
|
7
|
%
|
|
|
|
12
|
%
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2015
|
|
2014
|
||||
Net loss
|
$
|
(126,096
|
)
|
|
$
|
(210,589
|
)
|
Net cash used in operating activities
|
(106,152
|
)
|
|
(185,429
|
)
|
||
Net cash provided by investing activities
|
26,068
|
|
|
116,154
|
|
||
Net cash provided by financing activities
|
145,331
|
|
|
65,362
|
|
||
Net increase (decrease) in cash and cash equivalents
|
65,247
|
|
|
(3,913
|
)
|
||
Cash and cash equivalents at beginning of period
|
80,395
|
|
|
103,978
|
|
||
Cash and cash equivalents at end of period
|
$
|
145,642
|
|
|
$
|
100,065
|
|
•
|
the pace and progress of our current ramping up of sales, marketing, and distribution capabilities in anticipation of obtaining FDA approval for cabozantinib for the potential treatment of advanced RCC patients;
|
•
|
the commercial success of COMETRIQ and COTELLIC and the revenues we generate;
|
•
|
the progress and scope of other development and commercialization activities for cabozantinib and our other compounds;
|
•
|
our obligation to share U.S. sales and marketing costs for cobimetinib under our collaboration with Genentech;
|
•
|
the commercial success of cobimetinib and our share of related profits and losses for the commercialization of cobimetinib in the U.S. and receipt of royalties from cobimetinib sales outside the U.S. under our collaboration with Genentech;
|
•
|
our ability to obtain regulatory approval for cabozantinib for the treatment of advanced RCC and other indications;
|
•
|
the amount of expenses we incur in the build-out of our sales, marketing and distribution capabilities;
|
•
|
whether, when and the terms upon which we partner cabozantinib with a global pharmaceutical organization for further development and sales outside the U.S., and the sufficiency of upfront payments and milestones associated with any such transaction to meet our capital needs;
|
•
|
future clinical trial results, notably the results from CELESTIAL, our phase 3 pivotal trial in patients with advanced HCC;
|
•
|
repayment of the Deerfield Notes which mature on July 1, 2018, subject to a requirement to make a mandatory prepayment in each of 2016, 2017 and 2018 equal to 15% of certain revenues from collaborative arrangements (other than intercompany arrangements) received during the prior fiscal year, subject to a maximum annual prepayment amount of $27.5 million;
|
•
|
our ability to repay the Deerfield Notes with our common stock, which we are only able to do under specified conditions;
|
•
|
repayment of our $287.5 million aggregate principal amount of the 2019 Notes, which mature on August 15, 2019, unless earlier converted, redeemed or repurchased;
|
•
|
repayment of our term loan and line of credit from Silicon Valley Bank, which had an outstanding balance at
September 30, 2015
, of
$80.0 million
;
|
•
|
our ability to control costs;
|
•
|
our ability to remain in compliance with, or amend or cause to be waived, financial covenants contained in agreements with third parties;
|
•
|
our need to expand our product and clinical development efforts;
|
•
|
the cost and timing of regulatory approvals;
|
•
|
the cost of clinical drug supply for our clinical trials;
|
•
|
the effect of economic and scientific developments in the market for oncologic therapeutics and the timing of regulatory approvals for competing oncologic therapies; and
|
•
|
the filing, maintenance, prosecution, defense and enforcement of patent claims and other intellectual property rights.
|
•
|
fund our operations and clinical trials;
|
•
|
continue our research and development efforts;
|
•
|
expand our sales, marketing and distribution capabilities;
|
•
|
commercialize cabozantinib or any other future product candidates, if any such candidates receive regulatory approval for commercial sale; and
|
•
|
fund the portion of U.S. sales and marketing costs for cobimetinib that we are obligated to fund under our collaboration with Genentech, or any similar costs we are obligated to fund under collaborations we may enter into in the future.
|
•
|
the progress and scope of the cabozantinib development and commercialization activities;
|
•
|
the commercial success of COMETRIQ and the revenues we generate;
|
•
|
our obligation to share U.S. sales and marketing costs for cobimetinib under our collaboration with Genentech;
|
•
|
the commercial success of cobimetinib and our share of related profits and losses for the commercialization of cobimetinib in the U.S. and receipt of royalties from cobimetinib sales outside the U.S. under our collaboration with Genentech;
|
•
|
our ability to obtain regulatory approval for cabozantinib for the treatment of advanced RCC and other indications;
|
•
|
the amount of expenses we incur in the build-out of our sales, marketing and distribution capabilities;
|
•
|
whether, when and the terms upon which we partner cabozantinib with a global pharmaceutical organization for further development and sales outside the U.S., and the sufficiency of upfront payments and milestones associated with any such transaction to meet our capital needs;
|
•
|
future clinical trial results, notably the results from CELESTIAL, our phase 3 pivotal trial in patients with advanced HCC;
|
•
|
repayment of the Deerfield Notes which mature on July 1, 2018, subject to a requirement to make a mandatory prepayment in each of 2016, 2017 and 2018 equal to 15% of certain revenues from collaborative arrangements (other than intercompany arrangements) received during the prior fiscal year, subject to a maximum annual prepayment amount of $27.5 million;
|
•
|
our ability to repay the Deerfield Notes with our common stock, which we are only able to do under specified conditions;
|
•
|
repayment of our $287.5 million aggregate principal amount of the 2019 Notes, which mature on August 15, 2019, unless earlier converted, redeemed or repurchased;
|
•
|
repayment of our term loan and line of credit from Silicon Valley Bank, which had an outstanding balance at
September 30, 2015
, of
$80.0 million
;
|
•
|
our ability to control costs;
|
•
|
our ability to remain in compliance with, or amend or cause to be waived, financial covenants contained in agreements with third parties;
|
•
|
our need to expand our product and clinical development efforts;
|
•
|
the cost and timing of regulatory approvals;
|
•
|
the cost of clinical and research drug supply for our clinical trials;
|
•
|
the effect of economic and scientific developments in the market for oncologic therapeutics and the timing of regulatory approvals for competing oncologic therapies; and
|
•
|
the filing, maintenance, prosecution, defense and enforcement of patent claims and other intellectual property rights.
|
•
|
making it more difficult for us to meet our payment and other obligations under the 2019 Notes, the Deerfield Notes, our loan and security agreement with Silicon Valley Bank or our other indebtedness;
|
•
|
resulting in an event of default if we fail to comply with the covenants contained in our debt agreements, which event of default could result in all of our debt becoming immediately due and payable;
|
•
|
increasing our vulnerability to adverse economic and industry conditions;
|
•
|
subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including borrowings under our loan and security agreement with Silicon Valley Bank;
|
•
|
limiting our ability to obtain additional financing;
|
•
|
requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including clinical trials, research and development, capital expenditures, working capital and other general corporate purposes;
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business;
|
•
|
preventing us from raising funds necessary to purchase the 2019 Notes in the event we are required to do so following a “Fundamental Change” as specified in the indenture governing the 2019 Notes, or to settle conversions of the 2019 Notes in cash;
|
•
|
dilution experienced by our existing stockholders as a result of the conversion of the 2019 Notes or the Deerfield Notes into shares of common stock; and
|
•
|
placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.
|
•
|
the effectiveness, or perceived effectiveness, of cabozantinib in comparison to competing products;
|
•
|
the existence of any significant side effects of cabozantinib, as well as their severity in comparison to those of any competing products;
|
•
|
potential advantages or disadvantages in relation to alternative treatments;
|
•
|
the timing of market entry relative to competitive treatments;
|
•
|
indications for which cabozantinib is approved;
|
•
|
the ability to offer cabozantinib for sale at competitive prices;
|
•
|
relative convenience and ease of administration;
|
•
|
the strength of sales, marketing and distribution support; and
|
•
|
sufficient third-party coverage and reimbursement.
|
•
|
the federal Anti-Kickback Law, which constrains our business activities, including our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
|
•
|
federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent;
|
•
|
federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
|
•
|
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information;
|
•
|
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts;
|
•
|
the Foreign Corrupt Practices Act, a U.S. law which regulates certain financial relationships with foreign government officials (which could include, for example, certain medical professionals);
|
•
|
federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;
|
•
|
state and federal government price reporting laws that require us to calculate and report complex pricing metrics to government programs, where such reported priced may be used in the calculation of reimbursement and/or discounts on our marketed drugs (participation in these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs, and potentially limit our ability to offer certain marketplace discounts); and
|
•
|
state and federal marketing expenditure tracking and reporting laws, which generally require certain types of expenditures in the United States to be tracked and reported (compliance with such requirements may require investment in infrastructure to ensure that tracking is performed properly, and some of these laws result in the public disclosure of various types of payments and relationships, which could potentially have a negative effect on our business and/or increase enforcement scrutiny of our activities).
|
•
|
an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, not including orphan drug sales;
|
•
|
an increase in the rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively;
|
•
|
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts on negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;
|
•
|
extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;
|
•
|
expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
|
•
|
new requirements to report annually under the federal Open Payments program certain financial arrangements with physicians and teaching hospitals, as defined in PPACA and its implementing regulations, including reporting any payment or “transfer of value” provided to physicians and teaching hospitals and any ownership and investment interests held by physicians and their immediate family members during the preceding calendar year;
|
•
|
expansion of healthcare fraud and abuse laws, including the federal False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance; and
|
•
|
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research.
|
•
|
cabozantinib may not prove to be efficacious or may cause, or potentially cause, harmful side effects;
|
•
|
negative or inconclusive clinical trial results may require us to conduct further testing or to abandon projects that we had expected to be promising;
|
•
|
our competitors may discover or commercialize other compounds or therapies that show significantly improved safety or efficacy compared to cabozantinib;
|
•
|
patient registration or enrollment in our clinical testing may be lower than we anticipate, resulting in the delay or cancellation of clinical testing; and
|
•
|
regulators or institutional review boards may withhold authorization of cabozantinib, or delay, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or their determination that participating patients are being exposed to unacceptable health risks.
|
•
|
the number of patients who ultimately participate in the clinical trial;
|
•
|
the duration of patient follow-up that is appropriate in view of the results or required by regulatory authorities;
|
•
|
the number of clinical sites included in the trials; and
|
•
|
the length of time required to enroll suitable patient subjects.
|
•
|
we may not be able to control the amount of U.S. sales and marketing costs for cobimetinib we are obligated to share under our collaboration with Genentech;
|
•
|
we are not able to control the amount and timing of resources that our collaborators or potential future collaborators will devote to the development or commercialization of drug candidates or to their marketing and distribution;
|
•
|
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing;
|
•
|
disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization of our drug candidates, or that diminish or delay receipt of the economic benefits we are entitled to receive under the collaboration, or that result in costly litigation or arbitration that diverts management’s attention and resources;
|
•
|
collaborators may experience financial difficulties;
|
•
|
collaborators may not be successful in their efforts to obtain regulatory approvals in a timely manner, or at all;
|
•
|
collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;
|
•
|
collaborators may not comply with applicable healthcare regulatory laws;
|
•
|
business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;
|
•
|
a collaborator could independently move forward with a competing drug candidate developed either independently or in collaboration with others, including our competitors;
|
•
|
we may be precluded from entering into additional collaboration arrangements with other parties in an area or field of exclusivity;
|
•
|
future collaborators may require us to relinquish some important rights, such as marketing and distribution rights; and
|
•
|
collaborations may be terminated or allowed to expire, which would delay, and may increase the cost of development of our drug candidates.
|
•
|
the pace and progress of our current ramping up of sales, marketing, and distribution capabilities in anticipation of obtaining FDA approval for cabozantinib for the potential treatment of advanced RCC patients;
|
•
|
the commercial success of COMETRIQ and the revenues we generate;
|
•
|
the progress and scope of other development and commercialization activities for cabozantinib and our other compounds;
|
•
|
future clinical trial results, notably the results from CELESTIAL, our phase 3 pivotal trial in patients with advanced HCC;
|
•
|
the inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices;
|
•
|
recognition of upfront licensing or other fees or revenues;
|
•
|
payments of non-refundable upfront or licensing fees, or payment for cost-sharing expenses, to third parties;
|
•
|
acceptance of our technologies and platforms;
|
•
|
the success rate of our efforts leading to milestone payments and royalties;
|
•
|
the introduction of new technologies or products by our competitors;
|
•
|
the timing and willingness of collaborators to further develop or, if approved, commercialize our product candidates out-licensed to them;
|
•
|
the amount of expenses we incur in the build-out of our sales, marketing and distribution capabilities;
|
•
|
whether, when and the terms upon which we partner cabozantinib with a global pharmaceutical organization for further development and sales outside the U.S., and the sufficiency of upfront payments and milestones associated with any such transaction to meet our capital needs;
|
•
|
the termination or non-renewal of existing collaborations or third party vendor relationships;
|
•
|
regulatory actions with respect to our product candidates and any approved products or our competitors’ products;
|
•
|
disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;
|
•
|
the timing and amount of expenses incurred for clinical development and manufacturing of cabozantinib;
|
•
|
adjustments to expenses accrued in prior periods based on management’s estimates after the actual level of activity relating to such expenses becomes more certain;
|
•
|
the impairment of acquired goodwill and other assets;
|
•
|
the impact of our restructuring activities;
|
•
|
additions and departures of key personnel;
|
•
|
general and industry-specific economic conditions that may affect our or our collaborators’ research and development expenditures; and
|
•
|
other factors described in this “Risk Factors” section
|
•
|
adverse results or delays in our or our collaborators’ clinical trials;
|
•
|
announcement of FDA approval or non-approval, or delays in the FDA review process, of cabozantinib or our collaborators’ product candidates or those of our competitors or actions taken by regulatory agencies with respect to our, our collaborators’ or our competitors’ clinical trials;
|
•
|
the commercial success of COMETRIQ and the revenues we generate;
|
•
|
the timing of achievement of our clinical, regulatory, partnering and other milestones, such as the commencement of clinical development, the completion of a clinical trial, the filing for regulatory approval or the establishment of collaborative arrangements for cabozantinib or any of our other programs or compounds;
|
•
|
actions taken by regulatory agencies with respect to cabozantinib or our clinical trials for cabozantinib;
|
•
|
the announcement of new products by our competitors;
|
•
|
quarterly variations in our or our competitors’ results of operations;
|
•
|
developments in our relationships with our collaborators, including the termination or modification of our agreements;
|
•
|
conflicts or litigation with our collaborators;
|
•
|
litigation, including intellectual property infringement and product liability lawsuits, involving us;
|
•
|
failure to achieve operating results projected by securities analysts;
|
•
|
changes in earnings estimates or recommendations by securities analysts;
|
•
|
financing transactions;
|
•
|
developments in the biotechnology, biopharmaceutical or pharmaceutical industry;
|
•
|
sales of large blocks of our common stock or sales of our common stock by our executive officers, directors and significant stockholders;
|
•
|
departures of key personnel or board members;
|
•
|
developments concerning current or future collaborations;
|
•
|
FDA or international regulatory actions;
|
•
|
third-party coverage and reimbursement policies;
|
•
|
disposition of any of our subsidiaries, technologies or compounds; and
|
•
|
general market, economic and political conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
|
•
|
a classified Board of Directors;
|
•
|
a prohibition on actions by our stockholders by written consent;
|
•
|
the inability of our stockholders to call special meetings of stockholders;
|
•
|
the ability of our Board of Directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our Board of Directors;
|
•
|
limitations on the removal of directors; and
|
•
|
advance notice requirements for director nominations and stockholder proposals.
|
|
|
|
EXELIXIS, INC.
|
|
|
|
|
|
|
|
November 10, 2015
|
|
/s/ C
HRISTOPHER
J. S
ENNER
|
|
|
Date
|
|
Christopher J. Senner
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Duly Authorized Officer and Principal Financial and Accounting Officer)
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporation by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File Number
|
|
Exhibit/
Appendix
Reference
|
|
Filing Date
|
|
|||||
3.1
|
|
Amended and Restated Certificate of Incorporation of Exelixis, Inc.
|
|
10-K
|
|
000-30235
|
|
3.1
|
|
3/10/2010
|
|
|
3.2
|
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Exelixis, Inc.
|
|
10-K
|
|
000-30235
|
|
3.2
|
|
3/10/2010
|
|
|
3.3
|
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Exelixis, Inc.
|
|
8-K
|
|
000-30235
|
|
3.1
|
|
5/25/2012
|
|
|
3.4
|
|
Certificate of Ownership and Merger Merging X-Ceptor Therapeutics, Inc. with and into Exelixis, Inc.
|
|
8-K
|
|
000-30235
|
|
3.1
|
|
10/15/2014
|
|
|
3.5
|
|
Certificate of Change of Registered Agent and/or Registered Office of Exelixis, Inc.
|
|
8-K
|
|
000-30235
|
|
3.2
|
|
10/15/2014
|
|
|
3.6
|
|
Amended and Restated Bylaws of Exelixis, Inc.
|
|
8-K
|
|
000-30235
|
|
3.1
|
|
12/5/2011
|
|
|
4.1
|
|
Specimen Common Stock Certificate.
|
|
S-1,
as amended
|
|
333-96335
|
|
4.1
|
|
4/7/2000
|
|
|
4.2
|
|
Amended and Restated Secured Convertible Note dated July 1, 2015 in favor of Deerfield Partners, L.P.
|
|
10-Q
|
|
000-30235
|
|
4.1
|
|
9/11/2015
|
|
|
4.3
|
|
Amended and Restated Secured Convertible Note dated July 1, 2015 in favor of Deerfield International Master Fund, L.P.
|
|
10-Q
|
|
000-30235
|
|
4.2
|
|
9/11/2015
|
|
|
4.4
|
|
Registration Rights Agreement dated January 22, 2014 by and among Exelixis, Inc., Deerfield Partners, L.P. and Deerfield International Master Fund, L.P.
|
|
8-K
|
|
000-30235
|
|
4.2
|
|
1/22/2014
|
|
|
4.5
|
|
Form of Warrant to Purchase Common Stock of Exelixis, Inc. issued to OTA LLC
|
|
|
|
|
|
|
|
|
|
X
|
4.6
|
|
Indenture dated August 14, 2012 by and between Exelixis, Inc. and Wells Fargo Bank, National Association
|
|
8-K
|
|
000-30235
|
|
4.1
|
|
8/14/2012
|
|
|
4.7
|
|
First Supplemental Indenture dated August 14, 2012 to Indenture dated August 14, 2012 by and between Exelixis, Inc. and Wells Fargo Bank, National Association
|
|
8-K
|
|
000-30235
|
|
4.2
|
|
8/14/2012
|
|
|
4.8
|
|
Form of 4.25% Convertible Senior Subordinated Note due 2019
|
|
8-K
|
|
000-30235
|
|
4.2
(Exhibit A)
|
|
8/14/2012
|
|
|
10.1
|
|
Second Amendment to Sublease dated effective July 1, 2015 by and between Exelixis, Inc. and Nodality, Inc.
|
|
10-Q
|
|
000-30235
|
|
10.2
|
|
9/11/2015
|
|
|
10.2
|
|
First Amendment to Consent to Sublease Agreement dated effective July 1, 2015 by and among Britannia Pointe Grand Limited Partnership, Exelixis, Inc. and Nodality, Inc.
|
|
10-Q
|
|
000-30235
|
|
10.3
|
|
9/11/2015
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporation by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File Number
|
|
Exhibit/
Appendix
Reference
|
|
Filing Date
|
|
|||||
10.3
|
|
Second Amendment to Sublease dated effective July 1, 2015 by and between Exelixis, Inc. and Threshold Pharmaceuticals, Inc.
|
|
10-Q
|
|
000-30235
|
|
10.6
|
|
9/11/2015
|
|
|
10.4
|
|
Second Amendment to Consent to Sublease Agreement dated effective July 1, 2015 by and among Britannia Pointe Grand Limited Partnership, Exelixis, Inc. and Threshold Pharmaceuticals, Inc.
|
|
10-Q
|
|
000-30235
|
|
10.7
|
|
9/11/2015
|
|
|
10.5
|
|
Offer Letter Agreement, dated June 30, 2015, between Christopher Senner, and Exelixis, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
12.1
|
|
Statement Re Computation of Earnings to Fixed Charges
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
32.1‡
|
|
Certification by the Chief Executive Officer and the Chief Financial Officer of Exelixis, Inc., as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
|
|
|
|
|
|
|
|
|
|
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 Labels Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
Confidential treatment requested for certain portions of this exhibit.
|
‡
|
This certification accompanies this Quarterly Report on Form 10-Q, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of Exelixis, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.
|
|
|
|
Warrant to Purchase
|
|
|
Shares
|
|
Warrant Number
|
|
|
|
EXELIXIS, INC.
|
||
|
|
|
By:
|
|
|
|
|
Print
|
|
|
Title:
|
¨
|
Cash Exercise
|
¨
|
Cashless Exercise
|
¨
|
Cashless Major Exercise
|
¨
|
Cashless Default Exercise
|
1.
|
The undersigned agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of any of the Common Stock obtained on Exercise of the Warrant, except in accordance with applicable securities laws and the provisions of Section 8(a) of the Warrant.
|
2.
|
The number of shares of Common Stock beneficially owned by the Holder and its Affiliates (as defined in the Warrant) and any other persons or entities whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (including shares held by any “group” of which the Holder is a member, but excluding shares beneficially owned by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) is . For purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and applicable regulations of the Securities and Exchange Commission, and the number of shares beneficially owned has been determined in a manner consistent with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
|
3.
|
The undersigned requests that a warrant representing any unexercised portion hereof be issued, pursuant to the Warrant in the name of the undersigned and delivered to the undersigned at the address set forth below.
|
4.
|
Capitalized terms used but not otherwise defined in this Exercise Form shall have the meaning ascribed thereto in the Warrant.
|
5.
|
In the event of any conflict between the term of this Exercise Form and any provisions of this Warrant, the terms of the Warrant shall govern.
|
|
|
Signature
|
Print Name
|
|
|
|
|
|
|
|
Dated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
Name
|
|
Address
|
|
Please print name and address of assignee
(including zip code number)
|
Re:
|
Exelixis, Inc. (the “Company”)
|
|
|
Calculation Under Section 5(c)(iii)
|
|
Calculation Under Section 3(a)(iv), 10(b) or 11(b)
|
||
Remaining Term
|
|
Number of calendar days from date of public announcement of the Major Transaction until the prevailing Ending Date at such time.
|
|
Number of calendar days from date of the Event of Failure until the prevailing Ending Date at such time.
|
||
Interest Rate
|
|
A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Term.
|
|
A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Term.
|
||
Volatility
|
|
50
|
%
|
|
50
|
%
|
Stock Price
|
|
The closing price of the Common Stock on NASDAQ, or, if that is not the principal trading market for the Common Stock, such principal market on which the Common Stock is traded or listed (the “Closing Market Price”) on the trading day immediately preceding the date on which a Major Transaction is consummated.
|
|
The volume Weighted Average Price on the date of such calculation.
|
||
Dividends
|
|
Zero.
|
|
Zero.
|
||
Cost to Borrow
|
|
Zero.
|
|
Zero.
|
||
Strike Price
|
|
Exercise Price as defined in Section 3(a)
|
|
Exercise Price as defined in Section 3(a)
|
/s/ C
HRISTOPHER
S
ENNER
|
|
7/1/2015
|
Christopher Senner
|
|
Date
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
36,421
|
|
|
$
|
48,607
|
|
|
$
|
45,347
|
|
|
$
|
27,088
|
|
|
$
|
16,259
|
|
Interest portion of rental expense
|
474
|
|
|
886
|
|
|
935
|
|
|
2,948
|
|
|
606
|
|
|||||
Total fixed charges
|
$
|
36,895
|
|
|
$
|
49,493
|
|
|
$
|
46,282
|
|
|
$
|
30,036
|
|
|
$
|
16,865
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) before income taxes
|
$
|
(126,096
|
)
|
|
$
|
(268,724
|
)
|
|
$
|
(244,856
|
)
|
|
$
|
(147,538
|
)
|
|
$
|
76,992
|
|
Fixed charges per above
|
36,895
|
|
|
49,493
|
|
|
46,282
|
|
|
30,036
|
|
|
16,865
|
|
|||||
Earnings
|
$
|
(89,201
|
)
|
|
$
|
(219,049
|
)
|
|
$
|
(198,574
|
)
|
|
$
|
(117,502
|
)
|
|
$
|
93,857
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
|
|
|
|
|
|
|
5.57
|
|
|||||||||
Deficiency of earnings available to cover fixed charges
|
$
|
(126,096
|
)
|
|
$
|
(268,542
|
)
|
|
$
|
(244,856
|
)
|
|
$
|
(147,538
|
)
|
|
|
/s/ M
ICHAEL
M. M
ORRISSEY
|
Michael M. Morrissey, Ph.D.
|
President and Chief Executive Officer
(Principal Executive Officer)
|
/s/ C
HRISTOPHER
J. S
ENNER
|
Christopher J. Senner
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
/s/ M
ICHAEL
M. M
ORRISSEY
|
|
|
|
/s/ C
HRISTOPHER
J. S
ENNER
|
Michael M. Morrissey, Ph.D.
|
|
|
|
Christopher J. Senner
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|