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
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EXELIXIS, INC.
(Exact name of registrant as specified in its charter)
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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
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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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¨
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Emerging growth company
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¨
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Item 1.
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||
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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,
2017 |
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December 31, 2016*
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||||
ASSETS
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|
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||||
Current assets:
|
|
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||||
Cash and cash equivalents
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$
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149,357
|
|
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$
|
151,686
|
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Short-term investments
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217,741
|
|
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268,117
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Trade and other receivables
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90,005
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|
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40,444
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Inventory, net
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5,806
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3,338
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||
Prepaid expenses and other current assets
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8,012
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5,416
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Total current assets
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470,921
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469,001
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Long-term investments
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50,569
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55,601
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|
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Long-term restricted cash and investments
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4,650
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|
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4,150
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Property and equipment, net
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19,256
|
|
|
2,071
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||
Goodwill
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63,684
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63,684
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Other long-term assets
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692
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1,232
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Total assets
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$
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609,772
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$
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595,739
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||
Current liabilities:
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|
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||||
Accounts payable
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$
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5,988
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|
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$
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6,565
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Accrued compensation and benefits
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19,914
|
|
|
20,334
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||
Accrued clinical trial liabilities
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16,181
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|
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14,131
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||
Accrued collaboration liabilities
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9,137
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|
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2,046
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||
Current portion of deferred revenue
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31,377
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|
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19,665
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Convertible notes
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—
|
|
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109,122
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Term loan payable
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—
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80,000
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||
Other current liabilities
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26,356
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|
|
16,923
|
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||
Total current liabilities
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108,953
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|
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268,786
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Long-term portion of deferred revenue
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246,092
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237,094
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Other long-term liabilities
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16,012
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|
|
541
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Total liabilities
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371,057
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506,421
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Commitments
|
|
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Stockholders’ equity
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|
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||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized and no shares issued
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—
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—
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Common stock, $0.001 par value; 400,000,000 shares authorized; issued and outstanding: 295,700,576 and 289,923,798 at September 30, 2017 and December 31, 2016, respectively
|
296
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|
|
290
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Additional paid-in capital
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2,106,132
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2,072,591
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Accumulated other comprehensive loss
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(52
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)
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(416
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)
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Accumulated deficit
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(1,867,661
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)
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(1,983,147
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)
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Total stockholders’ equity
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238,715
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|
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89,318
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Total liabilities and stockholders’ equity
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$
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609,772
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|
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$
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595,739
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*
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The condensed consolidated balance sheet as of December 31, 2016 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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2017
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2016
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2017
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2016
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Revenues:
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Net product revenues
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$
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96,416
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$
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42,742
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$
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253,297
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$
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83,459
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Collaboration revenues
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56,094
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19,452
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79,108
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30,414
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||||
Total revenues
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152,510
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62,194
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332,405
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113,873
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||||
Operating expenses:
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|
|
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|
|
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||||||||
Cost of goods sold
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4,658
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2,455
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10,875
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4,700
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Research and development
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28,543
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20,256
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79,967
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72,166
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Selling, general and administrative
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38,129
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32,463
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113,116
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103,143
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Restructuring (recovery) charge
|
—
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|
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(244
|
)
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(32
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)
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|
871
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||||
Total operating expenses
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71,330
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54,930
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203,926
|
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180,880
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Income (loss) from operations
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81,180
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|
|
7,264
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|
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128,479
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(67,007
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)
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||||
Other income (expense), net:
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Interest income and other, net
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3,408
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3,059
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6,098
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4,010
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Interest expense
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—
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(7,834
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)
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(8,679
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)
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(28,575
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)
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||||
Loss on extinguishment of debt
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—
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(13,773
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)
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(6,239
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)
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(13,773
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)
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||||
Total other income (expense), net
|
3,408
|
|
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(18,548
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)
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(8,820
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)
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(38,338
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)
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Income (loss) before income taxes
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84,588
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(11,284
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)
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119,659
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(105,345
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)
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||||
Income tax expense
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3,206
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|
|
—
|
|
|
3,921
|
|
|
—
|
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||||
Net income (loss)
|
$
|
81,382
|
|
|
$
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(11,284
|
)
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|
$
|
115,738
|
|
|
$
|
(105,345
|
)
|
Net income (loss) per share, basic
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$
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0.28
|
|
|
$
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(0.04
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)
|
|
$
|
0.39
|
|
|
$
|
(0.44
|
)
|
Net income (loss) per share, diluted
|
$
|
0.26
|
|
|
$
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(0.04
|
)
|
|
$
|
0.37
|
|
|
$
|
(0.44
|
)
|
Shares used in computing net income (loss) per share, basic
|
294,269
|
|
|
256,319
|
|
|
292,776
|
|
|
238,024
|
|
||||
Shares used in computing net income (loss) per share, diluted
|
312,940
|
|
|
256,319
|
|
|
311,555
|
|
|
238,024
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
81,382
|
|
|
$
|
(11,284
|
)
|
|
$
|
115,738
|
|
|
$
|
(105,345
|
)
|
Other comprehensive income (loss)
(1)
|
67
|
|
|
(209
|
)
|
|
364
|
|
|
152
|
|
||||
Comprehensive income (loss)
|
$
|
81,449
|
|
|
$
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(11,493
|
)
|
|
$
|
116,102
|
|
|
$
|
(105,193
|
)
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(1)
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Other comprehensive income (loss) consisted solely of unrealized gains or losses, net, on available-for-sale securities arising during the periods presented. There were nominal or
no
reclassification adjustments to net income (loss) resulting from realized gains or losses on the sale of securities and there was
no
income tax expense related to other comprehensive income during those periods.
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|
Nine Months Ended September 30,
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||||||
|
2017
|
|
2016
|
||||
Net income (loss)
|
$
|
115,738
|
|
|
$
|
(105,345
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
842
|
|
|
754
|
|
||
Stock-based compensation expense
|
15,029
|
|
|
18,346
|
|
||
Loss on extinguishment of debt
|
6,239
|
|
|
13,773
|
|
||
Amortization of debt discounts and debt issuance costs
|
182
|
|
|
8,295
|
|
||
Interest paid in kind
|
(11,825
|
)
|
|
5,939
|
|
||
Gain on other equity investments
|
(2,980
|
)
|
|
(2,494
|
)
|
||
Other
|
1,530
|
|
|
1,332
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Trade and other receivables
|
(49,241
|
)
|
|
(85,026
|
)
|
||
Inventory, net
|
(2,468
|
)
|
|
(676
|
)
|
||
Prepaid expenses and other current assets
|
(2,530
|
)
|
|
(3,342
|
)
|
||
Other long-term assets
|
689
|
|
|
535
|
|
||
Accounts payable
|
(577
|
)
|
|
(2,436
|
)
|
||
Accrued compensation and benefits
|
(420
|
)
|
|
12,357
|
|
||
Accrued clinical trial liabilities
|
2,050
|
|
|
(3,184
|
)
|
||
Accrued collaboration liabilities
|
7,091
|
|
|
7,772
|
|
||
Deferred revenue
|
20,710
|
|
|
251,512
|
|
||
Other current and long-term liabilities
|
12,199
|
|
|
7,183
|
|
||
Net cash provided by operating activities
|
112,258
|
|
|
125,295
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(3,449
|
)
|
|
(1,116
|
)
|
||
Proceeds from sale of property and equipment
|
14
|
|
|
92
|
|
||
Purchases of investments
|
(248,046
|
)
|
|
(258,509
|
)
|
||
Proceeds from maturities of investments
|
266,335
|
|
|
100,635
|
|
||
Proceeds from sale of investments
|
37,294
|
|
|
2,266
|
|
||
Purchase of restricted cash and investments
|
(11,150
|
)
|
|
(4,150
|
)
|
||
Proceeds from maturities of restricted cash and investments
|
10,650
|
|
|
2,650
|
|
||
Proceeds from other equity investments
|
2,980
|
|
|
2,494
|
|
||
Net cash provided by (used in) investing activities
|
54,628
|
|
|
(155,638
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of convertible notes and term loan payable
|
(185,788
|
)
|
|
—
|
|
||
Payment on conversion of convertible notes
|
—
|
|
|
(7,134
|
)
|
||
Proceeds from exercise of stock options
|
16,532
|
|
|
9,296
|
|
||
Proceeds from employee stock purchase plan
|
3,053
|
|
|
479
|
|
||
Taxes paid related to net share settlement of equity awards
|
(3,012
|
)
|
|
(2,713
|
)
|
||
Net cash used in financing activities
|
(169,215
|
)
|
|
(72
|
)
|
||
Net decrease in cash and cash equivalents
|
(2,329
|
)
|
|
(30,415
|
)
|
||
Cash and cash equivalents at beginning of period
|
151,686
|
|
|
141,634
|
|
||
Cash and cash equivalents at end of period
|
$
|
149,357
|
|
|
$
|
111,219
|
|
Supplemental cash flow disclosure - non-cash investing and financing activity:
|
|
|
|
||||
Construction-in-progress deemed to have been acquired under build-to-suit lease
|
$
|
14,530
|
|
|
$
|
—
|
|
Issuance of common stock in settlement of convertible notes
|
$
|
—
|
|
|
$
|
285,308
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Milestones achieved
|
$
|
45,000
|
|
|
$
|
—
|
|
|
$
|
45,000
|
|
|
$
|
—
|
|
Amortization of upfront payments and deferred milestone
|
4,742
|
|
|
3,780
|
|
|
13,788
|
|
|
8,570
|
|
||||
Royalty revenue
|
371
|
|
|
—
|
|
|
814
|
|
|
—
|
|
||||
Development cost reimbursements
|
1,123
|
|
|
—
|
|
|
2,322
|
|
|
—
|
|
||||
Product supply agreement revenue
|
1,681
|
|
|
—
|
|
|
3,483
|
|
|
—
|
|
||||
Cost of supplied product
|
(1,681
|
)
|
|
—
|
|
|
(3,483
|
)
|
|
—
|
|
||||
Royalty payable to GSK on net sales by Ipsen
|
(557
|
)
|
|
—
|
|
|
(1,221
|
)
|
|
—
|
|
||||
Collaboration revenues under the Ipsen Collaboration Agreement
|
$
|
50,679
|
|
|
$
|
3,780
|
|
|
$
|
60,703
|
|
|
$
|
8,570
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Royalty revenues on ex-U.S. sales of COTELLIC included in Collaboration revenues
|
$
|
1,392
|
|
|
$
|
672
|
|
|
$
|
5,057
|
|
|
$
|
1,844
|
|
U.S. losses included in Selling, general and administrative expenses
(1)
|
$
|
(891
|
)
|
|
$
|
(2,922
|
)
|
|
$
|
(2,298
|
)
|
|
$
|
(14,845
|
)
|
(1)
|
A portion of the accrual for losses for the
three and nine months ended
September 30, 2016
were reversed in December 2016 when we were relieved of our obligation to pay certain disputed costs as a result of Genentech’s unilateral change to its approach to the allocation of promotional expenses arising from commercialization of the COTELLIC plus Zelboraf combination therapy.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
Amortization of upfront payment
|
$
|
2,830
|
|
|
$
|
7,547
|
|
Development cost reimbursements
|
1,193
|
|
|
3,301
|
|
||
Collaboration revenues under the Takeda Collaboration Agreement
|
$
|
4,023
|
|
|
$
|
10,848
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Royalties owed to GSK
|
$
|
3,446
|
|
|
$
|
1,277
|
|
|
$
|
8,809
|
|
|
$
|
2,495
|
|
|
September 30, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash and cash equivalents
|
$
|
149,357
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
149,357
|
|
Short-term investments
|
217,805
|
|
|
17
|
|
|
(81
|
)
|
|
217,741
|
|
||||
Long-term investments
|
50,557
|
|
|
41
|
|
|
(29
|
)
|
|
50,569
|
|
||||
Long-term restricted cash and investments
|
4,650
|
|
|
—
|
|
|
—
|
|
|
4,650
|
|
||||
Total cash and investments
|
$
|
422,369
|
|
|
$
|
58
|
|
|
$
|
(110
|
)
|
|
$
|
422,317
|
|
|
December 31, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash and cash equivalents
|
$
|
151,686
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
151,686
|
|
Short-term investments
|
268,234
|
|
|
13
|
|
|
(130
|
)
|
|
268,117
|
|
||||
Long-term investments
|
55,792
|
|
|
1
|
|
|
(192
|
)
|
|
55,601
|
|
||||
Long-term restricted cash and investments
|
4,150
|
|
|
—
|
|
|
—
|
|
|
4,150
|
|
||||
Total cash and investments
|
$
|
479,862
|
|
|
$
|
14
|
|
|
$
|
(322
|
)
|
|
$
|
479,554
|
|
|
September 30, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
42,797
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,797
|
|
Commercial paper
|
168,738
|
|
|
—
|
|
|
—
|
|
|
168,738
|
|
||||
Corporate bonds
|
187,197
|
|
|
58
|
|
|
(95
|
)
|
|
187,160
|
|
||||
U.S. Treasury and government sponsored enterprises
|
14,659
|
|
|
—
|
|
|
(15
|
)
|
|
14,644
|
|
||||
Total investments
|
$
|
413,391
|
|
|
$
|
58
|
|
|
$
|
(110
|
)
|
|
$
|
413,339
|
|
|
December 31, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Money market funds
|
$
|
71,457
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
71,457
|
|
Commercial paper
|
165,375
|
|
|
—
|
|
|
—
|
|
|
165,375
|
|
||||
Corporate bonds
|
152,712
|
|
|
3
|
|
|
(308
|
)
|
|
152,407
|
|
||||
U.S. Treasury and government sponsored enterprises
|
70,730
|
|
|
11
|
|
|
(14
|
)
|
|
70,727
|
|
||||
Total investments
|
$
|
460,274
|
|
|
$
|
14
|
|
|
$
|
(322
|
)
|
|
$
|
459,966
|
|
|
Mature within One Year
|
|
After One Year through Five Years
|
|
Fair Value
|
||||||
Money market funds
|
$
|
42,797
|
|
|
$
|
—
|
|
|
$
|
42,797
|
|
Commercial paper
|
168,738
|
|
|
—
|
|
|
168,738
|
|
|||
Corporate bonds
|
136,592
|
|
|
50,568
|
|
|
187,160
|
|
|||
U.S. Treasury and government sponsored enterprises
|
14,644
|
|
|
—
|
|
|
14,644
|
|
|||
Total investments
|
$
|
362,771
|
|
|
$
|
50,568
|
|
|
$
|
413,339
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
$
|
378
|
|
|
$
|
863
|
|
Work in process
|
2,951
|
|
|
2,343
|
|
||
Finished goods
|
2,856
|
|
|
738
|
|
||
Total
|
6,185
|
|
|
3,944
|
|
||
Less: non-current portion included in Other long-term assets
|
(379
|
)
|
|
(606
|
)
|
||
Inventory, net
|
$
|
5,806
|
|
|
$
|
3,338
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Computer equipment and software
|
$
|
14,242
|
|
|
$
|
13,738
|
|
Leasehold improvements
|
4,715
|
|
|
6,646
|
|
||
Laboratory equipment
|
5,836
|
|
|
4,310
|
|
||
Furniture and fixtures
|
1,954
|
|
|
2,240
|
|
||
Construction-in-progress
|
15,627
|
|
|
19
|
|
||
|
42,374
|
|
|
26,953
|
|
||
Less: accumulated depreciation and amortization
|
(23,118
|
)
|
|
(24,882
|
)
|
||
Property and equipment, net
|
$
|
19,256
|
|
|
$
|
2,071
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Secured Convertible Notes due 2018 (“Deerfield Notes”)
|
$
|
—
|
|
|
$
|
109,122
|
|
Term loan payable
|
—
|
|
|
80,000
|
|
||
Total debt
|
$
|
—
|
|
|
$
|
189,122
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stated coupon interest
|
$
|
—
|
|
|
$
|
2,031
|
|
|
$
|
4,151
|
|
|
$
|
5,939
|
|
Interest paid in kind
|
—
|
|
|
2,031
|
|
|
4,151
|
|
|
5,939
|
|
||||
Amortization of debt discount and debt issuance costs
|
—
|
|
|
121
|
|
|
182
|
|
|
327
|
|
||||
Total interest expense
|
$
|
—
|
|
|
$
|
4,183
|
|
|
$
|
8,484
|
|
|
$
|
12,205
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Research and development expense
|
$
|
1,663
|
|
|
$
|
1,165
|
|
|
$
|
4,741
|
|
|
$
|
7,894
|
|
Selling, general and administrative expense
|
3,626
|
|
|
2,438
|
|
|
10,288
|
|
|
10,452
|
|
||||
Total stock-based compensation expense
|
$
|
5,289
|
|
|
$
|
3,603
|
|
|
$
|
15,029
|
|
|
$
|
18,346
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stock options
|
$
|
11.75
|
|
|
$
|
8.59
|
|
|
$
|
10.32
|
|
|
$
|
4.31
|
|
ESPP
|
$
|
6.85
|
|
|
$
|
1.51
|
|
|
$
|
5.29
|
|
|
$
|
1.65
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income tax expense
|
$
|
3,206
|
|
|
$
|
—
|
|
|
$
|
3,921
|
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
81,382
|
|
|
$
|
(11,284
|
)
|
|
$
|
115,738
|
|
|
$
|
(105,345
|
)
|
Net income allocated to participating securities
|
(221
|
)
|
|
—
|
|
|
(368
|
)
|
|
—
|
|
||||
Net income allocable to common stock for basic net income (loss) per share
|
81,161
|
|
|
(11,284
|
)
|
|
115,370
|
|
|
(105,345
|
)
|
||||
Adjustment to net income allocated to participating securities
|
14
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Net income allocable to common stock for diluted net income (loss) per share
|
$
|
81,175
|
|
|
$
|
(11,284
|
)
|
|
$
|
115,393
|
|
|
$
|
(105,345
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares of common stock outstanding
|
294,269
|
|
|
256,319
|
|
|
292,776
|
|
|
238,024
|
|
||||
Dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Outstanding stock options, unvested RSUs and ESPP contributions
|
18,671
|
|
|
—
|
|
|
18,779
|
|
|
—
|
|
||||
Weighted-average shares of common stock outstanding and dilutive securities
|
312,940
|
|
|
256,319
|
|
|
311,555
|
|
|
238,024
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share, basic
|
$
|
0.28
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.39
|
|
|
$
|
(0.44
|
)
|
Net income (loss) per share, diluted
|
$
|
0.26
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.37
|
|
|
$
|
(0.44
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Outstanding stock options, unvested RSUs and ESPP contributions
|
583
|
|
|
30,474
|
|
|
1,108
|
|
|
30,474
|
|
Deerfield Notes
|
—
|
|
|
33,890
|
|
|
—
|
|
|
33,890
|
|
4.25% convertible senior subordinated notes due 2019 (the “2019 Notes”)
|
—
|
|
|
413
|
|
|
—
|
|
|
413
|
|
2014 Warrants
|
—
|
|
|
1,000
|
|
|
—
|
|
|
1,000
|
|
Total potentially dilutive shares
|
583
|
|
|
65,777
|
|
|
1,108
|
|
|
65,777
|
|
|
September 30, 2017
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money market funds
|
$
|
42,797
|
|
|
$
|
—
|
|
|
$
|
42,797
|
|
Commercial paper
|
—
|
|
|
168,738
|
|
|
168,738
|
|
|||
Corporate bonds
|
—
|
|
|
187,160
|
|
|
187,160
|
|
|||
U.S. Treasury and government sponsored enterprises
|
—
|
|
|
14,644
|
|
|
14,644
|
|
|||
Total financial assets
|
$
|
42,797
|
|
|
$
|
370,542
|
|
|
$
|
413,339
|
|
|
December 31, 2016
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Money market funds
|
$
|
71,457
|
|
|
$
|
—
|
|
|
$
|
71,457
|
|
Commercial paper
|
—
|
|
|
165,375
|
|
|
165,375
|
|
|||
Corporate bonds
|
—
|
|
|
152,407
|
|
|
152,407
|
|
|||
U.S. Treasury and government sponsored enterprises
|
—
|
|
|
70,727
|
|
|
70,727
|
|
|||
Total financial assets
|
$
|
71,457
|
|
|
$
|
388,509
|
|
|
$
|
459,966
|
|
|
Operating leases
|
|
Other financing obligations
(1)
|
||||
Remainder of 2017
|
$
|
1,006
|
|
|
$
|
—
|
|
Year Ending December 31,
|
|
|
|
||||
2018
|
2,802
|
|
|
566
|
|
||
2019
|
605
|
|
|
1,477
|
|
||
2020
|
630
|
|
|
1,685
|
|
||
2021
|
637
|
|
|
1,745
|
|
||
2022
|
646
|
|
|
1,814
|
|
||
Thereafter
|
3,465
|
|
|
10,441
|
|
||
|
$
|
9,791
|
|
|
$
|
17,728
|
|
(1)
|
Other financing obligations includes payments related to our build-to-suit lease.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Gross rental expense
|
$
|
1,215
|
|
|
$
|
1,972
|
|
|
$
|
4,986
|
|
|
$
|
7,424
|
|
less: Sublease income
|
—
|
|
|
(908
|
)
|
|
(1,225
|
)
|
|
(2,637
|
)
|
||||
Net rental expense
|
$
|
1,215
|
|
|
$
|
1,064
|
|
|
$
|
3,761
|
|
|
$
|
4,787
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Diplomat Specialty Pharmacy
|
13
|
%
|
|
31
|
%
|
|
19
|
%
|
|
41
|
%
|
Ipsen
|
33
|
%
|
|
6
|
%
|
|
18
|
%
|
|
8
|
%
|
Caremark L.L.C.
|
13
|
%
|
|
9
|
%
|
|
16
|
%
|
|
8
|
%
|
Affiliates of McKesson Corporation
|
10
|
%
|
|
6
|
%
|
|
12
|
%
|
|
5
|
%
|
Accredo Health, Incorporated
|
9
|
%
|
|
9
|
%
|
|
11
|
%
|
|
7
|
%
|
Daiichi Sankyo
|
—
|
%
|
|
24
|
%
|
|
—
|
%
|
|
13
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
U.S.
|
$
|
97,807
|
|
|
$
|
41,971
|
|
|
$
|
260,853
|
|
|
$
|
87,757
|
|
Europe
|
50,680
|
|
|
5,223
|
|
|
60,704
|
|
|
11,116
|
|
||||
Japan
|
4,023
|
|
|
15,000
|
|
|
10,848
|
|
|
15,000
|
|
•
|
In July 2017, BMS initiated a phase 3 trial, CheckMate 9ER, to evaluate cabozantinib in combination with nivolumab with or without ipilimumab, versus sunitinib in patients with previously untreated, advanced or metastatic RCC. The primary endpoint for the trial is PFS.
|
•
|
In July 2017, we entered into an amendment to our collaboration agreement with Genentech in connection with the settlement of our arbitration concerning claims asserted by us against Genentech related to the development, pricing and commercialization of COTELLIC. The amendment resolves our concerns outlined in the arbitration demand and provides for a favorably revised revenue and cost-sharing arrangement, effective as of July 1, 2017, that is applicable to current and potential future commercial uses of COTELLIC.
|
•
|
In August 2017, we completed the submission of an sNDA with the FDA for cabozantinib as a treatment for patients with previously untreated advanced RCC.
|
•
|
In September 2017, Ipsen received validation from the European Medicines Agency, or EMA, for the application for variation to the CABOMETYX marketing authorization for the addition of a new indication in first-line treatment of advanced RCC in adults.
|
•
|
In September 2017, at the 2017 European Society for Medical Oncology Congress, we announced updated results from CABOSUN, including the IRRC analysis that confirmed the primary efficacy endpoint results of investigator-assessed PFS. Per the IRRC analysis, cabozantinib demonstrated a clinically meaningful and statistically significant 52% reduction in the rate of disease progression or death (HR 0.48, 95% CI 0.31-0.74, two-sided P=0.0008). The median PFS for cabozantinib was 8.6 months versus 5.3 months for sunitinib, corresponding to a 3.3 month (62%) improvement favoring cabozantinib over sunitinib.
|
•
|
In September 2017, we announced that our partner Daiichi Sankyo reported positive top-line results from
ESAX-HTN,
a phase 3 pivotal trial of esaxerenone, a product of the companies’ prior research collaboration, in patients with essential hypertension in Japan. With the trial achieving its primary endpoint, Daiichi Sankyo communicated its intention to submit a Japanese regulatory application for esaxerenone for an essential hypertension indication in the first quarter of 2018.
|
•
|
In October 2017, we announced that BMS filed a Clinical Trial Authorization in Europe for a first-in-human study of a RORγt inverse agonist, which will trigger a $10.0 million milestone payment to us in the fourth quarter of 2017 under the terms of the parties’ worldwide collaboration for compounds targeting retinoic acid-related orphan receptor, a family of nuclear hormone receptors implicated in inflammatory conditions.
|
•
|
In October 2017, we announced that the FDA determined that our sNDA for cabozantinib for patients with previously untreated advanced RCC was sufficiently complete to permit a substantive review. The FDA granted Priority Review of the filing and assigned a PDUFA action date of February 15, 2018.
|
•
|
In October 2017, we announced that CELESTIAL met its primary endpoint of OS, with cabozantinib providing a statistically significant and clinically meaningful improvement in OS compared to placebo in patients with advanced HCC. Based on these results, we plan to submit an sNDA to the FDA in the first quarter of 2018.
|
•
|
Net income for the third quarter of 2017 was
$81.4 million
, or
$0.28
per share, basic and
$0.26
per share, diluted, compared to a net loss of
$(11.3) million
, or
$(0.04)
per share, basic and fully diluted, for the third quarter of 2016.
|
•
|
Total revenues for the third quarter of 2017 increased to
$152.5 million
, compared to
$62.2 million
for the third quarter of 2016.
|
•
|
Cost of goods sold for the third quarter of 2017 increased to
$4.7 million
, compared to
$2.5 million
for the third quarter of 2016.
|
•
|
Research and development expenses for the third quarter of 2017 increased to
$28.5 million
, compared to
$20.3 million
for the third quarter of 2016.
|
•
|
Selling, general and administrative expenses for the third quarter of 2017 increased to
$38.1 million
, compared to
$32.5 million
for the third quarter of 2016.
|
•
|
Total other income (expense), net for the third quarter of 2017 increased to
$3.4 million
, compared to
$(18.5) million
for the third quarter of 2016.
|
•
|
Cash and investments decreased to
$422.3 million
at
September 30, 2017
, compared to
$479.6 million
at
December 31, 2016
.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Product revenues:
|
|
|
|
|
|
|
|
||||||||
Gross product revenues
|
$
|
111,148
|
|
|
$
|
46,720
|
|
|
$
|
289,365
|
|
|
$
|
92,383
|
|
Discounts and allowances
|
(14,732
|
)
|
|
(3,978
|
)
|
|
(36,068
|
)
|
|
(8,924
|
)
|
||||
Net product revenues
|
96,416
|
|
|
42,742
|
|
|
253,297
|
|
|
83,459
|
|
||||
Collaboration revenues:
|
|
|
|
|
|
|
|
||||||||
Contract revenues
(1)
|
45,000
|
|
|
15,000
|
|
|
47,500
|
|
|
20,000
|
|
||||
License revenues
(2)
|
7,572
|
|
|
3,780
|
|
|
21,335
|
|
|
8,570
|
|
||||
Development cost reimbursements
|
2,316
|
|
|
—
|
|
|
5,623
|
|
|
—
|
|
||||
Royalty and product supply revenues, net
|
1,206
|
|
|
672
|
|
|
4,650
|
|
|
1,844
|
|
||||
Total collaboration revenues
|
56,094
|
|
|
19,452
|
|
|
79,108
|
|
|
30,414
|
|
||||
Total revenues
|
$
|
152,510
|
|
|
$
|
62,194
|
|
|
$
|
332,405
|
|
|
$
|
113,873
|
|
Dollar change
|
$
|
90,316
|
|
|
|
|
$
|
218,532
|
|
|
|
|
|||
Percentage change
|
145
|
%
|
|
|
|
192
|
%
|
|
|
|
(1)
|
Includes milestone payments.
|
(2)
|
Includes amortization of upfront payments.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
CABOMETYX
|
$
|
90,362
|
|
|
$
|
31,238
|
|
|
$
|
233,582
|
|
|
$
|
48,812
|
|
COMETRIQ
|
6,054
|
|
|
11,504
|
|
|
19,715
|
|
|
34,647
|
|
||||
Net product revenues
|
$
|
96,416
|
|
|
$
|
42,742
|
|
|
$
|
253,297
|
|
|
$
|
83,459
|
|
Dollar change
|
$
|
53,674
|
|
|
|
|
$
|
169,838
|
|
|
|
||||
Percentage change
|
126
|
%
|
|
|
|
203
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Diplomat Specialty Pharmacy
|
$
|
20,460
|
|
|
$
|
19,392
|
|
|
$
|
62,909
|
|
|
$
|
46,770
|
|
|
Ipsen
|
50,680
|
|
|
3,873
|
|
|
60,704
|
|
2,000
|
|
8,663
|
|
||||
Caremark L.L.C.
|
20,272
|
|
|
5,591
|
|
|
52,526
|
|
|
8,728
|
|
|||||
Affiliates of McKesson Corporation
|
14,575
|
|
|
3,683
|
|
|
38,699
|
|
|
5,764
|
|
|||||
Accredo Health, Incorporated
|
13,445
|
|
|
5,880
|
|
|
36,504
|
|
|
8,340
|
|
|||||
Daiichi Sankyo
|
—
|
|
|
15,000
|
|
|
—
|
|
|
15,000
|
|
|||||
Others, individually less than 10% of total revenues for all periods presented
|
33,078
|
|
|
8,775
|
|
|
81,063
|
|
|
20,608
|
|
|||||
Total revenues
|
$
|
152,510
|
|
|
$
|
62,194
|
|
|
$
|
332,405
|
|
|
$
|
113,873
|
|
|
Chargebacks and discounts for prompt payment
|
|
Other customer credits and co-pay assistance
|
|
Rebates
|
|
Returns
|
|
Total
|
||||||||||
Balance at December 31, 2016
|
$
|
1,802
|
|
|
$
|
794
|
|
|
$
|
2,627
|
|
|
$
|
351
|
|
|
$
|
5,574
|
|
Provision related to sales made in:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current period
|
22,823
|
|
|
5,135
|
|
|
8,389
|
|
|
—
|
|
|
36,347
|
|
|||||
Prior periods
|
(864
|
)
|
|
—
|
|
|
584
|
|
|
—
|
|
|
(280
|
)
|
|||||
Payments and customer credits issued
|
(22,221
|
)
|
|
(4,501
|
)
|
|
(7,533
|
)
|
|
(351
|
)
|
|
(34,606
|
)
|
|||||
Balance at September 30, 2017
|
$
|
1,540
|
|
|
$
|
1,428
|
|
|
$
|
4,067
|
|
|
$
|
—
|
|
|
$
|
7,035
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of goods sold
|
$
|
4,658
|
|
|
$
|
2,455
|
|
|
$
|
10,875
|
|
|
$
|
4,700
|
|
Gross margin
|
95
|
%
|
|
94
|
%
|
|
96
|
%
|
|
94
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Research and development expenses
|
$
|
28,543
|
|
|
$
|
20,256
|
|
|
$
|
79,967
|
|
|
$
|
72,166
|
|
Dollar change
|
$
|
8,287
|
|
|
|
|
$
|
7,801
|
|
|
|
||||
Percentage change
|
41
|
%
|
|
|
|
11
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Development:
|
|
|
|
|
|
|
|
||||||||
Clinical trial costs
|
$
|
9,754
|
|
|
$
|
7,279
|
|
|
$
|
27,966
|
|
|
$
|
27,504
|
|
Personnel expenses
|
7,437
|
|
|
5,661
|
|
|
21,649
|
|
|
16,168
|
|
||||
Consulting and outside services
|
2,464
|
|
|
1,938
|
|
|
6,370
|
|
|
6,453
|
|
||||
Other development costs
|
3,771
|
|
|
2,228
|
|
|
10,318
|
|
|
8,273
|
|
||||
Total development
|
23,426
|
|
|
17,106
|
|
|
66,303
|
|
|
58,398
|
|
||||
Drug discovery
|
1,743
|
|
|
213
|
|
|
3,986
|
|
|
723
|
|
||||
Other
|
3,374
|
|
|
2,937
|
|
|
9,678
|
|
|
13,045
|
|
||||
Total
|
$
|
28,543
|
|
|
$
|
20,256
|
|
|
$
|
79,967
|
|
|
$
|
72,166
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Selling, general and administrative expenses
|
$
|
38,129
|
|
|
$
|
32,463
|
|
|
$
|
113,116
|
|
|
$
|
103,143
|
|
Dollar change
|
$
|
5,666
|
|
|
|
|
$
|
9,973
|
|
|
|
||||
Percentage change
|
17
|
%
|
|
|
|
10
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest income and other, net
|
$
|
3,408
|
|
|
$
|
3,059
|
|
|
$
|
6,098
|
|
|
$
|
4,010
|
|
Interest expense
|
—
|
|
|
(7,834
|
)
|
|
(8,679
|
)
|
|
(28,575
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
(13,773
|
)
|
|
(6,239
|
)
|
|
(13,773
|
)
|
||||
Total other income (expense), net
|
$
|
3,408
|
|
|
$
|
(18,548
|
)
|
|
$
|
(8,820
|
)
|
|
$
|
(38,338
|
)
|
Dollar change
|
$
|
21,956
|
|
|
|
|
$
|
29,518
|
|
|
|
||||
Percentage change
|
(118
|
)%
|
|
|
|
(77
|
)%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income tax expense
|
$
|
3,206
|
|
|
$
|
—
|
|
|
$
|
3,921
|
|
|
$
|
—
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
115,738
|
|
|
$
|
(105,345
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
9,017
|
|
|
45,945
|
|
||
Changes in operating assets and liabilities
|
(12,497
|
)
|
|
184,695
|
|
||
Net cash provided by operating activities
|
112,258
|
|
|
125,295
|
|
||
Net cash provided by (used in) investing activities
|
54,628
|
|
|
(155,638
|
)
|
||
Net cash used in financing activities
|
(169,215
|
)
|
|
(72
|
)
|
||
Net decrease in cash and cash equivalents
|
(2,329
|
)
|
|
(30,415
|
)
|
||
Cash and cash equivalents at beginning of period
|
151,686
|
|
|
141,634
|
|
||
Cash and cash equivalents at end of period
|
$
|
149,357
|
|
|
$
|
111,219
|
|
•
|
the effectiveness, or perceived effectiveness, of cabozantinib in comparison to competing products;
|
•
|
the safety of cabozantinib, including the existence of serious side effects of cabozantinib and their severity in comparison to those of any competing products;
|
•
|
cabozantinib’s relative convenience and ease of administration;
|
•
|
unexpected results connected with analysis of data from future or ongoing clinical trials;
|
•
|
the timing of cabozantinib label expansions for additional indications, if any, relative to competitive treatments;
|
•
|
the price of cabozantinib relative to competitive therapies and any new government initiatives affecting pharmaceutical pricing;
|
•
|
the strength of CABOMETYX sales efforts, marketing, medical affairs and distribution support;
|
•
|
the sufficiency of commercial and government insurance coverage and reimbursement; and
|
•
|
our ability to enforce our intellectual property rights with respect to cabozantinib.
|
•
|
the federal Anti-Kickback Statute, or AKS, which governs our business activities, including our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities. The AKS prohibits, 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. Remuneration is not defined in the AKS and has been broadly interpreted to include anything of value, including for example, gifts, discounts, coupons, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payments, ownership interests and providing anything at less than its fair market value. The AKS has been broadly interpreted to apply to manufacturer arrangements with prescribers, purchasers and formulary managers, among others;
|
•
|
the Federal Food, Drug, and Cosmetic Act, or FDCA, and its regulations, which prohibit, among other things, the introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded;
|
•
|
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, or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
|
•
|
federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
|
•
|
the 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;
|
•
|
federal and state government price reporting laws that require us to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs, as well as certain state and municipal government price reporting laws that require us to provide justifications where drug prices exceed a certain price increase threshold (and participation in these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs, and could potentially affect our ability to offer certain marketplace discounts);
|
•
|
federal and state financial transparency laws, which generally require certain types of expenditures in the U.S. to be tracked and reported (and 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 with healthcare providers and healthcare entities, which could potentially have a negative effect on our business and/or increase enforcement scrutiny of our activities);
|
•
|
proposals by state legislatures and regulators to impose caps on the amount that pharmaceutical manufacturers may compensate healthcare providers for certain services (which could potentially restrict, or increase enforcement scrutiny with respect to, certain of our activities); and
|
•
|
federal and state healthcare fraud and abuse laws, FDA rules and regulations, as well as false claims laws, including the civil False Claims Act, which govern certain mar
keting practices, including off-label promotion.
|
•
|
lack of efficacy or 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 our product candidates;
|
•
|
our inability to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs;
|
•
|
patient registration or enrollment in our clinical testing may be lower than we anticipate, resulting in the delay or cancellation of clinical testing;
|
•
|
failure by our collaborators to supply us on a timely basis with the product required for a combination trial;
|
•
|
failure of our third-party contract research organization or investigators to satisfy their contractual obligations, including deviating from trial protocol; and
|
•
|
regulators or institutional review boards may withhold authorization to commence or conduct clinical trials of a product candidate, 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.
|
•
|
the commercial success of both CABOMETYX and COMETRIQ and the revenues we generate from those approved products;
|
•
|
costs associated with maintaining our expanded sales, marketing, medical affairs and distribution capabilities for CABOMETYX in advanced RCC and COMETRIQ in the approved MTC indications;
|
•
|
the achievement of stated regulatory and commercial milestones under the Ipsen Collaboration Agreement;
|
•
|
the commercial success of COTELLIC and the revenues generated through our share of related profits and losses for the commercialization of COTELLIC in the U.S. and royalties from COTELLIC sales outside the U.S. under our collaboration with Genentech;
|
•
|
the potential regulatory approval of cabozantinib as a treatment for patients with previously untreated advanced RCC, and in other indications, both in the U.S. and abroad;
|
•
|
our ability to timely prepare and submit an sNDA for cabozantinib as a treatment for patients with advanced HCC;
|
•
|
future clinical trial results;
|
•
|
our future investments in the expansion of our pipeline through drug discovery and corporate development activities;
|
•
|
our ability to control costs;
|
•
|
the cost of clinical drug supply for our clinical trials;
|
•
|
trends and developments in the pricing of oncologic therapeutics in the U.S. and abroad, especially in the European Union;
|
•
|
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.
|
•
|
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;
|
•
|
we are not able to control the U.S. commercial resourcing decisions made and resulting costs incurred by Genentech for cobimetinib, which costs we are obligated to share, in part, under our collaboration agreement with Genentech;
|
•
|
collaborators may delay clinical trials, fail to supply us on a timely basis with the product required for a combination trial, 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 commercial success of both CABOMETYX and COMETRIQ and the revenues we generate from those approved products;
|
•
|
customer ordering patterns for CABOMETYX and COMETRIQ, which may vary significantly from period to period;
|
•
|
the overall level of demand for CABOMETYX and COMETRIQ, including the impact of any competitive products and the duration of therapy for patients receiving CABOMETYX or COMETRIQ;
|
•
|
the commercial success of COTELLIC and the revenues generated through our share of related profits and losses for the commercialization of COTELLIC in the U.S. and royalties from COTELLIC sales outside the U.S. under our collaboration with Genentech;
|
•
|
costs associated with maintaining our sales, marketing, medical affairs and distribution capabilities for CABOMETYX, COMETRIQ and COTELLIC;
|
•
|
our ability to obtain regulatory approval for cabozantinib as a treatment for patients with previously untreated advanced RCC;
|
•
|
our ability to timely prepare and submit an sNDA for cabozantinib as a treatment for patients with advanced HCC;
|
•
|
the achievement of stated regulatory and commercial milestones, under our collaboration agreements;
|
•
|
the progress and scope of other development and commercialization activities for cabozantinib and our other compounds;
|
•
|
future clinical trial results;
|
•
|
our future investments in the expansion of our pipeline through drug discovery and corporate development activities;
|
•
|
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;
|
•
|
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 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;
|
•
|
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;
|
•
|
the 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 both CABOMETYX and COMETRIQ and the revenues we generate from those approved products;
|
•
|
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;
|
•
|
the announcement of an in-licensed product candidate or strategic acquisition;
|
•
|
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;
|
•
|
the entry into new financing arrangements;
|
•
|
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;
|
•
|
FDA or international regulatory actions;
|
•
|
third-party coverage and reimbursement policies;
|
•
|
disposition of any of our 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.
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporation by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File Number
|
|
Exhibit/
Appendix
Reference
|
|
Filing Date
|
|
|||||
3.1
|
|
|
10-K
|
|
000-30235
|
|
3.1
|
|
3/10/2010
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporation by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File Number
|
|
Exhibit/
Appendix
Reference
|
|
Filing Date
|
|
|||||
3.2
|
|
|
10-K
|
|
000-30235
|
|
3.2
|
|
3/10/2010
|
|
|
|
3.3
|
|
|
8-K
|
|
000-30235
|
|
3.1
|
|
5/25/2012
|
|
|
|
3.4
|
|
|
8-K
|
|
000-30235
|
|
3.1
|
|
10/15/2014
|
|
|
|
3.5
|
|
|
8-K
|
|
000-30235
|
|
3.2
|
|
10/15/2014
|
|
|
|
3.6
|
|
|
8-K
|
|
000-30235
|
|
3.1
|
|
12/5/2011
|
|
|
|
4.1
|
|
|
S-1,
as amended
|
|
333-96335
|
|
4.1
|
|
4/7/2000
|
|
|
|
10.1*
|
|
|
10-Q
|
|
000-30235
|
|
10.5
|
|
8/2/2017
|
|
|
|
10.2**
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
X
|
|
12.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1‡
|
|
|
|
|
|
|
|
|
|
|
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 granted for certain portions of this exhibit.
|
**
|
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.
|
|
|
E
XELIXIS,
I
NC.
|
|
|
|
|
|
November 1, 2017
|
|
By:
|
/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)
|
EXELIXIS, INC.
By: /s/ Christopher J. Senner
Name: Christopher J. Senner
Title: EVP and CFO
|
IPSEN PHARMA S.A.S
By: /s/ François Garnier
Name: François Garnier
Title: Executive Vice President, General
Counsel |
SECTION 1.
|
INTRODUCTION.
|
SECTION 2.
|
DEFINITIONS.
|
SECTION 3.
|
ELIGIBILITY FOR BENEFITS.
|
SECTION 4.
|
AMOUNT OF BENEFITS.
|
Position or Level
|
Months
|
Chief Executive Officer
|
24 months
|
Executive Participants other than the Chief Executive Officer
|
18 months
|
Participants who are not Executive Participants
|
12 months
|
Position or Level
|
Time Period
|
Maximum Amount
|
Chief Executive Officer
|
24 months
|
$50,000
|
Executive Participants other than the Chief Executive Officer
|
18 months
|
$30,000
|
Participants who are not Executive Participants
|
12 months
|
$20,000
|
SECTION 5.
|
TIME AND FORM OF SEVERANCE PAYMENTS.
|
SECTION 6.
|
REEMPLOYMENT.
|
SECTION 7.
|
LIMITATIONS ON BENEFITS.
|
SECTION 8.
|
RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.
|
SECTION 9.
|
NO IMPLIED EMPLOYMENT CONTRACT.
|
SECTION 10.
|
LEGAL CONSTRUCTION.
|
SECTION 11.
|
CLAIMS, INQUIRIES AND APPEALS.
|
(1)
|
the specific reason or reasons for the denial;
|
(2)
|
references to the specific Plan provisions upon which the denial is based;
|
(3)
|
a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and
|
(4)
|
an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 11(d) below.
|
(1)
|
the specific reason or reasons for the denial;
|
(2)
|
references to the specific Plan provisions upon which the denial is based;
|
(3)
|
a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim; and
|
(4)
|
a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA.
|
SECTION 12.
|
BASIS OF PAYMENTS TO AND FROM PLAN.
|
SECTION 13.
|
OTHER PLAN INFORMATION.
|
SECTION 14.
|
STATEMENT OF ERISA RIGHTS.
|
SECTION 15.
|
GENERAL PROVISIONS.
|
SECTION 16.
|
EXECUTION.
|
¨
|
accepts all of the benefits of Section 4(b) of the Plan regardless of any potential adverse effects on any outstanding option or other stock award
|
¨
|
accepts the benefits of Section 4(b) of the Plan that have no adverse effect on outstanding options or other stock awards and rejects the benefits of Section 4(b) of the Plan as to those outstanding options and other stock awards that would have potential adverse effects
|
¨
|
other (please describe): ____________________________________________
|
|
Nine Months Ended September 30, 2017
|
|
Year Ended December 31,
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
8,679
|
|
|
$
|
33,060
|
|
|
$
|
40,680
|
|
|
$
|
41,362
|
|
|
$
|
38,779
|
|
Interest portion of rental expense
|
443
|
|
|
721
|
|
|
755
|
|
|
886
|
|
|
935
|
|
|||||
Total fixed charges
|
$
|
9,122
|
|
|
$
|
33,781
|
|
|
$
|
41,435
|
|
|
$
|
42,248
|
|
|
$
|
39,714
|
|
Earnings available for fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) before income taxes
|
$
|
119,659
|
|
|
$
|
(70,222
|
)
|
|
$
|
(161,744
|
)
|
|
$
|
(261,297
|
)
|
|
$
|
(238,192
|
)
|
Fixed charges per above
|
9,122
|
|
|
33,781
|
|
|
41,435
|
|
|
42,248
|
|
|
39,714
|
|
|||||
Total earnings available for fixed charges
|
$
|
128,781
|
|
|
$
|
(36,441
|
)
|
|
$
|
(120,309
|
)
|
|
$
|
(219,049
|
)
|
|
$
|
(198,478
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
14.12
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|||||||||
Deficiency of earnings available to cover fixed charges
|
N/A
|
|
$
|
(70,222
|
)
|
|
$
|
(161,744
|
)
|
|
$
|
(261,297
|
)
|
|
$
|
(238,192
|
)
|
/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
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|