x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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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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For the transition period from to
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Delaware
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04-3523891
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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600 Technology Park Drive, Suite 200
Billerica, Massachusetts
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01821
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value Per Share
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The NASDAQ Stock Market, LLC
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Preferred Stock Purchase Rights
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The NASDAQ Stock Market, LLC
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Title of Class
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Shares Outstanding
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Common Stock, $0.001 Par Value Per Share
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57,651,012
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Preferred Stock Purchase Rights
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—
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•
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Type 1 diabetes is characterized by the body’s nearly complete inability to produce insulin. It is frequently diagnosed during childhood or adolescence. Individuals with Type 1 diabetes require daily insulin therapy, typically administered via injections or continuous infusion through pump therapy, to survive.
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Type 2 diabetes, the more common form of diabetes, is characterized by the body’s inability to either properly utilize insulin or produce enough insulin. Historically, Type 2 diabetes has occurred in later adulthood, but its incidence is increasing among the younger population, due primarily to increasing childhood obesity. Initially, many people with Type 2 diabetes attempt to manage their diabetes with improvements in diet, exercise and/or oral medications. As their diabetes advances, some patients progress to multiple drug therapy, which often includes insulin therapy.
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A small, constant background supply of insulin (called a basal rate) is delivered automatically at a programmed rate, all day and night.
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An extra dose of insulin (called a bolus) can be delivered when a patient needs it to match the carbohydrates in a meal or snacks or to correct high blood glucose.
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The Pod is a small, lightweight, self-adhesive device that the patient fills with insulin and wears directly on the body. The Pod delivers precise, personalized doses of insulin into the body through a small flexible tube (called a cannula), based on instructions that the patient programs into the Pod's wireless companion, the PDM.
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The PDM is a wireless, handheld device that programs the Pod with the patient's personalized insulin-delivery instructions, wirelessly monitors the Pod's operation and includes a FreeStyle
®
blood glucose meter.
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Omnipod Dash Insulin Management System. Development of a secured Bluetooth Low Energy enabled Pod and PDM with a touch screen color user interface supported by web application and smart phone connectivity.
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Omnipod Horizon Automated Glucose Control. Development of a hybrid closed loop control system that will utilize the Dash mobile platform. Our Pod will communicate with a continuous glucose monitor and help control insulin delivery utilizing an algorithm located on the Pod.
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Concentrated Insulin Delivery. Development to support the use of concentrated insulins for Type 1 and Type 2 patients with higher insulin-requirements, utilizing the same form factor as our existing Pod.
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the basic architecture of the Omnipod System, including the pump and the PDM;
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the Omnipod shape memory alloy drive system;
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the Omnipod System cannula insertion system;
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communication features between system components for the Omnipod System and next generation products;
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software for controlling the Omnipod System and next generation products; and
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various novel aspects of the Omnipod System, potential future generations of Omnipod Systems, and other mechanisms for the delivery of pharmaceuticals.
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First, build patient awareness about the features and benefits that the Omnipod System provides.
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Second, build physician support by increasing the clinical evidence that clearly demonstrates the benefits that the Omnipod System provides.
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Third, provide payors with the clinical and economic justification of why the Omnipod System is a greater benefit for the patients whom they insure.
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significantly greater name recognition;
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established relations with healthcare professionals, customers and third-party payors;
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larger and more established sales forces and distribution networks;
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greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory approval for products; and
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greater financial and human resources for product development, sales and marketing and patent litigation.
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510(k) Clearance
. To obtain 510(k) clearance for any of our potential future devices (or for certain modifications to devices that have previously received 510(k) clearance), we must submit a pre-market notification demonstrating that the proposed device is substantially equivalent to a previously cleared 510(k) device or a pre-amendment device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of a PMA application. The FDA’s 510(k) clearance pathway generally takes from three to twelve months from the date the application is completed, but can take significantly longer. After a medical device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a significant change in its intended use, requires a new 510(k) clearance or, depending on the modification, could require a PMA application. The FDA requires each manufacturer to make this determination initially, but the FDA can review any such decision and can disagree with a manufacturer’s determination.
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PMA.
Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, devices deemed not substantially equivalent to a previously cleared 510(k) device or devices in commercial distribution before May 28, 1976 for which PMAs have not been required, generally require a PMA before they can be commercially distributed. A PMA application must be supported by extensive data, including technical information, pre-clinical and clinical trials, manufacturing and labeling to demonstrate the safety and effectiveness of the device to the FDA’s satisfaction. After a PMA application is complete, the FDA begins an in-depth review of the submitted information, which generally takes between one and three years, but may take significantly longer. During this review period, the FDA may request additional information or clarification of information already provided. Also during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. In addition, the FDA will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with Quality System Regulations, or QSRs, which impose elaborate design development, testing, control, documentation and other quality assurance procedures in the design and manufacturing process. The FDA may approve a PMA application with post-approval conditions intended to ensure the safety and effectiveness of the device including, among other things, restrictions on labeling, promotion, sale and distribution and collection of long-term follow-up data from patients in the clinical study that supported approval. Failure to comply with the conditions of approval can result in materially adverse enforcement action, including the loss or withdrawal of the approval. After any pre-market approval, a new pre-market approval application or application supplement may be required in the event of modifications to the device, its labeling, intended use or indication or its manufacturing process. PMA supplements often require submission of the same type of information as a PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA application, and may not require as extensive clinical data or the convening of an advisory panel.
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establishment registration and device listing;
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quality system regulation, or QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;
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labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses, and other requirements related to promotional activities;
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medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur;
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corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the Federal Food, Drug and Cosmetic Act that may present a risk to health. In addition, FDA may order a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; and
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post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
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the referral of an individual;
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furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid or other federal health care programs; or
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the purchase, lease, or order of, or the arrangement or recommendation of the purchasing, leasing, or ordering of any item or service reimbursable under Medicare, Medicaid or other federal health care programs.
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delays in shipping due to capacity constraints;
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practices of health insurance companies and other third-party payors with respect to reimbursement for our current or future products;
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market acceptance of the Omnipod System;
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our ability to manufacture the Omnipod System efficiently;
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timing of regulatory approvals and clearances;
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new product introductions;
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competition; and
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timing of research and development expenditures.
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the failure of the Omnipod System to achieve and maintain wide acceptance among opinion leaders in the diabetes treatment community, insulin-prescribing physicians, third-party payors and people with insulin-dependent diabetes;
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manufacturing problems or capacity constraints;
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actual or perceived quality problems;
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changes in reimbursement rates or policies relating to the Omnipod System by third-party payors;
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claims that any portion of the Omnipod System infringes on patent rights or other intellectual property rights owned by other parties;
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adverse regulatory or legal actions relating to the Omnipod System;
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damage, destruction or loss of any of the facilities where our products are manufactured or stored or of the equipment therein or failure to successfully open or expand new facilities;
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conversion rate of patient referrals to actual sales of the Omnipod System;
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write-offs of receivables from our customers;
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attrition rates of customers who cease using the Omnipod System;
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competitive pricing and related factors; and
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results of clinical studies relating to the Omnipod System or our competitors’ products.
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revenue generated by sales of our current products and any other future products that we may develop;
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costs associated with adding further manufacturing capacity;
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costs associated with expanding our sales and marketing efforts in the United States and internationally;
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expenses we incur in manufacturing and selling the Omnipod System;
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costs of developing new products or technologies and enhancements to the Omnipod System;
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the cost of obtaining and maintaining FDA approval or clearance of our current or future products;
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costs associated with any expansion;
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the cost of complying with regulatory requirements;
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costs associated with capital expenditures;
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costs associated with litigation; and
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the number and timing of any acquisitions or other strategic transactions.
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we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours;
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we may not be able to obtain an adequate supply in a timely manner or on commercially reasonable terms;
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our suppliers may make errors in manufacturing that could negatively affect the efficacy or safety of the Omnipod System or cause delays in shipment;
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we may have difficulty locating and qualifying alternative suppliers for our sole-source supplies;
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switching components may require product redesign and submission to the FDA of a new 510(k);
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our suppliers manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacture for others may affect their ability to deliver products to us in a timely manner;
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the occurrence of a fire, natural disaster or other catastrophe, impacting one or more of our suppliers, may affect their ability to deliver products to us in a timely manner; and
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our suppliers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements.
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political instability and adverse economic conditions;
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trade protection measures, such as tariff increases, and import and export licensing and control requirements;
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potentially negative consequences from changes in tax laws;
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difficulty in staffing and managing widespread operations;
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difficulties associated with foreign legal systems including increased costs associated with enforcing contractual obligations in foreign jurisdictions;
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changes in foreign currency exchange rates;
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differing protection of intellectual property;
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unexpected changes in regulatory requirements;
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failure to fulfill foreign regulatory requirements on a timely basis or at all to market the Omnipod System or other future products;
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availability of, and changes in, reimbursement within prevailing foreign health care payment systems;
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adapting to the differing laws and regulations, business and clinical practices, and patient preferences in foreign markets;
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difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign partners, distributors or sales or marketing agents; and
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difficulty in collecting accounts receivable and longer collection periods.
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significantly greater name recognition;
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different and more complete reimbursement profiles;
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established relations with healthcare professionals, customers and third-party payors;
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larger and more established distribution networks;
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greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory approval; and
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greater financial and human resources for product development, sales and marketing and patent litigation.
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our identification of drug delivery opportunities appropriate for a modified Omnipod System;
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our achievement of satisfactory development and pricing terms with the pharmaceutical companies that sell such drugs;
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our development of appropriate modifications to our Omnipod System technology to address the needs and parameters required for the respective drug-delivery opportunities;
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manufacturing issues relating to the modified Omnipod System;
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long lead-times associated with the development, regulatory approvals and ramp up applicable to the use of modified Omnipod Systems for the delivery of such drugs;
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relatively small number of modified Omnipod Systems needed to address each drug-delivery opportunity;
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uncertainties regarding the market acceptance of such drugs and the modified Omnipod Systems as appropriate delivery devices;
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uncertainties relating to the success of the pharmaceutical companies in marketing and selling such drugs as well as the modified Omnipod Systems as the appropriate delivery devices;
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intense competition in the drug-delivery industry, including from competitors which have substantially greater resources than we do;
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maintaining appropriate gross margins; and
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regulatory requirements and reimbursement rates associated with such drugs.
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the pending patent applications we have filed or to which we have exclusive rights may not result in issued patents or may take longer than we expect to result in issued patents;
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the claims of any patents that are issued may not provide meaningful protection;
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we may not be able to develop additional proprietary technologies that are patentable; and
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other companies may design around technologies we have patented, licensed or developed.
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the agreements may be breached;
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we may have inadequate remedies for any breach;
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trade secrets and other proprietary information could be disclosed to our competitors; or
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others may independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies.
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assert claims of infringement;
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enforce our patents;
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protect our trade secrets or know-how; or
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determine the enforceability, scope and validity of the proprietary rights of others.
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untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
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customer notification, or orders for repair, replacement or refunds;
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voluntary or mandatory recall or seizure of our current or future products;
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administrative detention by the FDA of medical devices believed to be adulterated or misbranded;
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imposing operating restrictions, suspension or shutdown of production;
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refusing our requests for 510(k) clearance or pre-market approval of new products, new intended uses or modifications to the Omnipod System;
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rescinding 510(k) clearance or suspending or withdrawing pre-market approvals that have already been granted; and
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criminal prosecution.
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Twelve Months Ended December 31,
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2016
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2015
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2014
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Amgen, Inc.
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17%
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10%
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*
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Ypsomed Distribution AG
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16%
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12%
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19%
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RGH Enterprises, Inc.
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10%
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13%
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14%
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•
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the inability to complete the acquisition or investment;
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disruption of our ongoing businesses and diversion of management attention;
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difficulties in integrating the acquired entities, products or technologies;
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risks associated with acquiring intellectual property;
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difficulties in operating the acquired business profitably;
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the inability to achieve anticipated synergies, cost savings or growth;
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potential loss of key employees, particularly those of the acquired business;
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difficulties in transitioning and maintaining key customer, distributor and supplier relationships;
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risks associated with entering markets in which we have no or limited prior experience; and
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unanticipated costs.
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dilutive issuances of equity securities, which may be sold at a discount to market price;
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the use of significant amounts of cash;
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the incurrence of debt;
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the assumption of significant liabilities;
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increased operating costs or reduced earnings;
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financing obtained on unfavorable terms;
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large one-time expenses; and
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the creation of certain intangible assets, including goodwill, the write-down of which in future periods may result in significant charges to earnings.
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failure to maintain and increase production capacity and reduce per unit production costs;
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changes in the availability of third-party reimbursement in the United States or other countries;
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volume and timing of orders for the Omnipod System;
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developments in administrative proceedings or litigation related to intellectual property rights;
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issuance of patents to us or our competitors;
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the announcement of new products or product enhancements by us or our competitors;
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the announcement of technological or medical innovations in the treatment or diagnosis of diabetes;
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changes in governmental regulations or in the status of our regulatory approvals or applications;
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developments in our industry;
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publication of clinical studies relating to the Omnipod System or a competitor’s product;
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quarterly variations in our or our competitors’ results of operations;
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changes in earnings estimates or recommendations by securities analysts; and
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general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
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authorize the issuance of preferred stock which can be created and issued by the board of directors without prior stockholder approval, with rights senior to those of our common stock;
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provide for a classified board of directors, with each director serving a staggered three-year term;
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prohibit our stockholders from filling board vacancies, calling special stockholder meetings or taking action by written consent;
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provide for the removal of a director only with cause and by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of our directors; and
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require advance written notice of stockholder proposals and director nominations.
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High
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Low
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||||
Fiscal Year 2015
|
|
|
|
||||
First Quarter
|
$
|
45.18
|
|
|
$
|
29.39
|
|
Second Quarter
|
$
|
31.85
|
|
|
$
|
26.23
|
|
Third Quarter
|
$
|
34.39
|
|
|
$
|
25.64
|
|
Fourth Quarter
|
$
|
39.32
|
|
|
$
|
26.36
|
|
Fiscal Year 2016
|
|
|
|
||||
First Quarter
|
$
|
37.54
|
|
|
$
|
24.68
|
|
Second Quarter
|
$
|
35.15
|
|
|
$
|
26.89
|
|
Third Quarter
|
$
|
45.07
|
|
|
$
|
30.46
|
|
Fourth Quarter
|
$
|
40.72
|
|
|
$
|
30.73
|
|
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
||||||||||||
Insulet Corporation
|
$
|
100
|
|
$
|
113
|
|
$
|
197
|
|
$
|
245
|
|
$
|
201
|
|
$
|
200
|
|
NASDAQ Composite
|
100
|
|
116
|
|
165
|
|
189
|
|
200
|
|
217
|
|
||||||
NASDAQ Health Care
|
100
|
|
124
|
|
193
|
|
246
|
|
257
|
|
212
|
|
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
|
|
||||
Equity compensation plans approved by security holders
(1)
|
3,576,322
|
|
|
$
|
24.45
|
|
|
4,487,991
|
|
|
Equity compensation plans not approved by security holders
(2)
|
827,200
|
|
|
$
|
28.54
|
|
|
—
|
|
|
Total
(4)
|
4,403,522
|
|
|
$
|
25.22
|
|
|
4,487,991
|
|
(3)
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(In thousands, except share and per share data)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
366,989
|
|
|
$
|
263,893
|
|
|
$
|
231,321
|
|
|
$
|
185,139
|
|
|
$
|
148,898
|
|
Cost of revenue
|
155,903
|
|
|
130,622
|
|
|
104,195
|
|
|
95,364
|
|
|
80,430
|
|
|||||
Gross profit
|
211,086
|
|
|
133,271
|
|
|
127,126
|
|
|
89,775
|
|
|
68,468
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
55,710
|
|
|
43,208
|
|
|
27,900
|
|
|
21,765
|
|
|
24,359
|
|
|||||
Sales and marketing
|
94,483
|
|
|
78,407
|
|
|
50,552
|
|
|
45,176
|
|
|
40,436
|
|
|||||
General and administrative
(1)
|
71,597
|
|
|
60,392
|
|
|
57,548
|
|
|
49,509
|
|
|
34,642
|
|
|||||
Total operating expenses
|
221,790
|
|
|
182,007
|
|
|
136,000
|
|
|
116,450
|
|
|
99,437
|
|
|||||
Operating loss
|
(10,704
|
)
|
|
(48,736
|
)
|
|
(8,874
|
)
|
|
(26,675
|
)
|
|
(30,969
|
)
|
|||||
Interest and other income (loss), net
|
(16,114
|
)
|
|
(12,654
|
)
|
|
(39,006
|
)
|
|
(15,783
|
)
|
|
(15,702
|
)
|
|||||
Loss from continuing operations before income taxes
|
(26,818
|
)
|
|
(61,390
|
)
|
|
(47,880
|
)
|
|
(42,458
|
)
|
|
(46,671
|
)
|
|||||
Income tax expense (benefit)
|
392
|
|
|
212
|
|
|
60
|
|
|
22
|
|
|
(9
|
)
|
|||||
Net loss from continuing operations
|
(27,210
|
)
|
|
(61,602
|
)
|
|
(47,940
|
)
|
|
(42,480
|
)
|
|
(46,662
|
)
|
|||||
Loss from discontinued operations, net of tax
(2)
|
(1,669
|
)
|
|
(11,918
|
)
|
|
(3,560
|
)
|
|
(2,494
|
)
|
|
(5,205
|
)
|
|||||
Net loss
|
$
|
(28,879
|
)
|
|
$
|
(73,520
|
)
|
|
$
|
(51,500
|
)
|
|
$
|
(44,974
|
)
|
|
$
|
(51,867
|
)
|
Net loss per share basic and diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss from continuing operations per share
|
(0.48
|
)
|
|
(1.08
|
)
|
|
(0.86
|
)
|
|
(0.78
|
)
|
|
(0.97
|
)
|
|||||
Net loss from discontinued operations per share
|
(0.03
|
)
|
|
(0.21
|
)
|
|
(0.06
|
)
|
|
(0.05
|
)
|
|
(0.11
|
)
|
|||||
Weighted-average number of shares used in calculating net loss per share
(3)
|
57,251,377
|
|
|
56,785,646
|
|
|
55,628,542
|
|
|
54,010,887
|
|
|
47,924,324
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
137,174
|
|
|
$
|
122,672
|
|
|
$
|
151,193
|
|
|
$
|
149,727
|
|
|
$
|
57,293
|
|
Short-term investments
(4)
|
$
|
161,396
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Working capital
|
$
|
314,263
|
|
|
$
|
125,605
|
|
|
$
|
163,900
|
|
|
$
|
155,824
|
|
|
$
|
61,650
|
|
Total assets
|
$
|
456,647
|
|
|
$
|
275,126
|
|
|
$
|
297,182
|
|
|
$
|
286,541
|
|
|
$
|
196,055
|
|
Current portion of long-term debt and capital lease obligations
|
$
|
269
|
|
|
$
|
5,519
|
|
|
$
|
3,380
|
|
|
$
|
2,637
|
|
|
$
|
14,429
|
|
Long-term debt and capital lease obligations
(5)
|
$
|
332,768
|
|
|
$
|
171,967
|
|
|
$
|
166,283
|
|
|
$
|
117,627
|
|
|
$
|
101,726
|
|
Other long-term liabilities
|
$
|
5,032
|
|
|
$
|
3,952
|
|
|
$
|
2,774
|
|
|
$
|
1,943
|
|
|
$
|
1,867
|
|
Total stockholders’ equity
|
$
|
63,150
|
|
|
$
|
34,051
|
|
|
$
|
83,829
|
|
|
$
|
124,597
|
|
|
$
|
44,176
|
|
|
|
|
|
|
(1)
|
Included a charge of $6.1 million related to in-process internally developed software in 2016. See note
12
to our consolidated financial statements included in this Annual Report on Form 10-K.
|
(2)
|
Included an impairment charge of $9.0 million in 2015 related to the impairment of the Neighborhood Diabetes asset group. See note
13
to our consolidated financial statements included in this Annual Report on Form 10-K.
|
(3)
|
In January 2013, we issued and sold 4.7 million shares of common stock to the public. In July 2014, we issued 0.3 million shares of common stock in connection with the repurchase of the 3.75% Senior Convertible Notes. See note
7
to our consolidated financial statements included in this Annual Report on Form 10-K.
|
(4)
|
We invested in short-term investments beginning in 2016. See note
6
to our consolidated financial statements included in this Annual Report on Form 10-K.
|
(5)
|
In June 2008, we issued and sold $85.0 million principal amount of 5.375% Convertible Senior Notes due June 2013. In June 2011, we issued and sold $143.8 million of 3.75% Convertible Notes due June 2016 and repurchased $70 million in principal of the 5.375% Notes. In June 2014, we issued and sold $201.3 million of 2% Convertible Notes due June 2019 and repurchased $114.9 million in 3.75% Notes. In July 2014, the remaining principal balance of the 3.75% Notes were converted and the principal was settled in cash. In September 2016, we issued $345.0 million of 1.25% Convertible Notes due September 2021 and repurchased $134.2 million in principal of the 2% Notes. In 2013 and 2014 we acquired $9.0 million and $1.5 million, respectively, of manufacturing equipment under capital leases. See notes
7
and
8
to our consolidated financial statements included in this Annual Report on Form 10-K.
|
•
|
Strengthened leadership team with appointment of key executives across the Company.
|
•
|
Evidence demonstrating Omnipod's improved glycemic control and quality of life published in the Journal of Diabetes Technology & Therapeutics and the Journal of Diabetes Science and Technology.
|
•
|
Completed private placement of $345.0 million in principal amount of 1.25% Convertible Senior Notes due in 2021 and the repurchase of $134.2 million in principal amount of the existing 2.00% Convertible Senior Notes due in 2019.
|
•
|
Divested Neighborhood Diabetes medical supplies distribution business to focus on growth opportunities in insulin and drug delivery.
|
•
|
Expanded development partnership with Eli Lilly and Company for Omnipod delivery of Humalog 200 concentrated insulin, in addition to the Company's already-existing partnership for Humalog U500.
|
•
|
Partnered with Joslin Diabetes Center to implement a unique training certification for Insulet's clinical team.
|
•
|
Total revenue of
$367.0 million
|
◦
|
U.S. Omnipod revenue of
$229.8 million
|
◦
|
International Omnipod revenue of
$71.9 million
|
◦
|
Drug Delivery revenue of
$65.3 million
|
TABLE 1: RESULTS OF OPERATIONS
|
|||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||
(In Thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Omnipod
|
$
|
229,785
|
|
|
$
|
189,604
|
|
|
$
|
40,181
|
|
|
21
|
%
|
|
$
|
189,604
|
|
|
$
|
175,950
|
|
|
$
|
13,654
|
|
|
8
|
%
|
International Omnipod
|
71,889
|
|
|
40,339
|
|
|
31,550
|
|
|
78
|
%
|
|
40,339
|
|
|
50,025
|
|
|
(9,686
|
)
|
|
(19
|
)%
|
||||||
Drug Delivery
|
65,315
|
|
|
33,950
|
|
|
31,365
|
|
|
92
|
%
|
|
33,950
|
|
|
5,346
|
|
|
28,604
|
|
|
535
|
%
|
||||||
Total Revenue
|
366,989
|
|
|
263,893
|
|
|
103,096
|
|
|
39
|
%
|
|
263,893
|
|
|
231,321
|
|
|
32,572
|
|
|
14
|
%
|
||||||
Cost of revenue
|
155,903
|
|
|
130,622
|
|
|
25,281
|
|
|
19
|
%
|
|
130,622
|
|
|
104,195
|
|
|
26,427
|
|
|
25
|
%
|
||||||
Gross profit
|
211,086
|
|
|
133,271
|
|
|
77,815
|
|
|
58
|
%
|
|
133,271
|
|
|
127,126
|
|
|
6,145
|
|
|
5
|
%
|
||||||
Gross margin
|
57.5
|
%
|
|
50.5
|
%
|
|
|
|
|
7
|
|
50.5
|
%
|
|
55.0
|
%
|
|
|
|
|
-4.5
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Research and development
|
55,710
|
|
|
43,208
|
|
|
12,502
|
|
|
29
|
%
|
|
43,208
|
|
|
27,900
|
|
|
15,308
|
|
|
55
|
%
|
||||||
Sales and marketing
|
94,483
|
|
|
78,407
|
|
|
16,076
|
|
|
21
|
%
|
|
78,407
|
|
|
50,552
|
|
|
27,855
|
|
|
55
|
%
|
||||||
General and administrative
|
71,597
|
|
|
60,392
|
|
|
11,205
|
|
|
19
|
%
|
|
60,392
|
|
|
57,548
|
|
|
2,844
|
|
|
5
|
%
|
||||||
Total operating expenses
|
221,790
|
|
|
182,007
|
|
|
39,783
|
|
|
22
|
%
|
|
182,007
|
|
|
136,000
|
|
|
46,007
|
|
|
34
|
%
|
||||||
Operating loss
|
(10,704
|
)
|
|
(48,736
|
)
|
|
(38,032
|
)
|
|
(78
|
)%
|
|
(48,736
|
)
|
|
(8,874
|
)
|
|
39,862
|
|
|
449
|
%
|
||||||
Interest and other income (loss), net
|
(16,114
|
)
|
|
(12,654
|
)
|
|
(3,460
|
)
|
|
(27
|
)%
|
|
(12,654
|
)
|
|
(39,006
|
)
|
|
26,352
|
|
|
(68
|
)%
|
||||||
Loss from continuing operations before income taxes
|
(26,818
|
)
|
|
(61,390
|
)
|
|
(34,572
|
)
|
|
(56
|
)%
|
|
(61,390
|
)
|
|
(47,880
|
)
|
|
13,510
|
|
|
28
|
%
|
||||||
Income tax expense
|
392
|
|
|
212
|
|
|
180
|
|
|
85
|
%
|
|
212
|
|
|
60
|
|
|
152
|
|
|
253
|
%
|
||||||
Net loss from continuing operations
|
(27,210
|
)
|
|
(61,602
|
)
|
|
(34,392
|
)
|
|
(56
|
)%
|
|
(61,602
|
)
|
|
(47,940
|
)
|
|
13,662
|
|
|
28
|
%
|
||||||
Loss from discontinued operations, net of tax
|
(1,669
|
)
|
|
(11,918
|
)
|
|
(10,249
|
)
|
|
(86
|
)%
|
|
(11,918
|
)
|
|
(3,560
|
)
|
|
8,358
|
|
|
235
|
%
|
||||||
Net loss
|
$
|
(28,879
|
)
|
|
$
|
(73,520
|
)
|
|
$
|
(44,641
|
)
|
|
61
|
%
|
|
$
|
(73,520
|
)
|
|
$
|
(51,500
|
)
|
|
$
|
(22,020
|
)
|
|
43
|
%
|
|
|
Years Ended December 31,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
15,911
|
|
|
$
|
(12,552
|
)
|
|
$
|
8,920
|
|
Investing activities
|
|
(178,010
|
)
|
|
(15,323
|
)
|
|
(11,486
|
)
|
|||
Financing activities
|
|
176,567
|
|
|
(371
|
)
|
|
4,032
|
|
|||
Effect of exchange rate changes on cash
|
|
34
|
|
|
(275
|
)
|
|
—
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
14,502
|
|
|
$
|
(28,521
|
)
|
|
$
|
1,466
|
|
|
|
|
|
|
(1)
|
Debt obligations include principal and interest. Our senior convertible notes incur interest of 2% and 1.25% per annum.
|
(2)
|
The effective interest rate on our capital lease obligation is 13%.
|
(3)
|
Our purchase obligations include commitments with certain of our suppliers, primarily for the purchase of Omnipod System components and manufacturing equipment along with other commitments to purchase goods or services in the normal course of business. We make such commitments through a combination of purchase orders, supplier contracts, and open orders based on projected demand information. These amounts include an $8.8 million commitment for the purchase of property located in Acton, Massachusetts that will be used for our manufacturing facility in the U.S. and was subsequently paid in February 2017. Total purchase price for the property was $9.3 million. These amounts also include outstanding purchase commitments with various suppliers for the construction and retrofit of the manufacturing facility and the establishment of highly-automated manufacturing operations, including $22.8 million with ATS Automation Tooling Systems Inc for equipment purchases.
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
(In thousands, except share and per share data)
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
137,174
|
|
|
$
|
122,672
|
|
Short-term investments
|
161,396
|
|
|
—
|
|
||
Accounts receivable, net
|
28,803
|
|
|
42,530
|
|
||
Inventories, net
|
35,514
|
|
|
12,024
|
|
||
Prepaid expenses and other current assets
|
7,073
|
|
|
4,283
|
|
||
Current assets from discontinued operations
|
—
|
|
|
9,252
|
|
||
Total current assets
|
369,960
|
|
|
190,761
|
|
||
Property and equipment, net
|
46,266
|
|
|
41,793
|
|
||
Other intangible assets, net
|
528
|
|
|
933
|
|
||
Goodwill
|
39,677
|
|
|
39,607
|
|
||
Other assets
|
216
|
|
|
76
|
|
||
Long-term assets from discontinued operations
|
—
|
|
|
1,956
|
|
||
Total assets
|
$
|
456,647
|
|
|
$
|
275,126
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
13,160
|
|
|
$
|
15,213
|
|
Accrued expenses and other current liabilities
|
40,959
|
|
|
36,744
|
|
||
Deferred revenue
|
1,309
|
|
|
2,361
|
|
||
Current portion of capital lease obligations
|
269
|
|
|
5,519
|
|
||
Current liabilities from discontinued operations
|
—
|
|
|
5,319
|
|
||
Total current liabilities
|
55,697
|
|
|
65,156
|
|
||
Capital lease obligations
|
—
|
|
|
269
|
|
||
Long-term debt, net of discount
|
332,768
|
|
|
171,698
|
|
||
Other long-term liabilities
|
5,032
|
|
|
3,952
|
|
||
Total liabilities
|
393,497
|
|
|
241,075
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $.001 par value:
|
|
|
|
||||
Authorized: 5,000,000 shares at December 31, 2016 and 2015.
Issued and outstanding: zero shares at December 31, 2016 and 2015
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value:
|
|
|
|
||||
Authorized: 100,000,000 shares at December 31, 2016 and 2015.
Issued and outstanding: 57,457,967 and 56,954,830 shares at December 31, 2016 and 2015, respectively |
57
|
|
|
57
|
|
||
Additional paid-in capital
|
744,243
|
|
|
686,193
|
|
||
Accumulated other comprehensive loss
|
(726
|
)
|
|
(654
|
)
|
||
Accumulated deficit
|
(680,424
|
)
|
|
(651,545
|
)
|
||
Total stockholders’ equity
|
63,150
|
|
|
34,051
|
|
||
Total liabilities and stockholders’ equity
|
$
|
456,647
|
|
|
$
|
275,126
|
|
|
Years Ended December 31,
|
||||||||||
(In thousands, except share and per share data)
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
$
|
366,989
|
|
|
$
|
263,893
|
|
|
$
|
231,321
|
|
Cost of revenue
|
155,903
|
|
|
130,622
|
|
|
104,195
|
|
|||
Gross profit
|
211,086
|
|
|
133,271
|
|
|
127,126
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
55,710
|
|
|
43,208
|
|
|
27,900
|
|
|||
Sales and marketing
|
94,483
|
|
|
78,407
|
|
|
50,552
|
|
|||
General and administrative
|
71,597
|
|
|
60,392
|
|
|
57,548
|
|
|||
Total operating expenses
|
221,790
|
|
|
182,007
|
|
|
136,000
|
|
|||
Operating loss
|
(10,704
|
)
|
|
(48,736
|
)
|
|
(8,874
|
)
|
|||
Interest expense
|
14,388
|
|
|
12,712
|
|
|
14,578
|
|
|||
Other income (expense), net
|
825
|
|
|
58
|
|
|
(1,225
|
)
|
|||
Loss on extinguishment of long-term debt
|
2,551
|
|
|
—
|
|
|
23,203
|
|
|||
Interest and other income (loss), net
|
(16,114
|
)
|
|
(12,654
|
)
|
|
(39,006
|
)
|
|||
Loss from continuing operations before income taxes
|
(26,818
|
)
|
|
(61,390
|
)
|
|
(47,880
|
)
|
|||
Income tax expense
|
392
|
|
|
212
|
|
|
60
|
|
|||
Net loss from continuing operations
|
(27,210
|
)
|
|
(61,602
|
)
|
|
(47,940
|
)
|
|||
Loss from discontinued operations, net of tax ($408, $79 and $82 for the years ended December 31, 2016, 2015 and 2014, respectively)
|
(1,669
|
)
|
|
(11,918
|
)
|
|
(3,560
|
)
|
|||
Net loss
|
$
|
(28,879
|
)
|
|
$
|
(73,520
|
)
|
|
$
|
(51,500
|
)
|
|
|
|
|
|
|
||||||
Net loss from continuing operations per share basic and diluted
|
$
|
(0.48
|
)
|
|
$
|
(1.08
|
)
|
|
$
|
(0.86
|
)
|
Net loss from discontinued operations per share basic and diluted
|
$
|
(0.03
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.06
|
)
|
Weighted-average number of shares used in calculating net loss per share
|
57,251,377
|
|
|
56,785,646
|
|
|
55,628,542
|
|
|
Years Ended December 31,
|
||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
$
|
(28,879
|
)
|
|
$
|
(73,520
|
)
|
|
$
|
(51,500
|
)
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
||||||
Foreign currency translation adjustment, net of tax
|
135
|
|
|
(641
|
)
|
|
6
|
|
|||
Unrealized loss on available-for-sale securities, net of tax
|
(207
|
)
|
|
|
|
|
|||||
Total other comprehensive (loss) income, net of tax
|
(72
|
)
|
|
(641
|
)
|
|
6
|
|
|||
Total comprehensive loss
|
$
|
(28,951
|
)
|
|
$
|
(74,161
|
)
|
|
$
|
(51,494
|
)
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total
Stockholders’
Equity
|
|||||||||||||
(In thousands, except share data)
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance, December 31, 2013
|
54,870,424
|
|
|
$
|
55
|
|
|
$
|
651,086
|
|
|
$
|
(526,525
|
)
|
|
$
|
(19
|
)
|
|
$
|
124,597
|
|
Exercise of options to purchase common stock
|
754,522
|
|
|
1
|
|
|
11,084
|
|
|
—
|
|
|
|
|
11,085
|
|
||||||
Issuance for employee stock purchase plan
|
13,620
|
|
|
—
|
|
|
583
|
|
|
—
|
|
|
|
|
583
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
22,432
|
|
|
—
|
|
|
|
|
22,432
|
|
||||||
Restricted stock units vested, net of shares withheld for taxes
|
311,921
|
|
|
—
|
|
|
(8,665
|
)
|
|
—
|
|
|
|
|
(8,665
|
)
|
||||||
Net impact of conversion of 3.75% Notes
|
—
|
|
|
—
|
|
|
(61,728
|
)
|
|
—
|
|
|
|
|
(61,728
|
)
|
||||||
Allocation to equity for conversion feature on 2% Notes, net of issuance costs
|
—
|
|
|
—
|
|
|
34,455
|
|
|
—
|
|
|
|
|
34,455
|
|
||||||
Issuance of common stock pursuant to conversion of debt
|
348,535
|
|
|
—
|
|
|
12,564
|
|
|
—
|
|
|
|
|
12,564
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,500
|
)
|
|
|
|
(51,500
|
)
|
||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
6
|
|
|
6
|
|
|||||||||
Balance, December 31, 2014
|
56,299,022
|
|
|
56
|
|
|
661,811
|
|
|
(578,025
|
)
|
|
(13
|
)
|
|
83,829
|
|
|||||
Exercise of options to purchase common stock
|
449,149
|
|
|
1
|
|
|
7,198
|
|
|
—
|
|
|
|
|
7,199
|
|
||||||
Issuance for employee stock purchase plan
|
22,039
|
|
|
—
|
|
|
652
|
|
|
—
|
|
|
|
|
652
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
19,178
|
|
|
—
|
|
|
|
|
19,178
|
|
||||||
Restricted stock units vested, net of shares withheld for taxes
|
184,620
|
|
|
—
|
|
|
(2,646
|
)
|
|
—
|
|
|
|
|
(2,646
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(73,520
|
)
|
|
|
|
(73,520
|
)
|
||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(641
|
)
|
|
(641
|
)
|
|||||||||
Balance, December 31, 2015
|
56,954,830
|
|
|
57
|
|
|
686,193
|
|
|
(651,545
|
)
|
|
(654
|
)
|
|
34,051
|
|
|||||
Exercise of options to purchase common stock
|
242,962
|
|
|
—
|
|
|
4,832
|
|
|
—
|
|
|
—
|
|
|
4,832
|
|
|||||
Issuance for employee stock purchase plan
|
30,949
|
|
|
—
|
|
|
802
|
|
|
—
|
|
|
—
|
|
|
802
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
23,638
|
|
|
—
|
|
|
—
|
|
|
23,638
|
|
|||||
Restricted stock units vested, net of shares withheld for taxes
|
229,226
|
|
|
—
|
|
|
(2,866
|
)
|
|
—
|
|
|
—
|
|
|
(2,866
|
)
|
|||||
Allocation to equity for conversion feature on 1.25% Notes, net of issuance costs
|
—
|
|
|
—
|
|
|
64,509
|
|
|
—
|
|
|
—
|
|
|
64,509
|
|
|||||
Extinguishment of conversion feature on 2% Notes, net of issuance costs
|
—
|
|
|
—
|
|
|
(32,865
|
)
|
|
—
|
|
|
—
|
|
|
(32,865
|
)
|
|||||
Net loss
|
|
|
|
|
|
|
|
|
|
(28,879
|
)
|
|
|
|
|
(28,879
|
)
|
|||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(72
|
)
|
|
(72
|
)
|
|||||||||
Balance, December 31, 2016
|
57,457,967
|
|
|
$
|
57
|
|
|
$
|
744,243
|
|
|
$
|
(680,424
|
)
|
|
$
|
(726
|
)
|
|
$
|
63,150
|
|
|
Years Ended December 31,
|
||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(28,879
|
)
|
|
$
|
(73,520
|
)
|
|
$
|
(51,500
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
|
|
|
|
|
|
||||||
Depreciation and amortization
|
13,833
|
|
|
15,838
|
|
|
12,223
|
|
|||
Non-cash interest and other expense
|
10,068
|
|
|
7,678
|
|
|
10,253
|
|
|||
Stock-based compensation expense
|
23,617
|
|
|
19,178
|
|
|
22,519
|
|
|||
Loss on extinguishment of long-term debt
|
2,551
|
|
|
—
|
|
|
23,203
|
|
|||
Provision for bad debts
|
2,070
|
|
|
1,184
|
|
|
3,254
|
|
|||
Impairment and other charges
|
6,234
|
|
|
9,086
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
12,551
|
|
|
(9,793
|
)
|
|
(10,069
|
)
|
|||
Inventories
|
(24,103
|
)
|
|
(722
|
)
|
|
(3,635
|
)
|
|||
Deferred revenue
|
(849
|
)
|
|
809
|
|
|
654
|
|
|||
Prepaid expenses and other assets
|
(2,621
|
)
|
|
(1,460
|
)
|
|
662
|
|
|||
Accounts payable, accrued expenses and other current liabilities
|
639
|
|
|
17,986
|
|
|
525
|
|
|||
Other long-term liabilities
|
800
|
|
|
1,184
|
|
|
831
|
|
|||
Net cash provided by (used in) operating activities
(1)
|
15,911
|
|
|
(12,552
|
)
|
|
8,920
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(22,115
|
)
|
|
(10,608
|
)
|
|
(11,486
|
)
|
|||
Purchases of short-term investments
|
(177,654
|
)
|
|
—
|
|
|
—
|
|
|||
Receipts from the maturity or sale of short-term investments
|
16,045
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from divestiture of business, net
|
5,714
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of Canadian distribution business
|
—
|
|
|
(4,715
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(178,010
|
)
|
|
(15,323
|
)
|
|
(11,486
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Principal payments of capital lease obligations
|
(5,518
|
)
|
|
(5,576
|
)
|
|
(3,858
|
)
|
|||
Proceeds from issuance of convertible notes, net of issuance costs
|
333,725
|
|
|
—
|
|
|
194,490
|
|
|||
Repayment of convertible notes
|
(153,628
|
)
|
|
—
|
|
|
(189,521
|
)
|
|||
Proceeds from issuance of common stock, net of offering costs
|
4,854
|
|
|
7,851
|
|
|
11,586
|
|
|||
Payment of withholding taxes in connection with vesting of restricted stock units
|
(2,866
|
)
|
|
(2,646
|
)
|
|
(8,665
|
)
|
|||
Net cash provided by (used in) financing activities
|
176,567
|
|
|
(371
|
)
|
|
4,032
|
|
|||
Effect of exchange rate changes on cash
|
34
|
|
|
(275
|
)
|
|
—
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
14,502
|
|
|
(28,521
|
)
|
|
1,466
|
|
|||
Cash and cash equivalents, beginning of period
|
122,672
|
|
|
151,193
|
|
|
149,727
|
|
|||
Cash and cash equivalents, end of period
|
$
|
137,174
|
|
|
$
|
122,672
|
|
|
$
|
151,193
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
3,687
|
|
|
$
|
4,025
|
|
|
$
|
4,657
|
|
Cash paid for taxes
|
$
|
932
|
|
|
$
|
109
|
|
|
$
|
124
|
|
Non-cash investing and financing activities
|
|
|
|
|
|
||||||
Allocation to equity for conversion feature for issuance of 2% convertible notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,638
|
|
Allocation to equity for conversion feature for issuance of 1.25% convertible notes
|
$
|
66,689
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Allocation to equity for conversion feature for the repurchase of 2% convertible notes
|
$
|
(32,865
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock issued in exchange for 3.75% convertible notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,564
|
|
Purchases of property and equipment under capital lease
|
$
|
—
|
|
|
$
|
5,721
|
|
|
$
|
1,474
|
|
|
Years Ended December 31,
|
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Goodwill:
|
|
|
|
||||
Beginning balance
|
$
|
39,607
|
|
|
$
|
37,396
|
|
Goodwill as a result of acquisition
|
—
|
|
|
2,403
|
|
||
Foreign currency adjustment
|
70
|
|
|
(192
|
)
|
||
Ending balance
|
$
|
39,677
|
|
|
$
|
39,607
|
|
•
|
The evidence of an arrangement generally consists of a physician order form, a patient information form and, if applicable, third-party insurance approval for sales directly to patients or a purchase order for sales to a third-party distributor.
|
•
|
Transfer of title and risk and rewards of ownership are passed to the patient or third-party distributor upon shipment of the products.
|
•
|
The selling prices for all sales are fixed and agreed with the patient or third-party distributor and, if applicable, the patient’s third-party insurance provider(s) prior to shipment and are based on established list prices or, in the case of certain third-party insurers, contractually agreed upon prices. Provisions for discounts, rebates and other adjustments to customers are established as a reduction to revenue in the same period the related sales are recorded.
|
|
|
Twelve Months Ended December 31,
|
||||
|
|
2016
|
|
2015
|
|
2014
|
Amgen, Inc.
|
|
17%
|
|
10%
|
|
*
|
Ypsomed Distribution AG
|
|
16%
|
|
12%
|
|
19%
|
RGH Enterprises, Inc.
|
|
10%
|
|
13%
|
|
14%
|
Note
|
5
|
|
Page
|
||
|
|
|
|
|
|
Convertible Debt
|
Note
|
7
|
|
Page
|
|
|
|
|
|
|
|
Note
|
10
|
|
Page
|
||
|
|
|
|
|
|
Note
|
11
|
|
Page
|
||
|
|
|
|
|
|
Other Intangible Assets
|
Note
|
13
|
|
Page
|
|
|
|
|
|
|
|
Accrued Expenses and Other Current Liabilities- Product Warranty Costs
|
Note
|
14
|
|
Page
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
Note
|
15
|
|
Page
|
|
|
|
|
|
|
|
Equity - Stock-Based Compensation
|
Note
|
16
|
|
Page
|
|
|
|
|
|
|
|
Note
|
18
|
|
Page
|
|
Years Ended December 31,
|
||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Discontinued operations:
|
|
|
|
|
|
||||||
Revenue
(1)
|
$
|
7,730
|
|
|
$
|
60,332
|
|
|
$
|
57,399
|
|
Cost of revenue
|
5,468
|
|
|
45,449
|
|
|
41,237
|
|
|||
Gross profit
|
2,262
|
|
|
14,883
|
|
|
16,162
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
1,542
|
|
|
9,945
|
|
|
10,292
|
|
|||
General and administrative
(2)
|
1,853
|
|
|
16,967
|
|
|
9,293
|
|
|||
Total operating expenses
|
3,395
|
|
|
26,912
|
|
|
19,585
|
|
|||
Operating Loss
|
(1,133
|
)
|
|
(12,029
|
)
|
|
(3,423
|
)
|
|||
Interest and other income (expense), net
|
(128
|
)
|
|
190
|
|
|
(55
|
)
|
|||
Loss from discontinued operations before taxes
|
(1,261
|
)
|
|
(11,839
|
)
|
|
(3,478
|
)
|
|||
Income tax expense
|
408
|
|
|
79
|
|
|
82
|
|
|||
Net loss from discontinued operations
|
$
|
(1,669
|
)
|
|
$
|
(11,918
|
)
|
|
$
|
(3,560
|
)
|
(in thousands)
|
December 31,
2015 |
||
ASSETS
|
|
||
Accounts receivable, net
|
$
|
5,857
|
|
Inventories, net
|
2,019
|
|
|
Prepaid expenses and other current assets
|
1,376
|
|
|
Total current assets of discontinued operations
|
9,252
|
|
|
Intangible assets, net
|
1,788
|
|
|
Goodwill
|
140
|
|
|
Other non-current assets
|
28
|
|
|
Total long-term assets of discontinued operations
|
1,956
|
|
|
Total assets of discontinued operations
|
$
|
11,208
|
|
LIABILITIES
|
|
||
Accounts payable
|
$
|
3,436
|
|
Accrued expenses and other current liabilities
|
1,883
|
|
|
Current liabilities of discontinued operations
|
5,319
|
|
|
Total liabilities of discontinued operations
|
$
|
5,319
|
|
•
|
Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
|
•
|
Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.
|
•
|
Income approach, which is based on the present value of the future stream of net cash flows.
|
|
Fair Value Measurements
|
||||||||||||||
(in thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
93,467
|
|
|
$
|
93,467
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds
|
$
|
4,203
|
|
|
$
|
—
|
|
|
$
|
4,203
|
|
|
$
|
—
|
|
Certificates of deposit
|
$
|
735
|
|
|
$
|
—
|
|
|
$
|
735
|
|
|
$
|
—
|
|
Total cash equivalents
|
$
|
98,405
|
|
|
$
|
93,467
|
|
|
$
|
4,938
|
|
|
$
|
—
|
|
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency bonds
|
$
|
79,093
|
|
|
$
|
49,963
|
|
|
$
|
29,130
|
|
|
$
|
—
|
|
Corporate bonds
|
$
|
56,653
|
|
|
$
|
—
|
|
|
$
|
56,653
|
|
|
$
|
—
|
|
Certificates of deposit
|
$
|
25,650
|
|
|
$
|
—
|
|
|
$
|
25,650
|
|
|
$
|
—
|
|
Total short-term investments
|
$
|
161,396
|
|
|
$
|
49,963
|
|
|
$
|
111,433
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
98,223
|
|
|
$
|
98,223
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-recurring fair value measurements:
|
|
|
|
|
|
|
|
||||||||
Long-term assets of discontinued operations
(1)
|
$
|
1,800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,800
|
|
|
|
|
|
|
(1)
|
Long-lived assets held and used relate to the asset group of the Neighborhood Diabetes business which consists of definite lived intangible assets and property and equipment. During the fourth quarter of 2015, the Company recognized an impairment charge on this asset group totaling
$9.1 million
, which represented the difference between the fair value of the asset group and the carrying value. As a result of the impairment, the asset group was recorded at fair value as of December 31, 2015. The fair value for the asset group was determined using the direct cash flows expected to be received from the disposition of the asset group, which was completed in February 2016 (level 3 input).
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
(in thousands)
|
Carrying
Value
|
|
Estimated Fair
Value
|
|
Carrying
Value |
|
Estimated Fair
Value |
||||||||
2% Convertible Senior Notes
|
$
|
59,737
|
|
|
$
|
71,909
|
|
|
$
|
171,698
|
|
|
$
|
207,882
|
|
|
|
|
|
|
|
|
|
||||||||
1.25% Convertible Senior Notes
|
$
|
273,031
|
|
|
$
|
320,969
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(in thousands)
|
Amortized cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency bonds
|
$
|
79,211
|
|
|
$
|
—
|
|
|
$
|
(118
|
)
|
|
$
|
79,093
|
|
Corporate bonds
|
56,742
|
|
|
—
|
|
|
(89
|
)
|
|
56,653
|
|
||||
Certificates of deposit
|
25,650
|
|
|
—
|
|
|
—
|
|
|
25,650
|
|
||||
Total short-term investments
|
$
|
161,603
|
|
|
$
|
—
|
|
|
$
|
(207
|
)
|
|
$
|
161,396
|
|
|
As of
|
||||||
(in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Principal amount of the 2% Convertible Senior Notes
|
$
|
67,084
|
|
|
$
|
201,250
|
|
Principal amount of the 1.25% Convertible Senior Notes
|
345,000
|
|
|
—
|
|
||
Unamortized debt discount
|
(69,684
|
)
|
|
(25,704
|
)
|
||
Deferred financing costs
|
(9,632
|
)
|
|
(3,848
|
)
|
||
Long-term debt, net of discount
|
$
|
332,768
|
|
|
$
|
171,698
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Contractual coupon interest
|
4,467
|
|
|
4,025
|
|
|
4,657
|
|
|||
Accretion of debt discount
|
8,800
|
|
|
6,552
|
|
|
8,007
|
|
|||
Amortization of debt issuance costs
|
1,270
|
|
|
1,126
|
|
|
895
|
|
|||
Loss on extinguishment of long-term debt
|
2,551
|
|
|
—
|
|
|
23,203
|
|
|||
Total interest and loss on extinguishment
|
$
|
17,088
|
|
|
$
|
11,703
|
|
|
$
|
36,762
|
|
|
As of
|
||||||
(in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Manufacturing equipment
|
$
|
13,705
|
|
|
$
|
13,705
|
|
Less: Accumulated amortization
|
(7,086
|
)
|
|
(4,346
|
)
|
||
Total
|
$
|
6,619
|
|
|
$
|
9,359
|
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
2.00% Convertible Senior Notes
|
1,442,433
|
|
|
4,327,257
|
|
|
4,327,257
|
|
1.25% Convertible Senior Notes
|
5,910,954
|
|
|
—
|
|
|
—
|
|
Unvested restricted stock units
|
962,219
|
|
|
811,965
|
|
|
746,612
|
|
Outstanding stock options
|
3,441,303
|
|
|
2,999,199
|
|
|
1,847,669
|
|
Total dilutive common shares
|
11,756,909
|
|
|
8,138,421
|
|
|
6,921,538
|
|
|
As of
|
||||
|
December 31, 2016
|
|
December 31, 2015
|
||
Amgen, Inc.
|
16
|
%
|
|
22
|
%
|
Ypsomed Distribution AG
|
19
|
%
|
|
19
|
%
|
(in thousands)
|
As of
|
||||||
December 31, 2016
|
|
December 31, 2015
|
|||||
Trade receivables
|
$
|
31,714
|
|
|
$
|
46,668
|
|
Allowance for doubtful accounts
|
(2,911
|
)
|
|
(4,138
|
)
|
||
Total accounts receivable
|
$
|
28,803
|
|
|
$
|
42,530
|
|
(in thousands)
|
As of
|
||||||
December 31, 2016
|
|
December 31, 2015
|
|||||
Raw materials
|
$
|
1,911
|
|
|
$
|
632
|
|
Work-in-process
|
15,681
|
|
|
1,960
|
|
||
Finished goods, net
|
17,922
|
|
|
9,432
|
|
||
Total inventories
|
$
|
35,514
|
|
|
$
|
12,024
|
|
|
Estimated
Useful Life
(Years)
|
|
As of
|
||||||
(in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||||
Machinery and equipment
|
2-5
|
|
$
|
53,246
|
|
|
$
|
49,059
|
|
Lab equipment
|
2-3
|
|
694
|
|
|
1,615
|
|
||
Computers
|
3
|
|
2,833
|
|
|
2,067
|
|
||
Software
|
3
|
|
3,786
|
|
|
2,566
|
|
||
Office furniture and fixtures
|
3-5
|
|
1,960
|
|
|
1,468
|
|
||
Leasehold improvement
|
*
|
|
1,126
|
|
|
927
|
|
||
Construction in process
|
—
|
|
24,137
|
|
|
12,275
|
|
||
Total property and equipment
|
|
|
$
|
87,782
|
|
|
$
|
69,977
|
|
Less: accumulated depreciation
|
|
|
(41,516
|
)
|
|
(28,184
|
)
|
||
Total property and equipment, net
|
|
|
$
|
46,266
|
|
|
$
|
41,793
|
|
|
As of
|
||||||||||||||||||||||
December 31, 2016
|
|
December 31, 2015
|
|||||||||||||||||||||
(in thousands)
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||||||||
Customer and contractual relationships, net
(1) (2)
|
$
|
1,994
|
|
|
$
|
(1,466
|
)
|
|
$
|
528
|
|
|
$
|
3,399
|
|
|
$
|
(1,000
|
)
|
|
$
|
2,399
|
|
Tradename
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
322
|
|
|
—
|
|
|
322
|
|
||||||
Total intangible assets
(4)
|
$
|
1,994
|
|
|
$
|
(1,466
|
)
|
|
$
|
528
|
|
|
$
|
3,721
|
|
|
$
|
(1,000
|
)
|
|
$
|
2,721
|
|
|
|
|
|
|
(1)
|
Includes foreign currency translation loss of approximately
$0.1 million
.
|
(2)
|
The customer relationships asset includes
$1.5 million
of both the gross carrying amount and net book value, respectively, that are included in long-term assets from discontinued operations on the balance sheet as of December 31, 2015.
|
(3)
|
The tradename asset is included in long-term assets from discontinued operations on the balance sheet as of December 31, 2015.
|
(4)
|
As a result of the impairment recorded on the Neighborhood Diabetes asset group, the Company recorded an impairment charge of approximately
$9.0 million
on the related Neighborhood Diabetes intangible assets, which was recorded through discontinued operations. This resulted in the gross carrying value and accumulated amortization of the Neighborhood Diabetes intangibles being reduced by
$31.1 million
and
$22.1 million
, respectively, at December 31, 2015.
|
|
Years Ended December 31,
|
||||||
(in thousands)
|
2016
|
|
2015
|
||||
Employee compensation and related costs
|
$
|
21,999
|
|
|
$
|
16,856
|
|
Professional and consulting services
|
6,753
|
|
|
5,654
|
|
||
Sales and use tax
|
299
|
|
|
1,163
|
|
||
Supplier charges
|
2,886
|
|
|
4,981
|
|
||
Warranty
|
1,642
|
|
|
1,592
|
|
||
Other
|
7,380
|
|
|
6,498
|
|
||
Total accrued expenses and other current liabilities
|
$
|
40,959
|
|
|
$
|
36,744
|
|
|
Years Ended December 31,
|
||||||
(in thousands)
|
2016
|
|
2015
|
||||
Balance at the beginning of the period
|
$
|
4,152
|
|
|
$
|
2,614
|
|
Warranty expense
|
4,602
|
|
|
4,964
|
|
||
Warranty claims settled
|
(4,366
|
)
|
|
(3,426
|
)
|
||
Balance at the end of the period
|
$
|
4,388
|
|
|
$
|
4,152
|
|
|
As of
|
||||||
(in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Composition of balance:
|
|
|
|
||||
Short-term
|
$
|
1,642
|
|
|
$
|
1,592
|
|
Long-term
|
2,746
|
|
|
2,560
|
|
||
|
$
|
4,388
|
|
|
$
|
4,152
|
|
(in thousands)
|
|
||
Years Ending December 31,
|
Minimum Lease
Payments
|
||
2017
|
2,560
|
|
|
2018
|
2,468
|
|
|
2019
|
2,455
|
|
|
2020
|
2,383
|
|
|
2021
|
2,383
|
|
|
Thereafter
|
2,131
|
|
|
Total
|
$
|
14,380
|
|
•
|
Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period and is computed over expected terms based upon the historical volatility of the Company's stock.
|
•
|
The expected life of the awards is estimated based on the midpoint scenario, which combines historical exercise data with hypothetical exercise data for outstanding options, as the Company believes this data currently represents the best estimate of the expected life of a new employee option. The Company stratifies its employee population into two groups based upon organizational hierarchy.
|
•
|
The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.
|
•
|
The dividend yield assumption is based on Company history and expectation of paying no dividends. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation.
|
|
Years Ended December 31,
|
||||
|
2016
|
|
2015
|
|
2014
|
Risk-free interest rate
|
0.99% - 1.91%
|
|
1.16% - 1.75%
|
|
0.12% - 1.98%
|
Expected term (in years)
|
5.07 - 5.38
|
|
4.86 - 5.25
|
|
1.0 - 6.25
|
Dividend yield
|
—
|
|
—
|
|
—
|
Expected volatility
|
38% - 40%
|
|
37% - 38%
|
|
37% - 63%
|
|
Number of
Options (#)
|
|
Weighted Average
Exercise Price ($)
|
|
Aggregate
Intrinsic
Value ($)
|
|||||
|
|
|
|
|
(In thousands)
|
|||||
Balance, December 31, 2015
|
2,999,199
|
|
|
$
|
31.37
|
|
|
—
|
|
|
Granted
|
1,049,862
|
|
|
31.85
|
|
|
—
|
|
||
Exercised
(1)
|
(242,962
|
)
|
|
19.89
|
|
|
$
|
4,646
|
|
|
Canceled
|
(364,796
|
)
|
|
31.92
|
|
|
—
|
|
||
Balance, December 31, 2016
|
3,441,303
|
|
|
$
|
32.27
|
|
|
$
|
20,196
|
|
Vested, December 31, 2016
(2)
|
1,503,811
|
|
|
$
|
31.89
|
|
|
$
|
9,325
|
|
Vested and expected to vest, December 31, 2016
(2)(3)
|
3,167,755
|
|
|
|
|
$
|
18,648
|
|
|
|
|
|
|
(1)
|
The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of the date of exercise and the exercise price of the underlying options. The aggregate intrinsic value of options exercised in the years ended December 31,
2016
,
2015
and
2014
was
$4.6 million
,
$8.6 million
and
$20.4 million
, respectively,
|
(2)
|
The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of December 31,
2016
, and the exercise price of the underlying options.
|
(3)
|
Represents the number of vested options as of December 31,
2016
, plus the number of unvested options expected to vest as of December 31,
2016
, based on the unvested options outstanding at December 31,
2016
adjusted for the estimated forfeiture.
|
|
Number of
Shares (#)
|
|
Weighted
Average
Fair Value ($)
|
|||
Balance, December 31, 2015
|
811,965
|
|
|
$
|
30.58
|
|
Granted
|
592,783
|
|
|
29.85
|
|
|
Vested
|
(317,470
|
)
|
|
31.01
|
|
|
Forfeited
|
(125,059
|
)
|
|
33.02
|
|
|
Balance, December 31, 2016
|
962,219
|
|
|
$
|
31.14
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
52
|
|
|
72
|
|
|
57
|
|
|||
Non-U.S.
|
539
|
|
|
321
|
|
|
3
|
|
|||
Total current expense
|
591
|
|
|
393
|
|
|
60
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
—
|
|
|
—
|
|
|||
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Non-U.S.
|
(199
|
)
|
|
(181
|
)
|
|
—
|
|
|||
Total deferred expense
|
(199
|
)
|
|
(181
|
)
|
|
—
|
|
|||
Total income tax expense
|
$
|
392
|
|
|
$
|
212
|
|
|
60
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Tax at U.S. statutory rate
|
34.00
|
%
|
|
34.00
|
%
|
|
34.00
|
%
|
Changes from statutory rate:
|
|
|
|
|
|
|||
State taxes, net of federal benefit
|
(10.86
|
)
|
|
3.06
|
|
|
1.56
|
|
Tax credits
|
0.03
|
|
|
1.51
|
|
|
1.36
|
|
Permanent items
|
(11.03
|
)
|
|
(2.09
|
)
|
|
(1.32
|
)
|
Change in valuation allowance
|
(13.45
|
)
|
|
(37.11
|
)
|
|
(32.13
|
)
|
Other
|
(0.15
|
)
|
|
0.28
|
|
|
(3.60
|
)
|
Effective income tax rate
|
(1.46
|
)%
|
|
(0.35
|
)%
|
|
(0.13
|
)%
|
|
Year Ended December 31,
|
||||||
(in thousands)
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
169,203
|
|
|
$
|
172,815
|
|
Start up expenditures
|
929
|
|
|
1,168
|
|
||
Tax credits
|
8,007
|
|
|
8,173
|
|
||
Provision for bad debts
|
1,330
|
|
|
1,724
|
|
||
Depreciation and amortization
|
6,368
|
|
|
2,472
|
|
||
Capital loss carryforward
|
18,961
|
|
|
—
|
|
||
Other
|
15,060
|
|
|
13,022
|
|
||
Total deferred tax assets
|
$
|
219,858
|
|
|
$
|
199,374
|
|
Deferred tax liabilities:
|
|
|
|
||||
Prepaids
|
$
|
(1,173
|
)
|
|
$
|
(1,249
|
)
|
Amortization of acquired intangibles
|
(33
|
)
|
|
—
|
|
||
Amortization of debt discount
|
(25,977
|
)
|
|
(9,503
|
)
|
||
Goodwill
|
(855
|
)
|
|
(383
|
)
|
||
Other
|
(313
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
$
|
(28,351
|
)
|
|
$
|
(11,135
|
)
|
Valuation allowance
|
$
|
(191,922
|
)
|
|
$
|
(188,442
|
)
|
Net deferred tax liabilities
|
$
|
(415
|
)
|
|
$
|
(203
|
)
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
U.S. Omnipod
|
$
|
229,785
|
|
|
$
|
189,604
|
|
|
$
|
175,950
|
|
International Omnipod
|
71,889
|
|
|
40,339
|
|
|
50,025
|
|
|||
Drug Delivery
|
65,315
|
|
|
33,950
|
|
|
5,346
|
|
|||
Total
|
$
|
366,989
|
|
|
$
|
263,893
|
|
|
$
|
231,321
|
|
(in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
United States
|
$
|
20,854
|
|
|
$
|
13,018
|
|
China
|
25,431
|
|
|
28,638
|
|
||
Other
|
197
|
|
|
213
|
|
||
Total
|
$
|
46,482
|
|
|
$
|
41,869
|
|
|
2016 Quarters Ended
|
||||||||||||||
|
December 31
(1)
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
(In thousands, except per share data)
|
|
||||||||||||||
Revenue
|
$
|
103,575
|
|
|
$
|
94,871
|
|
|
$
|
87,330
|
|
|
$
|
81,213
|
|
Gross profit
|
60,937
|
|
|
55,641
|
|
|
50,457
|
|
|
44,051
|
|
||||
Operating income (loss)
|
(4,135
|
)
|
|
2,418
|
|
|
(1,288
|
)
|
|
(7,699
|
)
|
||||
Net loss from continuing operations, net of taxes
|
(9,153
|
)
|
|
(3,017
|
)
|
|
(4,351
|
)
|
|
(10,689
|
)
|
||||
Income (loss) from discontinued operations, net of taxes
|
34
|
|
|
(64
|
)
|
|
153
|
|
|
(1,792
|
)
|
||||
Net loss
|
$
|
(9,119
|
)
|
|
$
|
(3,081
|
)
|
|
$
|
(4,198
|
)
|
|
$
|
(12,481
|
)
|
Net loss per share from continuing operations
|
$
|
(0.16
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.19
|
)
|
Net loss per share from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
(1)
|
Included in net loss from continuing operations for the fourth quarter of 2016 was a charge of
$6.1 million
related to in-process internally developed software.
|
|
2015 Quarters Ended
|
||||||||||||||
|
December 31
(2)
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
(In thousands, except per share data)
|
|
||||||||||||||
Revenue
|
$
|
83,801
|
|
|
$
|
71,393
|
|
|
$
|
60,551
|
|
|
$
|
48,148
|
|
Gross profit
|
41,993
|
|
|
31,570
|
|
|
30,515
|
|
|
29,193
|
|
||||
Operating loss
|
(12,617
|
)
|
|
(14,794
|
)
|
|
(14,059
|
)
|
|
(7,266
|
)
|
||||
Net loss from continuing operations, net of taxes
|
(15,909
|
)
|
|
(17,984
|
)
|
|
(17,267
|
)
|
|
(10,442
|
)
|
||||
Income (loss) from discontinued operations, net of taxes
|
(11,418
|
)
|
|
(943
|
)
|
|
1,835
|
|
|
(1,392
|
)
|
||||
Net loss
|
$
|
(27,327
|
)
|
|
$
|
(18,927
|
)
|
|
$
|
(15,432
|
)
|
|
$
|
(11,834
|
)
|
Net loss per share from continuing operations
|
$
|
(0.28
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.18
|
)
|
Net loss per share from discontinued operations
|
$
|
(0.20
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
(2)
|
Included in loss from discontinued operations for the fourth quarter of 2015 was a charge of
$9.1 million
related to the impairment of the Neighborhood Diabetes asset group.
|
Description
|
Balance at
Beginning of
Period
|
|
Additions Charged
to Costs and
Expenses
|
|
Deductions
|
|
Balance at
End
of Period
|
||||||||
(In thousands)
|
|
||||||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
(1)
|
$
|
4,454
|
|
|
$
|
2,069
|
|
|
$
|
3,612
|
|
|
$
|
2,911
|
|
Deferred tax valuation allowance
(1)
|
193,405
|
|
|
7,599
|
|
|
9,082
|
|
|
191,922
|
|
||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
(1)
|
$
|
5,837
|
|
|
$
|
1,184
|
|
|
$
|
2,567
|
|
|
$
|
4,454
|
|
Deferred tax valuation allowance
(1)
|
165,020
|
|
|
28,418
|
|
|
33
|
|
|
193,405
|
|
||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
(1)
|
$
|
7,133
|
|
|
$
|
3,254
|
|
|
$
|
4,550
|
|
|
$
|
5,837
|
|
Deferred tax valuation allowance
(1)
|
158,323
|
|
|
21,070
|
|
|
14,373
|
|
|
165,020
|
|
|
INSULET CORPORATION
(Registrant)
|
|
|
February 27, 2017
|
/s/ Patrick J. Sullivan
|
|
Patrick J. Sullivan
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
February 27, 2017
|
/s/ Michael L. Levitz
|
|
Michael L. Levitz
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Signature
|
|
Title
|
/s/ Patrick J. Sullivan
|
|
Chief Executive Officer
|
Patrick J. Sullivan
|
|
(Principal Executive Officer)
|
|
|
|
/s/ Michael L. Levitz
|
|
Chief Financial Officer
|
Michael L. Levitz
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
/s/ Sally Crawford
|
|
|
Sally Crawford
|
|
Director
|
|
|
|
/s/ John Fallon, M.D.
|
|
|
John Fallon, M.D.
|
|
Director
|
|
|
|
/s/ Dr. Jessica Hopfield
|
|
|
Dr. Jessica Hopfield
|
|
Director
|
|
|
|
/s/ David A. Lemoine
|
|
|
David Lemoine
|
|
Director
|
|
|
|
/s/ Timothy J. Scannell
|
|
|
Timothy J. Scannell
|
|
Director
|
|
|
|
/s/ Regina Sommer
|
|
|
Regina Sommer
|
|
Director
|
|
|
|
/s/ Joseph Zakrzewski
|
|
|
Joseph Zakrzewski
|
|
Director
|
Number
|
Description
|
|
|
3.1
|
Eighth Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to our Registration Statement on Form S-8 (No. 333-144636) filed July 17, 2007)
|
|
|
3.2
|
Amended and Restated By-laws of the Registrant (Incorporated by reference to our Current Report on Form 8-K, filed February 26, 2016)
|
|
|
4.1
|
Specimen Stock Certificate (Incorporated by reference to our Registration Statement on Form S-8 (No. 333-144636) filed July 17, 2007)
|
|
|
4.2
|
Certificate of Designations, Preferences and Rights of a Series of Preferred Stock of Insulet Corporation classifying and designating the Series A Junior Participating Cumulative Preferred Stock (Incorporated by reference to our Form 8-A, filed November 20, 2008)
|
|
|
4.3
|
Shareholder Rights Agreement, dated as of November 14, 2008, between Insulet Corporation and Registrar and Transfer Company, as Rights Agent (Incorporated by reference to our Form 8-A, filed November 20, 2008)
|
|
|
4.4
|
Amendment, dated September 25, 2009, to Shareholder Rights Agreement, dated as of November 14, 2008, between Insulet Corporation and Computershare Trust Company, As Rights Agent (Incorporated by reference to our Current Report on Form 8-A/A, filed September 28, 2009)
|
|
|
4.5
|
Amendment No. 2, dated August 30, 2016, to Shareholder Rights Agreement, dated as of November 18, 2008, between Insulet Corporation and Computershare Trust Company, As Rights Agent (Incorporated by reference to our Current Report on Form 8-K, filed August 31, 2016)
|
|
|
4.6
|
Indenture, dated as of June 9, 2014, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to our Current Report on Form 8-K, filed June 12, 2014)
|
|
|
4.7
|
Form of 2.00% Convertible Senior Notes due 2019 (included in Exhibit 33.3) (Incorporated by reference to our Current Report on Form 8-K, filed June 12, 2014)
|
|
|
4.8
|
Indenture, dated as of September 13, 2016, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.1 in our Current Report on Form 8-K, filed September 13, 2016)
|
|
|
4.9
|
Form of 1.25% Convertible Senior Notes due 2021 (included in Exhibit 4.8) (Incorporated by reference to Exhibit 4.1 in our Current Report on Form 8-K, filed September 13, 2016)
|
|
|
10.1+
|
Development and License Agreement between TheraSense, Inc. and Insulet Corporation, dated January 23, 2002 (Incorporated by reference to Amendment No. 3 to our Registration Statement on Form S-1 (File No. 333-140694) filed May 8, 2007)
|
|
|
10.2+
|
Amendment No. 1 to Development and License Agreement, dated as of March 3, 2008, by and between Abbott Diabetes Care, Inc. (ADC), formerly known as TheraSense, Inc., and Insulet Corporation. (Incorporated by reference to our Current Report on Form 8-K, filed March 5, 2008)
|
|
|
10.3+
|
Amendment No. 2 to Development and License Agreement, dated as of June 30, 2010, by and between ADC formerly known as TheraSense, Inc., and Insulet Corporation (Incorporated by reference to our Quarterly Report on Form 10-Q/A, filed November 19, 2010)
|
|
|
10.4
|
Amendment No. 3 to Development and License Agreement, dated as of April 5, 2011 by and between ADC and Insulet Corporation (Incorporated by reference to our Quarterly Report on Form 10-Q, filed May 9, 2012)
|
|
|
10.5
|
Amendment No. 4 to Development and License Agreement, dated as of March 29, 2012 by and between ADC and Insulet Corporation (Incorporated by reference to our Quarterly Report on Form 10-Q, filed May 9, 2012)
|
|
|
10.6
|
Amendment No. 5 to Development and License Agreement, dated as of June 21, 2012 by and between ADC and Insulet Corporation (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 8, 2012)
|
|
|
10.7+
|
Master Supply Agreement between Insulet Corporation and Flextronic Marketing (L) Ltd., dated January 3, 2007 (Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-146810) filed October 19, 2007)
|
|
|
10.8+
|
Addendum to Master Supply Agreement between Insulet Corporation and Flextronic Marketing (L) Ltd., dated October 4, 2007 (Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-146810) filed October 19, 2007)
|
|
|
10.9+
|
Distribution Agreement dated January 4, 2010 by and between Insulet Corporation and Ypsomed Distribution AG (Incorporated by reference to our Quarterly Report on Form 10-Q/A, filed November 19, 2010)
|
|
|
Number
|
Description
|
|
|
10.10
|
Amendment No. 1 to Distribution Agreement dated April 10, 2012 by and between Insulet Corporation and Ypsomed Distribution AG (Incorporated by reference to our Quarterly Report on Form 10-Q, filed May 9, 2012)
|
|
|
10.11+
|
Settlement and Cross-License Agreement, dated September 18, 2013, by and among the Company and Medtronic Inc., Medtronic MiniMed Inc., and Medtronic Puerto Rico Operations Co. (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 7, 2013)
|
|
|
10.12+
|
Master Equipment and Services Agreement between Insulet Corporation and ATS Automated Tooling Systems Inc., dated August 31, 2016 (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 4, 2016)
|
|
|
10.13+
|
Materials Supplier Agreement between Insulet Corporation and Flextronics Medical Sales and Marketing, Ltd, dated September 1, 2016 (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 4, 2016)
|
|
|
10.14
|
Third Addendum to Manufacturing Services Agreement between Insulet Corporation and Flextronics Marketing (L) Ltd., dated May 29, 2014 (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 7, 2014)
|
|
|
10.15
|
Fourth Addendum to Manufacturing Services Agreement between Insulet Corporation and Flextronics Marketing (L) Ltd., dated July 15, 2014 (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 7, 2014)
|
|
|
10.16
|
Fifth Addendum to Manufacturing Services Agreement between Insulet Corporation and Flextronics Marketing (L) Ltd., dated July 15, 2014 (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 7, 2014)
|
|
|
10.17
|
Purchase and Sale Agreement by and between 100 Nagog Park Limited Partnership and Insulet Corporation, dated December 16, 2016 (Incorporated by reference to our Current Report on Form 8-K, filed December 20, 2016)
|
|
|
10.18#
|
Supply Agreement, dated November 21, 2013, between Amgen and Insulet Corporation, as amended by Amendment No. 1 through Amendment No. 14
|
|
|
10.19
|
Form of Employee Non-Competition and Non-Solicitation Agreement by and between Insulet Corporation and each of its executive officers (Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-140694) filed February 14, 2007)
|
|
|
10.20
|
Offer Letter by and between Insulet Corporation and Paul Lucidi, dated May 11, 2010 (Incorporated by reference to our Annual Report on Form 10-K, filed March 10, 2011)
|
|
|
10.21
|
Offer Letter by and between Insulet Corporation and Charles Liamos (Incorporated by reference to our Current Report on Form 8-K, filed January 10, 2011)
|
|
|
10.22
|
Employment Agreement by and between Insulet Corporation and Patrick J. Sullivan dated September 16, 2014 (Incorporated by reference to our Current Report on Form 8-K, filed September 16, 2014)
|
|
|
10.23
|
Amended and Restated Executive Severance Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.24
|
Rules and Conditions for the Directors' Compensation Program (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.25
|
Agreement by and between Insulet Corporation and Michael Levitz dated March 23, 2015 (Incorporated by reference to our Current Report on Form 8-K, filed April 1, 2015)
|
|
|
10.26
|
Amended and Restated Executive Severance Plan (Incorporated by reference to our Current Report on Form 8-K, filed December 20, 2016)
|
|
|
10.27
|
Insulet Corporation 2000 Stock Option and Incentive Plan (Incorporated by reference to Amendment No. 2 to our Registration Statement on Form S-1 (File No. 333-140694) filed April 25, 2007)
|
|
|
10.28
|
Insulet Corporation Second Amended and Restated 2007 Employee Stock Purchase Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 28, 2014)
|
|
|
10.29
|
Form of Non-Qualified Stock Option Agreement for Company Employees under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.30
|
Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
Number
|
Description
|
|
|
10.31
|
Form of Time Vesting Restricted Stock Unit Agreement for Employees under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.32
|
Form of Incentive Stock Option Agreement under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.33
|
Form of Time Vesting Restricted Stock Unit Agreement for Singapore Employees under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.34
|
Form of Time Vesting Restricted Stock Unit Agreement for Non-Employee Directors under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.35
|
Form of Incentive Stock Option Agreement for Section 16 Officers under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.36
|
Form of Non-Qualified Stock Option Agreement for Section 16 Officers under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.37
|
Form of Time Vesting Restricted Stock Unit Agreement for Employees at the Vice President Level and Above under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.38
|
Form of Time Vesting Restricted Stock Unit Agreement for Section 16 Officers under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.39
|
Form of Non-Qualified Stock Option Agreement for Patrick J. Sullivan under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.40
|
Form of Incentive Stock Option Agreement under the Second Amended and Restated 2007 Stock Option and Incentive Plan - October 2014 New Hires (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)
|
|
|
10.41
|
Form of UK Time Vesting Restricted Stock Unit Agreement for Employees at the Vice President Level and Above under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.42
|
Form of Incentive Stock Option Agreement under the Second Amended and Restated 2007 Stock Option and Incentive Plan - 2015 Sales Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.43
|
Form of Non-Qualified Stock Option Agreement for Brad Thomas under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.44
|
Form of Non-Qualified Stock Option Agreement for Shacey Petrovic under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.45
|
Form of Time Vesting Restricted Stock Unit Agreement for Brad Thomas under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.46
|
Form of Time Vesting Restricted Stock Unit Agreement for Shacey Petrovic under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.47
|
Form of UK Non-Qualified Stock Option Agreement for Employees at the Vice President Level and Above under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015)
|
|
|
10.48
|
Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Definitive Proxy Statement on Form DEF14A, filed April 2, 2015)
|
|
|
10.49
|
Form of Canada Non-Qualified Stock Option Agreement for Company Employees under the Insulet Corporation Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015)
|
|
|
Number
|
Description
|
|
|
10.50
|
Form of Canada Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015)
|
|
|
10.51
|
Form of Performance Vesting Restricted Stock Unit Agreement under the Insulet Corporation Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015)
|
|
|
10.52
|
Form of Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015)
|
|
|
10.53
|
Form of Non-Qualified Stock Option Agreement for Michael Levitz, David Colleran and Michael Spears (Incorporated by reference to our Registration Statement on Form S-8 (No. 333-208387) filed December 8, 2015)
|
|
|
10.54
|
Form of Time Vesting Restricted Stock Unit Agreement for Michael Levitz, David Colleran and Michael Spears (Incorporated by reference to our Registration Statement on Form S-8 (No. 333-208387) filed December 8, 2015)
|
|
|
10.55
|
Form of Non-Executive Employee Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016)
|
|
|
10.56
|
Form of Non-Executive Employee Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016)
|
|
|
10.57
|
Form of Section 16 Officer Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016)
|
|
|
10.58
|
Form of Section 16 Officer Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016)
|
|
|
10.59
|
Form of Vice President Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016)
|
|
|
10.60
|
Form of Vice President Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016)
|
|
|
10.61
|
Form of International Non-Qualified Stock Option Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016)
|
|
|
10.62
|
Form of Time Vesting Restricted Stock Unit Agreement for Non-Employee Directors under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016)
|
|
|
10.63
|
Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016)
|
|
|
10.64
|
Form of Vice President Incentive Stock Option Agreement (Three Year Vest) under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016)
|
|
|
10.65
|
Insulet Corporation Fourth Amended and Restated 2007 Employee Stock Purchase Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016)
|
|
|
12.1
|
Insulet Corporation Statement Regarding Computation of Ratios of Earnings to Fixed Charges (Incorporated by reference to our Registration Statement on Form S-3, filed June 22, 2011)
|
|
|
21.1
|
Subsidiaries of the Registrant
|
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm (Grant Thornton LLP)
|
|
|
23.2
|
Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP)
|
|
|
24.1
|
Power of Attorney (included on signature page)
|
|
|
Number
|
Description
|
|
|
31.1
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
|
|
|
31.2
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
|
|
|
32.1*
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer.
|
|
|
101
|
The following materials from Insulet Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Loss; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows
|
*
|
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
|
|
|
+
|
Confidential treatment granted as to certain portions of this exhibit.
|
|
|
#
|
Confidential treatment requested as to certain portions of this exhibit.
|
1.
|
Definitions.
|
1.1
|
“
Agreement
” means this Supply Agreement together with all Appendices referenced herein and attached hereto as each may be amended from time to time pursuant to Section 12.5.
|
1.2
|
“
Business Day
” means any day other than a Saturday or Sunday on which banking institutions in New York, NY, are open for business.
|
1.3
|
“
Commercialization
” or “
Commercialize
”
will mean any activities directed to marketing, promoting, distributing, importing, offering to sell, and/or selling the System.
|
1.4
|
“
Commercial Year
”
means (i) the First Commercial Year, and (ii) the twelve month period beginning on the first anniversary of the First Commercial Year, and each subsequent twelve month period thereafter during the Term.
|
1.5
|
“
Confidential Information
” of a Party means (i) all Technology [Controlled] by such Party, and (ii) all ideas, information and data of any kind, whether in written, oral, graphical, machine-readable or other form, whether or not marked as confidential or proprietary, which are transferred, disclosed or made available by or on behalf of such Party (“
Disclosing Party
”) to the other Party or its representatives (“
Receiving Party
”), including any of the foregoing of Third Parties disclosed by or on behalf of such Party. Confidential Information of Party includes information regarding such Party’s products, financial information, business information or objectives and reports and audits, and all biological materials of a Party. Notwithstanding the foregoing, Confidential Information will not include Technology or other information that:
|
(a)
|
was known or used by the Receiving Party or its Affiliates prior to its date of disclosure to the Receiving Party as demonstrated by contemporaneous written records; or
|
(b)
|
either before or after the date of the disclosure to the Receiving Party is lawfully disclosed to the Receiving Party or its Affiliates by sources other than the Disclosing Party rightfully in possession of such Technology or other information and not bound by confidentiality obligations to the Disclosing Party; or
|
(c)
|
either before or after the date of the disclosure to the Receiving Party or its Affiliates is or becomes published or otherwise is or becomes part of the public domain through no breach hereof on the part of the Receiving Party or its Affiliates; or
|
(d)
|
is independently developed by or for the Receiving Party or its Affiliates without reference to or reliance upon the Confidential Information of the Disclosing Party as demonstrated by contemporaneous written records.
|
1.6
|
“
Conforming Lot
” has the meaning ascribed to it in the Quality Agreement.
|
1.7
|
“
Customized Insulet Device
” shall have the meaning set forth in the Insulet Product Definition Document INSPR020-PDD, Amgen Delivery Device ADD) attached hereto as Exhibit 1.7 as updated from time to time by mutual agreement of the Parties (“
Product Definition Document
”).
|
1.8
|
“
Device
” means any [*].
|
1.9
|
“
Disposition
” means to either reject or pass a batch, or part thereof, of Customized Insulet Devices by the quality unit of a Party pursuant to such Party’s quality systems and, with respect to Insulet, in compliance with the Quality Agreement.
|
1.10
|
“
Executive Officers
” means Insulet’s President and Chief Operating Officer (who, as of the Effective Date, is Charles Liamos) (or an officer or employee of Insulet then serving in a substantially equivalent capacity) and Amgen’s Executive Vice President, Operations (who, as of the Effective Date, is Madhu Balachandran) (or the officer or employee of Amgen then serving in a substantially equivalent capacity).
|
1.11
|
“
Facility
” means Insulet’s or its Affiliate’s or sub-contractor’s facility at which the Custom Insulet Device is Manufactured.
|
1.12
|
“
First Commercial Year
” means the first full calendar year beginning after the granting of Regulatory Approval by the FDA for the System.
|
1.13
|
“
Governmental Authority
” means a country, federal, state, provincial, commonwealth, supranational, cantonal or local regulatory agency, department, bureau or other governmental entity with authority over the testing, Manufacture, use, storage, import, promotion, marketing or sale of a Customized Insulet Device.
|
1.14
|
“
Lot Release Procedures
” means the testing procedures for the Customized Insulet Device set forth in the Quality Agreement, as may be amended by the mutual agreement of the Parties, in writing, from time to time, that are the basis for determining whether a lot of Customized Insulet Devices is appropriate for release by Insulet.
|
1.15
|
“
Manufacturing Services
” shall mean, with respect to each Customized Insulet Device to be supplied hereunder, the preparation, assembly, and production of each such item. “Manufacture,” “Manufacturing,” “Manufactured,” and other variants of manufacturing services shall have comparable meanings.
|
1.16
|
“
Minimum Lot Quantity
” means [*] ([*]) units of Customized Insulet Devices.
|
1.17
|
“
Non-Conforming Lot
” means, except if due to [*], a lot of Customized Insulet Device Manufactured by Insulet that, based the performance of and results from the Lot Release Procedures and comparison to release criteria set forth in the Lot Release Procedures, is inappropriate for release by Insulet.
|
1.18
|
“
Partial Commercial Year
” means the remainder of the calendar year commencing on the first day of the month following the granting of Regulatory Approval by the FDA for the System.
|
1.19
|
“
Party
” means Insulet or Amgen and, when used in the plural, “Parties” shall mean Insulet and Amgen.
|
1.20
|
“
Purchase Order
” shall mean each written order for the purchase of Customized Insulet Device issued by Amgen or its Affiliates in accordance with Section 2.7.
|
1.21
|
“
Quality System Regulation
” shall mean the applicable quality system requirements, as amended from time to time, for the methods used in, and the facilities and controls used for, the design, manufacture, packaging, labeling, storage, installation, and servicing of all finished devices intended for human use according to CFR Part 820, and any applicable guidance document or standard published or recognized by the FDA.
|
1.22
|
“
Ship
” shall mean the delivery, pursuant to Section 2.11, by Insulet of Customized Insulet Devices meeting the Release Criteria to Amgen or its designee. “Shipping,” “Shipped,” “Shipment”, and other variants shall have comparable meanings.
|
1.23
|
“
Specifications
” means the specifications and requirements of a Customized Insulet Device, including but not limited to performance requirements, materials, equipment, systems, standards and workmanship as set forth in the Product Definition Document.
|
1.24
|
“
Supply Territory
” means [*] and additional countries and regions as provided for pursuant to Section 12.2(b).
|
1.25
|
“
Supply Territory Expansion Reimbursable Expenses
” means, with respect to each Supply Territory Expansion Request, those [*] in support of [*].
|
1.26
|
“
Unit Price
” means the price set forth in Section 3.1 payable, pursuant to the terms of this Agreement, by Amgen for Customized Insulet Devices.
|
Infringement Claim
|
8.2
|
Initial Period
|
9.1
|
Insulet
|
1
st
Paragraph
|
Insulet Enforcement Actions
|
11.3(e)
|
Insulet Indemnified Party
|
8.1
|
Licensed Marks
|
11.3(b)
|
Loss
|
8.1
|
Mandatory Disclosure
|
5.1(a)
|
[*]
|
4
|
Notice of Permitted Assignment
|
12.4
|
Order-Based [*]
|
3.1
|
Permitted User
|
5.1(b)
|
[*]
|
2.3
|
POD Marks
|
11.3(c)
|
Product Definition Document
|
1.7
|
Product Warranty
|
6.9(c)
|
PTO
|
11.3(b)
|
Publication
|
5.4
|
Purchase Order
|
2.7(a)
|
Quality Agreement
|
2.2
|
Receiving Party
|
1.5
|
Renewal Period
|
9.1
|
Severed Clause
|
12.11
|
[*]
|
12.17
|
Supply Territory Expansion Request
|
12.2(b)
|
Taxes
|
3.6
|
Term
|
9.1
|
Trademarks
|
11.3(c)
|
2.
|
Manufacture; Supply.
|
a.
|
As soon as practicable after the Effective Date and at least [*] days prior to the [*] of each calendar month thereafter, Amgen will provide Insulet with eighteen (18) month rolling
|
b.
|
Except as mutually agreed in writing by the Parties, for each Forecast following the initial Forecast provided by Amgen, the quantity of Customized Insulet Device forecast (i) for the [*] months of such Forecast shall not vary from the amounts forecasted for such months in the most recent previously delivered Forecast, (ii) the amounts forecasted for the [*] of such Forecast shall not exceed [*] percent ([*]%) of the amounts forecasted for such month in the most recent previously delivered Forecast and (iii) the amounts forecasted for the [*] months of such Forecast shall not exceed [*] percent ([*]%) of the amounts forecasted for such months in the most recent previously delivered Forecast. Accompanying each Forecast, Amgen shall place a binding Purchase Order in accordance with Section 2.7 for Custom Insulet Devices for the first month contained in such Forecast.
|
c.
|
Each Party acknowledges and agrees that, except with respect to the Binding Portion of each Forecast, as may be adjusted pursuant to Section 2.6(b), (a) the Forecasts are for planning purposes only, (b) Amgen will prepare such Forecasts in good-faith, but does not guarantee the accuracy of any portions of such Forecasts, and (c) with the exception of the Binding Portion of the Forecasts, Insulet does not guarantee its ability to meet the requirements of such Forecasts.
|
a.
|
Amgen may use its standard purchase order form for any notice provided for hereunder; provided that all purchase orders must reference this Agreement and include and specify the proposed delivery date, quantities and destination (each, a “
Purchase Order
”). The Parties agree that the terms and conditions contained in this Agreement shall govern and prevail over any terms and conditions of any such Purchase Order, acknowledgment form or other instrument.
|
b.
|
Unless otherwise accepted pursuant to Section 2.8, Insulet shall not be obligated to supply quantities of Customized Insulet Devices set forth in Purchase Orders to the extent such quantities are in excess of the Binding Portion of a Forecast for the applicable month.
|
c.
|
Unless otherwise accepted by Insulet pursuant to Section 2.8, Insulet shall not be obligated to Ship Customized Insulet Devices [*] after the date each Purchase Order is received by Insulet.
|
d.
|
Each Purchase Order shall be for no less than the Minimum Lot Quantity.
|
e.
|
In addition to the quantities set forth in the Binding Portion of the Forecast and any Purchase Orders issued and accepted pursuant hereto, within [*] days after receipt of a Notice of Permitted Assignment (as defined in Section 12.4), Amgen may place one or more Purchase Orders for a quantity [*] of Customized Insulet Devices [*] of Customized Insulet Devices set forth in the Forecast current as of the date of receipt of such Notice of Permitted Assignment, for delivery no sooner than [*] after the date of such Purchase Order. Quantities of Customized Insulet Devices set forth in Purchase Orders pursuant to this Section 2.7(e) shall be deemed included in and part of the Binding Portion of the Forecast and the rights and obligations of each Party with respect to the Binding Portion of the Forecast shall apply thereto.
|
a.
|
With respect to each Purchase Order, Insulet will promptly notify Amgen in writing of any anticipated delay in Shipping Customized Insulet Devices by the delivery date(s) specified in each such Purchase Order.
|
b.
|
Insulet shall ship Customized Insulet Devices under suitable controls and pursuant to all reasonable instructions provided by Amgen. Amgen shall have the right to designate the freight forwarder to be used by Insulet by notifying Insulet of such no later than [*] days prior to the applicable delivery date; provided, in the absence of such instructions, Insulet shall use a freight forwarder previously designated by Amgen. [*]. [*]. In the event of conflict, the terms of this Agreement take precedence over the Incoterms.
|
c.
|
Insulet shall package all Customized Insulet Devices in accordance with standard commercial practices that meet or exceed Applicable Laws and meet the ship testing requirements defined in the Product Definition Document. Unless instructed otherwise by Amgen, Insulet shall (i) Ship Purchase Orders complete; (ii) ensure that all packages and documents conspicuously bear the applicable Purchase Order number; (iii) enclose a packing slip with each Shipment and, when more than one package is Shipped, identify the package containing the packing slip; (iv) ensure that all Customized Insulet Devices included in a Shipment have an expiration date no less than the approved shelf life [*]; and (v) ship Customized Insulet Devices on plastic pallets.
|
3.
|
Compensation.
|
[*]
|
Aggregate Number of Customized Insulet Devices Ordered by Amgen
|
With respect to each [*], Unit Price for each Customized Insulet Device Shipped to Amgen
|
[*]
|
3.2.
|
Inclusive
. Insulet acknowledges and agrees that the Unit Price is all inclusive including inclusive of technical support services, complaint investigation services, root cause analysis, corrective actions activities, equipment maintenance, and purchase and maintenance of toolsets.
|
3.3.
|
[*]
. As full and complete compensation for [*] will pay [*]. For the avoidance of doubt, Amgen will [*].
|
3.4.
|
[*] Capital Expense
. In return for Insulet making capital investments in support of Manufacturing a Customized Insulet Device that includes a [*], Amgen will reimburse, up to an amount not to exceed $[*], Insulet the actual, reasonable costs incurred by Insulet and payable to Third Parties with respect to such capital investments. Promptly after incurring such costs, Insulet will invoice Amgen for such and include with each such invoice reasonably detailed documentation of the costs incurred.
|
3.5.
|
Supply Territory Expansion Reimbursable Expenses
. With respect to each Supply Territory Expansion Request, Amgen will compensate Insulet as full and complete compensation the Supply Territory Expansion Reimbursable Expenses. Promptly after incurring such Supply Territory Expansion Reimbursable Expenses, Insulet will invoice Amgen for such and include with each such invoice reasonably detailed documentation of such expenses.
|
3.6.
|
Taxes
. The pricing, fees and amounts payable by Amgen to Insulet hereunder do not include any taxes imposed by law on Amgen as the purchaser of Customized Insulet Devices for any national, state or local property, sales, service, use, excise, value added, gross receipts or other such taxes (“
Taxes
”). In addition to any amounts otherwise payable by Amgen pursuant to this Agreement, Amgen agrees to pay or reimburse Insulet for all Taxes which Insulet is required to pay or collect or which are required to be withheld in respect of the transactions contemplated by this Agreement except income and payroll taxes.
|
3.7.
|
Invoices.
|
a.
|
Insulet shall submit invoices to Amgen on a [*] basis for amounts payable by Amgen hereunder (i) pursuant to Section 3.1, Section 3.3, Section 3.4, and Section 3.5 for [*] and (ii) testing as provided in Section 12.1. Insulet will endeavor to submit such invoices promptly following the [*]. Invoices will be submitted in electronic format to the following electronic address (which addresses may be changed, from time-to-time, by Amgen upon prior notice to Insulet): email address:
AccountsPayableMailroom@Amgen.com
.
|
b.
|
Each invoice shall contain:
|
i.
|
Purchase Order number;
|
ii.
|
number of Customized Insulet Devices Shipped to Amgen in [*];
|
iii.
|
applicable Unit Price for each such Customized Insulet Device, and Unit Price Amounts;
|
iv.
|
if any, amounts due on account of Section 3.3, Section 3.4, Section 3.5 and, with respect to Section 3.4, Section 3.5 and Section 12.1, reasonable documentation thereof; and
|
v.
|
the total amount payable by Amgen.
|
c.
|
Amounts listed in each invoice shall be specified in United States dollars. To the extent Amgen reasonably requires additional information for any amounts stated on an invoice, Amgen shall promptly notify Insulet of same and Insulet shall respond promptly to such request.
|
d.
|
Amgen may request that Insulet submit at times other than those specified herein an invoice for portions of the Compensation that have not yet been invoiced but represent amounts payable for actual performance of Insulet’s obligations hereunder. When Amgen makes such a request, Insulet shall deliver to Amgen a complete invoice reflecting such portions of the Compensation, if any, believed by Insulet to be payable. Insulet shall endeavour to deliver such invoice by the deadline identified in Amgen’s request therefore and, if no deadline is specified in Amgen’s request, [*] days following Insulet’s receipt of Amgen’s request.
|
e.
|
If Amgen disputes in good faith an amount stated in an invoice, Amgen will pay the undisputed amounts and notify Insulet in writing of the dispute concerning the remaining amounts within [*] days after Amgen’s receipt of such invoice and provide a reasonably detailed basis therefore. Upon resolution of disputed amounts, Insulet shall submit an invoice pursuant to this Section 3.7 for the amounts that the Parties mutually agree are no longer in dispute. Payment by Amgen does not constitute acceptance of the Insulet’s performance hereunder or an admission of liability.
|
4.
|
[*].
|
5.
|
Confidentiality.
|
a.
|
Neither Party shall make any public announcement about the Agreement, or any part thereof, or its business relationship with the other Party or one or more of its Affiliates (collectively, “
Announcement
”) unless prior written consent is obtained from such other Party, which consent may be withheld in such other Party’s sole discretion. Notwithstanding the foregoing provisions of this Section 5.1, a Party may disclose Confidential Information of the Disclosing Party, the terms of this Agreement, or make an Announcement if such Party determines, based on advice from its outside counsel, that it is required to make such disclosure to comply with Applicable Law or the rules of a securities exchange on which such Party is listed (“
Applicable Securities Rules
”; and each such disclosure a “
Mandatory Disclosure
”). With respect to each Mandatory Disclosure, as much in advance of each such Mandatory Disclosure as practicable, such Party shall (i) notify the other Party of the proposed content of the Mandatory Disclosure, (ii) give the other Party reasonable opportunity to review and comment on the proposed content of the Mandatory Disclosure, and (iii) in good faith, consider and revise the content of the Mandatory Disclosure based on comments received from the other Party and submit the revised Mandatory Disclosure to the other Party for review and consent, such consent not to be unreasonably withheld, delayed or conditioned. A Party shall include in each Mandatory Disclosure only the information required to be disclosed by Applicable Law or Applicable Securities Rules, and, to the extent possible, shall seek confidential treatment of each Mandatory Disclosure.
|
b.
|
Disclosures to Employees and Subcontractors
. A Receiving Party is permitted to disclose Confidential Information of the Disclosing Party to its employees and Subcontractors and to Receiving Party’s Affiliates and employees of Affiliates who have a need to know such Confidential Information to assist the Receiving Party in fulfilling its obligations under this Agreement (each a “
Permitted User
”), provided that each Permitted User is bound by obligations at least as stringent as those set forth in Section 5and that the Receiving Party is responsible for and liable to the Disclosing Party for each and every failure by a Permitted User to comply with the terms of this Section 5.
|
6.
|
Representations and Warranties.
|
a.
|
To such Party’s knowledge, the performance of its obligations under the Agreement will not result in the infringement of any intellectual property rights or the use of misappropriated trade secrets of any Third Party.
|
b.
|
Such Party has the right to grant the rights and licenses granted to the other Party under this Agreement.
|
c.
|
To such Party’s knowledge, no Third Party with which such Party has entered into any written agreement under which Intellectual Property Rights material to this Agreement are licensed from such Third Party intends to cancel or terminate such written agreement and no Third Party has the right to cancel or terminate such written agreement.
|
a.
|
Subject to Section 6.9(c), with respect to Customized Insulet Devices Manufactured at times other than during the [*], such Customized Insulet Devices Shipped hereunder will (i) meet the Specifications and Product Definition Document requirements; (ii) have been Manufactured and Shipped in compliance with, in all material respects, Applicable Laws and the Quality Agreement; and (iii) to the extent required hereunder, meet and be manufactured in compliance with current Good Manufacturing Practices pursuant to 21 C.F.R. Part 820, any other Quality System Regulations, and ISO 13485 standards.
|
b.
|
Subject to Section 6.9(c), with respect to Customized Insulet Devices Manufactured during the [*], such Customized Insulet Devices Shipped hereunder will (i) meet the requirements set forth in the Specifications, Product Definition Document and Quality Agreement with respect to sterilization; (ii) have been Manufactured and Shipped in compliance with, in all material respects, Applicable Laws and the Quality Agreement; and (iii) to the extent required hereunder, meet and be manufactured in compliance with current Good Manufacturing Practices pursuant to 21 C.F.R. Part 820, any other Quality System Regulations, and ISO 13485 standards.
|
c.
|
The warranties set forth in Sections 6.9(a) and 6.9(b) (the “
Product Warranty
”) shall be in effect with respect to any Customized Insulet Device for the period beginning on the [*]. Amgen’s [*], and Insulet’s [*], for any breach of the Product Warranty shall be for Insulet to: (i) replace non-conforming Customized Insulet Devices returned to Insulet, and such remedy shall be available only for defects reported during the applicable warranty period; and (ii) in the event that such a breach necessitates a recall of the System, Insulet shall reimburse Amgen’s reasonable, necessary, direct, external costs associated with such recall, provided that such costs do not exceed [*] during the Term. The Product Warranty does not apply with respect to Customized Insulet Devices that are, following Shipment by Insulet, subject to abuse, alteration, misuse, or improper operation.
|
d.
|
The Manufacture of each Customized Insulet Device and, generically in combination with a human therapeutic, with respect to the Territory, the use of each Customized Insulet Device does not, to the knowledge of Insulet, infringe any patent, copyright, trade secret or other proprietary right of any Third Party, provided that Amgen’s sole and exclusive remedy for the breach of this representation shall be indemnification, defense and hold harmless pursuant to Section 8.2(iii) and the rights and remedies set forth in Section 8.3(b).
|
e.
|
That Insulet and its Affiliates and subcontractors and their respective employees, directors, officers and agents contributing to or in connection with performance hereunder, (i) have not and will not offer or give to Amgen or any of Amgen’s representatives gifts, entertainment, payments, loans or other gratuities in order to or that may influence the award of a contract or obtain favorable treatment under any agreement with Amgen or its representatives and (ii) have not and will not use federal funds to influence or attempt to influence any employee of the United States Federal government or a member of congress in connection with this Agreement.
|
7.
|
Risk Allocation.
|
8.
|
Indemnification and Limitation of Liability.
|
a.
|
In the event of a Loss for which a Party (the “
Indemnified Party
”) seeks from the other Party (the “
Indemnifying Party
”) indemnification and defense pursuant to Section 8.1 or Section 8.2, the Indemnified Party will promptly notify the Indemnifying Party of each such Loss, and the Indemnifying Party will assume the defense thereof with, counsel reasonably satisfactory to the Indemnified Party; provided that the Indemnified Party will have the right to retain its own counsel at its own cost except if representation of the Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential conflicting interests between the Parties in which case the cost shall be borne by the Indemnifying Party. The indemnifications provided for by Section 8.1 and Section 8.2 will not apply to amounts paid in settlement of any Loss if such settlement is effected without the consent of the Indemnifying Party, which consent will not be unreasonably withheld. The failure to promptly deliver notice of a Loss to the Indemnifying Party after service of the complaint, if materially prejudicial to the Indemnifying Party’s ability to defend such complaint, will relieve the Indemnifying Party of any liability to the Indemnified Party under this Section 8.3 only to the extent so prejudiced. The Indemnified Party will reasonably cooperate with the Indemnifying Party in the investigation and defense of each Loss.
|
b.
|
With respect to each Infringement Claim, without limiting Amgen’s other rights or remedies under this Agreement, Insulet shall use commercially reasonable efforts to obtain the intellectual property rights that are the subject of the claim or design around the alleged/actual infringement such that there is no infringement (while still being able to satisfy the Specifications for the Customized Insulet Device in accordance with this Agreement).
|
a.
|
EXCEPT WITH REGARD TO [*], ANY LIABILITY THAT ARISES FROM A PARTY’S [*], IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL,
|
b.
|
EXCEPT WITH RESPECT TO ANY LIABILITY OR LOSS THAT ARISES FROM (A) [*], IN NO EVENT SHALL INSULET’S AGGREGATE LIABILITY FOR DIRECT DAMAGES TO AMGEN UNDER THIS AGREEMENT AND THE DEVELOPMENT AGREEMENT, IN THE AGGREGATE, EXCEED [*].
|
9.
|
Term and Termination.
|
10.
|
Disputes.
|
11.
|
INTELLECTUAL PROPERTY OWNERSHIP, PATENTS, LICENSES, AND [*].
|
11.2
|
Retained Rights
.
Nothing contained in this Agreement confers or will be construed to confer any rights by implication, estoppel or otherwise, under any Intellectual Property Rights, other than the rights expressly granted in this Agreement and the Development Agreement. All rights not expressly granted by a Party under this Agreement or the Development Agreement are hereby reserved.
|
11.3
|
Trademarks
.
|
a.
|
Limitations on Use
. Except as set forth in this Section 11.3, Amgen shall not use, register, or seek to register any trademark for use with wearable infusion device for delivery of human therapeutics that is confusingly similar to, or contains the words, “POD”, “OMNI”, “OMNIPOD” or “INSULET”.
|
b.
|
Licensed Marks Assignment
. Amgen has pending applications Serial No. [*], and [*] for the marks [*] and [*], respectively (collectively, “
Applications
”) filed in the United States Patent and Trademark Office (“
PTO
”) on the basis of Amgen’s intent to use such trademarks (the “
Licensed Marks
”). Amgen agrees that Insulet shall become the owner of the [*] and [*] trademarks pursuant to this Section 11.3. With respect to each of the Licensed Marks, upon a statement of use or amendment to allege use is filed in the PTO and accepted by the PTO, Amgen will promptly assign the Application relevant to the Licensed Mark to Insulet. Amgen hereby agrees to use the Licensed Marks only in connection with the Customized Insulet Device and the System meeting reasonable standards of quality that equal or exceed the quality of similar products heretofore marketed or provided by Amgen, the quality of which is known and acceptable to Insulet.
|
c.
|
Trademark License
. Insulet hereby grants to Amgen an exclusive, worldwide, fully paid up, royalty-free, and sub-licensable (on terms and conditions substantially consistent herewith) right and license to use the Licensed Marks and related registrations (collectively, the “
Trademarks
”) upon or in connection with the Customized Insulet Device and System. The license to the Trademarks granted to Amgen is exclusive, even as to Insulet, and Insulet will not use the Trademarks on any Device, products or other materials except those made for Amgen. Other than the Licensed Marks, this Section 11.3(c) does not preclude Insulet from using any marks that contain the word “POD” (“
POD Marks
”), on Devices, products or other materials not supplied to Amgen, and Amgen understands and agrees that Insulet may use or license such POD Marks [*]. All use of the Trademarks under this Agreement in connection with the Customized Insulet Device shall inure to the benefit of Insulet. Upon termination of this Agreement by Amgen pursuant to Section 9.3 (Termination for Cause), Insulet shall immediately do all that is necessary or required to assign the Trademarks to Amgen and Amgen shall have the unrestricted right to use and license the Trademarks.
|
d.
|
New Trademark Filings and Maintenance
. Insulet will have the obligation, at its own expense, to use best efforts to file and prosecute trademark applications and maintain registrations for the Trademarks covering the Customized Insulet Device and System in the Supply Territory. This Section 11.3 is a material provision of this Agreement and Insulet’s failure to comply with this Section 11.3 shall be considered a material breach of this Agreement. Insulet shall promptly notify Amgen of the status of all trademark applications and registrations regarding the Trademarks. If Insulet does not timely take action before any deadline with respect to Trademarks, then Insulet hereby grants to Amgen a power of attorney to act on its behalf to take the necessary action during the grace period or otherwise, all at Amgen’s expense, and without waiver of any other rights of Amgen under this Agreement.
|
e.
|
Enforcement
. If either Party shall become aware of any infringement by third parties of the Licensed Marks or any other use of the Licensed Marks or any term or trademark application confusingly similar to the Licensed Marks, such Party shall promptly notify the other Party of that infringement, use or application. Insulet agrees, at Insulet’s expense, to defend and protect the Trademarks against infringement by third parties in the Supply Territory, including, without limitation, instituting suit to seek injunctions and monetary damages and filing opposition proceedings and cancellation actions against conflicting trademarks of third parties (collectively “
Insulet Enforcement Actions
”). Insulet shall consult with Amgen but will have control over the selection of counsel, the conduct of the matter, and the settlement of Insulet Enforcement Actions. Amgen shall have the right to participate in all such Insulet Enforcement Actions at Amgen’s expense. Insulet shall be entitled to [*] of any recovery of monetary damages from Insulet Enforcement Actions. If Insulet fails to prosecute actions against any third party
|
12.
|
Miscellaneous.
|
a.
|
Insulet will perform [*] of the Customized Insulet Device required or necessary to support submissions to or meetings with Regulatory Authorities, and Amgen will reimburse Insulet [*].
|
b.
|
Confidential Information of Insulet regarding the Customized Insulet Device that is required to be submitted to a Regulatory Authority will be managed through a Master File, where applicable, or an equivalent regionally appropriate mechanism for filing (referred to in this Agreement as a Master File). Information that is not Confidential Information of Insulet regarding the Customized Insulet Device may also be managed through a Master File, at the request of Amgen.
|
c.
|
With the exception of the Confidential Information of Insulet in a Master File, which Insulet shall file with the Regulatory Authorities upon Amgen’s request as set forth in this Section 12.1, Amgen shall have the right, but not the obligation, to compile and file any and all submissions with the Regulatory Authorities required for the approval of Customized Insulet Devices and/or Systems for commercial or clinical use (such submissions include without limitation briefing documents in support of meetings, clinical trial applications, marketing applications, and responses to questions or requests for additional information from Regulatory Authorities). Insulet shall submit to Amgen, in electronic form compatible with Amgen’s system requirements with Confidential Information of Insulet redacted, all documents necessary to be submitted to a Regulatory Authority. With the exception of Confidential Information of Insulet contained in a Master File: (i) Amgen shall own all right, title and interest in and to filings and submissions to Regulatory Authorities and Regulatory Approvals related to the Customized Insulet Devices and Systems; and (ii) with respect to the Customized Insulet Device, Insulet shall only submit to Regulatory Authorities those documents approved in writing and in advance by Amgen. With respect to Confidential Information of Insulet contained in a Master File, Amgen shall approve the index of content in writing prior to submission. Insulet will provide Amgen with a Letter of Authorization for the Master File that allows FDA to incorporate by reference the information into Amgen’s submission.
|
d.
|
Unless otherwise agreed by the Parties or required by Regulatory Authorities, for each document necessary to be submitted to a Regulatory Authority that does not contain Confidential Information of Insulet, Insulet shall submit to Amgen for its review and comment a draft of each such document no later than sixty (60) days prior to the anticipated date for submittal to the Regulatory Authority. Insulet will consider in good faith any comments and suggestions that Amgen may have based on its review of the documentation, address such comments and suggestions, and make reasonable changes to the documentation given such comments and suggestions.
|
e.
|
Except for Confidential Information of Insulet’s contained in a Master File, Insulet shall provide a copy of the Master File contents to Amgen at the time of submission and provide updated contents to Amgen when changes are made. With respect to Confidential Information of Insulet contained in a Master File, at the time of submission and when changes are made, Insulet shall submit to Amgen an index of the contents of the Master File and a brief description of contents. After submission to a Regulatory Authority, Insulet shall maintain a Master File throughout the life of the Customized Insulet Device and notify Amgen within [*] business days of each change to the content of a Master File. Insulet shall immediately notify Amgen of any communication from a Regulatory Authority regarding the Customized Insulet Device, to include but not limited to, information contained within a Master File. Amgen will reimburse Insulet its actual and reasonable costs incurred for compilation, submission, communication with a Regulatory Authority, and maintenance of a Master File to the extent the Master File is only
|
f.
|
Insulet and Amgen will document medical device reporting roles and responsibilities in an amendment to this Agreement. Insulet will, in good faith, with the engagement of staff adequate in number and expertise, and prior to the filing date as specified by Amgen and Insulet, negotiate the foregoing amendment.
|
a.
|
Each Party recognizes and acknowledges that changes to this Agreement arising from requirements of Regulatory Authorities applicable to Customized Insulet Devices (each a “
Change
”) may be necessary from time to time. In the event that either Party determines that a Change is desirable or necessary, such Party will notify the other Party of such Change in writing. Within [*] days after notice by either Party of a request for a Change, the Parties will negotiate in good faith with respect to such Change, in each case. Upon the mutual agreement of the Parties to approve a requested Change, the Parties will execute a written change order setting forth the agreed upon Change (each a “
Change Order
”). The Parties will perform their obligations under this Agreement as modified by each Change Order. If the Parties are unable to agree on any Change within the above-referenced [*] day period, the Parties will continue to perform their respective obligations hereunder as agreed to by the Parties.
|
b.
|
Notwithstanding anything to the contrary set forth in Section 12.1(a), upon Amgen’s request, from time-to-time, that Insulet Manufacture and supply the Customized Insulet Device for Commercialization in countries or regions specified by Amgen that are outside of the then-current Supply Territory pursuant to the Amgen-approved schedule (each such request a “
Supply Territory Expansion Request
”), Insulet will (a) submit to Amgen a proposed schedule and estimate of Supply Territory Expansion Reimbursable Expenses with respect to the Supply Territory Expansion Request, (b) subject to the Change process set forth in Section 12.1(a), do all that is necessary or required for it to Manufacture and supply the Customized Insulet Device for Commercialization in the countries or regions specified in the Supply Territory Expansion Request; and (c) be compensated by Amgen pursuant to Section 3.5. With respect to each Supply Territory Expansion Request, upon Regulatory Approval with respect to the territory(ies) that is(are) the subject of such request (each, an “
Additional Supply Territory
”), the definition of Supply Territory shall be automatically amended to include in each Additional Supply Territory. At Amgen’s request, Insulet shall file submissions, notifications, applications, documentation and related materials as Amgen may request in relation to obtaining approval of Regulatory Authorities for the Customized Insulet Devices and/or Systems anywhere in the world and any Change due to such requests shall be addressed pursuant to Section 12.1 and Section 12.1(a).
|
c.
|
In the event of a conflict between or among Change Orders, a Change Order dated later in time will control over a Change Order dated earlier in time. If a Change is mandated by a change in Applicable Laws, and failure to comply would render either Party’s performance under this Agreement or the use of the Customized Insulet Device illegal, each Party’s performance shall be temporarily suspended only to the extent such performance is illegal until such time as the Parties confer and the Parties shall mutually agree to a course of action and delegate responsibility for implementing such Change in order to comply with such amended Applicable Laws.
|
a.
|
Notices to Amgen will be addressed to:
|
b.
|
Notices to Insulet will be addressed to:
|
c.
|
Each Party may change its notice recipients under this Section 12.6 by giving notice to the other Party in the manner herein provided. Any notice required or provided for by the terms of this Agreement will be in writing and will be (a) sent by registered or certified mail, return receipt requested, postage prepaid, (b) sent via a reputable overnight courier service, or (c) sent by facsimile transmission with an original to be followed the same day via a reputable overnight courier service, in each case properly addressed in accordance with this Section 12.6. The effective date of each notice will be the actual date of receipt by the Party receiving the same.
|
IN WITNESS WHEREOF, the Parties have caused this Supply Agreement to be executed by their respective duly authorized officers effective as of the Effective Date.
|
|
INSULET CORPORATION
|
AMGEN INC.
|
By:
/s/ Charles T Liamos
|
By:
/s/ William Reis
|
Name:
Charles T Liamos
|
Name:
William Reis
|
Title:
COO
|
Title:
Vice President, Global Strategic Sourcing
|
|
|
|
By:
/s/ William Rich
|
|
Name:
William Rich
|
|
Title:
Vice President, Supply Chain
|
a.
|
If, prior to Amgen’s first submittal of the Forecast, Amgen requests in writing that Insulet purchase some or all of the Amgen-Specific Components (defined below) and Amgen submits to Insulet a purchase order for such, Insulet shall promptly purchase and maintain in its inventory the Amgen-Specific Components specified in, such request (the “
Requested Amgen-Specific Components
”); provided, however, that Amgen shall only have the right to request, and Insulet shall only be obligated to purchase and maintain in its inventory, up to [*] of each Amgen-Specific Component. Insulet shall take delivery of each Requested Amgen-Specific Component no later than the lead time (set forth in Section 3.9(b), below) applicable to each such Requested Amgen-Specific component. Insulet shall only use the Requested Amgen-Specific Components for the Manufacture of Customized Insulet Devices. The Manufacture of one Customized Insulet Device requires one of each of the Amgen-Specific Components (referred to as the “
Customized Insulet Device Amgen-Specific Components Set
”). Until the number of Customized Insulet Devices equal to the number of Customized Insulet Device Amgen-Specific Component Sets represented by the Requested Amgen-Specific Components (the “
Expedited Delivery Customized Insulet Devices
”) has been ordered by Amgen by Purchase Order, Insulet shall deliver Customized Insulet Devices within three months after Amgen’s submission of the Purchase Order (regardless of the timing of Amgen’s submission of Forecasts or the quantities of Customized Insulet Devices set forth in the Binding Portion of a Forecast). For illustrative purposes, if before submitting its first Forecast Amgen orders [*] of each Amgen-Specific Component and thereafter submits Purchase Orders on [*] and [*] for [*] and [*] Customized Insulet Devices, respectively, then Insulet will deliver [*] Customized Insulet Devices on or before [*] and [*] Customized Insulet Devices on or before [*].
|
b.
|
The Amgen-Specific Components are the following:
|
Item
|
Description of Amgen-Specific Component
|
Lead Times (weeks)
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*] or
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
c.
|
Amgen will pay Insulet [*] (US$[*]) for each Customized Insulet Device Amgen-Specific Components Set that Amgen requests and Insulet purchases and maintains in its inventory pursuant to this Agreement. Insulet will credit to Amgen [*] (US$[*]) for each Expedited Delivery Customized Insulet Device ordered by and delivered to Amgen.
|
IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effective as of the Amendment 1 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ W. P. Ryan
|
By:
/s/ Ed Vrable
|
Name:
W. P. Ryan
|
Name:
Ed Vrable
|
Title:
COO
|
Title:
Director Strategic Sourcing
|
|
|
“(a)
|
Insulet shall submit invoices to Amgen on a [*] basis for amounts payable by Amgen hereunder (i) pursuant to Section 3.1, Section 3.3, Section 3.4, and Section 3.5 for [*], (ii) pursuant to Section 3.10, and (ii) testing as provided in Section 12.1. Insulet will endeavor to submit such invoices promptly following the [*]. Invoices will be submitted in electronic format to the following electronic address (which addresses may be changed, from time-to-time, by Amgen upon prior notice to Insulet): email address:
AccountsPayableMailroom@Amgen.com
.”
|
IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effective as of the Amendment 2 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Brian K. Roberts
|
By:
/s/ Sev Sislian
|
Name:
Brian K. Roberts
|
Name:
Sev Sislian
|
Title:
CFO
|
Title:
Category Manager
|
|
|
IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effective as of the Amendment 3 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Brian K. Roberts
|
By:
/s/ Sev Sislian
|
Name:
BRIAN K. ROBERTS
|
Name:
SEV SISLIAN
|
Title:
CFO
|
Title:
CATEGORY MANAGER
|
|
|
|
Amgen Inc.
|
|
By:
N.A.
|
|
Name:
N.A.
|
|
Title:
N.A.
|
1.
|
SUPPLY AGREEMENT.
This Safety Agreement is incorporated by reference in and governed by that certain Supply Agreement by and between the Parties, dated as of November 21, 2013 (as might be amended from time to time, the
“
Agreement
”).
|
2.
|
DEFINITIONS.
All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In the event of a conflict between the capitalized terms defined and set forth in this Safety Agreement and the defined terms of the Agreement, the definitions set forth in this Safety Agreement shall control with respect to this Safety Agreement. The following definitions are used herein:
|
2.1
|
Drug Adverse Event
. Drug Adverse Event (or “Drug AE”) shall mean any untoward medical occurrence in a patient who has been administered an Amgen Product and which does not necessarily have a causal relationship with the treatment.) Drug AEs include without limitation any unfavorable and unintended sign, symptom or disease temporally associated with the use of an Amgen Product, whether or not considered related to Amgen Product, including any clinically significant worsening of a pre-existing condition. For purposes of this Safety Agreement, any doubt as to whether information constitutes a Drug AE shall be resolved by treating it as a Drug AE. The following events also shall be deemed Drug Adverse Events for purposes of this Agreement, even if the patient has not suffered an adverse outcome:
|
•
|
Incidents of pregnancy when either the mother or father is a patient or clinical trial subject to whom .Amgen Product has been administered;
|
•
|
Incidents when a lactating woman is actively taking an Amgen Product while breastfeeding;
|
•
|
Lack of therapeutic effect;
|
•
|
Suspected transmission of an infectious agent via an Amgen Product;
|
•
|
Incidents of overdose, abuse, or misuse of an Amgen Product, including off-label use or attempted suicide;
|
•
|
Medication errors involving an Amgen Product; and
|
•
|
Incidents of occupational exposure
.
to an Amgen Product.
|
2.2
|
Device Adverse Event
. Device Adverse Event (or “Device AE”) shall mean an event that reasonable suggests that the Customized Insulet Device or a similar device marketed by Insulet:
|
•
|
May have caused or contributed to death or serious injury.
|
•
|
Has malfunctioned and that the Customized Insulet Device or a similar device marketed by Insulet would be likely to cause or contribute to a death or serious injury if the malfunction were to recur, or
|
•
|
Resulted in an event that necessitates remedial action to prevent an unreasonable risk of substantial harm to the public health.
|
2.3
|
Privacy Laws and Regulations
. Privacy Laws and Regulations shall mean, as are in effect from time to time, applicable data privacy laws, including without limitation the national and sub-national laws based on the European Union Data Protection Directive to the extent applicable to data processors, and U.S. state data breach notification and information security laws and regulations specific to the handling of Personal Information to the extent applicable to a Party or its representatives or third-party service
|
2.4
|
Personal Information
. Personal Information shall mean any information from which an individual may be identified, including without limitation an individual’s name, address, telephone number, social security number, account numbers, account balances, account histories, and “personal information,” “nonpublic personal information,” “protected health information” (and other similar information, however described) as defined in applicable Privacy Laws and Regulations and that is obtained as a result of, or in connection with, the development, marketing, or commercialization of an Amgen Product.
|
3.
|
DRUG ADVERSE EVENT AND DEVICE ADVERSE EVENT HANDLING AND EXCHANGE.
|
3.1
|
Collection of Events Generally
.
|
(i)
|
Each Party will record in writing all available information of which it becomes aware regarding each Drug AE or Device AE that it is required to exchange under this Safety Agreement and shall use reasonable efforts to obtain the following information from the person providing the Drug AE or Device Adverse Event information (the “reporter”):
|
(a)
|
confirmation that the patient was exposed to an Amgen Product and/or used the Customized Insulet Device;
|
(b)
|
the details of the Drug AE or Device AE;
|
(c)
|
the details that identify the affected Amgen Product and/or Customized Insulet Device (Product name. Part number, Lot number. Serial number, Use by date. etc.);
|
(d)
|
the contact information for the patient’s healthcare provider; and
|
(e)
|
a description of the source of the report (for example, consumer, healthcare provider, etc.).
|
(ii)
|
If the reporter is the patient’s healthcare provider, the notifying Party shall obtain the reporter’s contact information.
|
(iii)
|
Each Party will provide the other Party with such assistance as may be reasonably requested in investigating and obtaining follow-up information with respect to Drug AEs or Device AEs.
|
3.2
|
Insulet’s Obligations Regarding Reporting, Investigation, and Follow Up of Drug AEs and Device AEs
|
(i)
|
Within [*] of Insulet’s awareness of information relating to a Drug AE or Device AE, Insulet will transmit to the designated Amgen phone number on Attachment A all available information of which it is then aware regarding such event.
|
(ii)
|
If Insulet receives any other information or documents relating to a Drug AE or Device AE, within [*]
after receipt of such, Insulet shall provide such information and/or the originals of such documents to Amgen’s designated contact.
|
(iii)
|
No later than the [*]
of each calendar month during the Term of the Agreement, Insulet shall submit to Amgen a written report including the following: (1) a line listing of Drug AEs and Device Adverse Events of which Insulet is aware that occurred or of which it became aware during the previous calendar month or (2) a statement certifying that Insulet is not aware of the occurrence of any Drug AEs or Device Adverse Events during the previous calendar month. If a line listing is provided, Amgen will inform Insulet if Amgen. did not receive an AE or Device Adverse Event reflected on the line listing and within [*] after receipt of such notice, Insulet shall transmit such missing reports to Amgen.
|
3.3
|
Amgen’s Obligations Regarding Device Adverse Events
|
4.
|
PHARMACOVIGILANCE
|
5.
|
SAFETY AND REGULATORY COMMUNICATIONS
|
(i)
|
Amgen shall control all regulatory matters relating to the Amgen Products or Customized Insulet Device, including without limitation regulatory communications and filings, regulatory/safety reporting to Governmental Authorities, packaging and labeling, recalls, reimbursements and returns, and any other corrective actions related to an Amgen Product or Customized Insulet Device.
|
(ii)
|
Notwithstanding the above, if Insulet, acting in good faith, determines that a Device AE or malfunction of the Customized Insulet Device is applicable to or is reasonably likely to occur with its other drug delivery systems as designed, manufactured and marketed, then to the extent Insulet is obligated under the Medical Device Reporting (MDR) regulations, Insulet is permitted to meet its separate reporting responsibilities regarding for its other drug delivery systems, as the case may be. However, under these circumstances, the other drug delivery system would be the product listed in the MDR Report, not the Customized Insulet Device.
|
(iii)
|
Insulet shall notify Amgen within
one (1) business day
after Insulet’s receipt of any safety or regulatory communication regarding Drug AEs or Device Adverse Events from a Governmental Authority concerning an Amgen Product, Customized Insulet Device, or similar device marketed by Insulet.
|
(iv)
|
If Insulet receives notification of an impending regulatory inspection related to an Amgen Product or Customized Insulet Device. Insulet shall notify Amgen within
one (1) business day
after such notification.
|
6.
|
RISK MANAGEMENT ACTIVITIES
|
7.
|
TRAINING
|
8.
|
QUALITY MANAGEMENT SYSTEM
|
9.
|
MISCELLANEOUS
|
9.1
|
Audits
|
9.2
|
Personal Information
|
9.3
|
Language
|
[*]
|
[*]
|
[*]
|
|
[*]
|
[*]
|
[*]
|
[*]
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 4 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Kevin Schmid
|
By:
/s/ Sev Sislian
|
Date:
August 6, 2014
Name: Kevin Schmid
|
Date:
August 6, 2014
Name: Sev Sislian
|
Title: Vice President, Business Development
|
Title: GSS, Category Manager
|
Insulet Corporation
By:
/s/ Tracey Wielinski
Date:
6 August 2014
Name: Tracey Wielinski
Title:Vice President of Global Regulatory/Clinical Affairs and Quality Assurance
|
Amgen Inc.
By:
/s/ Anthony Mire-Sluis
Date:
August 6, 2014
Name: Anthony Mire-Sluis
Title:Vice President Quality
|
3.
|
CONCLUSION
|
IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effective as of the Amendment 5 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Brian Roberts
|
By:
/s/ Sev Sislian
|
Name:
Brian Roberts
|
Name:
Sev Sislian
|
Title:
Chief Financial Officer
|
Title:
GSS Category Manager
|
|
Amgen Inc.
|
|
By:
/s/ Bill Rich
|
|
Name:
Bill Rich
|
|
Title:
Vice President External Supply
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 6 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Kevin Schmid
|
By:
/s/ Sev Sislian
|
Date:
August 18, 2014
Name: Kevin Schmid
|
Date:
August 18, 2014
Name: Sev Sislian
|
Title: Vice President, Business Development
|
Title: GSS, Category Manager
|
Insulet Corporation
By:
/s/ Tracey Wielinski
Date:
18 August 2014
Name: Tracey Wielinski
Title: Vice President of RA/QA
|
Amgen Inc.
By:
/s/ Anthony Mire-Sluis
Date:
August 18, 2014
Name: Anthony Mire-Sluis
Title: Vice President Quality
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 7 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Kevin Schmid
|
By:
/s/ Sev Sislian
|
Date:
February 11, 2015
Name: Kevin Schmid
|
Date:
February 12, 2015
Name: Sev Sislian
|
Title: Vice President, Business Development
|
Title: GSS, Sr. Category Manager
|
Insulet Corporation
By:
/s/ Tracey Wielinski
Date:
10 February 2015
Name: Tracey Wielinski
Title: Vice President Regulatory,
Clinical Affairs, and Quality Assurance
|
Amgen Inc.
By:
/s/ Troy Wright
Date:
12 February 2015
Name: Troy Wright
Title: Director, Quality Assurance,
Contract Manufacturing Quality
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 8 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Daniel Levangie
|
By:
/s/ Sev Sislian
|
Date:
June 23, 2015
Name: Daniel Levangie
|
Date:
June 24, 2015
Name: Sev Sislian
|
Title: President, Drug Delivery
|
Title: GSS, Sr. Category Manager
|
Insulet Corporation
By:
/s/ Brian Keogh
Date:
23 June 2015
Name: Brian Keogh
Title: Director, Quality Assurance
|
Amgen Inc.
By:
/s/ Troy Wright
Date:
23 June 2015
Name: Troy Wright
Title: Director, Quality Assurance
|
[*]
|
Aggregate Number of Customized Insulet Devices Ordered by Amgen
|
With respect to each [*], Unit Price for each Customized Insulet Device Shipped to Amgen
|
“(a)
|
Insulet shall submit invoices to Amgen on a [*] basis for amounts payable by Amgen hereunder (i) pursuant to Section 3.1, Section 3.4, and Section 3.5 for [*] and (ii) testing as provided in Section 12.1. Insulet will endeavor to submit such invoices promptly following the [*]. Invoices will be submitted in electronic format to the following electronic address (which addresses may be changed, from time-to-time, by Amgen upon prior notice to Insulet): email address:
AccountsPayableMailroom@Amgen.com
.”
|
3.
|
CONCLUSION
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 9 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Dan Levangie
|
By:
/s/ Sev Sislian
|
Date:
June 29, 2015
Name: Dan Levangie
|
Date:
July 6, 2015
Name: Sev Sislian
|
Title: President, Drug Delivery
|
Title: GSS, Sr. Category Manager
|
Insulet Corporation
By:
/s/ Brian Keogh
Date:
29 June 2015
Name: Brian Keogh
Title: Director, Quality Assurance
|
Amgen Inc.
By:
/s/ Chris Kozlik
Date:
July 6, 2015
Name: Chris Kozlik
Title: Director, External Supply Chain
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 10 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Dan Levangie
|
By:
/s/ Sev Sislian
|
Date:
10/1/15
Name: Dan Levangie
|
Date:
10/1/15
Name: Sev Sislian
|
Title: President, Drug Delivery
|
Title: GSS, Sr. Category Manager
|
|
Amgen Inc.
By:
/s/ Patricia Turney
Date:
10/1/15
Name: Patricia Turney
Title: Executive Director, Supply Chain
Amgen Inc.
By:
/s/ Bill Rich
Date:
1 October 2015
Name: Bill Rich
Title: VP, Device Technologies
|
|
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 11 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Daniel Levangie
|
By:
/s/ Sev Sislian
|
Date:
May 3, 2016
Name: Daniel Levangie
|
Date:
May 3, 2016
Name: Sev Sislian
|
Title: President, Drug Delivery
|
Title: GSS, Sr. Manager - Devices
|
Insulet Corporation
By:
/s/ Michael Spears
Date:
May 3, 2016
Name: Michael Spears
Title: Vice President, Quality, Regulatory
and Clinical affairs
|
Amgen Inc.
By:
/s/ Troy Wright
Date:
3 May 2016
Name: Troy Wright
Title: Site Head, Contract Manufacturing Quality
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 12 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Michael Graffeo
|
By:
|
Date:
9/1/16
Michael Graffeo Vice President Business Development Drug Delivery
for
Daniel Levangie
|
Date:
Name: Sev Sislian
Title: GSS, Sr. Manager - Devices
|
Title: President, Drug Delivery
|
|
Insulet Corporation
By:
/s/ Michael Spears
Date:
9/1/16
Name: Michael Spears
Title: Vice President, Quality, Regulatory and Clinical Affairs
|
Amgen Inc.
By:
Date:
Name: David Blake
Title: Sr. Manager, Contract Manufacturing Quality
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 13 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Shacey Petrovic
|
By:
/s/ Venkata P. Yepuri
|
Date:
12/21/16
Name: Shacey Petrovic
|
Date:
12/20/16
Name: Venkata P. Yepuri
|
Title: President and Chief Operating
Officer
|
Title: Executive Director/
Head of Global Strategic Sourcing
|
|
Amgen Inc.
By:
/s/ Patricia Turney
Date:
12/20/16
Name: Patricia Turney
Title: Vice President, External Supply
|
1.
|
DEFINITIONS
|
IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreement effective as of the Amendment 14 Effective Date.
|
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Michael Graffeo
|
By:
/s/ Sev Sislian
|
Date:
3 February 2017
Name:
Michael Graffeo
|
Date:
1/30/17
Name: Sev Sislian
|
Title:
VP Business Development
|
Title: GSS, Sr. Manager - Devices
|
Insulet Corporation
|
Amgen Inc.
|
By:
/s/ Michael Supczak
|
By:
/s/ David Blake
|
Date:
1/20/17
|
Date:
1/23/17
|
Name: Michael Supczak
|
Name: David Blake
|
Title: Sr. Director, Quality Assurance
|
Title: Sr. Manager Quality Systems,
|
|
Contract Manufacturing Quality
|
1.
|
PURPOSE
|
2.
|
SCOPE AND DELIVERABLES
|
2.1.
|
This Quality Agreement defines the high level Quality System requirements and related deliverables applicable to the Manufacture of Customized Insulet Devices ordered by Amgen pursuant to the Supply Agreement.
|
2.2.
|
On or before [*] after the effective date of this Quality Agreement, Insulet will submit to Amgen for Amgen’s review (and Insulet will consider in good faith and revise the draft plan based on Amgen’s review) and approval (such approval not to be unreasonably withheld) a Quality Plan that will be a controlled document defining the Quality System Requirements set-forth in this Quality Agreement and the details of how Insulet will fulfill these requirements. This will be done in the form of references to the procedures, documents and other controls in place to ensure the requirements are consistently met. Insulet will comply with the Quality Plan approved of by Amgen.
|
3.
|
REGULATORY
|
3.1.
|
Compliance:
Insulet will Manufacture for Amgen Customized Insulet Devices under requirements of, and in compliance with, the following applicable to the Manufacture and supply of Customized Insulet Device (collectively, “Quality System”):
|
3.1.1.
|
FDA, Quality System Regulation, Title 21 Code of Federal Regulations Part 820 (21 CFR §820),
|
3.1.2.
|
ISO 13485: 2003, Medical Devices - Quality Management System, and
|
3.1.3.
|
ISO 14971: 2012, Medical Devices - Application of risk management to medical devices.
|
3.2.
|
Compliance Audits
: Insulet shall allow Amgen's Regulatory Authorities and/or Notified Body to perform an announced/unannounced Quality Systems audit periodically (annually or as necessary). A Regulatory Authority or Notified Body shall be permitted to audit Insulet's suppliers on behalf of Amgen (accompanied by Insulet), and Insulet shall endeavor to secure such right from Insulet's suppliers, as related to the Customized Insulet Device, and Amgen's Regulatory Authority and Notified Body will follow the requirements set forth in this section with respect to the conduct of audits. With respect to an announced audit, Amgen's Regulatory Authority and Notified Body shall notify Insulet a minimum of [*] calendar days prior written notice of routine audits. In addition, Amgen may, after notifying Insulet, perform audits of Insulet’s compliance with the Quality System Requirements, and to assess the effectiveness of its quality system. Insulet will have an internal audit program to monitor compliance with the Quality System.
|
3.3.
|
Amgen observation right during Insulet’s audit of its suppliers:
|
3.3.1.
|
Amgen has the right to be present as an observer during Insulet’s audits of the [*] and Insulet’s sterilization supplier and testing Laboratory as outlined in section 11.1.
|
3.3.2.
|
Insulet has sole audit authorship rights of the [*] and Insulet’s sterilization suppliers and testing laboratory (section 11.1).
|
3.3.3.
|
Insulet will submit Audit Summary Report to Amgen within [*] after the last day of each audit.
|
3.3.4.
|
Insulet determines audit frequency as defined in the quality agreement between Insulet and their suppliers (section 11.1)
|
3.4.
|
Audit Notices
: Any compliance audit by Amgen of Insulet will be conducted during normal business hours after reasonable notice (typically [*] for planned audits) to Insulet and no more frequently than [*].
|
3.5.
|
Event (For-Cause) Audit
. In addition to other audits set forth in this Quality Agreement or the Supply Agreement, during the Supply Term, Insulet shall permit Amgen to conduct audits of Insulet upon the occurrence of an Event Audit Circumstance (as defined below) upon reasonable (given the nature of the Event Audit Circumstance) prior notice to Insulet and during the Insulet’s normal business hours. Each of the following is an Event Audit Circumstance that may trigger a For-Cause audit:
|
3.5.1.
|
Receipt of a Warning Letter or any other regulatory agency action from the FDA or other Governmental Authority;
|
3.5.2.
|
Recall or market withdrawal of Customized Insulet Device;
|
3.5.3.
|
Receipt of an unmitigated, unacceptable trending of complaints (i.e. Severity A and B) as reviewed in the Quarterly Business Review meeting;
|
3.5.4.
|
Existence of unmitigated, unacceptable data trends with respect to the manufacturing lot qualification testing, packaging, labeling, sterilization, or rejection of finished goods of Customized Insulet Device.
|
3.6.
|
For-Cause Audit Notices:
Any For-Cause audit by Amgen of Insulet will be conducted during normal business hours after [*].
|
3.7.
|
Audit Follow-up
: Any out of compliance observations noted during compliance and for-cause audits will be addressed per Insulet’s Corrective and Preventive Action system. Insulet will provide Amgen with a corrective action plan that addresses the compliance observation and a schedule for implementation of the corrective action(s) (which schedule shall reflect implementation of corrective actions within [*] time period, but in no event longer than required by applicable law).
|
3.8.
|
Facility Registration:
Insulet is responsible to maintain the U.S. FDA Establishment Registration for its facility(ies) such that it is up to date and readily available for FDA inspection. Additionally, Insulet will maintain ISO 13485:2003 certification.
|
3.9.
|
Agency Inspections:
Insulet will notify Amgen of inspection notifications and inspection results that may involve or impact Customized Insulet Devices. Insulet will provide Amgen copies of inspection reports that it receives from any regulatory agency or any notice of any claim or action by any agency relating to non-compliance with any applicable laws, rules or regulations that may affect Customized Insulet Devices or the Manufacture thereof. Except to the extent as it may be required by law, Insulet will not communicate directly with any regulatory agency (including FDA) regarding the Customized Insulet Device, except through or with the explicit review and approval of Amgen. To the extent relevant to the Manufacture or supply of Customized Insulet Devices, Insulet may require Amgen representatives to be present during any Third Party audit of Insulet products or processes. Amgen has the right to have representatives' present during an inspection by Regulatory Authorities or a Notified Body that relates to the Customized Insulet Device.
|
3.10.
|
Support during audits by Regulatory Authorities or a Notified Body at Amgen: In the event that Amgen is involved in such inspection, e.g. a Pre-Approval Inspection (PAI), Insulet shall make reasonable effort to support Amgen questioning by providing a team to respond to questions pertaining to Customized Insulet Device or common platform technology, services or QMS. Amgen shall request the information electronically or by phone. Insulet will make documents, including those considered Confidential Information of Insulet and information from its suppliers, available to review to representatives of Regulatory Authorities or a Notified Body within twenty four (24) hours after request, or as expeditiously as possible, during inspection/registration audits of Amgen.
|
4.
|
QUALITY SYSTEM
|
4.1.
|
Insulet will establish and maintain a documented quality system in compliance with 21 CFR §820 and ISO 13485:2003. Insulet will have written procedures for the control of changes to the materials, packaging
|
4.2.
|
Change Notification and Approval
|
4.2.1.
|
Insulet to:
|
i.
|
Notify Amgen of all changes related to the Manufacture, testing, packaging, labeling and shipping of Customized Insulet Devices including without limitation changes to components, suppliers, specifications, risk management documents, procedures, and CoC (collectively, “Controlled Change”) prior to implementation of each such change
|
4.2.2.
|
Amgen to:
|
i.
|
Review and approve, such approval not to be unreasonably withheld, each Controlled Change with respect to the Manufacture of the Customized Insulet Device.
|
ii.
|
Prior to each Customized Insulet Device production run, ensure all Controlled Changes have been approved in Amgen system.
|
4.3.
|
Insulet shall ensure the execution of the [*] sterilization validation of the device in accordance with applicable international regulatory requirements and internal procedures. In addition, Insulet shall perform an annual requalification, reassessment and verification of the same.
|
4.4.
|
Lot Release Procedures are attached hereto as Appendix B.
|
4.5.
|
Insulet will notify Amgen within [*] when a non-conformance or deviation beyond the established Quality Control Plan has been identified that may affect Manufacturing or supply of Customized Insulet Devices.
|
4.6.
|
Insulet will be responsible for supplying Amgen with quality reports. The content and frequency will be defined in the Quality Plan applicable to the Customized Insulet Device.
|
4.6
|
Insulet will have procedures in place to ensure data with respect to Customized Insulet Devices is complete and accurate; that it can be traced to its source and that it is readily available during regulatory inspections.
|
4.7
|
Insulet will notify Amgen of any incompleteness or inaccuracies related to data with respect to Customized Insulet Devices which may impact the quality or the safety of any of the Amgen product, as soon as possible, but not to exceed [*] after becoming aware such information.
|
5.
|
MANAGEMENT RESPONSIBILITY
|
5.1.
|
Executive Management at Insulet is responsible for quality planning and assures that resources are dedicated to achieve quality objectives, and manufacture and provide Customized Insulet Devices that meet Specifications approved by Amgen.
|
5.2.
|
Insulet and Amgen will conduct Quality and Compliance Reviews regarding the Manufacture of Customized Insulet Devices. The reviews will include: CAPA, product complaints, critical manufacturing data and yield trending, nonconformance reports (NCRs) and deviations, EO test trends, external audit reports as they pertain to Manufacture of Customized Insulet Devices, and status of previous open actions and other quality and compliance related topics. Unless otherwise agreed by Amgen, the Parties will complete one review per calendar quarter during the Term after the commencement of 1
st
commercial build of Customized Insulet Device.
|
6.
|
QUALITY AUDIT
|
6.1.
|
Insulet will establish and maintain procedures for internal quality audits and audit of their CMOs and conduct such audits to assure that the quality system is in compliance with the established quality system requirements and to determine the effectiveness of the Quality System.
|
7.
|
DESIGN CONTROLS
|
7.1.
|
Design Controls are the responsibility of Insulet and will follow and be consistent with established Insulet procedures. Insulet has the responsibility for the control, approval and issuance including but not limited to the following:
|
7.1.1.
|
Material Specifications
|
7.1.2.
|
Process Requirements
|
7.1.3.
|
Parts Specifications
|
7.1.4.
|
Finished Goods Specifications
|
7.1.5.
|
Packaging Component Specifications
|
7.1.6.
|
Label Specifications
|
7.2.
|
Amgen is responsible for design control for the combination product (that is, the System) including combination product design verification, design validation, human factors and drug-device interaction testing.
|
7.3.
|
Insulet shall ensure that all design control requirements have been met prior to the first shipment of Customized Insulet Device for human use. The interface between the groups and roles and responsibilities of each Party with respect to each phase of design controls is set forth in Appendix C.
|
7.4.
|
Control of changes to the Customized Insulet Device and components thereof will follow requirements set forth in Section 4.2.
|
8.
|
DOCUMENT CONTROL
|
8.1.
|
Insulet shall maintain document control procedures as defined in the Supply Agreement and in compliance with 21 CFR 820.40 and ISO 13485. Insulet shall make this documentation available for review by Amgen during quality systems audits and upon request. Insulet shall make the Design History File (DHF), Device Master Record (DMR), Device History Record (DHR) and Insulet's other related quality systems records that are relevant to the Customized Insulet Device accessible to Amgen upon reasonable request and in support of all Regulatory Authority inspections. Insulet will work with Amgen to make these documents available through agreed upon measures, such as electronic systems or through review. The provisions of the Supply Agreement regarding Confidential Information apply to this Quality Agreement and interactions between the Parties with respect hereto.
|
8.2.
|
Insulet will maintain documents in compliance with 21 CFR 820.180 and MDD 93/42/EEC for the time equivalent to design and expected life of the Customized Insulet Device but no less than five (5) years from the date of release for commercial distribution by Insulet. Insulet will notify Amgen prior to the end of the document retention period and the scheduled destruction of any contents of the DHF, DMR or DHR.
|
9.
|
RISK MANAGEMENT
|
9.1.
|
With respect to the Services, Insulet shall develop and comply with a risk management system that is compliant with ISO 14971 and all other product applicable standards to risk management. Insulet and Amgen shall fulfill the deliverables listed in the Risk Management Deliverables Table below.
|
9.2.
|
Insulet shall have provisions for Amgen to audit Insulet's risk management procedures and documents. Insulet shall have risk deliverables listed in the table below reviewed and approved by Amgen.
|
DELIVERABLE
|
PRIMARY RESPONSIBILITY
|
COMMENTS OR RATIONALE
|
Risk
Management
File
|
Amgen
|
Amgen will establish and maintain a Risk Management File per its internal procedures and ISO 14971.
Insulet shall provide required information for Amgen risk management file (e.g. risk document titles and identifiers).
|
Risk
Management
Plan
|
Insulet and Amgen
|
Amgen will create and maintain Risk Management Plan per internal procedures and ISO 14971.
Insulet will create a risk management plan to describe risk activities, and how overall risk will be evaluated.
|
Risk Assessments
|
Insulet and Amgen
|
Insulet will perform risk assessments per internal procedures. Amgen will conduct use and system risk assessments per internal SOP and ISO 14971.
|
Risk Management Report
|
Insulet and Amgen
|
The results of Insulet assessments will be documented in a Risk Management Report per internal procedures and ISO 14971.
Amgen will generate and maintain a Risk Management Report per internal procedures and ISO 14971 which includes a summary of risks identified by Insulet and Amgen.
|
10.
|
INSPECTION, MEASURING, TESTING
|
10.1.
|
Insulet shall assure that that measuring and test equipment is appropriate for its intended use and periodically serviced and/or calibrated in compliance with written procedures for such. Insulet shall be responsible for test method and equipment validation(s) as required by Insulet's approved procedures.
|
11.
|
PURCHASING CONTROL
|
11.1.
|
Insulet is responsible for the qualification of materials and the approval of new or alternate sub-tier suppliers for the Manufacture of Customized Insulet Device. The following suppliers will not be changed without prior written approval from Amgen:
|
Subcontractor Name
|
Location
|
Product/Service
|
11.2.
|
All fluid path components coming into contact with the Amgen Product will be manufactured [*]. Assembly of the fluid path components, sub-assemblies, and the entire Customized Insulet Device, including all packaging, will be performed [*]. Fluid path components are defined in the following table:
|
Part Number
|
Part Description
|
Approved Supplier
|
Mfg. Country
|
Material Description
|
12.
|
IDENTIFICATION AND TRACEABILITY
|
12.1.
|
Insulet will maintain a system to assure proper identification and acceptance status of material, components and Customized Insulet Devices throughout the manufacturing cycle and records to allow for traceability of materials and components used in each lot of Customized Insult Devices.
|
13.
|
PRODUCTION AND PROCESS CONTROLS
|
13.1.
|
Insulet will maintain written procedures for production and process control of the Customized Insulet Device. Insulet will sterilize the Customized Insulet Device in accordance with the Insulet Product Definition Document INSPR020-PDD, Amgen Delivery Device ADD specifications. Sterilization results will be provided on the Certificate of Conformance.
|
13.2.
|
Amgen will notify Insulet of any requested changes to the Specifications or Manufacturing of the Customized Insulet Device including without limitation changes required by Applicable Law or Government Authority and changes to the following:
|
•
|
Item #1 - Design Requirement Document;
|
•
|
Item #2 - Subsystem components (e.g., hardware, electrical, mechanical and software);
|
•
|
Item #3 - Manufacturing improvement (e.g., procedures, in line testing and equipment);
|
•
|
Item #4 - Lot qualification procedures;
|
•
|
Item #5 - Risk documents;
|
•
|
Item #6 - Shipping process and condition; and
|
•
|
Item #7 - Materials (e.g., packaging component and label artwork).
|
14.
|
ACCEPTANCE ACTIVITIES
|
14.1.
|
For each lot of Customized Insulet Devices, Insulet shall require [*] to conduct identification, sampling and testing in accordance with the Lot Release Procedures in Appendix B. A lot of Customized Insulet Devices Manufactured by [*] that, based on the performance of and results from the Lot Release Procedures and comparison to release criteria set forth in the Lot Release Procedures in Appendix B, is appropriate for release by [*] (each an “In-Process Conforming Lot”). In-Process Conforming Lots will proceed to sterilization in accordance with the Sterilization/[*] Procedures. For each In-Process Conforming Lot that completes the Sterilization/[*] Procedures, and is shipped to Insulet, Insulet will perform lot qualification testing per Lot release procedure in Appendix B. The lot passes acceptance criteria and Insulet release requirement will become Conforming Lot, and prior to ship to Amgen, Insulet will provide to Amgen electronic versions of the DHRs (Device History Record) and a Certificate of Conformance that will contain the following information:
|
14.1.10
|
[*]; and
|
14.2.
|
Amgen maintains final acceptance responsibility for all Customized Insulet Devices Shipped to Amgen. Amgen may reject any lot of Customized Insulet Devices (a) that is not associated with a valid Certificate of Conformance, (b) that, upon examination, is not in a condition consistent with the Certificate of Conformance, provided that any such deviation from the Certificate of Conformance does not arise after Shipping, or (c) that does not meet the warranties set forth in the Supply Agreement. Amgen shall notify Insulet by giving written notice of rejection to Insulet within [*] after the receipt of final documentation from Insulet as outlined in section 13.2. If Amgen determines in good faith that it is reasonably likely that Amgen will reject Customized Insulet Devices, Amgen will provide verbal notification of such to Insulet within [*] after each such determination. Any disputes concerning Amgen’s rejection of a lot of Customized Insulet Devices will be resolved in accordance with Section 10 of the Supply Agreement.
|
15.
|
SHIPPING REQUIREMENTS
|
15.1.
|
Shipping environmental condition from [*] facility to Insulet shall be:
|
16.
|
NON-CONFORMING CUSTOMIZED INSULET DEVICES
|
16.1.
|
During the [*] Production Run Period, Amgen quality will disposition lots that are not Conforming Lots, or portions thereof, by directing Insulet in writing that such lots, or portions thereof, be disposed of or that such Lots, or portions thereof, be delivered to Amgen without further processing.
|
17.
|
CORRECTIVE AND PREVENTIVE ACTION
|
17.1.
|
Insulet will establish and maintain a corrective and preventive action (CAPA) program in accordance and compliance with applicable requirements of Regulatory Authorities.
|
17.2.
|
Trending and analysis of all non-conformances will be performed by Insulet to verify the effectiveness of corrective and/or preventive actions and such trending and analyses will be reviewed with Amgen during the quarterly Quality and Compliance Review.
|
17.3.
|
After each Non-Conforming Lot and after completing the obligations set forth in Section 16.1 and 16.2 of the Quality Agreement, Insulet and Amgen (through its [*]) shall mutually agree on corrective action to resolve the cause of Non-Conformance, prior to conducting another production run.
|
18.
|
[*]
|
18.1.
|
[*]
|
18.2.
|
[*]
|
18.3.
|
[*]
|
18.4.
|
[*]
|
19.
|
QUALITY SYSTEM RECORD
|
19.1.
|
Insulet will prepare and maintain Quality System Records. Quality System Records include or refer to the location of non-Customized Insulet Devices specific quality system procedures.
|
20.
|
RETAIN SAMPLE
|
20.1.
|
Insulet shall receive and store certain amount of Customized Insulet device as “Retention Sample” per Insulet procedure. Insulet and Amgen shall agree on the required number of retains to support the Customized Insulet Device. If additional samples are required, above and beyond what has been agreed upon, Amgen should be notified and have the opportunity to authorize. Any additional samples taken as retains, above and beyond, should be destroyed at the time the batch is released by Amgen.
|
21.
|
RECALL/WITHDRAWALS/FIELD SAFETY CORRECTIVE ACTION
|
21.1.
|
Insulet shall notify Amgen within one (1) business day after there is an actual recall or correction/removal or Field Safety Corrective Action (FSCA) related to the Insulet Device that could affect the Customized Insulet Device. Insulet will follow its established procedures for determining the scope of the potential problem and actions necessary.
|
21.2.
|
Insulet will notify Amgen within one (1) business day after it determines that an issue with the Customized Insulet Device could require a recall or correction/removal or Field Safety Corrective Action (FSCA) from the market. Amgen will then determine whether the Customized Insulet Device should be the subject of a recall, correction or removal from the market.
|
21.3.
|
In the event Amgen determines that any problem identified as reasonably likely to require a recall or correction/removal or Field Safety Corrective Action (FSCA) from the market related to the released Customized Insulet Devices, Amgen will notify Insulet of such within one (1) business day after such determination and follow its established procedures for determining the scope of the potential problem and any actions necessary.
|
21.4.
|
When potential recall/withdrawal/Field Safety Corrective Action (FSCA) issue is identified by Amgen and communicated to Insulet by Amgen, Insulet shall immediately perform investigations regarding and related to the issue. Insulet shall submit to Amgen investigation reports regarding the defect, issue or cause for such regulatory reporting within an appropriate timeframe dependent on regulatory reporting requirements. Amgen shall have the final decision for a voluntary product recall or correction/removal as it relates to the Customized Insulet Device.
|
22.
|
ANNUAL PRODUCT QUALITY REVIEW
|
23.
|
CONFIDENTIALITY
|
24.
|
JOINT QUALITY COMMITTEE
|
a)
|
Formation
. The Joint Quality Committee (“JQC”) shall be comprised of two (2) members from each Party, which members shall initially be the persons set forth in the following. Amgen and Insulet shall designate one of its members to act as chairperson of the JQC. As of the Effective Date, the members of the JQC are the following or the designee:
|
b)
|
Responsibilities
. The JQC shall have overall responsibility for managing, directing and overseeing the Quality Agreement and compliance with such including, but not limited to, the following: (1) establishing specific requirements for, and implementing the general concepts of, the Quality Agreement; and (2) monitoring and coordinating communication regarding the Parties’ efforts under the Quality Agreement. The JQC shall not have any power to amend, modify or waive compliance with the terms of the Quality Agreement or Supply Agreement.
|
c)
|
Meetings
. During the Term, the JQC will meet (telephonically or in person) at times as reasonably requested by a Party.
|
25.
|
DECISION MAKING
. The Parties recognize that a bona fide dispute as to certain matters related to a Party’s rights or remedies under this Quality Agreement may arise from time to time. In the event of the occurrence of such a dispute, the JQC shall undertake good faith efforts to resolve any such dispute in good faith. In the event the JQC shall be unable to resolve any such dispute, by written notice to the other Party, a Party may, but shall not be obligated to, escalate such dispute pursuant to Section 10 of the Supply Agreement.
|
a)
|
Amgen shall notify Insulet of each Product Complaint of which Amgen becomes Aware, even if the information known to Amgen is incomplete. With respect to a Product Complaint,
“Aware”
means if: (1) any employee of Amgen has acquired information that reasonably suggests a Product Complaint has occurred; or (2) any of Amgen’s employees (A) who have management or supervisory responsibilities over persons with regulatory, scientific, or technical responsibilities or (B) whose responsibilities include the collection and reporting of Product Complaints, becomes aware from any information that a Product Complaint may have occurred.
|
b)
|
Amgen shall provide to Insulet all information relating to Product Complaints received by Amgen from any source, including patients and healthcare providers.
|
c)
|
Amgen will, within [*], report to Insulet all information available to Amgen regarding each Product Complaint and shall use reasonable efforts to obtain the following information from the person providing the Product Complaint information (the “reporter”):
|
◦
|
confirmation that the patient was exposed to an Amgen Product and/or used the Customized Insulet Device;
|
◦
|
the details of the Product Complaint; and
|
◦
|
the contact information for the reporter.
|
d)
|
On or before the [*] day
of each calendar month, Insulet shall notify Amgen whether there were Product Complaints related to common platform technology (Insulet Device) that could impact, or are applicable to, the Customized Insulet Device. With respect to such Product Complaints, Insulet shall provide tracking and trending data, the content of which shall be mutually agreed upon between the Parties.
|
a)
|
Within
One (1) Business Day
after Amgen becoming Aware of a Product Complaint and information relating thereto, Amgen will transmit all available information of which it is then aware regarding such Product Complaint to Insulet via established communication process. Receipt of information will be confirmed by Insulet within
two (2) Business Days
. Insulet will conduct investigations per Insulet standard process timelines. The Complaint Handling Process Flow is attached as Exhibit 2 and applies hereto.
|
b)
|
If a Party receives additional information or documents relating to a previously reported Product Complaint, such Party shall provide such information and/or the originals of such documents to the other Party’s designated contact within
two (2) business days
after receipt. Examples of such additional information include without limitation the following:
|
◦
|
Confirmed device failure; and
|
◦
|
Identification of potential product security issues.
|
c)
|
Within two (2) Business Days of receipt of a Product Complaint from Amgen; Insulet will notify Amgen to conduct a regulatory reportability assessment for the following symptom code:
|
d)
|
Insulet is responsible for conducting thorough investigations of Product Complaints, in alignment with agreed upon processes including those related to the authenticity, operation, functionality and performance of the Customized Insulet Device. The investigation shall be performed and documented in a written report which identifies the underlying cause if possible based on available information, and Corrective Actions, if required, necessary to correct the identified cause, including justification for such conclusions. The report shall include a visual inspection of the Product Complaint Sample, if there is a Product Complaint Sample or where applicable, to confirm the authenticity of the device that is the subject of the Product Complaint as a Customized Insulet Device.
|
e)
|
Upon Amgen’s request, an investigational report shall be provided by Insulet to Amgen with respect to a Product Complaint.
|
f)
|
All Product Complaint samples will be returned to Insulet for investigation or destruction as outlined in the Insulet complaint handling procedure as applicable to Customized Insulet Device
|
a.
|
Amgen will provide Return Material kits to complainants for return of the Product Complaint Sample directly to Insulet.
|
b.
|
Amgen will initiate return sample follow up activities if receipt of the return sample exceeds
seven (7) Business Days.
|
g)
|
Each Party will provide the other Party with such assistance as may be reasonably requested in investigating and obtaining follow-up information with respect to Product Complaints.
|
h)
|
No later than the
fifteenth (15
th
) day
of each calendar month during the term of the Agreement, Amgen shall submit to Insulet a written report including the following: (1) a line listing of Product Complaints of which Amgen is Aware that occurred or of which it became Aware during the previous calendar month or (2) a statement certifying that Amgen is not Aware of the occurrence of any Product Complaints during the previous calendar month. If a line listing of Product Complaints is provided, Insulet will inform Amgen to the extent that Insulet did not receive any Product Complaint reflected on the line listing and within
two (2) Business Days
after receipt of such notice, Amgen shall transmit such missing reports to Insulet.
|
i)
|
No later than the
fifteenth (15
th
) day
of each calendar month during the Term of the Supply Agreement, Insulet shall submit to Amgen the following for the previous calendar month:
|
◦
|
Rolling 24 months complaint rate per symptom code
|
◦
|
All trend investigations (Including similar devices)
|
◦
|
All device failures, including applicable failures with similar devices
|
◦
|
Open CAPAs and CAPA effectiveness verification for identified complaint codes
|
◦
|
Adherence to cycle time (on-time closure)
|
j)
|
Contact information may be updated by each Party as necessary by prior written notice to the other Party all without the need to formally amend this Quality Agreement.
|
|
|
|
Name of Entity
|
|
State/Country of Organization
|
Sub-Q Solutions, Inc.
|
|
Delaware
|
Insulet MA Securities Corporation
|
|
Massachusetts
|
Insulet Singapore Private Limited
|
|
Singapore
|
Insulet Canada Corporation
|
|
Canada
|
Insulet Consulting (Shenzhen) Co., Ltd.
|
|
China
|
1.
|
I have reviewed this Annual Report on Form 10-K of Insulet Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
/s/ Patrick J. Sullivan
|
|
|
Patrick J. Sullivan
|
|
|
Chief Executive Officer
|
|
|
|
|
|
Date:
|
February 27, 2017
|
1.
|
I have reviewed this Annual Report on Form 10-K of Insulet Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
/s/ Michael L. Levitz
|
|
|
Michael L. Levitz
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
February 27, 2017
|
|
|
|
/s/ Patrick J. Sullivan
|
|
|
Patrick J. Sullivan
|
|
|
Chief Executive Officer
|
|
|
|
|
|
Date:
|
February 27, 2017
|
|
|
|
|
/s/ Michael L. Levitz
|
|
|
Michael L. Levitz
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
February 27, 2017
|