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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 transition period from __________ to __________
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Delaware
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88-0488686
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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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11388 Sorrento Valley Road,
San Diego, California
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92121
(Zip Code)
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(Address of principal executive offices)
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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
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The NASDAQ Stock Market, LLC
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Large accelerated filer
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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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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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Item 1.
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Business
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•
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Focus on our oncology pipeline. We are currently developing PEGPH20, our investigational new drug candidate, in multiple different tumors that accumulate high levels of HA. PEGPH20 is in Phase 2 and Phase 3 development in stage IV PDA, in Phase 1b development in non-small cell lung cancer and gastric cancer and in Phase 1b/2 development in patients treated with up to two lines of prior therapy for HER2-negative metastatic breast cancer. Over time, it is our goal to study additional types of cancer and to advance this program toward regulatory approval and commercial launch. In addition, we have two novel oncology preclinical assets.
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•
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Focus on our ENHANZE platform. We currently have six collaborations with three current product approvals and additional product candidates in development. We intend to work with our existing collaborators to expand our collaborations to add new targets and product candidates under the terms of the operative agreements. In addition, we will continue our efforts to enter into new collaborations to further exploit and derive additional value from our proprietary technology.
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•
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The primary endpoint of PFS in the efficacy evaluable population (total of 231 patients) was met with statistical significance with a median PFS of 6.0 months in the PAG arm compared to 5.3 months in the AG arm, hazard ratio (HR) with a 95% confidence interval (CI): 0.73 (0.53, 1.00); p=0.048;
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•
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The secondary endpoint of PFS in the HA-High intent to treat population (total of 84 HA-High patients) was met with
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•
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The exploratory analysis of median OS was 11.5 months vs. 8.5 months in the PAG vs. AG arms, respectively. Factors potentially having an impact on these results include less aggressive disease among patients in the AG arm within the Stage 1 patient population, and 9 of the 24 patients in the PAG arm (approximately 40 percent) discontinued PEGPH20 treatment at the time of the clinical hold, resulting in many patients receiving AG alone in both arms.
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Median PFS was 8.6 months in the PAG arm compared to 4.5 months in the AG arm, hazard ratio of 0.63 (95% CI: 0.21, 1.93);
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Median overall survival (OS) was 11.7 months in the PAG arm compared to 7.8 months in the AG arm, hazard ratio of 0.52 (95% CI: 0.22, 1.23);
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The primary safety endpoint of decreasing the rate of TE events in Stage 2 was also met with the rate of TE events reducing from 43 percent to 10 percent in the PAG arm and from 25 percent to 6 percent in the AG arm, following a protocol amendment that excluded patients at high risk of TE events and with the introduction of prophylaxis with low molecular weight heparin (enoxaparin) in Stage 2 of the study with the current 1mg/kg/day dose of enoxaparin prophylaxis given in both treatment arms of the study.
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Magnitude of the PFS treatment effect observed;
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Toxicity profile; and
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Interim OS data.
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animal pharmacology studies to obtain preliminary information on the safety and efficacy of a drug; or
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•
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laboratory and preclinical evaluation
in vitro
and
in vivo
including extensive toxicology studies.
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Phase 1 investigations are generally conducted in healthy subjects (in certain instances, Phase 1 studies that determine the maximum tolerated dose and initial safety of the product candidate are performed in patients with the disease);
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Phase 2 studies are conducted in limited numbers of subjects with the disease or condition to be treated and are aimed at determining the most effective dose and schedule of administration, evaluating both safety and whether the product demonstrates therapeutic effectiveness against the disease; and
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Phase 3 studies involve large, well-controlled investigations in diseased subjects and are aimed at verifying the safety and effectiveness of the drug.
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Item 1A.
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Risk Factors
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•
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clinical results may not meet prescribed endpoints for the studies or otherwise provide sufficient data to support the efficacy of our product candidates;
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•
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clinical and nonclinical test results may reveal side effects, adverse events or unexpected safety issues associated with the use of our product candidates; for example, in April 2014, a clinical hold was placed on patient enrollment and dosing of PEGPH20 in Study 202 as a result of a possible difference in the TE event rate that had been observed at that time in the trial between the group of patients treated with PEGPH20 versus the group of patients treated without PEGPH20. The clinical hold was lifted by the FDA in June 2014, and we have completed enrollment and continue to monitor ongoing patients who remain either on treatment or in follow-up on Study 202 under a revised clinical protocol;
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•
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completion of clinical trials may be delayed for a variety of reasons including the amount of time it may take to identify and enroll patients with high levels of HA in our target population, and the ability to procure drug supply required in clinical trial protocols;
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regulatory review may not find a product candidate safe or effective enough to merit either continued testing or final approval;
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regulatory review may not find that the data from preclinical testing and clinical trials justifies approval;
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regulatory authorities may require that we change our studies or conduct additional studies which may significantly delay or make continued pursuit of approval commercially unattractive;
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•
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a regulatory agency may reject our trial data or disagree with our interpretations of either clinical trial data or applicable regulations;
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a regulatory agency may approve only a narrow use of our product or may require additional safety monitoring and reporting through Risk Evaluation and Mitigation Strategies or conditions to assure safe use programs;
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the cost of clinical trials required for product approval may be greater than what we originally anticipate, and we may decide to not pursue regulatory approval for such a product;
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a regulatory agency may not approve our manufacturing processes or facilities, or the processes or facilities of our collaborators, our contract manufacturers or our raw material suppliers;
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a regulatory agency may identify problems or other deficiencies in our existing manufacturing processes or facilities, or the existing processes or facilities of our collaborators, our contract manufacturers or our raw material suppliers;
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a regulatory agency may change its formal or informal approval requirements and policies, act contrary to previous guidance, adopt new regulations or raise new issues or concerns late in the approval process; or
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a product candidate may be approved only for indications that are narrow or under conditions that place the product at a competitive disadvantage, which may limit the sales and marketing activities for such product candidate or otherwise adversely impact the commercial potential of a product.
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restrictions on our products or manufacturing processes;
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warning letters;
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withdrawal of the products from the market;
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•
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voluntary or mandatory recall;
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•
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fines;
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suspension or withdrawal of regulatory approvals;
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suspension or termination of any of our ongoing clinical trials;
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refusal to permit the import or export of our products;
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refusal to approve pending applications or supplements to approved applications that we submit;
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product seizure;
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injunctions; or
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imposition of civil or criminal penalties.
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if any payment of principal is not made within three days of when such payment is due and payable or otherwise made in accordance with the terms of the Credit Agreement;
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if any representations or warranties made in the Credit Agreement or any other transaction document proves to be incorrect or misleading in any material respect when made;
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if there occurs a default in the performance of affirmative and negative covenants set forth in the Credit Agreement or any other transaction document;
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the failure by either Baxalta or Roche to pay material amounts owed under our collaboration agreements because of an actual breach or default by us under the collaboration agreements;
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•
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the voluntary or involuntary commencement of bankruptcy proceedings by either Halozyme or Halozyme Royalty and other insolvency related defaults;
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•
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any materially adverse effect on the binding nature of any of the transaction documents or the collaboration agreements with Baxalta and Roche; or
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•
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Halozyme ceases to own, of record and beneficially, 100% of the equity interests in Halozyme Royalty.
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the price of products relative to other therapies for the same or similar treatments;
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the perception by patients, physicians and other members of the health care community of the effectiveness and safety of these products for their prescribed treatments relative to other therapies for the same or similar treatments;
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our ability to fund our sales and marketing efforts and the ability and willingness of our collaborators to fund sales and marketing efforts;
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the degree to which the use of these products is restricted by the approved product label;
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the effectiveness of our sales and marketing efforts and the effectiveness of the sales and marketing efforts of our collaborators;
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•
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the introduction of generic competitors; and
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the extent to which reimbursement for our products and related treatments will be available from third party payors including government insurance programs (Medicare and Medicaid) and private insurers.
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we may have to issue convertible debt or equity securities to complete an acquisition, which would dilute our stockholders and could adversely affect the market price of our common stock;
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•
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an acquisition may negatively impact our results of operations because it may require us to amortize or write down amounts related to goodwill and other intangible assets, or incur or assume substantial debt or liabilities, or it may cause adverse tax consequences, substantial depreciation or deferred compensation charges;
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we may encounter difficulties in assimilating and integrating the business, products, technologies, personnel or operations of companies that we acquire;
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certain acquisitions may impact our relationship with existing or potential collaborators who are competitive with the acquired business, products or technologies;
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acquisitions may require significant capital infusions and the acquired businesses, products or technologies may not generate sufficient value to justify acquisition costs;
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we may take on liabilities from the acquired company such as debt, legal liabilities or business risk which could be significant;
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an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
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acquisitions may involve the entry into a geographic or business market in which we have little or no prior experience; and
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key personnel of an acquired company may decide not to work for us.
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the presence of competitive products to those being developed by us;
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•
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failure (actual or perceived) of our collaborators to devote attention or resources to the development or commercialization of product candidates licensed to such collaborator;
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a dispute regarding our failure, or the failure of one of our third party collaborators, to comply with the terms of a collaboration agreement;
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•
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the termination, for any reason, of any of our collaboration agreements;
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•
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the sale of common stock by any significant stockholder, including, but not limited to, direct or indirect sales by members of management or our Board of Directors;
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•
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the resignation, or other departure, of members of management or our Board of Directors;
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•
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general negative conditions in the healthcare industry;
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•
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general negative conditions in the financial markets;
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•
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the cost associated with obtaining regulatory approval for any of our proprietary or collaboration product candidates;
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•
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the failure, for any reason, to secure or defend our intellectual property position;
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for those products that are not yet approved for commercial sale, the failure or delay of applicable regulatory bodies to approve such products;
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identification of safety or tolerability issues;
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failure of clinical trials to meet efficacy endpoints;
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•
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suspensions or delays in the conduct of clinical trials or securing of regulatory approvals;
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•
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adverse regulatory action with respect to our and our collaborators’ products and product candidates such as clinical holds, imposition of onerous requirements for approval or product recalls;
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our failure, or the failure of our third party collaborators, to successfully commercialize products approved by applicable regulatory bodies such as the FDA;
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our failure, or the failure of our third party collaborators, to generate product revenues anticipated by investors;
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disruptions in our clinical or commercial supply chains, including disruptions caused by problems with a bulk rHuPH20 contract manufacturer or a fill and finish manufacturer for any product or product candidate;
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the sale of additional debt and/or equity securities by us;
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our failure to obtain financing on acceptable terms or at all; or
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a restructuring of our operations.
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we will be able to obtain patent protection for our products and technologies;
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•
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the scope of any of our issued patents will be sufficient to provide commercially significant exclusivity for our products and technologies;
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•
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others will not independently develop similar or alternative technologies or duplicate our technologies and obtain patent protection before we do; and
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•
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any of our issued patents, or patent pending applications that result in issued patents, will be held valid, enforceable and infringed in the event the patents are asserted against others.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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2016
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2015
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||||||||||||
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High
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Low
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High
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Low
|
||||||||
First Quarter
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$17.51
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|
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$6.96
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$16.55
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$9.47
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Second Quarter
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$12.33
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$7.70
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$22.85
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|
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$13.91
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Third Quarter
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$12.75
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|
|
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$8.43
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|
|
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$25.25
|
|
|
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$12.80
|
|
Fourth Quarter
|
|
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$14.38
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|
|
|
$8.18
|
|
|
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$18.65
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|
|
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$12.80
|
|
|
12/31/2011
|
12/31/2012
|
12/31/2013
|
12/31/2014
|
12/31/2015
|
12/31/2016
|
Halozyme Therapeutics, Inc.
|
$100
|
$71
|
$158
|
$101
|
$182
|
$104
|
NASDAQ Composite
|
$100
|
$117
|
$165
|
$189
|
$202
|
$220
|
NASDAQ Biotechnology
|
$100
|
$132
|
$220
|
$295
|
$330
|
$259
|
Item 6.
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Selected Financial Data
|
|
|
Year Ended December 31,
|
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Statement of Operations Data:
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2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
(4)
|
||||||||||
|
|
(in thousands, except for per share amounts)
|
||||||||||||||||||
Total revenues
|
|
$
|
146,691
|
|
|
$
|
135,057
|
|
|
$
|
75,334
|
|
|
$
|
54,799
|
|
|
$
|
42,325
|
|
Net loss
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
|
$
|
(68,375
|
)
|
|
$
|
(83,479
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)
|
|
$
|
(53,552
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)
|
Net loss per share, basic and diluted
|
|
$
|
(0.81
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.56
|
)
|
|
$
|
(0.74
|
)
|
|
$
|
(0.48
|
)
|
Shares used in computing net loss per share, basic and diluted
|
|
127,964
|
|
|
126,704
|
|
|
122,690
|
|
|
112,805
|
|
|
111,077
|
|
|
|
As of December 31,
|
||||||||||||||||||
Balance Sheet Data:
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cash and cash equivalents and available-for-sale marketable securities
|
|
$
|
204,981
|
|
|
$
|
108,339
|
|
|
$
|
135,623
|
|
|
$
|
71,503
|
|
|
$
|
99,501
|
|
Working capital
|
|
$
|
201,947
|
|
|
$
|
109,315
|
|
|
$
|
136,990
|
|
|
$
|
70,293
|
|
|
$
|
111,682
|
|
Total assets
|
|
$
|
261,515
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|
|
$
|
181,789
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|
|
$
|
165,977
|
|
|
$
|
101,793
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|
|
$
|
134,728
|
|
Deferred revenue
|
|
$
|
44,618
|
|
|
$
|
53,223
|
|
|
$
|
54,634
|
|
|
$
|
53,143
|
|
|
$
|
43,846
|
|
Long-term debt, net
|
|
$
|
199,228
|
|
|
$
|
27,971
|
|
|
$
|
49,860
|
|
|
$
|
49,772
|
|
|
$
|
29,662
|
|
Total liabilities
|
|
$
|
293,996
|
|
|
$
|
138,790
|
|
|
$
|
124,625
|
|
|
$
|
121,783
|
|
|
$
|
85,875
|
|
Stockholders’ equity (deficit)
|
|
$
|
(32,481
|
)
|
|
$
|
42,999
|
|
|
$
|
41,352
|
|
|
$
|
(19,991
|
)
|
|
$
|
48,854
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
•
|
In January 2017, we announced topline results from the combined analysis of Stage 1 and Stage 2, and Stage 2 alone, of the Halo 109-202 study, based on a December 2016 data cutoff. Among the findings, the overall study population showed a statistically significant increase in progression-free survival (PFS) in the 84 total HA-High patients treated with PEGPH20 plus ABRAXANE and gemcitabine when compared to HA-High patients receiving ABRAXANE and gemcitabine alone. Stage 2 of the study, which completed enrollment in February 2016, showed a 91 percent improvement in median PFS for HA-High patients in the PEGPH20 arm, 8.6 months compared to 4.5 months in the control arm, and achieved its primary endpoint to evaluate and demonstrate a reduction in the rate of TE events in the PEGPH20 arm.
|
•
|
In December 2016, we identified a dose of PEGPH20, namely 2.2 ug/kg, to move into the dose expansion phase of Study 107-101, the study with KEYTRUDA in combination with PEGPH20. We are now enrolling both NSCLC and gastric cancer patients prospectively based on a patient being determined to be HA-High.
|
•
|
In July 2016, we initiated a phase 1b/2 study with our partner, Eisai, Inc. (Eisai) exploring the combination of PEGPH20 and eribulin in patients treated with up to two lines of prior therapy for HER2-negative HA-High metastatic breast cancer.
|
•
|
In March 2016, we dosed the first patient in the Phase 3 study of PEGPH20 (Halozyme Study 301) in previously untreated stage IV PDA HA-High patients.
|
•
|
In March 2016, our partner, Ventana Medical Systems, Inc. (Ventana), received approval for an investigational device exemption (IDE) with the U.S. Food and Drug Administration (FDA) for the companion diagnostic test we co-developed to prospectively identify patients with high levels of HA.
|
•
|
In December 2016, Janssen announced results of the Phase 1b clinical trial, which supported continued development of daratumumab with rHuPH20. Janssen has said it plans to initiate a Phase 3 study.
|
•
|
In November 2016, Pfizer discontinue development of rHuPH20 with rivipansel and with bocoizumab, and AbbVie discontinued development of rHuPH20 with HUMIRA.
|
•
|
In November 2016, the FDA accepted Genentech’s BLA for a subcutaneous formulation of rituximab for CLL and NHL. This is a co-formulation with rHuPH20, which is approved and marketed under the MabThera SC brand in countries outside the U.S.
|
•
|
In May 2016, Roche announced that the European Medicines Agency approved MabThera SC to treat patients with chronic lymphocytic leukemia, demonstrating the expansion of our ENHANZE Technology into a new indication.
|
•
|
In May 2016, Baxalta announced that HYQVIA received a marketing authorization from the European Commission for a pediatric indication, which is being launched in eight European countries to treat primary and certain secondary immunodeficiencies.
|
•
|
In March 2016, Lilly and Pfizer each nominated a new target to be studied with ENHANZE Technology, triggering $9.5 million in milestone payments. In February 2016, Pfizer dosed the first patient in a Phase 1 clinical trial evaluating subcutaneous delivery of bococizumab with ENHANZE Technology, triggering a $1.0 million milestone payment.
|
•
|
In November 2016, we entered into an agreement with Genentech, a member of the Roche Group, to collaborate on clinical studies evaluating up to eight different tumor types, beginning in 2017. The first study will be a Phase 1b/2 open-label, multi-arm, randomized global study, led by Genentech to evaluate their cancer immunotherapy Tecentriq® (atezolizumab), an anti-PD-L1 monoclonal antibody, in combination with PEGPH20 in up to six tumor types. Halozyme will supply drug only for the Genentech study. This study will have an initial focus on gastrointestinal malignancies, including pancreatic and gastric cancers. The second study will be a Phase 1b open-label randomized study led by Halozyme to assess Tecentriq in combination with PEGPH20 and chemotherapy in advanced or metastatic biliary and gallbladder cancers.
|
•
|
In October 2016, we announced that PEGPH20 will be included in a pancreatic cancer clinical trial initiative called Precision Promise, an initiative that aims to change the current treatment approach to pancreatic cancer by offering options to patients based on the molecular profile of their tumor. This is being accomplished through the Pancreatic Cancer Action Network leading a collaboration that brings together clinicians, researchers, and drug developers. Pancreatic Cancer Action Network has announced plans to begin enrolling patients at 12 initial consortium sites in Spring 2017.
|
•
|
In June 2016, we entered into a new agreement with Oxford Finance LLC and Silicon Valley Bank to borrow $55.0 million, which replaces our previous agreement and provides Halozyme the option to borrow an additional $15.0 million in 2017.
|
•
|
In January 2016, through our wholly-owned subsidiary, Halozyme Royalty, we received a $150.0 million loan secured by future royalties received from our collaborations with Roche and Baxalta.
|
|
|
2016
|
|
Change
|
|
2015
|
|
Change
|
|
2014
|
||||||||
Sales of bulk rHuPH20:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Roche
|
|
$
|
24,786
|
|
|
9
|
%
|
|
$
|
22,773
|
|
|
(3
|
)%
|
|
$
|
23,523
|
|
Baxalta
|
|
11,117
|
|
|
73
|
%
|
|
6,410
|
|
|
n/a
|
|
|
—
|
|
|||
Other
|
|
1,332
|
|
|
73
|
%
|
|
772
|
|
|
(33
|
)%
|
|
1,146
|
|
|||
Sales of
Hylenex
|
|
16,157
|
|
|
—
|
|
|
16,127
|
|
|
23
|
%
|
|
13,154
|
|
|||
Total product sales, net
|
|
$
|
53,392
|
|
|
16
|
%
|
|
$
|
46,082
|
|
|
22
|
%
|
|
$
|
37,823
|
|
|
|
2016
|
|
Change
|
|
2015
|
|
Change
|
|
2014
|
||||||||
Upfront payments, license maintenance fees and amortization of deferred upfront, license fees and product-based payments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Lilly
|
|
$
|
8,000
|
|
|
(68
|
)%
|
|
$
|
25,000
|
|
|
n/a
|
|
|
$
|
—
|
|
AbbVie
|
|
6,000
|
|
|
(74
|
)%
|
|
23,000
|
|
|
n/a
|
|
|
—
|
|
|||
Roche
|
|
3,328
|
|
|
2
|
%
|
|
3,269
|
|
|
8
|
%
|
|
3,028
|
|
|||
Pfizer
|
|
2,500
|
|
|
25
|
%
|
|
2,000
|
|
|
100
|
%
|
|
1,000
|
|
|||
Baxalta
|
|
765
|
|
|
—
|
|
|
765
|
|
|
—
|
|
|
765
|
|
|||
Janssen
|
|
250
|
|
|
n/a
|
|
|
—
|
|
|
(100
|
)%
|
|
15,000
|
|
|||
|
|
20,843
|
|
|
(61
|
%)
|
|
54,034
|
|
|
173
|
%
|
|
19,793
|
|
|||
Reimbursements for research and development services:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Roche
|
|
18,700
|
|
|
632
|
%
|
|
2,556
|
|
|
(63
|
%)
|
|
6,923
|
|
|||
Janssen
|
|
2,051
|
|
|
146
|
%
|
|
834
|
|
|
n/a
|
|
|
—
|
|
|||
Baxalta
|
|
386
|
|
|
32
|
%
|
|
292
|
|
|
(76
|
%)
|
|
1,209
|
|
|||
Other
|
|
335
|
|
|
18
|
%
|
|
284
|
|
|
76
|
%
|
|
161
|
|
|||
|
|
21,472
|
|
|
441
|
%
|
|
3,966
|
|
|
(52
|
%)
|
|
8,293
|
|
|||
Total revenues under collaborative agreements
|
|
$
|
42,315
|
|
|
(27
|
%)
|
|
$
|
58,000
|
|
|
107
|
%
|
|
$
|
28,086
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
(1)
|
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt, including interest
(2)
|
|
$
|
266,360
|
|
|
$
|
37,338
|
|
|
$
|
224,267
|
|
|
$
|
4,755
|
|
|
$
|
—
|
|
Operating leases
(3)
|
|
4,031
|
|
|
2,622
|
|
|
1,373
|
|
|
36
|
|
|
—
|
|
|||||
Third-party manufacturing obligations
(4)
|
|
20,694
|
|
|
20,353
|
|
|
341
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations
|
|
856
|
|
|
410
|
|
|
446
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
291,941
|
|
|
$
|
60,723
|
|
|
$
|
226,427
|
|
|
$
|
4,791
|
|
|
$
|
—
|
|
(1)
|
Does not include milestone or contractual payment obligations contingent upon the achievement of certain milestones or events if the amount and timing of such obligations are unknown or uncertain. Our in-license agreement is cancelable with written notice within 90 days. We may be required to pay up to approximately $8.0 million in milestone payments, plus sales royalties, in the event that all scientific research under these agreements is successful. Also excludes contractual obligations already recorded on our consolidated balance sheet as current liabilities.
|
(2)
|
Long-term debt obligations include future monthly interest payments for the Oxford and SVB Loan and Security Agreement based on a fixed rate of 8.25% and a final payment of $3.03 million for our long-term debt due in January 2021. Long-term debt obligations also include future quarterly interest and principal payments for the Royalty-backed Loan based on an estimate of future royalty amounts. This estimate could be adversely affected and the repayment period could be extended if future royalty amounts are less than currently expected. The Royalty-backed loan bears interest at a per annum rate of
8.75%
plus the three-month LIBOR
rate. The three-month LIBOR rate is subject to a floor of
0.7%
and a cap of
1.5%
. Future interest payments will increase if the LIBOR rate increases.
|
(3)
|
Includes minimum lease payments related to leases of our office and research facilities and certain autos under non-cancelable operating leases.
|
(4)
|
We have contracted with third-party manufacturers for the supply of bulk rHuPH20 and fill/finish of
Hylenex
recombinant. Under these agreements, we are required to purchase certain quantities each year during the terms of the agreements. The amounts presented represent our estimates of the minimum required payments under these agreements.
|
•
|
the rate of progress and cost of research and development activities;
|
•
|
the number and scope of our research activities;
|
•
|
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
|
•
|
our ability to establish and maintain product discovery and development collaborations, including scale-up manufacturing costs for our collaborators’ product candidates;
|
•
|
the amount of royalties from our collaborators;
|
•
|
the amount of product sales for
Hylenex
recombinant;
|
•
|
the costs of obtaining and validating additional manufacturers of
Hylenex
recombinant;
|
•
|
the effect of competing technological and market developments;
|
•
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish; and
|
•
|
the extent to which we acquire or in-license new products, technologies or businesses.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Control and Procedures
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
/s/ Ernst & Young LLP
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Plan Category
|
|
Number of Shares
to be Issued upon
Exercise of
Outstanding Options
and Restricted Stock
Units
(a)
|
|
Weighted Average
Exercise Price
of Outstanding
Options
(2)
(b)
|
|
Number of Shares
Remaining Available
for Future Issuance
under Equity
Compensation
Plans (Excluding
Shares Reflected
in Column (a))
(c)
|
||
Equity compensation plans approved by stockholders
(1)
|
|
12,458,020
|
|
|
$11.70
|
|
9,001,562
|
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
—
|
|
—
|
|
|
|
12,458,020
|
|
|
$11.70
|
|
9,001,562
|
|
(1)
|
Represents stock options, restricted stock units, and performance restricted stock units under the Amended and Restated 2011 Stock Plan, 2008 Stock Plan, 2006 Stock Plan and 2005 Outside Directors’ Stock Plan.
|
(2)
|
This amount does not include restricted stock units and performance restricted stock units as there is no exercise price for such units.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
(a)
|
Documents filed as part of this report.
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
F-1
|
Consolidated Balance Sheets at December 31, 2016 and 2015
|
|
F-2
|
Consolidated Statements of Operations for Each of the Years Ended December 31, 2016, 2015 and 2014
|
|
F-3
|
Consolidated Statements of Comprehensive Loss for Each of the Years Ended December 31, 2016, 2015 and 2014
|
|
F-4
|
Consolidated Statements of Cash Flows for Each of the Years Ended December 31, 2016, 2015 and 2014
|
|
F-5
|
Consolidated Statements of Stockholders’ Equity (Deficit) for Each of the Years Ended December 31, 2016, 2015 and 2014
|
|
F-6
|
Notes to the Consolidated Financial Statements
|
|
F-7
|
|
|
Page
|
Schedule II: Valuation and Qualifying Accounts
|
|
(b)
|
Exhibits.
|
(c)
|
Financial Statement Schedules.
See Item 15(a) 2 above.
|
Item 16.
|
Form 10-K Summary
|
|
|
|
|
Halozyme Therapeutics, Inc.,
a Delaware corporation
|
||||
|
|
|
|
|||||
Date:
|
|
February 28, 2017
|
|
|
|
By:
|
|
/s/ Helen I. Torley, M.B. Ch.B., M.R.C.P.
|
|
|
|
|
|
|
|
|
Helen I. Torley, M.B. Ch.B., M.R.C.P.
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Helen I. Torley, M.B. Ch.B., M.R.C.P.
|
|
President and Chief Executive Officer
|
|
February 28, 2017
|
Helen I. Torley, M.B. Ch.B., M.R.C.P.
|
|
(Principal Executive Officer), Director
|
|
|
|
|
|
|
|
/s/ Laurie D. Stelzer
|
|
Senior Vice President and Chief Financial Officer
|
|
February 28, 2017
|
Laurie D. Stelzer
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Connie L. Matsui
|
|
Chair of the Board of Directors
|
|
February 28, 2017
|
Connie L. Matsui
|
|
|
|
|
|
|
|
|
|
/s/ Jean-Pierre Bizzari
|
|
Director
|
|
February 28, 2017
|
Jean-Pierre Bizzari
|
|
|
|
|
|
|
|
|
|
/s/ James M. Daly
|
|
Director
|
|
February 28, 2017
|
James M. Daly
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey W. Henderson
|
|
Director
|
|
February 28, 2017
|
Jeffrey W. Henderson
|
|
|
|
|
|
|
|
|
|
/s/ Kenneth J. Kelley
|
|
Director
|
|
February 28, 2017
|
Kenneth J. Kelley
|
|
|
|
|
|
|
|
|
|
/s/ Randal J. Kirk
|
|
Director
|
|
February 28, 2017
|
Randal J. Kirk
|
|
|
|
|
|
|
|
|
|
/s/ Matthew L. Posard
|
|
Director
|
|
February 28, 2017
|
Matthew L. Posard
|
|
|
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
66,764
|
|
|
$
|
43,292
|
|
Marketable securities, available-for-sale
|
|
138,217
|
|
|
65,047
|
|
||
Accounts receivable, net
|
|
15,680
|
|
|
32,410
|
|
||
Inventories
|
|
14,623
|
|
|
9,489
|
|
||
Prepaid expenses and other assets
|
|
21,248
|
|
|
21,534
|
|
||
Total current assets
|
|
256,532
|
|
|
171,772
|
|
||
Property and equipment, net
|
|
4,264
|
|
|
3,943
|
|
||
Prepaid expenses and other assets
|
|
219
|
|
|
5,574
|
|
||
Restricted cash
|
|
500
|
|
|
500
|
|
||
Total assets
|
|
$
|
261,515
|
|
|
$
|
181,789
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
3,578
|
|
|
$
|
4,499
|
|
Accrued expenses
|
|
28,821
|
|
|
26,792
|
|
||
Deferred revenue, current portion
|
|
4,793
|
|
|
9,304
|
|
||
Current portion of long-term debt, net
|
|
17,393
|
|
|
21,862
|
|
||
Total current liabilities
|
|
54,585
|
|
|
62,457
|
|
||
Deferred revenue, net of current portion
|
|
39,825
|
|
|
43,919
|
|
||
Long-term debt, net
|
|
199,228
|
|
|
27,971
|
|
||
Other long-term liabilities
|
|
358
|
|
|
4,443
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
||||
Stockholders’ (deficit) equity:
|
|
|
|
|
||||
Preferred stock — $0.001 par value; 20,000 shares authorized; no shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock — $0.001 par value; 200,000 shares authorized; 129,502 and 128,152 shares issued and outstanding at December 31, 2016 and 2015, respectively
|
|
130
|
|
|
128
|
|
||
Additional paid-in capital
|
|
552,737
|
|
|
525,628
|
|
||
Accumulated other comprehensive loss
|
|
(6
|
)
|
|
(99
|
)
|
||
Accumulated deficit
|
|
(585,342
|
)
|
|
(482,658
|
)
|
||
Total stockholders’ (deficit) equity
|
|
(32,481
|
)
|
|
42,999
|
|
||
Total liabilities and stockholders’ (deficit) equity
|
|
$
|
261,515
|
|
|
$
|
181,789
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Product sales, net
|
|
$
|
53,392
|
|
|
$
|
46,082
|
|
|
$
|
37,823
|
|
Royalties
|
|
50,984
|
|
|
30,975
|
|
|
9,425
|
|
|||
Revenues under collaborative agreements
|
|
42,315
|
|
|
58,000
|
|
|
28,086
|
|
|||
Total revenues
|
|
146,691
|
|
|
135,057
|
|
|
75,334
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of product sales
|
|
33,206
|
|
|
29,245
|
|
|
22,732
|
|
|||
Research and development
|
|
150,842
|
|
|
93,236
|
|
|
79,696
|
|
|||
Selling, general and administrative
|
|
45,853
|
|
|
40,028
|
|
|
35,942
|
|
|||
Total operating expenses
|
|
229,901
|
|
|
162,509
|
|
|
138,370
|
|
|||
Operating loss
|
|
(83,210
|
)
|
|
(27,452
|
)
|
|
(63,036
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Investment and other income, net
|
|
1,326
|
|
|
422
|
|
|
242
|
|
|||
Interest expense
|
|
(19,977
|
)
|
|
(5,201
|
)
|
|
(5,581
|
)
|
|||
Net loss before income taxes
|
|
(101,861
|
)
|
|
(32,231
|
)
|
|
(68,375
|
)
|
|||
Income tax expense
|
|
1,162
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
|
$
|
(68,375
|
)
|
|
|
|
|
|
|
|
||||||
Basic and diluted net loss per share
|
|
$
|
(0.81
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.56
|
)
|
|
|
|
|
|
|
|
||||||
Shares used in computing basic and diluted net loss per share
|
|
127,964
|
|
|
126,704
|
|
|
122,690
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
|
$
|
(68,375
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) on marketable securities
|
|
93
|
|
|
(58
|
)
|
|
(58
|
)
|
|||
Total comprehensive loss
|
|
$
|
(102,930
|
)
|
|
$
|
(32,289
|
)
|
|
$
|
(68,433
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
|
$
|
(68,375
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
||||||
Share-based compensation
|
|
25,585
|
|
|
20,838
|
|
|
15,274
|
|
|||
Depreciation and amortization
|
|
2,410
|
|
|
1,677
|
|
|
1,762
|
|
|||
Non-cash interest expense
|
|
2,896
|
|
|
1,243
|
|
|
2,025
|
|
|||
Payment-in-kind interest expense on long-term debt
|
|
13,184
|
|
|
—
|
|
|
—
|
|
|||
Amortization of premiums on marketable securities, net
|
|
552
|
|
|
879
|
|
|
1,457
|
|
|||
Loss on disposal of equipment
|
|
8
|
|
|
8
|
|
|
233
|
|
|||
Deferral of unearned revenue
|
|
701
|
|
|
4,379
|
|
|
7,045
|
|
|||
Recognition of deferred revenue
|
|
(9,304
|
)
|
|
(5,789
|
)
|
|
(5,554
|
)
|
|||
Deferral of rent expense
|
|
—
|
|
|
441
|
|
|
92
|
|
|||
Recognition of deferred rent
|
|
(370
|
)
|
|
(276
|
)
|
|
(108
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
16,730
|
|
|
(23,261
|
)
|
|
(52
|
)
|
|||
Inventories
|
|
(5,134
|
)
|
|
(3,083
|
)
|
|
(236
|
)
|
|||
Prepaid expenses and other assets
|
|
5,626
|
|
|
(15,774
|
)
|
|
(265
|
)
|
|||
Accounts payable and accrued expenses
|
|
(244
|
)
|
|
13,866
|
|
|
(816
|
)
|
|||
Net cash used in operating activities
|
|
(50,383
|
)
|
|
(37,083
|
)
|
|
(47,518
|
)
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Purchases of marketable securities
|
|
(155,412
|
)
|
|
(71,482
|
)
|
|
(88,884
|
)
|
|||
Proceeds from maturities of marketable securities
|
|
81,783
|
|
|
79,730
|
|
|
57,301
|
|
|||
Purchases of property and equipment
|
|
(3,137
|
)
|
|
(2,360
|
)
|
|
(1,368
|
)
|
|||
Net cash (used in) provided by investing activities
|
|
(76,766
|
)
|
|
5,888
|
|
|
(32,951
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt, net
|
|
203,006
|
|
|
—
|
|
|
—
|
|
|||
Repayment of long-term debt
|
|
(54,250
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of common stock under equity incentive plans, net
|
|
1,865
|
|
|
13,098
|
|
|
6,788
|
|
|||
Proceeds from issuance of common stock, net
|
|
—
|
|
|
—
|
|
|
107,713
|
|
|||
Net cash provided by financing activities
|
|
150,621
|
|
|
13,098
|
|
|
114,501
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
23,472
|
|
|
(18,097
|
)
|
|
34,032
|
|
||
Cash and cash equivalents at beginning of period
|
|
43,292
|
|
|
61,389
|
|
|
27,357
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
66,764
|
|
|
$
|
43,292
|
|
|
$
|
61,389
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
3,886
|
|
|
$
|
3,775
|
|
|
$
|
3,460
|
|
Income taxes paid
|
|
$
|
1,441
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Amounts accrued for purchases of property and equipment
|
|
$
|
75
|
|
|
$
|
473
|
|
|
$
|
156
|
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity (Deficit)
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
BALANCE AT JANUARY 1, 2014
|
|
114,534
|
|
|
$
|
115
|
|
|
$
|
361,930
|
|
|
$
|
17
|
|
|
$
|
(382,052
|
)
|
|
$
|
(19,990
|
)
|
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
15,274
|
|
|
—
|
|
|
—
|
|
|
15,274
|
|
|||||
Issuance of common stock for cash, net
|
|
8,846
|
|
|
9
|
|
|
107,704
|
|
|
—
|
|
|
—
|
|
|
107,713
|
|
|||||
Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net
|
|
1,552
|
|
|
1
|
|
|
6,787
|
|
|
—
|
|
|
—
|
|
|
6,788
|
|
|||||
Issuance of restricted stock awards, net
|
|
789
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(58
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68,375
|
)
|
|
(68,375
|
)
|
|||||
BALANCE AT DECEMBER 31, 2014
|
|
125,721
|
|
|
126
|
|
|
491,694
|
|
|
(41
|
)
|
|
(450,427
|
)
|
|
41,352
|
|
|||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
20,838
|
|
|
—
|
|
|
—
|
|
|
20,838
|
|
|||||
Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net
|
|
2,056
|
|
|
2
|
|
|
13,096
|
|
|
—
|
|
|
—
|
|
|
13,098
|
|
|||||
Issuance of restricted stock awards, net
|
|
375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(58
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,231
|
)
|
|
(32,231
|
)
|
|||||
BALANCE AT DECEMBER 31, 2015
|
|
128,152
|
|
|
128
|
|
|
525,628
|
|
|
(99
|
)
|
|
(482,658
|
)
|
|
42,999
|
|
|||||
Adjustment to beginning retained earnings
|
|
—
|
|
|
—
|
|
|
(339
|
)
|
|
—
|
|
|
339
|
|
|
—
|
|
|||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
25,585
|
|
|
—
|
|
|
—
|
|
|
25,585
|
|
|||||
Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units and performance restricted stock units, net
|
|
570
|
|
|
1
|
|
|
1,947
|
|
|
—
|
|
|
—
|
|
|
1,948
|
|
|||||
Issuance of restricted stock awards, net
|
|
780
|
|
|
1
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93
|
|
|
—
|
|
|
93
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103,023
|
)
|
|
(103,023
|
)
|
|||||
BALANCE AT DECEMBER 31, 2016
|
|
129,502
|
|
|
$
|
130
|
|
|
$
|
552,737
|
|
|
$
|
(6
|
)
|
|
$
|
(585,342
|
)
|
|
$
|
(32,481
|
)
|
1.
|
Organization and Business
|
2.
|
Summary of Significant Accounting Policies
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Total estimated fair value
|
|
Level 1
|
|
Level 2
|
|
Total estimated fair value
|
||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
$
|
60,916
|
|
|
$
|
—
|
|
|
$
|
60,916
|
|
|
$
|
38,595
|
|
|
$
|
—
|
|
|
$
|
38,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available-for-sale marketable
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate debt securities
|
|
—
|
|
|
40,207
|
|
|
40,207
|
|
|
—
|
|
|
62,052
|
|
|
62,052
|
|
||||||
U.S. Treasury securities
|
|
94,010
|
|
|
—
|
|
|
94,010
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commercial paper
|
|
—
|
|
|
4,000
|
|
|
4,000
|
|
|
—
|
|
|
2,995
|
|
|
2,995
|
|
||||||
|
|
$
|
154,926
|
|
|
$
|
44,207
|
|
|
$
|
199,133
|
|
|
$
|
38,595
|
|
|
$
|
65,047
|
|
|
$
|
103,642
|
|
|
|
Year Ended December 31,
|
||||
|
|
2016
|
|
2015
|
|
2014
|
Roche
|
|
63%
|
|
42%
|
|
57%
|
Baxalta
|
|
12%
|
|
7%
|
|
3%
|
Lilly
|
|
6%
|
|
19%
|
|
—
|
AbbVie
|
|
4%
|
|
17%
|
|
—
|
Janssen
|
|
2%
|
|
1%
|
|
20%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
|
$
|
52,292
|
|
|
$
|
77,149
|
|
|
$
|
31,397
|
|
Switzerland
|
|
93,067
|
|
|
57,136
|
|
|
42,791
|
|
|||
All other foreign
|
|
1,332
|
|
|
772
|
|
|
1,146
|
|
|||
Total revenues
|
|
$
|
146,691
|
|
|
$
|
135,057
|
|
|
$
|
75,334
|
|
•
|
Product Returns
. We allow the wholesalers to return product that is damaged or received in error. In addition, we accept unused product to be returned beginning
six months
prior to and ending
twelve months
following product expiration. Our estimates for expected returns of expired products are based primarily on an ongoing analysis of historical return patterns.
|
•
|
Distribution Fees
. The distribution fees, based on contractually determined rates, arise from contractual agreements we have with certain wholesalers for distribution services they provide with respect to
Hylenex
recombinant. These fees are generally a fixed percentage of the price of the product purchased by the wholesalers.
|
•
|
Prompt Payment Discounts
. We offer cash discounts to certain wholesalers as an incentive to meet certain payment terms. We estimate prompt payment discounts based on contractual terms, historical utilization rates, as available, and our expectations regarding future utilization rates.
|
•
|
Other Discounts and Fees
. We provide discounts to end-user members of certain GPOs under collective purchasing contracts between us and the GPOs. We also provide discounts to certain hospitals, who are members of the GPOs, with which we do not have contracts. The end-user members purchase products from the wholesalers at a contracted discounted price, and the wholesalers then charge back to us the difference between the current retail price and the price the end-users paid for the product. We also incur GPO administrative service fees for these transactions. In addition, we provide predetermined discounts under certain government programs. Our estimate for these chargebacks and fees takes into consideration contractual terms, historical utilization rates, as available, and our expectations regarding future utilization rates.
|
1.
|
The consideration is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone;
|
2.
|
The consideration relates solely to past performance; and
|
3.
|
The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement.
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial
Statements or Other Significant Matters
|
In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.
|
|
The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from that debt liability, consistent with the presentation of a debt discount.
|
|
Adopted on January 1, 2016.
|
|
There was no material impact on our consolidated financial statements and related disclosures.
|
|
|
|
|
|
|
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial
Statements or Other Significant Matters
|
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes.
|
|
The new guidance requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts.
|
|
Adopted on January 1, 2016.
|
|
There was no material impact on our consolidated financial statements and related disclosures.
|
|
|
|
|
|
|
|
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation.
|
|
The new guidance changes certain aspects of accounting for share-based payments to employees and involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Specifically, the new guidance requires that all income tax effects of share-based awards be recognized as income tax expense or benefit in the reporting period in which they occur. Additionally, the new guidance amends existing guidance to allow forfeitures of share-based awards to be recognized as they occur.
|
|
Adopted on January 1, 2016.
|
|
The cumulative effect of adoption was a decrease of $0.3 million to both additional paid-in capital and accumulated deficit.
|
|
|
|
|
|
|
|
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern.
|
|
The new guidance requires, in connection with preparing financial statements for each annual and interim reporting period, an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable).
|
|
December 31, 2016.
|
|
There was no material impact on our consolidated financial statements and related disclosures in the current period. In an annual or interim reporting period where conditions or events exist that raise substantial double about our ability to continue as a going concern, applicable disclosure will be provided.
|
|
|
|
|
|
|
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial
Statements or Other Significant Matters
|
In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory.
|
|
The new guidance requires that for entities that measure inventory using the first-in, first-out method, inventory should be measured at the lower of cost or net realizable value. Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximate normal profit margin. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
|
|
January 1, 2017.
|
|
The adoption is not expected to have a material impact on our consolidated financial position or results of operations.
|
|
|
|
|
|
|
|
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall; Recognition and Measurement of Financial Assets and Financial Liabilities.
|
|
The new guidance supersedes the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and requires equity securities to be measured at fair value with changes in the fair value recognized through net income. The new guidance requires public business entities that are required to disclose fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion consistent with Topic 820, Fair Value Measurement.
|
|
January 1, 2018.
|
|
We currently do not hold equity securities, and we are evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
|
|
|
|
|
|
|
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial
Statements or Other Significant Matters
|
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). In March, April, May and December 2016, the FASB issued additional guidance related to Topic 606.
|
|
The new standard will supersede nearly all existing revenue recognition guidance. Under Topic 606, an entity is required to recognize revenue upon transfer of promised goods or services to customers in an amount that reflects the expected consideration to be received in exchange for those goods or services. Topic 606 defines a five-step process in order to achieve this core principle, which may require the use of judgment and estimates, and also requires expanded qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including significant judgments and estimates used. The new standard also defines accounting for certain costs related to origination and fulfillment of contracts with customers, including whether such costs should be capitalized. The new standard permits adoption either by using (i) a full retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach where the new standard is applied in the financial statements starting with the year of adoption. Under both approaches, cumulative impact of the adoption is reflected as an adjustment to retained earnings (accumulated deficit) as of the earliest date presented in accordance with the new standard.
|
|
January 1, 2018. Early adoption is permitted.
|
|
We plan to implement the new guidance on January 1, 2018. We currently plan to adopt using the modified retrospective approach; however, a final decision regarding the adoption method has not been finalized at this time. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. However, we anticipate an impact to timing of recognition of payments related to certain of our license and collaboration agreements
(1)
and the timing of recognition of our sales-based royalties.
(2)
We anticipate that this standard will have a material impact on our consolidated financial statements. Additional areas of impact may be identified as we continue our evaluation. We cannot reasonably estimate additional quantitative information related to the impact of the new standard on our financial statements at this time.
|
|
|
|
|
|
|
|
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash.
|
|
Current U.S. GAAP either is unclear or does not include specific guidance on the eight cash flow classification issues included in ASU 2016-15. The new guidance is an improvement to U.S. GAAP and is intended to reduce the current and potential future diversity in practice. ASU 2016-18 provides additional classification guidance for restricted cash, which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
|
|
January 1, 2018. Early adoption is permitted.
|
|
We are currently evaluating the effect that the updated standard will have on our consolidated statement of cash flows.
|
|
|
|
|
|
|
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial
Statements or Other Significant Matters
|
In February 2016, the FASB issued ASU 2016-02, Leases.
|
|
The new guidance requires lessees to recognize assets and liabilities for most leases and provides enhanced disclosures.
|
|
January 1, 2019. Early adoption is permitted.
|
|
We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. However, we anticipate recognition of additional assets and corresponding liabilities related to our leases on our consolidated balance sheet.
|
(1)
|
Under the new standard, we are required to assess whether licenses granted under our collaboration and license agreements are distinct from other performance obligations and functional when granted. We expect that license-related amounts, including upfront payments, exclusive designation fees, annual license maintenance fees and sales based milestones will be recognized, generally, when earned. Currently, these amounts as related to certain of our license and collaboration agreements are being amortized over the term of the collaboration agreement. For example, during the year ended December 31, 2016 we recognized revenue from amortization of license payments of
$4.1 million
, and total deferred revenue related to license payments under collaboration agreements as of December 31, 2016 was
$43.9 million
. While we have not completed our evaluation at this time, we anticipate a potential reduction or elimination of our associated deferred revenue balances upon adoption of Topic 606.
|
(2)
|
Under the new standard, we expect sales-based royalties will be recognized in the quarter they are earned based on estimates, with true-up to actual results following the in the subsequent quarter. Sales-based royalty revenue earned under our collaboration and license agreements is presently recognized when the royalty reports are made available. Upon adoption of Topic 606, we will evaluate and reduce our accumulated deficit, and increase our accounts receivable, net, by the amount earned but not yet reported in our consolidated balance sheet at the time of adoption. We are establishing a process to estimate sales-based royalty revenues in the quarter in which the sales occur.
|
3.
|
Marketable Securities
|
|
|
December 31, 2016
|
|||||||||||||||
Description
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|||||||||
Corporate debt securities
|
|
$
|
40,221
|
|
|
$
|
1
|
|
|
$
|
(15
|
)
|
|
$
|
40,207
|
|
|
U.S. Treasury securities
|
|
94,002
|
|
|
24
|
|
|
(16
|
)
|
|
94,010
|
|
|||||
Commercial paper
|
|
4,000
|
|
|
—
|
|
|
—
|
|
|
4,000
|
|
|||||
|
|
$
|
138,223
|
|
|
$
|
25
|
|
|
$
|
(31
|
)
|
|
$
|
138,217
|
|
|
|
December 31, 2015
|
|||||||||||||||
Description
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|||||||||
Corporate debt securities
|
|
$
|
62,151
|
|
|
$
|
—
|
|
|
$
|
(99
|
)
|
|
$
|
62,052
|
|
|
Commercial paper
|
|
2,995
|
|
|
—
|
|
|
—
|
|
|
2,995
|
|
|||||
|
|
$
|
65,146
|
|
|
$
|
—
|
|
|
$
|
(99
|
)
|
|
$
|
65,047
|
|
4.
|
Collaborative Agreements
|
|
As of
December 31, 2016 |
||
Lilly
|
$
|
33,000
|
|
AbbVie
|
29,000
|
|
|
Janssen
|
15,250
|
|
|
Pfizer
|
16,500
|
|
|
Total payments received
|
$
|
93,750
|
|
5.
|
Certain Balance Sheet Items
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Accounts receivable from revenues under collaborative agreements
|
|
$
|
6,151
|
|
|
$
|
25,939
|
|
Accounts receivable from product sales to collaborators
|
|
7,854
|
|
|
4,996
|
|
||
Accounts receivable from other product sales
|
|
2,234
|
|
|
2,442
|
|
||
Total accounts receivable
|
|
16,239
|
|
|
33,377
|
|
||
Allowance for distribution fees and discounts
|
|
(559
|
)
|
|
(967
|
)
|
||
Total accounts receivable, net
|
|
$
|
15,680
|
|
|
$
|
32,410
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
|
$
|
761
|
|
|
$
|
677
|
|
Work-in-process
|
|
12,850
|
|
|
8,481
|
|
||
Finished goods
|
|
1,012
|
|
|
331
|
|
||
Total inventories
|
|
$
|
14,623
|
|
|
$
|
9,489
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Prepaid manufacturing expenses
|
|
$
|
9,663
|
|
|
$
|
16,155
|
|
Prepaid research and development expenses
|
|
8,613
|
|
|
9,225
|
|
||
Other prepaid expenses
|
|
1,661
|
|
|
1,198
|
|
||
Other assets
|
|
1,530
|
|
|
530
|
|
||
Total prepaid expenses and other assets
|
|
21,467
|
|
|
27,108
|
|
||
Less long-term portion
|
|
219
|
|
|
5,574
|
|
||
Total prepaid expenses and other assets, current
|
|
$
|
21,248
|
|
|
$
|
21,534
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Research equipment
|
|
$
|
10,479
|
|
|
$
|
9,666
|
|
Computer and office equipment
|
|
3,373
|
|
|
2,570
|
|
||
Leasehold improvements
|
|
2,331
|
|
|
2,025
|
|
||
Subtotal
|
|
16,183
|
|
|
14,261
|
|
||
Accumulated depreciation and amortization
|
|
(11,919
|
)
|
|
(10,318
|
)
|
||
Property and equipment, net
|
|
$
|
4,264
|
|
|
$
|
3,943
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Accrued compensation and payroll taxes
|
|
$
|
11,539
|
|
|
$
|
8,636
|
|
Accrued outsourced research and development expenses
|
|
9,522
|
|
|
8,617
|
|
||
Accrued outsourced manufacturing expenses
|
|
3,225
|
|
|
6,205
|
|
||
Other accrued expenses
|
|
4,552
|
|
|
4,118
|
|
||
Total accrued expenses
|
|
28,838
|
|
|
27,576
|
|
||
Less long-term accrued outsourced research and development expenses
|
|
17
|
|
|
784
|
|
||
Total accrued expenses, current
|
|
$
|
28,821
|
|
|
$
|
26,792
|
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Collaborative agreements
|
|
|
|
|
||||
License fees and event-based payments:
|
|
|
|
|
||||
Roche
|
|
$
|
35,709
|
|
|
$
|
39,038
|
|
Other
|
|
8,209
|
|
|
9,724
|
|
||
|
|
43,918
|
|
|
48,762
|
|
||
Reimbursement for research and development services
|
|
700
|
|
|
4,461
|
|
||
Total deferred revenue
|
|
44,618
|
|
|
53,223
|
|
||
Less current portion
|
|
4,793
|
|
|
9,304
|
|
||
Deferred revenue, net of current portion
|
|
$
|
39,825
|
|
|
$
|
43,919
|
|
6.
|
Long-Term Debt, Net
|
2017
|
|
$
|
37,338
|
|
2018
|
|
94,406
|
|
|
2019
|
|
105,758
|
|
|
2020
|
|
24,103
|
|
|
2021
|
|
4,755
|
|
|
Total minimum payments
|
|
266,360
|
|
|
Less amount representing interest
|
|
(45,208
|
)
|
|
Gross balance of long-term debt
|
|
221,152
|
|
|
Less unamortized debt discount
|
|
(4,531
|
)
|
|
Present value of long-term debt
|
|
216,621
|
|
|
Less current portion of long-term debt
|
|
(17,393
|
)
|
|
Long-term debt, less current portion and unamortized debt discount
|
|
$
|
199,228
|
|
7.
|
Stockholders’ Equity
|
8.
|
Equity Incentive Plans
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Research and development
|
|
$
|
11,470
|
|
|
$
|
9,795
|
|
|
$
|
7,939
|
|
Selling, general and administrative
|
|
14,115
|
|
|
11,043
|
|
|
7,335
|
|
|||
Share-based compensation expense
|
|
$
|
25,585
|
|
|
$
|
20,838
|
|
|
$
|
15,274
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Stock options
|
|
$
|
16,544
|
|
|
$
|
11,145
|
|
|
$
|
7,884
|
|
RSAs, RSUs and PRSUs
|
|
9,041
|
|
|
9,693
|
|
|
7,390
|
|
|||
|
|
$
|
25,585
|
|
|
$
|
20,838
|
|
|
$
|
15,274
|
|
|
|
December 31, 2016
|
||||
|
|
Unrecognized
Expense |
|
Remaining
Weighted Average Recognition Period (years) |
||
Stock options
|
|
$
|
42,592
|
|
|
2.8
|
RSAs
|
|
$
|
8,857
|
|
|
2.3
|
RSUs
|
|
$
|
8,442
|
|
|
2.6
|
|
|
Shares
Underlying
Stock Options
|
|
Weighted
Average Exercise
Price per Share
|
|
Weighted
Average Remaining Contractual Term (years) |
|
Aggregate
Intrinsic
Value
|
|||
Outstanding at January 1, 2014
|
|
6,700,915
|
|
|
$7.11
|
|
|
|
|
||
Granted
|
|
2,271,143
|
|
|
$13.02
|
|
|
|
|
||
Exercised
|
|
(1,432,206
|
)
|
|
$5.43
|
|
|
|
|
||
Canceled/forfeited
|
|
(1,185,960
|
)
|
|
$9.39
|
|
|
|
|
||
Outstanding at December 31, 2014
|
|
6,353,892
|
|
|
$9.18
|
|
|
|
|
||
Granted
|
|
3,973,604
|
|
|
$16.26
|
|
|
|
|
||
Exercised
|
|
(1,926,368
|
)
|
|
$7.49
|
|
|
|
|
||
Canceled/forfeited
|
|
(407,936
|
)
|
|
$10.64
|
|
|
|
|
||
Outstanding at December 31, 2015
|
|
7,993,192
|
|
|
$13.03
|
|
|
|
|
||
Granted
|
|
4,466,306
|
|
|
$9.03
|
|
|
|
|
||
Exercised
|
|
(413,248
|
)
|
|
$6.88
|
|
|
|
|
||
Canceled/forfeited
|
|
(955,054
|
)
|
|
$12.42
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
11,091,196
|
|
|
$11.70
|
|
7.8
|
|
|
$9.4
|
million
|
Vested and expected to vest at December 31, 2016
|
|
11,091,196
|
|
|
$11.70
|
|
7.8
|
|
|
$9.4
|
million
|
Exercisable at December 31, 2016
|
|
4,230,638
|
|
|
$11.77
|
|
6.2
|
|
|
$4.7
|
million
|
|
|
Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected volatility
|
|
67.5-71.9%
|
|
|
66.2-67.4%
|
|
|
66.6-71.8%
|
|
Average expected term (in years)
|
|
5.4
|
|
|
5.6
|
|
|
5.7
|
|
Risk-free interest rate
|
|
1.00-1.90%
|
|
|
1.34-1.92%
|
|
|
1.73-2.04%
|
|
Expected dividend yield
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
|
Number of
Shares
|
|
Weighted
Average Grant Date Fair Value |
|
Unvested at January 1, 2014
|
|
632,871
|
|
|
$8.23
|
Granted
|
|
1,055,122
|
|
|
$11.15
|
Vested
|
|
(263,765
|
)
|
|
$8.33
|
Forfeited
|
|
(265,777
|
)
|
|
$10.86
|
Unvested at December 31, 2014
|
|
1,158,451
|
|
|
$10.26
|
Granted
|
|
515,695
|
|
|
$15.00
|
Vested
|
|
(721,990
|
)
|
|
$10.11
|
Forfeited
|
|
(140,676
|
)
|
|
$11.84
|
Unvested at December 31, 2015
|
|
811,480
|
|
|
$13.13
|
Granted
|
|
968,652
|
|
|
$8.41
|
Vested
|
|
(296,831
|
)
|
|
$12.76
|
Forfeited
|
|
(180,198
|
)
|
|
$10.33
|
Unvested at December 31, 2016
|
|
1,303,103
|
|
|
$10.09
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Weighted
Average Remaining Contractual Term (yrs) |
|
Aggregate
Intrinsic
Value
|
|||
Unvested at January 1, 2014
|
|
736,355
|
|
|
$9.06
|
|
|
|
|
||
Granted
|
|
305,535
|
|
|
$13.71
|
|
|
|
|
||
Vested
|
|
(194,368
|
)
|
|
$9.12
|
|
|
|
|
||
Forfeited
|
|
(385,200
|
)
|
|
$8.84
|
|
|
|
|
||
Outstanding at December 31, 2014
|
|
462,322
|
|
|
$11.12
|
|
|
|
|
||
Granted
|
|
422,492
|
|
|
$14.75
|
|
|
|
|
||
Vested
|
|
(134,088
|
)
|
|
$10.93
|
|
|
|
|
||
Forfeited
|
|
(84,512
|
)
|
|
$10.86
|
|
|
|
|
||
Outstanding at December 31, 2015
|
|
666,214
|
|
|
$13.49
|
|
|
|
|
||
Granted
|
|
796,582
|
|
|
$8.17
|
|
|
|
|
||
Vested
|
|
(218,279
|
)
|
|
$12.74
|
|
|
|
|
||
Forfeited
|
|
(77,948
|
)
|
|
$10.99
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
1,166,569
|
|
|
$10.16
|
|
1.4
|
|
|
$11.5
|
million
|
|
|
Number of
Shares |
|
Weighted
Average
Grant Date
Fair Value
|
|
Weighted
Average
Remaining
Contractual
Term (yrs)
|
|
Aggregate
Intrinsic Value |
|||||
Outstanding at January 1, 2014
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
|
|
540,742
|
|
|
$
|
8.91
|
|
|
|
|
|
||
Vested
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited
|
|
(109,504
|
)
|
|
$
|
8.91
|
|
|
|
|
|
||
Outstanding at December 31, 2014
|
|
431,238
|
|
|
$
|
8.91
|
|
|
|
|
|
||
Granted
|
|
118,209
|
|
|
$
|
11.19
|
|
|
|
|
|
||
Vested
|
|
(83,380
|
)
|
|
$
|
9.48
|
|
|
|
|
|
||
Forfeited
|
|
(156,360
|
)
|
|
$
|
9.21
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
|
309,707
|
|
|
$
|
9.48
|
|
|
|
|
|
||
Granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Vested
|
|
(30,037
|
)
|
|
$
|
9.49
|
|
|
|
|
|
||
Forfeited
|
|
(79,415
|
)
|
|
$
|
9.44
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
200,255
|
|
|
$
|
9.49
|
|
|
0.3
|
|
|
$2.0
|
million
|
9.
|
Commitments and Contingencies
|
Year:
|
|
Operating
Leases
|
||
2017
|
|
$
|
2,622
|
|
2018
|
|
522
|
|
|
2019
|
|
425
|
|
|
2020
|
|
426
|
|
|
2021
|
|
36
|
|
|
Total minimum lease payments
|
|
$
|
4,031
|
|
10.
|
Income Taxes
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
|
$
|
6,384
|
|
|
$
|
11,724
|
|
|
$
|
(30,885
|
)
|
Foreign
|
|
(108,245
|
)
|
|
(43,955
|
)
|
|
(37,490
|
)
|
|||
Net loss before income taxes
|
|
$
|
(101,861
|
)
|
|
$
|
(32,231
|
)
|
|
$
|
(68,375
|
)
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
103,296
|
|
|
$
|
104,505
|
|
Deferred revenue
|
|
15,354
|
|
|
16,344
|
|
||
Research and development and orphan drug credits
|
|
73,701
|
|
|
54,846
|
|
||
Share-based compensation
|
|
8,844
|
|
|
6,286
|
|
||
Other, net
|
|
2,515
|
|
|
906
|
|
||
|
|
203,710
|
|
|
182,887
|
|
||
Valuation allowance for deferred tax assets
|
|
(203,370
|
)
|
|
(182,507
|
)
|
||
Deferred tax assets, net of valuation
|
|
340
|
|
|
380
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Depreciation
|
|
(340
|
)
|
|
(380
|
)
|
||
Total deferred tax liabilities
|
|
(340
|
)
|
|
(380
|
)
|
||
Net deferred tax asset (liability)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current federal
|
|
$
|
1,145
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current state
|
|
17
|
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
1,162
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Federal income tax benefit at 34%
|
|
$
|
(34,633
|
)
|
|
$
|
(10,959
|
)
|
|
$
|
(23,247
|
)
|
State income tax benefit, net of federal income tax impact
|
|
(653
|
)
|
|
5,524
|
|
|
(1,761
|
)
|
|||
Increase in valuation allowance
|
|
11,252
|
|
|
4,045
|
|
|
16,998
|
|
|||
Foreign income subject to tax at other than federal statutory rate
|
|
36,803
|
|
|
14,945
|
|
|
12,747
|
|
|||
Shared-based compensation
|
|
3,735
|
|
|
(4,990
|
)
|
|
(529
|
)
|
|||
Non-deductible expenses and other
|
|
698
|
|
|
6,457
|
|
|
1,069
|
|
|||
Research and development credits, net
|
|
(1,084
|
)
|
|
(3,861
|
)
|
|
(5,277
|
)
|
|||
Orphan drug credits, net of federal add back
|
|
(14,956
|
)
|
|
(11,161
|
)
|
|
—
|
|
|||
|
|
$
|
1,162
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Gross unrecognized tax benefits at beginning of period
|
|
$
|
4,898
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Increases in tax positions for prior years
|
|
5,615
|
|
|
—
|
|
|
—
|
|
|||
Decreases in tax positions for prior years
|
|
(4,898
|
)
|
|
—
|
|
|
—
|
|
|||
Increases in tax positions for current year
|
|
7,184
|
|
|
4,898
|
|
|
—
|
|
|||
Gross unrecognized tax benefits at end of period
|
|
$
|
12,799
|
|
|
$
|
4,898
|
|
|
$
|
—
|
|
|
|
|
|
Expires in:
|
||||||||||||
|
|
Net Operating Loss
|
|
2017
|
|
2021 and beyond
|
|
2028 and beyond
|
||||||||
Federal
|
|
$
|
268,703
|
|
|
$
|
—
|
|
|
$
|
268,703
|
|
|
$
|
—
|
|
California
|
|
$
|
249,783
|
|
|
$
|
10,434
|
|
|
$
|
—
|
|
|
$
|
239,349
|
|
11.
|
Employee Savings Plan
|
12.
|
Restructuring Expense
|
13.
|
Summary of Unaudited Quarterly Financial Information
|
|
|
Quarter Ended
|
||||||||||||||
2016 (Unaudited):
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
Total revenues
|
|
$
|
42,499
|
|
|
$
|
33,336
|
|
|
$
|
31,853
|
|
|
$
|
39,003
|
|
Gross profit on product sales
|
|
$
|
5,178
|
|
|
$
|
5,391
|
|
|
$
|
4,197
|
|
|
$
|
5,420
|
|
Total operating expenses
|
|
$
|
58,668
|
|
|
$
|
55,059
|
|
|
$
|
54,596
|
|
|
$
|
61,578
|
|
Net loss
|
|
$
|
(19,816
|
)
|
|
$
|
(26,875
|
)
|
|
$
|
(28,946
|
)
|
|
$
|
(27,386
|
)
|
Net loss per share, basic and diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.21
|
)
|
Shares used in computing basic and diluted net loss per share
|
|
127,615
|
|
|
127,958
|
|
|
128,154
|
|
|
128,185
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter Ended
|
||||||||||||||
2015 (Unaudited):
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
Total revenues
(1) (2)
|
|
$
|
18,666
|
|
|
$
|
43,384
|
|
|
$
|
20,780
|
|
|
$
|
52,227
|
|
Gross profit on product sales
|
|
$
|
3,366
|
|
|
$
|
4,198
|
|
|
$
|
4,121
|
|
|
$
|
5,152
|
|
Total operating expenses
|
|
$
|
32,577
|
|
|
$
|
39,153
|
|
|
$
|
44,017
|
|
|
$
|
46,762
|
|
Net income (loss)
|
|
$
|
(15,108
|
)
|
|
$
|
3,019
|
|
|
$
|
(24,460
|
)
|
|
$
|
4,318
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.12
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.03
|
|
Diluted
|
|
$
|
(0.12
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.19
|
)
|
|
$
|
0.03
|
|
Shares used in computing net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
125,299
|
|
|
126,144
|
|
|
126,921
|
|
|
127,197
|
|
||||
Diluted
|
|
125,299
|
|
|
134,507
|
|
|
126,921
|
|
|
129,248
|
|
(1)
|
Revenues for the quarter ended June 30, 2015 included
$23.0 million
in revenue under collaborative agreements from the AbbVie Collaboration.
|
(2)
|
Revenues for the quarter ended December 31, 2015 included
$25.0 million
in revenue under collaborative agreements from the Lilly Collaboration.
|
|
|
Balance at Beginning of Period
|
|
Additions
|
|
Deductions
|
|
Balance at End of Period
|
||||||||
For the year ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
967
|
|
|
$
|
4,795
|
|
|
$
|
(5,203
|
)
|
|
$
|
559
|
|
For the year ended December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
611
|
|
|
$
|
4,150
|
|
|
$
|
(3,794
|
)
|
|
$
|
967
|
|
For the year ended December 31, 2014
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
610
|
|
|
$
|
4,520
|
|
|
$
|
(4,519
|
)
|
|
$
|
611
|
|
(1)
|
Allowances are for chargebacks, prompt payment discounts and distribution fees related to
Hylenex
recombinant product sales.
|
|
|
|
Incorporated by Reference
|
||
Exhibit
|
|
Filed
|
|
|
|
Number
|
Exhibit Title
|
Herewith
|
Form
|
File No.
|
Date Filed
|
|
|
|
|
|
|
3.1
|
Composite Certification of Incorporation
|
|
10-Q
|
001-32335
|
8/7/2013
|
|
|
|
|
|
|
3.2
|
Bylaws, as amended
|
|
8-K
|
001-32335
|
12/19/2016
|
|
|
|
|
|
|
3.3
|
Certificate of Elimination of the Series A Preferred Stock of Halozyme Therapeutics, Inc.
|
|
8-K
|
001-32335
|
5/6/2016
|
|
|
|
|
|
|
10.1
|
License Agreement between University of Connecticut and Registrant, dated November 15, 2002
|
|
SB-2
|
333-114776
|
4/23/2004
|
|
|
|
|
|
|
10.2
|
First Amendment to the License Agreement between University of Connecticut and Registrant, dated January 9, 2006
|
|
8-K
|
001-32335
|
1/12/2006
|
|
|
|
|
|
|
10.3#
|
Halozyme Therapeutics, Inc. 2005 Outside Directors’ Stock Plan
|
|
8-K
|
001-32335
|
7/6/2005
|
|
|
|
|
|
|
10.4#
|
Form of Stock Option Agreement (2005 Outside Directors’ Stock Plan)
|
|
10-Q
|
001-32335
|
8/8/2006
|
|
|
|
|
|
|
10.5#
|
Form of Restricted Stock Agreement (2005 Outside Directors’ Stock Plan)
|
|
10-Q
|
001-32335
|
8/8/2006
|
|
|
|
|
|
|
10.6#
|
Halozyme Therapeutics, Inc. 2006 Stock Plan
|
|
8-K
|
001-32335
|
3/24/2006
|
|
|
|
|
|
|
10.7#
|
Form of Stock Option Agreement (2006 Stock Plan)
|
|
10-Q
|
001-32335
|
8/8/2006
|
|
|
|
|
|
|
10.8#
|
Form of Restricted Stock Agreement (2006 Stock Plan)
|
|
10-Q
|
001-32335
|
8/8/2006
|
|
|
|
|
|
|
10.9#
|
Halozyme Therapeutics, Inc. 2008 Stock Plan
|
|
8-K
|
001-32335
|
3/19/2008
|
|
|
|
|
|
|
10.10#
|
Form of Stock Option Agreement (2008 Stock Plan)
|
|
10-Q
|
001-32335
|
8/7/2009
|
|
|
|
|
|
|
10.11#
|
Form of Restricted Stock Agreement (2008 Stock Plan)
|
|
10-Q
|
001-32335
|
8/7/2009
|
|
|
|
|
|
|
10.12#
|
Halozyme Therapeutics, Inc. 2011 Stock Plan (as amended through May 4, 2016)
|
|
DEF-14A
|
001-32335
|
3/23/2016
|
|
|
|
|
|
|
10.13#
|
Form of Stock Option Agreement (2011 Stock Plan)
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
10.14#
|
Form of Stock Option Agreement for Executive Officers (2011 Stock Plan)
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
10.15#
|
Form of Restricted Stock Units Agreement for Officers (2011 Stock Plan)
|
|
10-Q
|
001-32335
|
8/10/2015
|
|
|
|
|
|
|
10.16#
|
Form of Restricted Stock Award Agreement for Officers (2011 Stock Plan)
|
|
10-Q
|
001-32335
|
8/10/2015
|
|
|
|
|
|
|
10.17#
|
Form of Restricted Stock Units Agreement (2011 Stock Plan)
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
10.18#
|
Form of Restricted Stock Award Agreement (2011 Stock Plan)
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
10.19#
|
Form of Stock Option Agreement (2011 Stock Plan -grants made on or after 11/4/2015)
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||
Exhibit
|
|
Filed
|
|
|
|
Number
|
Exhibit Title
|
Herewith
|
Form
|
File No.
|
Date Filed
|
10.20#
|
Form of Restricted Stock Units Agreement (2011 Stock Plan - grants made on or after 11/4/2015)
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
10.21#
|
Form of Restricted Stock Award Agreement (2011 Stock Plan - grants made on or after 11/4/2015)
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
10.22#
|
Form of Restricted Stock Units Agreement (2011 Plan - grants made on or after 2/22/2017)
|
X
|
|
|
|
|
|
|
|
|
|
10.23#
|
Form of Indemnity Agreement for Directors and Executive Officers
|
|
8-K
|
001-32335
|
12/20/2007
|
|
|
|
|
|
|
10.24#
|
Severance Policy
|
|
10-Q
|
001-32335
|
5/9/2008
|
|
|
|
|
|
|
10.25#
|
Form of Amended and Restated Change In Control Agreement with Officer
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
10.26
|
Lease (11404 and 11408 Sorrento Valley Road)
|
|
8-K
|
001-32335
|
6/16/2011
|
|
|
|
|
|
|
10.27
|
Amended and Restated Lease (11388 Sorrento Valley Road), effective as of June 10, 2011
|
|
8-K
|
001-32335
|
6/16/2011
|
|
|
|
|
|
|
10.28
|
Lease (11436 Sorrento Valley Road), effective as of April 2013
|
|
10-K
|
001-32335
|
2/28/2013
|
|
|
|
|
|
|
10.29
|
First modification to Lease (11436 Sorrento Valley Road)
|
|
10-Q
|
001-32335
|
5/8/2013
|
|
|
|
|
|
|
10.30*
|
Credit Agreement, dated December 30, 2015
|
|
10-K
|
001-32335
|
2/29/2016
|
|
|
|
|
|
|
10.31
|
Halozyme Therapeutics, Inc. Executive Incentive Plan
|
|
DEF-14A
|
001-32335
|
3/23/2016
|
|
|
|
|
|
|
10.32
|
Loan and Security Agreement, dated June 7, 2016
|
|
10-Q
|
001-32335
|
8/9/2016
|
|
|
|
|
|
|
10.33
|
Consent, Release, and First Amendment to Loan and Security Agreement, dated December 21, 2016
|
X
|
|
|
|
|
|
|
|
|
|
21.1
|
Subsidiaries of Registrant
|
X
|
|
|
|
|
|
|
|
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
X
|
|
|
|
|
|
|
|
|
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
|
|
|
|
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
X
|
|
|
|
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
X
|
|
|
|
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
X
|
|
|
|
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||
Exhibit
|
|
Filed
|
|
|
|
Number
|
Exhibit Title
|
Herewith
|
Form
|
File No.
|
Date Filed
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
X
|
|
|
|
|
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase
|
X
|
|
|
|
*
|
Confidential treatment has been granted (or requested) for certain portions of this exhibit. These portions have been omitted from this agreement and have been filed separately with the Securities and Exchange Commission.
|
#
|
Indicates management contract or compensatory plan or arrangement.
|
COLLATERAL AGENT:
OXFORD FINANCE LLC
By:
/s/ Mark Davis
Name:
Mark Davis
Title:
Vice President of Finance
LENDERS:
OXFORD FINANCE LLC
By:
/s/ Mark Davis
Name:
Mark Davis
Title:
Vice President of Finance
SILICON VALLEY BANK
By:
/s/ Anthony Flores
Name:
Anthony Flores
Title:
Director
|
BORROWER:
HALOZYME THERAPEUTICS, INC.
By:
/s/ Laurie Stelzer
Name:
Laurie Stelzer
Title:
Chief Financial Officer
HALOZYME, INC.
By:
/s/ Laurie Stelzer
Name:
Laurie Stelzer
Title:
Chief Financial Officer
|
|
|
Name of Subsidiary
|
|
State or Jurisdiction of
Incorporation or Organization
|
|
Percent Owned
|
Halozyme, Inc.
|
|
California
|
|
100%
|
Halozyme Holdings Ltd., a wholly owned subsidiary of Halozyme, Inc.
|
|
Bermuda
|
|
100%
|
Halozyme Royalty LLC, a wholly owned subsidiary of Halozyme, Inc.
|
|
Delaware
|
|
100%
|
Halozyme Switzerland GmbH, a wholly owned subsidiary of Halozyme, Inc.
|
|
Switzerland
|
|
100%
|
1.
|
I have reviewed this Annual Report on Form 10-K of Halozyme Therapeutics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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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;
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4.
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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:
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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;
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b)
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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;
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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
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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
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5.
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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):
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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
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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.
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Date:
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February 28, 2017
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/s/ Helen I. Torley, M.B. Ch.B, M.R.C.P.
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Helen I. Torley, M.B. Ch.B, M.R.C.P.
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President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Halozyme Therapeutics, Inc.;
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2.
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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.
|
|
|
|
|
|
Date:
|
February 28, 2017
|
|
|
/s/ Laurie D. Stelzer
|
|
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|
|
Laurie D. Stelzer
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|
|
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|
Senior Vice President and Chief Financial Officer
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(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
|
|
|
|
|
Dated:
|
February 28, 2017
|
|
|
/s/ Helen I. Torley, M.B. Ch.B, M.R.C.P.
|
|
|
|
|
Helen I. Torley, M.B. Ch.B, M.R.C.P.
|
|
|
|
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
|
|
|
|
|
Dated:
|
February 28, 2017
|
|
|
/s/ Laurie D. Stelzer
|
|
|
|
|
Laurie D. Stelzer
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|
|
|
|
Senior Vice President and Chief Financial Officer
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