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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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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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, CA
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92121
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value
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The NASDAQ Stock Market, LLC
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Page
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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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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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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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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 3 development in stage IV PDA and multiple Phase 1b/2 studies for various tumor types. 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 a novel oncology preclinical asset.
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•
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Focus on our ENHANZE platform. We currently have eight 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 develop 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 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 statistical significance with a median PFS of 9.2 months in the PAG arm compared to 5.2 months in the AG arm, HR 0.51 (95% CI: 0.26, 1.00); p=0.048;
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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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•
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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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•
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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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•
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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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•
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Magnitude of the PFS treatment effect observed;
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•
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Toxicity profile; and
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Interim OS data.
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Year Ended December 31,
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2017
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2016
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2015
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Roche
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38
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%
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63
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%
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42
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%
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BMS
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32
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%
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—
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—
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Alexion
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13
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%
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—
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—
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Baxalta
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7
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%
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12
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%
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7
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%
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Lilly
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—
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6
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%
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19
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%
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AbbVie
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—
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4
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%
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17
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%
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•
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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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•
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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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•
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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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•
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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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•
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during the course of clinical studies, the final data may differ from initial reported data, and 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 HALO-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 patients who remain either on treatment or in follow-up on Study HALO-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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clinical trial results may be negatively impacted if our companion diagnostic does not accurately identify patients most likely to respond to the therapy, including the level of HA in patients;
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third parties, such as contract research organizations, upon whom we rely to help conduct and manage our clinical trials may not perform satisfactorily, fulfill their contractual obligations to us, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated 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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•
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regulatory review may not find that the data from preclinical testing and clinical trials justifies approval;
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•
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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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•
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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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voluntary or mandatory recall;
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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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the voluntary or involuntary commencement of bankruptcy proceedings by either Halozyme or Halozyme Royalty and other insolvency related defaults;
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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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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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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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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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the termination, for any reason, of any of our collaboration agreements;
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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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the resignation, or other departure, of members of management or our Board of Directors;
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general negative conditions in the healthcare industry;
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general negative conditions in the financial markets;
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the cost associated with obtaining regulatory approval for any of our proprietary or collaboration product candidates;
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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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suspensions or delays in the conduct of clinical trials or securing of regulatory approvals;
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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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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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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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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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2017
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2016
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||||||||||||
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High
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Low
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High
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Low
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First Quarter
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$15.20
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$9.68
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$17.51
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$6.96
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Second Quarter
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$15.05
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$11.51
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$12.33
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$7.70
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Third Quarter
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$17.62
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$11.41
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$12.75
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$8.43
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Fourth Quarter
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$21.13
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$16.58
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$14.38
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$8.18
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|
12/31/2012
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12/31/2013
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12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
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Halozyme Therapeutics, Inc.
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$100
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$223
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$144
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$258
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$147
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$302
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NASDAQ Composite
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$100
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$140
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$161
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$172
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$187
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$243
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NASDAQ Biotechnology
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$100
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$166
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$223
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$249
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$196
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$239
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Item 6.
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Selected Financial Data
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Year Ended December 31,
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Statement of Operations Data:
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2017
|
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2016
|
|
2015
|
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2014
|
|
2013
|
||||||||||
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(in thousands, except for per share amounts)
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Total revenues
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$
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316,613
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|
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$
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146,691
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|
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$
|
135,057
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|
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$
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75,334
|
|
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$
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54,799
|
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Net income (loss)
|
|
$
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62,971
|
|
|
$
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(103,023
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)
|
|
$
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(32,231
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)
|
|
$
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(68,375
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)
|
|
$
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(83,479
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)
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Net income (loss) per share, basic
|
|
$
|
0.46
|
|
|
$
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(0.81
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)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.56
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)
|
|
$
|
(0.74
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)
|
Net income (loss) per share, diluted
|
|
$
|
0.45
|
|
|
$
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(0.81
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)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.56
|
)
|
|
$
|
(0.74
|
)
|
Shares used in computing net income (loss) per share, basic
|
|
136,419
|
|
|
127,964
|
|
|
126,704
|
|
|
122,690
|
|
|
112,805
|
|
|||||
Shares used in computing net income (loss) per share, diluted
|
|
139,068
|
|
|
127,964
|
|
|
126,704
|
|
|
122,690
|
|
|
112,805
|
|
|
|
As of December 31,
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||||||||||||||||||
Balance Sheet Data:
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in thousands)
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||||||||||||||||||
Cash and cash equivalents and available-for-sale marketable securities
|
|
$
|
469,214
|
|
|
$
|
204,981
|
|
|
$
|
108,339
|
|
|
$
|
135,623
|
|
|
$
|
71,503
|
|
Working capital
|
|
$
|
379,044
|
|
|
$
|
201,947
|
|
|
$
|
109,315
|
|
|
$
|
136,990
|
|
|
$
|
70,293
|
|
Total assets
|
|
$
|
519,945
|
|
|
$
|
261,515
|
|
|
$
|
181,789
|
|
|
$
|
165,977
|
|
|
$
|
101,793
|
|
Deferred revenue
|
|
$
|
60,865
|
|
|
$
|
44,618
|
|
|
$
|
53,223
|
|
|
$
|
54,634
|
|
|
$
|
53,143
|
|
Long-term debt, net
|
|
$
|
125,140
|
|
|
$
|
199,228
|
|
|
$
|
27,971
|
|
|
$
|
49,860
|
|
|
$
|
49,772
|
|
Total liabilities
|
|
$
|
311,579
|
|
|
$
|
293,996
|
|
|
$
|
138,790
|
|
|
$
|
124,625
|
|
|
$
|
121,783
|
|
Stockholders’ equity (deficit)
|
|
$
|
208,366
|
|
|
$
|
(32,481
|
)
|
|
$
|
42,999
|
|
|
$
|
41,352
|
|
|
$
|
(19,991
|
)
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
•
|
In January 2018, Roche initiated a Phase 1 study for an unnamed target with the ENHANZE Technology, triggering a $1.0 million milestone payment.
|
•
|
In December 2017, we and Alexion entered into a collaboration and license agreement, under which Alexion has the worldwide license to develop and commercialize product combining our rHuPH20 enzyme with up to four targets from Alexion’s portfolio of products for an upfront payment of $40.0 million. Targets may be selected on an exclusive basis. Alexion elected two targets on an exclusive basis, including a C5 complement inhibitor, and has an option to select two additional targets within five years from the effective date of the agreement.
|
•
|
During the fourth quarter of 2017, Baxalta and Roche achieved sales milestones for commercial products using the ENHANZE Technology, triggering $5.0 million and $7.0 million in milestone payments, respectively.
|
•
|
During the fourth quarter of 2017, Janssen initiated the first of four currently active Phase 3 studies of daratumumab combined with the ENHANZE Technology in amyloidosis patients, multiple myeloma patients and smoldering myeloma patients, triggering a $15.0 million milestone payment.
|
•
|
In September 2017, we entered into a collaboration and license agreement with BMS, under which BMS has the worldwide license to develop and commercialize products combining our ENHANZE Technology with BMS immuno-oncology targets directed at up to eleven targets for an upfront payment of $105.0 million. BMS has designated multiple immuno-oncology targets including programmed death 1 (PD-1) and has an option to select additional targets within five years from the effective date.
|
•
|
In September 2017, we entered into an agreement with Roche for the right to develop and commercialize one additional exclusive target using our ENHANZE Technology for an upfront payment of $30.0 million.
|
•
|
In August 2017, Lilly initiated a Phase 1 study of an investigational new therapy in combination with rHuPH20.
|
•
|
In June 2017, the FDA approved Genentech’s RITUXAN HYCELA
™
, a combination of rituximab and rHuPH20, for CLL and two types of NHL, follicular lymphoma and diffuse large B-cell lymphoma.
|
•
|
In January 2018, the Phase 1b portion of the study of HALAVEN (eribulin) with PEGPH20 in HER2-negative metastatic breast cancer closed enrollment. As a result of an Eisai portfolio decision, no further clinical development is planned on the Phase 2 portion of the study. Data analysis is ongoing and a submission of the results of this study to a scientific forum is expected in the second half of 2018.
|
•
|
In October 2017, Genentech initiated a Phase 1b/2 clinical trial evaluating PEGPH20 in combination with Tecentriq in patients with gastric cancer.
|
•
|
In October 2017, we initiated the second study in our clinical agreement with Genentech, a Phase 1b/2 open-label randomized study to assess Tecentriq in combination with PEGPH20 and chemotherapy in patients with cholangiocarcinoma and gall bladder cancer.
|
•
|
In July 2017, Genentech initiated a Phase 1b/2 clinical trial evaluating PEGPH20 in combination with Tecentriq in patients with previously treated metastatic
PDA.
|
•
|
In June 2017, results from Study HALO-202 were presented at the European Society for Medical Oncology (ESMO) World Congress of Gastrointestinal Cancer and the Annual Meeting of the American Society of Clinical Oncology (ASCO). The presentations expanded on the topline results announced in January 2017 with additional data from the study as of December 2016.
|
•
|
In April 2017, we presented at the annual meeting of the American Association of Cancer Research (AACR) that, in preclinical models, PEGPH20 increases the number of cancer-fighting white blood cells accumulating in the tumor and the effectiveness of immunotherapies, which builds upon prior preclinical findings and continues to support the potential benefits of remodeling the tumor microenvironment.
|
•
|
In March 2017, SWOG, an independent network of researchers that design and conduct cancer clinical trials, stopped enrollment in a Phase 1b/2 trial evaluating PEGPH20 plus modified FOLFIRINOX chemotherapy versus modified FOLFIRINOX alone in patients with previously untreated metastatic pancreas cancer. SWOG’s independent Data Monitoring Committee found, based on preliminary data, that the addition of PEGPH20 given every two weeks to modified FOLFIRINOX would be unlikely to demonstrate a statistically significant improvement in the primary endpoint of overall survival. SWOG further reported that a higher rate of death was observed in the PEGPH20 arm versus modified FOLFIRINOX alone. In January 2018, SWOG presented final overall survival (OS) and progression-free survival (PFS) data from the study at the ASCO-GI conference, which was consistent with the preliminary data findings. Our PEGPH20 studies and clinical collaborations in combination with agents other than modified FOLFIRINOX continue unchanged.
|
•
|
In January 2017, we announced topline results from the combined analysis of Stage 1 and Stage 2, and Stage 2 alone, of the Study 109-202, based on a December 2016 data cutoff. Among the findings, the overall study population showed a statistically significant increase in 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 May 2017, we completed an underwritten public offering pursuant to which we sold 11.5 million shares of common stock, including 1.5 million shares sold pursuant to the full exercise of an option to purchase additional shares granted to the underwriters. All of the shares were offered at a public offering price of $12.50 per share, generating approximately $134.9 million in net proceeds, after deducting underwriting discounts and commissions and other offering expenses. We intend to use the net proceeds from this offering to fund continued development of our PEGPH20 oncology program and for other general corporate purposes.
|
|
|
2017
|
|
Change
|
|
2016
|
|
Change
|
|
2015
|
||||||||
Sales of bulk rHuPH20:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Roche
|
|
$
|
22,325
|
|
|
(10
|
)%
|
|
$
|
24,786
|
|
|
9
|
%
|
|
$
|
22,773
|
|
Baxalta
|
|
11,717
|
|
|
5
|
%
|
|
11,117
|
|
|
73
|
%
|
|
6,410
|
|
|||
Other
|
|
1,204
|
|
|
(10
|
)%
|
|
1,332
|
|
|
73
|
%
|
|
772
|
|
|||
Sales of
Hylenex
|
|
15,150
|
|
|
(6
|
)%
|
|
16,157
|
|
|
—
|
|
|
16,127
|
|
|||
Total product sales, net
|
|
$
|
50,396
|
|
|
(6
|
)%
|
|
$
|
53,392
|
|
|
16
|
%
|
|
$
|
46,082
|
|
Upfront license fees, license fees for the election of additional targets, event-based payments, license maintenance fees and amortization of deferred upfront and other license fees:
|
|
2017
|
|
Change
|
|
2016
|
|
Change
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
BMS
|
|
$
|
101,400
|
|
|
n/a
|
|
|
$
|
—
|
|
|
n/a
|
|
|
$
|
—
|
|
Alexion
|
|
40,000
|
|
|
n/a
|
|
|
—
|
|
|
n/a
|
|
|
—
|
|
|||
Roche
|
|
33,330
|
|
|
902
|
%
|
|
3,328
|
|
|
2
|
%
|
|
3,269
|
|
|||
Janssen
|
|
15,000
|
|
|
5,900
|
%
|
|
250
|
|
|
n/a
|
|
|
—
|
|
|||
Baxalta
|
|
810
|
|
|
6
|
%
|
|
765
|
|
|
—
|
|
|
765
|
|
|||
Lilly
|
|
—
|
|
|
(100
|
)%
|
|
8,000
|
|
|
(68
|
)%
|
|
25,000
|
|
|||
AbbVie
|
|
—
|
|
|
(100
|
)%
|
|
6,000
|
|
|
(74
|
)%
|
|
23,000
|
|
|||
Pfizer
|
|
—
|
|
|
(100
|
)%
|
|
2,500
|
|
|
25
|
%
|
|
2,000
|
|
|||
|
|
190,540
|
|
|
814
|
%
|
|
20,843
|
|
|
(61
|
%)
|
|
54,034
|
|
|||
Reimbursements for research and development services:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Roche
|
|
6,900
|
|
|
(63
|
)%
|
|
18,700
|
|
|
632
|
%
|
|
2,556
|
|
|||
Janssen
|
|
3,302
|
|
|
61
|
%
|
|
2,051
|
|
|
146
|
%
|
|
834
|
|
|||
Baxalta
|
|
1,585
|
|
|
311
|
%
|
|
386
|
|
|
32
|
%
|
|
292
|
|
|||
Other
|
|
383
|
|
|
14
|
%
|
|
335
|
|
|
18
|
%
|
|
284
|
|
|||
|
|
12,170
|
|
|
(43
|
)%
|
|
21,472
|
|
|
441
|
%
|
|
3,966
|
|
|||
Total revenues under collaborative agreements
|
|
$
|
202,710
|
|
|
379
|
%
|
|
$
|
42,315
|
|
|
(27
|
%)
|
|
$
|
58,000
|
|
|
|
2017
|
|
Change
|
|
2016
|
|
Change
|
|
2015
|
||||||||
Programs
|
|
|
|
|
|
|
|
|
|
|
||||||||
PEGPH20
|
|
$
|
123,932
|
|
|
15
|
%
|
|
$
|
108,102
|
|
|
43
|
%
|
|
$
|
75,616
|
|
ENHANZE collaborations and rHuPH20 platform
|
|
19,197
|
|
|
(37
|
)%
|
|
30,398
|
|
|
189
|
%
|
|
10,514
|
|
|||
Other
|
|
7,514
|
|
|
(39
|
)%
|
|
12,342
|
|
|
74
|
%
|
|
7,106
|
|
|||
Total research and development expenses
|
|
$
|
150,643
|
|
|
—
|
|
|
$
|
150,842
|
|
|
62
|
%
|
|
$
|
93,236
|
|
|
|
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 current portion
(2)
|
|
$
|
205,157
|
|
|
$
|
77,211
|
|
|
$
|
127,946
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest on long-term debt
(3)
|
|
26,792
|
|
|
16,914
|
|
|
9,878
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
(4)
|
|
13,113
|
|
|
2,415
|
|
|
8,079
|
|
|
2,619
|
|
|
—
|
|
|||||
Third-party manufacturing obligations
(5)
|
|
12,257
|
|
|
7,507
|
|
|
4,750
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations
|
|
445
|
|
|
386
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
257,764
|
|
|
$
|
104,433
|
|
|
$
|
150,712
|
|
|
$
|
2,619
|
|
|
$
|
—
|
|
(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 by us 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 regulatory and commercial milestones under the in-license agreement are achieved. Also excludes contractual obligations already recorded on our consolidated balance sheet as current liabilities.
|
(2)
|
Long-term debt consists of the Royalty-backed Loan and the Loan Agreement. Obligations include future quarterly 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. Obligations also include future quarterly principal payments and a final payment of $3.03 million for the Loan Agreement due in January 2021.
|
(3)
|
Interest on long-term debt includes future monthly interest payments for the Loan Agreement based on a fixed rate of 8.25%. Interest on long-term debt also includes quarterly interest payments on the Royalty-backed Loan, which 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 obligations for the Royalty-backed Loan were estimated using rates in effect as of December 31, 2017.
|
(4)
|
Includes minimum lease payments related to leases of our office and research facilities and certain autos under non-cancelable operating leases.
|
(5)
|
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 costs of preparing for and launching a new commercial product;
|
•
|
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.
|
Revenue Recognition
|
|
|
|
|
Methodology
|
|
Judgment and Uncertainties
|
|
Effect if Actual Results Differ From Assumptions
|
|
|
|
|
|
For collaborative arrangements, we generally recognize revenues and income for each identified unit of accounting within the multiple element arrangements based on the nature and timing of the delivery process.
Management performs detailed reviews of all of our significant contracts. At the inception of the arrangement, consideration is allocated to all identified units of accounting based on their relative selling price. On an ongoing basis, the units of accounting are evaluated against revenue recognition criteria.
|
|
The relative selling price for each deliverable is determined using vendor specific objective evidence (“VSOE”) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence of selling price exists, we use our best estimate of the selling price for the deliverable.
|
|
Changes in the allocation of the sales price between delivered and undelivered elements can impact the timing of revenue recognition but do not change the total revenue recognized under any agreement.
|
Debt Classification
|
|
|
|
|
Methodology
|
|
Judgment and Uncertainties
|
|
Effect if Actual Results Differ From Assumptions
|
|
|
|
|
|
The short-term and long-term classification of outstanding debt represents management's best estimate of the timing of the amounts to be repaid. These estimates are based on contractual obligations, anticipated timing of royalty payments received and changes in LIBOR interest rates.
|
|
Royalty payments are estimated using partner insight to the marketplace, historical trends and our knowledge of the therapeutic space.
|
|
The short-term and long-term portion of the debts may change and the repayment term may be shortened or extended depending on the actual level of royalty payments received. The actual repayment period could vary materially from our estimate to the extent that royalty payments from our partners are lower than our current estimates, which could arise due to factors beyond our control, such as competitive factors, decreased market acceptance or a failure by our partners to successfully commercialize in territories where regulatory approval has been received.
Currently, we do not believe that we have significant amount of risk relative to the repayment of the debt. A 10% reduction in the amount of anticipated royalties would not change our expected repayment period at maximum contractual interest rates.
|
Share-Based Payments
|
|
|
|
|
Methodology
|
|
Judgment and Uncertainties
|
|
Effect if Actual Results Differ From Assumptions
|
|
|
|
|
|
The Company maintains a Stock Incentive Plan, which provides for share-based payment awards, including stock options, restricted stock and performance awards. We determine the fair value of our stock option awards and performance awards at the date of grant using a Black-Scholes model. We determine the fair value of our restricted stock awards at the date of grant using the closing market value of our common stock on the date of grant.
|
|
Option-pricing models and generally accepted valuation techniques require management to make assumptions and to apply judgment to determine the fair value of our awards. These assumptions and judgments include estimating the future volatility of our stock price, expected dividend yield and future employee stock option exercise behaviors. Changes in these assumptions can materially affect the fair value estimate.
Our performance awards require management to make assumptions regarding the likelihood of achieving long-term Company goals.
|
|
We do not currently believe there is a reasonable likelihood that there will be a material change in estimates or assumptions we use to determine stock-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in share-based compensation expense that could be material.
If actual results are not consistent with the assumptions used, the share-based compensation expense reported in our financial statements may not be representative of the actual economic cost of the share-based compensation. A 10% change in our share-based compensation expense for the year ended December 31, 2017, would have affected pre-tax earnings by approximately $3.1 million in 2017.
|
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.
|
Controls 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)
|
|
13,023,641
|
|
|
$12.24
|
|
6,552,249
|
|
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
13,023,641
|
|
|
$12.24
|
|
6,552,249
|
|
(1)
|
Represents stock options, restricted stock units, and performance restricted stock units under the Amended and Restated 2011 Stock Plan, 2008 Stock Plan and 2006 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
|
|
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
|
|
Consolidated Statements of Operations for Each of the Years Ended December 31, 2017, 2016 and 2015
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for Each of the Years Ended December 31, 2017,
2016 and 2015
|
|
|
Consolidated Statements of Cash Flows for Each of the Years Ended December 31, 2017, 2016 and 2015
|
|
|
Consolidated Statements of Stockholders’ Equity (Deficit) for Each of the Years Ended December 31, 2017,
2016 and 2015
|
|
|
Notes to the Consolidated Financial Statements
|
|
|
|
Page
|
Schedule II: Valuation and Qualifying Accounts
|
|
(b)
|
Exhibits.
|
|
|
|
Incorporated by Reference
|
||
Exhibit
|
|
Filed
|
|
|
|
Number
|
Exhibit Title
|
Herewith
|
Form
|
File No.
|
Date Filed
|
|
|
|
|
|
|
3.1
|
|
10-Q
|
001-32335
|
8/7/2013
|
|
|
|
|
|
|
|
3.2
|
|
8-K
|
001-32335
|
12/19/2016
|
|
|
|
|
|
|
|
10.1
|
|
SB-2
|
333-114776
|
4/23/2004
|
|
|
|
|
|
|
|
10.2
|
|
8-K
|
001-32335
|
1/12/2006
|
|
|
|
|
|
|
|
10.3#
|
|
8-K
|
001-32335
|
3/24/2006
|
|
|
|
|
|
|
|
10.4#
|
|
10-Q
|
001-32335
|
8/8/2006
|
|
|
|
|
|
|
|
10.5#
|
|
10-Q
|
001-32335
|
8/8/2006
|
|
|
|
|
|
|
|
10.6#
|
|
8-K
|
001-32335
|
3/19/2008
|
|
|
|
|
|
|
|
10.7#
|
|
10-Q
|
001-32335
|
8/7/2009
|
|
|
|
|
|
|
|
10.8#
|
|
10-Q
|
001-32335
|
8/7/2009
|
|
|
|
|
|
|
|
10.9#
|
|
DEF-14A
|
001-32335
|
3/23/2016
|
|
|
|
|
|
|
|
10.10#
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
|
10.11#
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
|
10.12#
|
|
10-Q
|
001-32335
|
8/10/2015
|
|
|
|
|
|
|
|
10.13#
|
|
10-Q
|
001-32335
|
8/10/2015
|
|
|
|
|
|
|
|
10.14#
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
|
10.15#
|
|
8-K
|
001-32335
|
5/6/2011
|
|
|
|
|
|
|
|
10.16#
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
|
10.17#
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
|
10.18#
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
|
10.19#
|
|
10-K
|
001-32335
|
2/28/2017
|
|
|
|
|
|
|
|
10.20#
|
|
8-K
|
001-32335
|
12/20/2007
|
|
|
|
Incorporated by Reference
|
||
Exhibit
|
|
Filed
|
|
|
|
Number
|
Exhibit Title
|
Herewith
|
Form
|
File No.
|
Date Filed
|
|
|
|
|
|
|
10.21#
|
|
10-Q
|
001-32335
|
5/9/2008
|
|
|
|
|
|
|
|
10.22#
|
|
10-Q
|
001-32335
|
11/9/2015
|
|
|
|
|
|
|
|
10.23
|
|
8-K
|
001-32335
|
6/16/2011
|
|
|
|
|
|
|
|
10.24
|
|
8-K
|
001-32335
|
7/5/2017
|
|
|
|
|
|
|
|
10.25
|
|
8-K
|
001-32335
|
6/16/2011
|
|
|
|
|
|
|
|
10.26
|
|
8-K
|
001-32335
|
7/5/2017
|
|
|
|
|
|
|
|
10.27
|
|
10-K
|
001-32335
|
3/1/2013
|
|
|
|
|
|
|
|
10.28
|
|
10-Q
|
001-32335
|
5/8/2013
|
|
|
|
|
|
|
|
10.29
|
|
8-K
|
001-32335
|
7/5/2017
|
|
|
|
|
|
|
|
10.30*
|
|
10-K
|
001-32335
|
2/29/2016
|
|
|
|
|
|
|
|
10.31#
|
|
DEF-14A
|
001-32335
|
3/23/2016
|
|
|
|
|
|
|
|
10.32
|
|
10-Q
|
001-32335
|
8/9/2016
|
|
|
|
|
|
|
|
10.33
|
|
10-K
|
001-32335
|
2/28/2017
|
|
|
|
|
|
|
|
10.34
|
X
|
|
|
|
|
|
|
|
|
|
|
10.35#
|
|
8-K
|
001-32335
|
5/9/2017
|
|
|
|
|
|
|
|
10.36#
|
|
8-K
|
001-32335
|
9/29/2017
|
|
|
|
|
|
|
|
21.1
|
X
|
|
|
|
|
|
|
|
|
|
|
23.1
|
X
|
|
|
|
|
|
|
|
|
|
|
31.1
|
X
|
|
|
|
|
|
|
|
|
|
|
31.2
|
X
|
|
|
|
|
|
|
Incorporated by Reference
|
||
Exhibit
|
|
Filed
|
|
|
|
Number
|
Exhibit Title
|
Herewith
|
Form
|
File No.
|
Date Filed
|
|
|
|
|
|
|
32
|
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
|
|
|
|
|
|
|
|
|
|
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.
|
(c)
|
Financial Statement Schedules.
See Item 15(a) 2 above.
|
Item 16.
|
Form 10-K Summary
|
|
|
|
|
Halozyme Therapeutics, Inc.,
a Delaware corporation
|
||||
|
|
|
|
|||||
Date:
|
|
February 20, 2018
|
|
|
|
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 20, 2018
|
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 20, 2018
|
Laurie D. Stelzer
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Connie L. Matsui
|
|
Chair of the Board of Directors
|
|
February 20, 2018
|
Connie L. Matsui
|
|
|
|
|
|
|
|
|
|
/s/ Jean-Pierre Bizzari
|
|
Director
|
|
February 20, 2018
|
Jean-Pierre Bizzari
|
|
|
|
|
|
|
|
|
|
/s/ James M. Daly
|
|
Director
|
|
February 20, 2018
|
James M. Daly
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey W. Henderson
|
|
Director
|
|
February 20, 2018
|
Jeffrey W. Henderson
|
|
|
|
|
|
|
|
|
|
/s/ Kenneth J. Kelley
|
|
Director
|
|
February 20, 2018
|
Kenneth J. Kelley
|
|
|
|
|
|
|
|
|
|
/s/ Randal J. Kirk
|
|
Director
|
|
February 20, 2018
|
Randal J. Kirk
|
|
|
|
|
|
|
|
|
|
/s/ Matthew L. Posard
|
|
Director
|
|
February 20, 2018
|
Matthew L. Posard
|
|
|
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
168,740
|
|
|
$
|
66,764
|
|
Marketable securities, available-for-sale
|
|
300,474
|
|
|
138,217
|
|
||
Accounts receivable, net
|
|
22,133
|
|
|
15,680
|
|
||
Inventories
|
|
5,146
|
|
|
14,623
|
|
||
Prepaid expenses and other assets
|
|
13,879
|
|
|
21,248
|
|
||
Total current assets
|
|
510,372
|
|
|
256,532
|
|
||
Property and equipment, net
|
|
3,520
|
|
|
4,264
|
|
||
Prepaid expenses and other assets
|
|
5,553
|
|
|
219
|
|
||
Restricted cash
|
|
500
|
|
|
500
|
|
||
Total assets
|
|
$
|
519,945
|
|
|
$
|
261,515
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
7,948
|
|
|
$
|
3,578
|
|
Accrued expenses
|
|
39,601
|
|
|
28,821
|
|
||
Deferred revenue, current portion
|
|
6,568
|
|
|
4,793
|
|
||
Current portion of long-term debt, net
|
|
77,211
|
|
|
17,393
|
|
||
Total current liabilities
|
|
131,328
|
|
|
54,585
|
|
||
Deferred revenue, net of current portion
|
|
54,297
|
|
|
39,825
|
|
||
Long-term debt, net
|
|
125,140
|
|
|
199,228
|
|
||
Other long-term liabilities
|
|
814
|
|
|
358
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
||||
Stockholders’ equity (deficit):
|
|
|
|
|
||||
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; 142,789 and
129,502 shares issued and outstanding at December 31, 2017 and 2016,
respectively
|
|
143
|
|
|
130
|
|
||
Additional paid-in capital
|
|
731,044
|
|
|
552,737
|
|
||
Accumulated other comprehensive loss
|
|
(450
|
)
|
|
(6
|
)
|
||
Accumulated deficit
|
|
(522,371
|
)
|
|
(585,342
|
)
|
||
Total stockholders’ equity (deficit)
|
|
208,366
|
|
|
(32,481
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
519,945
|
|
|
$
|
261,515
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Product sales, net
|
|
$
|
50,396
|
|
|
$
|
53,392
|
|
|
$
|
46,082
|
|
Royalties
|
|
63,507
|
|
|
50,984
|
|
|
30,975
|
|
|||
Revenues under collaborative agreements
|
|
202,710
|
|
|
42,315
|
|
|
58,000
|
|
|||
Total revenues
|
|
316,613
|
|
|
146,691
|
|
|
135,057
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of product sales
|
|
31,152
|
|
|
33,206
|
|
|
29,245
|
|
|||
Research and development
|
|
150,643
|
|
|
150,842
|
|
|
93,236
|
|
|||
Selling, general and administrative
|
|
53,816
|
|
|
45,853
|
|
|
40,028
|
|
|||
Total operating expenses
|
|
235,611
|
|
|
229,901
|
|
|
162,509
|
|
|||
Operating income (loss)
|
|
81,002
|
|
|
(83,210
|
)
|
|
(27,452
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
|
||||||
Investment and other income, net
|
|
2,592
|
|
|
1,326
|
|
|
422
|
|
|||
Interest expense
|
|
(21,984
|
)
|
|
(19,977
|
)
|
|
(5,201
|
)
|
|||
Income (loss) before income taxes
|
|
61,610
|
|
|
(101,861
|
)
|
|
(32,231
|
)
|
|||
Income tax (benefit) expense
|
|
(1,361
|
)
|
|
1,162
|
|
|
—
|
|
|||
Net income (loss)
|
|
$
|
62,971
|
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.46
|
|
|
$
|
(0.81
|
)
|
|
$
|
(0.25
|
)
|
Diluted
|
|
$
|
0.45
|
|
|
$
|
(0.81
|
)
|
|
$
|
(0.25
|
)
|
|
|
|
|
|
|
|
||||||
Shares used in computing net income (loss) per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
136,419
|
|
|
127,964
|
|
|
126,704
|
|
|||
Diluted
|
|
139,068
|
|
|
127,964
|
|
|
126,704
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
|
$
|
62,971
|
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Unrealized (loss) gain on marketable securities
|
|
(430
|
)
|
|
93
|
|
|
(58
|
)
|
|||
Foreign currency translation adjustment
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Total comprehensive income (loss)
|
|
$
|
62,527
|
|
|
$
|
(102,930
|
)
|
|
$
|
(32,289
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
62,971
|
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Share-based compensation
|
|
30,670
|
|
|
25,585
|
|
|
20,838
|
|
|||
Depreciation and amortization
|
|
2,161
|
|
|
2,410
|
|
|
1,677
|
|
|||
Non-cash interest expense
|
|
1,761
|
|
|
2,896
|
|
|
1,243
|
|
|||
Payment-in-kind interest expense on long-term debt
|
|
—
|
|
|
13,184
|
|
|
879
|
|
|||
(Accretion of discounts) amortization of premiums on marketable securities, net
|
|
(303
|
)
|
|
552
|
|
|
—
|
|
|||
Loss on disposal of equipment
|
|
46
|
|
|
8
|
|
|
8
|
|
|||
Deferral of unearned revenue
|
|
22,759
|
|
|
701
|
|
|
4,379
|
|
|||
Recognition of deferred revenue
|
|
(6,512
|
)
|
|
(9,304
|
)
|
|
(5,789
|
)
|
|||
Deferral of rent expense
|
|
13
|
|
|
—
|
|
|
441
|
|
|||
Recognition of deferred rent
|
|
(185
|
)
|
|
(370
|
)
|
|
(276
|
)
|
|||
Other
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
(6,453
|
)
|
|
16,730
|
|
|
(23,261
|
)
|
|||
Inventories
|
|
9,477
|
|
|
(5,134
|
)
|
|
(3,083
|
)
|
|||
Prepaid expenses and other assets
|
|
2,035
|
|
|
5,626
|
|
|
(15,774
|
)
|
|||
Accounts payable and accrued expenses
|
|
15,629
|
|
|
(244
|
)
|
|
13,866
|
|
|||
Net cash provided by (used in) operating activities
|
|
134,053
|
|
|
(50,383
|
)
|
|
(37,083
|
)
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Purchases of marketable securities
|
|
(398,187
|
)
|
|
(155,412
|
)
|
|
(71,482
|
)
|
|||
Proceeds from maturities of marketable securities
|
|
235,805
|
|
|
81,783
|
|
|
79,730
|
|
|||
Purchases of property and equipment
|
|
(1,350
|
)
|
|
(3,137
|
)
|
|
(2,360
|
)
|
|||
Net cash (used in) provided by investing activities
|
|
(163,732
|
)
|
|
(76,766
|
)
|
|
5,888
|
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock, net
|
|
134,874
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of long-term debt, net
|
|
—
|
|
|
203,006
|
|
|
—
|
|
|||
Repayment of long-term debt
|
|
(15,995
|
)
|
|
(54,250
|
)
|
|
—
|
|
|||
Proceeds from issuance of common stock under equity incentive plans, net of taxes paid related to net share settlement
|
|
12,776
|
|
|
1,865
|
|
|
13,098
|
|
|||
Net cash provided by financing activities
|
|
131,655
|
|
|
150,621
|
|
|
$
|
13,098
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
101,976
|
|
|
23,472
|
|
|
(18,097
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
|
67,264
|
|
|
43,792
|
|
|
61,889
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
169,240
|
|
|
$
|
67,264
|
|
|
$
|
43,792
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
20,295
|
|
|
$
|
3,886
|
|
|
$
|
3,775
|
|
Income taxes paid
|
|
$
|
3,015
|
|
|
$
|
1,441
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Amounts accrued for purchases of property and equipment
|
|
$
|
189
|
|
|
$
|
75
|
|
|
$
|
473
|
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity (Deficit)
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
BALANCE AT JANUARY 1, 2015
|
|
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
|
)
|
|||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
30,670
|
|
|
—
|
|
|
—
|
|
|
30,670
|
|
|||||
Issuance of common stock for cash, net
|
|
11,500
|
|
|
11
|
|
|
134,863
|
|
|
|
|
|
|
134,874
|
|
|||||||
Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units and performance restricted stock units, net
|
|
1,796
|
|
|
2
|
|
|
12,774
|
|
|
—
|
|
|
—
|
|
|
12,776
|
|
|||||
Cancellation of restricted stock awards, net
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(444
|
)
|
|
|
|
(444
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,971
|
|
|
62,971
|
|
|||||
BALANCE AT DECEMBER 31, 2017
|
|
142,789
|
|
|
$
|
143
|
|
|
$
|
731,044
|
|
|
$
|
(450
|
)
|
|
$
|
(522,371
|
)
|
|
$
|
208,366
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
|
$
|
196,274
|
|
|
$
|
52,292
|
|
|
$
|
77,149
|
|
Switzerland
|
|
119,136
|
|
|
93,067
|
|
|
57,136
|
|
|||
All other foreign
|
|
1,203
|
|
|
1,332
|
|
|
772
|
|
|||
Total revenues
|
|
$
|
316,613
|
|
|
$
|
146,691
|
|
|
$
|
135,057
|
|
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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
62,971
|
|
|
$
|
(103,023
|
)
|
|
$
|
(32,231
|
)
|
Denominator:
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding for basic
net income (loss) per share |
|
136,419
|
|
|
127,964
|
|
|
126,704
|
|
|||
Net effect of dilutive common stock equivalents
|
|
2,649
|
|
|
—
|
|
|
—
|
|
|||
Weighted average common shares outstanding for diluted
net income (loss) per share |
|
139,068
|
|
|
127,964
|
|
|
126,704
|
|
|||
Net income (loss) per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.46
|
|
|
$
|
(0.81
|
)
|
|
$
|
(0.25
|
)
|
Diluted
|
|
$
|
0.45
|
|
|
$
|
(0.81
|
)
|
|
$
|
(0.25
|
)
|
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 did not have a material impact on our consolidated financial position or results of operations.
|
|
|
|
|
|
|
|
In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Tax Assets
|
|
The amendments in this update simplify the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.
|
|
January 1, 2017
|
|
The adoption of this guidance did not have a significant impact on the Company’s financial statements.
|
|
|
|
|
|
|
|
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. We have elected to early adopt as of January 1, 2017.
|
|
Cash and cash equivalents at the beginning-of-period and end-of-period total amounts in the Consolidated Statements of Cash Flows have been adjusted to include $0.5 million of restricted cash for each of the periods presented.
|
|
|
|
|
|
|
|
Standard
|
|
Description
|
|
Effective Date
|
|
Effect on the Financial
Statements or Other Significant Matters
|
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 the updated standard will have on our consolidated financial statements and related disclosures.
|
|
|
|
|
|
|
|
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 equity (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 using the modified retrospective approach. We have substantially completed our evaluation of the effect that the updated standard will have on our consolidated financial statements and related disclosures. Adoption of the new guidance will impact the 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)
This standard will have a material impact on our consolidated financial statements.
|
|
|
|
|
|
|
|
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 the updated standard will have on our consolidated financial statements and related disclosures and do not intend to early adopt. We anticipate recognition of additional assets and corresponding liabilities related to our leases on our consolidated balance sheet.
|
|
|
|
|
|
|
|
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments
|
|
The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income.
|
|
January 1, 2020
|
|
The Company does not believe the adoption will have a material impact on our consolidated financial position or results of operations.
|
(1)
|
Under the new standard, we are required to assess whether licenses granted under our collaboration and license agreements are distinct in the context of the agreement from other performance obligations and functional when granted. We expect that license-related amounts, including upfront payments, exclusive designation fees, annual license maintenance fees, additional target fees, development, regulatory and sales-based milestones will be recognized, generally, at a point in time when earned. Currently, these amounts 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, 2017, we recognized revenue from amortization of license payments of
$4.1 million
. Total deferred revenue related to license payments under collaboration agreements as of December 31, 2017 was
$51.8 million
, which will be eliminated and recorded as a reduction to our accumulated deficit upon adoption of Topic 606. Under the new standard, license revenues would have totaled
$198.4 million
for the year ended December 31, 2017.
|
(2)
|
Under the new standard, we expect sales-based royalties will be recognized in the quarter they are earned based on estimates, with a true-up to actual results following 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 reduce our accumulated deficit and increase our accounts receivable, net, by the amount earned but not yet reported in our consolidated balance sheet of approximately
$19.4 million
. In 2017, we recognized royalty revenues of
$63.5 million
. Under the new standard, royalty revenues would have totaled
$68.9 million
for the year ended December 31, 2017. We have established a process to estimate sales-based royalty revenues in the quarter in which the sales occur going forward.
|
|
|
December 31, 2017
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Corporate debt securities
|
|
$
|
117,427
|
|
|
$
|
—
|
|
|
$
|
(235
|
)
|
|
$
|
117,192
|
|
U.S. Treasury securities
|
|
66,601
|
|
|
—
|
|
|
(201
|
)
|
|
66,400
|
|
||||
Commercial paper
|
|
116,882
|
|
|
—
|
|
|
—
|
|
|
116,882
|
|
||||
|
|
$
|
300,910
|
|
|
$
|
—
|
|
|
$
|
(436
|
)
|
|
$
|
300,474
|
|
|
|
December 31, 2016
|
||||||||||||||
|
|
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, 2017
|
|
December 31, 2016
|
||||
|
|
Estimated Fair Value
|
||||||
Due within one year
|
|
$
|
213,426
|
|
|
$
|
132,221
|
|
After one but within five years
|
|
87,048
|
|
|
5,996
|
|
||
|
|
$
|
300,474
|
|
|
$
|
138,217
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Total estimated fair value
|
|
Level 1
|
|
Level 2
|
|
Total estimated fair value
|
||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
$
|
142,091
|
|
|
$
|
—
|
|
|
$
|
142,091
|
|
|
$
|
60,916
|
|
|
$
|
—
|
|
|
$
|
60,916
|
|
Commercial paper
|
|
—
|
|
|
15,700
|
|
|
15,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Available-for-sale marketable
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate debt securities
|
|
—
|
|
|
117,192
|
|
|
117,192
|
|
|
—
|
|
|
40,207
|
|
|
40,207
|
|
||||||
U.S. Treasury securities
|
|
66,400
|
|
|
—
|
|
|
66,400
|
|
|
94,010
|
|
|
—
|
|
|
94,010
|
|
||||||
Commercial paper
|
|
—
|
|
|
116,882
|
|
|
116,882
|
|
|
—
|
|
|
4,000
|
|
|
4,000
|
|
||||||
|
|
$
|
208,491
|
|
|
$
|
249,774
|
|
|
$
|
458,265
|
|
|
$
|
154,926
|
|
|
$
|
44,207
|
|
|
$
|
199,133
|
|
|
As of December 31, 2017
|
||
Upfront license fee payment for the application of rHuPH20 to the initial exclusive targets
|
$
|
20,000
|
|
Election of additional exclusive targets and annual license maintenance fees for the
right to designate the remaining targets as exclusive targets
|
23,000
|
|
|
Clinical development milestone payments
|
13,000
|
|
|
Regulatory milestone payments
|
8,000
|
|
|
Sales-based milestone payments
|
22,000
|
|
|
Total payments received
|
$
|
86,000
|
|
|
As of December 31, 2017
|
||
Alexion Collaboration
|
$
|
40,000
|
|
BMS Collaboration
|
105,000
|
|
|
Lilly Collaboration
|
33,000
|
|
|
AbbVie Collaboration
|
29,000
|
|
|
Janssen Collaboration
|
30,250
|
|
|
Pfizer Collaboration
|
16,500
|
|
|
Total payments received
|
$
|
253,750
|
|
|
Consideration allocated to
license fees:
|
||
Alexion Collaboration
|
$
|
40,000
|
|
BMS Collaboration
|
101,400
|
|
|
Lilly Collaboration
|
33,000
|
|
|
AbbVie Collaboration
|
23,000
|
|
|
Janssen Collaboration
|
15,250
|
|
|
Pfizer Collaboration
|
12,500
|
|
|
Total consideration allocated to license fees
|
$
|
225,150
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Accounts receivable from product sales to collaborators
|
|
$
|
18,475
|
|
|
$
|
7,854
|
|
Accounts receivable from revenues under collaborative agreements
|
|
2,142
|
|
|
6,151
|
|
||
Accounts receivable from other product sales
|
|
2,075
|
|
|
2,234
|
|
||
Subtotal
|
|
22,692
|
|
|
16,239
|
|
||
Allowance for distribution fees and discounts
|
|
(559
|
)
|
|
(559
|
)
|
||
Total accounts receivable, net
|
|
$
|
22,133
|
|
|
$
|
15,680
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
|
$
|
377
|
|
|
$
|
761
|
|
Work-in-process
|
|
2,131
|
|
|
12,850
|
|
||
Finished goods
|
|
2,638
|
|
|
1,012
|
|
||
Total inventories
|
|
$
|
5,146
|
|
|
$
|
14,623
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Prepaid manufacturing expenses
|
|
$
|
2,337
|
|
|
$
|
9,663
|
|
Prepaid research and development expenses
|
|
7,793
|
|
|
8,613
|
|
||
Other prepaid expenses
|
|
2,585
|
|
|
1,661
|
|
||
Other assets
|
|
6,717
|
|
|
1,530
|
|
||
Total prepaid expenses and other assets
|
|
19,432
|
|
|
21,467
|
|
||
Less long-term portion
|
|
5,553
|
|
|
219
|
|
||
Total prepaid expenses and other assets, current
|
|
$
|
13,879
|
|
|
$
|
21,248
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Research equipment
|
|
$
|
10,970
|
|
|
$
|
10,479
|
|
Computer and office equipment
|
|
3,725
|
|
|
3,373
|
|
||
Leasehold improvements
|
|
2,715
|
|
|
2,331
|
|
||
Subtotal
|
|
17,410
|
|
|
16,183
|
|
||
Accumulated depreciation and amortization
|
|
(13,890
|
)
|
|
(11,919
|
)
|
||
Property and equipment, net
|
|
$
|
3,520
|
|
|
$
|
4,264
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Accrued outsourced research and development expenses
|
|
$
|
18,757
|
|
|
$
|
9,522
|
|
Accrued compensation and payroll taxes
|
|
13,384
|
|
|
11,539
|
|
||
Accrued outsourced manufacturing expenses
|
|
2,504
|
|
|
3,225
|
|
||
Other accrued expenses
|
|
5,396
|
|
|
4,552
|
|
||
Total accrued expenses
|
|
40,041
|
|
|
28,838
|
|
||
Less long-term portion
|
|
440
|
|
|
17
|
|
||
Total accrued expenses, current
|
|
$
|
39,601
|
|
|
$
|
28,821
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Collaborative agreements
|
|
|
|
|
||||
License fees and event-based payments:
|
|
|
|
|
||||
Roche
|
|
$
|
39,379
|
|
|
$
|
35,709
|
|
Other
|
|
15,999
|
|
|
8,209
|
|
||
|
|
55,378
|
|
|
43,918
|
|
||
Reimbursement for research and development services
|
|
—
|
|
|
700
|
|
||
Product sales
|
|
5,487
|
|
|
—
|
|
||
Total deferred revenue
|
|
60,865
|
|
|
44,618
|
|
||
Less current portion
|
|
6,568
|
|
|
4,793
|
|
||
Deferred revenue, net of current portion
|
|
$
|
54,297
|
|
|
$
|
39,825
|
|
2018
|
|
$
|
94,125
|
|
2019
|
|
105,758
|
|
|
2020
|
|
27,311
|
|
|
2021
|
|
4,755
|
|
|
2022
|
|
—
|
|
|
Total minimum payments
|
|
231,949
|
|
|
Less amount representing interest
|
|
(26,792
|
)
|
|
Gross balance of long-term debt
|
|
205,157
|
|
|
Less unamortized debt discount
|
|
(2,806
|
)
|
|
Present value of long-term debt
|
|
202,351
|
|
|
Less current portion of long-term debt
|
|
(77,211
|
)
|
|
Long-term debt, less current portion and unamortized debt discount
|
|
$
|
125,140
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Research and development
|
|
$
|
13,080
|
|
|
$
|
11,470
|
|
|
$
|
9,795
|
|
Selling, general and administrative
|
|
17,590
|
|
|
14,115
|
|
|
11,043
|
|
|||
Share-based compensation expense
|
|
$
|
30,670
|
|
|
$
|
25,585
|
|
|
$
|
20,838
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Stock options
|
|
$
|
19,583
|
|
|
$
|
16,544
|
|
|
$
|
11,145
|
|
RSAs, RSUs and PRSUs
|
|
11,087
|
|
|
9,041
|
|
|
9,693
|
|
|||
|
|
$
|
30,670
|
|
|
$
|
25,585
|
|
|
$
|
20,838
|
|
|
|
December 31, 2017
|
||||
|
|
Unrecognized
Expense
|
|
Remaining
Weighted-Average
Recognition Period
(years)
|
||
Stock options
|
|
$
|
36,914
|
|
|
2.4
|
RSAs
|
|
$
|
4,610
|
|
|
1.6
|
RSUs
|
|
$
|
15,965
|
|
|
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, 2015
|
|
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
|
|
|
|
|
||
Granted
|
|
2,717,614
|
|
|
$12.60
|
|
|
|
|
||
Exercised
|
|
(1,514,826
|
)
|
|
$9.24
|
|
|
|
|
||
Canceled/forfeited
|
|
(1,185,518
|
)
|
|
$11.89
|
|
|
|
|
||
Outstanding at December 31, 2017
|
|
11,108,466
|
|
|
$12.24
|
|
7.0
|
|
|
$90.8
|
million
|
Vested and expected to vest at December 31, 2017
|
|
11,108,466
|
|
|
$12.24
|
|
7.0
|
|
|
$90.8
|
million
|
Exercisable at December 31, 2017
|
|
5,493,802
|
|
|
$12.31
|
|
6.1
|
|
|
$44.7
|
million
|
|
|
Year Ended December 31,
|
||||
|
|
2017
|
|
2016
|
|
2015
|
Expected volatility
|
|
69.8-71.7%
|
|
67.5-71.9%
|
|
66.2-67.4%
|
Average expected term (in years)
|
|
5.6
|
|
5.4
|
|
5.6
|
Risk-free interest rate
|
|
1.73-2.13%
|
|
1.00-1.90%
|
|
1.34-1.92%
|
Expected dividend yield
|
|
—
|
|
—
|
|
—
|
|
|
Number of
Shares |
|
Weighted
Average Grant Date Fair Value |
|
Unvested at January 1, 2015
|
|
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
|
Granted
|
|
98,945
|
|
|
$14.15
|
Vested
|
|
(514,613
|
)
|
|
$10.23
|
Forfeited
|
|
(108,485
|
)
|
|
$9.62
|
Unvested at December 31, 2017
|
|
778,950
|
|
|
$10.59
|
|
|
Number of
Shares |
|
Weighted
Average Grant Date Fair Value |
|
Weighted
Average Remaining Contractual Term (yrs) |
|
Aggregate
Intrinsic Value |
|||
Unvested at January 1, 2015
|
|
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
|
|
|
|
|
||
Granted
|
|
1,378,273
|
|
|
$12.13
|
|
|
|
|
||
Vested
|
|
(378,406
|
)
|
|
$10.48
|
|
|
|
|
||
Forfeited
|
|
(251,261
|
)
|
|
$11.11
|
|
|
|
|
||
Outstanding at December 31, 2017
|
|
1,915,175
|
|
|
$11.39
|
|
1.4
|
|
|
$38.8
|
million
|
|
|
Number of
Shares |
|
Weighted
Average
Grant Date
Fair Value
|
|||
Outstanding at January 1, 2015
|
|
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
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
(200,255
|
)
|
|
|
$9.49
|
|
Outstanding at December 31, 2017
|
|
—
|
|
|
—
|
|
Year:
|
|
Operating
Leases |
||
2018
|
|
$
|
2,415
|
|
2019
|
|
2,785
|
|
|
2020
|
|
2,824
|
|
|
2021
|
|
2,470
|
|
|
2022
|
|
2,506
|
|
|
Total minimum lease payments
|
|
$
|
13,000
|
|
10.
|
Income Taxes
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
|
$
|
160,938
|
|
|
$
|
6,384
|
|
|
$
|
11,724
|
|
Foreign
|
|
(99,328
|
)
|
|
(108,245
|
)
|
|
(43,955
|
)
|
|||
Net income (loss) before income taxes
|
|
$
|
61,610
|
|
|
$
|
(101,861
|
)
|
|
$
|
(32,231
|
)
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
32,630
|
|
|
$
|
103,296
|
|
Deferred revenue
|
|
8,815
|
|
|
15,354
|
|
||
Research and development and orphan drug credits
|
|
75,224
|
|
|
73,701
|
|
||
Share-based compensation
|
|
7,423
|
|
|
8,844
|
|
||
Alternative minimum tax credit
|
|
5,532
|
|
|
1,494
|
|
||
Other, net
|
|
2,270
|
|
|
1,021
|
|
||
|
|
131,894
|
|
|
203,710
|
|
||
Valuation allowance for deferred tax assets
|
|
(126,189
|
)
|
|
(203,370
|
)
|
||
Deferred tax assets, net of valuation
|
|
5,705
|
|
|
340
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Depreciation
|
|
(173
|
)
|
|
(340
|
)
|
||
Total deferred tax liabilities
|
|
(173
|
)
|
|
(340
|
)
|
||
Net deferred tax asset (liability)
|
|
$
|
5,532
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current - federal
|
|
$
|
4,051
|
|
|
$
|
1,145
|
|
|
$
|
—
|
|
Current - state
|
|
120
|
|
|
17
|
|
|
—
|
|
|||
Deferred - federal
|
|
(5,532
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred - state
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
(1,361
|
)
|
|
$
|
1,162
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Federal income tax expense (benefit) at 34%
|
|
$
|
20,947
|
|
|
$
|
(34,633
|
)
|
|
$
|
(10,959
|
)
|
State income tax benefit, net of federal income tax impact
|
|
930
|
|
|
(653
|
)
|
|
5,524
|
|
|||
(Decrease) increase in valuation allowance
|
|
(77,181
|
)
|
|
11,252
|
|
|
4,045
|
|
|||
Enactment of the Tax Cuts and Jobs Act
|
|
17,132
|
|
|
—
|
|
|
—
|
|
|||
Foreign income subject to tax at other than federal statutory rate
|
|
33,674
|
|
|
36,803
|
|
|
14,945
|
|
|||
Shared-based compensation
|
|
525
|
|
|
3,735
|
|
|
(4,990
|
)
|
|||
Non-deductible expenses and other
|
|
5,779
|
|
|
698
|
|
|
6,457
|
|
|||
Research and development credits, net
|
|
4,162
|
|
|
(1,084
|
)
|
|
(3,861
|
)
|
|||
Orphan drug credits, net of federal add back
|
|
(7,329
|
)
|
|
(14,956
|
)
|
|
(11,161
|
)
|
|||
|
|
$
|
(1,361
|
)
|
|
$
|
1,162
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gross unrecognized tax benefits at beginning of period
|
|
$
|
12,799
|
|
|
$
|
4,898
|
|
|
$
|
—
|
|
Increases in tax positions for prior years
|
|
—
|
|
|
5,615
|
|
|
—
|
|
|||
Decreases in tax positions for prior years
|
|
(2,518
|
)
|
|
(4,898
|
)
|
|
—
|
|
|||
Increases in tax positions for current year
|
|
4,147
|
|
|
7,184
|
|
|
4,898
|
|
|||
Gross unrecognized tax benefits at end of period
|
|
$
|
14,428
|
|
|
$
|
12,799
|
|
|
$
|
4,898
|
|
|
|
|
|
Expires in:
|
|||||||||||
|
|
Net Operating Loss
|
|
2018
|
|
2021 and beyond
|
|
2028 and beyond
|
|||||||
Federal
|
|
$
|
88,516
|
|
|
—
|
|
|
$
|
88,516
|
|
|
—
|
|
|
California
|
|
$
|
243,080
|
|
|
—
|
|
|
—
|
|
|
$
|
243,080
|
|
11.
|
Employee Savings Plan
|
12.
|
Summary of Unaudited Quarterly Financial Information
|
|
|
Quarter Ended
|
||||||||||||||
2017 (Unaudited):
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
Total revenues
(1) (2)
|
|
$
|
29,568
|
|
|
$
|
33,750
|
|
|
$
|
63,731
|
|
|
$
|
189,564
|
|
Gross profit on product sales
|
|
$
|
3,890
|
|
|
$
|
4,992
|
|
|
$
|
5,257
|
|
|
$
|
5,105
|
|
Total operating expenses
|
|
$
|
57,094
|
|
|
$
|
59,228
|
|
|
$
|
55,654
|
|
|
$
|
63,635
|
|
Net income (loss)
|
|
$
|
(32,897
|
)
|
|
$
|
(30,763
|
)
|
|
$
|
2,749
|
|
|
$
|
123,882
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.26
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
0.02
|
|
|
$
|
0.87
|
|
Diluted
|
|
$
|
(0.26
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
0.02
|
|
|
$
|
0.85
|
|
Shares used in computing net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
128,615
|
|
|
134,013
|
|
|
141,190
|
|
|
141,718
|
|
||||
Diluted
|
|
128,615
|
|
|
134,013
|
|
|
143,236
|
|
|
145,633
|
|
||||
|
|
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
|
|
(1)
|
Revenues for the quarter ended December 31, 2017 included
$101.4 million
,
$40.0 million
and
$15.0 million
in revenue under collaborative arrangements from BMS, Alexion and Janssen, respectively.
|
(2)
|
Revenues for the quarter ended September 30, 2017 included
$30.0 million
in revenue under collaborative arrangements from the 2017 Roche Collaboration.
|
|
|
Balance at Beginning of Period
|
|
Additions
|
|
Deductions
|
|
Balance at End of Period
|
||||||||
For the year ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable allowances
(1)
|
|
$
|
559
|
|
|
$
|
4,645
|
|
|
$
|
(4,645
|
)
|
|
$
|
559
|
|
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
|
|
(1)
|
Allowances are for chargebacks, prompt payment discounts and distribution fees related to
Hylenex
recombinant product sales.
|
COLLATERAL AGENT:
OXFORD FINANCE LLC
|
BORROWER:
HALOZYME THERAPEUTICS, INC.
|
||
By:
|
/s/ Colette H. Featherly
|
By:
|
/s/ Laurie Stelzer
|
Name:
|
Colette H. Featherly
|
Name:
|
Laurie Stelzer
|
Title:
|
Senior Vice President
|
Title:
|
Chief Financial Officer
|
LENDERS:
OXFORD FINANCE LLC
|
HALOZYME, INC.
|
||
By:
|
/s/ Colette H. Featherly
|
By:
|
/s/ Laurie Stelzer
|
Name:
|
Colette H. Featherly
|
Name:
|
Laurie Stelzer
|
Title:
|
Senior Vice President
|
Title:
|
Chief Financial Officer
|
SILICON VALLEY BANK
|
|
|
|
By:
|
/s/ Anthony Flores
|
|
|
Name:
|
Anthony Flores
|
|
|
Title:
|
Director
|
|
|
1.
|
Definitions and Interpretation
|
3
|
|
2.
|
Quota Pledge
|
6
|
|
3.
|
Delivery of Documents
|
8
|
|
4.
|
Representations and Warranties
|
9
|
|
5.
|
Additional Covenants
|
11
|
|
6.
|
Realization of Security
|
12
|
|
7.
|
Application of Proceeds
|
13
|
|
8.
|
Power of Attorney
|
13
|
|
9.
|
Release of Security Assets
|
13
|
|
10.
|
Assignments and Transfer
|
14
|
|
11.
|
Successor Collateral Agent
|
14
|
|
12.
|
Cumulative and Continuing Security / Re-Instatement
|
14
|
|
13.
|
Liability of the Collateral Agent
|
15
|
|
14.
|
General Provisions
|
15
|
|
15.
|
Governing Law and Jurisdiction
|
16
|
|
ANNEX 1 CERTIFICATE OF GOOD STANDING Halozyme, Inc.
|
1
|
|
ANNEX 2 CERTIFICATE OF INCORPORATION WITH ARTICLES Halozyme, Inc.
|
2
|
|
ANNEX 3 BOARD RESOLUTION Halozyme, Inc.
|
3
|
|
ANNEX 4 EXCERPT FROM COMMERCIAL REGISTER Halozyme Switzerland Holdings GmbH
|
4
|
|
ANNEX 5 ARTICLES OF ASSOCIATION Halozyme Switzerland Holdings GmbH
|
5
|
|
ANNEX 6 MANAGER'S RESOLUTION Halozyme Switzerland Holdings GmbH
|
6
|
|
ANNEX 7 QUOTA REGISTER Halozyme Switzerland Holdings GmbH
|
7
|
|
ANNEX 8 BENEFICIAL OWNER REGISTER Halozyme Switzerland Holdings GmbH
|
8
|
|
1)
|
Oxford Finance LLC in its capacity as Lender and Collateral Agent, the other Lenders listed in the Credit Agreement (as defined below) as Lenders, and Halozyme, Inc. as Borrower entered into a loan and security agreement dated 7 June 2016 as amended from time-to-time by the Parties (the
Credit Agreement
) pursuant to which the Lenders agreed to make available to Halozyme, Inc. term loans in the amount of up to USD 70,000,000 (unless otherwise defined herein, each term as defined in the Credit Agreement);
|
2)
|
In the Credit Agreement, the Parties agreed that the claims of the Lenders under the Credit Agreement shall be secured,
inter alia
, by way of the Security Provider pledging a 65 % share in the quota capital of the Security Provider's Swiss wholly owned subsidiary, Halozyme Switzerland Holdings GmbH, a limited liability company (
Gesellschaft mit beschränkter Haftung
) with registered office in Basel, Switzerland] registration number [CHE-•] (the
Company
) to the Collateral Agent, acting for itself and as a direct representative (
direkter Stellvertreter
) on behalf of the other Secured Parties (as defined below); and
|
3)
|
This Agreement is entered into in connection with the establishment of the Company as new wholly owned subsidiary of the Security Provider and shall replace a quota pledge agreement dated 21 December 2016 between Haloyzme, Inc. as security provider and Oxford Finance LLC, acting for itself and as a direct representative on behalf of the other secured parties, as collateral agent, relating to a pledge of 65% of the quota in Halozyme Switzerland GmbH with registered office at Hochbergerstr. 60C, 4057 Basel, Switzerland, registration number CHE-377.722.348.
|
1.
|
Definitions and Interpretation
|
1.1
|
Definitions
|
Agreement
|
means this security agreement.
|
Business Day
|
means a Business Day as defined in the Credit Agreement,
provided on any such day commercial banks in Zurich are open for normal business transactions.
|
CC
|
means the Swiss Civil Code.
|
CO
|
means the Swiss Code of Obligations.
|
Company
|
shall have the meaning as set forth in Whereas Clause 2).
|
Credit Agreement
|
shall have the meaning set forth in Whereas Clause 1).
|
DEBA
|
means the Swiss Federal Act on Debt Collection and Bankruptcy.
|
Dividends
|
shall mean all kinds of dividend (including without limitation any repayment of capital) relating to the Pledged Quota whether in cash or in kind, including, without limitation, in form of additional Quotas or Participation Rights.
|
Event of Default
|
has the meaning ascribed to the term "Event of Default" in the Credit Agreement.
|
Pledge
|
shall have the meaning set forth in Section 2.1 (
Undertaking to Pledge and Pledge
), being a pledge pursuant to articles 899 et seq. CC.
|
Pledged Quota
|
means (i) a quota (
Stammanteil
) issued by the Company amounting to 65% of the entire quota capital (
Stammkapital
) of the Company pursuant to art. 774 CO, and with regard to which, for the avoidance of doubts, no certificate has been issued, (ii) all quota(s) or other rights or interests whatsoever which may substitute the quota defined in (i) above by operation of law or otherwise now or hereafter, and (iii) any further quota(s), participation rights ("
Genussscheine
" in the Company, within the meaning of art. 774a CO) or other rights, relating to the quota defined in (i) above, that will be issued to the Security Provider by the Company after the date hereof.
|
Quota
|
means each quota issued by the Company, all Quotas together representing the entire quota capital (
Stammkapital
) of the Company currently amounting to CHF 20,000 in the aggregate.
|
Related Rights
|
means all moneys payable and any and all other accessory or other rights, benefits and proceeds in respect of, or derived from, the Pledged Quota, whether present or future and whether by way of capital reduction, redemption, substitution, exchange, bonus or preference, conversion or otherwise, including Subscription Rights
,
Dividends, option rights or liquidation proceeds upon liquidation of the Company.
|
Secured Obligations
|
has the meaning ascribed to the term "Obligations" in the Credit Agreement.
|
Secured Party
|
means the Collateral Agent and each Lender as defined in the Credit Agreement.
|
Security
|
means the Pledge and the security assignment of Subscription Rights set out in Section 2.3(b) collectively.
|
Security Assets
|
means the Pledged Quota and the Related Rights over which the Security is created hereunder.
|
Subscription Rights
|
means the preemptive rights (
Bezugsrecht
) of a holder of the Pledged Quota in relation to such Pledged Quota.
|
Voting Rights
|
means the voting rights and any other non-monetary participation rights in relation to the Pledged Quota.
|
1.2
|
Interpretation
|
(a)
|
In this Agreement, unless the contrary intention appears, a reference to:
|
(i)
|
an amendment includes a supplement, novation, restatement or re-enactment, and amended will be construed accordingly;
|
(ii)
|
assets includes properties, revenues and rights of every description;
|
(iii)
|
an authorization includes an authorization, consent, approval, resolution, li-cense, exemption, filing and registration;
|
(iv)
|
a month is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that, if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last day in that calendar month;
|
(v)
|
a regulation includes any regulation, rule, official directive, request or guide-line (whether or not having the force of law but if not having the force of law compliance with which is customary amongst those to whom it is addressed) of any governmental body, agency, department or regulatory, self-regulatory or other authority or organization;
|
(vi)
|
a provision of law is a reference to that provision as amended or re-enacted from time to time;
|
(vii)
|
a Section or a Whereas Clause is a reference to a section or a Whereas Clause of this Agreement; and
|
(viii)
|
a person includes its successors and assigns.
|
(b)
|
Unless the contrary intention appears, a term used in any notice given under or in connection with this Agreement has the same meaning in that notice as in this Agreement.
|
(c)
|
The table of contents to, and the headings used in, this Agreement are for convenience only and shall not affect the interpretation of this Agreement.
|
(d)
|
Unless the context requires otherwise, references herein to the Collateral Agent shall be read as references to the Collateral Agent acting for itself and as direct representative (
direkter Stellvertreter
) on behalf of all other Secured Parties.
|
2.
|
Quota Pledge
|
2.1
|
Undertaking to Pledge and Pledge
|
(a)
|
The Security Provider hereby agrees to grant to the Collateral Agent
,
acting for itself and on behalf of each other Secured Party, a first ranking pledge in the sense of art. 899
et seq.
CC in the Pledged Quota and the Related Rights, free and clear of any pledges, liens, rights of set-off or other third party rights of any nature (the
Pledge
) until such time as the Secured Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full in cash.
|
(b)
|
To perfect the Pledge pursuant to Section 2.1(a), the Security Provider hereby pledges to the Collateral Agent, acting for itself and on behalf of each other Secured Party, the Pledged Quota and the Related Rights and undertakes to execute and/or perform or cause the Company to execute and/or perform any further document, formality or act necessary or advisable for the validity, effectiveness and enforceability of the Security.
|
(c)
|
The Pledge shall serve as a first ranking, continuing security right for the Collateral Agent to secure the payment and performance in full of the Secured Obligations.
|
2.2
|
Future Quotas
|
2.3
|
Subscription Rights
|
(a)
|
As long as no Event of Default has occurred and is continuing, the Security Provider shall be entitled to receive and retain the Subscription Rights issued to it by the Company as well as to exercise the Subscription Rights, provided that all new Quotas and Related Rights acquired by the Security Provider upon exercise of Subscription Rights are subject to the Pledge.
|
(b)
|
In case the Security Provider does not intend to exercise the Subscription Rights, the Security Provider (i) agrees to transfer and herewith transfers such Subscription Rights to the Collateral Agent free of charge, and the Collateral Agent shall be entitled to exercise such Subscription Rights in the name and on behalf of each of the Secured Parties, and (ii) undertakes to do all acts and things and to permit all acts and things to be done which are necessary or expedient to enable the Collateral Agent to exercise such Subscription Rights. The Security Provider shall notify the Collateral Agent promptly of any grant of Subscription Rights and undertakes to notify the Collateral Agent of any intention not to exercise Subscription Rights not less than 10 Business Days prior to expiration of the right to exercise such Subscription Rights.
|
(c)
|
Upon the occurrence and during the continuance of an Event of Default, all rights of the Security Provider under Section 2.3(a) and Section 2.3(b) shall cease, and the Security Provider herewith agrees to assign and assigns, with effect upon the occurrence and during the continuance of Event of Default, such Subscription Rights free of charge to the Collateral Agent (and for this purpose only, the Subscription Rights are released from the Pledge). If an Event of Default has occurred and is continuing, the Collateral Agent shall be entitled, but not obligated, to exercise the Subscription Rights.
|
2.4
|
Dividends
|
(a)
|
As long as no Event of Default has occurred and is continuing, the Security Provider shall be entitled to receive and retain all moneys payable on account of Dividends (subject always to the terms of the Loan Documents).
|
(b)
|
Upon the occurrence and during the continuance of an Event of Default, all rights of the Security Provider hereunder with respect to Dividends shall cease, and the Collateral Agent shall be entitled to receive as Security Asset all moneys payable on account of Dividends.
|
2.5
|
Voting Rights
|
(a)
|
As long as no Event of Default has occurred and is continuing, the Security Provider shall be entitled to exercise all Voting Rights, provided that it will not exercise any such Voting Rights in a manner which would materially prejudice the interests of the Secured Parties under this Agreement or lead to material deterioration in the value of the Security Assets and provided further that it will not exercise any such Voting Rights or powers for purposes that are inconsistent with the Credit Agreement.
|
(b)
|
Upon the occurrence and during the continuance of an Event of Default which is continuing, the Security Provider shall notify the Collateral Agent promptly in advance of any intention to exercise Voting Rights related to the Pledged Quota.
|
(c)
|
After receiving notification pursuant to Section 2.5 (b), the Collateral Agent shall be entitled but not obliged to either instruct the Security Provider on how to exercise the Voting Rights or to exercise in the name of the Security Provider all Voting Rights related to the Pledged Quota at its discretion.
|
(d)
|
The Security Provider hereby grants a power of attorney to the Collateral Agent (with right of substitution) to exercise the Voting Rights pursuant Section 2.5 (c) and hereby undertakes to promptly (i) execute and issue any and all proxies in favor of the Collateral Agent (acting in the name of and on behalf of the Secured Parties ) and (ii) do all acts and things and permit all acts and things to be done which are necessary or expedient for the Collateral Agent and the Secured Parties to exercise the Voting Rights pursuant to the previous paragraph.
|
2.6
|
Restriction to 65% of the Quota
|
3.
|
Delivery of Documents
|
(a)
|
an up-to-date certificate of good standing relating to the Security Provider, attached to this Agreement as Annex 1;
|
(b)
|
a photocopy of the current certificate of incorporation including articles of incorporation of the Security Provider, attached to this Agreement as Annex 2;
|
(c)
|
a photocopy of an unanimous written consent of the board of directors of the Security Provider wherein the entry into this Agreement and the granting of the Pledge as provided for hereunder is duly approved, attached to this Agreement as Annex 3;
|
(d)
|
an up-to-date excerpt from the commercial register
(Handelsregister)
relating to the Company, attached to this Agreement as Annex 4;
|
(e)
|
a photocopy of the current certified articles of association (
Statuten
) of the Company, attached to this Agreement as Annex 5;
|
(f)
|
a photocopy of an unanimous resolution of the board of managers of the Company acknowledging the Security provided for under this Agreement and approving the registration in the quota register of the Company of any future acquirer of the Pledged Quota as quotaholder with voting rights with respect to all the Quotas upon the enforcement of the Security, attached to this Agreement as Annex 6;
|
(g)
|
a photocopy of the quota register (
Anteilsbuch
) of the Company evidencing that the Security Provider is registered as quotaholder with respect to the Pledged Quota and that the Pledged Quota is subject to the Security, attached to this Agreement as Annex 7; and
|
(h)
|
a photocopy of the Company's register of ultimate beneficial owners (Verzeichnis der wirtschaftlich Berechtigten) from which it is evident that the Security Provider has complied with its notification obligations under article 790a CO, attached to this Agreement as Annex 8.
|
4.
|
Representations and Warranties
|
(a)
|
Without prejudice and in addition to the representations and warranties under the Credit Agreement which are incorporated herein by way of reference and shall apply to the Security Provider
mutatis mutandis
, the Security Provider represents and warrants to the Collateral Agent for itself and on behalf of the other Secured Parties that as of the date of this Agreement:
|
(i)
|
the written consent referred to in Section 3(c) has been duly passed in accordance with the laws of the jurisdiction of incorporation of the Security Provider, accurately reflects the resolutions and other matters reflected therein and has not been revoked or amended;
|
(ii)
|
the entering into, the signing and the performance of this Agreement do not result in a violation of any law or regulation applicable to the Security Provider;
|
(iii)
|
all its obligations under this Agreement are legal, valid, binding obligations and enforceable against the Security Provider in accordance with their terms;
|
(iv)
|
the Quotas are not subject to any transfer restrictions resulting from statutory laws or regulations, the articles of incorporation, corporate resolutions, contractual arrangements, arrangements or otherwise.
|
(v)
|
the Security Provider is the sole legal and beneficial owner of all Quotas, including, without limitation, the Security Assets, free and clear of any Liens, except for the Permitted Liens;
|
(vi)
|
the Quotas (including, without limitation, the Pledged Quota) are duly and validly issued by the Company and are fully paid and non-assessable (i.e., no further payment obligations by holders of Quotas towards the Company are attached to the Quotas);
|
(vii)
|
the Security Provider has not assigned, transferred or otherwise disposed of any of its rights, title and interest in the Security Assets, and the Security Assets are assignable;
|
(viii)
|
no meeting of a corporate body of the Security Provider and/or the Company has been held in which resolutions were passed or approved that could negatively affect the Security created (or to be created) under this Agreement or any other right or discretion of the Collateral Agent or the Secured Parties under this Agreement;
|
(ix)
|
the execution of, and performance of its obligations under, this Agreement by the Security Provider does not constitute or result in a breach of the articles of association of the Security Provider or the Company;
|
(x)
|
this Agreement constitutes an effective and perfected first ranking Security over the Security Assets;
|
(xi)
|
the photocopy of the quota register (
Anteilsbuch
) of the Company delivered to the Collateral Agents pursuant to Section 3 (g) is complete and accurate and includes the most current data;.
|
(xii)
|
there are no agreements between the Security Provider and any third party relating to the Pledged Quota that are opposed to the obligations of the Security Provider and the rights of the Collateral
|
(xiii)
|
no authorisation by any competent authority is required under any applicable law to grant a valid, binding and legally enforceable Pledge over the Pledged Quota;
|
(xiv)
|
all assets of the Company are free of any pledge, lien, encumbrance or other third party right, except (i) for any pledge, lien, encumbrance, or other interests or third party right notified to the Collateral Agent in writing prior to the execution of this Agreement, or (ii) as otherwise permitted by the other Loan Documents;
|
(xv)
|
the Company has not granted any options for the acquisition of Quotas;
|
(xvi)
|
the duly and validly undertaking to Pledge and the further execution of this Agreement does not require an authorisation pursuant to the Federal law on acquisition of real estate in Switzerland by non-residents (Lex Koller);
|
(xvii)
|
no legal, administrative or arbitration proceedings currently affect the entering into, the performance or the execution of any rights under this Agreement.
|
(b)
|
The representations and warranties set out in this Section 4 (
Representations and Warranties
) are deemed to be repeated by the Security Provider at the time an advance is made by the Lenders, in each case with reference to the facts and circumstances then existing.
|
(c)
|
The Representation and Warranties are deemed to be repeated by the Security Provider when delivering to the Collateral Agent the up-to-date certified excerpt from the commercial register evidencing that the Security Provider is the sole owner of all Quotas, with reference to the facts and circumstances then existing.
|
(d)
|
The Representation and Warranties are deemed to be repeated by the Security Provider each time the representation and warranties under the Credit Agreement are repeated or deemed to be repeated, in each case with reference to the facts and circumstances then existing.
|
5.
|
Additional Covenants
|
(a)
|
not to revoke or amend the written consent referred to in Section 3(c);
|
(b)
|
not to cause or approve the distribution, payment or delivery of any Related Rights, except as permitted pursuant to this Agreement or any other Loan Document;
|
(c)
|
not to vote in favor of any resolution with regard to the Company whereby:
|
(i)
|
the quota capital (
Stammkapital
) of the Company would be reduced;
|
(ii)
|
Quotas (including, without limitation, the Pledged Quota) would be modified or altered;
|
(iii)
|
any special benefits would be granted to present or future bodies or quotaholders of the Company which would constitute a repayment of equity and/or a (constructive) dividend;
|
(iv)
|
it is apparent at the time of the making of such resolution, that the value of the Quotas (including, without limitation, the Pledged Quota), the Related Rights or the underlying assets would materially deteriorate;
|
(v)
|
the validity or enforceability of the Security created under this Agreement would be adversely affected, and/or
|
(vi)
|
any term of this Agreement or the Loan Documents would be violated or another Event of Default would occur;
|
(d)
|
not to enter into any legal instrument relating to, or granting any Lien or make a disposition of the Security Assets, or enter into any legal instrument resulting in the Security Assets becoming non-assignable, or take any other action with respect to the Security Assets that would jeopardize any rights of the Collateral Agent and/or the Secured Parties under this Agreement and/or the realization of the Pledge or of which it is apparent at the time of the entry into of such legal instrument, or making of a disposition or taking of an action that it would materially jeopardize the value of the Security Assets;
|
(e)
|
to provide the Collateral Agent with all information, documents, requests and other communication relating to the Security Assets, which would adversely affect (i) the validity or enforceability of the Security created (or to be created) under this Agreement, (ii) or cause an Event of Default to occur;
|
(f)
|
to do all acts and things in case of a realization of the Pledge, and procure that all acts and things be done, which are necessary to properly effect the realization of the Security Assets;
|
(g)
|
to promptly execute and deliver at its own expenses such further documents and do such further acts which the Collateral Agent may reasonably require for the purpose of the creation, perfection, protection, maintenance or realization of the Security;
|
(h)
|
to indemnify and hold harmless the Collateral Agent and/or the Secured Parties as provided for in the Credit Agreement;
|
(i)
|
to take all action required to constitute a valid and binding first ranking pledge over the Pledged Quota pursuant to the terms of this Agreement.
|
(j)
|
not to cause or approve the managing directors resolution referred to in Section 3 (f) to be revoked or amended.
|
(k)
|
to enter into and to procure the perfection of additional pledge agreements, if and to the extent that the pledge of the Pledged Quota or Related Rights requires, as a matter of law, the execution and perfection of a specific pledge agreement for such Pledged Quota or Related Rights;.
|
(l)
|
to take all actions required for its registration as the quotaholder in the quota register of the Company with regards to all Quotas;
|
(m)
|
to procure and take all actions required to remain the sole legal and beneficial owner of 100% of the Quotas including any future Quotas that may be accrued, offered or issued in the future.
|
6.
|
Realization of Security
|
(a)
|
Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent (acting for itself and on behalf of the other Secured Parties) shall have the right, but not the obligation, without any further prior notice or communication (unless such notice or communication is required by mandatory law) to the Security Provider to undertake on its own initiative any acts it deems appropriate to enforce the Security created pursuant to this Agreement by:
|
(i)
|
initiating enforcement proceedings with respect to the Security Assets pursuant to any applicable official enforcement procedure including, as the case may be, pursuant to the DEBA; and/or
|
(ii)
|
liquidating the Security Assets in full or in part through private sale (
Private Verwertung
) or acquisition of the Security Assets for the Collateral Agent's account (
Selbsteintritt
), in each case
|
(b)
|
Notwithstanding the foregoing and notwithstanding the provision of article 41 DEBA, the Collateral Agent shall be entitled to institute or pursue the enforcement of the Secured Obligations pursuant to regular debt enforcement proceedings without having first to institute proceedings for the realization of the Pledge created to secure the Secured Obligations (
Ausschluss des beneficium excussionis realis
). The Parties agree in advance that a sale according to article 130 DEBA (
Freihandverkauf
) shall be admissible.
|
(c)
|
The Collateral Agent shall, upon the occurrence and during the continuance of an Event of Default, have full discretion as to manner, time and place of enforcement of the Security.
|
(d)
|
The Collateral Agent may act as Collateral Agent contracting in its own name and in the name of the other Secured Parties and on its and their accounts or for the account of third persons in private or official enforcement proceedings.
|
7.
|
Application of Proceeds
|
8.
|
Power of Attorney
|
9.
|
Release of Security Assets
|
(a)
|
The Security Assets or, in case of realization of the Security, the remainder thereof, shall be released and returned to the Security Provider if and when all Secured Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full in cash.
|
(b)
|
Any Security Assets so to be returned shall be delivered net of any transfer taxes or other expenses in connection with such release and return or reassignment, respectively. The Collateral Agent shall not make and shall not be deemed to have made any representation or warranty, whether express or implied, with respect to any Security Assets so returned, except that any such Security Assets shall be returned to the Security Provider free and clear of any third party right granted by the Collateral Agent.
|
(c)
|
If any payment by the Security Provider in respect of Secured Obligations, whereupon the Collateral Agent released the Security Assets (or any part thereof), is avoided or reduced as a result of insolvency or any similar event:
|
(i)
|
this Agreement, the liability of the Security Provider and the Security expressed to be created under this Agreement shall be re-instated and continue as if the payment, release, avoidance or reduction had not occurred; and
|
(ii)
|
the Security Provider shall return and deliver (as the case may be) to the Collateral Agent any Security Assets, including, for the avoidance of doubt, any proceeds from the disposal of and any other substitutes for the Security Assets, as if the repayment, release, avoidance or reduction had not occurred.
|
(d)
|
Upon the payment in full of the Secured Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement), this Agreement shall automatically terminate and the Pledge shall automatically be released. The Collateral Agent will, at the Company's sole cost and expense, execute and deliver to the Security Provider and/or the Company such documents as the Security Provider and/or the Company may reasonably request to effectuate or evidence such release.
|
10.
|
Assignments and Transfer
|
11.
|
Successor Collateral Agent
|
12.
|
Cumulative and Continuing Security / Re-Instatement
|
(a)
|
The Security constitutes a continuing security interest which shall be cumulative, in addition to and independent of every other security interest which the Collateral Agent may at any time hold for the Secured Obligations and/or any rights, powers and remedies provided by law. The Security shall not be affected in any way by any intermediate discharge of any but not all of the Secured Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) and/or by a variation, amendment, restatement, novation, transfer (including by way of novation), extension, compromise or release of any or all of the Secured Obligations or the Loan Documents or of any other security interest from time to time, with the exception of any release in accordance with Section 9 (
Release of Security Assets
).
|
(b)
|
To the extent mandatory law applicable to this Agreement works to the effect that the Security would not be a continuing security by operation of an amendment, restatement, supplement or novation of the Secured Obligations, respectively, the Security Provider agrees that the Security created hereunder is, to the extent required, re-instated.
|
13.
|
Liability of the Collateral Agent
|
14.
|
General Provisions
|
14.1
|
Taxes, Costs and Expenses
|
14.2
|
Notices
|
14.3
|
Currency Conversion
|
14.4
|
Entire Agreement
|
14.5
|
Amendments and Waivers
|
(a)
|
This Agreement may only be modified or amended by a document signed by the Parties. Any provision contained in this Agreement may only be waived by a document signed by the party waiving such provision.
|
(b)
|
No failure to exercise, nor any delay in exercising, on the part of any Party, any right or remedy under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.
|
14.6
|
Severability
|
14.7
|
Banking Secrecy Waiver
|
14.8
|
Counterparts
|
15.
|
Governing Law and Jurisdiction
|
15.1
|
Governing Law
|
15.2
|
Jurisdiction
|
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 Switzerland Holdings GmbH
|
|
Bermuda
|
|
100%
|
Halozyme Royalty LLC, a wholly owned subsidiary of Halozyme, Inc.
|
|
Delaware
|
|
100%
|
Halozyme Switzerland GmbH, a wholly owned subsidiary of Halozyme Switzerland Holdings GmbH
|
|
Switzerland
|
|
100%
|
Halozyme Switzerland Holdings 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;
|
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.
|
|
|
|
|
|
|
|
Dated:
|
February 20, 2018
|
|
|
|
|
/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.
|
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;
|
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.
|
|
|
|
|
|
|
|
Dated:
|
February 20, 2018
|
|
|
|
|
/s/ Laurie D. Stelzer
|
|
|
|
|
|
|
Laurie D. Stelzer
|
|
|
|
|
|
|
Senior Vice President and Chief Financial 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 20, 2018
|
|
|
|
|
/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 20, 2018
|
|
|
|
|
/s/ Laurie D. Stelzer
|
|
|
|
|
|
|
Laurie D. Stelzer
|
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|