Unassociated Document
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
(Mark
One)
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þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended September 30, 2009
OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from
to
Commission
File Number: 0-50440
MICROMET,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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52-2243564
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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6707 Democracy Boulevard, Suite 505, Bethesda,
MD
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20817
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(Address
of principal executive offices)
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(Zip
Code)
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(240) 752-1420
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. þ Yes
o No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes o No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large
accelerated filer £
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Accelerated
filer R
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Non-accelerated
filer £
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Smaller
reporting company o
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(Do
not check if a smaller reporting
company)
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). o Yes
þ No
The
number of outstanding shares of the registrant’s common stock, par value
$0.00004 per share, as of the close of business on November 2, 2009 was
68,985,005.
MICROMET,
INC.
FORM
10-Q — QUARTERLY REPORT
FOR
THE QUARTERLY PERIOD ENDED September 30, 2009
TABLE
OF CONTENTS
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Page No.
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PART
I — FINANCIAL INFORMATION
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2
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Item 1.
Financial Statements
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2
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Condensed
Consolidated Balance Sheets as of September 30, 2009 (Unaudited) and
December 31, 2008
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3
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Condensed
Consolidated Statements of Operations for the three-month and nine-month
periods ended September 30, 2009 and 2008 (Unaudited)
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4
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Condensed
Consolidated Statements of Cash Flows for the nine-month periods ended
September 30, 2009 and 2008 (Unaudited)
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5
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Notes to Condensed Consolidated
Financial Statements (Unaudited)
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6
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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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14
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Item 3.
Quantitative and Qualitative Disclosures about Market Risk
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22
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Item 4.
Controls and Procedures
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23
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PART
II — OTHER INFORMATION
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23
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Item 1.
Legal Proceedings
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23
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Item 1A.
Risk Factors
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23
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Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
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39
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Item 3.
Defaults Upon Senior Securities
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39
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Item 4.
Submission of Matters to a Vote of Security Holders
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39
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Item 5.
Other Information
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39
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Item 6.
Exhibits
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40
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SIGNATURES
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41
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PART
I — FINANCIAL INFORMATION
Item 1.
Financial Statements
Micromet,
Inc.
Condensed
Consolidated Balance Sheets
(In
thousands, except par value)
(unaudited)
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September 30,
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December 31,
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2009
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2008
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$ |
100,029 |
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$ |
46,168 |
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Short-term
investments
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14,360 |
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- |
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Accounts
receivable
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1,979 |
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3,424 |
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Prepaid
expenses and other current assets
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2,029 |
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1,950 |
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Total
current assets
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118,397 |
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51,542 |
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Property
and equipment, net
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3,751 |
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3,322 |
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Goodwill
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6,462 |
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6,462 |
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Patents,
net
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1,164 |
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5,250 |
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Other
long-term assets
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3 |
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959 |
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Restricted
cash
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3,167 |
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3,140 |
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Total
assets
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$ |
132,944 |
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$ |
70,675 |
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
liabilities:
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Accounts
payable
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$ |
1,508 |
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$ |
710 |
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Accrued
expenses
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7,159 |
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6,492 |
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Common
stock warrants liability
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20,477 |
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12,294 |
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Current
portion of deferred revenue
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5,608 |
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4,054 |
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Total
current liabilities
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34,752 |
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23,550 |
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Deferred
revenue, net of current portion
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7,413 |
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7,555 |
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Other
non-current liabilities
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2,352 |
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2,025 |
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Long-term
debt obligations
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- |
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2,157 |
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Stockholders'
equity:
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Preferred
stock, $0.00004 par value; 10,000 shares authorized; no shares issued and
outstanding
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- |
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- |
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Common
stock, $0.00004 par value; 150,000 shares authorized; 68,932 shares issued
and outstanding at September 30, 2009 and 50,913 shares issued and
outstanding at December 31, 2008
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3 |
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2 |
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Additional
paid-in capital
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312,470 |
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227,806 |
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Accumulated
other comprehensive income
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8,291 |
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5,749 |
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Accumulated
deficit
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(232,337 |
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(198,169 |
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Total
stockholders' equity
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88,427 |
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35,388 |
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Total
liabilities and stockholders' equity
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$ |
132,944 |
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$ |
70,675 |
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The
accompanying notes are an integral part of these financial
statements.
Micromet,
Inc.
Condensed
Consolidated Statements of Operations
(In
thousands, except per share amounts)
(Unaudited)
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Three
months ended
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Nine
months ended
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September 30,
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September 30,
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2009
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2008
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2009
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2008
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Revenues:
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Collaboration
agreements
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$ |
3,361 |
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$ |
7,009 |
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$ |
15,261 |
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$ |
20,658 |
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License
fees and other
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660 |
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29 |
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1,153 |
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756 |
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Total
revenues
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4,021 |
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7,038 |
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16,414 |
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21,414 |
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Operating
expenses:
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Research
and development
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13,324 |
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9,943 |
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30,963 |
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30,655 |
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General
and administrative
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3,808 |
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3,429 |
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11,124 |
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10,346 |
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Total
operating expenses
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17,132 |
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13,372 |
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42,087 |
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41,001 |
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Loss
from operations
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(13,111 |
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(6,334 |
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(25,673 |
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(19,587 |
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Other
income (expense):
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Interest
expense
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(52 |
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(45 |
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(222 |
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(189 |
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Interest
income
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66 |
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183 |
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346 |
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649 |
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Change
in fair value of warrants
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(6,354 |
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(6,794 |
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(8,183 |
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(8,503 |
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Other
(expense) income
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(441 |
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99 |
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(437 |
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246 |
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Net
loss
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$ |
(19,892 |
) |
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$ |
(12,891 |
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$ |
(34,169 |
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$ |
(27,384 |
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Basic
and diluted net loss per common share
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$ |
(0.32 |
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$ |
(0.31 |
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$ |
(0.62 |
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$ |
(0.67 |
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Weighted
average shares used to compute basic and diluted net loss per
share
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62,655 |
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41,041 |
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55,058 |
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40,883 |
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The
accompanying notes are an integral part of these financial
statements.
Micromet,
Inc.
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
(Unaudited)
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Nine months ended September 30,
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2009
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2008
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Cash
flows from operating activities:
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Net
loss
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$ |
(34,169 |
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$ |
(27,384 |
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation
and amortization
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2,484 |
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2,871 |
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Non-cash
interest on long-term debt obligations
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248 |
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269 |
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Amortization
of premium/discount on short-term investments
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126 |
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— |
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Non-cash
change in fair value of common stock warrants liability
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8,183 |
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8,503 |
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Stock-based
compensation expense
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4,344 |
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2,539 |
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Impairment
of long-term assets
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2,585 |
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— |
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Net
loss on disposal of property and equipment
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36 |
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— |
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Changes
in operating assets and liabilities:
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Accounts
receivable
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1,571 |
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2,724 |
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Prepaid
expenses and other current assets
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75 |
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|
833 |
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Accounts
payable, accrued expenses and other liabilities
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627 |
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(406 |
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Deferred
revenue
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|
744 |
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1,373 |
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Net
cash used in operating activities
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(13,146 |
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(8,678 |
) |
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Cash
flows from investing activities:
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Purchases
of investments
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(27,974 |
) |
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— |
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Proceeds
from the maturity of investments
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|
15,900 |
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— |
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Purchases
of property and equipment
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(666 |
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(377 |
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Restricted
cash used as collateral
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— |
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5 |
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Net
cash used in investing activities
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(12,740 |
) |
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(372 |
) |
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Cash
flows from financing activities:
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Proceeds
from the issuance of common stock, net
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|
80,029 |
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|
— |
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Proceeds
from exercise of stock options
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|
1,110 |
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|
608 |
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Proceeds
from the exercise of warrants
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|
— |
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|
421 |
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Principal
payments on debt obligations
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|
(2,187 |
) |
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|
(2,466 |
) |
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Principal
payments on capital lease obligations
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|
(92 |
) |
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|
(148 |
) |
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Net
cash provided by (used in) financing activities
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|
78,860 |
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|
(1,585 |
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Effect
of exchange rate changes on cash and cash equivalents
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|
887 |
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|
(495 |
) |
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Net
increase (decrease) in cash and cash equivalents
|
|
|
53,861 |
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|
(11,130 |
) |
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Cash
and cash equivalents at beginning of period
|
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|
46,168 |
|
|
|
27,066 |
|
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Cash
and cash equivalents at end of period
|
|
|
100,029 |
|
|
$ |
15,936 |
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|
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Supplemental
disclosure of noncash investing and financing activities:
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|
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Acquisitions
of equipment purchased through capital leases
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|
653 |
|
|
|
219 |
|
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|
Reclassification
of warrant liability to additional paid-in capital
|
|
|
— |
|
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|
988 |
|
|
The
accompanying notes are an integral part of these financial
statements.
Note 1. Business
Overview
We are a
biopharmaceutical company developing novel, proprietary antibodies for the
treatment of cancer, inflammation and autoimmune diseases. Five of our
antibodies are currently in clinical trials, while the remainder of our product
pipeline is in earlier stages of preclinical development. To date, we have
incurred significant research and development expenses and have not achieved any
revenues from product sales.
Note 2. Basis
of Presentation
Unless
otherwise noted, all financial information is that of Micromet, Inc. and our
wholly owned subsidiaries: Micromet AG; Micromet Holdings, Inc.; Tarcanta, Inc.;
and Cell-Matrix, Inc. Substantially all of our operating activities
are conducted through Micromet AG, a wholly-owned subsidiary of Micromet
Holdings, Inc. and an indirect wholly-owned subsidiary of Micromet, Inc. The
accompanying condensed consolidated financial statements include the accounts of
our wholly-owned subsidiaries. All intercompany accounts and transactions have
been eliminated in consolidation. Unless specifically noted
otherwise, as used throughout these notes to the condensed consolidated
financial statements, “Micromet,” “we,” “us,” and “our” refers to the business
of Micromet, Inc. and its subsidiaries as a whole.
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires us to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. On an ongoing basis, we evaluate our estimates, including
those related to revenue recognition, the valuation of goodwill, intangibles and
other long-lived assets, lease exit liabilities, asset retirement obligations
and assumptions in the valuation of stock-based compensation. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results could differ
from those estimates.
The
accompanying financial statements have been prepared assuming we will continue
as a going concern. This basis of accounting contemplates the recovery of our
assets and the satisfaction of our liabilities in the normal course of business.
As of September 30, 2009, we had an accumulated deficit of $232.3 million.
We expect that operating losses and negative cash flows from operations will
continue for at least the next several years and we will need to generate
additional funds to achieve our strategic goals. If necessary, we may raise
substantial funds through the sale of our common stock and common stock
warrants, or through debt financing or through establishing additional strategic
collaboration agreements. We do not know whether additional financing will be
available when needed, or whether it will be available on favorable terms, or at
all. Based on our capital resources as of the date of this report and the
proceeds received from the sale of common stock in August 2009 (see Note 9), we
believe that we have adequate resources to fund our operations for at least 24
months, without considering any potential future milestone payments that we may
receive under our current or any new collaborations we may enter into in the
future, any future capital raising transactions or any draw downs from our
committed equity financing facility, or CEFF, with Kingsbridge Capital Limited
(see Note 8).
Note 3. Summary
of Significant Accounting Policies
Cash
and Cash Equivalents
Cash and
cash equivalents on the balance sheets are comprised of cash at banks, money
market funds and short-term deposits with an original maturity from date of
purchase of three months or less. Our money market funds consist of
at least 80% of net assets in U.S. Treasury obligations and repurchase
agreements secured by U.S. Treasury obligations.
Short-Term
Investments
In
accordance with the Accounting Standards Codification (ASC) Topic 320 (formerly
Financial Accounting Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Debt and
Equity Securities),
short-term investments are classified as available-for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses reported in other comprehensive income (loss). The amortization
of premiums and accretion of discounts to maturity is included in investment
income. Realized gains and losses and declines in value judged to be
other-than-temporary, if any, on available-for-sale securities are included in
other income or expense. The cost of securities sold is based on the specific
identification method. Interest and dividends on securities classified as
available-for-sale are included in investment income. As of September
30, 2009 our investments are in debt of foreign governments with maturities of
less than one year. The amortized cost basis is $12.7 million and the
aggregate fair value is $14.4 million as of September 30, 2009. Other
comprehensive income for the nine months ended September 30, 2009 includes
unrealized gains of $115,000 and unrealized losses of $99,000.
Restricted
Cash
We have
issued irrevocable standby letters of credit in connection with prior building
leases for properties that are currently subleased, as well as our current
building leases in Munich, Germany and Bethesda, Maryland. As of September 30,
2009 and December 31, 2008, we had a total of $3.2 million and $3.1
million, respectively, in certificates of deposit that are classified as
non-current restricted cash.
Property
and Equipment
Property
and equipment are stated at cost, less accumulated depreciation and
amortization. Major replacements and improvements that extend the useful life of
assets are capitalized, while general repairs and maintenance are charged to
expense as incurred. Property and equipment are depreciated using the
straight-line method over the estimated useful lives of the assets, ranging from
three to ten years. Leasehold improvements are amortized over the estimated
useful lives of the assets or the related lease term, whichever is
shorter.
Goodwill
In
accordance with ASC Topic 350 (formerly SFAS No. 142, Goodwill and Other Intangible
Assets), we review goodwill for impairment at least
annually and more frequently if events or changes in circumstances indicate a
reduction in the fair value of the reporting unit to which the goodwill has been
assigned. A reporting unit is an operating segment for which discrete financial
information is available and segment management regularly reviews the operating
results of that component. We have determined that we have only one
reporting unit, the development of biopharmaceutical
products. Goodwill is determined to be impaired if the fair value of
the reporting unit to which the goodwill has been assigned is less than its
carrying amount. We have selected October 1 as our annual goodwill impairment
testing date.
Patents
Our
patent portfolio consists primarily of internally developed patents covering our
BiTE antibody platform and the composition of our BiTE antibody product
candidates and conventional antibodies. The costs of generating our
internally developed patent portfolio has been expensed as
incurred.
We also
acquired patents in 2001 covering single-chain antibody technology. These
purchased patents are being amortized over their estimated useful lives through
2011 using the straight-line method. These patents are utilized in
revenue-producing activities through license agreements. Evidence
from recent licensing transactions indicates that our future licensing fees
derived from these purchased patents will be lower than previously
expected. We deemed these events in connection with lower
expectations of future licensing fees to be an indication of potential
impairment.
In
accordance with ASC Topic 350, we periodically assess whether the carrying value
of the purchased patents is recoverable if there is an indicator of
impairment. We evaluated whether the carrying value of the patents
would be recoverable by comparing their carrying value to the undiscounted cash
flows generated from these assets. The carrying value was in excess
of the undiscounted cash flows; therefore, we calculated the fair value of the
patents to determine the amount of impairment. We calculated the fair
value of the patents using the income approach (discounted cash flows). Based on
the fair value, we recognized a non-cash patent impairment charge of
approximately $2.6 million for the three months ended September 30,
2009. The impairment charge was recorded within research and
development expenses on the statement of operations. Key inputs
utilized in the determination of this non-recurring fair value measurement
relate to our estimates of cash flows for the remaining patent life and the
discount rate factor. The determination of the discount rate was
based upon the risk-free rate, adjusted by a risk premium. Because
these inputs are unobservable, the fair value determination is a Level 3
measurement.
Impairment
of Long-Lived and Identifiable Intangible Assets
In
accordance with the provisions of ASC Topic 360 (formerly
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets), we evaluate the carrying value of long-lived
assets and identifiable intangible assets for potential impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. Recoverability is determined by comparing
projected undiscounted cash flows associated with such assets to the related
carrying value. An impairment loss would be recognized when the estimated
undiscounted future cash flow is less than the carrying amount of the asset. An
impairment loss would be measured as the amount by which the carrying value of
the asset exceeds the fair value of the asset.
Common
Stock Warrants Liability
In June
2007, we completed a private placement of 9,216,709 shares of common stock
and issued warrants to purchase an additional 4,608,356 shares of common
stock. Due to certain provisions in the common stock warrant agreement, these
warrants are required to be classified as a liability. Management believes that
the circumstances requiring cash settlement of the award are
remote. The common stock warrants liability is recorded at fair
value, which is adjusted to its estimated fair value at the end of each
reporting period using the Black-Scholes option-pricing
model. Changes in the estimated fair value from the previous
reporting period are included in the consolidated statements of
operations.
Foreign
Currency Transactions and Translation
Transactions
in foreign currencies are initially recorded at the functional currency rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are re-measured into the functional currency
at the exchange rate in effect at the balance sheet date. Transaction gains and
losses are recorded in the consolidated statements of operations in other income
(expense) and amounted to $(285,000) and $(75,000) for the three months ended
September 30, 2009 and 2008, respectively, and $(325,000) and $(164,000) for the
nine months ended September 30, 2009 and 2008, respectively.
The
accompanying condensed consolidated financial statements are presented in U.S.
dollars. The translation of assets and liabilities to U.S. dollars is made at
the exchange rate in effect at the balance sheet date, while equity accounts are
translated at historical rates. The translation of statement of operations data
is made at the average rate in effect for the period. The translation of
operating cash flow data is made at the average rate in effect for the period,
and investing and financing cash flow data is translated at the rate in effect
at the date of the underlying transaction. Translation gains and losses are
recognized within accumulated other comprehensive income in the accompanying
condensed consolidated balance sheets.
Revenue
Recognition
Our
revenues consist of licensing fees, milestone payments, and fees for research
services earned from license agreements or from research and development
collaboration agreements. We recognize revenue in accordance with the Securities
and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) No. 104,
Revenue Recognition, upon the
satisfaction of the following four criteria: persuasive evidence of an
arrangement exists, delivery has occurred, the price is fixed or determinable,
and collectibility is reasonably assured.
Revenues
under collaborative research agreements are recognized as the services specified
in the related agreement are performed, or as expenses that are passed through
to the collaborator are incurred. Milestone payments are derived from the
achievement of predetermined goals under the collaboration agreements. For
milestones that are deemed substantive, the related contingent revenue is not
recognized until the milestone has been reached and customer acceptance has been
obtained as necessary. Milestones are considered substantive if all the
following criteria are met: 1) milestone payment is non-refundable and relates
solely to past performance; 2) achievement of the milestone was not reasonably
assured at the inception of the arrangements; 3) substantive effort is involved
to achieve the milestone; and 4) the amount of the milestone payment appears
reasonable in relation to the effort expended, other milestones in the
arrangement and the related risk of achieving the milestone. Fees for
research and development services performed under the agreements are generally
stated at a yearly fixed fee per research scientist. We recognize revenue as the
research and development services are performed. Amounts received in advance of
services performed are recorded as deferred revenue until earned. We
have received upfront initial license fees and annual renewal fees each year
under certain license agreements. Revenue is recognized when the above noted
criteria are satisfied, unless we have further obligations associated with the
license granted. We recognize revenue from up front payments on a
straight-line basis over the term of our obligations as specified in
the agreement.
For
arrangements that include multiple deliverables, we identify separate units of
accounting based on the consensus reached on ASC Topic 605 (formerly Emerging
Issues Task Force Issue (EITF) No. 00-21, Revenue Arrangements with Multiple
Deliverables). ASC Topic 605 provides that revenue
arrangements with multiple deliverables should be divided into separate units of
accounting if certain criteria are met. The consideration for the arrangement is
allocated to the separated units of accounting based on their relative fair
values. Applicable revenue recognition criteria are considered separately for
each unit of accounting. We recognize revenue on development and collaboration
agreements, including upfront payments, where they are considered combined units
of accounting, over the period specified in the related agreement or as the
services are performed.
Research
and Development
Except
for payments made in advance of services rendered, research and development
expenditures, including direct and allocated expenses, are charged to operations
as incurred.
Comprehensive
Income (Loss)
Comprehensive
income (loss) is comprised of net income (loss) and other comprehensive income
(loss). Other comprehensive income (loss) is primarily the result of foreign
currency exchange translation adjustments. The following table sets forth the
components of comprehensive income (loss) (in thousands):
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
2009
|
|
|
|
2008
|
|
|
Net
loss
|
$
|
(19,892
|
)
|
|
$
|
(12,891
|
)
|
|
$
|
(34,169
|
)
|
|
$
|
(27,384
|
)
|
|
Foreign
currency translation adjustments
|
|
974
|
|
|
|
6
|
|
|
|
2,566
|
|
|
|
(260
|
)
|
|
Unrealized
gain on investments available for sale
|
|
(42
|
)
|
|
|
—
|
|
|
|
(22)
|
|
|
|
—
|
|
|
Comprehensive
loss
|
$
|
(18,960
|
)
|
|
$
|
(12,885
|
)
|
|
$
|
(31,625
|
)
|
|
$
|
(27,644
|
)
|
Share-based
compensation
We
account for share-based payments in accordance with ASC Topic 718 (formerly
SFAS No. 123(R),
Share-Based Payment Awards), utilizing the Black-Scholes option pricing
method for determining the fair value of stock-based awards. The
determination of the estimated fair value of our share-based payment awards on
the date of grant using an option-pricing model is affected by our stock price
as well as assumptions regarding expected volatility, risk-free interest rate,
and expected term.
We
recognize stock-based compensation expense for options granted with graded
vesting over the requisite service period of the individual stock option grants,
which typically equals the vesting period, using the straight-line attribution
method. For share-based awards that contain a performance condition,
expense is recognized using the accelerated attribution
method. Compensation expense related to stock-based compensation is
allocated to research and development or general and administrative based upon
the department to which the associated employee reports.
Options
or stock awards issued to non-employees are measured at their estimated fair
value in accordance with ASC Topic 718 and ASC Topic 505 (formerly EITF Issue
No. 96-18, Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with
Selling Goods or Services). Expense is recognized
when service is rendered; however, the expense may fluctuate with changes in the
fair value of the underlying common stock, until the award is
vested.
Income
Taxes
We
account for income taxes under ASC Topic 740
(formerly SFAS No. 109, Accounting for Income Taxes), using the liability method. Deferred income
taxes are recognized at the enacted tax rates for temporary differences between
the financial statement and income tax bases of assets and liabilities. Deferred
tax assets are reduced by a valuation allowance if, based upon the weight of
available evidence, it is more likely than not that some portion or all of the
related tax asset will not be recovered.
We
account for uncertain tax positions pursuant to ASC Topic 740 (formerly FASB
Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109). ASC Topic 740 was adopted on
January 1, 2007 with no material impact on our consolidated financial
statements. Financial statement recognition of a tax position taken
or expected to be taken in a tax return is determined based on a
more-likely-than-not threshold of that position being sustained. If
the tax position meets this threshold, the benefit to be recognized is measured
at the largest amount that is more than 50 percent likely to be realized upon
ultimate settlement. In making such determination, we
consider all available positive and negative evidence, including future
reversals of existing taxable temporary differences, projected future taxable
income, tax planning strategies and recent financial
operations. It is our policy to record interest and penalties
related to uncertain tax positions as a component of income tax
expense.
Net
Loss Per Share
We
calculate net loss per share in accordance with ASC Topic 260 (formerly
SFAS No. 128, Earnings Per Share). Basic net loss per share is calculated by
dividing the net loss by the weighted average number of common shares
outstanding for the period, without consideration for common stock equivalents.
Diluted net loss per share is computed by dividing the net loss by the weighted
average number of common stock equivalents outstanding for the period determined
using the treasury-stock method. For purposes of this calculation, convertible
preferred stock, stock options, and warrants are considered to be common stock
equivalents and are only included in the calculation of diluted net loss per
share when their effect is dilutive. Options to purchase 9,099,000 and
7,920,000 shares of common stock, respectively, and warrants to
purchase 8,222,000 and 5,264,000 shares, respectively, were excluded
from the net loss calculation for the nine months ended September 30,
2009 and 2008, respectively, as their effect would be
anti-dilutive.
Recent
Accounting Standards and Pronouncements
In
October 2009, the FASB approved ASC Topic 605-25, Arrangements with Multiple
Deliverables. This statement provides principles for allocation of
consideration among multiple elements, allowing more flexibility in identifying
and accounting for separate deliverables under an arrangement. ASC Topic 605-25
introduces an estimated selling price method for valuing the elements of a
bundled arrangement if vendor-specific objective evidence or third-party
evidence of selling price is not available, and significantly expands related
disclosure requirements. ASC Topic 605-25 is effective on a prospective basis
for revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Alternatively, adoption may be on a
retrospective basis, and early application is permitted. We are currently
evaluating the impact of adopting this pronouncement.
In July
2009, the FASB issued ASC Topic 105 (formerly SFAS No. 168, The Hierarchy of Generally Accepted
Accounting Principles).
ASC Topic 105 contains guidance that reduces the U.S. GAAP hierarchy
to two levels, one that is authoritative and one that is not. This pronouncement
is effective September 15, 2009. The adoption of this pronouncement did not
have an effect on our consolidated financial statements.
We
adopted the provisions of ASC Topic 820-10, Fair Value Measurements and
Disclosures (formerly SFAS No. 157, Fair Value Measurements), with respect to
non-financial assets and liabilities effective January 1, 2009. This
pronouncement defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. The adoption of ASC
Topic 820-10 did not have an impact on our consolidated financial
statements.
Note 4. Fair
Value Measurements
We
include disclosures about fair value measurements pursuant to ASC Topic
820. ASC Topic 820 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. Such transactions to sell an
asset or transfer a liability are assumed to occur in the principal or most
advantageous market for the asset or liability. Accordingly, fair
value as described by ASC Topic 820 is determined based on a hypothetical
transaction at the measurement date, considered from the perspective of a market
participant.
ASC Topic
820 establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. These tiers include: Level 1, defined
as observable inputs such as quoted prices in active markets; Level 2, defined
as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions. The following table presents information about our
assets and liabilities that are measured at fair value on a recurring basis as
of September 30, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant Other
|
|
|
Unobservable
|
|
|
|
|
September
30,
|
|
|
Active Markets
|
|
|
Observable inputs
|
|
|
Inputs
|
|
|
Description
|
|
2009
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
100,029 |
|
|
$ |
100,029 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Restricted
cash
|
|
|
3,167 |
|
|
|
3,167 |
|
|
|
— |
|
|
|
— |
|
|
Foreign
government bonds
|
|
|
14,360 |
|
|
|
— |
|
|
|
14,360 |
|
|
|
— |
|
|
Total
assets
|
|
$ |
117,556 |
|
|
$ |
103,196 |
|
|
$ |
14,360 |
|
|
$ |
— |
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock warrant liability
|
|
$ |
(20,477 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(20,477 |
) |
The
following table presents information about our common stock warrant liability,
which was our only financial asset or liability measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) as defined in
ASC Topic 820 at September 30, 2009 and December 31, 2008:
|
|
|
September 30, 2009
|
|
|
|
|
3-months ended
|
|
|
9-months ended
|
|
|
Beginning
balance
|
|
$ |
(14,123 |
) |
|
$ |
(12,294 |
) |
|
Transfers
to (from) Level 3
|
|
|
— |
|
|
|
— |
|
|
Total
gains/(losses) realized/ unrealized included in
earnings
|
|
|
(6,354
|
) |
|
|
(8,183
|
) |
|
Purchases/
issuances/ settlements, net
|
|
|
— |
|
|
|
— |
|
|
Balance
September 30, 2009
|
|
$ |
(20,477 |
) |
|
$ |
(20,477 |
) |
The
carrying value of the common stock warrant liability is calculated using the
Black-Scholes option pricing model, which requires the input of highly
subjective assumptions. These assumptions include the risk-free rate
of interest, expected dividend yield, expected volatility, and the remaining
contractual term of the award. The risk-free rate of interest is
based on the U.S. Treasury rates appropriate for the expected term of the
award. Expected dividend yield is projected at 0%, as we have not
paid any dividends on our common stock since our inception and we do not
anticipate paying dividends on our common stock in the foreseeable
future. Expected volatility is based on our historical volatility and
the historical volatilities of the common stock of comparable publicly traded
companies.
We also
adopted ASC Topic 820 for non-financial assets and liabilities in the first
quarter of 2009. We had no required fair value measurements for non-financial
assets and liabilities during the nine months ended September 30, 2009 and no
required additional disclosures upon adoption.
Note 5. Deferred
Revenue
Deferred
revenues were derived from research and development agreements with Nycomed,
Bayer Schering, TRACON Pharmaceuticals, Inc. and Merck Serono International SA
as follows (dollars in thousands):
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2009
|
|
2008
|
|
Nycomed
|
|
$
|
6,809
|
|
|
$
|
7,260
|
|
|
Bayer
Schering Pharma
|
|
|
1,642
|
|
|
|
—
|
|
|
TRACON
|
|
|
1,246
|
|
|
|
1,321
|
|
|
Merck
Serono
|
|
|
2,521
|
|
|
|
2,523
|
|
|
Other
|
|
|
803
|
|
|
|
505
|
|
|
Subtotal
|
|
|
13,021
|
|
|
|
11,609
|
|
|
Current
portion
|
|
|
(5,608
|
)
|
|
|
(4,054
|
)
|
|
Long
term portion
|
|
$
|
7,413
|
|
|
$
|
7,555
|
|
The
deferred revenue for Nycomed and TRACON consists mainly of the upfront license
fees that are being recognized over the period that we are required to
participate on joint steering committees of 20 years and 15 years,
respectively. The deferred revenue for Bayer Schering Pharma consists
of an option fee that is being recognized over a period of one year, which began
in the first quarter of 2009. Under the terms of the agreement with
Bayer Schering Pharma, we received €4.5 million, or $6.0 million at the exchange
rate in effect as of the date of this transaction, as a fee for a one-year
option on a specific BiTE antibody. Bayer Schering Pharma may
exercise this option on or before January 5, 2010 through the additional payment
of an option exercise fee. The exercise of the option would trigger a formal
collaboration for the development of the BiTE antibody through the completion of
phase 1 clinical trials, at which point Bayer Schering Pharma would assume full
control of the further development and commercialization of the BiTE
antibody. The upfront license fees and research and development
service reimbursements in the collaboration agreement with Merck Serono are
considered to be a combined unit of accounting and, accordingly, the related
amounts are recognized ratably over the expected period of the research and
development program, which is expected to continue through 2011.
Note 6. Other
Non-Current Liabilities
Other
non-current liabilities consist of the following (in thousands):
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Facility
lease exit liability, net of current portion
|
|
$ |
1,049 |
|
|
$ |
1,215 |
|
|
GEK
subsidy, net of current portion
|
|
|
98 |
|
|
|
135 |
|
|
Asset
retirement obligation
|
|
|
554 |
|
|
|
471 |
|
|
Capital
lease obligations, net of current portion
|
|
|
632 |
|
|
|
187 |
|
|
Other
|
|
|
19 |
|
|
|
17 |
|
|
|
|
$ |
2,352 |
|
|
$ |
2,025 |
|
Facility
Lease Exit Liability and Restructuring Provision
We
acquired a facility lease exit liability as of May 2006, the date of our merger
with CancerVax Corporation. As of April 2007, we fully subleased our
former corporate headquarters in Carlsbad, California. We review the
adequacy of our estimated exit accruals on an ongoing basis.
The
following table summarizes the facility lease activity for these obligations for
the nine months ended September 30, 2009 (in thousands):
|
Balance
January 1, 2009
|
|
$ |
1,432 |
|
|
Amounts
paid in period
|
|
|
(298
|
) |
|
Accretion
expense
|
|
|
187 |
|
|
Balance
September 30, 2009
|
|
$ |
1,321 |
|
Of the
$1,321,000 lease exit liability as of September 30, 2009, $272,000 is current
and $1,049,000 is non-current.
Asset
Retirement Obligation
In
February 2001, we entered into a building lease agreement with GEK. Under the
terms of the agreement, GEK agreed to lease laboratory and office space to us
for a period of 10 years beginning on July 1, 2002. Upon termination
of the agreement, we may, under certain conditions, be obligated to remove those
leasehold improvements that will not be assumed by GEK. The fair value of the
asset retirement obligation will increase due to accretion through the term of
the lease agreement. In connection with our sublease with Roche in 2007, certain
leasehold improvements were made to our facility which we will be required to
remove at the end of our lease. The following table summarizes the activity for
the nine months ended September 30, 2009 (in thousands):
|
Balance
January 1, 2009
|
|
$ |
471 |
|
|
Accretion
expense
|
|
|
63 |
|
|
Currency
translation adjustment
|
|
|
20 |
|
|
Balance
September 30, 2009
|
|
$ |
554 |
|
Note 7. Current
Portion of Long-Term Debt
Our only
long-term debt obligation at December 31, 2008 was an unsecured promissory note
in favor of an affiliate of MedImmune, Inc. with a maturity date of June 6,
2010. Interest on this note was payable monthly at an interest rate
of 4.5% per annum. On August 20, 2009, the remaining principal
balance and accrued but unpaid interest was repaid in full.
Note 8. Committed
Equity Financing Facility
In
December 2008, we entered into a Committed Equity Financing Facility (CEFF) with
Kingsbridge Capital Limited (Kingsbridge) which entitles us to sell and
obligates Kingsbridge to purchase, from time to time through December 2011, up
to 10,104,919 shares of our common stock for cash consideration of up to $75.0
million, subject to certain conditions and restrictions. We are not eligible to
draw down any funds under the CEFF at any time when our stock price is below
$2.00 per share. In connection with the December 2008 CEFF, we
terminated a prior CEFF with Kingsbridge that had been in place since August
2006. The December 2008 CEFF expanded the amount available to draw from $25.0
million under the August 2006 CEFF to $75.0 million. We did not draw down on the
August 2006 CEFF. In connection with the December 2008 CEFF, we
entered into a common stock purchase agreement and registration rights agreement
and issued a warrant to Kingsbridge to purchase 135,000 shares of our common
stock at a price of $4.44 per share. The warrant is exercisable until June 2014.
In connection with the August 2006 CEFF, we issued to Kingsbridge a warrant to
purchase up to 285,000 shares of common stock at an exercise price of $3.2145
per share, which warrant was not affected by the new CEFF or the issuance of the
new warrant to Kingsbridge. The aggregate fair value of the two warrants issued
to Kingsbridge approximated $0.8 million as of the
dates of issuance.
During
the second quarter of 2009, we completed two draw downs under the CEFF and
issued a total of 1,420,568 shares for aggregate gross proceeds of $5.3
million. In May 2009, we issued 764,700 shares to Kingsbridge
for gross proceeds of $2.5 million (average price per share of $3.27), and
in June 2009, we issued 655,868 shares to Kingsbridge in exchange for gross
proceeds of $2.8 million (average price per share of
$4.19). Accordingly, the remaining commitment of Kingsbridge under
the CEFF for the potential purchase of our common stock is equal to the lesser
of $69.7 million in cash consideration or 8,684,351 shares (which shares
would be priced at a discount ranging from 6% to 14% of the average market price
during any future draw down), subject to certain conditions and restrictions. In
connection with the CEFF, we have incurred legal fees and other financing costs
of approximately $138,000. Upon completion under the CEFF drawdown
these costs along with the $0.8 million fair value of the warrants were recorded
as a component of stockholders’ equity during the second quarter of
2009.
Note 9. Stockholders’
Equity
On July
30, 2009, we entered into a definitive agreement with various underwriters
pursuant to which we issued an aggregate of 16,100,000 shares of common stock in
a public offering, including the exercise in full of an over-allotment
option for 2,100,000 shares, for aggregate gross proceeds, before underwriting
discount and expenses, of $80.5 million. After underwriting
discount and expenses payable by us of approximately $0.3 million, net
proceeds from the public offering were $74.9 million. The offering
closed, and we received the proceeds, on August 4, 2009. The shares
were sold to the public at a price of $5.00 per share, and the underwriters
purchased the shares from us under the purchase agreement at a price of
$4.675 per share, reflecting an underwriting discount of $0.325 per
share.
The
offering was made pursuant to a registration statement on Form S-3 (File No.
333-160130) filed with the Securities and Exchange Commission on June 19, 2009,
which became effective on July 2, 2009 and a registration statement on Form S-3
(File No. 333-160888) filed on July 30, 2009 with the Commission pursuant to
Rule 462(b) under the Securities Act of 1933, as amended (the Securities Act),
which became automatically effective upon filing, and pursuant to the prospectus
dated July 2, 2009 and a prospectus supplement dated July 30, 2009, which
was filed pursuant to Rule 424(b)(5) of the Securities Act on July 30,
2009.
Note 10. Subsequent
Events
We have
evaluated subsequent events through the time of filing these financial
statements on November 5, 2009.
Collaboration
and License Agreement with sanofi-aventis
In
October 2009, we and sanofi-aventis entered into a collaboration and license
agreement under which the two companies will collaborate on the development of a
new BiTE® antibody targeting solid tumors. Under the terms of the
agreement, we will be responsible for generating and developing the BiTE
antibody through the completion of phase 1 clinical trials, at which point
sanofi-aventis will assume full control of the development and commercialization
of the product candidate on a worldwide basis. We will receive an
upfront payment of €8 million and are eligible to receive payments upon the
achievement of development milestones of up to €162 million and sales milestones
of up to €150 million, and up to a low double-digit royalty on worldwide net
sales of the product. In addition, sanofi-aventis will bear the cost of
development activities and will reimburse us for our expenses incurred in
connection with the development program. A portion of the upfront
payment in the amount of €2.75 million will be credited towards the
reimbursement of FTEs allocated by us to the performance of the development
program. After the second anniversary of the execution of the
agreement and at certain specified time points thereafter, sanofi-aventis may
terminate the agreement at will upon ninety days prior notice. In
addition, sanofi-aventis may terminate the agreement at any time after the
completion of the first phase 2 clinical trial upon 180 days prior
notice. Also, the agreement may be terminated by either party for
material breach.
Termination
and License Agreement with MedImmune, LLC
In
November 2009, we entered into a termination and license agreement (the 2009
Agreement) with MedImmune, LLC under which we acquired MedImmune’s remaining
option right to commercialize our BiTE antibody product candidate blinatumomab,
also known as MT103, in North America. The 2009 Agreement terminates
the June 2003 collaboration and license agreement (the 2003 Agreement) under
which MedImmune had been granted the right to develop and commercialize
blinatumomab and other
BiTE antibodies for the treatment of hematological cancers in North
America.
As
previously disclosed in our SEC filings, in March 2009, MedImmune elected to end
the clinical development of blinatumomab in North America, while continuing the
development of the commercial manufacturing process at its cost. MedImmune also
elected to commence the development of a new BiTE antibody for the treatment of
hematological cancers under the terms of the 2003 Agreement. Further,
MedImmune retained a one-time option to reacquire the commercialization rights
to blinatumomab in North America at pre-defined terms upon the first marketing
approval obtained by us for blinatumomab in the United States. As a result
of the 2009 Agreement, we now control the worldwide rights to develop and
commercialize blinatumomab, as well as other BiTE antibodies binding to targets
relevant for hematological tumors that had been licensed to MedImmune under the
2003 Agreement.
Under the
terms of the 2009 Agreement, MedImmune will sell to us the remaining stock of
blinatumomab clinical trial material and will transfer the manufacturing process
for this product candidate to us or our contract manufacturer. We
will make an upfront payment of $6.5 million in installments through December
2010. In addition, MedImmune is eligible to receive up to an aggregate of $19
million from us based upon the achievement of specified strategic and regulatory
milestone events relating to blinatumomab in North America and a low
single-digit royalty based on net sales of blinatumomab in North
America.
The
termination of the 2003 Agreement regarding blinatumomab does not affect our
ongoing collaboration with MedImmune for the development of our BiTE antibody
product candidate MT111 targeting carcinoembryonic antigen (CEA).
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion contains forward-looking statements, which involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth in Part II — Item 1A below under
the caption “Risk Factors.”
The
interim financial statements and this Management’s Discussion and Analysis of
the Financial Condition and Results of Operations should be read in conjunction
with the financial statements and notes thereto for the year ended December 31,
2008, and the related Management’s Discussion and Analysis of Financial
Condition and Results of Operations, both of which are contained in our Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
16, 2009.
Ongoing
Business Activities
We are a
biopharmaceutical company developing novel, proprietary antibodies for the
treatment of cancer, inflammation and autoimmune diseases. Our product
development pipeline includes novel antibodies generated with our proprietary
BiTE® antibody platform, as well as conventional monoclonal
antibodies. BiTE antibodies represent a new class of antibodies that
activate the T cells of a patient’s immune system to eliminate cancer
cells. T cells are considered the most powerful “killer cells” of the
human immune system. Five of our antibodies are currently in clinical
trials, while the remainder of our product pipeline is in preclinical
development.
Our CD19
targeting BiTE antibody blinatumomab, also known as MT103, is being evaluated in
a phase 2 clinical trial for the treatment of patients with acute lymphoblastic
leukemia, or ALL, and in a phase 1 clinical trial for the treatment of patients
with non-Hodgkin’s lymphoma, or NHL. We currently expect to initiate
a pivotal trial of blinatumomab in ALL patients in 2010. Until March
2009, blinatumomab was being developed under a collaboration and license
agreement with MedImmune, LLC entered into in 2003 (the 2003
Agreement). In March 2009, MedImmune elected to end the clinical
development of blinatumomab in North America, while continuing the development
of the commercial manufacturing process at its cost. MedImmune also elected to
commence the development of a new BiTE antibody for the treatment of
hematological cancers under the terms of the 2003 Agreement. Further,
MedImmune retained a one-time option to reacquire the commercialization rights
to blinatumomab in North America at pre-defined terms upon the first marketing
approval obtained by us for blinatumomab in the United States. In
November 2009, we entered into a termination and license agreement (the 2009
Agreement) with MedImmune under which we acquired MedImmune’s remaining rights
to commercialize blinatumomab in North America. As a result of the
2009 Agreement, we now control the rights to develop and commercialize
blinatumomab in all territories. Under the terms of the 2009
Agreement, MedImmune will sell to us the remaining stock of blinatumomab
clinical trial material and will transfer the manufacturing process for this
product candidate to us or our contract manufacturer.
A second
BiTE antibody, MT110, is being tested in a phase 1 clinical trial for the
treatment of patients with solid tumors. MT110 binds to the
epithelial cell adhesion molecule, or EpCAM, which is overexpressed in many
solid tumors. We are also developing our human monoclonal antibody
adecatumumab, also known as MT201, which also binds to EpCAM and is being
developed under a collaboration with Merck Serono. The current clinical
development of this antibody includes a phase 2 clinical trial in colorectal
carcinoma patients after complete resection of liver metastases, and a phase 1b
clinical trial evaluating adecatumumab in combination with docetaxel for the
treatment of patients with metastatic breast cancer. Our monoclonal
antibody MT293, also known as TRC093, is licensed to TRACON Pharmaceuticals,
Inc. and is being developed in a phase 1 clinical trial for the treatment of
patients with cancer. MT203, a human antibody neutralizing the
activity of granulocyte/macrophage colony stimulating factor, or GM-CSF, which
has potential applications in the treatment of various inflammatory and
autoimmune diseases, such as rheumatoid arthritis, psoriasis, or multiple
sclerosis, is under development in a phase 1 clinical trial being conducted by
our collaboration partner Nycomed. Our licensee Morphotek, a wholly-owned
subsidiary of Eisai, is also expected to commence a phase 1 clinical trial in
2010 to evaluate our glycolipid-binding human antibody MT228 for the treatment
of melanoma.
Our
preclinical product pipeline includes several novel BiTE antibodies generated
with our proprietary BiTE antibody platform technology. A BiTE antibody
targeting carcinoembryonic antigen, or CEA, for the treatment of solid tumors is
being developed in collaboration with MedImmune. In addition, we have entered
into an option, collaboration and license agreement with Bayer Schering Pharma
AG under which Bayer Schering Pharma was granted an exclusive option until
January 2010 to license a specified BiTE antibody against an undisclosed solid
tumor target. In October 2009, we entered into a collaboration and license
agreement with sanofi-aventis for the development and commercialization of a
BiTE antibody binding to another undisclosed solid tumor target. Other BiTE
antibodies are in various stages of preclinical development.
To date,
we have incurred significant research and development expenses and have not
achieved any revenues from sales of our product candidates. Each of our programs
will require a number of years and significant costs to advance through
development. Typically, it takes many years from the initial identification of a
lead compound to the completion of preclinical and clinical trials, before
applying for marketing approval from the FDA or EMEA, or equivalent regulatory
agencies in other countries and regions. The risk that a program has to be
terminated, in part or in full, for safety reasons or lack of adequate efficacy
is very high. In particular, we cannot predict which, if any, product candidates
can be successfully developed and for which marketing approval may be obtained,
or the time and cost to complete development and receive marketing
approvals.
As we
obtain results from preclinical studies or clinical trials, we may elect to
discontinue the development of one or more product candidates for safety,
efficacy or commercial reasons. We may also elect to discontinue or delay
development of one or more product candidates in order to focus our resources on
more promising product candidates. Our business strategy includes entering into
collaborative agreements with third parties for the development and
commercialization of certain of our product candidates. Depending on the
structure of such collaborative agreements, a third party may be granted control
over the clinical trial process, manufacturing process or other key development
process, for one of our product candidates. In such a situation, the third
party, rather than us, may in fact control development and commercialization
decisions for the respective product candidate. Consistent with our business
model, we may enter into additional collaboration agreements in the future. We
cannot predict the terms of such agreements or their potential impact on our
capital requirements. Our inability to complete our research and development
projects in a timely manner, or our failure to enter into new collaborative
agreements, when appropriate, could significantly increase our capital
requirements and affect our liquidity.
Since our
inception, we have financed our operations through public offerings and private
placements of preferred stock, common stock and associated warrants, government
grants for research, research-contribution revenues from our collaborations with
pharmaceutical companies, licensing and milestone payments related to our
product candidate partnering activities, debt financing and equity draws under
the CEFF with Kingsbridge. We may seek
funding through public or private financings in the future. If we raise
additional funds through the issuance of equity securities, stockholders may
experience substantial dilution, or the equity securities may have rights,
preferences or privileges senior to existing stockholders. If we raise
additional funds through debt financings, these financings may involve
significant cash payment obligations and covenants that restrict our ability to
operate our business. There can be no assurance that we can raise additional
capital on acceptable terms, or at all.
Research
and Development
Through
September 30, 2009, our research and development expenses consisted of costs
associated with the clinical development of adecatumumab, blinatumomab and
MT110, as well as development costs incurred for MT111 and MT203, and research
conducted with respect to our preclinical BiTE antibodies and the BiTE antibody
platform. The costs incurred include costs associated with clinical trials and
manufacturing processes, quality systems and analytical development, including
compensation and other personnel expenses, supplies and materials, costs for
consultants and related contract research, facility costs, license fees and
depreciation. We charge all research and development expenses to operations as
incurred.
We expect
to incur substantial additional research and development expenses that may
increase from historical levels as we further develop our product candidates
into more advanced stages of clinical development and increase our preclinical
development for certain of our human antibodies and BiTE antibodies in cancer,
anti-inflammatory and autoimmune diseases.
Our
strategic collaborations and license agreements generally provide for our
research, development and commercialization programs to be partly or wholly
funded by our collaborators and provide us with the opportunity to receive
additional payments if specified development or commercialization milestones are
achieved, as well as royalty payments upon the successful commercialization of
any products based upon our collaborations. We also may retain
co-promotion rights in certain of our agreements.
Under our
collaboration agreement with Merck Serono, we have received $22.0 million
in up front and milestone payments from Merck Serono to date, not including
reimbursements for costs and expenses incurred in connection with the
development of adecatumumab. The agreement provides for potential future
clinical development milestone payments of up to an additional
$126.0 million. In a November 2006 amendment to the original agreement, we
and Merck Serono agreed that Micromet would continue to conduct an ongoing phase
1 clinical trial testing the safety of adecatumumab in combination with
docetaxel in patients with metastatic breast cancer. In October 2007, we and
Merck Serono further amended the agreement and reallocated certain of our
respective development responsibilities with respect to adecatumumab. As part of
the revised responsibilities, Micromet now has all decision making authority and
operational responsibility for the clinical trials conducted by us. Merck Serono
will continue to bear the development expenses associated with the collaboration
in accordance with the agreed-upon budget.
Through
March 2009, we developed blinatumomab under the 2003 Agreement. Under the 2003
Agreement, MedImmune reimbursed a portion of the clinical development costs
incurred by us in our clinical trials in Europe. In November 2009, we entered
into the 2009 Agreement under which we acquired MedImmune’s remaining option
right to commercialize blinatumomab in North America. The 2009
Agreement terminates the 2003 Agreement, under which MedImmune had been granted
the right to develop and commercialize blinatumomab and other BiTE antibodies
binding to antigens relevant for hematological cancers in North
America. As a result of the 2009 Agreement, we now control the rights
to develop and commercialize blinatumomab in all territories, as well as any
other BiTE antibodies binding to antigens relevant for hematological cancers
that had been licensed to MedImmune under the 2003 Agreement. Under
the terms of the 2009 Agreement, MedImmune will sell to us the remaining stock
of blinatumomab clinical trial material and will transfer the manufacturing
process for this product candidate to us or our contract
manufacturer. In return, we will make an upfront payment of $6.5
million in installments through December 2010. In addition, MedImmune is
eligible to receive up to an aggregate of $19 million from us based upon the
achievement of specified strategic and regulatory milestone events relating to
blinatumomab in North America and a low single-digit royalty based on net sales
of blinatumomab in North America.
A second
agreement with MedImmune under which we are collaborating with MedImmune on the
development of MT111 provides for potential future milestone payments and
royalty payments based on future sales of MT111. The potential milestone
payments are subject to the successful completion of clinical development and
obtaining marketing approval in one or more national markets.
In
October 2009, we and sanofi-aventis entered into a collaboration and license
agreement under which the two companies will collaborate on the development of a
new BiTE® antibody targeting solid tumors. Under the terms of the
agreement, we will be responsible for generating and developing the BiTE
antibody through the completion of phase 1 clinical trials, at which point
sanofi-aventis will assume full control of the development and commercialization
of the product candidate on a worldwide basis. We will receive an
upfront payment of €8 million and are eligible to receive payments upon the
achievement of development milestones of up to €162 million and sales milestones
of up to €150 million, and up to a low double-digit royalty on worldwide net
sales of the product. In addition, sanofi-aventis will bear the cost of
development activities and will reimburse us for our expenses incurred in
connection with the development program. A portion of the upfront
payment in the amount of €2.75 million will be credited towards the
reimbursement of FTEs allocated by us to the performance of the development
program.
We intend
to pursue additional collaborations to provide resources for further development
of our product candidates and may grant technology access licenses. However, we
cannot forecast with any degree of certainty whether we will be able to enter
into collaborative agreements, and if we do, on what terms we might do
so.
We are
unable to estimate with any certainty the costs we will incur in the continued
development of our product candidates. However, we expect our research and
development costs associated with these product candidates to increase as we
continue to develop new indications and advance these product candidates through
preclinical and clinical trials.
Clinical
development timelines, the likelihood of success and total costs vary widely. We
anticipate that we will make determinations as to which research and development
projects to pursue and how much funding to direct to each project on an ongoing
basis in response to the scientific and clinical success of each product
candidate as well as relevant commercial factors.
The costs
and timing for developing and obtaining regulatory approvals of our product
candidates vary significantly for each product candidate and are difficult to
estimate. The expenditure of substantial resources will be required for the
lengthy process of clinical development and obtaining regulatory approvals as
well as to comply with applicable regulations. Any failure by us to obtain, or
any delay in obtaining, regulatory approvals could cause our research and
development expenditures to increase and, in turn, could have a material adverse
effect on our results of operations.
Results
of Operations
Comparison
of Three Months Ended September 30, 2009 and 2008
Revenues. The
following table summarizes our primary sources of revenue for the periods
presented (in millions):
|
|
|
Three
Months Ended
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Collaborative
R&D Revenue:
|
|
|
|
|
|
|
|
Nycomed
|
|
$ |
0.7 |
|
|
$ |
4.4 |
|
|
Bayer
Schering
|
|
|
1.6 |
|
|
|
— |
|
|
MedImmune
|
|
|
0.3 |
|
|
|
1.7 |
|
|
Merck
Serono
|
|
|
0.7 |
|
|
|
0.7 |
|
|
TRACON
|
|
|
0.1 |
|
|
|
— |
|
|
Other
|
|
|
— |
|
|
|
0.1 |
|
|
Total
collaborative R&D revenue
|
|
|
3.4 |
|
|
|
6.9 |
|
|
License
and other revenue
|
|
|
0.6 |
|
|
|
0.1 |
|
|
Total
revenues
|
|
$ |
4.0 |
|
|
$ |
7.0 |
|
Collaborative R&D
Revenue. Collaborative R&D revenue consists of
reimbursements for full-time equivalents and pass-through expenses we incur
under each collaborative agreement.
Nycomed. Collaborative
research and development revenues from Nycomed reflect Nycomed’s full cost
responsibility for the MT203 product development program. The Nycomed revenue
represents the reimbursement of our preclinical development activities,
including reimbursement for full-time equivalents as well as the portion of the
up-front payment from Nycomed that is being recognized over a 20-year period
ending in 2027. The decrease in revenue of $3.7 million for the three
months ended September 30, 2009 compared to the same period in 2008 was due
primarily to lower level of activity performed by us as Nycomed assumed primary
responsibility for the development of MT203.
Bayer
Schering. Revenues from Bayer Schering represent a
portion of the upfront option fee of approximately $6.0 million received in
January 2009 under an option, collaboration and license
agreement. The option fee is being recognized over the option period
of one year.
MedImmune. Collaborative
research and development revenues from MedImmune represent reimbursements
received from MedImmune for our costs incurred in the development of
blinatumomab and MT111. The decrease in MedImmune revenue was primarily due to
the termination of MedImmune’s participation in the development of blinatumomab
in North America. As described elsewhere in this report, the 2003
Agreement was terminated in November 2009, and therefore there will be no
further collaborative research and development revenue for blinatumomab in
future periods except for the final payment due from MedImmune for development
activities performed by Micromet under the 2003 Agreement.
Merck
Serono. Collaborative research and development revenues from
Merck Serono reflect Merck Serono’s full responsibility for the costs for the
development of the adecatumumab program. We expect 2009 revenues to be generally
consistent with those of 2008.
TRACON. Collaborative
research and development revenues from TRACON reflect TRACON’s full
responsibility for the costs of the MT293 product development program. Revenue
under this agreement consists of miscellaneous pass-through expenses and the
portion of the upfront payment received from TRACON that is being recognized
over a 15-year period ending in 2022.
License and Other
Revenue. License and other revenue consists primarily of
revenues from licenses of patents relating to single-chain antibody technology,
for which we serve as the exclusive marketing partner under a marketing
agreement with Enzon Pharmaceuticals, Inc.
Research and Development
Expenses. Research and development expense consists of costs
incurred to discover and develop product candidates. These expenses consist
primarily of salaries and related expenses for personnel, outside service costs
including production of clinical material, fees for services in the context of
clinical trials, medicinal chemistry, consulting and sponsored research
collaborations, and occupancy and depreciation charges. Process development
expenses were mainly incurred for production of GMP-grade clinical trial
material, as well as fermentation, purification and formulation development.
Preclinical development expenses cover pharmacological in vitro and in vivo experiments as well
as development of analytical testing procedures. Except for payments made in
advance of services rendered, we expense research and development costs as
incurred. Payments made in advance of services are recognized as research and
development expense as the related services are incurred.
Research
and development expenses were $13.3 million and $9.9 million for the three
months ended September 30, 2009 and 2008, respectively. We recorded a
non-cash impairment charge of $2.6 million related to the patents we acquired in
2001. We also recorded within research and development expenses a
non-cash share-based compensation charge of $0.9 million and a severance accrual
of $0.3 million in 2009 related to a former executive. Program
spending on our blinatumomab program increased by $0.7 as we assumed full
responsibility for the clinical development of this product candidate, and there
were expense increases in our new BiTE antibody programs of $0.5 million as
these programs advance in preclinical development. Partially
offsetting these increases were decreases in the MT203 program of $2.9 million
as a result of Nycomed assuming primary responsibility for the development of
MT203.
We track
our external research and development expenses by major project candidate
development program, such as for blinatumomab, MT203, adecatumumab and MT110, or
allocate such expenses to our BiTE antibody platform. We do not
allocate salary and overhead costs or stock-based compensation expense to
specific projects or product candidates. Our incurred research and
development expenses for the three months ended September 30, 2009 and 2008 are
summarized in the table below (in thousands):
|
|
|
Three
Months Ended
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Blinatumomab
|
|
$ |
1,281 |
|
|
$ |
557 |
|
|
MT203
|
|
|
29 |
|
|
|
3,205 |
|
|
Adecatumumab
|
|
|
928 |
|
|
|
234 |
|
|
MT110
|
|
|
544 |
|
|
|
279 |
|
|
BiTE
antibody platform and other
|
|
|
1,017 |
|
|
|
279 |
|
|
Unallocated
salary and overhead
|
|
|
8,146 |
|
|
|
5,045 |
|
|
Share-based
compensation
|
|
|
1,379 |
|
|
|
344 |
|
|
Total
|
|
$ |
13,324 |
|
|
$ |
9,943 |
|
General and Administrative
Expenses. General and administrative expense consists
primarily of salaries and related costs for personnel in executive, finance,
accounting, legal, information technology, corporate communications and human
resource functions. Other costs include facility costs not otherwise included in
research and development expense, insurance, and professional fees for legal and
audit services. General and administrative expenses were $3.8 million and $3.4
million for the three months ended September 30, 2009 and 2008,
respectively. The increase is primarily related to an increase in
recruiting expenses of $0.1 million and higher legal fees of $0.2
million.
Interest Expense.
Interest expense for the three months ended September 30, 2009 and
2008 was $52,000 and $45,000, respectively. The increase was due to the
amortization of premiums on our investments.
Interest Income.
Interest income for the three months ended September 30, 2009 and
2008 was $66,000 and $183,000, respectively. The decrease was due to lower
interest rates during 2009 as compared to 2008.
Change in Fair Value of Common Stock
Warrants Liability. Under the terms of the warrants issued in
connection with a private placement that we closed in June 2007, if at any time
while any of the warrants is outstanding, we are merged or consolidated with or
into another company, we sell all or substantially all of our assets in one or a
series of related transactions, any tender offer or exchange offer is completed
pursuant to which holders of our common stock are permitted to tender or
exchange their shares for other securities, cash or property, or we effect any
reclassification of our common stock or any compulsory share exchange pursuant
to which the common stock is effectively converted into or exchanged for other
securities, cash or property, then we (or any successor entity) are obligated to
purchase any unexercised warrants from the holder for cash in an amount equal to
its value computed using the Black-Scholes option-pricing model with prescribed
guidelines. As a consequence of these provisions, the warrants are classified as
a liability on our balance sheet, and changes in our stock price cause the fair
value of the warrants to change each reporting period, with these changes being
reflected in the statement of operations. Increases in our stock price cause the
warrant liability to increase, and this increase is recorded as a component of
other (expense), while decreases in our stock price cause the liability to
decrease, which is recorded as a component of other income. The expense of $6.4
million recorded during the third quarter of 2009 represents an increase in the
fair value of the warrant as of September 30, 2009 as compared to its value on
June 30, 2009. The expense of $6.8 million recorded during the third
quarter of 2008 represents an increase in the fair value of the warrant as of
September 30, 2008 as compared to its value on June 30, 2008.
Comparison
of Nine Months Ended September 30, 2009 and 2008
Revenues. The
following table summarizes our primary sources of revenue for the periods
presented (in millions):
|
|
|
Nine
Months Ended
|
|
|
|
|
September
30,
|
|
|
September 30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Collaborative
R&D revenue:
|
|
|
|
|
|
|
|
Nycomed
|
|
$ |
6.4 |
|
|
$ |
12.4 |
|
|
Bayer
Schering
|
|
|
4.6 |
|
|
|
— |
|
|
MedImmune
|
|
|
2.0 |
|
|
|
5.5 |
|
|
Merck
Serono
|
|
|
2.1 |
|
|
|
2.3 |
|
|
TRACON
|
|
|
0.2 |
|
|
|
0.2 |
|
|
Other
|
|
|
— |
|
|
|
0.2 |
|
|
Total
collaborative R&D revenue
|
|
|
15.3 |
|
|
|
20.6 |
|
|
License
and other revenue
|
|
|
1.1 |
|
|
|
0.8 |
|
|
Total
revenues
|
|
$ |
16.4 |
|
|
$ |
21.4 |
|
The
decrease in revenue from Nycomed for the nine months ended September 30, 2009
compared to the same period in 2008 was due primarily to a decrease in ongoing
development revenue of $7.2 million under this collaboration as the program
progresses from the pre-clinical stage to clinical trials, and the
responsibility for the development work shifts to
Nycomed. Partially offsetting this decrease was the receipt of
a milestone payment of approximately $2.0 million recognized as revenue during
2009 as a result of Nycomed’s filing of a clinical trial application for MT203
in Europe, as compared to milestone revenue of $0.8 million received in the same
period in 2008.
Bayer
Schering. Revenues from Bayer Schering represent a
portion of the upfront option fee of approximately $6.0 million received in
January 2009 under an option, collaboration and license
agreement. The option fee is being recognized over the option period
of one year.
MedImmune. The
decrease in MedImmune revenue was primarily due to the discontinuation of a
research program for EphA2 in the fourth quarter of 2008 and the diminished
activity and subsequent termination of MedImmune’s participation in the
blinatumomab development program.
Merck
Serono. Collaborative research and development revenues from
Merck Serono reflect Merck Serono’s full responsibility for the costs for the
development of the adecatumumab program.
TRACON. Collaborative
research and development revenues from TRACON reflect TRACON’s full
responsibility for the costs of the MT293 product development program. Revenue
under this agreement consists of miscellaneous pass-through expenses and the
portion of the upfront payment received from TRACON that is being recognized
over a 15-year period ending in 2022.
License and Other
Revenue. License and other revenue consists primarily of
revenues from licenses of patents relating to single-chain antibody technology,
for which we serve as the exclusive marketing partner under a marketing
agreement with Enzon Pharmaceuticals, Inc.
Research and Development
Expenses. Research and development expenses were $31.0
million and $30.7 million for the nine months ended September 30, 2009 and 2008,
respectively. The 2009 non-cash patent impairment charge of
$2.6 million, increased share-based compensation charge of $1.4 million and
increase to the severance accrual of $0.3 million, as well as increases in
expenses under our MT103 program of $1.2 million and our MT201 program of $0.8
million were largely offset by a decrease in MT203 program of $4.5 million and a
favorable exchange rate variance of $1.4 million in 2009 as compared to
2008.
Our
incurred research and development expenses for the nine months ended September
30, 2009 and 2008 are summarized in the table below (in thousands):
|
|
|
Nine
Months Ended
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Blinatumomab
|
|
$ |
3,164 |
|
|
$ |
2,179 |
|
|
MT203
|
|
|
1,559 |
|
|
|
7,420 |
|
|
Adecatumumab
|
|
|
1,672 |
|
|
|
881 |
|
|
MT110
|
|
|
1,219 |
|
|
|
1,300 |
|
|
BiTE
antibody platform and other
|
|
|
2,152 |
|
|
|
1,913 |
|
|
Unallocated
salary and overhead
|
|
|
18,807 |
|
|
|
15,926 |
|
|
Share-based
compensation
|
|
|
2,390 |
|
|
|
1.036 |
|
|
Total
|
|
$ |
30,963 |
|
|
$ |
30,655 |
|
General and Administrative
Expenses. General and administrative expenses were $11.1
million and $10.3 million for the nine months ended September 30, 2009 and 2008,
respectively. The increase is primarily related to an increase in
share-based compensation expense of $0.5 million related to the vesting of
performance-based stock option grants during 2009, increases in salary expenses
of $0.2 million and increases in investor relations expenses of $0.1
million.
Interest Expense.
Interest expense for the nine months ended September 30, 2009 and
2008 was $222,000 and $189,000, respectively. The increase was due to the
amortization of premiums on our investments, partially offset by reduced
interest expense resulting from the repayment of indebtedness in July
2008.
Interest Income.
Interest income for the nine months ended September 30, 2009 and
2008 was $346,000 and $649,000, respectively. The decrease was due to lower
interest rates during 2009 as compared to 2008.
Change in Fair Value of Common Stock
Warrants Liability. The non-cash expense resulting from the
change in the fair value of the warrants was $8.2 million and $8.5 million for
the nine months ended September 30, 2009 and 2008, respectively. In
each case, increases in our stock price during the period caused the warrant
liability to increase.
Liquidity
and Capital Resources
We had
unrestricted cash and cash equivalents and available for sale investments of
$114.4 million and $46.2 million as of September 30, 2009 and December 31, 2008,
respectively. We are also parties to irrevocable standby letters of
credit in connection with prior building leases for properties that are
currently subleased, as well as our current building leases in Munich, Germany
and Bethesda, Maryland. As of September 30, 2009, we had $3.2 million of cash
and certificates of deposit relating to these letters of credit that are
considered restricted cash, all of which is recorded as a non-current
asset.
Summary of Cash
Flows. Net cash used in operating activities was $13.1 million
for the nine months ended September 30, 2009, compared to $8.7 million used in
operating activities for the nine months ended September 30, 2008. The majority
of our cash is used to fund our ongoing research and development efforts, which
resulted in a net loss of $34.2 million for the nine months ended September 30,
2009. Net loss was adjusted by $18.0 million for non-cash expenses,
including $4.3 million for stock-based compensation, $8.2 million for the change
in the common stock warrant liability, $2.6 million for impairment of patents
and $2.5 million for depreciation and amortization. Changes in
working capital during the nine months ended September 30, 2009 included higher
cash balances of $1.6 million from net decreases in accounts receivable, higher
cash balances due to increases in accounts payable and accrued expenses of $0.6
million, and higher cash balances of $0.7 million resulting from an increase in
deferred revenue, which gives effect to the $6.0 million option fee received
from Bayer Schering in January 2009 that is being recognized as revenue through
January 2010.
Net cash
used in investing activities was $12.7 million for the nine months ended
September 30, 2009, compared to $372,000 used in investing activities for the
nine months ended September 30, 2008. In 2009, we purchased
short-term investments denominated in Euros to maintain liquid assets in the
currency in which the majority of our expenses are denominated. Some of these
investments matured and were reinvested.
Net cash
provided by financing activities was $78.9 million for the nine months ended
September 30, 2009, compared to $1.6 million used in financing activities for
the nine months ended September 30, 2008. Proceeds of $74.9 million, net of
underwriters’
discounts and offering expenses payable by us, were
received from the sale of common stock in a public offering that closed in
August 2009 and proceeds of $5.1 million, net of financing costs, were received
from the sale of common stock under our CEFF with Kingsbridge in May and June
2009. We also received $1.1 million from the exercise of stock
options during the nine months ended September 30, 2009, and we repaid the
remaining $2.2 million on our debt obligations to MedImmune following
the public offering. During the same period in 2008 we received $1.0
million from warrant and option exercises and repaid $2.5 million on debt
obligations.
Sources and Uses of
Cash. To date, we have funded our operations through proceeds
from public offerings and private placements of preferred stock, common stock
and associated warrants, government grants for research, research-contribution
revenues from our collaborations with pharmaceutical companies, licensing and
milestone payments related to our product candidate partnering activities, debt
financing and equity draws under the CEFF with Kingsbridge. We expect
that operating losses and negative cash flows from operations will continue for
at least the next several years and we will need to generate additional funds to
achieve our strategic goals. If necessary, we may raise substantial funds
through the sale of our common stock, or through debt financing or through
establishing additional strategic collaboration agreements. We do not know
whether additional financing will be available when needed, or whether it will
be available on favorable terms, or at all. Based on our capital resources as of
the date of this report, we believe that we have adequate resources to fund our
operations for at least 24 months, without considering any potential future
milestone payments that we may receive under our current or any new
collaborations we may enter into in the future, any future capital raising
transactions or any additional draw downs from our CEFF with
Kingsbridge.
If we are
unable to raise additional funds when needed, we may not be able to continue
development of our product candidates or we could be required to delay, scale
back or eliminate some or all of our development programs and other operations.
If we were to raise additional funds through the issuance of common stock,
substantial dilution to our existing stockholders would likely result. If we
were to raise additional funds through additional debt financing, the terms of
the debt may involve significant cash payment obligations as well as covenants
and specific financial ratios that may restrict our ability to operate our
business. Having insufficient funds may require us to delay, scale back or
eliminate some or all of our research or development programs or to relinquish
greater or all rights to product candidates at an earlier stage of development
or on less favorable terms than we would otherwise choose. If we raise funds
through corporate collaborations or licensing arrangements, we may be required
to relinquish, on terms that are not favorable to us, rights to some of our
technologies or product candidates that we would otherwise seek to develop or
commercialize ourselves. Failure to obtain adequate financing may adversely
affect our operating results or our ability to operate as a going
concern.
Our
future capital uses and requirements depend on numerous forward-looking factors
and involves risks and uncertainties. Actual results could vary as a result of a
number of factors, including the factors discussed in “Risk Factors” in this
report. In light of the numerous risks and uncertainties associated with the
development and commercialization of our product candidates, we are unable to
estimate the amounts of increased capital outlays and operating expenditures
associated with our current and anticipated clinical trials. Our future funding
requirements will depend on many factors, including:
|
|
•
|
the
number, scope, rate of progress, results and costs of our preclinical
studies, clinical trials and other research and development
activities;
|
|
|
•
|
the
terms and timing of any corporate collaborations that we may establish,
and the success of these
collaborations;
|
|
|
•
|
the
cost, timing and outcomes of regulatory
approvals;
|
|
|
•
|
the
number and characteristics of product candidates that we
pursue;
|
|
|
•
|
the
cost and timing of establishing manufacturing, marketing and sales, and
distribution capabilities;
|
|
|
•
|
the
cost of establishing clinical and commercial supplies of our product
candidates;
|
|
|
•
|
the
cost of preparing, filing, prosecuting, defending and enforcing any patent
claims and other intellectual property rights;
|
|
|
•
|
the
cost of preparing for, defending against and the ultimate resolution of
litigation or other claims brought against us;
and
|
|
|
•
|
the
extent to which we acquire or invest in businesses, products or
technologies, although we currently have no commitments or agreements
relating to any of these types of
transactions.
|
Committed Equity Financing
Facility. On December 1, 2008, we entered into a committed
equity financing facility, or CEFF, with Kingsbridge Capital Limited, or
Kingsbridge, pursuant to which Kingsbridge committed to purchase, subject to
certain conditions, up to $75.0 million of our common stock through December
2011, subject to early termination in certain circumstances. In connection with
this CEFF, we issued a warrant to Kingsbridge to purchase up to 135,000 shares
of our common stock with an exercise price of $4.44 per share. The warrant
is exercisable until June 2014. Under the CEFF, the maximum number of
shares that we may sell to Kingsbridge is 10,104,109 shares (exclusive of the
shares underlying the warrant issued to Kingsbridge). Subject to
certain conditions and limitations, from time to time under the CEFF, we may
require Kingsbridge to purchase shares of our common stock at a price that is
between 86% and 94% of the volume weighted average price on each trading day
during an eight-day pricing period, provided that if the average market price on
any day during the pricing period is less than the greater of $2.00 or 85% of
the closing price of the day preceding the first day of the pricing period, then
such day would not be used in determining the number of shares that would be
issued in the draw down and the aggregate amount of such draw down would be
decreased by one-eighth.
The
maximum dollar amount of shares that we may require Kingsbridge to purchase in
any pricing period is equal to the greater of (a) a percentage of our market
capitalization as determined at the time of the draw down (which percentage
ranges from 1.0% to 1.5% depending upon our market capitalization at the time of
the draw down) or (b) four times the average trading volume of our common stock
for a specified period prior to the draw down notice, multiplied by the closing
price of the common stock on the trading day prior to the draw down notice, in
each case subject to certain conditions. If either of the foregoing calculations
yields a draw down amount in excess of $10 million, then the individual draw
down amount is limited to $10 million.
We filed
a registration statement which became effective in December 2008 with respect to
the resale of shares issuable pursuant to the CEFF and underlying the warrant
issued to Kingsbridge, and the registration rights agreement requires us to
maintain the effectiveness of the registration statement. If we fail to maintain
the effectiveness of the registration statement or if we suspend the use of the
registration statement, under certain circumstances we may be required to pay
certain amounts to Kingsbridge (or issue to Kingsbridge additional shares of
common stock in lieu of cash payment) as liquidated damages. We are not
obligated to sell any of the $75.0 million of common stock available under the
CEFF and there are no minimum commitments or minimum use penalties. The CEFF
does not contain any restrictions on our operating activities, automatic pricing
resets or minimum market volume restrictions.
During
the second quarter of 2009 we made the first draw downs under the CEFF. In
May and June 2009, we issued a total of 1,420,568 shares of common stock to
Kingsbridge for aggregate gross proceeds of $5.3 million. We did not make
any draw downs under the CEFF during the third quarter of 2009. Accordingly, the
remaining amount available under the CEFF has decreased to the lesser of $69.7
million or 8,684,351 shares of common stock.
Public Offering of Common Stock.
On August 4, 2009, we completed an underwritten public offering of
16,100,000 shares of common stock at a public offering price of $5.00 per share
for net proceeds of $74.9 million after deducting the underwriters'
discount and offering expenses payable by us.
Contractual
Obligations
We have
contractual obligations related to our facility leases, research agreements and
financing agreements. The following table sets forth our significant
contractual obligations as of September 30, 2009 (in
thousands):
|
|
|
|
|
|
Payment
Due by Period
|
|
|
|
|
|
|
|
Less
Than
|
|
|
|
|
|
|
|
|
More
Than
|
|
|
Contractual
Obligations
|
|
Total
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
5 Years
|
|
|
Operating
leases(1)
|
|
$
|
14,409
|
|
|
$
|
5,219
|
|
|
$
|
9,190
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Contractual
payments under licensing agreements (2)
|
|
|
385
|
|
|
|
77
|
|
|
|
156
|
|
|
|
103
|
|
|
|
49
|
|
|
Capital
leases
|
|
|
1,073
|
|
|
|
325
|
|
|
|
604
|
|
|
|
131
|
|
|
|
13
|
|
|
|
|
$
|
15,867
|
|
|
$
|
5,621
|
|
|
$
|
9,950
|
|
|
$
|
234
|
|
|
$
|
62
|
|
|
|
(1)
|
The
amounts shown in operating leases excludes expected sub-lease
income.
|
|
|
(2)
|
We
are a party to technology transfer, licensing and research and development
agreements with various universities, research organizations and other
third parties under which we have received licenses to certain
intellectual property, scientific know-how and technology. In
consideration for the licenses received, we are required to pay license
and research support fees, milestone payments upon the achievement of
certain success-based objectives and/or royalties on future sales of
commercialized products, if any. We may also be required to pay minimum
annual royalties and the costs associated with the prosecution and
maintenance of the patents covering the licensed
technology.
|
Recent
Accounting Standards and Pronouncements
In
October 2009, the Financial Accounting Standards Board (FASB) approved for
issuance Emerging Issues Task Force (EITF) issue 08-01, Revenue Arrangements with Multiple
Deliverables (currently within the scope of FASB Accounting Standards
Codification (ASC) Topic 605-25). This statement provides principles for
allocation of consideration among multiple elements, allowing more flexibility
in identifying and accounting for separate deliverables under an arrangement.
ASC Topic 605-25 introduces an estimated selling price method for valuing the
elements of a bundled arrangement if vendor-specific objective evidence or
third-party evidence of selling price is not available, and significantly
expands related disclosure requirements. This standard is effective on a
prospective basis for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010. Alternatively,
adoption may be on a retrospective basis, and early application is permitted. We
are currently evaluating the impact of adopting this pronouncement.
In July
2009, the FASB issued ASC Topic 105 (formerly Statement of Financial Standards
(SFAS) No. 168, The
Hierarchy of Generally Accepted Accounting Principles). ASC Topic 105 contains
guidance which reduces the U.S. GAAP hierarchy to two levels, one that is
authoritative and one that is not. This pronouncement is effective
September 15, 2009. The adoption of this pronouncement did not have an
effect on our consolidated financial statements.
We
adopted the provisions of ASC Topic 820-10, Fair Value Measurements and
Disclosures (formerly SFAS No. 157, Fair Value Measurements), with respect to
non-financial assets and liabilities effective January 1, 2009. This
pronouncement defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. The adoption of ASC
Topic 820-10 did not have an impact on our consolidated financial
statements.
Cautionary
Note Regarding Forward-Looking Statements
Any
statements in this report about our expectations, beliefs, plans, objectives,
assumptions or future events or performance are not historical facts and are
forward-looking statements. Such forward-looking statements include statements
regarding our available cash resources, the efficacy, safety and intended
utilization of our product candidates, the development of our clinical stage
product candidates and our BiTE antibody technology, the future development of
blinatumomab by us, the conduct, timing and results of future clinical trials,
plans regarding regulatory filings, our ability to draw down under the CEFF and
the availability of financing, and our plans regarding partnering activities.
You can identify these forward-looking statements by the use of words or phrases
such as “believe,” “may,” “could,” “will,” “possible,” “can,” “estimate,”
“continue,” “ongoing,” “consider,” “anticipate,” “intend,” “seek,” “plan,”
“project,” “expect,” “should,” “would,” or “assume” or the negative of these
terms, or other comparable terminology, although not all forward-looking
statements contain these words. Among the factors that could cause actual
results to differ materially from those indicated in the forward-looking
statements are risks and uncertainties inherent in our business including,
without limitation, the progress, timing or success of our clinical trials;
difficulties or delays in development, testing, obtaining regulatory approval
for producing and marketing our product candidates; regulatory developments in
the United States or in foreign countries; the risks associated with our
reliance on collaborations for the development and commercialization of our
product candidates; unexpected adverse side effects or inadequate therapeutic
efficacy of our product candidates that could delay or prevent product
development or commercialization, or that could result in recalls or product
liability claims; our ability to attract and retain key scientific, management
or commercial personnel; the loss of key scientific, management or commercial
personnel; the size and growth potential of the potential markets for our
product candidates and our ability to serve those markets; the scope and
validity of patent protection for our product candidates; competition from other
pharmaceutical or biotechnology companies; our ability to establish and maintain
strategic collaborations or to otherwise obtain additional financing to support
our operations on commercially reasonable terms; successful administration of
our business and financial reporting capabilities; and other risks detailed in
this report, including those below in Part II, Item 1A, “Risk
Factors.”
Although
we believe that the expectations reflected in our forward-looking statements are
reasonable, we cannot guarantee future results, events, levels of activity,
performance or achievement. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, unless required by law.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Interest
Rates
Our
financial instruments consist primarily of cash and cash equivalents. These
financial instruments, principally comprised of corporate obligations and U.S.
and foreign government obligations, are subject to interest rate risk and will
decline in value if interest rates increase. Because of the relatively short
maturities of our investments, we do not expect interest rate fluctuations to
materially affect the aggregate value of our financial instruments. We do not
have derivative financial instruments in our investment portfolio.
Our
financial results and capital resources are affected by changes in the U.S.
dollar/Euro exchange rate. As of September 30, 2009, we had U.S.
dollar-denominated cash and cash equivalents of approximately $88.0 million and
Euro-denominated cash and investments of approximately €18.1 million, or
approximately $26.3 million using the exchange rate as of that
date. As of September 30, 2009, we had Euro-denominated liabilities
of approximately €13.3 million, or approximately $19.5 million, using the
exchange rate as of that date. The following table shows the hypothetical impact
of a change to the Euro/U.S. Dollar exchange rate:
|
Change
in Euro/$ U.S. Exchange Rate
|
|
10%
|
|
15%
|
|
20%
|
|
Increase
in reported net operating loss for the nine months ended September 30,
2009 (in thousands)
|
|
$
|
1,755
|
|
|
$
|
2,633
|
|
|
$
|
3,511
|
|
Item 4.
Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms and that such information is accumulated and communicated
to our management, including our Chief Executive Officer (our principal
executive officer) and our Chief Financial Officer (our principal financial
officer), as appropriate, to allow for timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
we recognize that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and we apply judgment in evaluating the cost-benefit relationship of
possible controls and procedures. In addition, the design of any system of
controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions, or the degree
of compliance with policies or procedures may deteriorate. Because of the
inherent limitations in a control system, misstatements due to error or fraud
may occur and not be detected.
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as such term is defined under Rules 13a-15(e) and
15d-15(e) promulgated under the Exchange Act, as of September 30, 2009, the end
of the period covered by this report. Based on the evaluation of our disclosure
controls and procedures as of September 30, 2009, our chief executive officer
and chief financial officer concluded that, as of such date, our disclosure
controls and procedures were effective at the reasonable assurance
level.
Changes
in Internal Control over Financial Reporting
Our
principal executive officer and principal financial officer also evaluated
whether any change in our internal control over financial reporting, as such
term is defined under Rules 13a-15(f) and 15d-15(f) promulgated under the
Exchange Act, occurred during our most recent fiscal quarter covered by this
report that has materially affected, or is likely to materially affect, our
internal control over financial reporting. There were no changes in our internal
control over financial reporting during the quarter ended September 30, 2009
that materially affected, or were reasonably likely to materially affect, our
internal control over financial reporting.
PART
II — OTHER INFORMATION
Item 1.
Legal Proceedings
On August
24, 2009, Curis, Inc. filed an arbitration demand and statement
of claims with the American Arbitration Association, relating to a June
2001 Agreement for the Purchase and Sale of Single Chain Peptide Business
between Curis and our wholly owned subsidiary Micromet AG under
which we acquired from Curis certain intellectual property assets relating
to single chain antibodies, including patents and license
agreements. In its demand for arbitration, Curis seeks monetary
damages in excess of $15 million for amounts that it alleges to be payable
under the 2001 agreement. We believe that Curis’s claims
are without merit and that no amounts are owed to Curis at this
time. We intend to vigorously defend ourselves in the
arbitration proceedings.
Item
1A. Risk Factors
Investing
in our common stock involves a high degree of risk. The following information
sets forth factors that could cause our actual results to differ materially from
those contained in forward-looking statements we have made in this report and
those we may make from time to time. If any of the following risks actually
occur, the market price of our common stock could decline, and you could lose
all or part of your investment. Additional risks not presently known to us or
that we currently believe are immaterial may also significantly impair our
business operations and could result in a complete loss of your investment.
Certain factors individually or in combination with others may have a material
adverse effect on our business, financial condition and results of operations
and you should carefully consider them.
Risks
Relating to Our Financial Results, Financial Reporting and Need for
Financing
We
have a history of losses, we expect to incur substantial losses and negative
operating cash flows for the foreseeable future and we may never achieve or
maintain profitability.
We have
incurred losses from our inception through September 30, 2009, and we expect to
incur substantial losses for the foreseeable future. We have no current sources
of material ongoing revenue, other than the reimbursement of development
expenses and potential future milestone payments from our current collaborators
or licensees, including sanofi-aventis, Nycomed, Merck Serono, MedImmune and
TRACON. We have not commercialized any products to date, either alone or with a
third party collaborator. If we are not able to commercialize any products,
whether alone or with a collaborator, we may not achieve profitability. Even if
our collaboration agreements provide funding for a portion of our research and
development expenses for some of our programs, we expect to spend significant
capital to fund our internal research and development programs for the
foreseeable future. As a result, we will need to generate significant revenues
in order to achieve profitability. We cannot be certain whether or when this
will occur because of the significant uncertainties that affect our business.
Even if we do achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis. Our failure to become and remain
profitable may depress the market value of our common stock and could impair our
ability to raise capital, expand our business, diversify our product offerings
or continue our operations and, as a result, you could lose part or all of your
investment.
We
will require additional financing, which may be difficult to obtain and may
dilute your ownership interest in us. If we fail to obtain the capital necessary
to fund our operations, we will be unable to develop or commercialize our
product candidates and our ability to operate as a going concern may be
adversely affected.
We will
require substantial funds to continue our research and development programs and
our future capital requirements may vary from what we expect. There are factors,
many of which are outside our control, that may affect our future capital
requirements and accelerate our need for additional financing. Among the factors
that may affect our future capital requirements and accelerate our need for
additional financing are:
|
|
•
|
continued
progress in our research and development programs, as well as the scope of
these programs;
|
|
|
•
|
our
ability to establish and maintain collaborative arrangements for the
discovery, research or development of our product
candidates;
|
|
|
•
|
the
timing, receipt and amount of research funding and milestone, license,
royalty and other payments, if any, from
collaborators;
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the
timing, receipt and amount of sales revenues and associated royalties to
us, if any, from our product candidates in the
market;
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our
ability to sell shares of our common stock under our December 2008
committed equity financing facility, or CEFF, with Kingsbridge Capital
Limited, or Kingsbridge;
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the
costs of preparing, filing, prosecuting, maintaining, defending and
enforcing patent claims and other patent-related costs, including
litigation costs and technology license
fees;
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costs
associated with litigation; and
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competing
technological and market
developments.
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We expect
to seek funding through public or private financings or from existing or new
collaborators with whom we enter into research or development collaborations
with respect to programs that are not currently licensed. However, the market
for stock of companies in the biotechnology sector in general, and the market
for our common stock in particular, is highly volatile. Due to market conditions
and the status of our product development pipeline, additional funding may not
be available to us on acceptable terms, or at all. Having insufficient funds may
require us to delay, scale back or eliminate some or all of our research or
development programs or to relinquish greater or all rights to product
candidates at an earlier stage of development or on less favorable terms than we
would otherwise choose. Failure to obtain adequate financing also may adversely
affect our ability to operate as a going concern.
If we
raise additional funds through the issuance of equity securities, our
stockholders may experience substantial dilution, including as a result of the
issuance of warrants in connection with the financing, or the equity securities
may have rights, preferences or privileges senior to those of existing
stockholders. If we raise additional funds through debt financings, these
financings may involve significant cash payment obligations and covenants that
restrict our ability to operate our business and make distributions to our
stockholders. We also could elect to seek funds through arrangements with
collaborators or others that may require us to relinquish rights to certain
technologies, product candidates or products.
Our
committed equity financing facility with Kingsbridge may not be available to us
if we elect to make a draw down, may require us to make additional “blackout” or
other payments to Kingsbridge and may result in dilution to our
stockholders.
In
December 2008, we entered into a CEFF with Kingsbridge, which entitles us to
sell and obligates Kingsbridge to purchase, from time to time over a period of
three years, up to 10,104,919 shares of our common stock for cash consideration
of up to $75.0 million, subject to certain conditions and restrictions. To date,
we have sold 1,420,568 shares of common stock for gross proceeds of $5.3 million
under this agreement. Kingsbridge will not be obligated to purchase
additional shares under the CEFF unless certain conditions are met, which
include:
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a
minimum price for our common stock that is not less than 85% of the
closing price of the day immediately preceding the applicable eight-day
pricing period, but in no event less than $2.00 per
share;
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the
accuracy of representations and warranties made to
Kingsbridge;
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our
compliance with all applicable laws which, if we failed to so comply,
would have a Material Adverse Effect (as that term is defined in the
purchase agreement with Kingsbridge);
and
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the
effectiveness of a registration statement registering for resale the
shares of common stock to be issued in connection with the
CEFF.
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Kingsbridge
is permitted to terminate the CEFF by providing written notice to us upon the
occurrence of certain events. For example, we are only eligible to draw down
funds under the CEFF at such times as our stock price is above $2.00 per share.
Kingsbridge is also able to terminate the CEFF at any time that we have not
drawn down at least $1.25 million in funds over a consecutive 12-month period.
If we are unable to access funds through the CEFF, or if Kingsbridge terminates
the CEFF or it otherwise expires, we may be unable to access capital from other
sources on favorable terms, or at all.
We are
entitled, in certain circumstances, to deliver a blackout notice to Kingsbridge
to suspend the use of the resale registration statement and prohibit Kingsbridge
from selling shares under the resale registration statement for a certain period
of time. If we deliver a blackout notice during the fifteen trading days
following our delivery of shares to Kingsbridge in connection with any draw
down, then we may be required to make a payment to Kingsbridge, or issue to
Kingsbridge additional shares in lieu of this payment, calculated on the basis
of the number of shares purchased by Kingsbridge in the most recent draw down
and held by
Kingsbridge
immediately prior to the blackout period and the decline in the market price, if
any, of our common stock during the blackout period. If the trading price of our
common stock declines during a blackout period, this blackout payment could be
significant.
In
addition, if we fail to maintain the effectiveness of the resale registration
statement or related prospectus in circumstances not permitted by our agreement
with Kingsbridge, we may be required to make a payment to Kingsbridge,
calculated on the basis of the number of shares held by Kingsbridge during the
period that the registration statement or prospectus is not effective,
multiplied by the decline in market price, if any, of our common stock during
the ineffective period. If the trading price of our common stock declines during
a period in which the resale registration statement or related prospectus is not
effective, this payment could be significant.
Should we
sell shares to Kingsbridge under the CEFF or issue shares in lieu of a blackout
payment, it will have a dilutive effect on the holdings of our current
stockholders and may result in downward pressure on the price of our common
stock. If we draw down under the CEFF, we will issue shares to Kingsbridge at a
discount of 6% to 14% from the volume weighted average price of our common
stock. If we draw down amounts under the CEFF when our share price is
decreasing, we will need to issue more shares to raise the same amount than if
our stock price was higher. Issuances in the face of a declining share price
will have an even greater dilutive effect than if our share price were stable or
increasing and may further decrease our share price. Moreover, the number of
shares that we will be able to issue to Kingsbridge in a particular draw down
may be materially reduced if our stock price declines significantly during the
applicable eight-day pricing period.
Our
quarterly operating results and stock price may fluctuate
significantly.
We expect
our results of operations to be subject to quarterly fluctuations. The level of
our revenues, if any, and results of operations for any given period, will be
based primarily on the following factors:
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the
status of development of our product
candidates;
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the
time at which we enter into research and license agreements with strategic
collaborators that provide for payments to us, the timing and accounting
treatment of payments to us, if any, under those agreements, and the
progress made by our strategic collaborators in moving forward the
development of our product
candidates;
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whether
or not we achieve specified research, development or commercialization
milestones under any agreement that we enter into with strategic
collaborators and the timely payment by these collaborators of any amounts
payable to us;
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the
addition or termination of research programs or funding support under
collaboration agreements;
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the
timing of milestone payments under license agreements, repayments of
outstanding amounts under loan agreements, and other payments that we may
be required to make to others;
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variations
in the level of research and development expenses related to our clinical
or preclinical product candidates during any given
period;
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the
change in fair value of the common stock warrants issued to investors in
connection with our 2007 private placement financing, remeasured at each
balance sheet date using a Black-Scholes option-pricing model, with the
change in value recorded as other income or expense;
and
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general
market conditions affecting companies with our risk profile and market
capitalization.
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These
factors may cause the price of our stock to fluctuate substantially. We believe
that quarterly comparisons of our financial results are not necessarily
meaningful and should not be relied upon as an indication of our future
performance.
If
the estimates we make and the assumptions on which we rely in preparing our
financial statements prove inaccurate, our actual results may vary
significantly.
Our
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of our assets, liabilities, revenues and expenses, the amounts of
charges taken by us and related disclosure. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances. We cannot assure you that our estimates, or the
assumptions underlying them, will be correct. Accordingly, our actual financial
results may vary significantly from the estimates contained in our financial
statements.
Changes
in, or interpretations of, accounting rules and regulations could result in
unfavorable accounting charges or require us to change our compensation
policies.
Accounting
methods and policies for biopharmaceutical companies, including policies
governing revenue recognition, research and development and related expenses,
accounting for stock options and in-process research and development costs are
subject periodically to further review, interpretation and guidance from
relevant accounting authorities, including the SEC. Changes to, or
interpretations of, accounting methods or policies in the future may require us
to reclassify, restate or otherwise change or revise our financial statements,
including those contained in this filing.
Risks
Relating to Our Common Stock
Substantial
sales of shares may adversely impact the market price of our common stock and
our ability to issue and sell shares in the future.
Substantially
all of the outstanding shares of our common stock are eligible for resale in the
public market. A significant portion of these shares is held by a small number
of stockholders. We have also registered shares of our common stock that we may
issue under our equity incentive compensation plans and our employee stock
purchase plan. In addition, any shares issued under our CEFF with Kingsbridge
will be eligible for resale in the public market. These shares generally can be
freely sold in the public market upon issuance. If our stockholders sell
substantial amounts of our common stock, the market price of our common stock
may decline, which might make it more difficult for us to sell equity or
equity-related securities in the future at a time and price that we deem
appropriate. We are unable to predict the effect that sales of our common stock
may have on the prevailing market price of our common stock.
Our
stock price may be volatile, and you may lose all or a substantial part of your
investment.
The
market price for our common stock is volatile and may fluctuate significantly in
response to a number of factors, many of which we cannot control. Among the
factors that could cause material fluctuations in the market price for our
common stock are:
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our
ability to successfully raise capital to fund our continued
operations;
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our
ability to successfully develop our product candidates within acceptable
timeframes;
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changes
in the regulatory status of our product
candidates;
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changes
in significant contracts, strategic collaborations, new technologies,
acquisitions, commercial relationships, joint ventures or capital
commitments;
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the
execution of new collaboration agreements or termination of existing
collaborations related to our clinical or preclinical product candidates
or our BiTE antibody technology
platform;
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announcements
of the invalidity of, or litigation relating to, our key intellectual
property;
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announcements
of the achievement of milestones in our agreements with collaborators or
the receipt of payments under those
agreements;
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announcements
of the results of clinical trials by us or by companies with commercial
products or product candidates in the same therapeutic category as our
product candidates;
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events
affecting our collaborators;
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fluctuations
in stock market prices and trading volumes of similar
companies;
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announcements
of new products or technologies, clinical trial results, commercial
relationships or other events by us, our collaborators or our
competitors;
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our
ability to successfully complete strategic collaboration arrangements with
respect to our product candidates, BiTE antibodies or our BiTE antibody
platform;
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variations
in our quarterly operating results;
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changes
in securities analysts’ estimates of our financial performance or product
development timelines;
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changes
in accounting principles;
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sales
of large blocks of our common stock, including sales by our executive
officers, directors and significant
stockholders;
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additions
or departures of key personnel; and
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discussions
of Micromet or our stock price by the financial and scientific press and
online investor communities such as chat
rooms.
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Our
stockholder rights plan, anti-takeover provisions in our organizational
documents and Delaware law may discourage or prevent a change in control, even
if an acquisition would be beneficial to our stockholders, which could affect
our stock price adversely and prevent attempts by our stockholders to replace or
remove our current management.
Our
stockholder rights plan and provisions contained in our amended and restated
certificate of incorporation and amended and restated bylaws may delay or
prevent a change in control, discourage bids at a premium over the market price
of our common stock and adversely affect the market price of our common stock
and the voting and other rights of the holders of our common stock. The
provisions in our amended and restated certificate of incorporation and amended
and restated bylaws include:
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dividing
our board of directors into three classes serving staggered three-year
terms;
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prohibiting
our stockholders from calling a special meeting of
stockholders;
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permitting
the issuance of additional shares of our common stock or preferred stock
without stockholder approval;
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prohibiting
our stockholders from making certain changes to our amended and restated
certificate of incorporation or amended and restated bylaws except with
66 2/3% stockholder approval;
and
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requiring
advance notice for raising matters of business or making nominations at
stockholders’ meetings.
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We are
also subject to provisions of the Delaware corporation law that, in general,
prohibit any business combination with a beneficial owner of 15% or more of our
common stock for five years unless the holder’s acquisition of our stock was
approved in advance by our board of directors.
We
may become involved in securities class action litigation that could divert
management’s attention and harm our business and our insurance coverage may not
be sufficient to cover all costs and damages.
The stock
market has from time to time experienced significant price and volume
fluctuations that have affected the market prices for the common stock of
pharmaceutical and biotechnology companies. These broad market fluctuations may
cause the market price of our common stock to decline. In the past, following
periods of volatility in the market price of a particular company’s securities,
securities class action litigation has often been brought against that company.
We may become involved in this type of litigation in the future. Litigation
often is expensive and diverts management’s attention and resources, which could
adversely affect our business.
Risks
Relating to Our Collaborations and Clinical Programs
We
are dependent on collaborators for the development and commercialization of many
of our product candidates. If we lose any of these collaborators, or if they
fail or incur delays in the development or commercialization of our current and
future product candidates, our operating results would suffer.
The
success of our strategy for development and commercialization of our product
candidates depends upon our ability to form and maintain productive strategic
collaborations and license arrangements. We currently have strategic
collaborations or license arrangements with sanofi-aventis, Nycomed, Merck
Serono, MedImmune and TRACON. In addition, we have an option, collaboration and
license agreement with Bayer Schering Pharma, under which Bayer Schering may
elect to commence a development collaboration for a BiTE antibody targeting a
solid tumor until January 2010. We expect to enter into additional
collaborations and license arrangements in the future. Our existing and any
future collaborations and licensed programs may not be scientifically or
commercially successful. The risks that we face in connection with these
collaborations and licensed programs include the following:
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Each
of our collaborators has significant discretion in determining the efforts
and resources that it will apply to the collaboration. The timing and
amount of any future royalty and milestone revenue that we may receive
under collaborative and licensing arrangements will depend on, among other
things, each collaborator’s efforts and allocation of
resources.
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All
of our strategic collaboration and license agreements are for fixed terms
and are subject to termination under various circumstances, including, in
some cases, on short notice without cause. If any of our collaborative
partners were to terminate its agreement with us, we may attempt to
identify and enter into an agreement with a new collaborator with respect
to the product candidate covered by the terminated agreement. If we are
not able to do so, we may not have the funds or capability to undertake
the development, manufacturing and commercialization of that product
candidate, which could result in a discontinuation or delay of the
development of that product
candidate.
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Our
collaborators may develop and commercialize, either alone or with others,
products and services that are similar to or competitive with the product
candidates and services that are the subject of their collaborations with
us or programs licensed from us.
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Our
collaborators may discontinue the development of our product candidates in
specific indications, for example as a result of their assessment of the
results obtained in clinical trials, or fail to initiate the development
in indications that have a significant commercial
potential.
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Pharmaceutical
and biotechnology companies from time to time re-evaluate their research
and development priorities, including in connection with mergers and
consolidations, which have been common in recent years. The ability of our
product candidates involved in strategic collaborations to reach their
potential could be limited if, as a result of changes in priorities, our
collaborators decrease or fail to increase spending related to our product
candidates, or decide to discontinue the development of our product
candidates and terminate their collaboration or license agreement with us.
In the event of such a termination, we may not be able to identify and
enter into a collaboration agreement for our product candidates with
another pharmaceutical or biotechnology company on terms favorable to us
or at all, and we may not have sufficient financial resources to continue
the development program for these product candidates on our own. As a
result, we may incur delays in the development for these product
candidates following any termination of the collaboration agreement, or we
may need to reallocate financial resources that could cause delays in
other development programs for our other product
candidates.
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We
may not be successful in establishing additional strategic collaborations, which
could adversely affect our ability to develop and commercialize product
candidates.
As an
integral part of our ongoing research and development efforts, we periodically
review opportunities to establish new collaborations for development and
commercialization of new BiTE antibodies or existing product candidates in our
development pipeline. We face significant competition in seeking appropriate
collaborators and the negotiation process is time-consuming and complex. We may
not be successful in our efforts to establish additional collaborations or other
alternative arrangements. Even if we are successful in our efforts to establish
a collaboration, the terms of the agreement may not be favorable to us. Finally,
such collaborations or other arrangements may not result in successful products
and associated revenue from milestone payments, royalties or profit share
payments.
Our
clinical stage product candidates adecatumumab, blinatumomab and MT110 have not
yet been proven to be safe or to be effective at the currently tested dose
levels. If we discontinue the development of any of our clinical stage product
candidates due to adverse events or lack of efficacy, our business could suffer
and the value of our company may be adversely affected.
We
previously have reported that two phase 2 clinical trials of adecatumumab did
not reach their respective primary endpoint in patients with metastatic breast
cancer (clinical benefit rate at week 24) and in patients with prostate cancer
(mean change in prostate specific antigen, compared to placebo control). We have
also reported that the treatment with blinatumomab was discontinued permanently
in some patients due to adverse events that included infections, central nervous
system events, and liver enzyme increases. MT110 is in a phase 1 dose-escalation
clinical trial, and we may reach the maximum tolerated dose without reaching a
dose level at which MT110 shows a clinically meaningful anti-tumor
effect. We are continuing the development of these product candidates
in phase 1 and/or phase 2 clinical trials, but there can be no assurance that we
will not encounter unacceptable adverse events or that any preliminary
suggestion of anti-tumor activity of these product candidates will be confirmed
during the ongoing or any future clinical trials.
If
we cannot establish clinical and regulatory operations in the United States, or
if we do not obtain the necessary regulatory approvals from the FDA for the
development and the marketing of blinatumomab in the United States, the
development and commercialization of blinatumomab in the United States may be
delayed or may not occur at all.
In
November 2009, we and MedImmune entered into a termination and license agreement
pursuant to which we terminated our collaboration and license agreement with
MedImmune relating to blinatumomab in North America. As a result of
this agreement, we now control the rights to develop and commercialize
blinatumomab in the United States. However, we will need to hire personnel in
order to prepare and execute the clinical development plan and obtain the
necessary regulatory approvals from the FDA or other regulatory authorities for
the development and marketing of blinatumomab. If we are not able to
hire the appropriate personnel, or if the FDA does not grant the necessary
approvals, the development of blinatumomab in the United States could be delayed
or may never be received at all. There can be no assurances that we
will be able to successfully develop blinatumomab following the termination of
our collaboration and license agreement with MedImmune, that such development
will not be delayed as a result of financial constraints, or that we will be
able to enter into a new collaboration agreement with respect to blinatumomab
with another industry partner for the development of blinatumomab in North
America or in any other territories if we desire to do so or that we will ever
be successful, alone or with a collaborator, in commercializing blinatumomab in
the United States or in any other territories.
Risks
Relating to Our Operations, Business Strategy, and the Life Sciences
Industry
We
face substantial competition, which may result in our competitors discovering,
developing or commercializing products before or more successfully than we
do.
Our
product candidates face competition with existing and new products being
developed by biotechnology and pharmaceutical companies, as well as universities
and other research institutions. For example, research in the fields of
antibody-based therapeutics for the treatment of cancer, and autoimmune and
inflammatory diseases, is highly competitive. A number of entities are seeking
to identify and patent antibodies, potentially active proteins and other
potentially active compounds without specific knowledge of their therapeutic
functions. Our competitors may discover, characterize and develop important
inducing molecules or genes in advance of us.
Many of
our competitors have substantially greater capital resources, research and
development staffs and facilities than we have. Efforts by other biotechnology
and pharmaceutical companies could render our programs or product candidates
uneconomical or result in therapies that are superior to those that we are
developing alone or with a collaborator. We and our collaborators face
competition from companies that may be more experienced in product development
and commercialization, obtaining regulatory approvals and product manufacturing.
As a result, they may develop competing products more rapidly that are safer,
more effective, or have fewer side effects, or are less expensive, or they may
discover, develop and commercialize products, which render our product
candidates non-competitive or obsolete. We expect competition to intensify in
antibody research as technical advances in the field are made and become more
widely known.
We
may not be successful in our efforts to expand our portfolio of product
candidates.
A key
element of our strategy is to discover, develop and commercialize a portfolio of
new BiTE antibody therapeutics. We are seeking to do so through our internal
research programs, which could place a strain on our human and capital
resources. A significant portion of the research that we are conducting involves
new and unproven technologies. Research programs to identify new disease targets
and product candidates require substantial technical, financial and human
resources regardless of whether or not any suitable candidates are ultimately
identified. Our research programs may initially show promise in identifying
potential product candidates, yet fail to yield product candidates suitable for
clinical development. If we are unable to discover suitable potential product
candidates, develop additional delivery technologies through internal research
programs or in-license suitable product candidates or delivery technologies on
acceptable business terms, our business prospects will suffer.
The
product candidates in our pipeline are in early stages of development and our
efforts to develop and commercialize these product candidates are subject to a
high risk of delay and failure. If we fail to successfully develop our product
candidates, our ability to generate revenues will be substantially
impaired.
All of
our product candidates are in early stages of clinical and preclinical
development, so we will require substantial additional financial resources, as
well as research, product development and clinical development capabilities, to
pursue the development of these product candidates, and we may never develop an
approvable or commercially viable product. The process of successfully
developing product candidates for the treatment of human diseases is very
time-consuming, expensive and unpredictable and there is a high rate of failure
for product candidates in preclinical development and in clinical trials. The
preclinical studies and clinical trials may produce negative, inconsistent or
inconclusive results, and the results from early clinical trials may not be
statistically significant or predictive of results that will be obtained from
expanded, advanced clinical trials. Further, we or our collaborators may decide,
or the FDA, EMEA or other regulatory authorities may require us, to conduct
preclinical studies or clinical trials or other development activities in
addition to those performed or planned by us or our collaborators, which may be
expensive or could delay the time to market for our product candidates. In
addition, we do not know whether the clinical trials will result in marketable
products.
We do not
know whether our planned preclinical development or clinical trials for our
product candidates will begin on time or be completed on schedule, if at all.
The timing and completion of clinical trials of our product candidates depend
on, among other factors, the number of patients that will be required to enroll
in the clinical trials, the inclusion and exclusion criteria used for selecting
patients for a particular clinical trial, and the rate at which those patients
are enrolled. Any increase in the required number of patients, tightening of
selection criteria, or decrease in recruitment rates or difficulties retaining
study participants may result in increased costs, delays in the development of
the product candidate, or both.
Our
product candidates may not be effective in treating any of our targeted diseases
or may prove to have undesirable or unintended side effects, toxicities or other
characteristics that may prevent or limit their commercial use. Institutional
review boards or regulators, including the FDA and EMEA, may hold, suspend or
terminate our clinical research or the clinical trials of our product candidates
for various reasons, including non-compliance with regulatory requirements or
if, in their opinion, the participating subjects are being exposed to
unacceptable health risks, or if additional information may be required for the
regulatory authority to assess the proposed development activities. Further,
regulators may not approve study protocols at all or in a timeframe anticipated
by us if they believe that the study design or the mechanism of action of our
product candidates poses an unacceptable health risk to study
participants.
We have
limited financial and managerial resources. These limitations require us to
focus on a select group of product candidates in specific therapeutic areas and
to forego the exploration of other product opportunities. While our technologies
may permit us to work in multiple areas, resource commitments may require
trade-offs resulting in delays in the development of certain programs or
research areas, which may place us at a competitive disadvantage. Our decisions
as to resource allocation may not lead to the development of viable commercial
products and may divert resources away from other market opportunities, which
would otherwise have ultimately proved to be more profitable.
In
addition, our product candidates may have different efficacy profiles in certain
clinical indications, sub-indications or patient profiles, and an election by us
or our collaborators to focus on a particular indication, sub-indication or
patient profile may result in a failure to capitalize on other potentially
profitable applications of our product candidates.
We
rely heavily on third parties for the conduct of preclinical studies and
clinical trials of our product candidates, and we may not be able to control the
proper performance of the studies or trials.
In order
to obtain regulatory approval for the commercial sale of our product candidates,
we and our collaborators are required to complete extensive preclinical studies
as well as clinical trials in humans to demonstrate to the FDA, EMEA and other
regulatory authorities that our product candidates are safe and effective. We
have limited experience and internal resources for conducting certain
preclinical studies and clinical trials and rely primarily on collaborators and
contract research organizations for the performance and management of
preclinical studies and clinical trials of our product candidates.
We are
responsible for confirming that our preclinical studies are conducted in
accordance with applicable regulations and that each of our clinical trials is
conducted in accordance with its general investigational plan and protocol. Our
reliance on third parties does not relieve us of responsibility for ensuring
compliance with appropriate regulations and standards for conducting,
monitoring, recording and reporting of preclinical and clinical trials. If our
collaborators or contractors fail to properly perform their contractual or
regulatory obligations with respect to conducting or overseeing the performance
of our preclinical studies or clinical trials, do not meet expected deadlines,
fail to comply with the good laboratory practice guidelines or good clinical
practice regulations, do not adhere to our preclinical and clinical trial
protocols, suffer an unforeseen business interruption unrelated to our agreement
with them that delays the clinical trial, or otherwise fail to generate reliable
clinical data, then the completion of these studies or trials may be delayed,
the results may not be useable and the studies or trials may have to be
repeated, and we may need to enter into new arrangements with alternative third
parties. Any of these events could cause our clinical trials to be extended,
delayed, or terminated or create the need for them to be repeated, or otherwise
create additional costs in the development of our product candidates and could
adversely affect our and our collaborators’ ability to market a product after
marketing approvals have been obtained.
Even
if we complete the lengthy, complex and expensive development process, there is
no assurance that we or our collaborators will obtain the regulatory approvals
necessary for the launch and commercialization of our product
candidates.
To the
extent that we or our collaborators are able to successfully complete the
clinical development of a product candidate, we or our collaborators will be
required to obtain approval by the FDA, EMEA or other regulatory authorities
prior to marketing and selling such product candidate in the United States, the
European Union or other countries. The process of preparing and filing
applications for regulatory approvals with the FDA, EMEA and other regulatory
authorities, and of obtaining the required regulatory approvals from these
regulatory authorities, is lengthy and expensive, and may require two years or
more. This process is further complicated because some of our product candidates
use non-traditional or novel materials in non-traditional or novel ways, and the
regulatory officials have little precedent to follow.
Any
marketing approval by the FDA, EMEA or other regulatory authorities may be
subject to limitations on the indicated uses for which we or our collaborators
may market the product candidate. These limitations could restrict the size of
the market for the product and affect reimbursement levels by third-party
payers.
As a
result of these factors, we or our collaborators may not successfully begin or
complete clinical trials and launch and commercialize any product candidates in
the time periods estimated, if at all. Moreover, if we or our collaborators
incur costs and delays in development programs or fail to successfully develop
and commercialize products based upon our technologies, we may not become
profitable and our stock price could decline.
We
and our collaborators are subject to governmental regulations in addition to
those imposed by the FDA and EMEA, and we or our collaborators may not be able
to comply with these regulations. Any non-compliance could subject us or our
collaborators to penalties and otherwise result in the limitation of our
operations.
In
addition to regulations imposed by the FDA, EMEA and other health regulatory
authorities, we and our collaborators are subject to regulation under the
Occupational Safety and Health Act, the Environmental Protection Act, the Toxic
Substances Control Act, the Research Conservation and Recovery Act, as well as
regulations administered by the Nuclear Regulatory Commission, national
restrictions on technology transfer, import, export and customs regulations and
certain other local, state or federal regulations, or their counterparts in
Europe and other countries. From time to time, other governmental agencies and
legislative or international governmental bodies have indicated an interest in
implementing further regulation of biotechnology applications. We are not able
to predict whether any such regulations will be adopted or whether, if adopted,
such regulations will apply to our or our collaborators’ business, or whether we
or our collaborators would be able to comply, without incurring unreasonable
expense, or at all, with any applicable regulations.
Our
growth could be limited if we are unable to attract and retain key personnel and
consultants.
We have
limited experience in filing and prosecuting regulatory applications to obtain
marketing approval from the FDA, EMEA or other regulatory authorities. Our
success depends on the ability to attract, train and retain qualified scientific
and technical personnel, including consultants, to further our research and
development efforts. The loss of services of one or more of our key employees or
consultants could have a negative impact on our business and operating results.
Competition for skilled personnel is intense and the turnover rate can be high.
Competition for experienced management and clinical, scientific and engineering
personnel from numerous companies and academic and other research institutions
may limit our ability to attract and retain qualified personnel on acceptable
terms. As a result, locating candidates with the appropriate qualifications can
be difficult, and we may not be able to attract and retain sufficient numbers of
highly skilled employees.
Any
growth and expansion into areas and activities that may require additional
personnel or expertise, such as in regulatory affairs, quality assurance, and
control and compliance, would require us to either hire new key personnel or
obtain such services from a third party. The pool of personnel with the skills
that we require is limited, and we may not be able to hire or contract such
additional personnel. Failure to attract and retain personnel would prevent us
from developing and commercializing our product candidates.
If
our third-party manufacturers do not follow current good manufacturing practices
or do not maintain their facilities in accordance with these practices, our
product development and commercialization efforts may be harmed.
We have
no manufacturing experience or manufacturing capabilities for the production of
our product candidates for clinical trials or commercial sale and must rely on
third parties to provide manufacturing services for us. Product candidates used
in clinical trials or sold after marketing approval has been obtained must be
manufactured in accordance with current good manufacturing practices
regulations. There are a limited number of manufacturers that operate under
these regulations, including the FDA’s and EMEA’s good manufacturing practices
regulations, and that are capable of manufacturing our product candidates.
Third-party manufacturers may encounter difficulties in achieving quality
control and quality assurance and may experience shortages of qualified
personnel. Also, manufacturing facilities are subject to ongoing periodic,
unannounced inspection by the FDA, the EMEA, and other regulatory agencies or
authorities, to ensure strict compliance with current good manufacturing
practices and other governmental regulations and standards. A failure of
third-party manufacturers to follow current good manufacturing practices or
other regulatory requirements or to document their adherence to such practices
may lead to significant delays in the availability of product candidates for use
in a clinical trial or for commercial sale, the termination of, or hold on a
clinical trial, or may delay or prevent filing or approval of marketing
applications for our product candidates. In addition, as a result of such a
failure, we could be subject to sanctions, including fines, injunctions and
civil penalties, refusal or delays by regulatory authorities to grant marketing
approval of our product candidates, suspension or withdrawal of marketing
approvals, seizures or recalls of product candidates, operating restrictions and
criminal prosecutions, any of which could significantly and adversely affect our
business. If we were required to change manufacturers, it may require additional
clinical trials and the revalidation of the manufacturing process and procedures
in accordance with applicable current good manufacturing practices and may
require FDA or EMEA approval. This revalidation may be costly and
time-consuming. If we are unable to arrange for third-party manufacturing of our
product candidates, or to do so on commercially reasonable terms, we may not be
able to complete development or marketing of our product
candidates.
Even
if regulatory authorities approve our product candidates, we may fail to comply
with ongoing regulatory requirements or experience unanticipated problems with
our product candidates, and these product candidates could be subject to
restrictions or withdrawal from the market following approval.
Any
product candidates for which we obtain marketing approval, along with the
manufacturing processes, post-approval clinical trials and promotional
activities for such product candidates, will be subject to continual review and
periodic inspections by the FDA, EMEA and other regulatory authorities. Even if
regulatory approval of a product candidate is granted, the approval may be
subject to limitations on the indicated uses for which the product may be
marketed or contain requirements for costly post-marketing testing and
surveillance to monitor the safety or efficacy of the product. Post-approval
discovery of previously unknown problems with any approved products, including
unanticipated adverse events or adverse events of unanticipated severity or
frequency, difficulties with a manufacturer or manufacturing processes, or
failure to comply with regulatory requirements, may result in restrictions on
such approved products or manufacturing processes, limitations in the scope of
our approved labeling, withdrawal of the approved products from the market,
voluntary or mandatory recall and associated publicity requirements, fines,
suspension or withdrawal of regulatory approvals, product seizures, injunctions
or the imposition of civil or criminal penalties.
The
procedures and requirements for granting marketing approvals vary among
countries, which may cause us to incur additional costs or delays or may prevent
us from obtaining marketing approvals in different countries and regulatory
jurisdictions.
We intend
to market our product candidates in many countries and regulatory jurisdictions.
In order to market our product candidates in the United States, the European
Union and many other jurisdictions, we must obtain separate regulatory approvals
in each of these countries and territories. The procedures and requirements for
obtaining marketing approval vary among countries and regulatory jurisdictions,
and can involve additional clinical trials or other tests. Also, the time
required to obtain approval may differ from that required to obtain FDA and EMEA
approval. The various regulatory approval processes may include all of the risks
associated with obtaining FDA and EMEA approval. We may not obtain all of the
desirable or necessary regulatory approvals on a timely basis, if at all.
Approval by a regulatory authority in a particular country or regulatory
jurisdiction, such as the FDA in the United States and the EMEA in the European
Union, generally does not ensure approval by a regulatory authority in another
country. We may not be able to file for regulatory approvals and may not receive
necessary approvals to commercialize our product candidates in any or all of the
countries or regulatory jurisdictions in which we desire to market our product
candidates.
If
we fail to obtain an adequate level of reimbursement for any approved products
by third-party payers, there may be no commercially viable markets for these
products or the markets may be much smaller than expected. The continuing
efforts of the government, insurance companies, managed care organizations and
other payers of health care costs to contain or reduce costs of healthcare may
adversely affect our ability to generate revenues and achieve profitability, the
future revenues and profitability of our potential customers, suppliers and
collaborators, and the availability of capital.
Our
ability to commercialize our product candidates successfully will depend in part
on the extent to which governmental authorities, private health insurers and
other organizations establish appropriate reimbursement levels for the price
charged for our product candidates and related treatments. The efficacy, safety
and cost-effectiveness of our product candidates as well as the efficacy, safety
and cost-effectiveness of any competing products will determine in part the
availability and level of reimbursement. These third-party payers continually
attempt to contain or reduce the costs of healthcare by challenging the prices
charged for healthcare products and services. Given recent federal and state
government initiatives directed at lowering the total cost of healthcare in the
United States, the U.S. Congress and state legislatures will likely continue to
focus on healthcare reform, the cost of prescription pharmaceuticals and on the
reform of the Medicare and Medicaid systems. In certain countries, particularly
the countries of the European Union, the pricing of prescription pharmaceuticals
is subject to governmental control. In these countries, pricing negotiations
with governmental authorities can take six to twelve months or longer after the
receipt of regulatory marketing approval for a product. To obtain reimbursement
or pricing approval in some countries, we may be required to conduct clinical
trials that compare the cost-effectiveness of our product candidates to other
available therapies. If reimbursement for our product candidates were
unavailable or limited in scope or amount or if reimbursement levels or prices
are set at unsatisfactory levels, our projected and actual revenues and our
prospects for profitability would be negatively affected.
Another
development that may affect the pricing of drugs in the United States is
regulatory action regarding drug reimportation into the United States. The
Medicare Prescription Drug, Improvement and Modernization Act requires the
Secretary of the U.S. Department of Health and Human Services to promulgate
regulations allowing drug reimportation from Canada into the United States under
certain circumstances. These provisions will become effective only if the
Secretary certifies that such imports will pose no additional risk to the
public’s health and safety and result in significant cost savings to consumers.
Proponents of drug reimportation may also attempt to pass legislation that would
remove the requirement for the Secretary’s certification or allow reimportation
under circumstances beyond those anticipated under current law. If legislation
is enacted, or regulations issued, allowing the reimportation of drugs, it could
decrease the reimbursement we would receive for any product candidates that we
may commercialize, or require us to lower the price of our product candidates
then on the market that face competition from lower-priced supplies of that
product from other countries. These factors would negatively affect our
projected and actual revenues and our prospects for profitability.
We are
unable to predict what additional legislation or regulation, if any, relating to
the healthcare industry or third-party coverage and reimbursement may be enacted
in the future or what effect such legislation or regulation would have on our
business. Any cost containment measures or other healthcare system reforms that
are adopted could have a material adverse effect on our ability to commercialize
successfully any future products or could limit or eliminate our spending on
development projects and affect our ultimate profitability.
If
physicians and patients do not accept the product candidates that we may
develop, our ability to generate product revenue in the future will be adversely
affected.
Our
product candidates, if successfully developed and approved by the regulatory
authorities, may not gain market acceptance among physicians, healthcare payers,
patients and the medical community. Market acceptance of and demand for any
product candidate that we may develop will depend on many factors,
including:
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our
ability to provide acceptable evidence of safety and
efficacy;
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convenience
and ease of administration;
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prevalence
and severity of adverse side effects;
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the
timing of market entry relative to competitive
treatments;
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cost
effectiveness;
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effectiveness
of our marketing and pricing strategy for any product candidates that we
may develop;
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publicity
concerning our product candidates or competitive
products;
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the
strength of marketing and sales support; and
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our
ability to obtain third-party coverage or
reimbursement.
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If any
product candidates for which we may receive marketing approval fail to gain
market acceptance, our ability to generate product revenue in the future will be
adversely affected.
We
face the risk of product liability claims and may not be able to obtain
insurance.
Our
business exposes us to the risk of product liability claims that is inherent in
the testing, manufacturing, and marketing of drugs and related devices. Although
we have product liability and clinical trial liability insurance that we believe
is appropriate, this insurance is subject to deductibles and coverage
limitations. We may not be able to obtain or maintain adequate protection
against potential liabilities. If any of our product candidates is approved for
marketing, we may seek additional insurance coverage. If we are unable to obtain
insurance at acceptable cost or on acceptable terms with adequate coverage or
otherwise protect ourselves against potential product liability claims, we will
be exposed to significant liabilities, which may cause a loss of revenue or
otherwise harm our business. These liabilities could prevent or interfere with
our product commercialization efforts. Defending a suit, regardless of merit,
could be costly, could divert management attention and might result in adverse
publicity, injury to our reputation, or reduced acceptance of our product
candidates in the market. If we are sued for any injury caused by any future
products, our liability could exceed our total assets.
Our
operations involve hazardous materials and we must comply with environmental
laws and regulations, which can be expensive.
Our
research and development activities involve the controlled use of hazardous
materials, including chemicals and radioactive and biological materials. Our
operations also produce hazardous waste products. We are subject in the United
States to a variety of federal, state and local regulations, and in Europe to
European, national, state and local regulations, relating to the use, handling,
storage and disposal of these materials. We generally contract with third
parties for the disposal of such substances and store certain low-level
radioactive waste at our facility until the materials are no longer considered
radioactive. We cannot eliminate the risk of accidental contamination or injury
from these materials. We may be required to incur substantial costs to comply
with current or future environmental and safety regulations which could impose
greater compliance costs and increased risks and penalties associated with
violations. If an accident or contamination occurred, we would likely incur
significant costs associated with civil penalties or criminal fines, substantial
investigation and remediation costs, and costs associated with complying with
environmental laws and regulations. There can be no assurance that violations of
environmental laws or regulations will not occur in the future as a result of
the inability to obtain permits, human error, accident, equipment failure or
other causes. We do not have any insurance for liabilities arising from
hazardous materials. Compliance with environmental and safety laws and
regulations is expensive, and current or future environmental regulation may
impair our research, development or production efforts.
Risks
Relating to Our Intellectual Property and Litigation
We
may not be able to obtain or maintain adequate patents and other intellectual
property rights to protect our business and product candidates against
competitors.
Our value
will be significantly enhanced if we are able to obtain adequate patents and
other intellectual property rights to protect our business and product
candidates against competitors. For that reason, we allocate significant
financial and personnel resources to the filing, prosecution, maintenance and
defense of patent applications, patents and trademarks claiming or covering our
product candidates and key technology relating to these product
candidates.
To date,
we have sought to protect our proprietary positions related to our important
technology, inventions and improvements by filing patent applications in the
U.S., Europe and other jurisdictions. Because the patent position of
pharmaceutical and biopharmaceutical companies involves complex legal and
factual questions, the issuance, scope and enforceability of patents cannot be
predicted with certainty, and we cannot be certain that patents will be issued
on pending or future patent applications that cover our product candidates and
technologies. Claims could be restricted in prosecution that might lead to a
scope of protection which is of minor value for a particular product candidate.
Patents, if issued, may be challenged and sought to be invalidated by third
parties in litigation. In addition, U.S. patents and patent applications may
also be subject to interference proceedings, and U.S. patents may be subject to
reexamination proceedings in the U.S. Patent and Trademark Office. European
patents may be subject to opposition proceedings in the European Patent Office.
Patents might be invalidated in national jurisdictions. Similar proceedings may
be available in countries outside of Europe or the U.S. These proceedings could
result in either a loss of the patent or a denial of the patent application or
loss or reduction in the scope of one or more of the claims of the patent or
patent application. Thus, any patents that we own or license from others may not
provide any protection against competitors. Furthermore, an adverse decision in
an interference proceeding could result in a third party receiving the patent
rights sought by us, which in turn could affect our ability to market a
potential product or product candidate to which that patent filing was directed.
Our pending patent applications, those that we may file in the future, or those
that we may license from third parties may not result in patents being issued.
If issued, they may not provide us with proprietary protection or competitive
advantages against competitors with similar technology. Furthermore, others may
independently develop similar technologies or duplicate any technology that we
have developed, which fall outside the scope of our patents. Products or
technology could also be copied by competitors after expiration of the patent
life. Furthermore, claims of employees or former employees of Micromet related
to their inventorship or compensation pursuant to the German Act on Employees’
Inventions may lead to legal disputes.
We rely
on third-party payment services and external law firms for the payment of
foreign patent annuities and other fees. Non-payment or delay in payment of such
fees, whether intentional or unintentional, may result in loss of patents or
patent rights important to our business.
We
may incur substantial costs enforcing our patents against third parties. If we
are unable to protect our intellectual property rights, our competitors may
develop and market products with similar features that may reduce demand for our
potential products.
We own or
control a substantial portfolio of issued patents. From time to time, we may
become aware of third parties that undertake activities that infringe on our
patents. We may decide to grant those third parties a license under our patents,
or to enforce the patents against those third parties by pursuing an
infringement claim in litigation. If we initiate patent infringement litigation,
it could consume significant financial and management resources, regardless of
the merit of the claims or the outcome of the litigation. The outcome of patent
litigation is subject to uncertainties that cannot be adequately quantified in
advance, including the demeanor and credibility of witnesses and the identity of
the adverse party, especially in biotechnology-related patent cases that may
turn on the testimony of experts as to technical facts upon which experts may
reasonably disagree. Some of our competitors may be able to sustain the costs of
such litigation or proceedings more effectively than we can because of their
substantially greater financial resources. Uncertainties resulting from the
initiation and continuation of patent litigation or other proceedings could harm
our ability to compete in the marketplace.
Our
ability to enforce our patents may be restricted under applicable law. Many
countries, including certain countries in Europe, have compulsory licensing laws
under which a patent owner may be compelled to grant licenses to third parties.
For example, compulsory licenses may be required in cases where the patent owner
has failed to “work” the invention in that country, or the third-party has
patented improvements. In addition, many countries limit the enforceability of
patents against government agencies or government contractors. In these
countries, the patent owner may have limited remedies, which could materially
diminish the value of the patent. Moreover, the legal systems of certain
countries, particularly certain developing countries, do not favor the
aggressive enforcement of patent and other intellectual property rights, which
makes it difficult to stop infringement. In addition, our ability to enforce our
patent rights depends on our ability to detect infringement. It is difficult to
detect infringers who do not advertise the compounds that are used in their
products or the methods they use in the research and development of their
products. If we are unable to enforce our patents against infringers, it could
have a material adverse effect on our competitive position, results of
operations and financial condition.
If
we are not able to protect and control our unpatented trade secrets, know-how
and other technological innovation, we may suffer competitive harm.
We rely
on proprietary trade secrets and unpatented know-how to protect our research,
development and manufacturing activities and maintain our competitive position,
particularly when we do not believe that patent protection is appropriate or
available. However, trade secrets are difficult to protect. We attempt to
protect our trade secrets and unpatented know-how by requiring our employees,
consultants and advisors to execute confidentiality and non-use agreements. We
cannot guarantee that these agreements will provide meaningful protection, that
these agreements will not be breached, that we will have an adequate remedy for
any such breach, or that our trade secrets or proprietary know-how will not
otherwise become known or independently developed by a third party. Our trade
secrets, and those of our present or future collaborators that we utilize by
agreement, may become known or may be independently discovered by others, which
could adversely affect the competitive position of our product candidates. If
any trade secret, know-how or other technology not protected by a patent or
intellectual property right were disclosed to, or independently developed by a
competitor, our business, financial condition and results of operations could be
materially adversely affected.
If
third parties claim that our product candidates or technologies infringe their
intellectual property rights, we may become involved in expensive patent
litigation, which could result in liability for damages or require us to stop
our development and commercialization of our product candidates after they have
been approved and launched in the market, or we could be forced to obtain a
license and pay royalties under unfavorable terms.
Our
commercial success will depend in part on not infringing the patents or
violating the proprietary rights of third parties. Competitors or third parties
may obtain patents that may claim the composition, manufacture or use of our
product candidates, or the technology required to perform research and
development activities relating to our product candidates.
From time
to time we receive correspondence inviting us to license patents from third
parties. While we believe that our pre-commercialization activities fall within
the scope of an available exemption against patent infringement provided in the
United States by 35 U.S.C. § 271(e) and by similar research exemptions in
Europe, claims may be brought against us in the future based on patents held by
others. Also, we are aware of patents and other intellectual property rights of
third parties relating to our areas of practice, and we know that others have
filed patent applications in various countries that relate to several areas in
which we are developing product candidates. Some of these patent applications
have already resulted in patents and some are still pending. The pending patent
applications may also result in patents being issued. In addition, the
publication of patent applications occurs with a certain delay after the date of
filing, so we may not be aware of all relevant patent applications of third
parties at a given point in time. Further, publication of discoveries in the
scientific or patent literature often lags behind actual discoveries, so we may
not be able to determine whether inventions claimed in patent applications of
third parties have been made before or after the date on which inventions
claimed in our patent applications and patents have been made. All issued
patents are entitled to a presumption of validity in many countries, including
the United States and many European countries. Issued patents held by others may
therefore limit our freedom to operate unless and until these patents expire or
are declared invalid or unenforceable in a court of applicable jurisdiction. For
example, we are aware that GlaxoSmithKline holds a European patent covering the
administration of adecatumumab in combination with docetaxel, which is the
combination that we are currently testing in a phase 1b clinical trial. We have
filed an opposition proceeding against this patent with the European Patent
Office seeking to have the patent invalidated. We may not be successful in this
proceeding, and if it is not resolved in our favor, we could be required to
obtain a license under this patent from GlaxoSmithKline, which we may not be
able to obtain on commercially reasonable terms, if at all.
We and
our collaborators may not have rights under some patents that may cover the
composition of matter, manufacture or use of product candidates that we seek to
develop and commercialize, drug targets to which our product candidates bind, or
technologies that we use in our research and development activities. As a
result, our ability to develop and commercialize our product candidates may
depend on our ability to obtain licenses or other rights under these patents.
The third parties who own or control such patents may be unwilling to grant
those licenses or other rights to us or our collaborators under terms that are
commercially viable or at all. Third parties who own or control these patents
could bring claims based on patent infringement against us or our collaborators
and seek monetary damages and to enjoin further clinical testing, manufacturing
and marketing of the affected product candidates or products. There has been,
and we believe that there will continue to be, significant litigation in the
pharmaceutical industry regarding patent and other intellectual property rights.
If a third party sues us for patent infringement, it could consume significant
financial and management resources, regardless of the merit of the claims or the
outcome of the litigation.
If a
third party brings a patent infringement suit against us and we do not settle
the patent infringement suit and are not successful in defending against the
patent infringement claims, we could be required to pay substantial damages or
we or our collaborators could be forced to stop or delay research, development,
manufacturing or sales of the product or product candidate that is claimed by
the third party’s patent. We or our collaborators may choose to seek, or be
required to seek, a license from the third party and would most likely be
required to pay license fees or royalties or both. However, there can be no
assurance that any such license would be available on acceptable terms or at
all. Even if we or our collaborators were able to obtain a license, the rights
may be nonexclusive, which would give our competitors access to the same
intellectual property. Ultimately, we could be prevented from
commercializing a product candidate, or forced to cease some aspect of our
business operations as a result of patent infringement claims, which could harm
our business.
Our
success depends on our ability to maintain and enforce our licensing
arrangements with various third party licensors.
We are
party to intellectual property licenses and agreements that are important to our
business, and we expect to enter into similar licenses and agreements in the
future. These licenses and agreements impose various research, development,
commercialization, sublicensing, milestone payments, indemnification, insurance
and other obligations on us. Moreover, certain of our license agreements contain
an obligation for us to make payments to our licensors based upon revenues
received in connection with such licenses. If we or our collaborators fail to
perform under these agreements or otherwise breach obligations thereunder, our
licensors may terminate these agreements, we could lose licenses to intellectual
property rights that are important to our business and we could be required to
pay damages to our licensors. Any such termination could materially harm our
ability to develop and commercialize the product candidate that is the subject
of the agreement, which could have a material adverse impact on our results of
operations.
If
licensees or assignees of our intellectual property rights breach any of the
agreements under which we have licensed or assigned our intellectual property to
them, we could be deprived of important intellectual property rights and future
revenue.
We are a
party to intellectual property out-licenses, collaborations and agreements that
are important to our business, and we expect to enter into similar agreements
with third parties in the future. Under these agreements, we license or transfer
intellectual property to third parties and impose various research, development,
commercialization, sublicensing, royalty, indemnification, insurance, and other
obligations on them. If a third party fails to comply with these requirements,
we generally retain the right to terminate the agreement and to bring a legal
action in court or in arbitration. In the event of breach, we may need to
enforce our rights under these agreements by resorting to arbitration or
litigation. During the period of arbitration or litigation, we may be unable to
effectively use, assign or license the relevant intellectual property rights and
may be deprived of current or future revenues that are associated with such
intellectual property, which could have a material adverse effect on our results
of operations and financial condition.
An
arbitration proceeding commenced by Curis, Inc. against us could result in a
payment that could materially and adversely impact our cash reserves and could
shorten the time period in which our current capital resources will be
sufficient to fund our operations.
On August
24, 2009, Curis, Inc. filed an arbitration request and a statement of claims
with the American Arbitration Association claiming that we have underpaid
royalties in excess of $15 million allegedly due to Curis pursuant to a 2001
patent acquisition agreement. The claim is based on Curis’s interpretation of
certain terms of the patent acquisition agreement based on which we
are required to pay to Curis a royalty on license revenues received from or
on account of licenses granted by us under the patents acquired from
Curis. Although we believe that Curis’s claim is without merit and we
intend to defend ourselves vigorously against the claims, arbitration can be
expensive, lengthy and disruptive to normal business operations, and we may
nevertheless experience an adverse outcome in this matter. In addition, due to
the uncertainty surrounding the outcome of the arbitration, the parties may
choose to settle the dispute under mutually agreeable terms. Any agreement
reached with Curis to resolve the dispute or an award in favor of Curis could
result in payments that may materially reduce the capital
resources available to us to fund our operations through the periods stated
in this report and the length of time that our existing cash resources would be
sufficient to fund our operations.
We
may be subject to damages resulting from claims that we or our employees have
wrongfully used or disclosed alleged trade secrets of their former
employers.
Many of
our employees were previously employed at other biotechnology or pharmaceutical
companies, including our competitors or potential competitors. Although no
claims against us are currently pending, we may be subject to claims that these
employees or we have inadvertently or otherwise used or disclosed trade secrets
or other proprietary information of their former employers. Litigation may be
necessary to defend against these claims. Even if we are successful in defending
against these claims, litigation could result in substantial costs and be a
distraction to management. If we fail in defending such claims, in addition to
paying money claims, we may lose valuable intellectual property rights or
personnel. A loss of key personnel or their work product could hamper or prevent
our ability to commercialize certain product candidates.
Risks
Relating to Manufacturing and Sales of Products
We
depend on our collaborators and third-party manufacturers to produce most, if
not all, of our product candidates and if these third parties do not
successfully manufacture these product candidates, or do not follow current good
manufacturing practices or do not maintain their facilities in accordance with
these practices, our product development and commercialization efforts may be
harmed.
We have
no manufacturing experience or manufacturing capabilities for the production of
our product candidates for clinical trials or commercial sale. In order to
continue to develop product candidates, apply for regulatory approvals, and
commercialize our product candidates following approval, we or our collaborators
must be able to manufacture or contract with third parties to manufacture our
product candidates in clinical and commercial quantities, in compliance with
regulatory requirements, at acceptable costs and in a timely manner. The
manufacture of our product candidates may be complex, difficult to accomplish
and difficult to scale-up when large-scale production is required. Manufacture
may be subject to delays, inefficiencies and poor or low yields of quality
products. The cost of manufacturing our product candidates may make them
prohibitively expensive. If supplies of any of our product candidates or related
materials become unavailable on a timely basis or at all or are contaminated or
otherwise lost, clinical trials by us and our collaborators could be seriously
delayed. This is due to the fact that such materials are time-consuming to
manufacture and cannot be readily obtained from third-party
sources.
Product
candidates used in clinical trials or sold after marketing approval has been
obtained must be manufactured in accordance with current good manufacturing
practices regulations. There are a limited number of manufacturers that operate
under these regulations, including the FDA’s and EMEA’s good manufacturing
practices regulations, and that are capable of manufacturing our product
candidates. Third-party manufacturers may encounter difficulties in achieving
quality control and quality assurance and may experience shortages of qualified
personnel. Also, manufacturing facilities are subject to ongoing periodic,
unannounced inspection by the FDA, the EMEA, and other regulatory agencies or
authorities, to ensure strict compliance with current good manufacturing
practices and other governmental regulations and standards. A failure of
third-party manufacturers to follow current good manufacturing practices or
other regulatory requirements and to document their adherence to such practices
may lead to significant delays in the availability of product candidates for use
in a clinical trial or for commercial sale, the termination of, or hold on, a
clinical trial, or may delay or prevent filing or approval of marketing
applications for our product candidates. In addition, as a result of such a
failure, we could be subject to sanctions, including fines, injunctions and
civil penalties, refusal or delays by regulatory authorities to grant marketing
approval of our product candidates, suspension or withdrawal of marketing
approvals, seizures or recalls of product candidates, operating restrictions and
criminal prosecutions, any of which could significantly and adversely affect our
business.
To the
extent that we or our collaborators seek to enter into manufacturing
arrangements with third parties, we and such collaborators will depend upon
these third parties to perform their obligations in a timely and effective
manner and in accordance with government regulations. Contract manufacturers may
breach their manufacturing agreements because of factors beyond our control or
may terminate or fail to renew a manufacturing agreement based on their own
business priorities at a time that is costly or inconvenient for us. If
third-party manufacturers fail to perform their obligations, our competitive
position and ability to generate revenue may be adversely affected in a number
of ways, including:
|
|
•
|
we
and our collaborators may not be able to initiate or continue clinical
trials of product candidates that are under
development;
|
|
|
|
|
|
|
•
|
we
and our collaborators may be delayed in submitting applications for
regulatory approvals for our product candidates; and
|
|
|
|
|
|
|
•
|
We
and our collaborators may not be able to meet commercial demands for any
approved products.
|
If we
were required to change manufacturers, it may require additional clinical trials
and the revalidation of the manufacturing process and procedures in accordance
with applicable current good manufacturing practices and may require FDA or EMEA
approval. This revalidation may be costly and time-consuming. If we are unable
to arrange for third-party manufacturing of our product candidates, or to do so
on commercially reasonable terms, we may not be able to complete development or
marketing of our product candidates.
The
transfer of the manufacturing process for blinatumomab from MedImmune to us or
our contract manufacturer may not be successful, which may result in a shortage
of clinical trial materials and a delay in the development of
blinatumomab.
As a
result of the termination of the collaboration and license agreement with
MedImmune relating to blinatumomab, we have assumed the responsibility for the
manufacture of blinatumomab for clinical trials. There can be no
assurance that we will find a new contract manufacturer in a timely fashion, or
that we will be able to implement the manufacturing process transferred from
MedImmune in a manner that results in clinical trial materials with
specifications comparable to the clinical trial materials produced by
MedImmune. Any of these or similar or other events could result in a
delay of the development and potential regulatory approval of blinatumomab,
which would have an adverse effect on the commercial potential of this product
candidate.
We
have no sales, marketing or distribution experience and will depend
significantly on third parties who may not successfully sell our product
candidates following approval.
We have
no sales, marketing or product distribution experience. If we receive required
regulatory approvals to market any of our product candidates, we plan to rely
primarily on sales, marketing and distribution arrangements with third parties,
including our collaborators. For example, as part of our agreements with
sanofi-aventis, Nycomed, Merck Serono, MedImmune and TRACON, we have granted
these companies the right to market and distribute products resulting from such
collaborations, if any are ever successfully developed. We may have to enter
into additional marketing arrangements in the future and we may not be able to
enter into these additional arrangements on terms that are favorable to us, if
at all. In addition, we may have limited or no control over the sales, marketing
and distribution activities of these third parties, and sales through these
third parties could be less profitable to us than direct sales. These third
parties could sell competing products and may devote insufficient sales efforts
to our product candidates following approval. As a result, our future revenues
from sales of our product candidates, if any, will be materially dependent upon
the success of the efforts of these third parties.
We may
seek to co-promote products with our collaborators, or to independently market
products that are not already subject to marketing agreements with other
parties. If we determine to perform sales, marketing and distribution functions
ourselves, then we could face a number of additional risks,
including:
|
|
•
|
we
may not be able to attract and build an experienced marketing staff or
sales force;
|
|
|
|
|
|
|
•
|
the
cost of establishing a marketing staff or sales force may not be
justifiable in light of the revenues generated by any particular
product;
|
|
|
|
|
|
|
•
|
our
direct sales and marketing efforts may not be successful;
and
|
|
|
|
|
|
|
•
|
we
may face competition from other products or sales forces with greater
resources than our own sales
force.
|
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Submission of Matters to a Vote of Security Holders
None.
Item 5.
Other Information
None.
Item 6.
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
3.1(1)
|
|
Amended
and Restated Certificate of Incorporation of the
Registrant
|
|
|
|
|
|
3.2(2)
|
|
Certificate
of Amendment of the Amended and Restated Certificate of Incorporation of
the Registrant
|
|
|
|
|
|
3.3(3)
|
|
Certificate
of Designations for Series A Junior Participating Preferred Stock of the
Registrant
|
|
|
|
|
|
3.4(4)
|
|
Amended
and Restated Bylaws effective October 3, 2007
|
|
|
|
|
|
10.1
|
|
Separation
Agreement, by and between the Registrant and Carsten Reinhardt, dated July
6, 2009
|
|
|
|
|
|
10.2
|
|
Consulting
Agreement, by and between the Registrant and Carsten Reinhardt, effective
as of October 1, 2009
|
|
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14
promulgated under the Securities Exchange Act of 1934
|
|
|
|
|
|
31.2
|
|
Certification
of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14
promulgated under the Securities Exchange Act of 1934
|
|
32(*)
|
|
Certifications
of Principal Executive Officer and Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of
2002
|
__________
|
(1)
|
Incorporated
by reference from the Registrant’s Quarterly Report on Form 10-Q
filed with the SEC on December 11, 2003
|
|
|
|
|
(2)
|
Incorporated
by reference from the Registrant’s Quarterly Report on Form 10-Q
filed with the SEC on May 10, 2006
|
|
|
|
|
(3)
|
Incorporated
by reference from the Registrant’s Current Report on Form 8-K filed
with the SEC on November 8, 2004
|
|
|
|
|
(4)
|
Incorporated
by reference from the Registrant’s Current Report on Form 8-K filed
with the SEC on October 9, 2007
|
|
|
|
|
*
|
These
certifications are being furnished solely to accompany this annual report
pursuant to 18 U.S.C. Section 1350, and are not being filed for
purposes of Section 18 of the Securities Exchange Act of 1934 and are
not to be incorporated by reference into any filing of the Registrant,
whether made before or after the date hereof, regardless of any general
incorporation language in such
filing
|
SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
Dated:
November 5, 2009
|
Micromet,
Inc.
|
|
|
|
|
|
|
By:
|
/s/
Barclay A. Phillips
|
|
|
|
Barclay
A. Phillips
|
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
|
(Duly
authorized officer and Principal Financial
Officer)
|
Exhibit List
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
3.1(1)
|
|
Amended
and Restated Certificate of Incorporation of the
Registrant
|
|
|
|
|
|
3.2(2)
|
|
Certificate
of Amendment of the Amended and Restated Certificate of Incorporation of
the Registrant
|
|
|
|
|
|
3.3(3)
|
|
Certificate
of Designations for Series A Junior Participating Preferred Stock of the
Registrant
|
|
|
|
|
|
3.4(4)
|
|
Amended
and Restated Bylaws effective October 3, 2007
|
|
|
|
|
|
10.1
|
|
Separation
Agreement, by and between the Registrant and Carsten Reinhardt, dated July
6, 2009
|
|
|
|
|
|
10.2
|
|
Consulting
Agreement, by and between the Registrant and Carsten Reinhardt, effective
as of October 1, 2009
|
|
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14
promulgated under the Securities Exchange Act of 1934
|
|
|
|
|
|
31.2
|
|
Certification
of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14
promulgated under the Securities Exchange Act of
1934
|
| |
|
|
|
32(*)
|
|
Certifications
of Principal Executive Officer and Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of
2002
|
__________
|
(1)
|
Incorporated
by reference from the Registrant’s Quarterly Report on Form 10-Q
filed with the SEC on December 11, 2003
|
|
|
|
|
(2)
|
Incorporated
by reference from the Registrant’s Quarterly Report on Form 10-Q
filed with the SEC on May 10, 2006
|
|
|
|
|
(3)
|
Incorporated
by reference from the Registrant’s Current Report on Form 8-K filed
with the SEC on November 8, 2004
|
|
|
|
|
(4)
|
Incorporated
by reference from the Registrant’s Current Report on Form 8-K filed
with the SEC on October 9, 2007
|
|
|
|
|
*
|
These
certifications are being furnished solely to accompany this annual report
pursuant to 18 U.S.C. Section 1350, and are not being filed for
purposes of Section 18 of the Securities Exchange Act of 1934 and are
not to be incorporated by reference into any filing of the Registrant,
whether made before or after the date hereof, regardless of any general
incorporation language in such
filing
|