Item 2. Management
’
s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist the reader in understanding the business of Progenics Pharmaceuticals, Inc. and its subsidiaries (the “Company”, “Progenics”, “we”, or “us”). MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended December 31, 2017. Our results of operations discussed in MD&A are presented in conformity with accounting principles generally accepted in the U.S. (“GAAP”). We operate under a single research and development business segment. Therefore, our results of operations are discussed on a consolidated basis.
Note Regarding Forward-Looking Statements
This document and other public statements we make may contain statements that do not relate strictly to historical fact, any of which may be forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements contained in this communication that refer to our estimated or anticipated future results or other non-historical facts are forward-looking statements that reflect our current perception of existing trends and information as of the date of this communication. Forward looking statements generally will be accompanied by words such as
“
anticipate
”
,
“
believe
”
,
“
plan
”
,
“
could
”
,
“
should
”
,
“
estimate
”
,
“
expect
”,
“
forecast
”
,
“
outlook
”
,
“
guidance
”
,
“
intend
”
,
“
may
”
,
“
might
”
,
“
will
”
,
“
possible
”
,
“
potential
”
,
“
predict
”
,
“
project
”
, or other similar words, phrases or expressions. Such statements are predictions only, and are subject to risks and uncertainties that could cause actual events or results to differ materially. Forward-looking statements involve known and unknown risks and uncertainties which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements.
While it is impossible to identify or predict all such matters, these differences between forward-looking statements and our actual results, performance or achievement may result from, among other things, the inherent uncertainty of the timing and success of, and expense associated with, research, development, regulatory approval and commercialization of our products and product candidates, including the risks that clinical trials will not commence or proceed as planned; products which appear to be promising in early trials will not demonstrate efficacy or safety in larger-scale trials;
clinical trial data on our products and product candidates will be unfavorable; our products will not receive marketing approval from regulators or, if approved, do not gain sufficient market acceptance to justify development and commercialization costs;
the sales of RELISTOR
®
and other products by our partners and the revenue and income generated for us thereby may not meet expectations;
our
commercial launch of AZEDRA
®
may not meet revenue and income expectations;
competing products currently on the market or in development might reduce the commercial potential of our products; we, our collaborators or others might identify side effects after the product is on the market; or efficacy or safety concerns regarding marketed products, whether or not originating from subsequent testing or other activities by us, governmental regulators, other entities or organizations or otherwise, and whether or not scientifically justified, may lead to product recalls, withdrawals of marketing approval, reformulation of the product, additional pre-clinical testing or clinical trials, changes in labeling of the product, the need for additional marketing applications, declining sales, or other adverse events.
We are also subject to risks and uncertainties associated with the actions of our corporate, academic and other collaborators and government regulatory agencies, including risks from market forces and trends; potential product liability; intellectual property, litigation and other dispute resolution, environmental and other risks; the risk that we may not be able to obtain sufficient capital, recruit and retain employees, enter into favorable collaborations or transactions, or other relationships or that existing or future relationships or transactions may not proceed as planned; the risk that current and pending patent protection for our products may be invalid, unenforceable or challenged, or fail to provide adequate market exclusivity, or that our rights to in-licensed intellectual property may be terminated for our failure to satisfy performance milestones; the risk of difficulties in, and regulatory compliance relating to, manufacturing products; and the uncertainty of our future profitability.
Risks and uncertainties to which we are subject also include general economic conditions, including interest and currency exchange-rate fluctuations and the availability of capital; changes in generally accepted accounting principles; the impact of legislation and regulatory compliance; the highly regulated nature of our business, including government cost-containment initiatives and restrictions on third-party payments for our products; trade buying patterns; the competitive climate of our industry; and other factors set forth in this document and other reports filed with the U.S. Securities and Exchange Commission (
“
SEC
”
). In particular, we cannot assure you that
AZEDRA
or
RELISTOR will be commercially successful or be approved in the future in other formulations, indications or jurisdictions, that any of our other programs will result in a commercial product.
We do not have a policy of updating or revising forward-looking statements and, except as expressly required by law, we disclaim any intent or obligation to update or revise any statements as a result of new information or future events or developments. It should not be assumed that our silence over time means that actual events are bearing out as expressed or implied in forward-looking statements.
Overview
Business
We are an oncology company focused on the development and commercialization of innovative targeted medicines and other technologies to target and treat cancer.
Highlights of our recent progress include:
|
●
|
AZEDRA
®
approval.
U.S. Food and Drug Administration (“FDA”) approved the New Drug Application (“NDA”) for AZEDRA (iobenguane I 131) 555 MBq/mL injection for intravenous use. AZEDRA, a radiotherapeutic, is indicated for the treatment of adult and pediatric patients 12 years and older with iobenguane scan positive, unresectable, locally advanced or metastatic pheochromocytoma or paraganglioma who require systemic anticancer therapy. AZEDRA is the first and only approved therapy for this indication.
|
|
●
|
AZEDRA Launch.
AZEDRA was launched August 1, 2018. Since August, AZEDRA was added to the National Comprehensive Cancer Network
®
(“NCCN”) Clinical Practice Guidelines in Oncology for Neuroendocrine and Adrenal Tumors v 3.2018. NCCN Guidelines
®
are widely recognized and used as the standard for clinical policy in oncology by clinicians and payors. Since AZEDRA’s approval by the FDA, it has also been added to four drug compendia: Clinical Pharmacology
©
; DRUGDEX
®
; Lexi-Drugs
®
; and NCCN. These compendia are recognized by private and public payers, including Centers for Medicare and Medicaid Services (“CMS”) as authoritative sources to be considered in determining drug reimbursement. A field-based team of Nuclear Medicine Technologists/Sales Representatives/Medical Science Liaisons and Access Specialists have been in the field since approval assisting centers of excellence and payers in the preparation for utilizing and reimbursing AZEDRA.
|
|
●
|
We advanced our 1095 program and plan initiate a Phase 2 trial in early 2019. 1095 is a small molecule radiotherapeutic designed to selectively bind to the extracellular domain of prostate specific membrane antigen (“PSMA”). The multicenter, randomized, controlled trial will evaluate the efficacy and safety of 1095 in combination with enzalutamide in patients with metastatic castration-resistant prostate cancer (mCRPC) who are PSMA-avid, chemotherapy naïve, and progressed on abiraterone.
|
|
●
|
We reported topline results from our recently completed Phase 2/3 study of PyL which demonstrated its potential high clinical utility. These results were used to design the pivotal Phase 3 study planned to commence in the fourth quarter.
|
|
●
|
We reported topline results of our recently completed Phase 3 study in 1404. The Phase 3 trial evaluated the specificity of 1404 imaging to identify patients without clinically significant prostate cancer and sensitivity to identify patients with clinically significant disease. Based on the 1404 data and an assessment of the PSMA-targeted imaging agent commercial landscape, we decided to focus our efforts on our PyL PSMA-targeted PET/CT imaging agent and will not further invest in 1404.
|
We consider opportunities for strategic collaborations, out-licenses, and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs. We may also in-license or acquire additional oncology compounds and/or programs.
Strategic partnerships
|
●
|
RELISTOR
®
(methylnaltrexone bromide) is licensed, to Salix Pharmaceuticals, Inc., which is a wholly-owned subsidiary of Bausch Health Companies Inc. (formerly known as Valeant Pharmaceuticals International, Inc.). RELISTOR subcutaneous injection and RELISTOR Tablets are approved by the FDA for the treatment of opioid-induced constipation in adults with chronic non-cancer pain.
|
|
●
|
Bayer AG (“Bayer”) has exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology in combination with Bayer’s alpha-emitting radionuclides. Bayer is developing PSMA TTC, a thorium-227 labeled PSMA-targeted antibody therapeutic. We expect Bayer to initiate a Phase 1 study of PSMA TTC in patients with metastatic castration-resistant prostate cancer by year-end.
|
Product / Candidate
|
|
Description
|
|
Status
|
Ultra-Orphan
|
|
|
|
|
AZEDRA (iobenguane I 131) 555 MBq/mL injection
|
|
Treatment of adult and pediatric patients 12 years and older with iobenguane scan positive, unresectable, locally advanced or metastatic pheochromocytoma or paraganglioma who require systemic anticancer therapy
|
|
Approved in U.S. July 30, 2018
|
Prostate Cancer
|
|
|
|
|
I-131-1095
|
|
Iodine-131 PSMA-targeted small molecule therapeutic for treatment of metastatic prostate cancer
|
|
Announced plans for start of Phase 2 trial
|
PyL
|
|
Flourine-18 PSMA-targeted PET/CT imaging agent for prostate cancer
|
|
Topline data on Phase 2/3 trial released; Phase 3 trial in biochemical recurrence (BCR) patients to begin by year end
|
1404
|
|
Technetium-99m PSMA-targeted SPECT/CT imaging agent for prostate cancer
|
|
Phase 3 top-line data released; no further investment planned
|
PSMA TTC (Targeted Thorium Conjugate)
[antibody licensed to Bayer]
|
|
Thorium-227 PSMA-targeted antibody conjugate therapeutic for treatment of metastatic prostate cancer
|
|
Preclinical development in progress; Phase 1 trial to begin by year end
|
PSMA AI
|
|
Automated reading of PSMA PET/SPECT/CT images based on artificial intelligence (AI) and deep learning
|
|
Development in progress based on 1404 and PyL data
|
automated Bone Scan Index ("aBSI")
[licensed to Fuji]
|
|
Automated reading of PSMA SPECT/PET/CT images based on artificial intelligence (AI) and deep learning
|
|
Sold in Japan
|
Opioid-Induced Constipation ("OIC") Treatment
|
|
|
RELISTOR Subcutaneous Injection
[licensed to Valeant]
|
|
Treatment of OIC in adults with chronic non-cancer pain and treatment of OIC in advanced-illness adult patients receiving palliative care when laxative therapy has not been sufficient
|
|
Sold in the U.S., European Union, and Canada
|
RELISTOR Tablets
[licensed to Valeant]
|
|
Treatment of OIC in adults with chronic non-cancer pain
|
|
Sold in the U.S.
|
Bausch
Agreement
Under our agreement with Bausch, we received a development milestone of $40.0 million upon U.S. marketing approval for subcutaneous RELISTOR in non-cancer pain patients in 2014, and a development milestone of $50.0 million for the U.S. marketing approval of an oral formulation of RELISTOR in 2016. We are also eligible to receive up to $200.0 million of commercialization milestone payments upon first achievement of specified U.S. sales targets in any single calendar year. The following table summarizes the commercialization milestones (in thousands):
Calendar Year Net Sales Level
|
|
Payment
|
|
In excess of $100 million
|
|
$
|
10,000
|
|
In excess of $150 million
|
|
|
15,000
|
|
In excess of $200 million
|
|
|
20,000
|
|
In excess of $300 million
|
|
|
30,000
|
|
In excess of $750 million
|
|
|
50,000
|
|
In excess of $1 billion
|
|
|
75,000
|
|
|
|
$
|
200,000
|
|
Each commercialization milestone payment is payable one time only, regardless of the number of times the condition is satisfied, and all six payments could be made within the same calendar year. We are also eligible to receive royalties from Bausch and its affiliates based on the following royalty scale: 15% on worldwide net sales up to $100 million, 17% on the next $400 million in worldwide net sales, and 19% on worldwide net sales over $500 million each calendar year, and 60% of any upfront, milestone, reimbursement or other revenue (net of costs of goods sold, as defined, and territory-specific research and development expense reimbursement) Bausch receives from sublicensees outside the U.S.
Bausch has also entered into license and distribution agreements to expand its sales channels outside of the U.S. for RELISTOR.
Bayer Agreement
Under our April 2016 agreement with a subsidiary of Bayer AG (“Bayer”) granting Bayer exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology, we received an upfront payment of $4.0 million and milestone payments totaling $3.0 million and could receive up to an additional $46.0 million in potential clinical and regulatory development milestones. We are also entitled to single digit royalties on net sales, and potential net sales milestone payments up to an aggregate total of $130.0 million as well as royalty payments.
Results of Operations
The following table is an overview of our results of operations (in thousands, except percentages):
|
|
Three Months Ended
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
Total revenue
|
|
$
|
5,317
|
|
|
$
|
2,697
|
|
|
|
97%
|
|
|
$
|
12,384
|
|
|
$
|
7,809
|
|
|
|
59%
|
|
Operating expenses
|
|
$
|
30,365
|
|
|
$
|
17,002
|
|
|
|
(79%)
|
|
|
$
|
64,188
|
|
|
$
|
52,927
|
|
|
|
(21%)
|
|
Operating loss
|
|
$
|
(25,048
|
)
|
|
$
|
(14,305
|
)
|
|
|
(75%)
|
|
|
$
|
(51,804
|
)
|
|
$
|
(45,118
|
)
|
|
|
(15%)
|
|
Net loss
|
|
$
|
(24,357
|
)
|
|
$
|
(15,352
|
)
|
|
|
(59%)
|
|
|
$
|
(52,953
|
)
|
|
$
|
(48,348
|
)
|
|
|
(10%)
|
|
Revenue
Our sources of revenue include royalties and license fees from Bausch and other collaborators and, to a small extent, sale of research reagents. The following table is a summary of our worldwide revenue (in thousands, except percentages):
|
|
Three Months Ended
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
Source
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
Royalty income
|
|
$
|
5,169
|
|
|
$
|
2,562
|
|
|
|
102%
|
|
|
$
|
11,757
|
|
|
$
|
7,282
|
|
|
|
61%
|
|
Other revenue
|
|
|
148
|
|
|
|
135
|
|
|
|
10%
|
|
|
|
627
|
|
|
|
527
|
|
|
|
19%
|
|
Total revenue
|
|
$
|
5,317
|
|
|
$
|
2,697
|
|
|
|
97%
|
|
|
$
|
12,384
|
|
|
$
|
7,809
|
|
|
|
59%
|
|
Royalty income.
We recognized royalty income based on the below net sales of RELISTOR as reported to us by Bausch (in thousands). Bausch reported net sales for the three and nine months ended September 30, 2018 include a non-recurring favorable sales return adjustment.
|
|
Three Months Ended
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
U.S.
|
|
$
|
32,400
|
|
|
$
|
16,900
|
|
|
|
92%
|
|
|
$
|
76,200
|
|
|
$
|
46,700
|
|
|
|
63%
|
|
Outside U.S.
|
|
|
2,100
|
|
|
|
200
|
|
|
|
950%
|
|
|
|
2,200
|
|
|
|
1,800
|
|
|
|
22%
|
|
Worldwide net sales of RELISTOR
|
|
$
|
34,500
|
|
|
$
|
17,100
|
|
|
|
102%
|
|
|
$
|
78,400
|
|
|
$
|
48,500
|
|
|
|
62%
|
|
Royalty income increased by $2.6 million, or 102%, during the three months ended September 30, 2018, compared to the same period in 2017, and by $4.5 million, or 61% during the nine months ended September 30, 2018, compared to the same period in 2017, due primarily to higher net sales.
Operating Expenses
The following table is a summary of our operating expenses (in thousands, except percentages):
|
|
Three Months Ended
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
Operating Expenses
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
Research and development
|
|
$
|
8,090
|
|
|
$
|
10,344
|
|
|
|
22%
|
|
|
$
|
25,547
|
|
|
$
|
31,641
|
|
|
|
19%
|
|
Selling, general and administrative
|
|
|
7,075
|
|
|
|
5,958
|
|
|
|
(19%)
|
|
|
|
21,341
|
|
|
|
17,986
|
|
|
|
(19%)
|
|
Intangible impairment charge
|
|
|
23,200
|
|
|
|
-
|
|
|
|
N/A
|
|
|
|
23,200
|
|
|
|
-
|
|
|
|
N/A
|
|
Change in contingent consideration liability
|
|
|
(8,000
|
)
|
|
|
700
|
|
|
|
1243%
|
|
|
|
(5,900
|
)
|
|
|
3,300
|
|
|
|
279%
|
|
Total operating expenses
|
|
$
|
30,365
|
|
|
$
|
17,002
|
|
|
|
(79%)
|
|
|
$
|
64,188
|
|
|
$
|
52,927
|
|
|
|
(21%)
|
|
Research and Development (
“
R&D
”
)
R&D expenses decreased by $2.3 million, or 22%, during the three months ended September 30, 2018, compared to the same period in 2017. R&D expenses decreased by $6.1 million, or 19%, during the nine months ended September 30, 2018, compared to the same period in 2017. These decreases were primarily attributable to lower external costs associated with the completion of the Phase 2 study for AZEDRA and the Phase 3 trial for 1404.
Selling,
General and Administrative (
“
S
G&A
”
)
SG&A expenses increased by $1.1 million, or 19%, during the three months ended September 30, 2018, compared to the same period in 2017. SG&A expenses increased by $3.4 million, or 19%, during the nine months ended September 30, 2018, compared to the same period in 2017. These increases were primarily attributable to higher costs associated with the commercial launch of AZEDRA.
Intangible Impairment Charge
The completion of the 1404 Phase 3 trial, whereby only one of the co-primary endpoints was met, negatively impacted our third quarter 2018 assumptions of potential future sales projections, resulting in a $23.2 million impairment of the 1404 indefinite-lived asset fair value. The corresponding non-cash impairment charge was recorded as part of operating expenses in the condensed consolidated statements of operations.
Change in Contingent Consideration Liability
The decrease in the contingent consideration liability of $8.0 million and $5.9 million during the three and nine months ended September 30, 2018, respectively, was primarily attributable to a decrease in sales projections and probability of success for 1404, following results from the recently completed Phase 3 trial, whereby only one of the co-primary endpoints was met, partially offset by higher estimated probability of success of AZEDRA and a decrease in the discount period used to calculate the potential milestone payments to former Molecular Insight stockholders. The increase of $0.7 million and $3.3 million during the three and nine months ended September 30, 2017, respectively, resulted primarily from decreases in the discount period used to calculate the present value of the contingent consideration liability and a higher estimated probability of success of AZEDRA used to calculate the potential milestone payments.
Other
(Expense)
Income
The following table is a summary of our other (expense) income (in thousands, except percentages):
|
|
Three Months Ended
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
Interest (expense) income, net
|
|
$
|
(670
|
)
|
|
$
|
(985
|
)
|
|
|
32%
|
|
|
$
|
(2,469
|
)
|
|
$
|
(3,045
|
)
|
|
|
19%
|
|
Other expense, net
|
|
|
(92
|
)
|
|
|
(62
|
)
|
|
|
(48%)
|
|
|
|
(229
|
)
|
|
|
(185
|
)
|
|
|
(24%)
|
|
Other (expense) income, net
|
|
$
|
(762
|
)
|
|
$
|
(1,047
|
)
|
|
|
27%
|
|
|
$
|
(2,698
|
)
|
|
$
|
(3,230
|
)
|
|
|
16%
|
|
Total other (expense) income, net decreased by $0.3 million, or 27%, and $0.5 million, or 16%, during the three and nine months ended September 30, 2018, respectively, compared to the same periods in 2017.
Income Tax Benefit
The following table is a summary of our income tax benefit (in thousands, except percentages):
|
|
Three Months Ended
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
$
|
1,453
|
|
|
$
|
-
|
|
|
|
N/A
|
|
|
$
|
1,549
|
|
|
$
|
-
|
|
|
|
N/A
|
|
We account for income taxes using the liability method in accordance with ASC 740 (Topic 740,
Income Taxes
). Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Income tax expense or benefit related to items not characterized as ordinary income or expense is recognized as a discrete item when incurred.
During the three and nine months ended September 30, 2018, we reduced our deferred tax liability and recorded income tax benefit of $1.5 million, primarily related to the impairment of an indefinite-lived intangible asset.
Liquidity and Capital Resources
The following table is a summary of selected financial data (in thousands):
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Cash and cash equivalents
|
|
$
|
148,851
|
|
|
$
|
90,642
|
|
Accounts receivable, net
|
|
$
|
5,821
|
|
|
$
|
3,972
|
|
Total assets
|
|
$
|
182,382
|
|
|
$
|
145,957
|
|
Working capital
|
|
$
|
140,414
|
|
|
$
|
81,511
|
|
Our current principal sources of revenue from operations are royalties and development and commercial milestones. Our principal sources of liquidity are our existing cash and cash equivalents. As of September 30, 2018, we had cash and cash equivalents of approximately $148.9 million, an increase of $58.2 million from $90.6 million at December 31, 2017. We will continue to have significant cash requirements to support product development activities and the commercial launch of AZEDRA. The amount and timing of our cash requirements will depend on the progress and success of our clinical development programs, regulatory and market acceptance, and the resources we devote to research and commercialization activities. The amount of cash on-hand will depend on the progress of various clinical programs, potential sales from the launch of AZEDRA, and the achievement of various milestones and royalties under our existing license agreements.
We believe that our current cash and cash equivalents, which includes $104.7 million of net proceeds received through September 30, 2018 from an underwritten public offering and the sale of our stock in at-the-market (“ATM”) transactions under a controlled equity offering sales agreement (see
Shelf Registration
section below for additional details), will be sufficient to fund our operations for at least the next twelve months. We expect to fund our operations going forward with existing cash resources, anticipated revenues from our existing license agreements, sales of AZEDRA, and cash that we may raise through future capital raising and other financing transactions.
If we do not realize sufficient royalty or milestone revenue from our license agreements, sales of AZEDRA, or are unable to enter into favorable collaboration, license, asset sale, additional capital raising, or other financing transactions, we will have to reduce, delay, or eliminate spending on certain programs, and/or take other economic measures.
Shelf Registration
During the first quarter of 2017, we filed a shelf registration statement on Form S-3 (File No. 333-215454) that permitted: (a) the offering, issuance and sale of up to a maximum aggregate offering price of $250 million of our common stock, preferred stock, debt securities, warrants, rights and/or units; and (b) as part of the $250 million, the offering, issuance and sale by us of up to a maximum aggregate offering price of $75 million of our common stock under our sales agreement with Cantor Fitzgerald & Co. (“Cantor”) in one or more ATM offerings. During the third quarter of 2018, we raised $70 million, net of underwriting discounts and commissions and offering expenses, in an underwritten public offering of 9.1 million shares of common stock at a public offering price of $8.25 per share. Through September 30, 2018, we sold a total of approximately 5.1 million shares of our common stock in ATM offerings under the sales agreement, for net proceeds, after deducting commissions and other transaction costs, of approximately $34.7 million. During the third quarter of 2018, we sold a total of 0.6 million shares of our common stock in ATM transactions under the sales agreement for net proceeds, after deducting commissions and other transaction costs, of approximately $4.8 million at an average selling price of $8.36 per share.
On October 12, 2018, we filed a new shelf registration statement on Form S-3 (File No. 333-227805), which was declared effective by the SEC on October 24, 2018. The new shelf registration replaced our prior shelf registration statement, pursuant to which no additional securities will be offered or sold. The new shelf registration statement permits: (a) the offering, issuance and sale of up to a maximum aggregate offering price of $250 million of our common stock, preferred stock, debt securities, warrants, rights and/or units; and (b) as part of the $250 million, the offering, issuance and sale by us of up to a maximum aggregate offering price of $75 million of our common stock under our sales agreement with Cantor in one or more ATM offerings.
In addition, in October 2018 we entered into a new sales agreement with Cantor, as sales agent, which replaced the previous sales agreement from January 2017. Pursuant to the new sales agreement, we may offer and sell through Cantor, from time to time, shares of our common stock up to an aggregate offering price of $75 million. This Sales Agreement may be terminated by Cantor or us at any time upon ten (10) days’ notice, or by Cantor at any time in certain circumstances, including the occurrence of a material adverse change in our business or financial condition.
Cash Flows
The following table is a summary of our cash flow activities (in thousands):
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
Net cash used in operating activities
|
|
$
|
(37,842
|
)
|
|
$
|
(40,984
|
)
|
Net cash used in investing activities
|
|
$
|
(595
|
)
|
|
$
|
(226
|
)
|
Net cash provided by financing activities
|
|
$
|
96,739
|
|
|
$
|
491
|
|
Operating Activities
Net cash used in operating activities during the nine months ended September 30, 2018 was primarily attributable to operating expenses, net of non-cash items including the intangible impairment charge and change in fair value of contingent consideration liability.
Investing Activities
Net cash used in investing activities during the nine months ended September 30, 2018 was primarily related to capital expenditures.
Financing Activities
Net cash provided by financing activities during the nine months ended September 30, 2018 was primarily attributable to net proceeds from the sale of our common stock in an underwritten public offering, ATM transactions and the exercise of stock options.
Off-Balance Sheet Arrangements and Guarantees
We have no obligations under off-balance sheet arrangements and do not guarantee the obligations of any other unconsolidated entity.
Critical Accounting Policies
We prepare our financial statements in conformity with accounting principles generally accepted in the U.S. Our significant accounting policies are disclosed in
Note 2. Summary of Significant Accounting Policies
to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. The selection and application of these accounting principles and methods requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. We evaluate these estimates on an ongoing basis. We base these estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities that are not otherwise readily apparent. While we believe that the estimates and assumptions we use in preparing the financial statements are appropriate, they are subject to a number of factors and uncertainties regarding their ultimate outcome and, therefore, actual results could differ from these estimates.
There have been no changes to our critical accounting policies and estimates as of and for the nine months ended September 30, 2018 as noted in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Recent Accounting Developments
Refer to our discussion of recently adopted accounting pronouncements and other recent accounting pronouncements in
Note 2. New Accounting Pronouncements
to the accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.