DELAWARE
|
13-3379479
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
|
Page
No.
|
Part
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
3
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
Item
2.
|
12
|
|
Item
3.
|
25
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Item
4.
|
25
|
|
|
|
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PART
II
|
OTHER
INFORMATION
|
|
Item
1A.
|
25
|
|
Item
6.
|
27
|
|
|
28
|
|
|
Certifications
|
|
March
31, 2007
|
December
31, 2006
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
20,237
|
$
|
11,947
|
|||
Marketable
securities
|
104,774
|
113,841
|
|||||
Accounts
receivable
|
1,699
|
1,699
|
|||||
Other
current assets
|
2,835
|
3,181
|
|||||
Total
current assets
|
129,545
|
130,668
|
|||||
Marketable
securities
|
15,118
|
23,312
|
|||||
Fixed
assets, at cost, net of accumulated depreciation and
amortization
|
11,962
|
11,387
|
|||||
Restricted
cash
|
546
|
544
|
|||||
Total
assets
|
$
|
157,171
|
$
|
165,911
|
|||
Liabilities
and
Stockholders’
Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
12,985
|
$
|
11,852
|
|||
Deferred
revenue ¾
current
|
26,433
|
26,989
|
|||||
Total
current liabilities
|
39,418
|
38,841
|
|||||
Deferred
revenue —long term
|
11,385
|
16,101
|
|||||
Deferred
lease liability
|
124
|
123
|
|||||
Total
liabilities
|
50,927
|
55,065
|
|||||
Commitments
and contingencies (Note 9)
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value; 20,000,000 shares authorized; issued and
outstanding—none
|
|||||||
Common
stock, $.0013 par value; 40,000,000 shares authorized; issued and
outstanding— 26,503,941 in 2007 and 26,199,016 in 2006
|
34
|
34
|
|||||
Additional
paid-in capital
|
327,067
|
321,315
|
|||||
Accumulated
deficit
|
(220,791
|
)
|
(210,358
|
)
|
|||
Accumulated
other comprehensive (loss)
|
(66
|
)
|
(145
|
)
|
|||
Total
stockholders’ equity
|
106,244
|
110,846
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
157,171
|
$
|
165,911
|
|
For
the three months ended
|
||||||
|
March
31,
|
||||||
|
2007
|
2006
|
|||||
Revenues:
|
|||||||
Contract
research and development from collaborator
|
$
|
15,499
|
$
|
8,488
|
|||
Research
grants and contracts
|
2,119
|
2,462
|
|||||
Product
sales
|
19
|
51
|
|||||
Total
revenues
|
17,637
|
11,001
|
|||||
|
|||||||
Expenses:
|
|||||||
Research
and development
|
22,421
|
10,
283
|
|||||
License
fees ¾
research and development
|
750
|
275
|
|||||
General
and administrative
|
6,276
|
4,512
|
|||||
Loss
in joint venture
|
121
|
||||||
Depreciation
and amortization
|
492
|
363
|
|||||
Total
expenses
|
29,939
|
15,554
|
|||||
Operating
loss
|
(12,302
|
)
|
(4,553
|
)
|
|||
Other
income:
|
|||||||
Interest
income
|
1,869
|
1,910
|
|||||
Total
other income
|
1,869
|
1,910
|
|||||
|
|||||||
Net
loss
|
$
|
(10,433
|
)
|
$
|
(2,643
|
)
|
|
|
|||||||
Net
loss per share - basic and diluted
|
$
|
(0.40
|
)
|
$
|
(0.10
|
)
|
|
Weighted-average
shares - basic and diluted
|
26,365
|
25,354
|
Common
Stock
|
Additional
|
Accumulated
Other
|
Total
|
|||||||||||||||||||
Shares
|
Amount
|
Paid-In
Capital
|
Accumulated
Deficit
|
Comprehensive
(Loss)
|
Stockholders’
Equity
|
Comprehensive
(Loss)
|
||||||||||||||||
Balance
at December 31, 2006
|
26,199
|
$
|
34
|
$
|
321,315
|
$
|
(210,358
|
)
|
$
|
(145
|
)
|
$
|
110,846
|
|||||||||
Compensation
expense for vesting of share based payment arrangements
|
2,948
|
2,948
|
||||||||||||||||||||
Issuance
of restricted stock, net of forfeitures
|
17
|
|||||||||||||||||||||
Sale
of Common Stock under employee stock purchase plans and exercise
of stock
options
|
288
|
2,804
|
2,804
|
|||||||||||||||||||
Net
(loss)
|
(10,433
|
)
|
(10,433
|
)
|
$
|
(10,433
|
)
|
|||||||||||||||
Change
in unrealized loss on marketable securities
|
79
|
79
|
79
|
|||||||||||||||||||
Balance
at March 31, 2007
|
26,504
|
$
|
34
|
$
|
327,067
|
$
|
(220,791
|
)
|
$
|
(66
|
)
|
$
|
106,244
|
$
|
(10,354
|
)
|
|
Three
months ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(10,433
|
)
|
$
|
(2,643
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
492
|
363
|
|||||
Amortization
of discounts, net of premiums, on marketable securities
|
(49
|
)
|
22
|
||||
Noncash
expenses incurred in connection with vesting of share-based payment
arrangements
|
2,948
|
2,224
|
|||||
Loss
in joint venture
|
121
|
||||||
Changes
in assets and liabilities:
|
|||||||
Decrease
in accounts receivable
|
2,117
|
||||||
Decrease
(increase) in other current assets and other assets
|
346
|
(698
|
)
|
||||
Increase
(decrease) in accounts payable and accrued expenses
|
1,133
|
(3,690
|
)
|
||||
Decrease
in other current liabilities
|
(153
|
)
|
|||||
Decrease
in deferred revenue
|
(5,272
|
)
|
(2,852
|
)
|
|||
Increase
in deferred lease liability
|
1
|
5
|
|||||
Net
cash used in operating activities
|
(10,834
|
)
|
(5,184
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures
|
(1,067
|
)
|
(822
|
)
|
|||
Sales
of marketable securities
|
69,439
|
78,600
|
|||||
Purchase
of marketable securities
|
(52,050
|
)
|
(113,760
|
)
|
|||
(Increase)
in restricted cash
|
(2
|
)
|
(1
|
)
|
|||
Net
cash provided by (used in) investing activities
|
16,320
|
(35,983
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from the exercise of stock options and sale of Common Stock under
the
Employee Stock Purchase Plans
|
2,804
|
2,446
|
|||||
Net
cash provided by financing activities
|
2,804
|
2,446
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
8,290
|
(38,721
|
)
|
||||
Cash
and cash equivalents at beginning of period
|
11,947
|
67,072
|
|||||
Cash and cash equivalents at end of period
|
$
|
20,237
|
$
|
28,351
|
For
the Three Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Expected
volatility
|
55%
- 89%
|
|
|
94%
|
|
||
Expected
dividends
|
|
|
zero
|
|
|
zero
|
|
Expected
term (in years)
|
|
|
5.25
- 10
|
|
|
6.5
|
|
Weighted
average expected term (years)
|
|
|
9.0
|
|
|
6.5
|
|
Risk-free
rate
|
|
|
4.4%
- 4.5%
|
|
4.6%
|
|
For
the Three Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Expected
volatility
|
40%
|
|
|
38%
|
|
||
Expected
dividends
|
|
|
zero
|
|
|
zero
|
|
Expected
term
|
|
|
6
months
|
|
|
6
months
|
|
Risk-free
rate
|
|
|
5.1%
|
|
|
3.3%
|
|
March
31,
2007
|
December
31,
2006
|
||||||
National
Institutes of Health
|
$
|
1,697
|
$
|
1,697
|
|||
Other
|
2
|
2
|
|||||
Total
|
$
|
1,699
|
$
|
1,699
|
March
31,
2007
|
December
31,
2006
|
||||||
Accounts
payable
|
$
|
809
|
$
|
1,559
|
|||
Consulting
and clinical trial costs
|
9,479
|
7,404
|
|||||
Payroll
and related costs
|
978
|
990
|
|||||
Legal
and professional fees
|
987
|
1,301
|
|||||
Other
|
732
|
598
|
|||||
Total
|
$
|
12,985
|
$
|
11,852
|
5. |
Revenue
Recognition
|
6. |
Net
Loss Per Share
|
|
Net
Loss (Numerator)
|
Shares
(Denominator)
|
Per
Share Amount
|
|||||||
Three
months ended March 31, 2007
|
||||||||||
Basic
and Diluted
|
$
|
(10,433
|
)
|
26,365
|
$
|
(0.40
|
)
|
|||
Three
months ended March 31, 2006
|
||||||||||
Basic
and Diluted
|
$
|
(2,643
|
)
|
25,354
|
$
|
(0.10
|
)
|
|
Three
Months Ended March 31,
|
||||||||||||
|
2007
|
2006
|
|||||||||||
|
Wtd.
Avg. Number
|
Wtd.
Avg. Exercise Price
|
Wtd.
Avg. Number
|
Wtd.
Avg. Exercise Price
|
|||||||||
Stock
options
|
4,689
|
$
|
16.77
|
4,546
|
$
|
14.00
|
|||||||
Nonvested
shares
|
395
|
243
|
|||||||||||
Total
|
5,084
|
4,789
|
|
Three
Months Ended
March
31,
|
||||||
|
2007
|
2006
|
|||||
Net
loss
|
$
|
(10,433
|
)
|
$
|
(2,643
|
)
|
|
Change
in net unrealized (loss) on marketable securities
|
79
|
(141
|
)
|
||||
Comprehensive
loss
|
$
|
(10,354
|
)
|
$
|
(2,784
|
)
|
Three
Months Ended
March
31,
|
||||||||||
Sources
of Revenue
|
2007
|
2006
|
Percent
Change
|
|||||||
Contract
research from collaborator
|
$
|
15,499
|
$
|
8,488
|
83%
|
|
||||
Research
grants and contract
|
2,119
|
2,462
|
(14%)
|
|
||||||
Product
sales
|
19
|
51
|
(63%)
|
|
||||||
Total
|
$
|
17,637
|
$
|
11,001
|
60%
|
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Salaries
and benefits (cash)
|
$5,524
|
$3,832
|
44%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Share-based
compensation (non-cash)
|
$1,615
|
$1,193
|
35%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Clinical
trial costs
|
$4,649
|
$1,607
|
189%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Laboratory
supplies
|
$1,657
|
$927
|
79%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Contract
manufacturing and subcontractors
|
$6,094
|
$1,135
|
437%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Consultants
|
$1,571
|
$572
|
175%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
License
fees
|
$750
|
$275
|
173%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Other
operating expenses
|
$1,311
|
$1,017
|
29%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Salaries
and benefits (cash)
|
$1,958
|
$1,465
|
34%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Share-based
compensation (non-cash)
|
$1,333
|
$1,030
|
29%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Consulting
and professional fees
|
$1,840
|
$1,108
|
66%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Other
operating expenses
|
$1,145
|
$909
|
26%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Loss
in Joint Venture
|
$121
|
(100%)
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Depreciation
and Amortization
|
$492
|
$363
|
36%
|
Three
Months Ended March 31,
|
||||||
2007
|
2006
|
Percent
Change
|
||||
Other
Income
|
$1,869
|
$1,910
|
(2%)
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
in
thousands
|
|||||||
Net
cash (used in) provided by:
|
|||||||
Operating
activities
|
$
|
(10,834
|
)
|
$
|
(5,184
|
)
|
|
Investing
activities
|
16,320
|
(35,983
|
)
|
||||
Financing
activities
|
2,804
|
2,446
|
· |
Cash
used in operating activities for the three months ended March 31,
2007
resulted primarily from a net loss of $10.4 million, which was offset
by
$2.9 million of non-cash compensation expense from the issuance of
restricted stock and stock options to employees and non-employees
and $0.5
million of depreciation expense on our fixed assets. Significant
changes
in operating assets and liabilities between March 31, 2007 and December
31, 2006 were: a decrease of $5.3 million in deferred revenue resulting
from the amortization of the $60 million upfront payment received
from
Wyeth in 2005; and an increase of $1.1 million in accounts payable
and
accrued expenses, due to timing of payments.
|
· |
Net
cash used in investing activities for the three months ended March
31,
2007 resulted primarily from the sale of $69.4 million of marketable
securities offset by the purchase of $52.1 million of marketable
securities. We purchase and sell marketable securities in order to
provide
funding for our operations and to achieve appreciation of our unused
cash
in a low risk environment. We also purchased $1.1 million and $0.8
million
of fixed assets, during the three months ended March 31, 2007 and
2006,
respectively, including capital equipment and leasehold improvements
as we
acquired and built out additional manufacturing space and purchased
more
laboratory equipment for our expanding research and development
projects.
|
· |
The
net cash provided by financing activities for the three months ended
March
31, 2007 and 2006 includes the exercise of stock options under our
Stock
Incentive Plans and the sale of common stock under our Employee Stock
Purchase Plans. Cash received from exercises under such plans during
the
three months ended March 31, 2007 was more than that during the three
months ended March 31, 2006 due to an increase in
headcount.
|
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
(in
millions)
|
|||||||
Methylnaltrexone
|
$
|
10.2
|
|
$
|
5.3
|
|
|
HIV
|
|
|
6.4
|
|
|
3.2
|
|
Cancer
|
|
|
4.8
|
|
|
1.6
|
|
Other
programs
|
|
|
1.8
|
|
|
0.5
|
|
Total
|
|
$
|
23.2
|
|
$
|
10.6
|
|
Payments
due by March 31,
|
||||||||||||||||
Total
|
2008
|
2009-2010
|
2011-2012
|
Thereafter
|
||||||||||||
(in
millions)
|
||||||||||||||||
Operating
leases
|
$
|
7.5
|
$
|
2.4
|
$
|
4.2
|
$
|
0.4
|
$
|
0.5
|
||||||
License
and collaboration agreements (1)
|
98.9
|
2.8
|
4.1
|
3.2
|
88.8
|
|||||||||||
Total
|
$
|
106.4
|
$
|
5.2
|
$
|
8.3
|
$
|
3.6
|
$
|
89.3
|
(1) |
Assumes
attainment of milestones covered under each agreement, including
those by
PSMA LLC. The timing of the achievement of the related milestones
is
highly uncertain, and accordingly the actual timing of payments,
if any,
is likely to vary, perhaps significantly, relative to the timing
contemplated by this table.
|
· |
We
use the closing price of our common stock on the date of grant, as
quoted
on The NASDAQ Stock Market LLC, as the exercise price.
|
· |
Historical
volatilities are based upon daily quoted market prices of our common
stock
on The NASDAQ Stock Market LLC over a period equal to the expected
term of
the related equity instruments. We rely only on historical volatility
since future volatility is expected to be consistent with historical;
historical volatility is calculated using a simple average calculation;
historical data is available for the length of the option’s expected term
and a sufficient number of price observations are used consistently.
Since
our stock options are not traded on a public market, we do not use
implied
volatility. For the three months ended March 31, 2007 and 2006, the
volatility of our common stock for periods equal to the expected
term of
options granted during those periods has been high, 55% - 89% and
94%,
respectively, which is common for entities in the biotechnology industry
that do not have commercial products. A higher volatility input to
the
Black-Scholes model increases the resulting compensation expense.
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· |
The
expected term of options granted represents the period of time that
options granted are expected to be outstanding. For the three months
ended
March 31, 2007, our expected term has been calculated based upon
historical data related to exercise and post-termination cancellation
activity for each of two groups of recipients of stock options: employees
and officers and directors. Accordingly, for grants made to each
of the
groups mentioned above, we are using expected terms of 5.25 and 7.5
years,
respectively. For the three months ended March 31, 2006, our
expected term was calculated based upon the
simplified method as detailed in Staff Accounting Bulletin No. 107
(“SAB
107”). We used an expected term of 6.5 years for options granted in 2006,
based upon the vesting period of the outstanding options of four
or five
years and a contractual term of ten years. Expected term for options
granted to non-employee consultants was ten years, which is the
contractual term of those options. A shorter expected term would
result in
a lower compensation expense.
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· |
We
have never paid dividends and do not expect to pay dividends in the
future. Therefore, our dividend rate is
zero.
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· |
The
risk-free rate for periods within the expected term of the options
is
based on the U.S. Treasury yield curve in effect at the time of
grant.
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·
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the
results of clinical trials and preclinical studies involving our
products
or those of our competitors;
|
·
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changes
in the status of any of our drug development programs, including
delays in
clinical trials or program
terminations;
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·
|
developments
regarding our efforts to achieve marketing approval for our
products;
|
·
|
developments
in our relationship with Wyeth regarding the development and
commercialization of
methylnaltrexone;
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·
|
announcements
of technological innovations or new commercial products by us, our
collaborators or our competitors;
|
·
|
developments
in our relationships with other collaborative
partners;
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·
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developments
in patent or other proprietary
rights;
|
·
|
governmental
regulation;
|
·
|
changes
in reimbursement policies or health care
legislation;
|
·
|
public
concern as to the safety and efficacy of products developed by us,
our
collaborators or our competitors;
|
·
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our
ability to fund on-going
operations;
|
·
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fluctuations
in our operating results; and
|
·
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general
market conditions.
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(a)
|
Exhibits
|
10.6
|
Form
of Indemnification Agreement
|
31.1
|
Certification
of Paul J. Maddon, M.D., Ph.D., Chief Executive Officer of the Registrant,
pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended
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31.2
|
Certification
of Robert A. McKinney, Chief Financial Officer and Senior Vice President,
Finance and Operations (Principal Financial and Accounting Officer)
of the
Registrant, pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the
Securities Exchange Act of 1934, as amended
|
32
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Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
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|
PROGENICS
PHARMACEUTICALS, INC.
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|
Date:
May 9, 2007
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By:
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/s/
Robert A. McKinney
|
|
|
Robert
A. McKinney
Chief
Financial Officer
Senior
Vice President, Finance & Operations and Treasurer
(Duly
authorized officer of the Registrant and Principal Financial and
Accounting Officer)
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