fprx-10q_20150930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2015

or

¨

TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                      to                      

Commission File Number: 001-36070

 

Five Prime Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

26-0038620

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

Two Corporate Drive

South San Francisco, California 94080

(415) 365-5600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

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.    Yes  x    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  x    No  ¨

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 the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

¨

  

Accelerated filer

 

x

 

 

 

 

Non-accelerated filer

 

¨  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2)     Yes  ¨    No  x

As of October 30, 2015, the number of outstanding shares of the registrant’s common stock was 27,503,839.

 

 

 

 

 

 


TABLE OF CONTENTS

 

PART I.

  

FINANCIAL INFORMATION

  

4

 

  

 

Item 1.

  

Financial Statements

  

4

 

  

 

  

 

Condensed Balance Sheets as of September 30, 2015 and December 31, 2014

  

4

 

  

 

  

 

Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014

  

5

 

  

 

  

 

Condensed Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2015 and 2014

  

6

 

  

 

  

 

Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2015 and 2014

  

7

 

  

 

  

 

Notes to Condensed Financial Statements

  

8

 

  

Item 2.

  

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

14

 

  

Item 3.

  

 

Quantitative and Qualitative Disclosures About Market Risk

  

24

 

  

Item 4.

  

 

Controls and Procedures

  

24

PART II.

  

 

OTHER INFORMATION

  

25

 

  

Item 1.

  

 

Legal Proceedings

  

25

 

  

Item 1A.

  

 

Risk Factors

  

25

 

  

Item 2.

  

 

Unregistered Sales of Equity Securities and Use of Proceeds

  

49

 

  

Item 6.

  

 

Exhibits

  

49

 

  

 

  

 

Signatures

  

50

 

  

 

  

 

Exhibit Index

  

51

In this report, unless otherwise stated or the context otherwise indicates, references to “Five Prime,” “the company,” “we,” “us,” “our” and similar references refer to Five Prime Therapeutics, Inc. The Five Prime logo and RIPPS ® are our registered trademarks. This report also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.

 

 

 

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:

 

·

our estimates regarding our expenses, revenues, anticipated capital requirements and our needs for additional financing;

 

·

our expectations that our FPA008 collaboration agreement with Bristol-Myers Squibb Company will become effective upon expiration of the notice and waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;

 

·

our receipt of future milestone payments and/or royalties, and the timing of such payments;

 

·

our or our partners’ ability to timely advance drug candidates into and through clinical data readouts and successful completion of clinical trials alone or in combination with other drugs;

 

·

the timing of the initiation, progress and results of preclinical studies and research and development programs;

 

·

our expectations regarding the potential safety, efficacy or clinical utility of our product candidates;

 

·

the implementation, timing and likelihood of success of our plans to develop companion diagnostics for our product candidates;

 

·

our ability to maintain and establish collaborations;

 

·

the implementation of our business model and strategic plans for our business, drug candidates and technology;

 

·

the scope of protection we establish and maintain for intellectual property rights covering our drug candidates and technology;

 

·

the size of patient populations targeted by products we or our partners develop and market adoption of our potential products by physicians and patients;

 

·

the timing or likelihood of regulatory filings and approvals;

 

·

developments relating to our competitors and our industry; and

 

·

our expectations regarding licensing, acquisitions and strategic operations.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this report in greater detail under the heading “Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this report.

We obtained the industry, market and competitive position data in this quarterly report from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the market definitions we use are appropriate, neither such research nor these definitions have been verified by any independent source.

 

 

 

3


PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

FIVE PRIME THERAPEUTICS, INC.

Condensed Balance Sheets

(In thousands)

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

36,956

 

 

$

15,267

 

Marketable securities

 

146,458

 

 

 

133,787

 

Receivable from collaborative partners

 

1,666

 

 

 

410

 

Prepaid and other current assets

 

5,454

 

 

 

1,794

 

Total current assets

 

190,534

 

 

 

151,258

 

Property and equipment, net

 

4,030

 

 

 

3,794

 

Other long-term assets

 

409

 

 

 

579

 

Total assets

$

194,973

 

 

$

155,631

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

1,565

 

 

$

1,096

 

Accrued personnel-related expenses

 

4,280

 

 

 

4,618

 

Other accrued liabilities

 

4,033

 

 

 

1,531

 

Deferred revenue, current portion

 

12,119

 

 

 

11,938

 

Deferred rent, current portion

 

743

 

 

 

632

 

Total current liabilities

 

22,740

 

 

 

19,815

 

Deferred revenue, long-term portion

 

45,173

 

 

 

48,628

 

Deferred rent, long-term portion

 

1,057

 

 

 

1,514

 

Other long-term liabilities

 

368

 

 

 

469

 

Commitments

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock

 

26

 

 

 

22

 

Preferred stock

 

 

 

 

 

Additional paid-in capital

 

361,051

 

 

 

274,180

 

Accumulated other comprehensive income

 

37

 

 

 

1

 

Accumulated deficit

 

(235,479

)

 

 

(188,998

)

Total stockholders' equity

 

125,635

 

 

 

85,205

 

Total liabilities and stockholders' equity

$

194,973

 

 

$

155,631

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

 

4


FIVE PRIME THERAPEUTICS, INC.

Condensed Statements of Operations

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

Collaboration and license revenue

 

$

5,858

 

 

$

6,059

 

 

$

16,460

 

 

$

14,586

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

24,720

 

 

 

9,803

 

 

 

49,241

 

 

 

30,602

 

 

General and administrative

 

 

5,213

 

 

 

3,360

 

 

 

14,029

 

 

 

9,664

 

 

Total operating expenses

 

 

29,933

 

 

 

13,163

 

 

 

63,270

 

 

 

40,266

 

 

Loss from operations

 

 

(24,075

)

 

 

(7,104

)

 

 

(46,810

)

 

 

(25,680

)

 

Interest income

 

 

107

 

 

 

57

 

 

 

332

 

 

 

148

 

 

Other expense, net

 

 

(3

)

 

 

(41

)

 

 

(3

)

 

 

(66

)

 

Net loss

 

$

(23,971

)

 

$

(7,088

)

 

$

(46,481

)

 

$

(25,598

)

 

Basic and diluted net loss per common share

 

$

(0.93

)

 

$

(0.33

)

 

$

(1.82

)

 

$

(1.24

)

 

Shares used to compute basic and diluted net loss per

   common share

 

 

25,825

 

 

 

21,521

 

 

 

25,532

 

 

 

20,619

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

 

5


FIVE PRIME THERAPEUTICS, INC.

Condensed Statements of Comprehensive Loss

(In thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

Net loss

 

$

(23,971

)

 

$

(7,088

)

 

$

(46,481

)

 

$

(25,598

)

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (loss) gain on marketable securities

 

 

(35

)

 

 

19

 

 

 

36

 

 

 

60

 

 

Comprehensive loss

 

$

(24,006

)

 

$

(7,069

)

 

$

(46,445

)

 

$

(25,538

)

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

 

6


FIVE PRIME THERAPEUTICS, INC.

Condensed Statement of Cash Flows

(In thousands)

 

 

Nine Months Ended

 

 

September 30,

 

 

2015

 

 

2014

 

 

 

 

Operating activities

 

 

 

 

 

 

 

Net loss

$

(46,481

)

 

$

(25,598

)

Adjustments to reconcile net loss to net cash used in

   operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

1,275

 

 

 

1,154

 

Loss on disposal of property

 

3

 

 

 

41

 

Stock-based compensation expense

 

5,056

 

 

 

2,230

 

Amortization of premium on marketable securities

 

1,491

 

 

 

1,075

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivable from collaborative partners

 

(1,256

)

 

 

205

 

Prepaid, other current assets, and other long-term assets

 

(3,490

)

 

 

(539

)

Accounts payable

 

469

 

 

 

324

 

Accrued personnel-related expenses

 

(338

)

 

 

149

 

Deferred revenue

 

(3,274

)

 

 

17,560

 

Deferred rent

 

(346

)

 

 

(412

)

Other accrued liabilities and other long-term liabilities

 

2,401

 

 

 

373

 

Net cash used in operating activities

 

(44,490

)

 

 

(3,438

)

Investing activities

 

 

 

 

 

 

 

Purchases of marketable securities

 

(135,376

)

 

 

(121,016

)

Maturities of marketable securities

 

121,250

 

 

 

70,705

 

Purchases of property and equipment

 

(1,514

)

 

 

(1,430

)

Net cash used in investing activities

 

(15,640

)

 

 

(51,741

)

Financing activities

 

 

 

 

 

 

 

Proceeds from public offering of common stock, net

 

78,693

 

 

 

40,099

 

Proceeds from the sale of common stock to collaborative partner

 

 

 

 

18,629

 

Proceeds from issuance of common stock under equity

   incentive plans

 

3,126

 

 

 

1,418

 

Net cash provided by financing activities

 

81,819

 

 

 

60,146

 

Net increase in cash and cash equivalents

 

21,689

 

 

 

4,967

 

Cash and cash equivalents at beginning of period

 

15,267

 

 

 

8,161

 

Cash and cash equivalents at end of period

$

36,956

 

 

$

13,128

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

 

7


FIVE PRIME THERAPEUTICS, INC.

Notes to Condensed Financial Statements

September 30, 2015

 

1.

Description of Business

Five Prime Therapeutics, Inc. (we, us, our or the Company) is a clinical-stage biotechnology company focused on discovering and developing novel protein therapeutics. Protein therapeutics are antibodies or drugs developed from extracellular proteins or protein fragments that block disease processes, including cancer and inflammatory diseases. We were incorporated in December 2001 in Delaware. Our operations are based in South San Francisco, California and we operate in one segment.

Unaudited Interim Financial Information

The accompanying financial information as of September 30, 2015 is unaudited. The Condensed Financial Statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that our management considers necessary for the fair statement of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. We derived the Condensed Balance Sheet as of December 31, 2014 from the audited financial statements, but did not include all disclosures required by generally accepted accounting principles in the United States of America, or GAAP. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The accompanying Condensed Financial Statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the U.S. Securities and Exchange Commission.

Follow-on Public Offering

In January 2015, we closed an underwritten public offering of 3,829,994 shares of our common stock, which included shares we issued pursuant to our underwriters’ exercise of their over-allotment option. We received net proceeds of $78.7 million, after underwriting discounts, structuring fees and offering expenses.

2.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements as well as reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Fair Value of Financial Instruments

We determine the fair value of financial and nonfinancial assets and liabilities using the fair value hierarchy, which describes three levels of inputs that may be used to measure fair value, as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities;

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We determine the fair value of Level 1 assets using quoted prices in active markets for identical assets. We review trading activity and pricing for Level 2 investments as of each measurement date. Level 2 inputs, obtained from various third-party data providers, represent quoted prices for similar assets in active markets and were derived from observable market data, or, if not directly observable, were derived from or corroborated by other observable market data.

In certain cases where there is limited activity or less transparency around inputs to valuation, we classify securities as Level 3 within the valuation hierarchy. We do not have any Level 3 securities as of September 30, 2015.

8


The following table summarizes, for assets recorded at fair value, the respective fair values and the classifications by level of input within the fair value hierarchy defined above (in thousands):

 

 

September 30, 2015

 

 

 

 

 

 

 

Basis of Fair Value

 

 

 

 

 

 

 

Measurements

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

31,653

 

 

$

31,653

 

 

$

 

 

$

 

 

U.S. Treasury securities

 

146,458

 

 

 

146,458

 

 

 

 

 

 

 

 

Total cash equivalents and marketable securities

$

178,111

 

 

$

178,111

 

 

$

 

 

$

 

 

 

 

 

December 31, 2014

 

 

 

 

 

 

Basis of Fair Value

 

 

 

 

 

 

Measurements

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

9,996

 

 

$

9,996

 

 

$

 

 

$

 

U.S. Treasury securities

 

130,786

 

 

 

130,786

 

 

 

 

 

 

 

U.S. government agency securities

 

3,001

 

 

 

 

 

 

3,001

 

 

 

 

Total cash equivalents and marketable securities

$

143,783

 

 

$

140,782

 

 

$

3,001

 

 

$

 

 

Net Loss Per Share of Common Stock

We compute basic net loss per common share by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

We excluded the following options to purchase shares of common stock and restricted stock awards, or RSAs, (in thousands) from the calculation of diluted net loss per share for all periods presented as the effect would have been antidilutive:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

Options and RSAs to purchase common stock

 

3,499

 

 

 

2,404

 

 

 

2,926

 

 

 

2,253

 

 

 

 

3,499

 

 

 

2,404

 

 

 

2,926

 

 

 

2,253

 

 

 

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective application of ASU 2014-09 to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective application of ASU 2014-09 with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our financial statements.

 

 

9


3.

Cash Equivalents and Marketable Securities

The following is a summary of our cash equivalents and marketable securities (in thousands):

 

 

September 30, 2015

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

Cost Basis

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Money market funds

$

31,653

 

 

$

 

 

$

 

 

$

31,653

 

U.S. Treasury securities

 

146,421

 

 

 

38

 

 

 

(1

)

 

 

146,458

 

 

 

178,074

 

 

 

38

 

 

 

(1

)

 

 

178,111

 

Less: cash equivalents

 

(31,653

)

 

 

 

 

 

 

 

 

(31,653

)

Total marketable securities

$

146,421

 

 

$

38

 

 

$

(1

)

 

$

146,458

 

 

 

 

December 31, 2014

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

Cost Basis

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Money market funds

$

9,996

 

 

$

 

 

$

 

 

$

9,996

 

U.S. Treasury securities

 

130,785

 

 

 

18

 

 

 

(17

)

 

 

130,786

 

U.S. government agency securities

 

3,001

 

 

 

 

 

 

 

 

 

3,001

 

 

 

143,782

 

 

 

18

 

 

 

(17

)

 

 

143,783

 

Less: cash equivalents

 

(9,996

)

 

 

 

 

 

 

 

 

(9,996

)

Total marketable securities

$

133,786

 

 

$

18

 

 

$

(17

)

 

$

133,787

 

 

As of September 30, 2015, the amortized cost and estimated fair value of our available-for-sale securities by contractual maturity are shown below (in thousands):

 

 

Amortized

 

 

Estimated

 

 

Cost

 

 

Fair Value

 

Debt securities maturing:

 

 

 

 

 

 

 

In one year or less

$

146,421

 

 

$

146,458

 

Total marketable securities

$

146,421

 

 

$

146,458

 

 

We determined that the gross unrealized losses on our marketable securities as of September 30, 2015 were temporary in nature.  We currently do not intend to sell these securities prior to maturity and do not consider these investments to be other-than-temporarily impaired at September 30, 2015. There were no sales of available-for-sale securities in any of the periods presented.

4.

Equity Incentive Plans

The following table summarizes option activity under our equity incentive plans and related information:

 

 

Options Outstanding

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

 

 

 

 

Average

 

 

Average

 

 

Number of

 

 

Exercise Price

 

 

Remaining

 

 

Shares

 

 

Per Share

 

 

Term

 

Balance at December 31, 2014

 

2,684,812

 

 

$

7.85

 

 

 

 

 

Options granted

 

877,988

 

 

$

19.97

 

 

 

 

 

Options exercised

 

(348,999

)

 

$

6.61

 

 

 

 

 

Options forfeited

 

(114,231

)

 

$

8.73

 

 

 

 

 

Options expired

 

(10,465

)

 

$

8.03

 

 

 

 

 

Balance at September 30, 2015

 

3,089,105

 

 

$

11.40

 

 

 

 

 

Options exercisable

 

1,496,574

 

 

$

7.14

 

 

 

5.73

 

 

10


We have granted RSAs to certain of our employees. RSAs are share awards that entitle the holder to receive freely tradable shares of our common stock upon vesting and are unforfeitable once fully vested. We based the fair value of RSAs on the closing sales price of our common stock on the grant date.

The following table summarizes RSA activity under our equity incentive plans and related information:

 

RSAs Outstanding

 

 

 

 

 

Weighted-Average

 

 

Number

 

Grant-Date

 

 

of Shares

 

Fair Value

 

Unvested balance at January 1, 2015

 

24,000

 

$

12.18

 

RSAs granted

 

1,461,230

 

$

18.58

 

RSAs vested

 

(2,000

)

$

13.47

 

RSAs forfeited

 

(8,760

)

$

20.06

 

Unvested balance at September 30, 2015

 

1,474,470

 

$

18.47

 

 

 

 

 

 

 

 

 

As of September 30, 2015, there were 2,020,024 shares of common stock available for future issuance under our 2013 Omnibus Incentive Plan.

Stock-Based Compensation

We calculate employee stock-based compensation expense based on awards ultimately expected to vest reduced by estimated forfeitures. We estimate forfeitures at the time of grant and revise forfeitures, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Total stock-based compensation expense recognized was as follows (in thousands):

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Research and development

 

$

1,537

 

 

$

383

 

 

$

2,642

 

 

$

1,112

 

General and administrative

 

 

1,316

 

 

 

471

 

 

 

2,414

 

 

 

1,118

 

Total

 

$

2,853

 

 

$

854

 

 

$

5,056

 

 

$

2,230

 

 

We estimated the fair value of each stock option using the Black-Scholes option-pricing model based on the date of grant of such stock option with the following assumptions:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

Expected term (years)

 

6.0-6.1

 

 

5.4-6.7

 

 

5.5-6.1

 

 

5.3-6.7

 

 

Expected volatility

 

 

71

%

 

 

85

%

 

71-73%

 

 

 

85

%

 

Risk-free interest rate

 

1.5-1.9%

 

 

1.7-2.0%

 

 

1.4-1.9%

 

 

1.6-2.0%

 

 

Expected dividend yield

 

 

0

%

 

 

0

%

 

 

0

%

 

 

0

%

 

 

As of September 30, 2015, we had $13.7 million of total unrecognized compensation expense related to nonvested employee and director stock options that we expect to recognize over a weighted-average period of 3.2 years. Additionally, we had $23.7 million of total unrecognized compensation expense related to employee and director RSAs that we expect to recognize over a weighted-average period of 1.4 years.

 

11


5.Acquired Technology

INBRX 110 LP

In July 2015, we entered into a research collaboration and license agreement with INBRX 110 LP, or Inhibrx, to obtain (a) an exclusive, worldwide license to antibodies to glucocorticoid-induced tumor necrosis factor receptor, or GITR, for therapeutic and diagnostic uses, which we refer to respectively as licensed therapeutic products and  licensed diagnostic products, and (b) an exclusive option, or the option, to obtain exclusive, worldwide licenses to multi-specific antibodies developed by Inhibrx that bind to both GITR and other targets, each of which we refer to as a multi-specific product.  We can exercise an option with respect to a multi-specific product within a limited period of time after (i) certain activities related to initiating clinical manufacturing of such multi-specific product or (ii) if not earlier exercised, the dosing of the first patient in a Phase 2 clinical trial of such multi-specific product.

Pursuant to the agreement, we paid Inhibrx an upfront fee of $10.0 million for the license and for services to be provided by Inhibrx related to a research cell bank. Additionally, with respect to each licensed therapeutic product, we will be obligated to pay up to $62.5 million in specified development milestone payments and (i) if such licensed therapeutic product does not receive a Breakthrough Therapy Designation from the U.S. Food and Drug Administration, or FDA, up to $280.0 million in specified regulatory and commercial milestone payments, or (ii) if such licensed therapeutic product receives a Breakthrough Therapy Designation from the FDA, up to $380.0 million in specified regulatory and commercial milestone payments. Inhibrx is also eligible for low double-digit tiered royalties on future product sales. We may pay all or a portion of milestone payments for development and regulatory events in shares of our common stock, subject to certain limitations and conditions. We would be obligated to register for resale under the Securities Act of 1933, as amended, or the Securities Act, any such shares of our common stock.

We expense payments for the acquisition and development of technology as research and development cost if, at the time of payment, the technology is under development, is not approved by the FDA or other regulatory agencies for marketing, has not reached technical feasibility, or otherwise has no foreseeable alternative future use.  In accordance with this policy, we expensed the $8.0 million that we determined to be related to the license upon our entry into the agreement in July 2015 as research and development expense.  

In accordance with the ASC 730, Research and Development Costs, we concluded that we should defer and capitalize the $2.0 million that we determined to be related to the prepayment for the research cell bank services over the performance period, which is expected to be through the end of the first quarter of 2016.  As of September 30, 2015, we have recognized $0.4 million of expense related to the research cell bank services.  

6.

Employee Benefit Plans

We sponsor a 401(k) plan under which eligible employees may elect to contribute to the 401(k) plan, subject to certain limitations, up to the lesser of the statutory maximum or 100% of eligible compensation on a pre-tax basis. We pay the administrative costs for the plan.

Effective January 1, 2015, we elected to match employee contributions to the 401(k) plan, or the Company Match, as permitted by the plan. We plan to make matching contributions on June 15 and December 15 each year in an amount equal to 50% of the amount contributed by the employee up to an annual maximum Company Match per employee equal to the lesser of (i) 4% of such employee’s compensation, or (ii) $6,000. We deliver the Company Match through the issuance of shares of our common stock. We delivered 13,720 shares of our common stock as the Company Match on June 15, 2015 and recorded 401(k) plan Company Match expense of $94,000 and $430,000 for the three and nine months ended September 30, 2015.

7.

Subsequent Event

On October 14, 2015, we entered into a license and collaboration agreement, or the FPA008 collaboration agreement, with Bristol-Myers Squibb Company, or BMS, pursuant to which we agreed to grant BMS exclusive global rights to develop and commercialize certain colony stimulating factor-1 receptor (CSF1R) antibodies, including our monoclonal CSF1R inhibiting antibody that we refer to as FPA008, and all modifications, derivatives, fragments, or variants of such antibodies, each of which we refer to as a Licensed Antibody.  Under the terms of the FPA008 collaboration agreement, BMS will be responsible, at its expense, for developing products containing Licensed Antibodies, each of which we refer to as a Licensed Product, under a development plan, subject to our option, at our own expense, to conduct certain future studies, including registration-enabling studies to support approval of FPA008 in pigmented villonodular synovitis, or PVNS, and in combination with our proprietary internal or in-licensed compounds, including in oncology.  BMS will be responsible for manufacturing and commercializing each Licensed Product and we will retain rights to a U.S. co-promotion option.

We will continue to conduct the current Phase 1a/1b clinical trial to evaluate the safety, tolerability and preliminary efficacy of combining Opdivo® (nivolumab), BMS’s programmed-death 1 (PD-1) immune checkpoint inhibitor, with FPA008 in six tumor types, which we are currently conducting under the clinical trial collaboration agreement, effective November 21, 2014, between us and BMS.  BMS will bear all costs and expenses relating to this trial, including manufacturing costs for the supply of FPA008, except that we will be responsible for our own internal costs, including internal personnel costs.

12


Pursuant to the FPA008 collaboration agreement, BMS will make an upfront payment of $350 million to us within 30 days after the effective date.  Additionally, we will be eligible to receive up to $1.05 billion in development and regulatory milestone payments per anti-CSF1R product for oncology indications and up to $340 million in development and regulatory milestone payments per anti-CSF1R product for non-oncology indications, as well as royalties ranging from the high teens to the low twenties, such royalties to be enhanced in the U.S. in the event that we exercise our co-promotion option.

The FPA008 collaboration agreement is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act, or the HSR, and we expect it to become effective upon the expiration or early termination of the notice and waiting period.

 

 

13


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto for the year ended December 31, 2014, included in our Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission (SEC) on March 18, 2015.

Overview

We are a clinical-stage biotechnology company focused on discovering and developing novel protein therapeutics to improve the lives of patients with serious diseases. We currently have three product candidates in clinical development covering multiple potential indications. Each of our product candidates has an innovative mechanism of action and addresses patient populations for which better therapies are still needed. In addition, we are pursuing companion diagnostics, where appropriate, for each of our clinical programs to allow us to select patients most likely to benefit from treatment and therefore accelerate clinical development and improve patient care. Our most advanced product candidates are identified below.

 

·

FPA008 is an antibody that inhibits colony stimulating factor-1, or CSF1, receptor, or CSF1R, that we are studying in clinical trials as a monotherapy in rheumatoid arthritis and pigmented villonodular synovitis, or PVNS, and in multiple cancers in combination with Bristol-Myers Squibb Company’s PD-1 immune checkpoint inhibitor, Opdivo® (nivolumab).  In October 2015, we entered into a license and collaboration agreement, or the FPA008 collaboration agreement, with Bristol-Myers Squibb Company, or BMS, pursuant to which we agreed to grant BMS an exclusive worldwide license for the development and commercialization of FPA008.  The FPA008 collaboration agreement is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act, or the HSR, and we expect it to become effective upon the expiration or early termination of the notice and waiting period.

 

 

·

FPA144 is an antibody that inhibits fibroblast growth factor receptor 2b, or FGFR2b, that we are developing to treat patients with gastric (stomach) cancer.

 

 

·

FP-1039/GSK3052230 is a fusion protein that “traps” and neutralizes cancer-promoting fibroblast growth factors, or FGFs, involved in cancer cell survival and proliferation and new blood vessel formation that our partner, GlaxoSmithKline, or GSK, is developing to treat patients with squamous non-small cell lung cancer, or NSCLC, and malignant pleural mesothelioma.

We have a differentiated target discovery platform and library that we believe encompasses substantially all of the body’s medically important targets for protein therapeutics. This positions us to explore pathways in cancer and inflammation and their intersection in immuno-oncology, an area of oncology with significant therapeutic potential and the primary focus of our research activities.  We are applying all aspects of our biologics discovery platform, including cell-based screening, in vivo screening, receptor-ligand matching technologies and bioinformatics, in our immuno-oncology research program. We have identified novel targets that we believe could be useful in immuno-oncology and are actively validating these and looking for additional targets. We have begun, and will continue, to generate therapeutic proteins, including antibodies or ligand traps, directed to the targets we identify and advance selected candidates into pre-clinical development and eventually into clinical development, with a goal of adding at least one new molecule per year to our clinical pipeline beginning in 2017.

We have no products approved for commercial sale and have not generated any revenue from product sales to date. We continue to incur significant research and development and other expenses related to our ongoing operations. We have incurred losses in each period since our inception in 2002, with the exception of the fiscal year ended 2011, primarily due to the $50.0 million upfront payment we received from GSK from our license and collaboration agreement for FP-1039. For the nine months ended September 30, 2015 and 2014, we reported a net loss of $46.5 million and $25.6 million, respectively. As of September 30, 2015, we had an accumulated deficit of $235.5 million.

Our management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, which we prepared in accordance with GAAP for interim periods and with Regulation S-X promulgated under the Securities and Exchange Act of 1934, as amended, or the Exchange Act.

14


Third Quarter 2015 and Other Recent Highlights

License and Collaboration Agreement

In October 2015, we entered into the FPA008 collaboration agreement with BMS, pursuant to which we agreed to grant BMS an exclusive, worldwide license to develop and commercialize certain CSF1R antibodies, including FPA008, and all modifications, derivatives, fragments or variants of such antibodies, each of which we refer to as a Licensed Antibody.  Under the terms of the FPA008 collaboration agreement, BMS will be responsible, at its expense, for developing products containing Licensed Antibodies, each of which we refer to as a Licensed Product, under a development plan, subject to our option, at our own expense, to conduct certain future studies, including registration-enabling studies to support approval of FPA008 in PVNS and in combination with our proprietary internal or in-licensed compounds, including in oncology.  BMS will be responsible for manufacturing and commercialization of each Licensed Product and we will retain rights to a U.S. co-promotion option.

We will continue to conduct our current Phase 1a/1b clinical trial to evaluate the safety, tolerability and preliminary efficacy of combining Opdivo® with FPA008 in eight tumor settings, which we are currently conducting under the clinical trial collaboration agreement that we entered into with BMS on November 21, 2014, or the existing clinical agreement.  BMS will bear all costs and expenses relating to this trial, including manufacturing costs for the supply of FPA008, except that we will be responsible for our own internal costs, including internal personnel costs.

The FPA008 collaboration agreement is subject to review under the HSR, and we expect it will become effective upon the expiration or early termination of the notice and waiting period. The existing clinical agreement will terminate upon the effective date of the FPA008 collaboration agreement.

GSK Collaboration

In September 2015, GSK exercised its option under our respiratory diseases research collaboration to reserve specific targets that we identified using our proprietary target discovery platform, triggering a $300,000 payment.

UCB Collaboration

In September 2015, UCB Pharma S.A., or UCB, exercised its option under our discovery collaboration to reserve certain targets in the area of fibrosis-related inflammatory diseases that we identified using our proprietary target discovery platform, triggering $140,000 in payments.

Acquired Technology

In July 2015, we entered into a research collaboration and license agreement with INBRX 110 LP, or Inhibrx, pursuant to which we obtained an exclusive, worldwide license to Inhibrx’s glucocorticoid-induced tumor necrosis factor receptor, or GITR, antibodies, which we refer to now as our FPA154 program. Our FPA154 antibody program is currently at lead selection stage.

15


Clinical Pipeline

The following table summarizes key information about our most advanced product candidates:

FPA008

FPA008 in Immuno-Oncology

We are conducting a Phase 1a/1b clinical trial with BMS to evaluate the safety, tolerability and preliminary efficacy of combining Opdivo® (nivolumab) with FPA008 as a potential treatment for patients with non-small cell lung cancer, or NSCLC, melanoma, head and neck cancer, pancreatic cancer, colorectal cancer and malignant glioma. We expect to enroll approximately 30 patients with advanced cancers in the Phase 1a portion of the trial.  In the Phase 1b portion, we will evaluate the safety, tolerability and preliminary efficacy of the selected dose of FPA008 in combination with Opdivo® in approximately 240 patients across eight tumor settings consisting of:

 

·

second- or third-line non-small cell lung cancer (NSCLC, anti PD-1 therapy naïve);

 

·

anti PD-1 therapy resistant NSCLC (either de novo or acquired resistance);

 

·

previously untreated melanoma (anti-PD1 therapy naïve);

 

·

anti PD-1 therapy resistant melanoma (de novo);

 

·

second-line squamous cell carcinoma of the head and neck;

 

·

second-line pancreatic cancer;

 

·

third-line colorectal cancer; and

 

·

second-line glioblastoma multiforme (GBM).

We expect to complete the Phase 1a dose escalation portion of this trial and begin the Phase 1b portion with the selected dose of FPA008 in early 2016.

FPA008 in Pigmented Villonodular Synovitis (PVNS)

We are conducting a Phase 1/2 clinical trial of FPA008 in patients with PVNS. During the Phase 1 dose escalation part of the trial, we will assess the safety, pharmacodynamics and imaging of the joints to determine the dose for expansion. During the Phase 2 expansion, we will evaluate tumor response rate and duration, and measures of pain and joint function. We expect to complete the Phase 1 dose escalation part of this trial and move into the Phase 2 dose expansion in early 2016.

FPA008 in Rheumatoid Arthritis (RA)

We are in the process of completing dosing in an open-label safety and dose escalation component of a Phase 1 clinical trial of FPA008 in patients with active RA. We plan to present preliminary data from this RA component of the Phase 1 clinical trial at the American College of Rheumatology’s annual meeting on November 10, 2015.  We do not plan to proceed with a randomized cohort following the completion of the Phase 1 trial and are not planning additional trials of FPA008 in patients with RA.

16


FPA144

We are conducting a Phase 1a/1b clinical trial of FPA144 in solid tumor and gastric cancer patients. By the end of 2015, we expect to complete the dose escalation portion of the trial and begin expansion in selected gastric cancer patients with FGFR2b protein overexpression or FGFR2 gene amplification in their tumors as identified by molecular diagnostic assays.  We anticipate reporting preliminary data from the dose escalation portion of the trial in early 2016.

FP-1039

GSK is conducting a three-arm Phase 1b clinical trial of FP-1039 combined with standard doses of chemotherapy in patients with first-line or previously treated squamous non-small cell lung cancer, or SqNSCLC, and first-line malignant pleural mesothelioma, or MPM.  The two arms of the trial treating patients with newly-diagnosed SqNSCLC (Arm A) and MPM (Arm C) have each advanced into the expansion phase.  Dose escalation is ongoing for the arm of the trial treating patients with previously treated SqNSCLC (Arm B).  

In September 2015, GSK presented preliminary safety and efficacy data from this trial at the World Conference on Lung Cancer.

As of August 5, 2015, the data cutoff date for the World Conference on Lung Cancer presentation, 176 patients with first-line or previously-treated SqNSCLC were tested centrally for FGFR1 gene amplification, with a positive amplification rate of approximately 20%. Forty-four patients had been dosed with FP-1039 at dose levels ranging from 5mg/kg to 20mg/kg in combination with chemotherapy across the three study arms. In Arm A, a maximum tolerated dose was not identified, therefore a maximum feasible dose (MFD) was determined and GSK expanded that arm at the 20 mg/kg dose level. In Arm C, the maximally tolerated dose was established and GSK expanded that arm at the 15 mg/kg dose level. No dose limiting toxicities (DLTs) have been observed in SqNSCLC patients (Arms A and B). Three DLTs were reported in MPM patients (Arm C) at the 20mg/kg dose level consisting of: grade 5 bowel perforation/ischemia, grade 3 elevated creatinine level and grade 3 infusion reaction. The most common adverse events across all three arms were neutropenia, anemia, constipation, diarrhea, nausea, vomiting, decreased appetite, pyrexia, fatigue, asthenia and alopecia. Infusion reactions were seen in 17%, 14%, and 37% of patients treated in Arms A, B and C, respectively. Toxicities typically associated with small-molecule FGFR kinase inhibitors, namely hyperphosphatemia and retinal, nail, and skin changes, were not observed.

Preliminary efficacy data as measured by RECIST (Arms A and B) and mRECIST (Arm C) criteria are reported in the following table:

 

 

 

 

 

Best Tumor Response

Arm A 
(First-line SqNSCLC): 
paclitaxel + carboplatin +
FP-1039

(n=18)

Arm B 
(Previously treated SqNSCLC):
docetaxel + FP-1039
(n=7)

Arm C 
(First-line MPM):
pemetrexed +cisplatin +
FP-1039
(n=19)

Partial response

10*

0

3

Stable disease

3

4

5

Progressive disease

2

1

1

Not evaluable

3

2

10

Objective response rate

55%

0%

16%

Disease control rate

72%

57%

42%

*Includes 2 unconfirmed partial responses.

Preclinical Pipeline

 

We are applying all aspects of our biologics discovery platform to discover and validate targets that we believe could be useful in immuno-oncology and to generate therapeutic proteins, including antibodies and ligand traps, directed to these targets.  We have several ongoing antibody discovery campaigns and expect to initiate additional antibody and ligand trap campaigns as we continue to validate additional targets.  We plan to advance select candidates into pre-clinical development and eventually clinical development.

17


Using our biologics discovery platform, we identified GITR as one of the most effective tumor suppressors among hundreds of targets that regulate immune response to tumors.  GITR is selectively expressed on effector and regulatory T cells and agonist antibodies to GITR have induced tumor regressions in preclinical models, particularly in combination therapy.  We identified Inhibrx as having unique multivalent antibody scaffolds designed to multimerize and activate GITR receptors to a high degree without any Fc receptor binding, which we believe will achieve greater agonist activity with a higher therapeutic index and less variability among patients than GITR antibodies currently under development.  In July 2015, we entered into a research collaboration and license agreement with Inhibrx under which we obtained an exclusive, worldwide license to Inhibrx’s GITR antibodies, which we refer to now as our FPA154 program.  Our FPA154 antibody program is currently at lead selection stage.

We plan to add at least one new molecule per year to our clinical pipeline beginning in 2017.

Financial Overview

Collaboration and License Revenue

We have not generated any revenue from product sales. We have derived our revenue to date from upfront payments, research and development funding and milestone payments under collaboration and license agreements with our collaboration partners and licensees.  We currently have a respiratory diseases research collaboration and an FP-1039 license agreement with GSK, a fibrosis and CNS research collaboration with UCB, an immuno-oncology research collaboration and an FPA008 clinical collaboration with BMS, and a license agreement with bluebird bio. In 2014, we also were performing obligations under a muscle diseases research collaboration with GSK under which we received funding and recognized revenue.

Summary Revenue by Collaboration and License Agreements

The following is a comparison of collaboration and license revenue for the three and nine months ended September 30, 2015 and 2014:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

(in millions)

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

R&D Funding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Respiratory Diseases Collaboration

 

$

1.0

 

 

$

0.9

 

 

$

3.1

 

 

$

2.6

 

 

 

Muscle Diseases Collaboration

 

 

 

 

 

 

 

 

 

 

 

0.8

 

 

 

FP-1039 Product Collaboration

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

 

 

Fibrosis and CNS Collaboration

 

 

0.2

 

 

 

 

 

 

0.6

 

 

 

0.1

 

 

 

Immuno-oncology Research Collaboration

 

 

0.6

 

 

 

0.9

 

 

 

2.0

 

 

 

1.7

 

 

 

Immuno-oncology Clinical Collaboration

 

 

1.0

 

 

 

 

 

 

1.2

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

Ratable Revenue Recognition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Respiratory Diseases Collaboration

 

 

0.7

 

 

 

0.7

 

 

 

2.0

 

 

 

2.0

 

 

 

Muscle Diseases Collaboration

 

 

 

 

 

 

 

 

 

 

 

0.9

 

 

 

Fibrosis and CNS Collaboration

 

 

0.8

 

 

 

0.8

 

 

 

2.3

 

 

 

2.2

 

 

 

Immuno-oncology Research Collaboration

 

 

1.2

 

 

 

1.1

 

 

 

3.4

 

 

 

2.4

 

 

 

Milestone and Contingent Payments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Muscle Diseases Collaboration

 

 

 

 

 

1.6

 

 

 

 

 

 

1.7

 

 

 

Respiratory Diseases Collaboration

 

 

0.3

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

Fibrosis and CNS Collaboration

 

 

0.1

 

 

 

 

 

 

0.1

 

 

 

 

 

 

Other License Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

bluebird bio License Agreement

 

 

 

 

 

 

 

 

1.5

 

 

 

 

 

 

Total

 

$

5.9

 

 

$

6.1

 

 

$

16.5

 

 

$

14.6

 

 

 

 

We expect that any revenue we generate will fluctuate from period to period as a result of the timing and amount of milestones and other payments from our existing collaborations and licenses or any new collaborations and licenses we may enter into.

Research and Development

Research and development expenses consist of costs we incur in performing internal and collaborative research and development activities. Expenses incurred related to collaborative research and development agreements approximate the revenue recognized under these agreements. Research and development costs consist of salaries and benefits, including associated stock-based compensation, lab supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities, including manufacturing, on our behalf.

18


We are conducting research and development activities on several oncology and inflammatory disease targets and products.

We have a research and development team that designs, manages and evaluates the results of all of our research and development activities. We conduct nearly all of the core target discovery and early research and preclinical activities internally and rely on third parties, such as clinical research organizations, or CROs, and clinical manufacturing organizations, or CMOs, for the execution of certain of our research and development activities, such as toxicology studies, drug substance and drug product manufacturing and the conduct of clinical trials. We account for research and development costs on a program-by-program basis. In the early phases of research and discovery, our costs are often related to improving our discovery platform or preliminary screening activities and are not necessarily allocable to a specific program. We assign costs for such activities to a distinct non-program related project code. We allocate research and development management, overhead, common usage laboratory supplies and facility costs on a full-time equivalent basis.

The following is a comparison of research and development expenses for the three and nine months ended September 30, 2015 and 2014:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Development programs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FPA008

 

$

5.5

 

 

$

2.3