Item 1.
Business
Overview
We are a biotechnology company developing novel targeted therapeutics, primarily for the treatment of cancer. Our product candidates are based on proprietary polymeric nanoparticles called ACCURINS®, which are engineered to target specific cells and tissues in the body at sites of disease. ACCURINS® have the potential to achieve therapeutic outcomes not currently possible with conventional treatment modalities. We are developing ACCURINS® with three different therapeutic objectives, both through internal research programs and with collaborators:
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Innovative medicines: Designing new therapeutic approaches by combining novel targeting methods and new classes of therapeutic payloads.
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Enabling potent pathway inhibitors: Enabling greater inhibition of important cellular pathways where that level of inhibition has been unachievable due to off target toxicity.
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Differentiated efficacy with approved drugs: Improving upon safety and efficacy with previously approved chemotherapeutic agents.
ACCURINS®
ACCURINS® are polymeric nanoparticles that incorporate therapeutic payloads with diverse physical and chemical properties, provide prolonged circulation within the bloodstream, enable targeting of the diseased tissue or cells, and provide for the controlled and timely release of the therapeutic payload. We believe ACCURINS® represent the next stage in the evolution of targeted therapies and nanomedicine.
Prolonged circulation. We design ACCURINS® with a stealth and protective layer that enables them to circulate within the bloodstream for a prolonged period of time, and accumulate at sites of disease before being cleared from the circulatory system.
Targeting. We design ACCURINS® with specific pharmaceutical properties intended to target tumors at three levels: tissue, cellular and molecular. Tissue targeting is achieved by engineering the physical and chemical properties-size, shape and surface properties-of the ACCURIN to allow it to escape through gaps in the blood vessels surrounding tumors and other disease sites. Cellular targeting is achieved using proprietary targeting ligands on the surface of the ACCURIN that binds to specific cell surfaces or tissue markers. The specific characteristics of the therapeutic payload may enable molecular targeting within the diseased cells.
Controlled and timely release. Upon administration, the therapeutic payload begins to diffuse through the polymer matrix. Subsequently, the polymer breaks down to lactic acid, a compound naturally found in the body. If the therapeutic payload releases before the ACCURINS® accumulate at the disease site, the ACCURINS® will be unable to effectively increase drug concentration in the diseased tissue and the anticipated therapeutic impact will be minimized or lost. Similarly, if the therapeutic payload is not released, or releases too slowly, the anticipated therapeutic impact will be lost or minimized and new toxicities may be created. We design ACCURINS® with specific polymers that provide for the controlled and timely release of the therapeutic payload in order to maximize the therapeutic effect.
By combining prolonged circulation, targeting and controlled and timely release of the therapeutic payload, ACCURINS® have the potential to significantly increase the net clinical benefit associated with the therapeutic payload and result in efficacy and safety currently not achievable with conventional treatment standards.
These diagrams depict an ACCURIN and its key components:
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Controlled-release polymer matrix
Unmodified therapeutic payload
Stealth and protective layer
Targeting ligands
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Controlled-release polymer matrix-We physically entrap a broad spectrum of therapeutic payloads in a matrix of clinically-validated, biodegradable and biocompatible FDA approved polymers that mediate the release of the payload at sites of disease. The matrix is engineered, or programmed, to control the release of the therapeutic payload at a predetermined rate for the specific therapeutic payload and disease application.
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Unmodified therapeutic payload-ACCURINS® are designed to encapsulate multiple payload types with diverse physiochemical properties, including small molecules, peptides, proteins and nucleic acids, such as siRNA and mRNA.
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Stealth and protective layer-We have designed a stealth and protective layer for the ACCURIN using polyethylene glycol, or PEG, which is engineered to protect the ACCURIN from the body’s immune detection and clearance mechanisms by creating a hydration shell. PEG also provides attachment sites for the targeting ligand through linking chemistries.
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Targeting ligands-To facilitate cellular targeting, we utilize a targeting ligand on the surface of the ACCURIN that binds to specific cell-surface or tissue markers, enabling the ACCURINS® to preferentially accumulate at their intended site of action. Targeting ligands may include small molecules, peptides, antibodies and antibody fragments and can provide a broad range of functions from simple localization of the particle to cellular internalization and even biological activity.
The PEG and polymers used in our ACCURINS® have been used in other medical products that have been approved by the FDA and other regulatory agencies.
ACCURIN Pipeline
Innovative Medicines
Currently, our internal discovery and research efforts are focused predominately on the discovery of innovative medicines leveraging the benefits of our ACCURINS® nanomedicine platform. We are in the early discovery process of designing ACCURINS® that combine novel tumor-directed targeting ligands with new classes of therapeutic payloads to achieve outcomes not currently possible with current therapeutic modalities.
For example, ACCURINS® containing small molecules can be engineered to reverse the tumor-protective behavior of immune cells, thereby disrupting the tumor microenvironment. In addition, we can add biologically active ligands to the surface of the particle that potentiate anti-tumor immunity. The combination of these two mechanisms in one ACCURIN nanoparticle has the potential to achieve meaningful benefit for patients with cancer. We are currently working with payloads and targeting ligands to develop ACCURINS with this therapeutic approach.
We are also developing our ACCURINS® platform to use oligonucleotide therapeutics as payloads. Oligonucleotides have the potential to very selectively impact intracellular cancer targets in a way that could not previously be achieved with traditional therapeutics; however, technical challenges have limited their utility in this setting. ACCURINS® are ideally suited for overcoming these technical challenges by protecting them from enzymatic degradation and clearance in the plasma, targeting tissues beyond the liver (where most oligonucleotide delivery systems accumulate), and concentrating them in target cells through ligand-mediated binding. Our initial focus is on single-stranded RNA-based payloads to disrupt, or enhance, gene expression as a means to treat disease since these oligonucleotides do not require endosomal escape. Future efforts will focus on double-stranded RNA-based payloads where we need to solve the challenge of endosomal escape.
Based on the modular nature of ACCURINS®, we are able to source ligands and active pharmaceutical agents from strategic partners, such as our research collaboration with Synergy Pharmaceuticals, Inc. to explore the potential targeting of guanylate cyclase-C (GC-C) receptors expressed on gastrointestinal tumors, or by using technologies that are available in the public domain. Following optimization of lead product candidates and completion of preclinical studies, we anticipate beginning clinical testing for one or more of our innovative medicines as early as 2018.
In addition, we are collaborating with F. Hoffmann-La Roche Ltd., or Roche, to explore ACCURIN concepts for new therapeutic applications outside of cancer.
Enabling More Potent Pathway Inhibitors
ACCURINS® have the potential to create therapies using active pharmaceutical agents that might otherwise be too toxic at doses required to achieve a high levels of pathway inhibition. We envision developing this category of ACCURINS® internally and as part of strategic collaborations.
To diversify our pipeline and advance the knowledge and capabilities of the ACCURIN platform, we have formed and expect to continue to form collaborations with pharmaceutical companies seeking to develop potent pathway inhibitors that are limited due to toxicity at dosages needed to obtain a therapeutic effect. Our collaboration with AstraZeneca AB has resulted in the initiation of a Phase 1 clinical trial with ACCURIN AZD2811. AZD2811 is an ACCURIN that inhibits Aurora B kinase, a protein involved in the progression of cancer. Previous development efforts around this target have been limited due to mechanism-based myelotoxicity. Preclinical studies have shown that by utilizing hydrophobic ion pairing to control release kinetics, AZD2811 ACCURINS® accumulate at tumor sites resulting in prolonged pharmacodynamic effects, superior tumor growth inhibition and a reduction in on-target but off-tissue toxicity. Additionally, we have a collaboration with Pfizer, Inc., to develop an ACCURIN containing a targeted kinase inhibitor for which preclinical research and CMC activities to support the initiation of clinical studies are underway.
We also are conducting preclinical studies to evaluate the potential of ACCURINS® as part of our collaboration with Merck & Co.
Differentiated Efficacy with Approved Drugs
The third category of ACCURINS® encapsulates previously approved chemotherapies to improve tolerability and efficacy. BIND-014, our most clinically advanced ACCURIN, targets prostate-specific membrane antigen (PSMA) and contains docetaxel, a clinically-validated and widely-used cancer chemotherapy drug. BIND-014 has been studied in over 250 patients across multiple different tumor types. By April 2016, we expect to report combined clinical data for BIND-014 in the following indications: i) non-small cell lung cancer (NSCLC) with squamous histology; ii) advanced cervical cancer; and iii) head and neck cancer. We have been pursuing and we intend to continue to pursue a potential collaboration for BIND-014. Any additional clinical development of BIND-014 beyond our existing trials will require positive clinical data. After reviewing data from preclinical gating studies, we are no longer developing BIND-510, a PSMA-targeted ACCURIN drug candidate containing vincristine.
Manufacturing of ACCURINS®
ACCURINS® are manufactured using a readily-scalable, self-assembly nanoemulsion process with well-defined, robust unit operations. This highly specialized and precisely controlled manufacturing process enables us to reproducibly manufacture ACCURINS® across many scales, from gram-scale at the laboratory bench to kilogram for IND- enabling toxicology studies complying with the FDA’s good laboratory practice, or GLP, regulations to the multi-kilogram scale for clinical batches complying with FDA’s current good manufacturing practice, or cGMP, regulations. In addition, our well-controlled, self-assembly manufacturing process is the backbone of our Medicinal Nanoengineering® platform, allowing us to take a combinatorial approach varying key nanoparticle parameters, such as drug load and release profiles, nanoparticle size/distribution and targeting ligand content, to identify ACCURINS® for lead candidate selection. Our approach differs from common approaches to the preparation of nanoparticles that often employ multiple steps for drug incorporation and, separately, for the attachment of ligands to preformed nanoparticles, which create several challenges for reproducibility, yield and scalability. We have more than five issued U.S. patents relating to ACCURIN manufacturing processes.
We have a pilot manufacturing facility at our Cambridge location where we conduct process development, scale-up activities and assemble the manufacturing equipment in a non-GMP environment. We do not own or operate GMP manufacturing facilities for the production of any of our drug candidates, and we do not have plans to develop our own cGMP manufacturing operations in the foreseeable future. We currently rely on third-party contract manufacturers for all of our required raw materials, therapeutic payload and finished product for our preclinical research and clinical trials. We made an investment in a dedicated compounding space at a contract manufacturer, where we expect to be able to manufacture at the double-digit kilogram scale. We do not currently have arrangements in place for redundant supply or a second source for all required raw materials used in the manufacture of our drug candidates, including the cGMP supply of the polymers used in our ACCURINS®. We also do not have any current contractual relationship for the manufacture of commercial supplies of any of our drug candidates if they are approved. If any of our products are approved by any regulatory agency, we intend to enter into agreements with a third-party contract manufacturer (likely one of our current clinical suppliers) and one or more backup manufacturers for the commercial production of those products. Development and commercial quantities of any products that we develop will need to be manufactured in facilities, and by processes, that comply with the requirements of the FDA and the regulatory agencies of other jurisdictions in which we are seeking approval. We currently employ internal resources to manage our third-party contract manufacturers.
BIND-014
Our first drug candidate to enter clinical development, BIND-014, is a PSMA -targeted ACCURIN that contains docetaxel, a clinically-validated and widely-used cancer chemotherapy drug. PSMA is a clinically-validated tumor marker expressed on prostate cancer cells and the blood vessels of many types of non-prostate solid tumors. In 2013, we initiated two Phase 2 clinical trials to evaluate the level of clinical activity of BIND-014, one in NSCLC (the BIND-014-005 trial), where we evaluated two dose schedules (60mg/m2 on day one of a 21 day cycle, or Q3W, and 40 mg/m2 on day 1, 8 and 15 of a 28 day cycle, or Q1W), and one in metastatic castrate resistant prostate cancer (mCRPC), where we evaluated only the Q3W schedule. In November 2014, we announced positive topline data for BIND-014 in the NSCLC patient population with promising signals of efficacy in two subpopulations of NSCLC with high unmet need: KRAS mutant tumors and tumors with squamous histology. Based on these results, we initiated the two-stage phase 2 iNSITE 1 trial to evaluate BIND-014 for the treatment of NSCLC patients with KRAS mutations or squamous histology. In December 2015, we announced that the squamous histology NSCLC cohort of the iNSITE 1 trial would advance to the second stage and complete enrollment to 40 patients. We also announced that the KRAS mutant NSCLC arm would not advance to the second stage. The rationale for these decisions was based on safety and efficacy data from the planned interim analysis of iNSITE 1 as well as updated overall survival (OS) data in the squamous cohort from the previous clinical trial in the broad NSCLC population, the BIND-014-005 trial. In January 2015, we also announced positive topline data from the ongoing Phase 2 trial in mCRPC; however, given the rapidly emerging treatment landscape in mCRPC we decided not to move forward with the development of BIND-014 in mCRPC and focus our resources on more promising opportunities. We also initiated a clinical trial with BIND-014 in advanced cervical, bladder, head and neck and cholangio cancers in 2015. In January 2016, we discontinued the bladder and cholangio cohorts of this trial due to slower than anticipated enrollment. Enrollment is ongoing in the advanced cervical and head and neck cancer cohorts.
Continued clinical development of BIND-014 for any indication is contingent upon positive clinical data.
BIND-014 Market Opportunity
NSCLC
NSCLC remains an area of high unmet medical need. According to the World Health Organization, lung cancer is the number one cause of cancer related morbidity and mortality worldwide, with an estimated 1.8 million new diagnoses and 1.6 million deaths annually. Approximately 80-90% of lung cancer diagnoses are of the non-small cell type, of which squamous cell and adenocarcinoma
subtypes make up 26% and 50% of these cases, respectively. Despite the availability of numerous active therapies, the prognosis remains poor, with average five-year survival as low as 16% for all patients diagnosed with NSCLC, and less than 5% for patients with locally-advanced or metastatic disease at diagnosis.
Current first-line therapy for advanced or metastatic NSCLC consists of platinum-based combination chemotherapy. The most effective combination chemotherapy approach for initial treatment of patients with advanced or metastatic squamous lung cancer, cisplatin/gemcitabine plus necitumumab, provides a median survival of 11.5 months, while median survival in patients with non-squamous histologies of 12.6 months have been reported with cisplatin/pemetrexed. Second-line therapy for patients with advanced or metastatic NSCLC is typically monotherapy with agents such as docetaxel, pemetrexed (non squamous only), gemcitabine, erlotinib, as well as immunotherapies, including nivolumab and, for selected patients, pembrolizumab. Taxanes are used extensively to treat NSCLC in the United States, EU-28, and Japan, with a large percentage of these patients receiving docetaxel, predominantly in second or subsequent lines of treatment. Notwithstanding its widespread use in the second-line treatment for NSCLC, docetaxel has modest efficacy in this setting. In the definitive docetaxel trial in NSCLC, patients previously treated with platinum-based chemotherapy, partial responses were observed in only 5.5% of patients and median overall survival surpassed best supportive care by only 2.9 months (7.5 months vs. 4.6 months, P=0.003). By concentrating docetaxel at the tumor site, we believe that BIND-014 will be able to achieve superior efficacy to docetaxel in this setting without worsening treatment tolerability.
Cervical Cancer
Cervical cancer is a malignant neoplasm arising from cells originating in the cervix. Human papillomavirus (HPV) infection appears to be involved in the development of more than 90% of cases. There were expected to be approximately 12,000 new patients with invasive cervical cancer diagnosed in the United States in 2014 with approximately 4,000 deaths from this disease. In developed countries, the widespread use of cervical screening programs has dramatically reduced the incidence of invasive cervical cancer and incidence is expected to further decline with the recent adoption of HPV vaccines. However, worldwide cervical cancer is a major public health issue with approximately 500,000 new cases and 250,000 deaths per year. India and China account for almost half of these cases where screening programs and the use of HPV vaccines are less common.
The prognosis of advanced cervical cancer is discouraging. Recurrent, persistent or advanced cervical cancer responds poorly to current treatment modalities. Five-year survival rates have been approximately 57.4% and 16.1% for patients with regional and distant disease, respectively.
Cisplatin combinations have been the first-line standard of care for advanced disease for decades, with cisplatin/paclitaxel preferred. Recently Avastin in combination with chemotherapy received FDA approval for the treatment of persistent, recurrent or metastatic disease based on a four-month survival advantage compared to chemotherapy alone in a Phase 3 study of 452 patients. Despite many studies of cytotoxics and targeted agents given as single agents or in combination regimens, no Phase 3 studies have demonstrated efficacy in the second-line setting, and there is no standard of care for patients once they progress on their first-line regimen. Docetaxel had a response rate of 0-9% in this patient population. The vascular nature of cervical cancer may be a good rationale for BIND-014 targeting PSMA as a result of the convincing data on the presence of PSMA in cervical cancer.
Head & Neck Cancer
Globally, there are approximately 120,000 new cases of head and neck cancer annually. Squamous cell carcinomas of the head and neck (SCCHN) are a diverse range of cancers, grouped by anatomic site, that together represent 90% of all head and neck cancer cases. SCCHN typically affects older (>60 yrs.) male patients with five-year survival rates of 60-70%. Alcohol, tobacco use and HPV infection are the primary risk factors. The specific site of disease, stage and pathologic findings guide treatment. Single-modality treatment with surgery or radiation therapy is generally recommended for the 30-40% of patients who present with early-stage disease. In contrast, combined modality therapy is generally recommended for the approximately 60% of patients with locally or regionally advanced disease. Cisplatin is the systemic therapy of choice for advanced disease. Carboplatin/5-FU or Erbitux (cetuximab) are also used first-line and significantly improve overall survival. There is no standard of care for patients who progress on first-line therapy. Single agents such as docetaxel, paclitaxel or carboplatin are commonly used. Combination regimens are also used, when tolerated, and have generally demonstrated double the response rates of single agents, but no survival advantage. Enrollment in clinical trials is recommended, suggesting a significant unmet medical need.
BIND-014 Development
NSCLC
Results from our ongoing Phase 2 study of BIND-014 in NSCLC were presented at the 26th EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics in Barcelona, Spain in November 2014. The trial met the primary objective in the Q3W arm (60 mg/m2 of BIND-014 on Day 1 of a 21-day cycle) as measured by overall response rate. These data from our Phase 2 study (the BIND-014-005 trial) demonstrated substantial clinical activity as monotherapy in advanced second line NSCLC patients, with 15% partial response rate (n= 40; 5 confirmed, 1 unconfirmed), progression free survival of 2.7 months, and mediation duration response of 5.2 months. In addition, BIND-014 demonstrated prolonged disease control, with 63% of patients (25) achieving stable disease or partial response for more than 6 weeks and 48% (19) for more than 12 weeks, and meaningful reductions of docetaxel-related toxicities. Based on the promising results of the Q3W arm and the more patient-friendly once every three week dosing schedule, combined with the absence of a confirmed partial response in the first 22 patients enrolled on the once weekly dosing schedule, we chose not to continue evaluating the weekly dosing schedule. We believe that the increased anti-tumor activity at a lower dose than conventional docetaxel provides important validation of our ACCURIN platform.
In the BIND-014-005 trial, BIND-014 also demonstrated promising anti-tumor activity in NSCLC patients with KRAS mutant tumors, with two out of nine patients (22%) with KRAS mutations enrolled in the trial experiencing an objective response. One KRAS mutant NSCLC objective response was also seen in the Phase 1 trial with BIND-014, yielding a combined total confirmed response rate of 30% across both studies. Additionally, in the Phase 2 study, BIND-014 demonstrated prolonged disease control in NSCLC patients with KRAS mutations, with 66% of patients (6) achieving stable disease or partial response for more than six weeks and 44% (4) for more than 12 weeks. KRAS mutations in NSCLC account for approximately 20% of all NSCLC and are generally associated with poor response to currently available drug therapy regimens, including docetaxel.
An additional signal was observed in NSCLC patients with squamous histology, with interim overall survival of 11.1 months as of October 23, 2014. Although no confirmed objective responses were seen in this subset of patients, BIND-014 demonstrated prolonged disease control in NSCLC patients with squamous histology (n=9), with 66% of patients (6) achieving stable disease for more than six weeks and 55% (5) for more than 12 weeks. Squamous histology is a major NSCLC subtype accounting for approximately 25% of all NSCLC and there are limited treatment options available.
Importantly, and consistent with previous results with BIND-014, neutropenia, anemia, neuropathy, and alopecia, adverse events commonly observed with docetaxel, were significantly reduced with BIND-014 and dose reductions or discontinuations in the study due to toxicity were less than 10%. In addition, 21 of 40 patients received four or more cycles of therapy, attesting to the tolerability of BIND-014.
BIND-014: Phase 2 data in NSCLC
In 2015, we initiated the iNSITE 1 (BIND-014 Nanoparticle Study In Patients with Advanced KRAS Mutant or Squamous NSCLC to Determine Tolerability and Efficacy) trial, a two-tier Phase 2 trial with BIND-014 in NSCLC patients with KRAS mutant or squamous histology. In December 2015, we announced that the squamous histology NSCLC cohort of the iNSITE 1 trial would advance to the second stage and complete enrollment to 40 patients. We also announced that the KRAS mutant NSCLC arm would not advance to the second stage. The rationale for these decisions was based on safety and efficacy data from the planned interim analysis of iNSITE 1 as well as updated overall survival (OS) data of 11.1 months in the squamous cohort from the previous clinical trial in the broad NSCLC population, the BIND-014-005 trial.
mCRPC
Our Phase 2 trial of BIND-014 in mCRPC enrolled 42 patients, 31 of whom had been treated with androgen inhibitors prior to enrolling in the study. In January 2016, we announced final data from this study showing that BIND-014 was clinically active and well-tolerated and the study met its primary endpoint with 71 percent of patients achieving radiographic progression-free survival, or rPFS, of at least 6 months. BIND-014 demonstrated a promising efficacy profile with rPFS, of 9.9 months.
Key results include:
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BIND-014 administered at 60 mg/m² on day 1 of a 21-day cycle was clinically active and well-tolerated when administered to patients (n=42) with chemotherapy-naive mCRPC, including the 74% of patients with prior exposure to abiraterone acetate and/or enzalutamide.
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Median rPFS of 9.9 months (95% confidence interval, 7.1 - 12.6) was achieved (n=42 with 8 censored).
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A confirmed ORR of 21% was observed in patients with measurable disease (n=19).
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A 50% reduction in PSA was observed in 30% of PSA evaluable patients (n=40).
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CTC conversion from ≥ 5 cells/7.5 mL blood at baseline to < 5 cells/7.5 mL blood was observed in 50% of patients.
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Median OS was 13.4 months (95% CI, 9.9 - 18.6 months [n=42 with 10 censored]).
Safety and tolerability were also promising, with notable reductions in adverse effects that often limit dosing of conventional docetaxel, including hematologic and non-hematologic toxicities. Given the rapidly evolving prostate cancer treatment landscape, we decided not to move forward with the development of BIND-014 in mCRPC and focus our resources on more promising opportunities.
Other Indications
We also initiated the iNSITE 2 (BIND-014 Nanoparticle Study In Patients with Urothelial Carcinoma, Cholangiocarcinoma, Cervical Cancer, and Squamous Cell Carcinoma of the Head and Neck to Determine Tolerability and Efficacy) trial, a Phase 2 multi-tumor trial with BIND-014 in patients with cholangiocarcinoma, cervical cancer, bladder cancer, and head and neck cancers, in the second quarter of 2015. Each of these indications was selected based on three criteria: signals of efficacy in our Phase 1 clinical trial with BIND-014, evidence that these tumors are sensitive to docetaxel, and significant level of unmet need for these patients. This trial was conducted as a single arm, open-label, multi-center, Phase 2 efficacy and safety study of BIND-014 in patients with either advanced urothelial carcinoma (transitional cell carcinoma), cervical cancer, cholangiocarcinoma or carcinomas of the biliary tree or squamous cell carcinoma of the head and neck. A Fleming two-stage design for Phase 2 oncology studies was employed with starting and stopping rules established. In January 2016, we discontinued the bladder and cholangio cohorts of this trial due to slower than anticipated enrollment. Enrollment is ongoing in the advanced cervical and head and neck cancer cohorts and up to 80 patients will be enrolled in these cohorts.
This trial’s primary objective is to determine the objective response rate (ORR), with secondary objectives of determining progression-free survival (PFS), overall survival (OS), best overall response rate (BOR), duration of response (DOR), time to response (TTR), disease control rate (DCR), and assessing the safety and tolerability of BIND-014.
Collaborations
In addition to our internal development programs, we also consider opportunities to collaborate with biopharmaceutical companies to develop new applications of our ACCURIN technology. Our collaborations enable the extension of our platform with minimal financial risk and we seek collaborators with novel payloads and/or targeting ligands from which to develop ACCURINS®. Our collaborations may entail licensing products from proprietary product portfolios, sourcing of novel payloads and/or targeting ligands, or expanding into new therapeutic areas with novel payloads specifically engineered or optimized for ACCURIN encapsulation.
We have established a number of ongoing collaborations, including announced agreements with Pfizer, Inc., AstraZeneca AB and Roche. Our collaboration agreements generally require the collaborator to pay all the development costs associated with the ACCURIN, including those incurred by us. In addition, the upfront and potential milestone payments received under these agreements provide us with additional capital resources to develop our own proprietary pipeline of ACCURINS®.
Pfizer
In March 2013, we entered into a research, option and license agreement with Pfizer, pursuant to which we granted to Pfizer two options to obtain an exclusive worldwide license to use, develop, manufacture and commercialize ACCURINS® incorporating specified Pfizer small molecular targeted therapies, for the treatment, prevention and/or diagnosis of any disease or medical condition in humans, except that the licensed rights exclude some vaccine products and products for the treatment of brain cancer.
Under the agreement, we received an upfront payment of $4.0 million in 2013 and achieved a $1 million development milestone in December 2014. In September 2015, we received notification that Pfizer exercised its option to acquire an exclusive license for the development and commercialization of the first compound covered by the agreement. Pfizer has also notified us that it decided not to continue the development of the second compound, and therefore would not exercise its option to acquire an exclusive license for the development and commercialization of the second compound. As a result of the option exercise for the first compound, we earned a $2.5 million option exercise fee.
We have the potential to receive additional contingent payments for the selected compound totaling up to $86.0 million in the aggregate upon achievement by Pfizer of specified development and regulatory events plus additional contingent payments totaling up to $110.0 million in the aggregate upon achievement by Pfizer of specified commercial events. We will also receive royalties in the low-single digit to the high-single digit percentages of aggregate worldwide net sales, if any. We will receive royalties on a country-by-country and licensed product-by-licensed product basis until the expiration of the Pfizer patents covering such licensed product.
While we will continue to conduct chemistry, manufacturing and control activities, Pfizer is responsible for all further development and commercialization activities with respect to the licensed products covered by the option, and Pfizer is also solely responsible for obtaining all regulatory approvals for the applicable licensed products and conducting all communications with regulatory authorities.
AstraZeneca
In April 2013, we entered into a license agreement with AstraZeneca, pursuant to which we granted to AstraZeneca a worldwide license to research, develop, manufacture and commercialize ACCURINS® based on barasertib (AZD1152), a potent selective inhibitor of the Aurora B kinase, for any therapeutic use in humans or animals. This license is exclusive with respect to our intellectual property rights that arise under this agreement or the feasibility study that preceded it, and non-exclusive with respect to all of our other intellectual property rights.
We and AstraZeneca are each responsible for using commercially reasonable efforts to develop licensed products under a development plan that extends a previously completed feasibility study we conducted for AstraZeneca. AstraZeneca is required to pay for all of our development costs. AstraZeneca is also solely responsible for, and must use commercially reasonable efforts in, obtaining all regulatory approvals for licensed products. We are responsible for manufacturing licensed product for use in preclinical and some clinical trials. AstraZeneca is responsible for manufacturing other supplies of licensed products. For a specified number of years after entering into this agreement, we may not develop or commercialize a compound against the same target as AstraZeneca’s Aurora B kinase inhibitor, barasertib (AZD1152).
Our collaboration with AstraZeneca has achieved positive preclinical results to date with the ACCURIN nanoparticle AZD2811, demonstrating improved efficacy and enhanced trafficking to tumor sites in multiple preclinical models while displaying minimal bone marrow toxicity. AZD2811 is an ACCURIN containing AZD1152-hQPA, the active metabolite of the prodrug barasertib (AZD1152), a potent and selective inhibitor of Aurora B kinase. AstraZeneca began enrolling patients in a Phase 1 clinical trial with AZD2811 in November 2015.
Under the agreement, we received an upfront payment of $4.0 million in 2013. We achieved a $1 million development milestone in March 2015. In November 2015, we earned a $4.0 million clinical milestone for dosing of the first patient in AstraZeneca’s ACCURIN AZD2811 Phase 1 trial.
We have the potential to receive additional milestone payments totaling up to $60 million upon achievement by AstraZeneca of specified clinical events and up to $128 million in the aggregate upon achievement by AstraZeneca of all specified regulatory and commercial events. We will also receive tiered royalties in the low-single digit to the low-double digit percentages of aggregate worldwide net sales of licensed product, if any.
The agreement will remain in effect, on a country-by-country and licensed product-by-licensed product basis, until AstraZeneca’s obligation to pay us royalties ends.
Roche
In June 2014, we entered into a research agreement with Roche to discover novel nanomedicines using ACCURINS® for the treatment of diseases in therapeutic areas outside of oncology. The research agreement focuses on combining our ACCURIN technology with Roche’s proprietary therapeutic payloads and targeting ligands. Under the agreement, Roche paid us an immaterial, non-refundable upfront fee and, additionally, will compensate us for our research and development services up to a specified amount. The upfront fee will be creditable against an upfront fee negotiated in a future Roche agreement, if any.
Merck
We entered into a research and development agreement with Merck in November 2014 that leverages our Medicinal Nanoengineering® platform to create targeted ACCURINS® that utilize compounds provided from Merck’s oncology pipeline for the treatment of cancer. The agreement initially covers two Merck compounds.
Under terms of the agreement, we lead all aspects of product development prior to the end of Phase 1 and can choose to advance or terminate programs at our sole discretion. At end of Phase 1, we and Merck can choose to take products forward under a defined picking mechanism; we will choose first, except in situations where Merck makes additional monetary or compound contributions to the collaboration. The party taking a product forward has worldwide development and commercial rights. If Merck does not exercise its option, we can choose to take all the products forward globally. If we opt in at the end of Phase 1, we make no payments to Merck beyond a royalty on future product sales. If Merck opts in, it will pay us a fee based on a multiple of our research and development expenses and a royalty on future product sales, if any. There are incentives in the contract for Merck to offer additional compounds from its oncology pipeline in the future; however, we are under no obligation to accept additional compounds.
Intellectual Property
Patents and Proprietary Rights
We actively seek to protect our Medicinal Nanoengineering® platform technology, which we consider important to our business, including pursuing patents relating to our products and compositions, their methods of use and the processes for their manufacture, as well as any other relevant inventions and improvements that are commercially important to the development of our business and are eligible for patent protection. We effect a layered approach by seeking multiple different patents or patent applications on different aspects of ACCURINS®. We also rely on trade secrets that may be important to the development of our business.
Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for the technology, inventions and improvements we consider important to our business; defend our patents; preserve the confidentiality of our trade secrets; and operate without knowingly infringing the patents and proprietary rights of third parties. We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.
Medicinal Nanoengineering® Platform Patent Portfolio
As of December 31, 2015, we owned more than 20 issued U.S. patents, more than 40 pending U.S. provisional and non-provisional patent applications that relate to our Medicinal Nanoengineering® platform, as well as issued and pending foreign counterparts to many of these patents and patent applications. As of December 31, 2015, we had licenses to more than 10 U.S. patents and six pending patent applications, as well as several pending foreign counterparts to many of these patents and patent applications that also relate to our Medicinal Nanoengineering® platform. Of these licensed patents and patent applications, we license the majority on an exclusive basis, with the rest licensed non-exclusively to us. The exclusive licenses are, in some cases, limited to certain technical fields, for example for medical and diagnostic purposes. Our owned and licensed patents and patent applications relate to our nanoparticles, nanoparticle compositions, nanoparticles with specific drugs, targeting ligands, methods of making nanoparticles, methods of making targeting ligands and methods of treating breast and prostate cancer using our nanoparticles. We believe these patents and patent applications relate to advances in the nanoparticle field that are important for the development of a therapeutic nanoparticle. The issued patents generally are expected to expire between 2025 and 2030, and applications are pending which would expire, if issued, between 2028 and 2035.
BIND-014 Patent Portfolio
We also strive to protect BIND-014 with multiple layers of patent protection. As of December 31, 2015, of the owned Medicinal Nanoengineering® platform patents and patent applications described above, more than 10 issued U.S. patents, more than 10 pending U.S. provisional and various non-provisional patent applications and pending foreign counterparts relate to our BIND-014 ACCURIN. As of December 31, 2015, of the licensed Medicinal Nanoengineering® platform patents and patent applications described above, more than five U.S. patents and patent applications, as well as several foreign counterparts to these patents and patent applications, relate to our BIND-014 ACCURIN. Our BIND-014 patent portfolio consists of patents directed to BIND-14 nanoparticles, compositions of BIND-014 nanoparticles, methods of making BIND-014, and methods of using BIND-014. The issued patents directed to BIND-014 generally are expected to expire between 2025 and 2030, and applications are pending which would expire, if issued, between 2028 and 2035.
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the date of filing the first non-provisional application or Patent Cooperation Treaty application.
In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent. The patent term of a patent that covers an approved drug may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the regulatory review process. To obtain a patent extension in the United States, the term of a relevant patent must not have expired before the extension application, the patent cannot have been extended previously under this law, an application for extension must be submitted, the product must be subject to regulatory review prior to its commercialization, and the permission for the commercial marketing or use of the product after such regulatory review period is the first permitted commercial marketing or use of the product. The active ingredient in BIND-014, docetaxel, has been previously approved and commercially marketed and, as such, we do not expect to be eligible for a patent term extension in the United States. If our future products contain active ingredients that have not been previously approved, we may be eligible for a patent term extension in the United States. If patent extensions are available to us outside of the United States, we would expect to file for a patent term extension in applicable jurisdictions.
Trade Secrets
We endeavor to maintain trade secret protection for certain aspects of our technology. In some situations, maintaining information as a trade secret is more appropriate than seeking patent protection. Specifically, we have a number of trade secrets relating to identifying new ACCURINS® and to our ACCURIN manufacturing process. With regard to manufacturing ACCURINS®, we believe that small changes in processing ACCURINS® can result in ACCURINS® with different properties. As a result, we expect the FDA and other regulatory bodies to require additional clinical data for approval of a generic ACCURIN. As such, we believe that maintaining our manufacturing process as a trade secret will be helpful to maintaining our product exclusivity.
Third-Party Rights
Many pharmaceutical companies, biotechnology companies and academic institutions are competing with us in the field of nanotechnology and filing patent applications potentially relevant to our business. In order to contend with the strong possibility of third-party intellectual property conflicts, we periodically conduct freedom-to-operate studies, but such studies may not uncover all patents relevant to our business. With respect to BIND-014, we are aware of a third-party U.S. patent application that contains claims related to a formulation of a nanoparticle composition. We have an issued U.S. patent and pending non-U.S. patent applications claiming similar subject matter, which we believe have earlier priority filing dates than the third party application. Most countries award patents to the first party to file their patent application, however, these U.S. patents and patent applications are subject to pre-AIA U.S. law that awards patents to the first party to invent the claimed invention, rather than the first party to file a patent application. The possibility therefore exists for an interference proceeding between our issued patent and this third-party patent application to determine the earliest party to invent the composition. While it is our contention that we are in a strong position to prevail in any such potential interference proceeding, however unlikely, the possibility exists that this third-party patent application could prevail in such an interference proceeding and obtain claims that cover a formulation of a composition of BIND-014. We believe the potential exists, if necessary, to find and use an alternative formulation which would be outside of any valid and issued claims that could be obtained from this third-party patent application, but we may need to overcome certain technical challenges in order to do so, and this process may cause us to incur additional costs and delays.
From time to time, we find it necessary or prudent to obtain licenses from third-party intellectual property holders. Where licenses are readily available at reasonable cost, such licenses are considered a normal cost of doing business. In other instances, however, we may use the results of freedom-to-operate studies to guide our early-stage research away from areas where we are likely to encounter obstacles in the form of third-party intellectual property. For example, where a third party holds relevant intellectual property and is a direct competitor, a license might not be available on commercially reasonable terms or available at all. We strive to identify potential third-party intellectual property issues in the early stages of research of our research programs, in order to minimize the cost and disruption of resolving such issues.
In spite of these efforts to avoid obstacles and disruptions arising from third-party intellectual property, it is impossible to establish with certainty that our technology platform or our product programs will be free of claims by third-party intellectual property holders. Even with modern databases and on-line search engines, freedom-to-operate searches are imperfect and may fail to identify relevant patents and published applications. Even when a third-party patent is identified, we may conclude upon a thorough analysis, that we do not infringe the patent or that the patent is invalid. If the third-party patent owner disagrees with our conclusion and we continue with the business activity in question, it remains a possibility that we might be a litigant in an infringement suit. Alternatively, we might decide to initiate litigation in an attempt to have a court declare the third-party patent invalid or non-infringed
by our activity. In either scenario, patent litigation typically is costly and time-consuming, and as with any litigation the outcome is uncertain. The outcome of patent litigation is subject to uncertainties that cannot be quantified in advance, for example, the credibility of expert witnesses who may disagree on technical interpretation of scientific data. Ultimately, in the case of an adverse outcome in litigation, we could be prevented from commercializing a product or using certain aspects of our technology platform as a result of patent infringement claims asserted against us. This could have a material adverse effect on our business. For further discussion of the risks relating to our intellectual property see “Risk Factors-Risks Related to Our Intellectual Property.”
In-Licensed Intellectual Property
Massachusetts Institute of Technology
In June 2007, we entered into a license agreement with the Massachusetts Institute of Technology, or MIT, which was amended in November 2008 and April 2013. Pursuant to this agreement, MIT granted us a worldwide license under certain periods and patent applications generally relating to targeted nanoparticles and methods of making targeted nanoparticles to develop and commercialize licensed products and processes for all therapeutic and diagnostic uses and as research reagents, except in connection with therapeutic or prophylactic vaccines with a limited-term option to license certain improvements. Certain licensed MIT patents and patent applications relate to BIND-014. This license is exclusive with respect to certain of MIT’s patent rights and non-exclusive with respect to other of MIT’s patent rights.
We are obligated to use diligent efforts to develop and commercialize one or more licensed products, and thereafter make licensed products reasonably available to the public. We must also achieve specified milestone events by certain dates. Failure to achieve such milestone events may be treated by MIT as a material breach, which could allow MIT to terminate the agreement.
We must also make contingent payments to MIT totaling up to $1.5 million in the aggregate upon achievement by us or our collaboration partners of specified clinical, regulatory and commercial events. We must also pay MIT royalties in the low-single digit percentages on aggregate worldwide net sales of licensed products, including sales by our collaboration partners. We must also reimburse MIT for all reasonable costs related to the prosecution and maintenance of the licensed patents rights. Under the agreement, we must pay MIT a percentage, ranging from the high-single digits to the low-mid double digits, of any consideration we receive from sublicensees, including our collaboration partners, and a specified percentage, in the mid-single digits, of all payments we receive in excess of a specified amount in the aggregate for the practice of the licensed patents on behalf of non-sublicensee third parties. Finally, in connection with the agreement we issued to MIT and some other parties shares of our common stock representing a low-single digit percentage of our then-outstanding common stock.
The agreement remains in effect until expiration or abandonment of all issued patents and filed patent applications within the rights licensed to us under the agreement. The agreement will terminate automatically if we assign the agreement or any of our rights or obligations thereunder in connection with a change of control and the proposed assignee fails to agree in writing to be bound by the terms and conditions of the agreement. MIT may terminate the agreement if we cease to carry on our business related to the agreement, if we fail to maintain the insurance coverage required under the agreement or if we materially breach the agreement and fail to cure such breach. We may terminate the agreement for convenience upon six months’ prior notice.
The Johns Hopkins University
In February 2009, we entered into a license agreement with The Johns Hopkins University, or JHU, which was amended in January 2013. Pursuant to the agreement, JHU granted us an exclusive, worldwide license under some of its intellectual property rights relating to nanoparticles targeting PSMA in all fields of use. Certain licensed JHU patent applications relate to BIND-014. Under this agreement, we are obligated to use commercially reasonable efforts to develop and commercialize licensed products as soon as practicable, and after commercialization we must endeavor to keep licensed products reasonably available to the public.
We are responsible for costs relating to the prosecution and maintenance of the licensed patents incurred after the date of the agreement. We must make contingent payments to JHU totaling up to $1.0 million in the aggregate upon achievement by us or our collaborators of specified patent prosecution, clinical, regulatory and commercial events and pay JHU royalties in the low-single digit percentages on aggregate worldwide net sales of licensed products, including sales by our collaborators, subject to a minimum annual royalty. Finally, we must pay JHU 30% of any consideration we receive from sublicensees who solely sublicense the intellectual property we have licensed from JHU.
The agreement remains in effect on a country-by-country basis until the date of expiration of the last to expire licensed patent in such country. Either we or JHU may terminate the agreement for the other party’s uncured material breach, and we may terminate the agreement for convenience upon 90 days’ prior notice.
Yale University
In January 2013, we entered into a license agreement with Yale University, or Yale, pursuant to which Yale granted us an exclusive, worldwide license under specified intellectual property rights relating to targeted and high density drug-loaded polymeric materials to develop and commercialize licensed products and to practice licensed methods for the treatment of cancer. The rights granted to us under the agreement specifically exclude the use of licensed products for the treatment of brain cancer and for specified types of vaccines. We have the option to expand the rights granted to us under the agreement to include the treatment of cardiovascular disease, inflammation and/or autoimmune disorders, after we initiate specified studies in the respective field, subject to any then-existing third-party rights and upon the payment by us to Yale of a specified amount for each such field so added. Certain of the Yale licensed intellectual property relates to BIND-014.
We are obligated to use commercially reasonable efforts to develop and commercialize one or more licensed products or licensed methods. Our agreement with Yale requires us to achieve specified milestone events. Failure to achieve such milestone events or to use commercially reasonable efforts to develop and commercialize one or more licensed products or licensed methods may result in termination of the agreement by Yale. Both Yale and we must use commercially reasonable efforts, when possible under good business practice, to facilitate the availability of licensed products in low and lower-middle income countries at locally affordable prices, under reasonable terms and circumstances to improve access to such licensed products in such countries.
While the agreement remains in effect, we must pay Yale royalties below 1% on aggregate worldwide net sales of licensed products and licensed methods, including sales by our collaborators. Under the agreement, in addition to the royalties described in the previous sentence, we must pay Yale 40% of any consideration we receive from sublicensees who solely sublicense the intellectual property we have licensed from Yale. Finally, we are also responsible for costs relating to the prosecution and maintenance of the licensed patents.
The agreement remains in effect until the date on which the last claim of the licensed patents expires. Either we or Yale may terminate the agreement for the other party’s uncured material breach, we may terminate the agreement for convenience upon 60 days’ prior notice, and Yale may terminate the agreement if we fail to make a payment when due, fail to obtain or maintain adequate insurance coverage, become insolvent, challenge or assist others in challenging the licensed patents, or fail to terminate a sublicense if the applicable sublicensee challenges or assists others in challenging the licensed patents.
Other
We may license intellectual property from certain other parties that we believe to be necessary or useful for the conduct of our business, and may enter additional license agreements in the future.
Intellectual Property in Collaborations
We have entered into research and development collaboration agreements with Pfizer, AstraZeneca, and Merck. In each collaboration, we provide our collaborator with exclusive rights to inventions relating to the collaborator’s molecules that arise out of the collaboration. These agreements provide for us to own general improvements to our Medicinal Nanoengineering® platform technology that arise out of the collaborations. We did not provide any of our collaborators with the right to enforce our Medicinal Nanoengineering® platform patent portfolio, with the exception of patents relating to the applicable drug candidates.
Competition
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our Medicinal Nanoengineering® technologies, integrated research, clinical and manufacturing capabilities, development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. Any drug candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
The key competitive factors affecting the success of BIND-014 and any other drug candidates that we develop, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we obtain approval for ours. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. Generic products are currently on the market, including the therapeutics payload in BIND-014, docetaxel, for the indications that we are pursuing, and additional products are expected to become available on a generic basis over the coming years. If our drug candidates achieve marketing approval, we expect that they will be priced at a significant premium over competitive generic products.
The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy and targeted drug therapy. There are a variety of available drug therapies marketed for solid tumors. In many cases, these drugs are administered in combination to enhance efficacy. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis, including docetaxel, the therapeutic payload contained in BIND-014. Many of these approved drugs are well-established therapies and are widely accepted by physicians, patients and third-party payors. In general, although there has been considerable progress over the past few decades in the treatment of solid tumors and the currently marketed therapies provide benefits to many patients, these therapies all are limited to some extent in their efficacy and frequency of adverse events, and none of them are successful in treating all patients. As a result, the level of morbidity and mortality from solid tumor cancers remains high.
There are also a number of products in late stage clinical development to treat solid tumors. The products in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies. As a result, they may provide significant competition for BIND-014 or any other drug candidate for which we obtain marketing approval.
We believe that our most significant competition comes from immunotherapies, including nivolumab and pembrolizumab.
We also face competition from other nanomedicine platforms developing targeted therapies, including platforms focused on albumin nanoparticles, liposomes and polymeric nanoparticles.
Government Regulation
Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug products such as those we are developing. BIND-014 and any other drug candidates that we develop must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory agency before they may be legally marketed in foreign countries.
United States Drug Development Process
In the United States, the FDA regulates drugs under the FDCA and FDA’s implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and subsequent compliance with appropriate federal, state and local statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. FDA sanctions may include, among other actions, refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us. The process required by the FDA before a drug may be marketed in the United States generally involves the following:
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completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies in accordance with applicable regulations, including the FDA’s GLP regulations;
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submission to the FDA of an IND, which must become effective before human clinical trials may begin;
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performance of adequate and well-controlled human clinical trials in accordance with applicable regulations, including the FDA’s current good clinical practice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its proposed indication;
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submission to the FDA of a NDA, for a new drug product;
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a determination by the FDA within 60 days of its receipt of an NDA to accept the NDA for filing and review;
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the drug is produced to assess compliance with the FDA’s cGMP regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;
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potential FDA audit of the preclinical and/or clinical trial sites that generated the data in support of the NDA; and
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FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.
Before testing any compounds with potential therapeutic value in humans, the drug candidate enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the drug candidate. The conduct of the preclinical tests must comply with federal regulations and requirements including the FDA’s GLP regulations. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND is a request for authorization from the FDA to administer an investigational drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocols for human studies. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the IND on clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose a clinical hold on a drug candidate at any time before or during clinical trials due to safety concerns or noncompliance. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such trial.
Clinical trials involve the administration of the drug candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND. Further, each clinical trial must be reviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers issues such as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
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Phase 1. The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion, the side effects associated with increasing doses, and if possible, to gain early evidence of effectiveness. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.
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Phase 2. The drug is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases or conditions and to determine dosage tolerance, optimal dosage and dosing schedule.
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Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall benefit/risk ratio of the product and provide an adequate basis for product approval. Generally, two adequate and well-controlled Phase 3 clinical trials are required by the FDA for approval of an NDA. Phase 3 clinical trials usually involve several hundred to several thousand participants.
Post-approval studies, or Phase 4 clinical trials, may be conducted after initial marketing approval. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, FDA may mandate the performance of Phase 4 studies.
The FDCA permits the FDA and an IND sponsor to agree in writing on the design and size of clinical studies intended to form the primary basis of a claim of effectiveness in an NDA. This process is known as a Special Protocol Assessment, or SPA. An SPA agreement may not be changed by the sponsor or the FDA after the trial begins except with the written agreement of the sponsor and the FDA, or if the FDA determines that a substantial scientific issue essential to determining the safety or effectiveness of the drug was identified after the testing began. For certain types of protocols, including carcinogenicity protocols, stability protocols, and Phase 3 protocols for clinical trials that will form the primary basis of an efficacy claim, the FDA has agreed under its performance goals associated with the Prescription Drug User Fee Act, or PDUFA, to provide a written response on most protocols within 45 days of receipt. However, the FDA does not always meet its PDUFA goals, and additional FDA questions and resolution of issues leading up to an SPA agreement may result in the overall SPA process being much longer, if an agreement is reached at all.
Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events or any finding from tests in laboratory animals that suggests a significant risk for human subjects. Phase 1, Phase 2 and Phase 3 clinical trials may fail to be completed successfully within any specified period, if at all. The FDA, the IRB or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward at designated checkpoints based on access to certain data from the study. We may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, must include developed methods for testing the identity, strength, quality and purity of the final drug. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.
FDA Review and Approval Processes
The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The application must include negative or ambiguous results of preclinical and clinical trials as well as positive findings. Data may come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product to the satisfaction of the FDA. The submission of an NDA is subject to the payment of substantial user
fees; a waiver of such fees may be obtained under certain limited circumstances, such as when the product candidate has received orphan drug designation.
In addition, under the Pediatric Research Equity Act, or PREA, an NDA or supplement to an NDA must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted. However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for the non-orphan indication(s).
The FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting an NDA for filing. The FDA must make a decision on accepting an NDA for filing within 60 days of receipt. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the goals and policies agreed to by the FDA under PDUFA, for drugs that do not contain new molecular entities, such as BIND-014, the FDA has ten months from the date of receipt in which to complete its initial review of a standard NDA and respond to the applicant, and six months for a priority NDA. Priority review is available for NDAs for drugs that treat a serious condition that, if approved, would provide a significant improvement in safety or effectiveness. The FDA does not always meet its PDUFA goal dates for standard and priority NDAs, and the review process is often significantly extended by FDA requests for additional information or clarification.
The FDA reviews each NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. The FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical sites to assure compliance with GCP requirements. After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval. A Complete Response Letter usually describes all of the specific deficiencies in the NDA identified by the FDA. A Complete Response Letter may require additional clinical data, including an additional pivotal Phase 3 clinical trial, and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information is submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we do.
If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling or may condition the approval of the NDA on other changes to the proposed labeling, development of adequate controls and specifications, or a commitment to conduct one or more post-market studies or clinical trials. For example, the FDA may require Phase 4 testing which involves clinical trials designed to further assess a drug’s safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. The FDA may also determine that a risk evaluation and mitigation strategy, or REMS, is necessary to ensure that the benefits of the drug outweigh its risks. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS, and the FDA will not approve the NDA without an approved REMS. Depending on FDA’s evaluation of a drug’s risks, a REMS may include medication guides, physician communication plans, or elements to assure safe use, such as limitations on who may prescribe or dispense the drug, requirements that patients enroll in a registry or undergo certain health evaluations, and other risk minimization tools. Following approval of an NDA with a REMS, the sponsor is responsible for marketing the drug in compliance with the REMS and must submit periodic REMS assessments to the FDA.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that sales of the drug in the United States will be sufficient to offset the cost of developing and making the drug available in the United States for the disease or condition will be recovered from sales of the drug. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, though companies with orphan-designated drugs are eligible for certain incentives, including opportunities for grant funding toward clinical trial costs, tax credits for qualified clinical testing and waiver of application user fees.
If the FDA approves a sponsor’s marketing application for a designated orphan drug for use in the rare disease or condition for which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during which the FDA may not approve another sponsor’s marketing application for a drug with the same active moiety and intended for the same use or indication as the approved orphan drug, except in limited circumstances, such as if a subsequent sponsor demonstrates its product is clinically superior. During a sponsor’s orphan drug exclusivity period, competitors, however, may receive approval for drugs with different active moieties for the same indication as the approved orphan drug, or for drugs with the same active moiety as the approved orphan drug, but for different indications. Orphan drug exclusivity could block the approval of one of our products for seven years if a competitor obtains approval for a drug with the same active moiety intended for the same indication before we do, unless we are able to demonstrate that grounds for withdrawal of the orphan drug exclusivity exist, or that our product is clinically superior. Further, if a designated orphan drug receives marketing approval for an indication broader than the rare disease or condition for which it received orphan drug designation, it may not be entitled to exclusivity. Orphan drug status in the EU has similar but not identical benefits in that jurisdiction.
We may seek orphan drug designation for one or more of our product candidates, but the FDA may disagree with our analysis of the prevalence of the particular disease or condition or other criteria for designation and refuse to grant orphan status. Even if we do obtain orphan drug designation for a product candidate, we cannot guarantee that the FDA will later grant approval for the drug, or that we will be able to secure orphan drug exclusivity if we do obtain approval.
Expedited Development and Review Programs
The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. Unique to a Fast Track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
Any product submitted to the FDA for approval, including a product with a Fast Track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. A product is eligible for priority review if it is intended to treat a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. The FDA will attempt to direct additional resources to the evaluation of an NDA designated for priority review and, under PDUFA, the FDA’s goal is to act on such NDAs within six months. Additionally, a product may be eligible for accelerated approval. Drug products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.
The FDA may also accelerate the approval of a designated breakthrough therapy, which is a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence
indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The sponsor of a breakthrough therapy may request the FDA to designate the drug as a breakthrough therapy at the time of, or any time after, the submission of an IND for the drug. If the FDA designates a drug as a breakthrough therapy, it must take actions appropriate to expedite the development and review of the application, which may include holding meetings with the sponsor and the review team throughout the development of the drug; providing timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program to gather the nonclinical and clinical data necessary for approval is as efficient as practicable; involving senior managers and experienced review staff, as appropriate, in a collaborative, cross-disciplinary review; assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor; and taking steps to ensure that the design of the clinical trials is as efficient as practicable, when scientifically appropriate, such as by minimizing the number of patients exposed to a potentially less efficacious treatment.
Fast Track designation, priority review, accelerated approval and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process. We plan to explore these opportunities for BIND-014 as appropriate for our targeted indications.
Post-Approval Requirements
Any drug products for which we receive FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among other requirements, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry sponsored scientific and educational activities, and requirements for promotional activities involving the Internet. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.
In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved NDA, including, among other things, recall or withdrawal of the product from the market. In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented. Other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.
The FDA also may require Phase 4 testing and surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures, such as a REMS. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development. For example, in June 2014, the FDA issued guidance reflecting FDA’s current thinking on certain issues related to the use of nanotechnology in FDA-regulated products. The guidance provides that the FDA will address issues such as the safety, effectiveness, public health impact, and regulatory status of nanotechnology products on a case-by-case basis using the FDA’s existing review processes; however, the guidance represents only the FDA’s current thinking, which may change in the future. While the FDA has not issued any regulations or drug-specific guidance to date, it is possible that the FDA and other regulatory authorities could issue regulations or additional guidance in the future regarding nanotechnology-based therapeutics that could adversely affect our drug candidates.
United States Patent Term Restoration, Generic Nanomedicine Pathway and Marketing Exclusivity
Depending upon the timing, duration and specifics of the FDA approval of the use of our drug candidates, if any, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA plus the time between the submission date of an NDA and the approval of that application. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. However, to obtain a patent extension in the United States, the permission for the commercial marketing or use of the product after the applicable regulatory review period must be the first permitted commercial marketing or use of the product. As the active ingredient in BIND-014, docetaxel, has been previously approved and commercially marketed, we do not expect to be eligible for a patent term extension in the United States. If a future product contains an active ingredient which has not been previously approved, we may intend to apply for restoration of patent term for one of the U.S. patents relating to such product, depending on the expected length of the clinical trials, other factors involved in the filing of the relevant NDA, and the eligibility for patent term extension.
Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain competing marketing applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA also provides three years of marketing exclusivity for an NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, clinical investigations to support new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of any full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical and clinical trials necessary to demonstrate safety and effectiveness.
Other types of non-patent marketing exclusivity include orphan drug exclusivity under the Orphan Drug Act, which may offer a seven-year period of marketing exclusivity as described above, and pediatric exclusivity under the Best Pharmaceuticals for Children Act, which may add six months to existing exclusivity periods and patent terms. This six-month pediatric exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.
In addition, regulatory authorities have established heightened requirements for the demonstration of equivalence between proposed generic drugs and therapeutics using certain nanomedicine platforms, such as liposomes and other nanoparticulate suspensions. We expect these requirements will apply to the development of generic ACCURINS® as well. We believe these additional regulatory requirements will strengthen the protection afforded by our intellectual property portfolio and present significant barriers to entry for potential generics.
Coverage and Reimbursement
Sales of our products will depend, in part, on the extent to which our products will be covered by third-party payors, such as government health care programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly limiting coverage and reimbursement for medical products and services. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our drug candidates or a decision by a third-party payor to not cover our drug
candidates could reduce physician usage of our products once approved and have a material adverse effect on our sales, results of operations and financial condition.
Fraud and Abuse Laws
We will also be subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we will conduct our business once our products are approved. The laws that may affect our ability to operate include: the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; the federal healthcare programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
Research and Development
We have invested $37.3 million, $28.9 million and $24.4 million in research and development for the years ended December 31, 2015, 2014 and 2013, respectively.
Financial Information
See Note 1 to the Consolidated Financial Statements for information about liquidity. See Note 2 to the Consolidated Financial Statements for financial information about geographic areas, Notes 2 and 4 to the Consolidated Financial Statements for information about our revenues, and the Consolidated Financial Statements for our net loss and total assets.
Employees
As of December 31, 2015, we had 103 full-time employees, 78 of whom were primarily engaged in research and development activities. A total of 29 employees have an M.D. or Ph.D. degree. BIND (RUS) LLC, our wholly owned subsidiary in Russia, had 11 employees as of December 31, 2015. None of our employees is represented by a labor union and we consider our employee relations to be good.
Other Information
We were incorporated under the laws of the state of Delaware on May 19, 2006 under the name BIND Biosciences, Inc., and changed our name to BIND Therapeutics, Inc. in April 2013. On September 25, 2013, we completed an initial public offering of our common stock. We maintain a website with the address www.bindtherapeutics.com. We are not including the information contained in our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available, free of charge through our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports as soon as reasonably practicable after we electronically file these materials with, or otherwise furnish them to, the Securities and Exchange Commission (“SEC”).
PART II. OTHER INFORMATION
Item 1A.
Item 1A.
Risk Factors
Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition and results of operations, and they should be carefully considered. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
Since inception, we have incurred significant operating losses. Our net loss was $36.6 million for the year ended December 31, 2015. As of December 31, 2015, we had an accumulated deficit of $173.9 million. Through December 31, 2015, we have financed our operations primarily through our initial public offering, an underwritten public offering of common stock and warrants, our at-the-market sales agreement with Cowen & Company, LLC, or Cowen, private placements of our preferred stock and convertible debt securities, borrowings under our credit facility with Hercules Technology III, L.P., or Hercules, collaborations and government grants. All of our revenue to date has been derived from collaboration agreements and government grants. We have devoted a substantial amount of our financial resources and efforts to developing our Medicinal Nanoengineering® platform, identifying potential drug candidates, and conducting preclinical studies and clinical trials. We are conducting Phase 2 clinical trials of BIND-014 and our collaborations and our preclinical pipeline are in various stages of development. By April 2016, we expect to report combined clinical data for BIND-014 in the following indications: i) non-small cell lung cancer (NSCLC) with squamous histology; ii) advanced cervical cancer; and iii) head and neck cancer. We have been pursuing and intend to continue to pursue a potential collaboration for BIND-014. Any additional clinical development of BIND-014 beyond our existing trials will require positive clinical data. We have not completed development of any ACCURINS® or other drugs. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Even if we obtain positive clinical data, we may need to curtail or terminate the development of BIND-014 if we are unable to obtain additional financing. We expect that any decision to curtail or terminate the development of BIND-014, whether based on the lack of positive data or due to a lack of sufficient financing, would impact our future operating expense and capital expenditure requirements. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our capital needs may increase significantly to the extent that we:
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conduct our Phase 2 clinical trials of BIND-014, our lead ACCURIN drug candidate, which is a prostate-specific membrane antigen, or PSMA, targeted ACCURIN that contains docetaxel;
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continue the research and development (R&D) of our internal pipeline;
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develop our ACCURINS® platform to use oligonucleotide therapeutics as payloads;
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conduct our proof-of-concept work with Macrophage Therapeutics and Synergy Pharmaceutical, Inc.;
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scale up external manufacturing capabilities for clinical trial material needs for our collaborators;
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seek to enhance our Medicinal Nanoengineering® platform and discover and develop additional drug candidates;
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seek regulatory approvals for any drug candidates that perform successfully in clinical trials;
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potentially establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any products for which we may obtain regulatory approval;
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maintain, expand and protect our intellectual property portfolio; and
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add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts.
To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our drug candidates, discovering additional drug candidates, obtaining regulatory approval for these drug candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval, and establishing and managing our collaborations at various stages of each candidate’s development. We are only in the early stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we are required by the U.S. Food and Drug Administration, or FDA, or the European Medicines Agency, or EMA, to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our drug candidates, our expenses could increase and profitability could be further delayed.
Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our R&D efforts, diversify our product offerings or even continue our operations. A decline in the value of our company could also cause you to lose part or all of your investment.
We will need additional financing to execute our business plan, to fund our operations and to continue as a going concern.
As of December 31, 2015, we had cash, cash equivalents and short-term investments of $36.9 million. We expect that our cash, cash equivalents and short-term investments will our fund operating expense and capital expenditure requirements into the fourth quarter of 2016. This expectation is based on our current operating plans and R&D funding that we expect to receive under our existing collaborations but excludes any potential milestone payments under our collaboration agreements. This expectation also assumes that the scheduled payments to Hercules under our credit facility are not accelerated. Under the terms of our credit facility, Hercules could accelerate our payment obligations upon the occurrence of a circumstance that would reasonably be expected to have a material adverse effect, as defined in the credit agreement, or another event of default. If our principal obligations under such credit facility (which totaled approximately $15.0 million as of December 31, 2015) are accelerated, we would need to secure additional financing to fund our operating expense and capital expenditure requirements as early as the middle of April 2016. In the event we are unable to secure the necessary financing, we may need to cease operations or file for bankruptcy protection. We will need additional funding to continue development of our internal pipeline and collaborations. In addition, if we obtain regulatory approval for any of our drug candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our R&D programs or any future commercialization efforts.
Identifying potential drug candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, our drug candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.
Our future capital requirements will depend on many factors, including:
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the progress and results of our clinical trials of BIND-014;
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our collaboration agreements remaining in effect, our ability to achieve milestones under these agreements and our entering into additional collaboration agreements;
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the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other drug candidates;
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the progress and results of developing our ACCURINS® platform to use oligonucleotide therapeutics as payloads;
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the progress and results of our proof-of-concept work with Macrophage Therapeutics and Synergy Pharmaceuticals, Inc.;
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the costs, timing and outcome of regulatory review of our drug candidates;
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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our drug candidates for which we receive marketing approval;
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the revenue, if any, received from commercial sales of our drug candidates for which we receive marketing approval;
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the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and
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the extent to which we acquire or in-license other products and technologies.
The adverse capital market conditions could continue to affect our liquidity.
Adverse capital market conditions could continue to affect our ability to meet liquidity needs, as well as our access to capital and cost of capital. We need additional funding to continue development of our internal pipeline and collaborations. Our results of operations, financial condition, cash flows and capital position could be materially affected by continued disruptions in the capital markets.
If we default on our credit facility with Hercules, we may not be able to continue as a going concern.
If we default on our credit facility with Hercules, we may not be able to continue as a going concern. We have an amended credit facility with Hercules with an outstanding principal balance as of December 31, 2015 of approximately $15.0 million that is secured by a lien covering substantially all of our personal property, excluding intellectual property. The credit facility contains customary affirmative and negative covenants and events of default applicable to us and certain of our subsidiaries. The affirmative covenants include, among others, covenants requiring us (and us to cause certain of our subsidiaries) to maintain our legal existence and governmental approvals, deliver unqualified audited financial statements as of the end of the year and maintain insurance coverage. The negative covenants include, among others, restrictions on us and our subsidiaries transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets, and suffering a change in control, in each case subject to certain exceptions. If we default under the facility, Hercules may potentially require us to renegotiate our agreement on terms less favorable to us or it may accelerate all of our obligations under the facility and foreclose on our pledged assets, potentially requiring us to immediately cease operations or file for bankruptcy protection. Hercules could also declare a default upon the occurrence of a circumstance that would reasonably be expected to have a material adverse effect as defined under the credit facility, thereby requiring us to repay the loan immediately or to attempt to reverse the declaration of default through negotiation or litigation. In the event that we are liquidated, Hercules’ right to repayment would be senior in most respects to the rights of the holders of our common stock to receive any proceeds from the liquidation.
The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2015 contains an explanatory paragraph regarding our ability to continue as a going concern which may have an adverse effect on our relationships with current and future collaborators, contract manufacturers and investors.
Since our inception, we have experienced recurring operating losses and negative cash flows, and we expect to continue to generate operating losses and consume significant cash resources for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern without additional financing. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the year ended December 31, 2015, or the 2015 financial statements, with respect to this uncertainty. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. The explanatory paragraph in the report of our independent registered public accounting firm may adversely affect our relationships with current and future collaborators, contract manufacturers and investors, who may grow concerned about our ability to meet our ongoing financial obligations. If potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our 2015 financial statements do not include any adjustment to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or drug candidates.
In order to meet our financing needs, we may issue a significant amount of additional shares of our common stock and warrants to purchase shares of our common stock. The precise terms of any future financing will be determined by us and potential investors and such future financings may significantly dilute our stockholders’ percentage ownership in us.
Additionally, if we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our common stock.
Our limited operating history may make it difficult to evaluate the success of our business to date and to assess our future viability.
We commenced active operations in 2007, and our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our Medicinal Nanoengineering® platform, identifying potential drug candidates, and conducting preclinical studies and clinical trials. All of our drug candidates are still in preclinical development with the exception of BIND-014 and ACCURIN AZD2811, which are in clinical development. We are in Phase 2 clinical trials for BIND-014, our leading drug candidate. We have not yet demonstrated our ability to successfully complete any pivotal clinical trials, obtain regulatory approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history.
In addition, as a young business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition at some point from a company with an R&D focus to a company capable of supporting commercial activities. We may not be successful in such a transition.
We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, the results of any quarterly or annual periods should not be relied on as indications of future operating performance.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which are
outside our control. As a result, our ability to use our pre-change net operating loss carryforwards and other pre-change tax attributes to offset U.S. federal taxable income may be subject to limitations, which could result in an increased future tax liability to us.
Risks Related to the Discovery and Development of Our Drug Candidates
We may not be successful in our efforts to use and expand our Medicinal Nanoengineering® platform to build a pipeline of drug candidates and develop marketable drugs.
We are using our proprietary Medicinal Nanoengineering® platform to develop BIND-014 and additional ACCURINS®, with an initial focus on the treatment of various types of cancer. We are at an early stage of development and our platform has not yet, and may never lead to, approvable or marketable drugs. Even if we are successful in continuing to build our pipeline, the potential drug candidates that we identify may not be suitable for clinical development, including as a result of their harmful side effects, limited efficacy or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance. If we do not successfully develop and commercialize drug candidates based upon our technological approach, we will not be able to obtain product or collaboration revenues in future periods, which likely would result in significant harm to our financial position and adversely affect our stock price.
We are early in our development efforts and we currently only have BIND-014 and ACCURIN AZD2811 in clinical development. All of our other drug candidates are still in preclinical development. If we or our collaborators are unable to successfully develop and commercialize drug candidates or experience significant delays in doing so, our business will be materially harmed.
We are early in our development efforts with only BIND-014 and ACCURIN AZD2811 in clinical development. All of our other drug candidates are still in preclinical development. We have invested substantially all of our efforts and financial resources in developing our Medicinal Nanoengineering® platform, identifying potential drug candidates, and conducting preclinical studies and clinical trials. Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our drug candidates. The success of our drug candidates will depend on several factors, including the following:
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completion of preclinical studies and clinical trials with positive results;
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receipt of marketing approvals from applicable regulatory authorities;
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obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our drug candidates;
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making arrangements with third-party manufacturers for, or establishing, commercial manufacturing capabilities;
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launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;
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successfully maintaining existing collaborations and entering into new ones throughout the development process as appropriate, from preclinical studies through to commercialization;
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acceptance of the products, if and when approved, by patients, the medical community and third-party payors;
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effectively competing with other therapies;
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obtaining and maintaining coverage and adequate reimbursement by third-party payors, including government payors, for our drug candidates;
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protecting our rights in our intellectual property portfolio;
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maintaining a continued acceptable safety profile of the products following approval; and
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maintaining and growing an organization of scientists and business people who can develop and commercialize our products and technology.
If we or our collaborators do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully develop and commercialize our drug candidates, which would materially harm our business. In addition, clinical trial results of BIND-014 that have not met our criteria for moving forward with development in particular indications have adversely affected, and could continue to adversely affect, our ability to raise sufficient capital to fund our operations. If we are unable to raise sufficient capital, we will not be able to continue as a going concern.
Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug candidates.
With only BIND-014 and ACCURIN AZD2811 in clinical development and our other product candidates in preclinical development, our risk of failure is high. It is impossible to predict when or if any of our drug candidates will prove safe and effective in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any drug candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our drug candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failed clinical trial can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their drug candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval for their products.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our drug candidates, including:
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regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
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we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
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clinical trials of our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;
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the number of patients required for clinical trials of our drug candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
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we may have to suspend or terminate clinical trials of our drug candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks;
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regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
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the cost of clinical trials of our drug candidates may be greater than we anticipate;
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the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate;
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our drug candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials;
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regulators may revise the requirements for approving our drug candidates, or such requirements may not be as we anticipate;
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regarding trials managed by our existing or any future collaborators, our collaborators may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but potentially suboptimal for us; and
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changes in the competitive landscape.
If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:
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be delayed in obtaining marketing approval for our drug candidates;
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lose the support of collaborators, requiring us to bear more of the burden of development of certain compounds;
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not obtain marketing approval at all;
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obtain marketing approval in some countries and not in others;
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obtain approval for indications or patient populations that are not as broad as we intend or desire;
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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;
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be subject to additional post-marketing testing requirements; or
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have the product removed from the market after obtaining marketing approval.
We are currently in Phase 2 clinical development for BIND-014. However, we cannot provide any assurance that we will successfully complete Phase 2 clinical development and be able to initiate pivotal clinical trials for BIND-014. The results of our Phase 2 clinical trials of BIND-014 could yield negative or ambiguous results. For example, in December 2015, we announced that the KRAS mutant NSCLC arm would not advance to the second stage of the iNSITE 1 trial. Because BIND-014 is our most advanced drug candidate, such results could adversely affect future development plans, collaborations and our stock price.
By April 2016, we expect to report combined clinical data for BIND-014 in the following indications: i) non-small cell lung cancer (NSCLC) with squamous histology; ii) advanced cervical cancer; and iii) head and neck cancer. We have been pursuing and we intend to continue to pursue a potential collaboration for BIND-014. Any additional clinical development of BIND-014 beyond our existing trials will require positive clinical data. Even if we obtain positive clinical data, we may need to curtail or terminate the development of BIND-014 if we are unable to obtain additional financing. We expect that any decision to curtail or terminate the development of BIND-014, whether based on the lack of positive data or due to a lack of sufficient financing, would impact our future operating expense and capital expenditure requirements.
Our product development costs will increase if we experience delays in clinical testing or marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our drug candidates or allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our drug candidates and harming our business and results of operations.
If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
We may not be able to initiate or continue clinical trials for our drug candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States. Some of our competitors have ongoing clinical trials for drug candidates that treat the same indications as our drug candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ drug candidates. New drug products may be approved for marketing that treat the same indications as our drug candidates, and patients who would otherwise be eligible for our clinical trials may instead be treated with these new drug products.
Patient enrollment is affected by other factors including:
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the severity of the disease under investigation;
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the patient eligibility criteria for the study in question;
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the perceived risks and benefits of the drug candidate under study;
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the efforts to facilitate timely enrollment in clinical trials;
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our payments for conducting clinical trials;
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the patient referral practices of physicians;
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the ability to monitor patients adequately during and after treatment; and
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the proximity and availability of clinical trial sites for prospective patients.
Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether. For example, the cholangiocarcinoma and bladder cancer cohorts of the iNSITE 2
trial of BIND-014 were discontinued in the first quarter of 2016 due to slower than anticipated enrollment. Enrollment delays in our clinical trials may result in increased development costs for our drug candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.
If serious adverse or unacceptable side effects are identified during the development of our drug candidates or we observe limited efficacy, we may need to abandon or limit our development of some of our drug candidates.
If our drug candidates are associated with undesirable side effects in clinical trials, have limited efficacy or have characteristics that are unexpected, we may need to abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.
For example, of the more than 250 patients dosed in our clinical trials of BIND-014, almost all have experienced at least one adverse event, with one treatment-related adverse event resulting in death. A number of patients have discontinued treatment as a result of treatment-related adverse events. The most common adverse events experienced by patients in clinical trials are fatigue, nausea, diarrhea, anemia, anorexia, dyspnea, alopecia, and neutropenia (a low number of white blood cells), all of which are toxicities that are frequently associated with docetaxel as well as many other cancer drugs. The treatment-related death in the Phase 1 clinical trial involved an elderly patient with advanced biliary cancer with a biliary stent who was treated with BIND-014 at 75 mg/m2 once every three weeks and developed sepsis as a consequence of neutropenia, which has previously been observed in clinical studies of patients receiving docetaxel. The adverse events observed in clinical trials are qualitatively similar to those associated with docetaxel. In light of the similarity with other FDA-approved cancer therapeutics, we believe our results to date suggest an acceptable safety profile at this stage of development. However, many compounds that initially showed promise in early stage testing for treating cancer have later been found to cause side effects that prevented further development of the compound.
Additionally, in the KRAS mutant cohort of the iNSITE 1 trial of BIND-014, data from 23 patients in the intent to treat population and 14 patients from the per-protocol subset demonstrated an interim six week disease control rate of 17.4 percent (95% confidence interval, 5% to 39%) and 28.6 percent (95% confidence interval, 8% to 58%) respectively, which did not meet pre-specified criteria to move to the second stage of the trial.
Risks Related to Our Dependence on Third Parties
Our existing collaborations and a future collaboration for BIND-014 are important to our business. If we are unable to maintain any of our current collaborations, if such current collaborations are not successful, or if we are unable to enter into a collaboration for BIND-014, our business could be materially adversely affected.
We have entered into collaborations with other biopharmaceutical companies to develop ACCURINS® based on therapeutic payloads and / or ligands from their product pipelines, and such collaborations currently represent a significant portion of our product pipeline. Our ongoing collaboration and license agreements include those we have with AstraZeneca, Pfizer, and Roche. These collaborations also have provided us with important funding for our development programs and we expect to receive additional funding under these collaborations in the future.
We have been pursuing and we intend to continue to pursue a potential collaboration for BIND-014. Any additional clinical development of BIND-014 beyond our existing trials will require positive clinical data.
Our existing collaborations, and any future collaboration we enter into, may pose a number of risks, including the following:
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collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
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collaborators may not perform their obligations as expected;
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collaborators may not pursue development and commercialization of any drug candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;
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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing;
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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or drug candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours, which may cause collaborators to cease to devote resources to the commercialization of our drug candidates;
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a collaborator with marketing and distribution rights to one or more of our drug candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products;
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disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of drug candidates, might lead to additional responsibilities for us with respect to drug candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;
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collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;
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collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;
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collaborations may be terminated for the convenience of the collaborator and, if terminated, we could lose the right to pursue further development or commercialization of the applicable drug candidates;
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collaborators may learn about our technology and use this knowledge to compete with us in the future;
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results of collaborators’ preclinical or clinical studies could produce results that harm or impair other products using our technology;
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there may be conflicts between different collaborators that could negatively affect those collaborations and potentially others; and
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the number and type of our collaborations could adversely affect our attractiveness to future collaborators, investors or acquirers.
If our collaborations do not result in the successful development and commercialization of products or if one or more of our collaborators terminates its agreement with us, we may not receive any future R&D funding or milestone or royalty payments under the collaboration. For example, in June 2014, Amgen and we notified each other that both parties would not exercise the respective options to develop an ACCURIN incorporating the Amgen therapeutic payload. In addition, in September 2015, Pfizer notified us that, while it would exercise its option to develop one of the compounds covered by our collaboration agreement, it would not exercise its option to develop the second compound covered by our collaboration agreement. If we do not receive the funding we expect under these agreements, our continued development of our Medicinal Nanoengineering® platform and drug candidates could be delayed and we may need additional resources to develop additional drug candidates. All of the risks relating to product development, regulatory approval and commercialization described in this report also apply to the activities of our collaborators and there can be no assurance that our collaborations will produce positive results or successful products on a timely basis or at all.
In addition, for a specified period of time following the execution of our collaboration agreement with AstraZeneca, we may not develop or commercialize a compound against the same molecular target as AstraZeneca’s drug candidate. Also, for a limited time while the Roche research agreement is in effect, we are required to work exclusively with Roche with respect to the use of BIND technology targeting therapeutic molecules to specified organs. As a result, our ability to enter into collaboration agreements for additional drug candidates against these targets are significantly limited until the end of the period specified in our collaboration agreements. These restrictions may have the effect of preventing us from undertaking development and other efforts that may appear attractive to us.
Additionally, subject to its contractual obligations to us, if a collaborator of ours is involved in a business combination or otherwise changes its business priorities, the collaborator might deemphasize or terminate the development or commercialization of any drug candidate licensed to it by us. If any of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and the perception of us in the business and financial communities and our stock price could be adversely affected.
In the future we may seek to collaborate with additional pharmaceutical and biotechnology companies for development and potential commercialization of therapeutic products. We face significant competition in seeking appropriate collaborators. Our ability
to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may not be able to access therapeutic payloads that would be suitable for development with our platform, have to curtail the development of a drug candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our drug candidates or bring them to market or continue to develop our product platform and our business may be materially and adversely affected.
We rely, and expect to continue to rely, on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.
We currently rely on third-party clinical research organizations, or CROs, to conduct clinical development of BIND-014 and do not plan to independently conduct clinical trials of our other drug candidates. We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators, to conduct and manage our clinical trials. These agreements might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative arrangements, that would delay our product development activities.
Our reliance on these third parties for R&D activities reduces our control over these activities but does not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with regulatory standards, commonly referred to as good clinical practices, or GCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Other countries’ regulatory agencies also have requirements for clinical trials with which we must comply. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we may not be able to obtain, or may be delayed in obtaining, marketing approvals for our drug candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our drug candidates.
We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our drug candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue. We contract with third parties for the manufacture of our drug candidates for preclinical and clinical testing and expect to continue to do so for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient quantities of our drug candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
We rely, and expect to continue to rely, on third parties to manufacture clinical materials for both us and our collaborators, and those third parties may not perform satisfactorily, including failing to meet deadlines.
We have a pilot manufacturing facility at our Cambridge, Massachusetts location where we conduct process development, scale-up activities and assemble the manufacturing equipment for use in the manufacture of ACCURINS®. However, we do not own any manufacturing facilities that meet the FDA’s current good manufacturing practices, or cGMP, requirements for the production of any drug candidates used in humans. We rely, and expect to continue to rely, on third parties for the manufacture of our drug candidates for clinical testing, as well as for commercial manufacture if any of our drug candidates receive marketing approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our drug candidates on a timely basis or at all or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.
We may be unable to establish or maintain any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
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failure of third-party manufacturers to comply with regulatory requirements and maintain quality assurance;
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breach of the manufacturing agreement by the third party;
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failure to manufacture clinical materials for both us and our collaborators according to either our or our collaborators’ specifications;
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failure to manufacture clinical materials for both us and our collaborators according to our or our collaborators’ schedule or at all;
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misappropriation of our proprietary information, including our trade secrets and know-how; and
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termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of drug candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products and potential revenues.
Our drug candidates and any products that we may develop may compete with other drug candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply or a second source for required raw materials used in the manufacture of our drug candidates, including the polymers used in our ACCURINS®, or for the manufacture of BIND-014 or product candidates in development with our collaborators. If our current contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers and we may be unable to replace them on a timely basis or at all. In particular, there are a very few manufacturers capable of supplying the polymers used in our ACCURINS®.
Our current and anticipated future dependence upon others for the manufacture of our drug candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.
Risks Related to Regulatory Approval of Our Drug Candidates and Other Legal Compliance Matters
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our drug candidates or will not be able to do so as soon as anticipated, and our ability to generate revenue will be materially impaired.
Our drug candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and similar regulatory authorities outside the United States. Failure to obtain marketing approval for a drug candidate will prevent us from commercializing the drug candidate. We have not received approval to market any of our drug candidates from regulatory authorities in any jurisdiction. We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third parties to assist us in this process. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our drug candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. For example, new cancer drugs frequently are indicated only for patient populations that have not responded to an existing therapy or have relapsed. If any of our drug candidates with a cancer indication receives marketing approval, the accompanying label may limit the approved use of our drug in this way, which could limit sales of the product and thereby have a negative effect on our results of operations and financial condition.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive and may take many years. If additional clinical trials are required for certain jurisdictions, these trials can vary substantially based upon a variety of factors, including the type, complexity and novelty of the drug candidates involved, and may ultimately be unsuccessful. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or
changes in the regulatory review process for each submitted product application, may cause delays in the review and approval of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept a marketing application as deficient or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a drug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.
The FDA and other regulatory authorities are monitoring whether nanotechnology-based therapeutics pose any specific health and human safety risks. In June 2014, the FDA issued guidance providing that it will address issues such as safety, effectiveness, public heath impact, and regulatory status of nanotechnology products on a case-by-case basis using the FDA’s existing review processes. It is possible that the FDA or other regulatory authorities could issue additional guidance or regulations in the future regarding nanotechnology-based therapeutics that could adversely affect our drug candidates.
If we experience delays in obtaining approval or if we fail to obtain approval of our drug candidates, the commercial prospects for our drug candidates may be harmed and our ability to generate revenues will be materially impaired.
A fast track designation by the FDA may not actually lead to a faster development or regulatory review or approval process.
We may seek fast track designation for some of our drug candidates. If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA fast track designation. The FDA has broad discretion whether or not to grant this designation, and even if we believe a particular drug candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even if we do receive fast track designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program.
We may not be able to obtain orphan drug exclusivity for our drug candidates.
Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States.
Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same drug for that time period. The applicable period is seven years in the United States and 10 years in Europe. The European exclusivity period can be reduced to nine years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.
Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
A breakthrough therapy designation by the FDA for our drug candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our drug candidates will receive marketing approval.
We may seek a breakthrough therapy designation for some of our drug candidates. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. For drugs that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA are also eligible for accelerated approval.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our drug candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. The availability of breakthrough therapy designation was established recently with the passage of the Food and Drug Administration Safety and Innovation Act of 2012, and the FDA only recently released guidance on its implementation of the breakthrough therapy framework in May 2014. As a result, we cannot be sure that our evaluation of our drugs as qualifying for breakthrough therapy designation will meet the FDA’s expectations. In any event, the receipt of a breakthrough therapy designation for a drug candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our drug candidates qualify as breakthrough therapies, the FDA may later decide that the products no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.
Failure to obtain marketing approval in international jurisdictions would prevent our drug candidates from being marketed abroad.
In order to market and sell our products in the European Union and many other jurisdictions, we or our collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval in foreign countries may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or our collaborators may not obtain approvals for our drug candidates from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market.
Any drug candidate for which we obtain marketing approval could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
Any drug candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a drug candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, including the requirement to implement a risk evaluation and mitigation strategy, or REMS, which could include requirements for a restricted distribution system. If any of our drug candidates receives marketing approval, the accompanying label may limit the approved use of our drug, which could limit sales of the product.
The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of our approved products. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use, and if we market our products outside of their approved indications, we may be subject to enforcement action for off-label marketing. Violations of the FDCA relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws.
In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:
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litigation involving patients taking our drug;
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restrictions on such products, manufacturers or manufacturing processes;
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restrictions on the labeling or marketing of a product;
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restrictions on product distribution or use;
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requirements to conduct post-marketing studies or clinical trials;
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warning letters;
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withdrawal of the products from the market;
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refusal to approve pending applications or supplements to approved applications that we submit;
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recall of products;
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fines, restitution or disgorgement of profits or revenues;
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suspension or withdrawal of marketing approvals;
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damage to relationships with existing and potential collaborators;
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unfavorable press coverage and damage to our reputation;
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refusal to permit the import or export of our products;
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product seizure; or
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injunctions or the imposition of civil or criminal penalties.
Noncompliance with similar European Union requirements regarding safety monitoring or pharmacovigilance can also result in significant financial penalties. Similarly, failure to comply with U.S. and foreign regulatory requirements regarding the development of products for pediatric populations and the protection of personal health information can also lead to significant penalties and sanctions.
Our relationships with customers, physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, including the Foreign Corrupt Practices Act, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any drug candidates for which we obtain marketing approval. Our future arrangements with third-party payors, physicians and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following:
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the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation;
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the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
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federal law requires applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals, as well as the ownership and investment interests held by such physicians and their immediate family members, by the 90th day of each calendar year; and
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our drug candidates and affect the prices we may obtain.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our drug candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any drug candidates for which we obtain marketing approval.
In the United States, in 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the PPACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
Among the provisions of the PPACA of importance to our potential drug candidates are the following:
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an annual, nondeductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents;
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an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
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expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;
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a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices;
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extension of manufacturers’ Medicaid rebate liability;
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expansion of eligibility criteria for Medicaid programs;
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expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
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new requirements to report financial arrangements with physicians and teaching hospitals;
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a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on
Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments, will remain through 2024 unless additional Congressional action is taken. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain.
We expect that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our drug candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.
Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our drug candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed, possibly materially.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.
The workers’ compensation insurance we maintain may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Risks Related to the Commercialization of Our Drug Candidates
Even if any of our drug candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.
If any of our drug candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer treatments like
chemotherapy and radiation therapy are well established in the medical community, and physicians may continue to rely on these treatments. In addition, many new drugs have been recently approved and many more are in the pipeline for the same diseases for which we are developing our drug candidates. If our drug candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of our drug candidates, if approved for commercial sale, will depend on a number of factors, including:
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their efficacy, safety and other potential advantages compared to alternative treatments;
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our ability to offer them for sale at competitive prices;
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their convenience and ease of administration compared to alternative treatments;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the strength of marketing and distribution support;
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the availability of third-party coverage and adequate reimbursement for our drug candidates;
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the prevalence and severity of their side effects;
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any restrictions on the use of our products together with other medications;
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interactions of our products with other medicines patients are taking; and
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inability of certain types of patients to take our product.
If we are unable to establish effective sales, marketing and distribution capabilities or enter into agreements with third parties with such capabilities, we may not be successful in commercializing our drug candidates if and when they are approved.
We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any product for which we obtain marketing approval, we will need to establish a sales and marketing organization or make arrangements with third parties to perform sales and marketing functions.
If and when our drug candidates are approved, we expect to build a focused oncology sales and marketing infrastructure to market or co-promote some of our drug candidates in the United States and potentially elsewhere. There are risks involved with establishing our own sales, marketing and distribution capabilities. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a drug candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our products on our own include:
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our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;
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the inability of sales personnel to obtain access to or educate physicians on the benefits of our products;
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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines;
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unforeseen costs and expenses associated with creating an independent sales and marketing organization; and
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inability to obtain sufficient coverage and reimbursement from third-party payors and governmental agencies.
Outside the United States, we expect to rely on third parties to sell, market and distribute our drug candidates. We may not be successful in entering into arrangements with such third parties or may be unable to do so on terms that are favorable to us. In addition, our product revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to market, sell and distribute any products that we develop ourselves. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our drug candidates.
We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition with respect to our current drug candidates, and will face competition with respect to any drug candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our drug candidates. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.
Many of the companies with which we are competing or with which we may compete in the future have significantly greater financial resources, market presence and expertise in R&D, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific, sales and marketing and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. Generic products are currently on the market, including the therapeutic payload in BIND-014, for some of the indications that we are pursuing, and additional products are expected to become available on a generic basis over the coming years. If our drug candidates achieve marketing approval, we expect that they will be priced at a significant premium over competitive generic products.
The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, targeted drug therapy and immunotherapies. There are a variety of available drug therapies marketed for solid tumors. In many cases, these drugs are administered in combination to enhance efficacy. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis, including the therapeutic payload contained in BIND-014. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third-party payors. There are also a number of products in late stage clinical development to treat solid tumors. These products in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies. As a result, they may provide significant competition for BIND-014 or any other drug candidate for which we obtain marketing approval.
Even if we are able to commercialize any drug candidates, the products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.
The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control, including possible price reductions, even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain marketing approval.
Our ability to commercialize any drug candidates successfully also will partially depend on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health
maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for drugs. Coverage and reimbursement may not be available for any product that we commercialize and, even if these are available, the level of reimbursement may not be sufficient to generate a profit. Reimbursement may affect the demand for, or the price of, any drug candidate for which we obtain marketing approval. Obtaining and maintaining adequate reimbursement for our products may be difficult. We may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not be able to successfully commercialize any drug candidate for which we obtain marketing approval.
There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our drug candidates in human clinical trials and will face an even greater risk if we commercially sell any products that we may develop. If we cannot successfully defend ourselves against claims that our drug candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for any drug candidates or products that we may develop;
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injury to our reputation and significant negative media attention;
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withdrawal of clinical trial participants;
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significant costs to defend the related litigation;
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substantial monetary awards to trial participants or patients;
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loss of revenue;
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reduced resources of our management to pursue our business strategy; and
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the inability to commercialize any products that we may develop.
We currently hold product liability insurance coverage, which may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our drug candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Risks Related to Employee Matters and Managing Growth and Other Risks Related to Our Business
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
We are highly dependent on the principal members of our management, scientific and clinical team. Although we have entered into employment letter agreements with our executive officers, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.
Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our R&D and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
A variety of risks associated with operating internationally could materially adversely affect our business.
In addition to our U.S. operations, we have operations in Russia through our wholly-owned subsidiary, BIND (RUS) LLC, and may have other such international operations in the future. We face risks associated with our operations in Russia, including possible unfavorable regulatory, pricing and reimbursement, legal, political, tax and labor conditions, which could harm our business. We are also conducting and in the future plan to continue to conduct clinical trials of drug candidates in Russia. We are subject to numerous risks associated with international business activities in Russia and elsewhere, including:
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compliance with differing or unexpected regulatory requirements for our products;
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compliance with Russian laws with respect to our BIND (RUS) LLC subsidiary including a completed research grant from the Ministry for Industry and Trade of the Russian Federation;
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difficulties in staffing and managing foreign operations;
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foreign government taxes, regulations and permit requirements;
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seizures of foreign banks by governments, such as the Russian government’s seizure of a bank whose holdings included the restricted cash of BIND (RUS) LLC in November 2015;
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U.S. and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements;
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economic weakness, including inflation, natural disasters, war, events of terrorism or political instability in particular foreign countries;
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fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenues;
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compliance with tax, employment, immigration and labor laws, regulations and restrictions for employees living or traveling abroad;
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changes in diplomatic and trade relationships; and
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challenges in enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States.
These and other risks associated with our international operations in Russia and elsewhere may materially adversely affect our business, financial condition and results of operations.
Sanctions against Russia, and Russia’s response to those sanctions, could adversely affect our business.
Due to Russia’s intervention in Ukraine and annexation of Crimea, the United States and the European Union have imposed sanctions on certain individuals and entities in Russia and Ukraine, including economic sanctions restricting certain entities’ access to U.S. securities markets. In response, Russia has imposed entry bans on certain U.S. lawmakers and officials. We have a wholly owned subsidiary, BIND (RUS) LLC, in Russia, which held $1.0 million in cash and cash equivalents, including $0.9 million denominated in U.S. dollars, in Russian banks as of December 31, 2015. Our subsidiary conducts R&D activities for our product pipeline, including clinical trials for BIND-014. Our success is dependent upon our ability to successfully complete clinical development of and obtain regulatory approval of our drug candidates. If the United States and Europe were to impose sanctions on additional Russian
businesses, or if Russia were to take retaliatory action against U.S. companies operating in Russia, our R&D activities and our business could be affected.
Our business and operations would suffer in the event of system failures or security breaches.
Our internal computer systems and those of our current and future contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Any system failure or security breach by employees or others may pose a risk that sensitive data, including clinical trial data, intellectual property, trade secrets or personal information belonging to us, our patients or our collaborators may be exposed to unauthorized persons or to the public. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we rely on third parties to manufacture our drug candidates and conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development and commercialization of our drug candidates could be delayed, and the trading price of our common stock could be adversely affected.
Risks Related to Our Intellectual Property
If we or our licensors are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficiently broad, competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
Our success depends in large part on our ability to obtain and maintain patent and other intellectual property protection in the United States and other countries with respect to our proprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and drug candidates.
The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, in a timely manner, or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our R&D output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. We may also require the cooperation of our licensors in order to enforce the licensed patent rights, and such cooperation may not be provided. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States and we may fail to seek or obtain patent protection in all major markets. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned patents or pending patent applications, or that we were the first to file for patent protection of such inventions, nor can we know whether those from whom we license patents were the first to make the inventions claimed or were the first to file. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.
Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The U.S. Patent and Trademark Office, or U.S. PTO, recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the
operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.
Moreover, we may be subject to a third-party preissuance submission of prior art to the U.S. PTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. A European opposition has been filed with respect to a BIND owned European patent directed to a manufacturing process. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future drug candidates.
Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time required for the development, testing and regulatory review of new drug candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and ultimately unsuccessful.
Competitors may infringe our issued patents or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could adversely affect us and our collaborators.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.
Our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, market and sell our drug candidates and use our proprietary technologies without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the biotechnology and pharmaceutical industries. We cannot guarantee that our technology, products or use of our products do not infringe third-party patents. It is also possible that we have failed to identify relevant third-party patents or applications. For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing, which is referred to as the priority date. Therefore, patent applications covering our products or technology could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our products or the use of our products.
We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference or derivation proceedings before the U.S. PTO and similar bodies in other countries. Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future. With respect to BIND-014, we are aware of a third-party U.S. patent application that contains claims related to a formulation of a nanoparticle composition. We have an issued U.S. patent and pending
non-U.S. patent applications claiming similar subject matter, and we believe our patents and patent applications have an earlier priority filing date. However, the U.S. patents and applications are subject to pre-AIA U.S. laws that awards patents to the first party to invent the claimed invention, rather than the first party to file a patent application. The possibility exists for an interference proceeding between our issued patent and this third-party patent application to determine the earliest party to invent the composition and that this third-party patent application could win such an interference proceeding and obtain claims covering this formulation of a nanoparticle composition.
If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our drug candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid to the U.S. PTO and foreign patent agencies in several stages over the lifetime of the patent. The U.S. PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.
If we fail to comply with our obligations in our intellectual property licenses and funding arrangements with third parties, we could lose rights that are important to our business.
We are party to multiple license agreements that impose, and we may enter into additional licensing and funding arrangements with third parties that may impose, diligence, development and commercialization timelines, milestone payment, royalty, insurance and other obligations on us. Under our existing licensing agreements, we are obligated to pay royalties on net product sales of drug candidates or related technologies to the extent they are covered by the agreement. If we fail to comply with our obligations under current or future license agreements, our counterparties may have the right to terminate these agreements, in which event we might not be able to develop, manufacture or market any product that is covered by these agreements or may face other penalties under the agreements. Such an occurrence could materially adversely affect the value of drug candidates being developed using rights licensed to us under any such agreement. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.
We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our and their assignment agreements
may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for some of our technology and drug candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also seek to enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Our trade secrets may also be obtained by third parties by other means, such as breaches of our physical or computer security systems. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.
Risks Related to Our Common Stock
Our executive officers, directors and principal stockholders, if they choose to act together, will have the ability to control or significantly influence all matters submitted to stockholders for approval.
As of December 31, 2015, our executive officers, directors and stockholders who own more than 5% of our outstanding common stock and their respective affiliates, in the aggregate, hold shares representing approximately 48% of our outstanding voting stock. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership control may:
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delay, defer or prevent a change in control;
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entrench our management and the board of directors; or
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impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.
The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our stockholders.
Our stock price is likely to be volatile. The stock market in general and the market for smaller biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price of our common stock may be influenced by many factors, including:
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the success of competitive products or technologies;
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results of clinical trials of our drug candidates or those of our competitors;
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developments related to our existing or any future collaborations;
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regulatory or legal developments in the United States and other countries;
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developments or disputes concerning patent applications, issued patents or other proprietary rights;
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the recruitment or departure of key personnel;
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the level of expenses related to any of our drug candidates or clinical development programs;
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the results of our efforts to discover, develop, acquire or in-license additional drug candidates or products;
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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
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variations in our financial results or those of companies that are perceived to be similar to us;
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changes in the structure of healthcare payment systems;
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market conditions in the pharmaceutical and biotechnology sectors;
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general economic, industry and market conditions;
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sales of our common stock by significant stockholders, in light of the relatively low trading volume of our common stock;
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sales of some or all of the 2.2 million shares of our common stock issuable upon the exercise of warrants issued in our February 2015 underwritten public offering; and
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the other factors described in this “Risk Factors” section.
We are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of the initial public offering of our common stock. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:
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not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
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reduced disclosure obligations regarding executive compensation; and
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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our
stock price may be reduced or more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
We have incurred and will continue to incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives.
As a public reporting company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and NASDAQ have imposed various requirements on public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. In particular, pursuant to Section 404 of the Sarbanes-Oxley Act, our management is required to annually assess the effectiveness of our internal control over financial reporting. Once we cease to be an emerging growth company, our independent registered public accounting firm will be required to furnish an annual attestation report on our internal control over financial reporting. These requirements have increased and will continue to increase our legal and financial compliance costs and will make some activities more time consuming and costly.
If we are unable to maintain effective internal controls, we may not have adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a public company or comply with the requirements of the SEC or Section 404. This could result in a restatement of our financial statements, the imposition of sanctions, including the inability of registered broker dealers to make a market in our common stock, or investigation by regulatory authorities. Any such action or other negative results caused by our inability to meet our reporting requirements or comply with legal and regulatory requirements or by disclosure of an accounting, reporting or control issue could adversely affect the trading price of our securities and our business. Material weaknesses in our internal control over financial reporting could also reduce our ability to obtain financing or could increase the cost of any financing we obtain. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
If securities or industry analysts issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our clinical and preclinical data and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
Provisions in our restated certificate of incorporation and amended and restated bylaws and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions include those establishing:
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a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors;
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the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
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the ability of our board of directors to alter our bylaws without obtaining stockholder approval;
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the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our restated certificate of incorporation regarding the election and removal of directors;
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
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the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
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advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Furthermore, our restated certificate of incorporation specifies that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving actions brought against us by stockholders. This provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our restated certificate of incorporation to be inapplicable or unenforceable in such action.
We do not anticipate paying any cash dividends on our capital stock and, consequently, a stockholder’s ability to achieve a return on investment will depend on appreciation in the price of our common stock.
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, our Hercules credit facility currently prohibits us from paying dividends on our equity securities, and any future debt agreements may likewise preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
We could be subject to securities class action litigation.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.
Item 1B.
Item 1B.
Unresolved Staff Comments
None.
Item 2.
Item 2.
Properties
Our headquarters are located in Cambridge, Massachusetts, where we occupy approximately 51,000 square feet of office and laboratory space. The term of the lease expires on April 30, 2017. We also lease office and laboratory space in Moscow, Russia.
Item 3.
Item 3.
Legal Proceedings
We are not currently party to any material legal proceedings.
Item 4.
Item 4.
Mine Safety Disclosures
Not applicable.
Executive Officers of the Registrant
Andrew Hirsch, age 45, has served as our President and Chief Executive Officer since March 10, 2015. Prior to that, Mr. Hirsch served as our Chief Operating Officer since February 15, 2014, and as our Chief Financial Officer since July 2012. From June 2011 to May 2012, he was Vice President of Finance and Chief Financial Officer at Avila Therapeutics, Inc., a biotechnology company, until its acquisition by Celgene Corporation. From 2002 to 2011, Mr. Hirsch served in roles of increasing responsibility at Biogen Idec, a biotechnology company, including the most recent role from 2010 to 2011 as Vice President, Corporate Strategy and M&A. While at Biogen Idec, Mr. Hirsch also served as Program Executive for the Tecfidera development team, leading the successful transition from Phase 2 to Phase 3 clinical trials, as well as the Avonex and Tysabri programs. Additionally, Mr. Hirsch held various positions in the finance organization at Biogen Idec including leading the company’s Business Planning and Investor Relations functions. He received his M.B.A. from the Tuck School at Dartmouth College and a B.A. in Economics from the University of Pennsylvania.
Hagop Youssoufian, M.Sc., M.D., age 59, has served as our Chief Medical Officer since November 2014. Prior to joining BIND, Dr. Youssoufian served as Executive Vice President of R&D at Progenics Pharmaceuticals, Inc., a biopharmaceutical company. Prior to that, from June 2011 to April 2013, he and was President and Chief Medical Officer at Ziopharm Oncology, a biopharmaceutical company. Dr. Youssoufian also served as Senior Vice President and Chief Medical Officer at ImClone Systems, a biopharmaceutical company, from April 2005 to June 2011. In addition, Dr. Youssoufian has held other senior roles in clinical and translational science at ImClone Systems, Sanofi Aventis and Bristol-Myers Squibb. Dr. Youssoufian has served on the faculties at Baylor College of Medicine and Harvard Medical School and received his M.Sc. and M.D. from the University of Massachusetts Medical School and a B.S. from Boston College.
Dan Koerwer, age 48, has served as our Chief Business Officer since March 10, 2015. Prior to that, he served as our Senior Vice President, Business Development and Commercial since June 2013. From August 2010 to June 2013, Mr. Koerwer served as our Head of Market and Business Development. From 2007 to July 2010, Mr. Koerwer was President and Managing Director of Eidetica Biopharma, GmbH, a subsidiary of Biogen Idec focused on developing a portfolio of protein therapeutics. From 1998 to 2007, he held various management roles at Biogen Idec. Mr. Koerwer led Research Operations across Biogen Idec’s North American research sites. Subsequently, he led global New Product Commercialization then assumed the role of Chief of Staff, Biogen Idec International in Zug, Switzerland. Mr. Koerwer has worked as a management consultant with Booz, Allen & Hamilton and began his career in sales at the Rohm and Haas Company. He received his M.B.A. from Harvard Business School and B.S. in Biochemistry from Boston College.
Jonathan Yingling, age 47, has served as our Chief Scientific Officer since December 14, 2015. Prior to that, he served as Vice President, Oncology Discovery and Translational Research of Bristol Myers Squibb & Company from June 2013 until October 2015. Prior to that, from April 2011 to January 2013, he served as Vice President, Translational Science & Technology of Eli Lilly & Company. From November 2009 to March 2011, he was the Vice President, Oncology Research at Eli Lilly & Company. Dr. Yingling joined Eli Lilly & Company in 2000 as a Senior Biologist. He received a B.S. in Chemistry with a minor in Biology at the College of William & Mary and a Ph.D. in Cell and Molecular Biology & Pharmacology at Duke University.
Christopher Lindblom, age 44, has served as our Senior Vice President, Finance and Administration, Treasurer and Secretary since March 10, 2015. Prior to that, he served as our Vice President, Finance since March 2014. From May 2013 to March 2014, Mr. Lindblom was the Vice President of Finance and Treasurer of OvaScience, Inc., a life sciences company. From October 2006 to May 2013, he served in various financial roles of increasing responsibility at Infinity Pharmaceuticals, Inc., a biotechnology company, including as Vice President, Accounting and Finance from July 2010. Mr. Lindblom previously served as Assistant Controller and in other finance roles at Millennium Pharmaceuticals, Inc. from April 2002 to October 2006, including during the VELCADE product launch. Mr. Lindblom began his career at PricewaterhouseCoopers. He is a certified public accountant. He received his M.B.A. from Boston College and B.S. in Accounting from Syracuse University.
Greg Troiano, age 41, has served as our Senior Vice President, Pharmaceutical Development and Operations since October 26, 2015. Prior to that, he served as our Senior Director, Particle Engineering and Manufacturing from April 2013 to October 2015, and Head of Process Development from January 2008 to March 2013. Prior to that, Mr. Troiano worked at Alkermes from August 2000 to December 2007 where he was Associate Director of Process Development and led a team to develop, optimize, commercialize, and scale up microsphere and other drug delivery technologies. Prior to Alkermes, Mr. Troiano was an engineer at Guilford Pharmaceuticals from June 1998 to August 2000, where he helped commercialize Gliadel® Wafer and develop a process for Paclimer™ paclitaxel microspheres. Mr. Troiano received his M.S.E. and B.S. in Biomedical Engineering from The Johns Hopkins University. He has more than 15 process and equipment patents/applications and seven scientific publications in drug delivery.
PART II
Item 5.
Item 5.
Market for Registrant’s Common Shares, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock has been listed on The NASDAQ Global Select Market under the symbol “BIND” since September 19, 2013. The following table sets forth on a per share basis, for the periods indicated, the low and high sale prices of our common stock as reported by The NASDAQ Global Select Market.
Holders
As of the close of business on March 11, 2016, there were approximately 44 holders of record of our common shares. Since many of the common shares are registered in “nominee” or “street” names, we believe that the total number of beneficial owners is considerably higher.
Dividend Policy
We have never declared or paid cash dividends on our common shares. We currently intend to retain any current and future earnings to finance the growth and development of our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future. Our amended and restated credit facility contains restrictions on our ability to pay dividends.
Purchases of Equity Securities by the Issuer and Affiliated Purchaser
None.
Performance Graph
This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any filing of we under the Securities Act of 1933, as amended, or the Exchange Act.
The following graph compares the cumulative total return to stockholders for our common shares for the period from September 19, 2013 through December 31, 2015 with The NASDAQ Composite Index and the NASDAQ Biotechnology index (NBI). The comparison assumes an investment of $100 is made on September 19, 2013 in our common shares and in each of the indices and in the case of the indices it also assumes reinvestment of all dividends. The performance shown is not necessarily indicative of future performance.
Item 6.
Item 6.
Selected Financial Data
The following tables set forth, for the periods and as of the dates indicated, our selected consolidated financial data. The Consolidated Statement of Operations data for the years ended December 31, 2015, 2014 and 2013 and the Consolidated Balance Sheet data as of December 31, 2015, and 2014, are derived from our audited consolidated financial statements included in this Annual Report on Form 10-K. The Consolidated Statement of Operations data for the years ended December 31, 2012 and 2011, and Consolidated Balance Sheet data as of December 31, 2013, 2012 and 2011 are derived from our audited consolidated financial statements that are not included in this Annual Report on Form 10-K. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Our historical results are not indicative of the results to be expected in the future.
Item 7.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a biotechnology company developing novel targeted therapeutics, primarily for the treatment of cancer. Our product candidates are based on proprietary polymeric nanoparticles called ACCURINS®, which are engineered to target specific cells and tissues in the body at sites of disease. ACCURINS® have the potential to achieve therapeutic outcomes not currently possible with conventional treatment modalities. We are developing ACCURINS® with three different therapeutic objectives, both through internal research programs and with collaborators:
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Innovative medicines: Designing new therapeutic approaches by combining novel targeting methods and new classes of therapeutic payloads.
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Enabling potent pathway inhibitors: Enabling greater inhibition of important cellular pathways where that level of inhibition has been unachievable due to off target toxicity.
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Differentiated efficacy with approved drugs: Improving upon safety and efficacy with previously approved chemotherapeutic agents.
Our wholly owned, lead drug candidate, BIND-014, is a prostate-specific membrane antigen (PSMA) -targeted ACCURIN that contains docetaxel, a clinically-validated and widely-used cancer chemotherapy drug, as the therapeutic payload. PSMA is a clinically-validated tumor marker expressed on prostate cancer cells and the blood vessels of many types of non-prostate solid tumors, including non-small cell lung cancer, or NSCLC.
By April 2016, we expect to report combined clinical data for BIND-014 in the following indications: i) non-small cell lung cancer (NSCLC) with squamous histology; ii) advanced cervical cancer; and iii) head and neck cancer. We have been pursuing and we intend to continue to pursue a potential collaboration for BIND-014. Any additional clinical development of BIND-014 beyond our existing trials will require positive clinical data. Even if we obtain positive clinical data, we may need to curtail or terminate the development of BIND-014 if we are unable to obtain additional financing. We expect that any decision to curtail or terminate the development of BIND-014, whether based on the lack of positive data or due to a lack of sufficient financing, would impact our future operating expense and capital expenditure requirements.
After reviewing data from preclinical gating studies, we are no longer developing BIND-510, a PSMA-targeted ACCURIN drug candidate containing vincristine. We are continuing preclinical work on our remaining pipeline candidates. We have ongoing collaborations with Merck & Co. (known as Merck Sharp & Dohme outside of the United States and Canada), Pfizer Inc., AstraZeneca AB, F. Hoffmann-La Roche Ltd., Macrophage Therapeutics (a subsidiary of Navidea Biopharmaceuticals) and Synergy Pharmaceutical, Inc. to develop ACCURINS® based on their proprietary therapeutic payloads and/or targeting ligands.
We were incorporated in May 2006 and commenced active operations in early 2007. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential drug candidates, undertaking preclinical studies and, beginning in 2011, conducting clinical trials. To date, we have financed our operations primarily through our initial public offering, an underwritten public offering of common stock and warrants, our at-the-market sales agreement (the “Sales Agreement”) with Cowen & Company, LLC (“Cowen”), private placements of our preferred stock and convertible debt securities, borrowings under our credit facility with Hercules Technology III, L.P., or Hercules, collaborations and government grants. We have no products approved for sale, and all of our revenue to date has been collaboration revenue or government grant revenue. As of December 31, 2015, our cash and cash equivalents and marketable securities totaled $36.9 million, of which $1.0 million was held by our Russian subsidiary for use in its operations.
Since inception, we have incurred significant operating losses. Our net loss was $36.6 million for the year ended December 31, 2015, compared to $32.5 million for the year ended December 31, 2014 and $27.7 million for the year ended December 31, 2013. As of December 31, 2015, we had an accumulated deficit of $173.9 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. If potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited.
Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our consolidated financial statements and the notes thereto in Item 8, Part I of this annual report, and the other transactions, events, and trends discussed in “Risk Factors” in Item 1A, Part I of this annual report.
The consolidated financial statements and following information include the accounts of BIND Therapeutics, Inc. and our wholly owned subsidiaries, BIND (RUS), LLC, a Russian limited liability company, and BIND Biosciences Security Corporation, a Massachusetts securities corporation. All intercompany accounts and transactions have been eliminated.
In addition to our internal development programs, we actively seek opportunities to collaborate with recognized biopharmaceutical companies to develop ACCURINS® incorporating therapeutic payloads and ligands from their proprietary product portfolios. Our collaboration agreements, with the exception of our agreement with Merck, require the collaborator to pay all the research and development costs associated with the ACCURIN, including those incurred by us. In addition, the upfront and potential milestone payments received under these agreements provide us with additional capital resources to develop our own proprietary pipeline of ACCURINS®.
AstraZeneca
In April 2013, we entered into a license agreement with AstraZeneca. Under the agreement, we granted to AstraZeneca a worldwide license to research, develop, manufacture and commercialize ACCURINS® incorporating a specified AstraZeneca product candidate (AZD2811) for any therapeutic use in humans or animals. We are responsible for manufacturing licensed product for use in preclinical and some clinical trials. AstraZeneca is required to pay for substantially all of our development costs. AstraZeneca is also solely responsible for, and must use commercially reasonable efforts in, obtaining all regulatory approvals for licensed products.
Under the agreement, we received an upfront payment of $4.0 million in 2013. In March 2015, we achieved a $1.0 million development milestone. In November 2015, we earned a $4.0 million clinical milestone for dosing of the first patient in AstraZeneca’s ACCURIN AZD2811 Phase 1 trial. We have the potential to receive additional milestone payments totaling up to $60 million upon achievement by AstraZeneca of specified clinical events and up to $128 million in the aggregate upon achievement by AstraZeneca of all specified regulatory and commercial events. We will also receive tiered royalties in the low-single digit to the low-double digit percentages of aggregate worldwide net sales of licensed product, if any. AstraZeneca may terminate the agreement effective upon six months’ prior written notice to us.
Pfizer
In March 2013, we entered into a research, option and license agreement with Pfizer, pursuant to which we granted to Pfizer two options to obtain an exclusive worldwide license to use, develop, manufacture and commercialize ACCURINS® incorporating specified Pfizer drug candidates, for the treatment, prevention and/or diagnosis of any disease or medical condition in humans, except that the licensed rights exclude some vaccine products and products for the treatment of brain cancer.
Under the agreement, we received an upfront payment of $4.0 million and achieved a $1 million development milestone in December 2014. In September 2015, we received notification that Pfizer exercised its option to acquire an exclusive license for the development and commercialization of the first compound covered by the agreement. As a result of the option exercise, BIND earned a $2.5 million option exercise fee. Pfizer has also notified us that that it has decided not to exercise its option to acquire an exclusive license for the development and commercialization of the second compound covered by the agreement.
We have the potential to receive additional contingent payments for the selected compound totaling up to $86 million in the aggregate upon achievement by Pfizer of specified development and regulatory events plus additional contingent payments totaling up to $110 million in the aggregate upon achievement by Pfizer of specified commercial events. We will also receive royalties in the low-
single digit to the high-single digit percentages of aggregate worldwide net sales, if any. We will receive royalties on a country-by-country and licensed product-by-licensed product basis generally until the expiration of the Pfizer patents covering such licensed product. Pfizer may terminate this agreement without cause for any or no reason effective upon 60 days’ prior written notice to us.
While we are responsible for conducting chemistry, manufacturing and control activities, Pfizer is responsible for all further development and commercialization activities with respect to the licensed products covered by the option, and Pfizer is also solely responsible for obtaining all regulatory approvals for the applicable licensed products and conducting all communications with regulatory authorities.
As a result of Pfizer’s exercise of its option to develop and commercialize the first compound covered by the agreement, we may not develop or commercialize, or license to a third party to develop or commercialize, any nanotherapeutic incorporating any compound in such compound’s family.
Roche
In June 2014, we entered into a research agreement with F. Hoffmann-La Roche Ltd. and Hoffmann-La Roche Inc., or Roche, to discover novel nanomedicines using ACCURINS® for the treatment of diseases in therapeutic areas outside of oncology. The research agreement focuses on combining our ACCURIN technology with Roche’s proprietary therapeutic payloads and targeting ligands. Under the agreement, Roche paid us an immaterial, non-refundable upfront fee and, additionally, will compensate us for our research and development services up to a specified amount. The upfront fee will be creditable against an upfront fee negotiated in a future Roche agreement, if any.
Merck
In November 2014, we entered into a joint research and development agreement with Merck to discover and develop novel nanomedicines for oncology. This collaboration leverages our proprietary nanomedicine technology to create targeted ACCURINS® based on novel, potent payloads from Merck’s preclinical oncology portfolio. The agreement initially covers two Merck compounds, and also allows the incorporation of additional Merck compounds in the future. We agreed to fund and conduct research and development activities to advance ACCURIN product candidates based on these agents through first-in-human clinical studies, after which Merck and we will alternate in choosing whether or not to further develop and commercialize the ACCURIN products. If we opt in, we will pay Merck a royalty on future product sales, if any. If Merck opts in, it agreed to pay us a fee based on a multiple of our research and development expenses, plus a royalty on future product sales, if any.
Financial Overview
Revenue
Our revenue consists of collaboration revenue, which may include amounts recognized related to upfront payments for licenses or options to obtain licenses in the future, research and development funding and milestone payments earned under collaboration and license agreements with our collaboration partners. In addition, we earn revenue under the terms of government contracts which require the performance of certain research and development activities. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees, research and development reimbursements, payments for manufacturing services, and milestone and other payments from collaborations. We do not expect to generate revenue from product sales for at least the next several years. If we or our collaborators fail to complete the development of our drug candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.
Research and Development
Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, an allocation of facilities expenses, overhead expenses, manufacturing process-development and scale-up activities, clinical trial and related clinical manufacturing expenses, fees paid to clinical research organizations, or CROs, and investigative sites, payments to universities under our license agreements and other outside expenses. In the early phases of development, our research and development costs are often devoted to expanding our product platform and are not necessarily allocable to a specific product candidate.
We expense research and development costs as incurred. Conducting a significant amount of research and development is central to our business model. Drug candidates in late stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of late stage clinical trials. The successful development of our clinical and preclinical drug candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of BIND-014, our collaborations, or any of our preclinical programs or the period, if any, in which material net cash inflows from these drug candidates may commence. Clinical development timelines, the probability of success and development costs can differ materially from expectations. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those which we currently anticipate will be required for the completion of clinical development of a drug candidate or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative
General and administrative expense primarily consists of compensation of personnel in executive, finance, accounting, legal, corporate communications, corporate development, human resources and early commercial functions. Other costs include facilities costs not otherwise included in research and development expense, and professional fees for legal and accounting services. General and administrative expense also consists of the costs of maintaining our intellectual property portfolio.
Change in fair value of warrant liability
Change in fair value of warrant liability consists of changes in fair value of our warrants issued in our February 2015 underwritten public offering. The warrants contain weighted-average anti-dilution protection upon the issuance of any common stock, securities convertible into common stock or certain other issuances at a price below the then-existing exercise price of the warrants, with certain exceptions, including but not limited to securities issued pursuant to equity compensation plans or arrangements, currently outstanding warrants, securities issued pursuant to shareholder rights plans, securities issued pursuant to certain strategic transactions or financings, and the first $30 million of securities sold under our at-the-market facility with Cowen that would otherwise cause an adjustment. The warrants are being recorded at fair value on our Consolidated Balance Sheets as a liability, and changes in fair value are included in change in fair value of warrant liability on our Consolidated Statement of Operations.
Interest Expense
Interest expense consists of interest expense on our amounts borrowed under our credit facility with Hercules Technology III, L.P. (“Hercules”) as lender.
Other Income (Expense), net
Other income (expense) consists of foreign currency transaction gains and losses and interest income. The functional currency of our Russian subsidiary is the ruble. Accordingly, the amounts denominated in U.S. dollars are subject to transaction gains and losses, which are reported in our Consolidated Statement of Operations. Interest income consists of interest income earned on our cash and cash equivalents, short-term investments and income from loans to our founders and former chief executive officer. The loans to our founders and former chief executive officer were fully repaid in August 2013.
Critical Accounting Policies and Use of Estimates
The following discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, accrued expenses, and assumptions in the valuation of stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Differences between actual and estimated results have not been material and are adjusted in the period they become known. We believe that the following accounting policies and estimates are most critical to understanding and evaluating our reported financial results. Please refer to Note 2 to our Consolidated Financial Statements for a description of our significant accounting policies.
Revenue Recognition
Collaborative Research and Development and Multiple-Deliverable Arrangements
We enter into collaborative arrangements for the development and commercialization of drug candidates utilizing our technology. The terms of these agreements have typically included multiple deliverables by us (for example, license rights, research and development services and manufacturing of clinical materials) in exchange for consideration to us of some combination of non-refundable license fees, research and development funding, payments based upon achievement of clinical development or other milestones and royalties in the form of a designated percentage of product sales or profits.
Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collection is reasonably assured. Multiple-deliverable arrangements, such as license and development agreements, are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price method and the appropriate revenue recognition principles are applied to each unit. When we determine that an arrangement should be accounted for as a single unit of accounting, we must determine the period over which the performance obligations will be performed and revenue will be recognized.
The assessment of multiple-deliverable arrangements requires judgment in order to determine the appropriate unit of accounting, the estimated selling price of each unit of accounting and the point in time that, or period over which, revenue should be recognized.
Milestone Payments
We recognize a milestone payment as revenue in the period in which the milestone is achieved only if the applicable event achieved meets the definition of a milestone and the milestone is determined to be substantive. A milestone is considered substantive when it meets all of the following criteria: (1) the milestone is commensurate with either our performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from our performance to achieve the milestone; (2) the milestone relates solely to past performance; and (3) the payment is reasonable relative to all of the deliverables and payment terms within the arrangement. Payments for achieving milestones which are not considered substantive are treated as additional arrangement consideration and are recognized over the period during which the performance obligations will be performed.
Accrued Expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing contracts and purchase orders, reviewing the terms of our vendor agreements, communicating with our applicable personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include:
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fees payable to CROs and investigative sites in connection with clinical studies;
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fees payable to vendors in connection with preclinical development activities; and
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fees payable to vendors related to clinical manufacturing, development and distribution of clinical supplies.
We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly. Our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in our reporting changes in estimates in any particular period. We have not experienced any significant adjustments to our estimates to date.
Stock-Based Compensation
We expense the fair value of employee stock options and other equity compensation. We use our judgment in determining the fair value of our equity instruments, including in selecting the inputs we use for the Black-Scholes valuation model. Equity instrument valuation models are by their nature highly subjective. Any significant changes in any of our judgments, including those used to select the inputs for the Black-Scholes valuation model, could have a significant impact on the fair value of the equity instruments granted and the associated compensation charge we record in our financial statements.
Warrant Liability
As part of February 2015 public offering, each unit consisted of one share of our common stock and six-tenths (0.6) of a warrant to purchase one share of our common stock with an exercise price of $6.60 per share. The warrants are being recorded at fair value on our Consolidated Balance Sheet as a liability and changes in fair value are included in fair value of warrant liability on our Consolidated Statement of Operations. Fair value of the warrants was determined using the Monte Carlo valuation model. Certain estimates and judgments were used including future funding and associated probabilities, and volatility among others.
Results of Operations
The following table summarizes our results of operations for the years ended December 31, 2015, 2014 and 2013, in thousands, together with the change in each item as a percentage.
Revenue
The increase of $5.0 million in revenue for the year ended December 31, 2015 compared to the year ended December 31, 2014 was primarily due to the $4.0 million clinical milestone earned in November 2015 for dosing of the first patient in AstraZeneca’s ACCURIN AZD2811 Phase 1 trial.
The decrease in revenue for the year ended December 31, 2014 compared to the year ended December 31, 2013 was primarily due to a $3.1 million reduction in up-front license fee revenue recognized under our collaboration agreements with AstraZeneca, Amgen and Pfizer, compared to the prior year, and a $0.2 million reduction in research and development service revenue recognized under our government grants, compared to the prior year. These decreases were partially offset by a $2.8 million increase in reimbursable research and development services we performed under our collaboration agreements primarily with AstraZeneca, Pfizer and Roche, compared to the prior year
Research and Development Expense
Research and development expenses represented approximately 68%, 66%, and 65% of our total operating expenses for the years ended December 31, 2015, 2014 and 2013, respectively.
The increase in research and development expense for the year ended December 31, 2015 compared to the year ended December 31, 2014 was primarily driven by headcount growth to support the development of BIND’s internal pipeline and collaborations which led to an increase in salaries and benefits of $1.9 million, as well as an increase in reimbursable manufacturing expense of $1.9 million as we scaled up our clinical material manufacturing capability under our AstraZeneca collaboration. We also had higher clinical trial expenses of $1.2 million due to the iNSITE 1 and iNSITE 2 clinical trials of BIND-014 as well as an increase in outsourced research and development services related to our preclinical candidates of $1.2 million.
The increase in research and development expense for the year ended December 31, 2014 compared to the year ended December 31, 2013 was primarily driven by headcount growth to support the development of BIND’s internal pipeline and collaborations which led to an increase in salaries and benefits of $2.7 million and associated laboratory supplies of $1.0 million for our research and development personnel.
We began to track and accumulate both external and internal costs by major program starting on January 1, 2013. These expenses primarily relate to payroll and related expenses for personnel working on the programs, process development and manufacturing, preclinical toxicology studies, clinical trial costs and allocated costs of facilities. The following table illustrates our research and development expenses by major program during the periods indicated:
We do not believe that the historical costs of any of our programs are indicative of the future costs associated with these programs or represent what any other future drug development program we initiate may cost. Due to the variability in the length of time and scope of activities necessary to develop a product candidate and uncertainties related to cost estimates and our ability to obtain marketing approval for our product candidates, accurate and meaningful estimates of the total costs required to bring our product candidates to market are not available.
Because of the risks inherent in drug discovery and development, we cannot reasonably estimate or know:
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the nature, timing and estimated costs of the efforts necessary to complete the development of our programs;
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the completion dates of these programs; or
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the period in which material net cash inflows are expected to commence, if at all, from the programs described above and any potential future product candidates.
There is significant uncertainty regarding our ability to successfully develop any product candidates, including:
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the scope, rate of progress and cost of our clinical trials that we are currently running or may commence in the future;
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the scope and rate of progress of our preclinical studies and other research and development activities;
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clinical trial results;
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the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights relating to our programs under development;
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the terms and timing of any strategic alliance, licensing and other arrangements that we have or may establish in the future relating to our programs under development;
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the cost and timing of regulatory approvals;
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the cost of establishing clinical supplies of any product candidates; and
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the effect of competing technological and market developments.
General and Administrative Expense
For the year ended December 31, 2015, our general and administrative expenses increased by $2.6 million, or 17%, compared to the same period in 2014. The increase was primarily driven by $2.9 million in higher salaries, benefits and stock-based compensation expense for our general and administrative personnel primarily driven by headcount growth and included a $0.8 million non-recurring charge for salary, benefits and a stock options modification related to the March 2015 resignation and associated separation agreement with our former president and chief executive officer.
For the year ended December 31, 2014, our general and administrative expenses increased by $1.7 million, or 12%, compared to the same period in 2013. The increase was primarily driven by $1.6 million in higher salaries and benefits for our general and administrative personnel, $1.3 million in higher external consulting expenses (including early commercial) as well as higher insurance and other expenses principally related to operating as a public company since September 2013. The increase was partially offset by $2.8 million in lower stock-compensation expense as certain performance-based stock option awards granted to two executives vested upon the closing of our IPO.
Change in Fair Value of Warrant Liability
The warrants issued in our February 2015 underwritten public offering contain weighted-average anti-dilution protection upon the issuance of any common stock, securities convertible into common stock or certain other issuances at a price below the then-existing exercise price of the warrants, with certain exceptions, including but not limited to securities issued pursuant to equity compensation plans or arrangements, currently outstanding warrants, securities issued pursuant to shareholder rights plans, securities issued pursuant to certain strategic transactions or financings, and the first $30 million of securities sold under our at-the-market facility with Cowen that would otherwise cause an adjustment. The warrants were recorded at fair value on our Consolidated Balance Sheets as a liability upon issuance. We recorded a $5.7 million change in fair value of warrant liability for the year ended December 31, 2015.
Impairment of Restricted Cash
In November 2015, the Russian government seized a bank whose holdings included our Russian subsidiary’s restricted cash. Due to the uncertainty as to our ability to recover the asset, we have impaired this restricted cash on our balance sheet as of December 31, 2015 and recorded an impairment loss of $0.8 million in our Consolidated Statement of Operations.
Interest Expense
In January 2015, we entered into an amendment to the amended and restated credit facility with Hercules Technology III, L.P. (“Hercules”) as lender. The January 2015 amendment provided us with a term loan in an amount equal to $15.0 million, a portion of which was used to repay our then-existing term loan with Hercules in the aggregate amount of $3.1 million, and the remainder of which will be used for general corporate purposes. Our interest expense increased primarily due to the larger principal balance on our credit facility for the year ended December 31, 2015.
For the year ended December 31, 2014, our interest expense decreased primarily due to $0.3 million in additional interest expense related to the June 2013 amended and restated credit facility recorded during the year ended December 31, 2013.
Other Income (Expense), net
The fluctuations in other income (expense) is primarily driven by gains and losses on Russian transactions. Our Russian subsidiary’s functional currency is the ruble, and the majority of its cash is held in U.S. dollars. Therefore, the U.S. dollar denominated cash held in Russia is subject to transaction gains and losses. We recorded $0.2 million of losses, $1.3 million of gains and $0.2 million of losses for the years ended December 31, 2015, 2014 and 2013, respectively.
Liquidity and Capital Resources
Since our inception and through December 31, 2015, our capital resources have included gross proceeds from the sale of common stock in our IPO, proceeds from the sale of preferred stock and convertible debt securities, collaborations and license agreements, government grants, and borrowings under our credit facility.
In addition to our existing cash, cash equivalents, and short-term investments, we receive research and development funding and are eligible to earn a significant amount of milestone payments under our collaboration agreements. Our ability to earn these milestone payments and the timing of achieving these milestones is dependent upon the outcome of our research and development and regulatory activities and is uncertain at this time. Our rights to receive research and development funding and the payment of certain milestones, when achieved, under our collaboration agreements are our only committed external source of funds.
Our significant capital resources are as follows (in thousands):
Cash Flows
The following is a summary of cash flows for the years ended December 31, 2015, 2014 and 2013 (in thousands):
Operating Cash Flows
Net cash used in operating activities was $30.6 million during the year ended December 31, 2015, compared to $29.9 million in 2014. The increase of net cash used in operating activities of $0.7 million was primarily due to funding a higher net loss for the year ended December 31, 2015 partially offset by changes in working capital.
Net cash used in operating activities was $29.9 million during the year ended December 31, 2014, compared to $13.0 million in 2013. The increase in cash used in operating activities in the year ended December 31, 2014 was primarily driven by a decrease in upfront payments received from collaboration agreements compared to the same period in 2013. We did not enter into any collaboration agreements with material upfront payments in the year ended December 31, 2014. In addition, we funded a larger net loss during the year ended December 31, 2014 compared to the same period in 2013.
Investing Cash Flows
Net cash provided by investing activities was $3.2 million for the year ended December 31, 2015, compared to net cash provided by investing activities of $0.4 million in 2014. The increase in cash provided by investing activities during the year ended December 31, 2015 compared to 2014 was primarily due to an increase of $15.5 million in proceeds from maturities of investments and $2.9 million in proceeds from sales of investments partially offset by an increase of $13.3 million in purchases of investments. The purchases of property and equipment for the year ended December 31, 2015 included laboratory equipment and dedicated compounding space at a contract manufacturer, where we expect to manufacture both BIND-014 and ACCURIN AZD2811 at the double-digit kilogram scale.
Net cash provided by investing activities was $0.4 million for the year ended December 31, 2014, compared to net cash used in investing activities of $27.8 million in 2013. The increase in cash provided by investing activities during the year ended December 31, 2014 compared to 2013 was primarily due to an increase of $30.5 million in maturities of investments and $11.8 million in proceeds from sales of investments partially offset by an increase of $12.5 million purchase of investments and an increase of $0.8 million of purchases of property and equipment principally related to laboratory equipment.
Financing Cash Flows
Net cash provided by financing activities of $32.9 million during the year ended December 31, 2015 is primarily due to proceeds from our February 2015 public offering of $19.8 million as well as $14.8 million in borrowings under our credit facility.
Net cash used in financing activities of $1.3 million during the year ended December 31, 2014 was primarily due to $1.2 million in debt repayments under our credit facility.
Net cash provided by financing activities was $87.8 million during the year ended December 31, 2013 and was primarily due to the proceeds, net of expenses, from our initial public offering of $67.7 million, cash received related to the sale of Series D preferred stock to investors for net proceeds of $17.3 million, cash received related to the sale of Series BRN preferred stock to investors for net proceeds of $1.5 million as well as the net increase in debt of $1.2 million associated with the amended and restated credit facility.
We have not generated any revenue from the sale of drugs to date, and we do not expect to generate any such revenue for the next several years, if at all. We have instead relied on the proceeds from sales of equity securities, interest on investments, up-front license fees, expense reimbursement, milestones and cost sharing under our collaborations and debt to fund our operations. Because our product candidates are in various stages of clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability.
At-the-Market Facility
In October 2014, we entered into an at-the-market sales agreement (“Sales Agreement”) with Cowen & Company, LLC (“Cowen”) pursuant to which we may from time to time, at our option, offer and sell shares of our common stock having an aggregate offering price of up to $40 million through Cowen, acting as our sales agent. Upon delivery of a placement notice by us and subject to the terms and conditions of the Sales Agreement, Cowen will use its commercially reasonable efforts to sell shares of our common stock, based upon our instructions. We have provided Cowen with customary indemnification rights, and Cowen will be entitled to a commission of up to 3.0% of the gross proceeds from sales of shares of our common stock under the Sales Agreement. Sales of shares of our common stock under the Sales Agreement may be made by any method permitted by law that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made through the Nasdaq Global Select Market, on any other existing trading market for our common stock or to or through a market maker. We may also authorize Cowen to sell shares in negotiated transactions. As of December 31, 2015, we had sold 204,696 shares of common stock under the Sales Agreement at an average price of $6.09 for net proceeds of approximately $1.2 million. We plan to use proceeds from the Sales Agreement for general corporate purposes. We have no obligation to sell shares of our common stock and cannot provide any assurances that we will issue any additional shares pursuant to the Sales Agreement. We may also suspend the offering of shares of our common stock upon notice and subject to other conditions under the Sales Agreement or may at any time upon notice terminate the Sales Agreement.
Public Offering of Equity Securities
On February 10, 2015, we completed an underwritten public offering of 3,739,130 units at the public offering price of $5.75 per unit. Each unit consisted of one share of our common stock and six-tenths (0.6) of a warrant to purchase one share of our common stock with an exercise price of $6.60 per share. We received net proceeds of approximately $20 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us and not including any future proceeds from the exercise of the warrants.
The exercise price and the number and type of securities purchasable upon exercise of the warrants are subject to adjustment upon certain corporate events, including certain mergers, consolidations, tender offer or exchange offer, reclassifications, stock dividends and stock splits, cash dividends, a sale of all or substantially all of our assets and certain other events. In the event of an extraordinary transaction, as described in the warrants and generally including any merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, or reclassification of common stock, we or any successor entity will pay at the holder’s option, exercisable at any time concurrently with or within 10 days after the consummation of the extraordinary transaction, an amount of cash equal to the value of the warrant as determined in accordance with the Black Scholes option pricing model and the terms of the warrants. In addition, the warrants contain weighted-average anti-dilution protection upon the issuance of any common stock, securities convertible into common stock or certain other issuances at a price below the then-existing exercise price of the warrants, with certain exceptions, including but not limited to securities issued pursuant to equity compensation plans or arrangements, currently outstanding warrants, securities issued pursuant to shareholder rights plans, securities issued pursuant to certain strategic transactions or financings, and the first $30 million of securities sold under the Sales Agreement with Cowen that would otherwise cause an adjustment. The warrants are being recorded at fair value on our Consolidated Balance Sheets as a liability and remeasurements in fair value are included in change in fair value of warrant liability on our Consolidated Statement of Operations.
Indebtedness
In January 2015, we entered into an amendment to the amended and restated credit facility (“New Term Loan”) with Hercules as lender. The amendment provides us with a term loan in an amount equal to $15.0 million, a portion of which was used to repay our existing term loan with Hercules in the aggregate amount of $3.1 million, and the remainder of which will be used for general corporate purposes.
The principal balance of the New Term Loan bears interest at a floating per annum rate equal to 8.35% plus the prime rate less 3.25% (with a minimum rate of 8.35%). The interest rate at December 31, 2015 was 8.6%. The New Term Loan matures on July 2, 2018 (the “Maturity Date”) and we have been required to make interest-only payments on the New Term Loan since February 2, 2015. This obligation to make interest-only payments will continue through December 31, 2015. Beginning on January 1, 2016, we are paying equal monthly installments of principal and interest, with the entire remaining principal balance and all accrued and unpaid interest due on the Maturity Date. The loan can be prepaid at any time with certain additional amounts due based on the date of the prepayment. The loan is secured by our tangible assets as of the date of the loan and additions acquired thereafter.
The credit facility includes affirmative and negative covenants applicable to us and our subsidiaries. The affirmative covenants include, among others, covenants requiring us (and us to cause our subsidiaries) to maintain our legal existence and governmental approvals, deliver unqualified audited financial statements as of the end of the year and maintain insurance coverage. The negative covenants include, among others, restrictions on us and our subsidiaries transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets, and suffering a change in control, in each case subject to certain exceptions. Additionally, the credit facility restricts us from investing in our wholly-owned domestic subsidiary, BIND Biosciences Security Corporation, unless we hold cash and other liquid investments equal to $25.0 million in BIND Therapeutics, Inc., less any payments of principal that we have made to Hercules under the credit facility. The credit facility contains certain restrictions on stock repurchases, dividend payments and future loans.
The credit facility also includes events of default, the occurrence and continuation of which provide Hercules with the right to exercise remedies against us and the collateral securing the loans under the credit facility, including our cash. These events of default include, among other things, our failure to pay any amounts due under the credit facility, a breach of covenants under the credit facility, our insolvency and the insolvency of our subsidiaries, the occurrence of any default under certain other indebtedness, and a final judgment against us in an amount greater than $500,000. Hercules could also declare a default upon the occurrence of a circumstance that would reasonably be expected to have a material adverse effect as defined under the credit facility, thereby requiring us to repay the loan immediately or to attempt to reverse the declaration of default through negotiation or litigation. If we default under the facility, Hercules may potentially require us to renegotiate our agreement on terms less favorable to us or it may accelerate all of our obligations under the facility and foreclose on our pledged assets, potentially requiring us to immediately cease operations or file for bankruptcy protection. In the event that we are liquidated, Hercules’ right to repayment would be senior in most respects to the rights of the holders of our common stock to receive any proceeds from the liquidation. The total principal outstanding under the credit facility as of December 31, 2015 was approximately $15.0 million.
Plan of Operations and Future Funding Requirements
We have generated an accumulated deficit of $173.9 million since inception and will require substantial additional capital to fund operations. Our future success is dependent on our ability to develop our product candidates and ultimately upon our ability to attain profitable operations. We are subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful discovery and development of our drug candidates; our need for additional funding, which may not be available; risks relating to the New Term Loan with Hercules; and the risks and uncertainties described in Part I, Item 1A, “Risk Factors” of this Form 10-K.
As of December 31, 2015, we had cash, cash equivalents and short-term investments of $36.9 million. We expect that our cash, cash equivalents and short-term investments will fund our operating expense and capital expenditure requirements into the fourth quarter of 2016. This expectation is based on our current operating plans and R&D funding that we expect to receive under our existing collaborations but excludes any potential milestone payments under our collaboration agreements. This expectation also assumes that the scheduled payments to Hercules under our credit facility are not accelerated. Under the terms of our credit facility, Hercules could accelerate our payment obligations upon the occurrence of a circumstance that would reasonably be expected to have a material adverse effect, as defined in the credit agreement, or another event of default. If our principal obligations under such credit facility (which totaled approximately $15.0 million as of December 31, 2015) are accelerated, we would need to secure additional financing to fund our operating expense and capital expenditure requirements as early as the middle of April 2016. In the event we are unable to secure the necessary financing, we may need to cease operations or file for bankruptcy protection.
By April 2016, we expect to report combined clinical data for BIND-014 in the following indications: i) non-small cell lung cancer (NSCLC) with squamous histology; ii) advanced cervical cancer; and iii) head and neck cancer. We have been pursuing and we intend to continue to pursue a potential collaboration for BIND-014. Continued clinical development of BIND-014 for any indication is contingent upon positive clinical data. Even if we obtain positive clinical data, we may need to curtail or terminate the development of BIND-014 if we are unable to obtain additional financing. We expect that any decision to curtail or terminate the development of BIND-014, whether based on the lack of positive data or due to a lack of sufficient financing, would impact our future operating expense and capital expenditure requirements.
We have entered into collaborations with other biopharmaceutical companies to develop ACCURINS® based on therapeutic payloads from their product pipelines, and such collaborations currently represent a significant portion of our product pipeline. Our ongoing collaboration and license agreements include those we have with AstraZeneca, Pfizer, and Roche. These collaborations also have provided us with important funding for our development programs, and we expect to receive additional funding under these collaborations in the future. We are pursuing additional collaborations with biopharmaceutical companies for additional funding. We may seek additional funding through public or private offerings of equity securities, but such financing may not be available on acceptable terms, or at all, particularly in light of current market conditions and any upcoming results from our clinical trials of BIND-014.
If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate the development of BIND-014, activities under our collaboration agreements and other development programs or to scale back, suspend or terminate our business operations.
We believe that there is substantial doubt about our ability to continue as a going concern. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional funding may not be available to us on acceptable terms, or at all. Market conditions, including an historically low price for our common stock, will likely limit our ability to raise additional capital on acceptable terms, or at all, and the terms of any public or private offerings of stock likely would be significantly dilutive to existing stockholders.
Our future capital requirements will depend on many factors, including:
·
our collaboration agreements remaining in effect and our ability to achieve milestones under these agreements;
·
the progress and results of our clinical trials of BIND-014;
·
the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other drug candidates;
·
the number and development requirements of other drug candidates that we pursue;
·
the costs, timing and outcome of regulatory review of our drug candidates;
·
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our drug candidates for which we receive marketing approval;
·
the revenue, if any, received from commercial sales of our drug candidates for which we receive marketing approval;
·
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and
·
the extent to which we acquire or in-license other products and technologies.
Contractual Obligations and Contingent Liabilities
The following summarizes our significant contractual obligations as of December 31, 2015 (in thousands):
Operating Leases. Represents future minimum lease payments under non-cancelable operating leases in effect as of December 31, 2015, including the remaining lease payments for our current facilities in Cambridge, Massachusetts. The minimum lease payments above do not include common area maintenance charges or real estate taxes.
Research and development contract obligations. Represents minimum annual license fees payable to universities under our license agreements.
Debt. Represents obligations by us to make payments under loan agreements. These amounts include interest.
The contractual obligations table does not include any potential contingent payments upon the achievement by us of specified patent prosecution, clinical, regulatory and commercial events, as applicable, or royalty payments we may be required to make under license agreements we have entered into with various universities pursuant to which we have in-licensed certain intellectual property, including our license agreement with the MIT. See “Business-Intellectual Property-In-Licensed Intellectual Property” for additional information. The table also excludes potential payments we may be required to make under manufacturing and CRO agreements as the timing of when these payments will actually be made is uncertain and the payments are contingent upon the initiation and completion of future activities.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under Securities and Exchange Commission rules.
Item 7A.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of December 31, 2015, we had cash, cash equivalents and short term investments of $36.9 million, consisting of $12.8 million of interest-bearing money market accounts and $6.3 million of U.S. government securities. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents or investments. As of December 31, 2015, we were also subject to interest rate risk from the loans under the credit facility that bear interest at an annual rate equal to 8.35% plus the prime rate less 3.25% (minimum rate of 8.35%). A 100 basis point increase in interest rates at December 31, 2015, would not have a material effect on our annual pre-tax interest expense.
In addition, we are subject to currency risk for balances held in rubles in our foreign subsidiary. We work to maintain all balances in U.S. dollars until payment in rubles is required to minimize this currency risk. Fluctuations in the exchange rate over the past 18 months have been approximately 67%. As of December 31, 2015, we maintained $1.0 million in cash, $0.9 million of which was denominated in U.S. dollars, in Russian banks. Transactions with these providers are predominantly settled in rubles and, therefore, we believe we have only minimal exposure to foreign currency exchange risk over time. We do not hedge against foreign currency risks. In December 2015, the Russian government seized the bank that held our Russian subsidiary’s restricted cash. Due to the uncertainty as to our ability to recover the asset, we have impaired this restricted cash on our Consolidated Balance Sheet as of December 31, 2015 and recorded an impairment loss of $0.8 million in our Consolidated Statement of Operations.
Item 8.
Item 8.
Financial Statements and Supplementary Data
BIND THERAPEUTICS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet as of December 31, 2015 and 2014
Consolidated Statement of Operations for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
BIND Therapeutics, Inc.
Cambridge, Massachusetts
We have audited the accompanying consolidated balance sheets of BIND Therapeutics, Inc. and subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BIND Therapeutics, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements for the year ended December 31, 2015 have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company's recurring use of cash to fund operations and service debt raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also discussed in Note 1 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 15, 2016
BIND THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data and par value)
See notes to consolidated financial statements.
BIND THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
See notes to consolidated financial statements.
BIND THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
See notes to the consolidated financial statements
BIND THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
See notes to consolidated financial statements.
BIND THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share data and par value)
See notes to consolidated financial statements.
BIND THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
BIND Therapeutics, Inc. is a clinical-stage nanomedicine platform company developing ACCURINS®, which are targeted and programmable therapeutics. As used throughout these consolidated financial statements, the terms “BIND,” “we,” “us,” and “our” refer to the business of BIND Therapeutics, Inc. including our wholly-owned subsidiaries, BIND (RUS) LLC and BIND Biosciences Security Corporation. Our strategy is to leverage our Medicinal Nanoengineering® platform to develop our own pipeline of ACCURINS®, initially in oncology, as well as to develop ACCURINS® in collaboration with biopharmaceutical companies.
Liquidity-We have generated an accumulated deficit of $173.9 million since inception and will require substantial additional capital to fund operations. Our future success is dependent on our ability to develop our product candidates and ultimately upon our ability to attain profitable operations. We are subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful discovery and development of our drug candidates; our need for additional funding, which may not be available; and risks relating to our credit facility (the “New Term Loan”) with Hercules Technology III, L.P. (“Hercules”) as lender.
As of December 31, 2015, we had cash, cash equivalents and short-term investments of $36.9 million. We expect that our cash, cash equivalents and short-term investments will fund our operating expense and capital expenditure requirements into the fourth quarter of 2016. This expectation is based on our current operating plans and R&D funding that we expect to receive under our existing collaborations but excludes any potential milestone payments under our collaboration agreements. This expectation also assumes that the scheduled payments to Hercules under our credit facility are not accelerated. Under the terms of our credit facility, Hercules could accelerate our payment obligations upon the occurrence of a circumstance that would reasonably be expected to have a material adverse effect, as defined in the credit agreement, or another event of default. If our principal obligations under such credit facility (which totaled approximately $15.0 million as of December 31, 2015) are accelerated, we would need to secure additional financing to fund our operating expense and capital expenditure requirements as early as the middle of April 2016. In the event we are unable to secure the necessary financing, we may need to cease operations or file for bankruptcy protection.
By April 2016, we expect to report combined clinical data for BIND-014 in the following indications: i) non-small cell lung cancer (NSCLC) with squamous histology; ii) advanced cervical cancer; and iii) head and neck cancer. We have been pursuing and we intend to continue to pursue a potential collaboration for BIND-014. Continue clinical development of BIND-014 for any indication is contingent upon positive clinical data. Even if we obtain positive clinical data, we may need to curtail or terminate the development of BIND-014 if we are unable to obtain additional financing. We expect that any decision to curtail or terminate the development of BIND-014, whether based on the lack of positive data or due to a lack of sufficient financing, would impact our future operating expense and capital expenditure requirements.
We have entered into collaborations with other biopharmaceutical companies to develop ACCURINS® based on therapeutic payloads from their product pipelines, and such collaborations currently represent a significant portion of our product pipeline. Our ongoing collaboration and license agreements include those we have with AstraZeneca, Pfizer, and Roche. These collaborations also have provided us with important funding for our development programs, and we expect to receive additional funding under these collaborations in the future. We are pursuing additional collaborations with biopharmaceutical companies for additional funding. We will seek additional funding through public or private offerings of equity securities, but such financing may not be available on acceptable terms, or at all, particularly in light of current market conditions and any upcoming results from our clinical trials of BIND-014. Market conditions, including a historically low price for our common stock, will likely limit our ability to raise additional capital on acceptable terms, or at all, and the terms of any public or private offerings of stock likely would be significantly dilutive to existing stockholders.
If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate the development of BIND-014, activities under our collaboration agreements and other development programs, or to scale back, suspend or terminate our business operations.
The foregoing matters give rise to substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation-The consolidated financial statements include our accounts and our wholly-owned subsidiaries, BIND (RUS), LLC, a Russian limited liability corporation, and BIND Biosciences Security Corporation, a Massachusetts securities corporation. All intercompany accounts and transactions have been eliminated.
Use of Estimates-The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities (including clinical trial accruals), and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base estimates and assumptions on historical experience when available and on various factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Foreign Currency Translation-The functional currency of our Russian subsidiary is the Russian ruble (RUB). All assets and liabilities of our Russian subsidiary are translated at year-end exchange rates and revenues and expenses are translated at average exchange rates for the year. Translation adjustments are reflected in the accumulated other comprehensive loss component of stockholders’ equity. At December 31, 2015, we maintained $1.0 million of cash, $0.9 million of which was denominated in U.S. dollars, in Russian banks. At December 31, 2014, we maintained $2.2 million of cash, $2.1 million of which was denominated in U.S. dollars, and $1.0 million of restricted cash in Russian banks. Accordingly, the amounts denominated in U.S. dollars are subject to transaction gains and losses, which are reported in the accompanying Consolidated Statement of Operations.
Cash and Cash Equivalents-Cash and cash equivalents are stated at fair value and include short-term, highly liquid investments with remaining maturities of 90 days or less at the date of purchase. Cash equivalents consist of money market funds recorded at fair value and certificates of deposit and US government agency notes recorded at amortized cost.
Short-term and Long-term Investments- Short-term and long-term investments represent holdings of available-for-sale marketable securities in accordance with our investment policy and cash management strategy. Short-term investments mature within 12 months from the balance sheet date, and long-term investments represent investments with maturity dates greater than one year from the balance sheet date. At the time that the maturity dates of these investments become one year or less, the securities are reclassified as short-term investments. Our investments in marketable securities are recorded at fair value, with any unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity until realized or until a determination is made that an other-than-temporary decline in market value has occurred. The cost of marketable securities sold is determined based on the specific identification method and any realized gains or losses on the sale of investments are reflected as a component of interest expense, net.
Restricted Cash-Restricted cash represents cash deposits held in connection with obligations under facility leases. The restricted cash in 2014 related to performance collateral under our grant from the Ministry of Industry and Trade of the Russian Federation was impaired as of December 31, 2015 (see Note 8, “Restricted Cash”).
Concentration of Credit Risk-Financial instruments that subject us to significant concentrations of credit risk consist primarily of cash. Substantially all of our cash is held at financial institutions that management believes to be of high-credit quality. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits may be redeemed upon demand and, therefore, bear minimal risk.
As of December 31, 2015, one customer accounted for 92% of our amounts due under collaboration agreements. As of December 31, 2014, two customers accounted for 55% and 41% of our amounts due under collaboration agreements.
During the year ended December 31, 2015, we had two customers representing 76% and 14% of total revenue. During the year ended December 31, 2014, we had two customers representing 68% and 13% of total revenue. During the year ended December 31, 2013, we had three customers representing 38%, 25% and 23% of total revenue.
Property and Equipment-Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation and amortization are provided using the straight-line method over the estimated useful lives:
Impairment of Long-Lived Assets-Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, we compare the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. To date, no such impairment has occurred.
Fair Value of Warrant Liability-Warrants issued in connection with our February 2015 underwritten public offering are being recorded at fair value on our Consolidated Balance Sheets as a liability and changes in fair value are included in change in fair value of warrant liability on our Consolidated Statements of Operations. Fair value of the warrants was determined using the Monte Carlo valuation model. Certain estimates and judgments were used including future funding and associated probabilities, and volatility, amongst others.
Segment and Geographic Information-Operating segments are defined as components of an enterprise (business activity from which it earns revenue and incurs expenses) about which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is the Chief Executive Officer. Our chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire company. We view our operations and manage our business as one operating segment; however, we operate in two geographic regions: United States (Cambridge, MA) and Russia (Moscow). Information about our operations in different geographic regions is presented in the tables below (in thousands):
Revenue Recognition-
Collaborative Research and Development and Multiple-Deliverable Arrangements
We have entered into collaborative arrangements with strategic partners for the development and commercialization of product candidates utilizing our technologies. The terms of these agreements have typically included multiple deliverables by us (for example, license rights, research and development services and manufacturing of clinical materials) in exchange for consideration to us of some combination of non-refundable license fees, research and development funding, payments based upon achievement of clinical development or other milestones and royalties in the form of a designated percentage of product sales or profits.
Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collection is reasonably assured. Multiple-deliverable arrangements, such as license and development agreements, are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single
unit of accounting. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price method and the appropriate revenue recognition principles are applied to each unit. When we determine that an arrangement should be accounted for as a single unit of accounting, we must determine the period over which the performance obligations will be performed, and revenue will be recognized over the performance period.
Milestone Payments
We recognize a milestone payment as revenue in the period in which the milestone is achieved only if the applicable event achieved meets the definition of a milestone and the milestone is determined to be substantive. A milestone is considered substantive when it meets all of the following criteria: (1) the milestone is commensurate with either the entity’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone; (2) the milestone relates solely to past performance; and (3) the payment is reasonable relative to all of the deliverables and payment terms within the arrangement. Payments for achieving milestones which are not considered substantive are treated as additional arrangement consideration and are recognized over a period which the performance obligations will be performed.
Royalty Revenues and Sales-Based Milestones
Under certain of our agreements, we may be entitled to royalty revenues and/or milestone payments based on net sales. We will recognize royalty revenues and sales-based milestone payments in the period that sales are reported to us, assuming all other revenue recognition criteria are met.
Grant Revenue
Revenues from government grants are recognized in the period we perform the service.
Deferred Revenue
Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying Consolidated Balance Sheets. Amounts not expected to be recognized within one year following the balance sheet date are classified as non-current deferred revenue.
Research and Development Costs-Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, an allocation of facilities expenses, overhead expenses, manufacturing process-development and scale-up activities, clinical trial and related clinical manufacturing expenses, fees paid to clinical research organizations and investigator sites, payments to universities under our license agreements and other outside expenses. Research and development costs are expensed as incurred. Research and development costs that are paid in advance of performance are capitalized as a prepaid expense until incurred.
Stock-Based Compensation-We account for all share-based payment awards granted to employees and nonemployees using a fair value method. Our share-based payments include stock options and grants of common stock, including common stock subject to vesting. The measurement date for employee awards is the date of grant, and share-based compensation costs are recognized as expense over the employees’ requisite service period, which is the vesting period, on a straight-line basis. We issued performance based grants where the vesting of the grant is tied to certain milestone performance and in these cases, the compensation is recognized as expense when achievement of the milestone is probable. The measurement date for nonemployee awards is the date the services are completed, resulting in periodic adjustments to stock-based compensation during the vesting period for changes in the fair value of the awards. Stock-based compensation costs for nonemployees are recognized as expense over the vesting period on a straight-line basis.
Net Loss Per Share Attributable to Common Stockholders-Basic net loss attributable to common stockholders per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net loss attributable to common stockholders per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as-if-converted method, for convertible securities, if inclusion of these is dilutive.
Income Taxes-Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in our consolidated financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the consolidated financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
We assessed our income tax positions and recorded tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we record the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. We classify interest and penalties associated with material uncertain tax positions as a component of income tax expense. As of December 31, 2015, we have not identified any material uncertain tax positions.
Guarantees and Indemnifications-As permitted under Delaware law, we indemnify our officers, directors, and employees for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The term of the indemnification is for the officer’s or director’s lifetime. We lease laboratory and office space in Cambridge, Massachusetts, under a noncancelable operating lease. We have standard indemnification arrangements under these leases that require us to indemnify the landlord against any liability for injury, loss, accident, or damage from any claims, actions, proceedings, or costs resulting from certain acts, breaches, violations, or nonperformance under our lease.
Through December 31, 2015, we had not experienced any losses related to these indemnification obligations and no material claims were outstanding. We do not expect significant claims related to these indemnification obligations, and consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.
Recent Accounting Pronouncements-In November 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17). The new standard requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for us on January 1, 2017. We are currently assessing the potential impact of the adoption of ASU 2015-17 on our consolidated financial statements.
On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, (“ASU 2015-03”), which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. ASU 2015-03 became effective for us on January 1, 2016 and we are currently assessing the impact of the adoption on our consolidated financial statements.
On August 27, 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if “conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.” ASU 2014-15 is effective for us on January 1, 2017. We are currently assessing the potential impact of the adoption of ASU 2014-15 on our consolidated financial statements.
On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), its final standard on revenue from contracts with customers. ASU 201409 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. ASU 2014-09 is effective for us on January 1, 2018. We are currently assessing the potential impact of the adoption of ASU 2014-09 on our consolidated financial statements.
On February 25, 2016, the FASB issued new guidance on the accounting for leases. The provisions of this guidance are effective for annual periods beginning after December 31, 2018, and for interim periods therein. The Company has not yet assessed the impact of this new standard on its financial statements.
3. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
The following table summarizes the computation of basic and diluted net loss per share attributable to our common stockholders (in thousands, except share and per share data):
Because we have reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share.
The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or as-if-converted method, have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact due to the losses reported:
4. REVENUE
Our revenue for the periods presented consists of the following (in thousands):
Government Grants-Government grants consist primarily of a research grant from the Ministry for Industry and Trade of the Russian Federation (the “MPT Grant”) that was awarded in October 2012 in the amount of RUB 147.9 million ($4.9 million). Revenue recognized for this contract for the years ended December 31, 2015, 2014 and 2013, was $1.1 million, $0.7 million and $0.9 million, respectively. We completed our performance obligations and recognized all remaining revenue under the MPT grant during the year ended December 31, 2015.
Research and Development and Collaboration Agreements-Revenue recognized for research and development agreements related principally to our 2013 agreements with AstraZeneca AB, Pfizer Inc., and Amgen, Inc. and our 2014 agreement with F. Hoffmann-La Roche Ltd. Under these agreements, we perform research, development and manufacturing of ACCURINS®
incorporating therapeutic payloads and ligands from such pharmaceutical and biotechnology companies’ proprietary product portfolios and provide the resulting data from such work to the pharmaceutical and biotechnology companies in exchange for reimbursement upfront fees, for research and development services, upfront fees and milestones.
AstraZeneca AB-In April 2013, we entered into a license agreement with AstraZeneca. Under the agreement, we granted to AstraZeneca a worldwide license to research, develop, manufacture and commercialize ACCURINS® incorporating a specified AstraZeneca product candidate for any therapeutic use in humans or animals. This license is exclusive with respect to our intellectual property rights that arise under this agreement or the feasibility study that preceded it, and non-exclusive with respect to all of our other intellectual property rights. We and AstraZeneca are each responsible for using commercially reasonable efforts to develop licensed products under a development plan that extends a previously completed feasibility study we conducted for AstraZeneca. AstraZeneca is required to pay for substantially all of our development costs. AstraZeneca is also solely responsible for, and must use commercially reasonable efforts in, obtaining all regulatory approvals for licensed products.
Under the agreement, we received an upfront payment of $4.0 million in 2013. We achieved a $1.0 million development milestone in March 2015. In November 2015, we earned a $4.0 million clinical milestone for dosing of the first patient in AstraZeneca’s ACCURIN AZD2811 Phase 1 trial, which was recorded as revenue during the year ended December 31, 2015.
We have the potential to receive additional milestone payments totaling up to $60 million upon achievement by AstraZeneca of specified clinical events and up to $128 million in the aggregate upon achievement by AstraZeneca of all specified regulatory and commercial events. We will also receive tiered royalties in the low-single digit to the low-double digit percentages of aggregate worldwide net sales of licensed product, if any. We will receive royalties on a country-by-country and licensed product-by-licensed product basis generally until the AstraZeneca patents and any regulatory exclusivity relating to such licensed product expire. AstraZeneca may terminate the agreement effective upon six months’ prior written notice to us.
We determined that the deliverables under the agreement include the license, the research and development services and participation in the Joint Steering Committee (“JSC”). The JSC deliverable ends at the same time as the research and development services. Our obligations related to the research and development services are to use commercially reasonable efforts to perform the research and development as set forth in the collaboration plan. We also determined that, pursuant to the accounting guidance governing revenue recognition on multiple element arrangements, the license and undelivered research and development services and participation in the JSC do not have standalone value due to the specialized nature of the research and development services to be provided by us. In addition, while AstraZeneca has the ability to grant sublicenses, it cannot sublicense all or substantially all of its rights under the agreement. The uniqueness of our research and development services and the limited sublicense right are indicators that standalone value is not present in the arrangement. Therefore the deliverables are not separable and, accordingly, the license and undelivered research and development and JSC services are being treated as a single unit of accounting. When multiple deliverables are accounted for as a single unit of accounting, we base our revenue recognition model on the final deliverable, since multiple deliverables are accounted for as a single unit of accounting. Under the agreement, the last deliverable to be completed is the research and development services and participation in the JSC which are expected to be completed in 2017. We are utilizing a proportional performance model to recognize revenue related to the upfront payment, achievement of non-substantive milestones and other research and development services (both internal effort as well as external costs). Revenue is recognized upon achievement for milestones that are determined to be substantive.
During the years ended December 31, 2015, 2014 and 2013, we recognized revenue of $11.7 million, $7.1 million and $2.5 million, respectively related to the AstraZeneca license agreement.
Pfizer Inc.-In March 2013, we entered into a research, option and license agreement with Pfizer Inc. pursuant to which we granted to Pfizer two options to obtain an exclusive worldwide license to use, develop, manufacture and commercialize ACCURINS® incorporating two Pfizer compounds, for the treatment, prevention and/or diagnosis of any disease or medical condition in humans, except that the licensed rights exclude some vaccine products and products for the treatment of brain cancer.
Under the agreement, we received an upfront payment of $4.0 million and achieved a $1.0 million development milestone in December 2014. In September 2015, we received notification that Pfizer exercised its option to acquire an exclusive license for the development and commercialization of the first compound covered by the agreement. As a result of the option exercise, BIND received a $2.5 million option exercise fee, which is being recognized on a proportional basis. Pfizer also notified us that that it decided not to continue the development of the second compound covered by the agreement, and therefore would not exercise its option to acquire an exclusive license for the development and commercialization of the second compound.
We have the potential to receive additional contingent payments for the selected compound totaling up to $86 million in the aggregate and achievement by Pfizer of specified development and regulatory events plus additional contingent payments totaling up
to $110 million in the aggregate upon achievement by Pfizer of specified commercial events. We will also receive royalties in the low-single digit to the high-single digit percentages of aggregate worldwide net sales, if any. We will receive royalties on a country-by-country and licensed product-by-licensed product basis generally until the expiration of the Pfizer patents covering such licensed product. Pfizer may terminate this agreement without cause for any or no reason effective upon 60 days’ prior written notice to us.
While we are responsible for conducting chemistry, manufacturing and control activities, Pfizer is responsible for all further development and commercialization activities with respect to the licensed products covered by the option, and Pfizer is also solely responsible for obtaining all regulatory approvals for the applicable licensed products and conducting all communications with regulatory authorities.
Our obligations related to the research and development services are to use commercially reasonable efforts to perform the research and development including the chemistry, manufacturing and control activities as set forth in the collaboration plan. We considered our deliverables a single unit of accounting for revenue recognition purposes. The Pfizer option exercise resulted in a change in accounting estimate for our chemistry, manufacturing and control activities. The performance period is the expected period over which the services of the combined unit are performed, which we now expect will continue into 2018 and include manufacturing through a Phase 1 clinical trial. We are utilizing a proportional performance model to recognize revenue related to the upfront payment, the option fee, achievement of non-substantive milestones and other research and development services (both our internal effort as well as external costs). Revenue is recognized upon achievement for milestones that are determined to be substantive.
During the years ended December 31, 2015, 2014 and 2013, we recognized revenue of $2.1 million, $1.4 million and $2.7 million, respectively, related to the Pfizer research, option and license agreement.
F. Hoffmann-La Roche Ltd.- In June 2014, we entered into a research agreement with F. Hoffmann-La Roche Ltd. and Hoffmann-La Roche Inc., or Roche, to discover novel nanomedicines using ACCURINS® for the treatment of diseases in therapeutic areas outside of oncology. The research agreement focuses on combining BIND’s ACCURIN technology with Roche’s proprietary therapeutic payloads and targeting ligands. Under the agreement, Roche paid us an immaterial, non-refundable upfront fee and, additionally, will compensate us for our research and development services up to a specified amount. The upfront fee, which was received by us in July 2014, will be creditable against any such fee negotiated in a future Roche agreement, if any. Therefore, we will not recognize revenue related to the upfront fee during the term of the research agreement. We recognized revenue of $0.4 million and $0.4 million for the years ended December 31, 2015, and 2014, respectively, for reimbursable research and development activities related to the Roche research agreement.
Amgen, Inc.-In January 2013, we entered into a license agreement with Amgen, Inc. (“Amgen”), pursuant to which we granted to Amgen an option to obtain an exclusive worldwide license to develop, manufacture and commercialize an ACCURIN incorporating a specified Amgen drug candidate for all uses except for some vaccine applications (“Amgen Option”). Under the agreement, we received an upfront payment of $5.0 million as well as potential development and regulatory milestone payments contingent upon Amgen exercising its option.
Our deliverables under the agreement included conducting the research and development program and participation on a joint research committee (“JRC”). The JRC deliverable ended at the same time as the research and development services. Our obligations related to the research and development services were to use commercially reasonable efforts to perform the research as set forth in the design/preclinical collaboration plan. Having determined that the JRC did not have standalone value apart from the research and development program, we considered these deliverables as a single unit of accounting. We concluded that the Amgen Option was not a deliverable of the agreement because it was a substantive option and was not priced at a significant and incremental discount. The performance period was the expected period over which the services of the combined unit were performed, which we expected would span through the middle of 2014. The upfront payment was being recognized over the performance period on a proportional performance basis.
In December 2013, we and Amgen amended the license agreement to extend the period during which Amgen could exercise its option by nine months, to July 2014. In June 2014, Amgen notified us that it would not exercise its option; therefore, we had no further performance obligations to Amgen. As a result, we recognized the remaining portion of the upfront license fee of $0.8 million as revenue during the year ended December 31, 2014. In June 2014, we also notified Amgen that we would not exercise our option to develop an ACCURIN incorporating the Amgen therapeutic payload.
During the year ended December 31, 2015, we did not recognize revenue related to the Amgen license agreement. During the years ended December 31, 2014 and 2013, we recognized revenue of $0.8 million and $4.2 million, respectively, related to the Amgen license agreement.
5. SHORT-TERM INVESTMENTS
The following is a summary of marketable securities as of December 31, 2015 (in thousands):
(1)
U.S. government securities consist of U.S. treasuries, U.S. agency securities and U.S. government-sponsored enterprises
The contractual maturities of our investments as of December 31, 2015 are all due within one year. We had immaterial realized gains on our short-term investments for the years ended December 31, 2015 and 2014. Our certificates of deposit were each under $250,000 and were subject to insurance by the Federal Deposit Insurance Corporation. There were no other-than-temporary impairments recognized for the years ended December 31, 2015 and 2014.
6. FAIR VALUE MEASUREMENTS
Financial instruments, including cash equivalents, restricted cash, amounts due under collaboration agreements, accounts payable, and accrued expenses are carried in the consolidated financial statements at amounts that approximate fair value at December 31, 2015 and 2014. Fair values are based on market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.
We believe that our debt obligations bear interest at rates which approximate prevailing market rates for instruments with similar characteristics and, accordingly, the carrying values for these instruments approximate fair value. The debt fair value measurements are considered Level 2 in the fair value hierarchy.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
Level 1-Quoted prices in active markets that are accessible at the market date for identical unrestricted assets or liabilities.
Level 2 -Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
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 value our marketable securities utilizing third party pricing services. The pricing services use many observable market inputs to determine value, including benchmark yields, reportable trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, new issue data, monthly payment information and collateral performance. We validate the prices provided by our third party pricing services by understanding the models used, obtaining market values from other pricing sources, and confirming that those securities trade in active markets.
There have been no changes to the valuation methods during the years ended December 31, 2015 and 2014. We evaluate transfers between levels at the end of each reporting period. There were no transfers of assets or liabilities between Level 1, Level 2 or Level 3 during the years ended December 31, 2015 and 2014. We had no short-term or long-term investments that were classified as Level 3 at any point during years ended December 31, 2015 and 2014. A summary of our assets and liabilities that are measured at fair value as of December 31, 2015 and 2014 is as follows (in thousands):
(1)
Money market funds are included within cash and cash equivalents and restricted cash in the accompanying Consolidated Balance Sheets
In February 2015, we completed an underwritten public offering of 3,739,130 units at the public offering price of $5.75 per unit. Each unit consisted of one share of our common stock and six-tenths (0.6) of a warrant to purchase one share of our common stock with an exercise price of $6.60 per share (see Note 13, “Stockholders’ Equity”). These warrants are subject to revaluation at each balance sheet date, and any changes in fair value are recorded as a component of change in fair value of warrant liability, until the earlier of their exercise or expiration or upon the completion of a liquidation event. The following table sets forth a summary of changes in the fair value of our common stock warrant liability, which represented a recurring measurement classified within Level 3 of the fair value hierarchy, wherein fair value was estimated using significant unobservable inputs (in thousands):
There have been no changes to the valuation methods during the year ended December 31, 2015.
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses as of December 31, 2015 and 2014 consisted of the following (in thousands):
8. RESTRICTED CASH
In November 2015, the Russian government seized the bank whose holdings included our Russian subsidiary’s restricted cash. Due to the uncertainty as to our ability to recover the asset, we have impaired this restricted cash on our Consolidated Balance Sheet as of December 31, 2015 and recorded an impairment loss of $0.8 million in our Consolidated Statement of Operations.
9. PROPERTY AND EQUIPMENT, NET
Property and equipment as of December 31, 2015 and 2014 consisted of the following (in thousands):
Depreciation and amortization expense for the years ended December 31, 2015, 2014 and 2013 was $2.4 million, $1.7 million, and $1.4 million, respectively.
During the year ended December 31, 2015, our capital expenditures of $5.8 million were primarily related to investments in lab equipment and dedicated compounding space at a contract manufacturer, where we expect to be able to manufacture both BIND-014 and ACCURIN AZD2811 at the double-digit kilogram scale.
10. ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES
Accrued expenses as of December 31, 2015 and 2014 consisted of the following (in thousands):
Other long-term liabilities as of December 31, 2015 and 2014 consisted of the following (in thousands):
11. LONG-TERM DEBT
Debt-In June 2013, we entered into an amended and restated credit facility with Hercules Technology III, L.P. (“Hercules”) as lender, pursuant to which we borrowed an aggregate principal amount of $4.5 million in term loans. In January 2015, we entered into an amendment to the amended and restated credit facility (“New Term Loan”) with Hercules Technology III, L.P. (“Hercules”) as lender. The January 2015 amendment provides us with a term loan in an amount equal to $15.0 million, a portion of which was used to repay our then-existing term loan with Hercules in the aggregate amount of $3.1 million, and the remainder of which is being used for general corporate purposes. Substantially all our assets serve as collateral for our New Term Loan.
The January 2015 amendment to the credit facility includes the same affirmative and negative covenants applicable to us and our subsidiaries as the June 2013 amended and restated credit facility. The affirmative covenants include, among others, covenants requiring us (and us to cause our subsidiaries) to maintain our legal existence and governmental approvals, deliver certain financial reports and maintain insurance coverage. The negative covenants include, among others, restrictions on us and our subsidiaries transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets, and suffering a change in control, in each case subject to certain exceptions. Additionally, the credit facility restricts us from investing in our wholly-owned domestic subsidiary, BIND Biosciences Security Corporation, unless we hold cash and other liquid investments equal to $25.0 million, less any payments of principal that we have made to Hercules under the credit facility.
The credit facility also includes events of default, the occurrence and continuation of which provide Hercules with the right to exercise remedies against us and the collateral securing the loans under the credit facility, including our cash. These events of default include, among other things, our failure to pay any amounts due under the credit facility, a breach of covenants under the credit facility, including our obligation to provide unqualified audited financial statements as of the end of the year, our insolvency and the insolvency of our subsidiaries, the occurrence of any default under certain other indebtedness, and a final judgment against us in an amount greater than $500,000.
In addition, under the credit facility, Hercules can declare a material adverse effect while monitoring our business, our operations, our assets or our condition (financial or otherwise). A material adverse effect is an event of default under the credit facility. In the event of default, repayment of amounts due under the credit facility may be accelerated by Hercules.
The principal balance of the New Term Loan bears interest at a floating per annum rate equal to 8.35% plus the prime rate less 3.25% (with a minimum rate of 8.35%). The interest rate at December 31, 2015 was 8.6%. The New Term Loan matures on July 2, 2018 (the “Maturity Date”) and we made interest-only payments through the remainder of 2015. Beginning on January 1, 2016, we are paying in equal monthly installments of principal and interest, with the entire remaining principal balance and all accrued and unpaid interest due on the Maturity Date.
Future principal payments under our New Term Loan as of December 31, 2015, are as follows (in thousands):
In connection with the closing of the amendment in January 2015, we also paid Hercules a facility charge of approximately $0.2 million. Furthermore, on the earliest to occur of (i) the Maturity Date, (ii) the date that we prepay the New Term Loan, or (iii) the date that the New Term Loan becomes due and payable, we agreed to pay Hercules an end of term charge of approximately $0.8 million. The end of term charge is being accrued through interest expense using the effective interest method through the Maturity Date.
In connection with the closing of the amendment in January 2015, we and Hercules entered into a Warrant Agreement (the “Warrant”), pursuant to which Hercules, as warrant holder, has the right to purchase 81,227 shares of our common stock at an exercise price of $5.54. The Warrant is exercisable beginning on the date of issuance and expires five years from that date. On the issuance date, the warrants were valued using the Black-Scholes option pricing model with the following assumptions: volatility of 73%, expected term of five years, risk-free interest rate of 1.3%, and a zero dividend yield. The Warrant fair value of $0.4 million and the facility charge of approximately $0.2 million have been recorded as a debt discount and are being amortized through interest expense using the effective interest method through the Maturity Date. In addition to the warrants issued with prior Hercules agreements and amendments, there were a total of 155,639 warrants outstanding as of December 31, 2015.
Interest expense for the years ended December 31, 2015, 2014 and 2013 was $1.8 million, $0.3 million, and $0.7 million, respectively.
12. REDEEMABLE CONVERTIBLE PREFERRED STOCK
In connection with the closing of the IPO, all of our outstanding redeemable convertible preferred stock automatically converted to common stock at a 1:2.62 ratio on September 25, 2013, resulting in an additional 8,515,439 shares of our common stock becoming outstanding.
13. STOCKHOLDERS’ EQUITY
At-the-Market Facility-In October 2014, we entered into an at-the-market sales agreement (“Sales Agreement”) with Cowen & Company, LLC (“Cowen”) pursuant to which we may from time to time, at our option, offer and sell shares of our common stock having an aggregate offering price of up to $40 million through Cowen, acting as our sales agent. Upon delivery of a placement notice by us and subject to the terms and conditions of the Sales Agreement, Cowen will use its commercially reasonable efforts to sell shares of our common stock, based upon our instructions. We have provided Cowen with customary indemnification rights, and Cowen will be entitled to a commission of up to 3.0% of the gross proceeds from sales of shares of our common stock under the Sales Agreement. Sales of shares of our common stock, under the Sales Agreement may be made by any method permitted by law that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made through the Nasdaq Global Select Market, on any other existing trading market for our common stock or to or through a market maker. We may also authorize Cowen to sell shares in negotiated transactions. As of December 31, 2015, we had sold 204,696 shares of common stock under the Sales Agreement at an average price of $6.09 for net proceeds of approximately $1.2 million. We plan to use proceeds from the Sales Agreement for general corporate purposes. We have no obligation to sell shares of our common stock and cannot provide any assurances that we will issue any additional shares pursuant to the Sales Agreement. We may also suspend the offering of shares of our common stock upon notice and subject to other conditions under the Sales Agreement or may at any time upon notice terminate the Sales Agreement.
Public Offering of Equity Securities-In February 2015, we completed an underwritten public offering of 3,739,130 units at the public offering price of $5.75 per unit. Each unit consisted of one share of our common stock and six-tenths (0.6) of a warrant to purchase one share of our common stock with an exercise price of $6.60 per share. We received net proceeds of approximately $20 million after deducting underwriting discounts and commissions and offering expenses payable by us and not including any future proceeds from the exercise of the warrants.
The warrants were exercisable immediately upon their initial issuance date and will expire five years from the date of issuance. The shares of common stock and the warrants were immediately separable and were issued separately. The warrants contain weighted-average anti-dilution protection upon the issuance of any common stock, or securities convertible into common stock or certain other issuances at a price below the then-existing exercise price of the warrants, with certain exceptions, including but not limited to securities issued pursuant to equity compensation plans or arrangements, currently outstanding warrants, securities issued pursuant to shareholder rights plans, securities issued pursuant to certain strategic transactions or financings, and the first $30 million of securities sold under the Sales Agreement with Cowen that would otherwise cause an adjustment. The warrants are being recorded at fair value on our Consolidated Balance Sheets as a liability and changes in fair value are included in change in fair value of warrant liability on our Consolidated Statement of Operations.
The assumptions used in calculating the fair value of the warrants represent management’s best estimates. The warrants were valued at December 31, 2015 and on the issuance date using a Monte Carlo valuation model, using estimates of future funding and associated probabilities and the following parameters:
Initial Public Offering-On September 25, 2013, we completed an initial public offering (“IPO”) of our common stock, which resulted in the sale of 4,700,000 shares, at a price of $15.00 per share. On October 23, 2013, we closed a portion of the underwriters’ over-allotment option, and we sold an additional 370,499 shares at a price to the public of $15.00 per share. We received net proceeds before expenses from the IPO of $67.4 million after deducting underwriting discounts and commissions paid. In connection with the closing of the IPO, all of our outstanding redeemable convertible preferred stock automatically converted to common stock at a 1:2.62 ratio on September 25, 2013, resulting in an additional 8,515,439 shares of our common stock becoming outstanding.
2013 Incentive Award Plan-Our 2013 Incentive Award Plan (the “2013 Plan”) provides for the issuance of common stock and stock options to employees, officers, directors, consultants, and advisors. Under the 2013 Plan, the Board determines the number of shares of common stock to be granted and the terms pursuant to the awards. The exercise price of incentive stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the 2013 Plan expire 10 years after the grant date, unless the Board sets a shorter term. In September 2013, the Board authorized the number of shares authorized to be issued under the 2013 Plan to 1,335,877. The 2013 Plan provides an annual increase on the first day of each calendar year beginning January 1, 2014 and ending on and including January 1, 2023, equal to the lesser of (A) 1,335,877 Shares, (B) 4% of the Shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (C) such smaller number of Shares as determined by the Board; provided, however, no more than 10,000,000 Shares may be issued upon the exercise of Incentive Stock Options. As of December 31, 2015, there were 564,671 shares of common stock available for future grant under the 2013 Plan. In January 2016, there was an increase of 835,269 shares of common stock available for future grant under the 2013 Plan.
2006 Stock Incentive Plan-Our 2006 Stock Incentive Plan (the “2006 Plan”) provided for the issuance of common stock and stock options to employees, officers, directors, consultants, and advisors. Under the 2006 Plan, the Board determined the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards. The exercise price of incentive stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the 2006 Plan expire 10 years after the grant date, unless the Board sets a shorter term. In June 2013, the Board increased the number of shares authorized to be issued under the 2006 Plan to 3,157,394. As of December 31, 2015, there were no shares of common stock available for future grant under the 2006 Plan.
Prior to September 19, 2013, in determining the exercise prices for options granted, the Board considered the fair value of the common stock as of the measurement date. The fair value of the common stock was determined by the Board based on a variety of different factors, including our financial position, the status of development efforts, the composition and ability of the current scientific and management teams, the current climate in the market place, the illiquid nature of our common stock, arm’s-length sale of our preferred stock, the effect of the rights and preferences of the preferred stockholders, and the prospects of a liquidity event, among others.
Certain of our unvested stock options will vest upon the sale of all or substantially all of our stock or assets.
A summary of option activity under the 2013 Plan and 2006 Plan as of December 31, 2015, and changes during the year then ended is as follows:
During the years ended December 31, 2015, 2014 and 2013, we used the Black-Scholes option-pricing model to estimate the fair value of stock option grants. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The assumptions used in determining fair value of our employee stock options granted for the years ended December 31, 2015, 2014 and 2013, are as follows:
We derived the risk-free interest rate assumption from the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. We based the assumed dividend yield on our expectation of not paying dividends in the foreseeable future. The expected term of the awards represented the period of time that the awards were expected to be outstanding. We calculated the expected term of options using historical grant, exercise and cancellation data. The estimated volatility is based upon a weighted calculation of our historical price volatility and the historical volatility of comparable companies with publicly available share prices. The accounting guidance for stock-based compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The weighted-average grant-date fair value of options granted in 2015, 2014 and 2013 was $5.12, $7.78, and $6.05 per share, respectively. The fair value is being expensed over the vesting period of the options, generally four years, on a straight-line basis as the services are being provided.
During the year ended December 31, 2015, we did not issue any nonemployee stock options under consulting agreements to purchase shares of common stock. During the years ended December 31, 2014 and 2013, we issued nonemployee stock options under consulting agreements to purchase 50,000 and 30,000 shares of common stock, respectively, at a weighted-average exercise price of $8.45 and $9.33 per share, respectively, with primarily a four-year vesting period. The options were estimated to have a fair value at the grant date of approximately $357,000 and $221,000, respectively, using the Black-Scholes option-pricing model using the fair value of the common stock and the following assumptions:
The related stock-based compensation is subject to remeasurement and is being expensed on a straight-line method over the vesting term.
During the year ended December 31, 2015, we granted 81,272 shares of common stock to non-employees for consulting services which were fully vested on the date of grant resulted in $0.4 million in compensation expense being recognized.
As of December 31, 2015, there was $4.7 million (includes $0.3 million of compensation for options containing performance conditions) of unrecognized compensation cost related to the stock options granted under the 2006 Plan and 2013 Plan. As of December 31, 2015, $4.4 million of compensation with only service conditions is expected to be recognized over the remaining requisite service period of 2.56 years.
We have recorded aggregate stock-based compensation expense related to the issuance of stock option awards in the following line items in the accompanying consolidated statement of operations (in thousands):
In September 2013, certain performance based stock option awards, granted to two executives, vested upon the closing of our IPO resulting in stock-based compensation expense of $3.6 million. Additionally, during the three months ended March 31, 2015, our president and chief executive officer resigned. In connection with his resignation and separation agreement, we accelerated the vesting of all equity and equity-based awards held as of the effective date of his resignation. In connection with this modification, we recognized an additional $0.2 million in stock-based compensation expense during the three months ended March 31, 2015.
Reserved Shares-As of December 31, 2015 and 2014, we have reserved the following shares of common stock for warrants and exercise of stock options:
14. INCOME TAXES
We have no current or deferred income tax expense for the years ended December 31, 2015, 2014 and 2013, due to our net operating loss position. We did not record a federal or state income tax provision or benefit for the year ended December 31, 2015, due to the losses incurred in the corresponding periods as well as our continued maintenance of a full valuation allowance against our net deferred tax assets.
The reconciliation between income taxes computed at the federal statutory income tax rate and the provision for (benefit from) income taxes is as follows:
The significant components of our deferred tax assets as of December 31, 2015 and 2014, are as follows (in thousands):
Because of our limited operating history, management has concluded that it is more likely than not that the benefits of losses to date which result in deferred tax assets will not be realized and, accordingly, we provided a full valuation allowance against the net deferred tax assets. As such, there is no income tax benefit recorded in the accompanying Consolidated Statement of Operations for all periods presented. The valuation allowance increased by approximately $17.7 million and $15.1 million in 2015 and 2014, respectively, due to the increase in the deferred tax assets (primarily due to the net operating loss carryforwards and capitalization of certain expenses for tax purposes).
At December 31, 2015, we had federal, foreign, and state net operating loss carryforward of approximately $119.4 million, 5.7 million, and $116.7 million, respectively, available to reduce future taxable income, if any. The federal net operating loss carryforwards expire beginning in 2027 and ending in 2035. The state net operating loss carryforwards began expiring in 2012 and may continue to expire through 2035. At December 31, 2015, we had available federal and state income tax credits of approximately $3.5 million and $2.3 million, respectively, which are available to reduce future income taxes, if any, through 2029 (state) and 2035 (federal).
Realization of the future tax benefits is dependent on many factors, including our ability to generate taxable income within the net operating loss carryforward period. Under the provisions of the Internal Revenue Code, certain substantial changes in our ownership, including a sale of the company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards, which could be used annually to offset future taxable income.
We file tax returns in the United States, Massachusetts, and Russia. In the United States and Massachusetts, the tax years 2006 through 2014 remain open to examination by the Internal Revenue Service and in Russia, the tax year 2014 remains open to examination by taxing jurisdictions in Russia. As a result, carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service or other state tax authorities if they have or will be used in a future period. We are not currently under examination by the Internal Revenue Service or any other jurisdiction for any tax years. We do not believe material uncertain tax positions have arisen to date. We have not recorded any interest or penalties on any unrecognized tax benefits since our inception.
15. COMMITMENTS
Leases-Our Cambridge headquarters is under a five-year operating lease beginning in April 2012 and expiring in 2017. In June 2014, we amended our primary office and laboratory lease to include space in the same building that we had been previously subleasing from a third party. Total rent expense for all operating leases for the years ended December 31, 2015, 2014 and 2013 was $1.9 million, $2.0 million, and $1.2 million, respectively.
In connection with the lease agreement, we issued a letter of credit to the landlord for $0.5 million in 2011. We secured the letter of credit using restricted cash for the full amount of the letter.
Future minimum commitments due under all leases at December 31, 2015, are as follows (in thousands):
License Agreements-We have license agreements with three universities. In 2007, we entered into a license agreement with the Massachusetts Institute of Technology (“MIT”) for a portfolio of approximately 15 patent families. We will pay royalties in the low single digit percentages on the commercial sale of such licensed product. We may also make contingent payments to MIT totaling up to $1.5 million in aggregate upon achievement of specified clinical, regulatory and commercial events. We are also required to pay MIT a percentage, ranging from the high-single digits to the low-mid double digits, of any consideration we receive from sublicensees, including our collaboration partners, and a specified percentage, in the mid-single digits, of all payments we receive in excess of a specified amount in the aggregate for the practice of the licensed patents on behalf of non-sublicensee third parties. Contingent payments totaling $2.1 million have been made to MIT through December 31, 2015.
We recorded research and development expenses, exclusive of sublicense consideration, relating to these agreements of $0.5 million, $0.2 million and $0.2 million for the years ended December 31, 2015 and 2014 and 2013 respectively.
16. 401(k) PLAN
We have a 401(k) defined contribution plan (the “401(k) Plan”) for substantially all of our employees. Eligible employees may make pretax contributions to the 401(k) Plan up to statutory limits. On October 1, 2015, at the election of our Board, we began matching 50% of the first 6% of participant contributions. Our matching contribution for the year ended December 31, 2015 was $0.1 million.
17. QUARTERLY FINANCIAL DATA (unaudited)
The following tables summarize the unaudited quarterly financial data for the last two fiscal years (in thousands, except share and per share data):
Item 9.
Item 9.
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A.
Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2015.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting during the quarter ended December 31, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.
Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2015, our internal control over financial reporting was effective.
This annual report does not include an attestation report of our registered public accounting firm on internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies”.
Item 9B.
Item 9B.
Other Information
None.
PART III
Certain information required by Part III is omitted from this Annual Report on Form 10-K and is incorporated herein by reference to the Registrant’s Definitive Proxy Statement for the Annual Meeting of Stockholders scheduled to be held on June 21, 2016 to be filed with the Securities and Exchange Commission.
Item 10.
Item 10.
Directors, Executive Officers and Corporate Governance
Except as provided below, the information in response to this item contained to the Proxy Statement for our Annual Meeting of Stockholders scheduled to be held on June 21, 2016 and is incorporated herein by reference.
The information regarding executive officers is contained under the caption “Executive Officers of the Registrant” at the end of Part I of this Annual Report on Form 10-K
Our board of directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which is available on our website at http://ir.bindtherapeutics.com/governance.cfm in the “Investors & Media” section. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics, as well as Nasdaq’s requirement to disclose waivers with respect to directors and executive officers, by posting such information on our website at the address and location specified above.
Item 11.
Item 11.
Executive Compensation
The information required to be disclosed by this item is contained in the Proxy Statement for our Annual Meeting of Stockholders scheduled to be held on June 21, 2016 and is incorporated herein by reference.
Item 12.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required to be disclosed by this item is contained in the Proxy Statement for our Annual Meeting of Stockholders scheduled to be held on June 21, 2016 and is incorporated herein by reference.
Item 13.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required to be disclosed by this item is contained in the Proxy Statement for our Annual Meeting of Stockholders scheduled to be held on June 21, 2016 and is incorporated herein by reference.
Item 14.
Item 14.
Principal Accountant Fees and Services
The information required to be disclosed by this item is contained in the Proxy Statement for our Annual Meeting of Stockholders scheduled to be held on June 21, 2016 and is incorporated herein by reference.
PART IV
Item 15.
Item 15.
Exhibits and Financial Statement Schedules
(a) Documents filed as part of this report:
1. List of Financial Statements
The financial statements required by this item are listed in Item 8, “Financial Statements and Supplementary Data” herein.
2. List of Financial Statement Schedules
All schedules are omitted because they are not applicable, not required or the required information is shown in the consolidated financial statements or notes thereto.
3. List of Exhibits
*
Filed herewith.
**
Furnished herewith.
#
Indicates management contract or compensatory plan.
†
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BIND Therapeutics, Inc.
By:
/s/ Andrew Hirsch
Andrew Hirsch
President and Chief Executive Officer
March 15, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
President and Chief Executive Officer
/s/ Andrew Hirsch
March 15, 2016
Andrew Hirsch
(principal executive officer)
/s/ Christopher Lindblom
Senior Vice President, Finance and Administration (principal financial and accounting officer)
March 15, 2016
Christopher Lindblom
/s/ Daniel Lynch
Chairman of the Board of Directors
March 15, 2016
Daniel Lynch
/s/ Peter Barton Hutt
Director
March 15, 2016
Peter Barton Hutt
/s/ Robert Langer, Sc.D.
Director
March 15, 2016
Robert Langer, Sc.D.
/s/ Amir Nashat, Sc.D.
Director
March 15, 2016
Amir Nashat, Sc.D.
/s/ Eric K. Rowinsky, M.D.
Director
March 15, 2016
Eric K. Rowinsky, M.D.
/s/ Charles A. Rowland, Jr.
Director
March 15, 2016
Charles A. Rowland, Jr.
/s/ Amy W. Schulman
Director
March 15, 2016
Amy W. Schulman
/s/ Arthur Tzianabos, Ph.D.
Director
March 15, 2016
Arthur Tzianabos, Ph.D.