XML 18 R8.htm IDEA: XBRL DOCUMENT

LIQUIDITY AND CAPITAL RESOURCES

6 Months Ended

Jun. 30, 2011

4. LIQUIDITY AND CAPITAL RESOURCES

Substantially all of the Company’s revenue to date has been derived from upfront, milestone and royalty payments earned on licensing transactions and from subcontracts. The Company’s business operations to date have primarily consisted of licensing and research and development activities and the Company expects this to continue for the immediate future. The Company has not introduced commercially any products. If and when the Company’s products for which it has not entered into marketing relationships receive FDA approval, the Company may begin to incur other expenses, including sales and marketing related expenses if it chooses to market the products itself.

To date, the Company has used primarily equity financings, and to a lesser extent, licensing income, interest income and the cash received from its 2009 merger with Cell Genesys, Inc. (Cell Genesys) to fund its ongoing business operations and short-term liquidity needs. In March 2011, the Company completed an offering of an aggregate of approximately 12.2 million shares of the Company’s common stock and warrants to purchase an aggregate of approximately 4.0 million shares of the Company’s common stock, resulting in net proceeds of $23.9 million, after deducting placement agent fees and other offering expenses. See Note 9, “Stockholders’ Equity,” for additional discussion regarding the March 2011 registered direct offering. As of June 30, 2011, the Company had $37.1 million of cash and cash equivalents, including $34.9 million invested in a U.S. Treasury money market fund. On August 2, 2011, the Company completed an underwritten public offering of an aggregate of 16.0 million shares of common stock, resulting in net proceeds of approximately $45.0 million, after underwriters’ discounts, commissions and offering expenses. See Note 11, “Subsequent Event.”

Absent the receipt of any additional licensing income or financing, the Company expects its cash and cash equivalents balance to decrease as it continues to use cash to fund its operations, including in particular its LibiGel Phase III clinical development program. The Company expects its ongoing LibiGel Phase III clinical development program to continue to require significant resources. The Company’s future capital requirements will depend upon numerous factors, including: the progress, timing, cost and results of our LibiGel Phase III clinical development program; the cost, timing and outcome of regulatory reviews of the Company’s products; the Company’s ability to license LibiGel or its other products for development and commercialization; the rate of technological advances; the commercial success of the Company’s products; the Company’s general and administrative expenses; and the success, progress, timing and costs of the Company’s business development efforts to implement business collaborations, licenses and other business combinations or transactions, and its efforts to continue to evaluate various strategic alternatives available with respect to its products and the company, itself.

The Company expects its cash and cash equivalents as of June 30, 2011, together with the net proceeds from its August 2011 public offering, to meet the Company’s liquidity requirements through at least the next 18 months. These estimates may prove incorrect or the Company, nonetheless, may choose to raise additional financing earlier.

As of June 30, 2011, the Company did not have any existing credit facilities under which it could borrow funds. The Company does have a Committed Equity Financing Facility (CEFF) with Kingsbridge Capital Limited (Kingsbridge) in which Kingsbridge has committed to purchase, subject to certain conditions and at the Company’s sole discretion, up to the lesser of $25.0 million or approximately 5.4 million shares of the Company’s common stock. The CEFF term runs through December 2011. If the Company accessed capital under the CEFF, it would do so by providing Kingsbridge with common stock at discounts ranging from eight to 14 percent, depending on the average market price of the Company’s common stock during the applicable pricing period. As of June 30, 2011, the Company had not sold any shares to Kingsbridge under the CEFF.

As an alternative to raising additional financing, the Company may choose to license LibiGel, Elestrin (outside the territories already licensed) or another product (e.g. one or more of the Company’s cancer vaccines) to a third party who may finance a portion or all of the continued development and, if approved, commercialization of that licensed product, sell certain assets or rights under its existing license agreements or enter into other business collaborations or combinations, including the possible sale of the Company.