SEC Filings

ARRAY BIOPHARMA INC filed this Form 10-K on 08/11/2017
Entire Document

historically funded its operations from up-front fees and license and milestone payments received under drug collaborations and license agreements, the sale of equity securities, and debt provided by convertible debt and other credit facilities. During the years ended June 30, 2017, and 2016 the Company received net proceeds of $30.1 million and $2.9 million, respectively, from sales in an at-the-market offering of its common stock made from time to time under our Sales Agreement with Cantor Fitzgerald & Co. (or "Cantor") as well as net proceeds of $9.8 million upon the issuance of Subordinated Convertible Promissory Notes to Redmile Biopharma Investments I, L.P. and Redmile Capital Offshore Fund II, Ltd. (collectively, “Redmile”) in September 2015 and $124.2 million in net proceeds in October 2016 from an underwritten public offering of the Company's common stock. Additionally, as of June 30, 2017, the Company has received a total of $319.4 million from up-front fees and license and milestone payments since December 2009. For more information on the Company's equity offerings and our outstanding debt, see Note 7 - Debt and Note 10 - Stockholders’ Equity (Deficit) to the accompanying audited financial statements.

The Company believes that its cash, cash equivalents, marketable securities and accounts receivable as of June 30, 2017 will enable it to continue to fund operations in the normal course of business for at least the next 12 months from the date of filing this Annual Report on Form 10-K. Until the Company can generate sufficient levels of cash from operations, which it does not expect to achieve in the next two years, and because sufficient funds may not be available to the Company when needed from existing collaborations, the Company expects that it will be required to continue to fund its operations in part through the sale of debt or equity securities, through licensing select programs, or partial economic rights that include upfront, royalty and/or milestone payments.

The Company's assessment of its future need for funding and its ability to continue to fund its operations through the sale of debt or equity securities or from upfront fees, milestone payments or other sources are forward-looking statements that are based on assumptions that may prove to be wrong and that involve substantial risks and uncertainties. The Company may be unable to obtain such funding when needed or on terms that are favorable to the Company. In addition, the Company's actual future capital requirements could vary as a result of a number of factors. These risks, uncertainties and factors are described further below under the heading "Item 1A. Risk Factors" under Part I of this Annual Report on Form 10-K and in other reports we file with the SEC.

If the Company is unable to generate enough revenue from its existing or new collaborations or license agreements when needed or secure additional sources of funding and receive related full and timely collections of amounts due, it may be necessary to significantly reduce the Company's current rate of spending through reductions in staff and delaying, scaling back or stopping certain research and development programs, including more costly late phase clinical trials on our wholly-owned programs. These events could prevent the Company from successfully executing our operating plan and, in the future, could raise substantial doubt about the Company's ability to continue as a going concern. These events may also result in the Company's inability to maintain the liquidity ratio required under our Loan Agreement with Silicon Valley Bank.

Summary of Significant Accounting Policies

Fair Value Measurements

Array follows accounting guidance on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value our financial instruments:
Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.
Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.