Overview



We are a clinical-stage biotechnology company focused on developing the next
generation of ADCs to improve outcomes for cancer patients. By generating
targeted therapies with enhanced anti-tumor activity and favorable tolerability
profiles, we aim to disrupt the progression of cancer and offer patients more
good days. We call this our commitment to ''target a better now.''

An ADC with our proprietary technology comprises an antibody that binds to a
target found on tumor cells and is conjugated to one of our potent anti-cancer
agents as a ''payload'' to kill the tumor cell once the ADC has bound to its
target. ADCs are an expanding approach to the treatment of cancer, with seven
approved products and the number of agents in development growing significantly
in recent years.

We have established a leadership position in ADCs with a portfolio of differentiated product candidates to address both solid tumors and hematological malignancies.



Our lead program is mirvetuximab soravtansine, a first-in-class investigational
ADC targeting FR?, a cell-surface protein overexpressed in a number of
epithelial tumors, including ovarian, endometrial, and non-small-cell lung
cancers. In March of 2019, we announced that FORWARD I, our Phase 3 clinical
trial evaluating mirvetuximab compared to chemotherapy in women with
FR?-positive PROC, did not meet the primary endpoint in either the entire
treatment population or the pre-specified high FR? expression population. Data
from FORWARD I did, however, show promising efficacy signals across a range of
parameters in the pre-specified subset of patients with high FR? expression. In
post hoc exploratory analyses using a PS2+ scoring method, in the FR?-high
population scored by the PS2+ method, mirvetuximab was associated with longer
PFS, by BIRC, higher overall response rate, or ORR, and longer overall survival,
or OS.

Following consultation with the FDA, we will concurrently enroll two new trials
of mirvetuximab: SORAYA, a single-arm clinical trial that, if successful, could
lead to accelerated approval of mirvetuximab; and MIRASOL, a randomized Phase 3
clinical trial that, if successful, could lead to full approval of mirvetuximab.
We anticipate enrolling our first patient in SORAYA during the first quarter of
2020, and expect to report top-line data from this trial in mid-2021. We opened
enrollment in MIRASOL in December 2019 and expect to report top-line data from
this trial in the first half of 2022. If SORAYA is successful, we expect to
submit an application for accelerated approval of mirvetuximab in the applicable
patient population to the FDA during the second half of 2021 and to thereafter
seek full approval on the basis of a confirmatory Phase 3 trial, MIRASOL.

We undertook a review of our operations during the second quarter of 2019 with
the goals of prioritizing our portfolio and reducing our cost base to ensure
that our cash resources will be sufficient to advance certain of our programs
through the next stages of development. Based on the outcome of this operational
review and subsequent consultation with FDA, we have established three strategic
priorities for the business: (i) execute SORAYA and MIRASOL and pursue the
development of additional indications for mirvetuximab in ovarian cancer; (ii)
advance a select portfolio of three earlier-stage product candidates; and (iii)
further strengthen our balance sheet and expand our capabilities through
partnering. Consistent with these priorities, we have focused our operations on
the following activities:

? open SORAYA and enroll patients in MIRASOL to support the potential for

accelerated approval in 2022 and conversion to full approval in 2023;

continue follow up in the ongoing Phase 1b FORWARD II companion trial of

? mirvetuximab in combination regimens and initiate additional combination trials

to support expanded indications;

? continue IMGN632 development in patients with AML, BPDCN, and other

CD123-positive hematologic malignancies in collaboration with Jazz;

advance two additional assets that demonstrate our continued innovation in

ADCs: IMGC936, which is an investigational ADC directed to the novel solid

? tumor target, ADAM9, which we are co-developing with MacroGenics; and our next

generation investigational anti-FR? ADC, IMGN151, which is expected to enter

preclinical development in 2020; and

? monetize our remaining portfolio and platform technologies through

out-licensing transactions or asset sales.




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Corresponding to the prioritization of our portfolio, we have reduced ongoing expenses through the discontinuation of our IMGN779 development program, suspension of all other research activities, and a reduction in our workforce.



We have also developed a new class of cytotoxic payloads that we refer to as
IGNs. Our IGNs are designed to alkylate DNA without cross-linking, which has
provided a broad therapeutic index in preclinical models. Specifically, IGN ADCs
have retained the anti-tumor potency of crosslinking drugs with less toxicity to
normal cells in in vitro and animal models. These properties have allowed for
repeat administration of ADCs with IGN payloads in clinical studies and as
supported by preclinical data, suggest that IGNs may be able to be combined with
other agents.

IMGN632 is an investigational ADC comprised of a high affinity antibody designed
to target CD123 with site specific conjugation to our most potent IGN payload.
We are advancing IMGN632 in clinical trials for patients with AML and BPDCN. We
recently presented data from our Phase 1 clinical trial of IMGN632 in patients
with relapsed or refractory adult AML and BPDCN. We have also determined a Phase
2 dose and schedule for IMGN632 and have initiated a clinical trial with
combinations in AML as well as monotherapy in front-line patients with minimal
residual disease following induction therapy. In addition, we continue to enroll
BPDCN patients under our initial protocol.

We continue to advance select preclinical programs, led by IMGC936. IMGC936 is
an investigational ADC in co-development with MacroGenics designed to target
ADAM9, an enzyme overexpressed in a range of solid tumors and implicated in
tumor progression and metastasis. This ADC incorporates a number of innovations,
including antibody engineering to extend half-life, site-specific conjugation
with a fixed drug-antibody ratio to enable higher dosing, and a next-generation
linker and payload for improved stability and bystander activity. We reported
encouraging preclinical safety and activity data from this program at the AACR
meeting in 2019 and expect an IND for IMGC936 will be submitted to the FDA in
the first half of 2020. Finally, we expect our next generation anti-folate
receptor alpha candidate, IMGN151, to move into preclinical development in 2020.

Collaborating on ADC development with other companies allows us to generate
revenue, mitigate expenses, enhance our capabilities, and extend the reach of
our proprietary platform. The most advanced partner program is Roche's marketed
product, Kadcyla®. Our ADC technology is also used in candidates in clinical
development with a number of partners. We have evolved our partnering approach
to pursue relationships where we can gain access to technology and complementary
capabilities, such as our technology swap with CytomX, as well as co-development
and co-commercialization opportunities, such as our relationships with Jazz and
MacroGenics. In addition, following our restructuring in 2019, we seek to
monetize our remaining portfolio and platform technologies through out-licensing
transactions or asset sales. To this end, in December 2019, we granted an
exclusive development and commercialization license to CytomX to our cytotoxic
payload technology for use with antibodies (and Probodies™ developed therefrom)
directed to EpCAM, including certain of our proprietary anti-EpCAM antibodies
developed into Probodies utilizing CytomX's Probody technology, in return for
which we will receive an upfront payment from CytomX with the potential for
additional payments following CytomX's successful achievement of pre-defined
clinical development, approval, and commercialization milestones, as well as
royalties on net sales. In addition, the new license terminated the previous
exclusive development and commercialization license CytomX granted us in 2017 to
its proprietary antibody-masking technology for use with Probodies. We expect
that substantially all of our revenue for the foreseeable future will result
from payments under our collaborative arrangements. For more information
concerning these relationships, including their ongoing financial and accounting
impact on our business, please read Note C, "Significant Collaborative
Agreements," to our consolidated financial statements included in this report.

To date, we have not generated revenues from commercial sales of internal products and we expect to incur significant operating losses for the foreseeable future. As of December 31, 2019, we had $176.2 million in cash and cash equivalents compared to $262.3 million as of December 31, 2018.



In January 2020, we announced the closing of a public offering of 24,523,750
shares of common stock at a price of $4.25 per share. We received net proceeds
from the offering of $97.7 million after deducting underwriting discounts and
offering expenses. We intend to use the net proceeds of the offering, together
with its existing capital, to fund our operations, including, but not limited
to, clinical trial activities, supply of drug substance and drug product,
pre-commercialization activities, capital expenditures, and working capital.

Critical Accounting Policies



We prepare our consolidated financial statements in accordance with accounting
principles generally accepted in the U.S. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, and expenses and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to our collaborative agreements, clinical
trial

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accruals, inventory, and stock-based compensation. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.



We adopted ASC 842 using the transition method provided by ASC Update No.
2018-11, Leases (Topic 842): Targeted Improvements. Under this method, we
initially applied the new leasing rules on January 1, 2019, rather than at the
earliest comparative period presented in the financial statements. Prior periods
presented are in accordance with previous guidance issued under ASC 840. The
adoption of ASC 842 represents a change in accounting principle that will
recognize lease assets and liabilities on the balance sheet, including those
previously classified as operating leases under ASC 840, and disclose key
information about leasing arrangements. Refer to Note B to the consolidated
financial statements for further discussion on this change.

We adopted ASC 606 on January 1, 2018, using the modified retrospective method
for all contracts not completed as of the date of adoption. The reported results
for 2018 reflect the application of ASC 606 guidance, while the reported results
prior to 2018 were prepared under the guidance of ASC 605, "Revenue
Recognition", which is also referred to herein as "legacy GAAP" or the "previous
guidance." Refer to Note B to the consolidated financial statements for further
discussion on this change. We believe the following critical accounting policies
reflect our more significant judgments and estimates used in the preparation of
our consolidated financial statements.

Revenue Recognition

We enter into licensing and development agreements with collaborators for the development of



ADCs. The terms of these agreements contain multiple deliverables/performance
obligations which may include (i) licenses, or options to obtain licenses, to
our ADC technology, (ii) rights to future technological improvements, (iii)
research activities to be performed on behalf of the collaborative partner, (iv)
delivery of cytotoxic agents, and (v) prior to the decommission of our Norwood
facility in 2018, the manufacture of preclinical or clinical materials for the
collaborative partner. Payments to us under these agreements may include upfront
fees, option fees, exercise fees, payments for research activities, payments for
the manufacture of preclinical or clinical materials, payments based upon the
achievement of certain milestones, and royalties on product sales. We follow the
provisions of Accounting Standards Codification Topic 606 - Revenue from
Contracts with Customers (ASC 606) in accounting for these agreements.

Revenue is recognized when a customer obtains control of promised goods or
services, in an amount that reflects the consideration which the entity expects
to receive in exchange for those goods or services. In determining the
appropriate amount of revenue to be recognized as we fulfill our obligations
under the agreements, we perform the following five steps: (i) identification of
the promised goods or services in the contract; (ii) determination of whether
the promised goods or services are performance obligations, including whether
they are distinct in the context of the contract; (iii) measurement of the
transaction price, including the constraint on variable consideration; (iv)
allocation of the transaction price to the performance obligations; and (v)
recognition of revenue when or as we satisfy each performance obligation.

We only apply the five-step model to contracts when it is probable that we will
collect the consideration to which we are entitled in exchange for the goods or
services we transfer to the customer. At contract inception, once the contract
is determined to be within the scope of ASC 606, we assess the goods or services
promised within each contract and determine those that are performance
obligations, and assess whether each promised good or service is distinct. We
then recognize as revenue the amount of the transaction price that is allocated
to the respective performance obligation when or as the performance obligation
is satisfied.

As part of the accounting for the arrangement, we must develop assumptions that
require judgment to determine the selling price for each performance obligation
that was identified in the contract, which is discussed in further detail below.

At December 31, 2019, we had the following material types of agreements with the parties identified below:

Development and commercialization licenses, which provide the party with the

? right to use our ADC technology and/or certain other intellectual property to

develop and commercialize anticancer compounds to a specified antigen target:

Bayer (one exclusive single-target license)

Biotest (one exclusive single-target license)

CytomX (two exclusive single-target licenses)

Debiopharm (one exclusive single-compound license)



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Fusion Pharmaceuticals (one exclusive single-compound license)

Novartis (five exclusive single-target licenses)

Oxford BioTherapeutics/Menarini (one exclusive single target license sublicensed from Amgen)

Roche, through its Genentech unit (five exclusive single-target licenses)

Sanofi (five fully-paid, exclusive single-target licenses)

Takeda, through its wholly owned subsidiary, Millennium Pharmaceuticals, Inc. (one exclusive single-target license)

Collaboration and option agreement for a defined period of time to secure a

? license to develop and commercialize a specified anticancer compound on


   established terms:


Jazz Pharmaceuticals

? Collaboration and license agreement to co-develop and co-commercialize a

specified anticancer compound on established terms:

MacroGenics

There are no performance, cancellation, termination, or refund provisions in any of the arrangements that contain material financial consequences to us.

Development and Commercialization Licenses


The obligations under a development and commercialization license agreement
generally include the license to our ADC technology with respect to a specified
antigen target, and may also include obligations related to rights to future
technological improvements, research activities to be performed on behalf of the
collaborative partner and, previously, the manufacture of preclinical or
clinical materials for the collaborative partner.

Generally, development and commercialization licenses contain non-refundable
terms for payments and, depending on the terms of the agreement, provide that we
will earn payments upon the achievement of certain milestones and royalty
payments, generally until the later of the last applicable patent expiration or
10 to 12 years after product launch. Royalty rates may vary over the royalty
term depending on our intellectual property rights and/or the presence of
comparable competing products. In the case of Sanofi, its licenses are
fully-paid and no further milestones or royalties will be received. In the case
of Debiopharm, no royalties will be received. We previously made available
research and manufacturing services under the development and commercialization
licenses; following our restructuring in June 2019, these services have been
discontinued. However, we may provide technology transfer services in connection
with the out-licensing of product candidates initially developed by us at
negotiated prices which are generally consistent with what other third parties
would charge. We may also provide technical assistance and share any technology
improvements with our collaborators during the term of the collaboration
agreements. We do not directly control when or whether any collaborator will
request research, achieve milestones, or become liable for royalty payments.

In determining the performance obligations, management evaluates whether the
license is distinct, and has significant standalone functionality, from the
undelivered elements to the collaborative partner based on the consideration of
the relevant facts and circumstances for each arrangement. Factors considered in
this determination include the research capabilities of the partner and the
availability of ADC technology research expertise in the general marketplace and
whether technological improvements are required for the continued functionality
of the license. If the license to our intellectual property is determined to be
distinct from the other performance obligations identified in the arrangement,
we recognize revenues from non-refundable, up-front fees allocated to the
license when the license is transferred to the customer and the customer is able
to use and benefit from the license.

We estimate the selling prices of the license and all other performance
obligations based on market conditions, similar arrangements entered into by
third parties, and entity-specific factors such as the terms of our previous
collaborative agreements, recent preclinical and clinical testing results of
therapeutic products that use our ADC technology, our pricing practices and
pricing objectives, the likelihood that technological improvements will be made,
and, if made, will be used by our collaborators, and the nature of the research
services to be performed on behalf of our collaborators and market rates for
similar services.

We recognize revenue related to research services as the services are performed.
We have also produced research material for potential collaborators under
material transfer agreements. We are compensated at negotiated rates that are
consistent with what other third parties would charge. We record amounts
received for research materials

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produced or services performed as a component of research and development support revenue. Following our restructuring in July 2019, we are no longer making research services available under our development and commercialization licenses.



Prior to 2019, we also provided cytotoxic agents to our collaborators and
produced preclinical and clinical materials (drug substance) at negotiated
prices generally consistent with what other third parties would charge. We
recognized revenue on cytotoxic agents and on preclinical and clinical materials
when the materials passed all quality testing required for collaborator
acceptance and control had transferred to the collaborator. During the twelve
months ended December 31, 2018 and 2017 the difference between our full cost to
manufacture preclinical and clinical materials on behalf of our collaborators as
compared to total amounts received from collaborators for the manufacture of
preclinical and clinical materials was $1.4 and $3.1 million, respectively. We
discontinued producing preclinical and clinical materials for our collaborators
at the end of 2018.

We recognize revenue related to the rights to future technological improvements over the estimated term of the applicable license.



Our development and commercialization license agreements have milestone payments
which for reporting purposes are aggregated into three categories:
(i) development milestones, (ii) regulatory milestones, and (iii) sales
milestones. Development milestones are typically payable when a product
candidate initiates or advances into different clinical trial phases. Regulatory
milestones are typically payable upon submission for marketing approval with the
FDA or other countries' regulatory authorities or on receipt of actual marketing
approvals for the compound or for additional indications. Sales milestones are
typically payable when annual sales reach certain levels.

At the inception of each arrangement that includes developmental and regulatory
milestone payments, we evaluate whether the achievement of each milestone
specifically relates to our efforts to satisfy a performance obligation or
transfer a distinct good or service within a performance obligation. If the
achievement of a milestone is considered a direct result of our efforts to
satisfy a performance obligation or transfer a distinct good or service and the
receipt of the payment is based upon the achievement of the milestone, the
associated milestone value is allocated to that distinct good or service. If the
milestone payment is not specifically related to our effort to satisfy a
performance obligation or transfer a distinct good or service, the amount is
allocated to all performance obligations using the relative standalone selling
price method. In addition, we evaluate the milestone to determine whether the
milestone is considered probable of being reached and estimate the amount to be
included in the transaction price using the most likely amount method. If it is
probable that a significant revenue reversal would not occur, the associated
milestone value is included in the transaction price to be allocated; otherwise,
such amounts are considered constrained and excluded from the transaction
price. At the end of each subsequent reporting period, we re-evaluate the
probability of achievement of such development or regulatory milestones and any
related constraint, and if necessary, adjust our estimate of the transaction
price. Any such adjustments to the transaction price are allocated to the
performance obligations on the same basis as at contract inception. Amounts
allocated to a satisfied performance obligation shall be recognized as revenue,
or as a reduction of revenue, in the period in which the transaction price
changes.

For development and commercialization license agreements that include
sales-based royalties, including milestone payments based on the level of sales,
and the license is deemed to be the predominant item to which the royalties
relate, we recognize revenue at the later of (i) when the related sales occur,
or (ii) when the performance obligation to which some or all of the royalty has
been allocated has been satisfied (or partially satisfied) in accordance with
the royalty recognition constraint. Under our development and commercialization
license agreements, except for the Sanofi and Debiopharm licenses, we receive
royalty payments based upon our licensees' net sales of covered products.
Generally, under the development and commercialization agreements, we receive
royalty reports and payments from our licensees approximately one quarter in
arrears. We estimate the amount of royalty revenue to be recognized based on
historical and forecasted sales and/or sales information from our licensees if
available.

Collaboration and Option Agreements/Right-to-Test Agreements



Our right-to-test agreements provide collaborators the right to test our ADC
technology for a defined period of time through a research, or right-to-test,
license. Under both right-to-test agreements and collaboration and option
agreements, collaborators may (a) take options, for a defined period of time, to
specified targets and (b) upon exercise of those options, secure or "take"
licenses to develop and commercialize products for the specified targets on
established terms. Under these agreements, fees may be due to us (i) at the
inception of the arrangement (referred to as "upfront" fees or payments),
(ii) upon the opt-in to acquire a development and commercialization license(s)
(referred to as exercise fees or payments earned, if any, when the development
and commercialization license is "taken"), (iii) at the collaborator's request,
after providing research services at negotiated prices, which are generally
consistent with what other third parties would charge, or (iv) some combination
of all of these fees.

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The accounting for collaboration and option agreements and right-to-test
agreements is dependent on the nature of the options granted to the
collaborative partner. Options are considered distinct performance obligations
if they provide a collaborator with a material right. Factors that are
considered in evaluating whether options convey a material right include the
overall objective of the arrangement, the benefit the collaborator might obtain
from the agreement without exercising the options, the cost to exercise the
options relative to the fair value of the licenses, and the additional financial
commitments or economic penalties imposed on the collaborator as a result of
exercising the options. As of December 31, 2019, all right-to-test agreements
have expired.

If we conclude that an option provides the customer a material right, and
therefore is a separate performance obligation, we then determine the estimated
selling prices of the option and all other units of accounting using the
following inputs: a) estimated fair value of each program, b) the amount the
partner would pay to exercise the option to obtain the license, and c)
probability of exercise.

We do not control when or if any collaborator will exercise its options for development and commercialization licenses. As a result, we cannot predict when or if we will recognize revenues in connection with any of the foregoing.



Upfront payments on development and commercialization licenses may be recognized
upon delivery of the license if facts and circumstances dictate that the license
has stand-alone functionality and is distinct from the undelivered elements.

In determining whether a collaboration and option agreement is within the scope
of ASC 808, Collaborative Arrangements, management evaluates the level of
involvement of both companies in the development and commercialization of the
products to determine if both parties are active participants and if both
parties are exposed to risks and rewards dependent on the commercial success of
the licensed products. If the agreement is determined to be within the scope of
ASC 808, we will segregate the research and development activities and the
related cost sharing arrangement. Payments made by us for such activities will
be recorded as research and development expense and reimbursements received from
its partner will be recognized as an offset to research and development expense.

Clinical Trial Accruals



Clinical trial expenses are a significant component of research and development
expenses, and we outsource a significant portion of these costs to third
parties. Third party clinical trial expenses include investigator fees, site
costs (patient costs), clinical research organization costs, and costs for
central laboratory testing and data management. The accrual for site and patient
costs includes inputs such as estimates of patient enrollment, patient cycles
incurred, clinical site activations, and other pass-through costs. These inputs
are required to be estimated due to a lag in receiving the actual clinical
information from third parties. Payments for these activities are based on the
terms of the individual arrangements, which may differ from the pattern of costs
incurred, and are reflected on the consolidated balance sheets as a prepaid
asset or accrued clinical trial cost. These third party agreements are generally
cancelable, and related costs are recorded as research and development expenses
as incurred. Non-refundable advance clinical payments for goods or services that
will be used or rendered for future R&D activities are recorded as a prepaid
asset and recognized as expense as the related goods are delivered or the
related services are performed. We also record accruals for estimated ongoing
clinical research and development costs. When evaluating the adequacy of the
accrued liabilities, we analyze progress of the studies, including the phase or
completion of events, invoices received, and contracted costs. Significant
judgments and estimates may be made in determining the accrued balances at the
end of any reporting period. Actual results could differ from the estimates made
by the Company. The historical clinical accrual estimates made by the Company
have not been materially different from the actual costs.

Leases



Effective January 1, 2019, we adopted ASU 2016-2, Leases (Topic 842), the
details of which are further discussed in Note B to the consolidated financial
statements. We determine if an arrangement is a lease at inception. Operating
leases include right-of-use ("ROU") assets and operating lease liabilities
(current and non-current), which are recorded in our consolidated balance
sheets. Single payment capital leases for equipment that are considered finance
leases are included in property and equipment in our consolidated balance
sheets. As these single payment obligations have all been made, there is no
related liability recorded.

ROU assets represent our right to use an underlying asset for the lease term and
lease liabilities represent our obligation to make lease payments arising from
the lease. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease
term. We use the implicit rate when readily determinable. As a number of our
leases do not provide an implicit rate, we use an incremental borrowing rate
applicable to us based on the information available at the commencement date in
determining the present value of lease payments. As we have no existing or
proposed collateralized borrowing arrangements, to determine a reasonable

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incremental borrowing rate, we consider collateral assumptions, the lease term,
our current credit risk profile and rates for existing borrowing arrangements
for comparable peer companies. The operating lease ROU assets were netted
against any lease incentive and straight-line lease liability balances at
January 1, 2019. We account for the lease and fixed non-lease components as a
single lease component. Our lease terms may include options to extend or
terminate the lease when it is reasonably certain that we will exercise that
option. Lease expense for operating lease payments is recognized on a
straight-line basis over the lease term.

Stock-based Compensation



As of December 31, 2019, we are authorized to grant future awards under three
share-based compensation plans, which are the ImmunoGen, Inc. 2018 Employee,
Director and Consultant Equity Incentive Plan, the Employee Stock Purchase Plan,
and the Inducement Equity Plan. The stock-based awards are accounted for under
ASC Topic 718, "Compensation-Stock Compensation," pursuant to which the
estimated grant date fair value of awards is charged to the statement of
operations over the requisite service period, which is the vesting period. Such
amounts have been reduced by our estimate of forfeitures for unvested awards.

The fair value of each stock option is estimated on the date of grant using the
Black-Scholes option-pricing model. Expected volatility is based exclusively on
historical volatility of our stock. The expected term of stock options granted
is based exclusively on historical data and represents the period of time that
stock options granted are expected to be outstanding. The expected term is
calculated for and applied to one group of stock options as we do not expect
substantially different exercise or post-vesting termination behavior amongst
our employee population. The risk-free rate of the stock options is based on the
U.S. Treasury rate in effect at the time of grant for the expected term of the
stock options. Estimated forfeitures are based on historical data as well as
current trends. Stock compensation cost related to stock options and restricted
stock incurred during the years ended December 31, 2019, 2018, and 2017 was
$13.8, $16.4 and $11.1 million, respectively. Stock compensation cost related to
director deferred share units recorded during the years ended December 31, 2019,
2018, and 2017 was $337,000, $361,000 and $206,000 respectively.

Future stock-based compensation may significantly differ based on changes in the
fair value of our common stock and our estimates of expected volatility and the
other relevant assumptions.

Results of Operations

Revenues



Our total revenues increased $28.9 million to $82.3 million for the year ended
December 31, 2019 compared to the prior year and decreased $62.0 million to
$53.4 million for the year ended December 31, 2018 compared to the year ended
December 31, 2017. The increase in revenues in 2019 compared to 2018 is
attributable to an increase in license and milestone and non-cash royalty
revenue, partially offset by decreases in research and development support and
clinical materials revenue. The decrease in revenues in 2018 compared to 2017 is
attributable to a decrease in license and milestone fees and research and
development support revenue, partially offset by an increase in non-cash royalty
revenue and clinical materials revenue.

License and milestone fees

The amount of license and milestone fees we earn is directly related to the number of our collaborators, the collaborators' advancement of the product candidates, and the overall success in the clinical trials of the product candidates. As such, the amount of license and milestone fees may vary widely from quarter to quarter and year to year.



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Total revenue recognized from license and milestone fees from each of our collaborators in the years ended December 31, 2019, 2018, and 2017 is shown in the following table (in thousands):




                                                   Years Ended
                                                  December 31,
License and Milestone Fees                 2019        2018       2017

Collaborative Partner:
Amgen/Oxford BioTherapeutics/Menarini    $      5    $  1,066   $     17
Bayer HealthCare                               16          16          -
CytomX                                     10,314          14     13,665
Debiopharm                                      -         500     29,500
Fusion                                          -         750          -
Jazz                                       14,500           -          -
Lilly                                           -         717         22
Novartis                                    4,865       1,189        180
Roche                                       5,046          46          -
Sanofi                                          -           -     36,000
Takeda                                         42      10,982         85
Total                                    $ 34,788    $ 15,280   $ 79,469


Revenue from license and milestone fees increased $19.5 million to $34.8 million
for the year ended December 31, 2019 and decreased $64.2 million to $15.3
million for the year ended December 31, 2018. Included in license and milestone
fees for the year ended December 31, 2019 is a $5 million regulatory milestone
achieved under our license agreement with Genentech, a member of the Roche
Group, and $3.0 million and $4.7 million of development milestones that were
determined to be probable of occurring under our license agreements with CytomX
and Novartis, respectively, that were allocated to the previously delivered
licenses. Also included in license and milestone fees for the year ended
December 31, 2019 is $14.5 million of previously deferred license revenue earned
upon the opt-out of the right to execute a license by Jazz. In addition, $7.3
million was recognized as revenue pursuant to a license agreement executed with
CytomX in December 2019. Included in license and milestone fees for the year
ended December 31, 2018 is $10.9 million of previously deferred license revenue
earned upon the expiration of the right to execute a license or extend the
research term specified under the right-to-test agreement with Takeda, a
$500,000 payment received in January 2018 related to the delivery of IMGN529
clinical materials to Debiopharm, and $1 million and $500,000 of development
milestones that were determined to be probable of occurring under our license
agreements with Oxford BioTherapeutics Ltd. and Fusion, respectively, that were
allocated to the previously delivered licenses. In May 2018, Novartis terminated
one of its six development and commercialization licenses, and in October 2018,
Lilly terminated its three development and commercialization licenses. As a
result, we recorded the remaining $1.7 million balance of the upfront payments
that had been allocated to future performance obligations under these licenses
as revenue, which is included in license and milestone fees for 2018. Included
in license and milestone fees for the year ended December 31, 2017 is $29.5
million of revenue related to the sale and transfer of our IMGN529 asset to
Debiopharm, a $30 million paid-up license fee related to an amendment to our
collaboration and license agreement with Sanofi, $6 million of development
milestones achieved under the collaboration and license agreement with Sanofi
prior to amendment, $12.7 million of non-cash license revenue earned upon the
expiration of the right to replace the target specified under the development
and commercialization license with CytomX and a $1 million development milestone
achieved under said license agreement with CytomX.

Deferred revenue of $127.4 million as of December 31, 2019 includes $60.5
million remaining from an upfront payment related to the license options granted
to Jazz in August 2017 and $65.2 million related to the sale of our residual
rights to receive royalty payments on commercial sales of Kadcyla, with the
remainder of the balance primarily representing consideration received from our
collaborators pursuant to our license agreements which we have yet to earn
pursuant to our revenue recognition policy.

Non-cash royalty revenue related to the sale of future royalties



In February 2013, the U.S. FDA granted marketing approval to Kadcyla, an ADC
resulting from one of our development and commercialization licenses with Roche,
through its Genentech unit. We receive royalty reports and payments related to
sales of Kadcyla from Roche one quarter in arrears. In accordance with our
revenue recognition policy, $47.4, $32.2, and $28.1 million of non-cash
royalties on net sales of Kadcyla were recorded and included in royalty revenue
for the years ended December 31, 2019, 2018, and 2017, respectively. Kadcyla
sales occurring after January 1, 2015 are covered by a royalty purchase
agreement whereby the associated cash was remitted to Immunity

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Royalty Holdings, L.P. subject to a residual cap. In January 2019, we sold our
residual rights to receive royalty payments on commercial sales of Kadcyla to
OMERS, the defined benefit pension plan for municipal employees in the Province
of Ontario, Canada, for $65.2 million, net of $1.5 million of fees.
Simultaneously, OMERS purchased IRH's right to the royalties the Company
previously sold as described above, thereby obtaining the rights to 100% of the
royalties received from that date on. See further details regarding royalty
obligation in Note F of the Consolidated Financial Statements.

Research and development support revenue



Research and development support revenue was $68,000, $1.4 million, and $3.5
million for the years ended December 31, 2019, 2018 and 2017, respectively. The
amount of research and development support revenue we earn is directly related
to requests we receive from collaborators for research and development work
under our agreements with them and, as such, the amount of these fees may vary
widely from quarter to quarter and year to year. Additionally, as a result of
the restructuring at the end of the second quarter of 2019, we have discontinued
providing such services.

Clinical materials revenue


Clinical materials revenue was $4.6 million and $4.4 million, respectively, for
the years ended December 31, 2018 and 2017. During these periods, we shipped
clinical materials in support of a number of our collaborators' clinical trials,
as well as preclinical materials in support of certain collaborators'
development efforts and DMx shipments to certain collaborators in support of
development and manufacturing efforts. We were compensated at negotiated prices
which were generally consistent with what other third-parties would charge. We
discontinued producing preclinical and clinical materials for our collaborators
by the end of 2018.

Research and Development Expenses



Our research and development expenses relate to (i) research to evaluate new
targets and to develop and evaluate new antibodies, linkers, and cytotoxic
agents, (ii) preclinical testing of our own and, in certain instances, our
collaborators' product candidates, and the cost of our own clinical trials,
(iii) development related to clinical and commercial manufacturing processes,
and (iv) external manufacturing operations, and prior to 2019, internal
manufacturing operations, which also included raw materials.

Research and development expense for the year ended December 31, 2019 decreased
$60.0 million to $114.5 million from $174.5 million for the year ended December
31, 2018. Research and development expense was $139.7 million for the year ended
December 31, 2017. The significant decrease in 2019 from the prior year was
primarily due to: (i) lower expenses resulting from the restructuring of the
business at the end of the second quarter of 2019 and the closing of our
manufacturing facility at the end of 2018, including decreases in personnel,
facility, and third-party research expenses; (ii) decreased clinical trial costs
driven by lower activity in the FORWARD I Phase 3 study; and, (iii) lower
antibody costs driven by activity to support commercial validation of
mirvetuximab soravtansine in the prior year period. The significant increase in
2018 from 2017 was primarily due to higher clinical trial costs driven largely
by completion of patient enrollment in FORWARD I, increased costs related to the
FORWARD II and IMGN632 trials, and higher external manufacturing costs in
support of commercial validation of mirvetuximab soravtansine. Contract service
expense also increased due to increased clinical, regulatory, and
commercial-readiness efforts to support advancement of mirvetuximab
soravtansine.

We are unable to accurately estimate which potential product candidates, if any,
will eventually move into our internal preclinical research program. We are
unable to reliably estimate the costs to develop these products as a result of
the uncertainties related to discovery research efforts as well as preclinical
and clinical testing. Our decision to move a product candidate into the clinical
development phase is predicated upon the results of preclinical tests. We cannot
accurately predict which, if any, of the discovery stage product candidates will
advance from preclinical testing and move into our internal clinical development
program. The clinical trial and regulatory approval processes for our product
candidates that have advanced or that we intend to advance to clinical testing
are lengthy, expensive, and uncertain in both timing and outcome. As a result,
the pace and timing of the clinical development of our product candidates is
highly uncertain and may not ever result in approved products. Completion dates
and development costs will vary significantly for each product candidate and are
difficult to predict. A variety of factors, many of which are outside our
control, could cause or contribute to the prevention or delay of the successful
completion of our clinical trials, or delay or prevent our obtaining necessary
regulatory approvals. The costs to take a product through clinical trials are
dependent upon, among other factors, the clinical indications, the timing, size,
and design of each clinical trial, the number of patients enrolled in each
trial, and the speed at which patients are enrolled and treated. Product
candidates may be found to be ineffective or to cause unacceptable side effects
during clinical trials, may take longer to progress through clinical trials

than

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anticipated, may fail to receive necessary regulatory approvals or may prove
impractical to manufacture in commercial quantities at reasonable cost or with
acceptable quality.

The lengthy process of securing FDA approvals for new drugs requires the
expenditure of substantial resources. Any failure by us to obtain, or any delay
in obtaining, regulatory approvals, would materially adversely affect our
product development efforts and our business overall. Accordingly, we cannot
currently estimate, with any degree of certainty, the amount of time or money
that we will be required to expend in the future on our product candidates prior
to their regulatory approval, if such approval is ever granted. As a result of
these uncertainties surrounding the timing and outcome of our clinical trials,
we are currently unable to estimate when, if ever, our product candidates that
have advanced into clinical testing will generate revenues and cash flows.

We do not track our research and development costs by project. Since we use our
research and development resources across multiple research and development
projects, we manage our research and development expenses within each of the
categories listed in the following table and described in more detail below

(in
thousands):


                                                        Years Ended
                                                        December 31,

Research and Development Expense Category 2019 2018 2017 Research

$  12,272    $  24,218   $  

22,570


Preclinical and Clinical Testing                71,193       89,226      

68,794


Process and Product Development                  7,807       12,463      

10,261


Manufacturing Operations                        23,250       48,549      

38,114

Total Research and Development Expense $ 114,522 $ 174,456 $ 139,739




Research

Research includes expenses associated with activities to evaluate new targets
and to develop and evaluate new antibodies, linkers, and cytotoxic agents for
our products and in support of our collaborators. Such expenses primarily
include personnel, contract services, facility expenses, and lab supplies.
Research expenses decreased $11.9 million to $12.3 million for the year ended
December 31, 2019 and increased $1.6 million to $24.2 million for the prior
year. The decrease in 2019 is principally due to a decrease in personnel
expenses, lab supplies, and allocated facility expenses as a result of the
restructuring of the business. The increase in 2018 was principally due to
increases in allocated facility expenses, contract services, and lab supplies.

Preclinical and Clinical Testing



Preclinical and clinical testing includes expenses related to preclinical
testing of our own and, in certain instances, our collaborators' product
candidates, regulatory activities, and the cost of our own clinical trials. Such
expenses include personnel, patient enrollment at our clinical testing sites,
consultant fees, contract services, and facility expenses. Preclinical and
clinical testing expenses decreased $18.0 million to $71.2 million for the year
ended December 31, 2019 and increased $20.4 million to $89.2 million for the
prior year. The decrease in 2019 was primarily the result of lower clinical
trial costs principally driven by lower FORWARD I activity, lower personnel and
lab expenses resulting from the restructuring of the business, and a higher
credit recorded against IMGN779 and IMGN632 development costs pursuant to our
cost-sharing agreement with Jazz due largely to an increased reimbursement cap
for 2019 pursuant to the collaboration agreement executed in August 2017. The
increase in 2018 was primarily the result of an increase in clinical trial costs
principally driven by advancement of the FORWARD I, FORWARD II, and IMGN632
studies, an increase in salaries and related expenses driven by increases in
personnel and stock compensation expense, and an increase in contract services
to support commercial advancement of mirvetuximab. Partially offsetting these
increases, a higher credit was recorded against IMGN779 and IMGN632 development
costs in 2018 resulting from a full-year of cost-sharing with Jazz.

Process and Product Development



Process and product development expenses include costs for development of
clinical and commercial manufacturing processes for our own and collaborator
compounds. Such expenses include the costs of personnel, contract services, lab
supplies, and facility expenses. Process and product development expenses
decreased $4.7 million to $7.8 million for the year ended December 31, 2019 and
increased $2.2 million to $12.5 million for the prior year. The decrease in 2019
was principally due to a decrease in personnel expenses, lab supplies, and
allocated facility expenses as a result of the restructuring of the business.
The increase in 2018 was principally due to increases in allocated facility
expenses, lab supplies, and salaries and related expenses driven by greater
stock compensation expense, partially offset by a higher credit recorded against
IMGN779 and IMGN632 development costs in 2018 resulting from a full-year of

cost-sharing with Jazz.

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Manufacturing Operations

Manufacturing operations expense includes costs to manufacture preclinical and
clinical materials for our own and our collaborators' product candidates,
quality control and quality assurance activities, and costs to support the
operation and maintenance of our conjugate manufacturing facility, which we
ramped-down in 2018 and decommissioned in February 2019. Such expenses include
personnel, raw materials for our and our collaborators' preclinical studies and
clinical trials, non-pivotal and pivotal development costs with contract
manufacturing organizations, manufacturing supplies, and facility expenses.
Manufacturing operations expense decreased $25.2 million to $23.3 million for
the year ended December 31, 2019 and increased $10.4 million to $48.5 million in
the previous year. The decrease in 2019 was principally the result of lower
antibody and small molecule costs driven by activity to support commercial
validation of mirvetuximab soravtansine in the prior year, and lower personnel
expenses, raw materials/manufacturing supplies, and facility-related expenses,
including amortization of leasehold improvements, resulting from the shut-down
of our manufacturing facility in late 2018, as well as related to the
restructuring of the business in 2019. The increase in 2018 was principally the
result of: (i) an increase in external manufacturing costs, including antibody
development and supply expense; (ii) an increase in analytical service fees to
transfer our products and certain of our collaborators' out of our Norwood
plant; and (iii) increased depreciation expense related to accelerated
amortization of Norwood leasehold improvements. Partially offsetting these
increases, a higher credit was recorded against IMGN779 and IMGN632 development
costs in 2018 resulting from a full-year of cost-sharing with Jazz.

Antibody development and supply expense in support of commercial validation and
in anticipation of potential future clinical trials, as well as our ongoing
trials, was $8.3, $18.5, and $12.5 million for the years ended December 31,
2019, 2018, and 2017, respectively. Activity and supply in support of commercial
validation of mirvetuximab drove the significant increase in 2018. The process
of antibody production is lengthy due in part to the lead time to establish a
satisfactory production process at a vendor. Accordingly, costs incurred related
to antibody production and development have fluctuated from period to period and
we expect these cost fluctuations to continue in the future.

General and Administrative Expenses


General and administrative expenses increased $1.8 million to $38.5 million for
the year ended December 31, 2019 and increased $2.8 million to $36.7 million for
the prior year. The increase in 2019 was principally due to greater allocated
facility expenses related to excess laboratory and office space, partially
offset by a decrease in personnel expenses resulting from the restructuring. The
increase in 2018 was principally due to an increase in third-party service fees
and an increase in salaries and related expenses driven largely by greater

stock
compensation expense.

Restructuring Charges

2019 Corporate Restructuring

On June 26, 2019, the Board of Directors approved a plan to restructure the
business to focus resources on continued development of mirvetuximab
soravtansine and a select portfolio of three earlier-stage product candidates,
resulting in a significant reduction of our workforce, with a majority of these
employees separating from the business by mid-July 2019 and most of the
remaining affected employees transitioning over varying periods of time of up to
12 months. Communication of the plan to the affected employees was substantially
completed on June 27, 2019.

As a result of the workforce reduction, we recorded a charge of $16.0 million
for severance related to a pre-existing plan in June 2019, which has been
subsequently reduced to $15.4 million due to minor adjustments to the plan. The
related cash payments will be substantially paid out by June 30, 2020. In
addition, a charge of $4.0 million is expected to be recorded for incremental
retention benefits in the same time period, of which approximately $2.1 million
was recorded during the year ended December 31, 2019.

In addition to the termination benefits and other related charges, we are seeking to sub-lease the majority of the laboratory and office space at 830 Winter Street in Waltham, Massachusetts and decided to liquidate excess equipment. In performing the impairment test, we recorded a charge of $2.5 million in June 2019 to write down the equipment to fair value; however, we determined the right-to-use asset related to the lease was recoverable, therefore, no impairment was recorded.

2018 Manufacturing Restructuring


In February 2018, following an in-depth review of manufacturing and quality
operations, the Board of Directors authorized management to implement a new
operating model that will rely on external manufacturing and quality testing for
drug substance and drug product for our development programs. The implementation
of this new operating model led to the ramp-down of manufacturing and quality
activities at the Norwood, Massachusetts facility by the end of 2018, with a
full decommissioning of the facility in February 2019. Implementation of the new
operating model resulted in the

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separation of 22 employees. Communication of the plan to the affected employees was substantially completed on February 8, 2018.



In connection with the implementation of the new operating model, we recorded a
charge of $1.2 million for severance related to a pre-existing plan in the first
quarter of 2018. Additional expense was recorded for incremental retention
benefits over the remaining service period of the related employees, as well as
marginal adjustments to severance resulting from voluntary terminations, which
totaled $2.3 million for the remainder of 2018. Cash payments related to
retention benefits were paid in the fourth quarter of 2018 and those related to
severance were substantially paid out by the end of the second quarter of 2019.
Additionally, certain options held by the employees to be separated were
modified to extend the exercise period, resulting in a stock compensation charge
of $157,000 in the first quarter of 2018.

Charge Related to Unoccupied Office Space



We have sought to sub-lease 10,281 square feet of unoccupied office space in
Waltham that was leased in 2016. During the year ended December 31, 2019, we
recorded a $559,000 impairment charge related to this lease, which represents
the remaining balance of the right to use asset as the likelihood of finding a
sub-lessor has diminished significantly as the lease approaches termination.
During the year ended December 31, 2017, $779,000 of similar charges were also
recorded.

Investment Income, net

Investment income for the years ended December 31, 2019, 2018, and 2017 was
$4.4, $4.2, and $1.1 million, respectively. The increase in 2019 and 2018
compared to 2017 is due to a greater average cash balance in each period driven
largely by $65.2 million of net proceeds generated from the sale of the our
residual rights to Kadcyla® (ado-trastuzumab emtansine) royalties in January
2019, $162.5 million of net proceeds generated from a public offering of common
stock in June 2018, and $101.7 million of net proceeds generated from a public
offering of common stock in October 2017.

Non-Cash Interest Expense on Liability Related to Sale of Future Royalty


In 2015, IRH purchased our right to receive 100% of the royalty payments on
commercial sales of Kadcyla arising under our development and commercialization
license with Genentech, until IRH has received aggregate royalties equal to
$235 million or $260 million, depending on when the aggregate royalties received
by IRH reach a specified milestone. In January 2019, OMERS purchased IRH's right
to the royalties the Company previously sold as described above. As described in
Note F to our Consolidated Financial Statements, this royalty sale transaction
has been recorded as a liability that amortizes over the estimated royalty
payment period as Kadcyla royalties are remitted directly to the purchaser.
During the years ended December 31, 2019, 2018, and 2017, we recorded $16.9,
$10.6 and $13.2, respectively, of non-cash interest expense. The increase in
2019 compared to 2018 and 2017 is a result of a greater effective interest rate
driven by greater projected royalty payments than previously estimated due to
market expansion of Kadcyla and approval for a second indication received in
2019. We impute interest on the transaction and record interest expense at the
effective interest rate, which we currently estimate to be 15.5%. There are a
number of factors that could materially affect the estimated interest rate, in
particular, the amount and timing of royalty payments from future net sales of
Kadcyla, and we assess this estimate on a periodic basis. As a result, future
interest rates could differ significantly and any such change in interest rate
will be adjusted prospectively.

Interest Expense on Convertible Senior Notes



In June 2016, the Company issued Convertible 4.5% Senior Notes with an aggregate
principal amount of $100 million. The Convertible Notes are senior unsecured
obligations and bear interest at a rate of 4.5% per year, payable semi-annually
in arrears on January 1 and July 1 of each year, commencing on January 1, 2017.
During the second half of calendar 2017, $97.9 million of this debt was
converted to common shares, which is discussed further below. For the years
ended December 31, 2019, 2018, and 2017, we recorded $95,000, $95,000 and $3.0
million, respectively, of interest expense.

Non-Cash Debt Conversion Expense



During the second half of calendar 2017, we entered into privately negotiated
exchange agreements with a number of holders of our outstanding Convertible
Notes, pursuant to which we agreed to exchange, in a private placement, $97.9
million in aggregate principal amount of Convertible Notes held by the holders
for 26.2 million newly issued shares of our common stock, equivalent to the
number of shares based on the original conversion terms, plus an additional
number of newly issued shares of common stock to be determined based on the
volume-weighted average trading price of the common stock over certain trading
days. As a result of the agreements, 2.8 million additional shares, were issued.
In accordance with ASC, Topic 470-20, "Debt - Debt with Conversion and Other
Options," we recorded a

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non-cash debt conversion expense in the amount of $22.9 million in 2017, the
accounting details of which are further discussed in Note E to our Consolidated
Financial Statements. In addition, accrued interest on the bonds of $743,000
which the noteholders forfeited, $2.5 million of deferred financing costs, and
$1.7 million of costs incurred to execute the conversions were charged to
paid-in capital as a result of the issuance of common stock.

Other Income (Expense), net



Other income (expense), net for the years ended December 31, 2019, 2018, and
2017, was $590,000, $(895,000) and $1.5 million, respectively. This includes
$(240,000), $(780,000) and $1.6 million in foreign currency exchange (losses)
gains related to obligations with non-U.S. dollar-based suppliers and Euro cash
balances maintained to fulfill them during the same periods, respectively. In
addition, we recorded $830,000, $(115,000) and $(93,000) of gain (loss) on the
sale/disposal of fixed assets in 2019, 2018, and 2017, respectively. The gain on
sale/disposal of fixed assets in 2019 was largely driven by the sale of excess
lab equipment resulting from the restructuring.

Liquidity and Capital Resources

(amounts in tables in thousands)





                                       As of December 31,
                                        2019         2018
Cash and cash equivalents            $  176,225    $ 262,252
Working capital                         131,488      208,121

Shareholders' (deficit) equity (76,121) 10,972








                                                      Years Ended December 31
                                                  2019          2018         2017

Cash (used) provided by operating activities $ (88,367) $ (166,422) $ 7,645 Cash used for investing activities

                  (533)        (5,246)    

(1,116)


Cash provided by financing activities               2,873        166,813   

 100,614


Cash Flows

We require cash to fund our operating expenses, including the advancement of our
own clinical programs, and to make capital expenditures. Historically, we have
funded our cash requirements primarily through equity and convertible debt
financings in public markets and payments from our collaborators, including
license fees, milestones, research funding, and royalties. We have also
monetized our rights to receive royalties on Kadcyla for up-front consideration.
As of December 31, 2019, we had $176.2 million in cash and cash equivalents. Net
cash (used) provided by operating activities was $(88.4), $(166.4), and
$7.6 million during the years ended December 31, 2019, 2018, and 2017,
respectively. The principal use of cash in operating activities for all periods
presented was to fund our net loss, adjusted for non-cash items, with the
current year benefiting from $65.2 million of net proceeds from the sale of our
residual rights to royalty payments on net sales of Kadcyla, and with 2017
benefiting from payments by Jazz, Debiopharm, and Sanofi, totaling $137.8
million resulting in cash provided by operations.

Net cash used for investing activities was $533,000, $5.2 million, and $1.1
million for the years ended December 31, 2019, 2018, and 2017, respectively, and
represent cash outflows from capital expenditures, net of proceeds generated
from the sale of capital assets. Capital expenditures for all periods presented
consisted primarily of leasehold improvements to the laboratory and office space
at our corporate headquarters, laboratory equipment, computer software
applications, and dedicated equipment at third-party manufacturing vendors.
During 2019, as a result of the restructuring, we sold excess equipment
generating proceeds of $2.3 million.

Net cash provided by financing activities was $2.9 million, $166.8, and $100.6
million for the years ended December 31, 2019, 2018, and 2017, respectively. In
June 2018, pursuant to a public offering, we issued and sold 15.8 million shares
of our common stock resulting in net proceeds of $162.5 million. In October
2017, pursuant to a public offering, we issued and sold 16.7 million shares of
our common stock resulting in net proceeds of $101.7 million.

Net cash provided by financing activities for the years ended December 31, 2019, 2018, and 2017 include proceeds from the exercise of 794,000, 742,000, and 191,000 stock options, respectively.



We anticipate that our current capital resources of $176.2 million and $97.7
million of net proceeds generated from a public offering in January 2020 will
enable us to meet our operational expenses and capital expenditures for more
than twelve months after the date of this report. We may raise additional funds
through equity and debt financings or generate revenues from collaborators
through a combination of upfront license payments, milestone payments, royalty

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payments and research funding. We cannot provide assurance that such collaborative agreement funding will, in fact, be received. Should we or our partners not meet some or all of the terms and conditions of our various collaboration agreements or if we are not successful in securing future collaboration agreements, we may elect or be required to secure alternative financing arrangements, and/or defer or limit some or all of our research, development, and/or clinical projects.


As of December 31, 2019, pursuant to a Sales Agreement dated March 3, 2017, with
Cowen and Company, LLC, or Cowen, as sales agent, we could offer and sell, from
time to time, through Cowen, shares of our common stock having an aggregate
offering price of up to $50.0 million. This agreement was terminated in January
2020, in conjunction with a public offering of our common stock.

Contractual Obligations

Below is a table that presents our contractual obligations and commercial commitments as of December 31, 2019 (in thousands):




                                                              Payments Due by Period
                                                        Less than       1­3         4­5        More than
                                            Total       One Year       Years       Years        5 Years
Waltham lease obligations(1)              $  33,785    $     5,419    $ 10,580    $ 10,920    $     6,866
Other operating lease obligations(1)            258             66         132          60              -
Liability related to the sale of
future royalties(2)                         125,034         41,909      55,265      15,552         12,308
Convertible 4.5% senior notes(3)              2,100              -       2,100           -              -
Total                                     $ 161,177    $    47,394    $ 68,077    $ 26,532    $    19,174

(1) See Note J to the Consolidated Financial Statements in Item 8 for discussion

of these leases.

(2) See Note F to the Consolidated Financial Statements in Item 8 for discussion

of this liability.

(3) See Note E to the Consolidated Financial Statements in Item 8 for discussion

of the convertible senior notes.

In addition to the above table, the Company is responsible for variable operating costs and real estate taxes approximating $3.1 million per year through March 2026.



In 2018, the Company executed a commercial agreement with one of its
manufacturers for future production of antibody through calendar 2025. In May
2019, the agreement was amended to reduce the number of committed antibody
batches for an agreed-upon exit fee, which was recorded as research and
development expense in the first quarter of 2019. After further negotiations,
our noncancelable commitment for future production is approximately €5 million
at December 31, 2019.

Recent Accounting Pronouncements



The information set forth under Note B to the consolidated financial statements
under the caption "Summary of Significant Accounting Policies" is incorporated
herein by reference.

Off-Balance Sheet Arrangements



None.

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