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Investment in Non-Controlled Entity and Other Arrangements (Notes)
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9 Months Ended |
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Sep. 30, 2014
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| Investment and Loan With Non-Controllable Entity [Abstract] | |
| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
INVESTMENT IN NON-CONTROLLED ENTITY AND OTHER ARRANGEMENTS
In August 2013, PDI entered into phase one of a collaboration agreement with a privately held, emerging molecular diagnostics company (the Diagnostics Company) to commercialize its fully-developed, molecular diagnostic tests. The Diagnostics Company does not have experience in, or a history of, successfully commercializing diagnostic products. Under the terms of phase one of the collaboration agreement, PDI paid an initial fee of $1.5 million and had the ability to enter the second phase of the collaboration agreement in the form of a call option to purchase the outstanding common stock of the Diagnostics Company. PDI has recorded the initial fee as an investment in a non-controlled entity within Other current assets in the Consolidated Balance Sheets in accordance with ASC 325-20 Investments Other - Cost Method Investments. The Company also has the option to contribute an additional $0.5 million for mutually agreed upon activities in furtherance of collaboration efforts.
In August 2014, PDI entered into an amendment to the collaboration agreement reducing the option price to a maximum amount of $3.0 million plus any amounts outstanding under the loan to the Diagnostics Company. If PDI purchases the outstanding common stock of the Diagnostics Company, in addition to the option price, beginning in 2015, PDI would pay a royalty of 5.5% on annual net revenue up to $50.0 million with escalating royalty percentages for higher annual net revenue capped at 7.5% for annual net revenue in excess of $100.0 million. PDI can terminate the amended collaboration agreement if all milestones are not achieved by March 31, 2015 and receive a $1.0 million termination fee. If all milestones are achieved by March 31, 2015 and PDI has not exercised its option, the Diagnostics Company can terminate the collaboration agreement and pay PDI a termination fee of approximately $1.5 million. The amended collaboration agreement provides PDI the right to extend the effective date of termination until to September 30, 2015 by making a payment of $0.5 million (the Extension Fee) to the Diagnostics Company before the expiration of the termination notice period. If the Extension Fee is paid, and the Company thereafter purchases the outstanding stock of the Diagnostics Company, then the option price due at closing will be reduced by the amount of the Extension Fee. The amendment to collaboration agreement eliminated the Diagnostics Company's ability to require PDI to exercise the option to purchase the outstanding common stock of the Diagnostics Company.
Through June 30, 2014, PDI loaned the Diagnostics Company approximately $0.7 million bearing a 4% interest rate. In connection with the amendment to the collaboration agreement during the three month period ended September 30, 2014, the loan balance was reduced to $0.6 million. This loan is secured by the stock of Diagnostics Company and is payable to PDI at the sooner of: March 31, 2015; the expiration or termination of the collaboration agreement between the parties; the acquisition of the Diagnostics Company by PDI; or default by the Diagnostics Company. PDI recorded the loan receivable within Other current assets in the Condensed Consolidated Balance Sheets.
Other Arrangements
In October 2013, the Company entered into phase one of a collaboration agreement to commercialize CardioPredict™, a molecular diagnostic test developed by Transgenomic, in the United States. Under the terms of the collaboration agreement, PDI was responsible for all U.S.-based marketing and promotion of CardioPredict™, while Transgenomic would be responsible for processing CardioPredict™ in its state-of-the-art CLIA lab and all customer support. Both parties were responsible for their respective expenses. Subsequently, the Company has determined that it would not enter into the second phase of the collaboration agreement with Transgenomic and notified Transgenomic of its decision to terminate the collaboration agreement effective June 30, 2014.
PDI's costs related to both of these agreements are expensed in the Company's PC Services segment and reflected in Cost of services or Selling, general and administrative expenses in the Consolidated Statement of Comprehensive Loss, depending upon the underlying nature of the expenses incurred.
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