☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2020
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Symbol(s)
Large accelerated filer | ☐ | Accelerated Filer | ☒ | |||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||
Emerging growth company | ☐ |
Item 1. | FINANCIAL STATEMENTS | ||||||||
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Item 2. | 23 | ||||||||
Item 3. | 35 | ||||||||
Item 4. | 36 | ||||||||
PART II. OTHER INFORMATION | |||||||||
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Item 1. | 36 | ||||||||
Item 1A. | 36 | ||||||||
Item 2. | 37 | ||||||||
Item 3. | 37 | ||||||||
Item 4. | 37 | ||||||||
Item 5. | 37 | ||||||||
Item 6. | 37 | ||||||||
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38 |
September 30, 2019 | December 31, 2018 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 44,983,218 | $ | 16,559,400 | ||||
Short-term investments | 31,561,673 | 36,922,213 | ||||||
Accounts receivable, net | 10,095,352 | — | ||||||
Inventory | 599,801 | 56,012 | ||||||
Prepaid expenses and other current assets | 3,339,399 | 1,649,781 | ||||||
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Total current assets | 90,579,443 | 55,187,406 | ||||||
Investments | 5,008,800 | 5,008,243 | ||||||
Operating leaseright-of-use asset | 952,340 | — | ||||||
Property and equipment, net | 141,088 | 245,425 | ||||||
Deposits | 8,888 | 8,888 | ||||||
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Total assets | $ | 96,690,559 | $ | 60,449,962 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 4,147,029 | $ | 2,337,367 | ||||
Accrued expenses and other liabilities | 13,835,292 | 7,173,987 | ||||||
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Total current liabilities | 17,982,321 | 9,511,354 | ||||||
Accrued expenses and other liabilities,non-current | — | 154,799 | ||||||
Operating lease liability, net of current portion | 725,700 | — | ||||||
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Total liabilities | 18,708,021 | 9,666,153 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized: none issued and outstanding at September 30, 2019 and December 31, 2018 | — | — | ||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 103,041,033 shares and 102,739,257 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 103,041 | 102,739 | ||||||
Additionalpaid-in capital | 214,478,406 | 211,265,279 | ||||||
Accumulated deficit | (136,618,337 | ) | (160,563,961 | ) | ||||
Accumulated other comprehensive income (loss) | 19,428 | (20,248 | ) | |||||
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Total stockholders’ equity | 77,982,538 | 50,783,809 | ||||||
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Total liabilities and stockholders’ equity | $ | 96,690,559 | $ | 60,449,962 | ||||
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June 30, 2020 | December 31, 2019 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 115,052,248 | $ | 89,511,710 | ||||
Short-term investments | — | 5,007,050 | ||||||
Accounts receivable, net | 6,762,262 | 10,536,997 | ||||||
Inventory | 1,827,924 | 1,956,792 | ||||||
Prepaid expenses and other current assets | 7,521,253 | 4,351,074 | ||||||
Total current assets | 131,163,687 | 111,363,623 | ||||||
Operating lease right-of-use | 71,711 | 793,252 | ||||||
Property and equipment, net | 167,514 | 210,467 | ||||||
Deposits | 8,888 | 8,888 | ||||||
Total assets | $ | 131,411,800 | $ | 112,376,230 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 5,804,778 | $ | 4,117,447 | ||||
Accrued expenses and other liabilities | 14,405,597 | 19,981,295 | ||||||
Total current liabilities | 20,210,375 | 24,098,742 | ||||||
Operating lease liability, net of current portion | — | 647,532 | ||||||
Total liabilities | 20,210,375 | 24,746,274 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized: NaN issued and outstanding at June 30, 2020 and December 31, 2019 | — | — | ||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 103,422,032 shares and 103,397,033 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 103,422 | 103,397 | ||||||
Additional paid-in capital | 219,581,816 | 216,205,678 | ||||||
Accumulated deficit | (108,482,622 | ) | (128,688,624 | ) | ||||
Accumulated other comprehensive income (loss) | (1,191 | ) | 9,505 | |||||
Total stockholders’ equity | 111,201,425 | 87,629,956 | ||||||
Total liabilities and stockholders’ equity | $ | 131,411,800 | $ | 112,376,230 | ||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Product revenue, net | $ | 30,897,444 | $ | — | $ | 72,183,782 | $ | — | ||||||||
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Operating costs and expenses: | ||||||||||||||||
Cost of sales | 4,387,461 | — | 10,360,874 | — | ||||||||||||
Research and development | 4,597,039 | 4,538,369 | 12,534,362 | 11,502,235 | ||||||||||||
Selling, general and administrative | 8,067,792 | 3,644,234 | 25,471,974 | 8,949,663 | ||||||||||||
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Total operating costs and expenses | 17,052,292 | 8,182,603 | 48,367,210 | 20,451,898 | ||||||||||||
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Operating income (loss) | 13,845,152 | (8,182,603 | ) | 23,816,572 | (20,451,898 | ) | ||||||||||
Other income, net | 393,415 | 343,730 | 1,187,091 | 947,993 | ||||||||||||
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Net income (loss) before income taxes | 14,238,567 | (7,838,873 | ) | 25,003,663 | (19,503,905 | ) | ||||||||||
Provision for income taxes | 608,388 | — | 1,058,039 | — | ||||||||||||
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Net income (loss) | $ | 13,630,179 | $ | (7,838,873 | ) | $ | 23,945,624 | $ | (19,503,905 | ) | ||||||
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Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.13 | $ | (0.08 | ) | $ | 0.23 | $ | (0.19 | ) | ||||||
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Diluted | $ | 0.13 | $ | (0.08 | ) | $ | 0.23 | $ | (0.19 | ) | ||||||
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Weighted average shares outstanding: | ||||||||||||||||
Basic | 102,974,105 | 102,641,504 | 102,864,571 | 102,598,740 | ||||||||||||
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Diluted | 107,045,234 | 102,641,504 | 105,821,609 | 102,598,740 | ||||||||||||
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Net income (loss) | $ | 13,630,179 | $ | (7,838,873 | ) | $ | 23,945,624 | $ | (19,503,905 | ) | ||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gain (loss) onavailable-for-sale securities | (2,330 | ) | (9,450 | ) | 39,676 | (45,948 | ) | |||||||||
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Comprehensive income (loss) | $ | 13,627,849 | $ | (7,848,323 | ) | $ | 23,985,300 | $ | (19,549,853 | ) | ||||||
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Product revenue, net | $ | 29,604,764 | $ | 28,837,900 | $ | 58,741,236 | $ | 41,286,338 | ||||||||
Operating costs and expenses: | ||||||||||||||||
Cost of sales | 4,139,873 | 4,261,625 | 8,290,739 | 5,973,413 | ||||||||||||
Research and development | 4,349,643 | 4,629,364 | 8,572,454 | 7,937,323 | ||||||||||||
Selling, general and administrative | 10,833,358 | 8,987,722 | 20,896,406 | 17,404,182 | ||||||||||||
Total operating costs and expenses | 19,322,874 | 17,878,711 | 37,759,599 | 31,314,918 | ||||||||||||
Operating income (loss) | 10,281,890 | 10,959,189 | 20,981,637 | 9,971,420 | ||||||||||||
Other income, net | 111,269 | 450,410 | 447,502 | 793,676 | ||||||||||||
Net income (loss) before income taxes | 10,393,159 | 11,409,599 | 21,429,139 | 10,765,096 | ||||||||||||
Provision for income taxes | 613,172 | 449,651 | 1,223,137 | 449,651 | ||||||||||||
Net income (loss) | $ | 9,779,987 | $ | 10,959,948 | $ | 20,206,002 | $ | 10,315,445 | ||||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.09 | $ | 0.11 | $ | 0.20 | $ | 0.10 | ||||||||
Diluted | $ | 0.09 | $ | 0.10 | $ | 0.19 | $ | 0.10 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 103,414,523 | 102,869,202 | 103,410,881 | 102,808,897 | ||||||||||||
Diluted | 106,730,423 | 105,928,970 | 106,433,862 | 105,098,930 | ||||||||||||
Net income (loss) | $ | 9,779,987 | $ | 10,959,948 | $ | 20,206,002 | $ | 10,315,445 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gain (loss) on available-for-sale | (84,942 | ) | 28,446 | (10,696 | ) | 42,006 | ||||||||||
Comprehensive income (loss) | $ | 9,695,045 | $ | 10,988,394 | $ | 20,195,306 | $ | 10,357,451 | ||||||||
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Gain (Loss) | Total | |||||||||||||||||||
Balance at December 31, 2018 | $ | — | $ | 102,739 | $ | 211,265,279 | $ | (160,563,961 | ) | $ | (20,248 | ) | $ | 50,783,809 | ||||||||||
Issuance of stock options for services | — | — | 933,411 | — | — | 933,411 | ||||||||||||||||||
Exercise of stock options for common stock | — | 65 | 89,285 | — | — | 89,350 | ||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | 13,560 | 13,560 | ||||||||||||||||||
Net income (loss) | — | — | — | (644,503 | ) | — | (644,503 | ) | ||||||||||||||||
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Balance at March 31, 2019 | — | 102,804 | 212,287,975 | (161,208,464 | ) | (6,688 | ) | 51,175,627 | ||||||||||||||||
Issuance of stock options for services | — | — | 924,996 | — | — | 924,996 | ||||||||||||||||||
Exercise of stock options for common stock | — | 125 | 192,425 | — | — | 192,550 | ||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | 28,446 | 28,446 | ||||||||||||||||||
Net income (loss) | — | — | — | 10,959,948 | — | 10,959,948 | ||||||||||||||||||
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Balance at June 30, 2019 | — | 102,929 | 213,405,396 | (150,248,516 | ) | 21,758 | 63,281,567 | |||||||||||||||||
Issuance of stock options for services | — | — | 817,060 | — | — | 817,060 | ||||||||||||||||||
Exercise of stock options for common stock | — | 112 | 255,950 | — | — | 256,062 | ||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | (2,330 | ) | (2,330 | ) | ||||||||||||||||
Net income (loss) | — | — | — | 13,630,179 | — | 13,630,179 | ||||||||||||||||||
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Balance at September 30, 2019 | $ | — | $ | 103,041 | $ | 214,478,406 | $ | (136,618,337 | ) | $ | 19,428 | $ | 77,982,538 | |||||||||||
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Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Gain (Loss) | Total | |||||||||||||||||||
Balance at December 31, 2017 | $ | — | $ | 102,549 | $ | 207,421,710 | $ | (126,560,447 | ) | $ | — | $ | 80,963,812 | |||||||||||
Issuance of stock options for services | — | — | 971,340 | — | — | 971,340 | ||||||||||||||||||
Exercise of stock options for common stock | — | 37 | 32,995 | — | — | 33,032 | ||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | (21,826 | ) | (21,826 | ) | ||||||||||||||||
Net income (loss) | — | — | — | (5,699,892 | ) | — | (5,699,892 | ) | ||||||||||||||||
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Balance at March 31, 2018 | — | 102,586 | 208,426,045 | (132,260,339 | ) | (21,826 | ) | 76,246,466 | ||||||||||||||||
Issuance of common stock, net | — | 3 | 10,546 | — | — | 10,549 | ||||||||||||||||||
Issuance of stock options for services | — | — | 776,510 | — | — | 776,510 | ||||||||||||||||||
Exercise of stock options for common stock | — | 10 | 8,490 | — | — | 8,500 | ||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | (14,672 | ) | (14,672 | ) | ||||||||||||||||
Net income (loss) | — | — | — | (5,965,140 | ) | — | (5,965,140 | ) | ||||||||||||||||
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Balance at June 30, 2018 | — | 102,599 | 209,221,591 | (138,225,479 | ) | (36,498 | ) | 71,062,213 | ||||||||||||||||
Issuance of stock options for services | — | — | 758,176 | — | — | 758,176 | ||||||||||||||||||
Exercise of stock options for common stock | — | 90 | 104,442 | — | — | 104,532 | ||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | (9,450 | ) | (9,450 | ) | ||||||||||||||||
Net income (loss) | — | — | — | (7,838,873 | ) | — | (7,838,873 | ) | ||||||||||||||||
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Balance at September 30, 2018 | $ | — | $ | 102,689 | $ | 210,084,209 | $ | (146,064,352 | ) | $ | (45,948 | ) | $ | 64,076,598 | ||||||||||
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2019
Preferred | Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | ||||||||||||||||||||||||
Stock | Shares | Amount | Capital | Deficit | Gain (Loss) | Total | ||||||||||||||||||||||
Balance at December 31, 2019 | $ | — | 103,397,033 | $ | 103,397 | $ | 216,205,678 | $ | (128,688,624 | ) | $ | 9,505 | $ | 87,629,956 | ||||||||||||||
Issuance of stock options for services | — | — | — | 1,383,672 | — | — | 1,383,672 | |||||||||||||||||||||
Exercise of stock options for common stock | — | 11,666 | 12 | 26,137 | — | — | 26,149 | |||||||||||||||||||||
Amortization of restricted stock for services | — | — | — | 135,679 | — | — | 135,679 | |||||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | — | 74,246 | 74,246 | |||||||||||||||||||||
Net income (loss) | — | — | — | — | 10,426,015 | — | 10,426,015 | |||||||||||||||||||||
Balance at March 31, 2020 | — | 103,408,699 | 103,409 | 217,751,166 | (118,262,609 | ) | 83,751 | 99,675,717 | ||||||||||||||||||||
Issuance of stock options for services | — | — | — | 1,627,105 | — | — | 1,627,105 | |||||||||||||||||||||
Exercise of stock options for common stock | — | 13,333 | 13 | 36,188 | — | — | 36,201 | |||||||||||||||||||||
Amortization of restricted stock for services | — | — | — | 167,357 | — | — | 167,357 | |||||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | — | (84,942 | ) | (84,942 | ) | |||||||||||||||||||
Net income (loss) | — | — | — | — | 9,779,987 | — | 9,779,987 | |||||||||||||||||||||
Balance at June 30, 2020 | $ | — | 103,422,032 | $ | 103,422 | $ | 219,581,816 | $ | (108,482,622 | ) | $ | (1,191 | ) | $ | 111,201,425 | |||||||||||||
Preferred | Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | ||||||||||||||||||||||||
Stock | Shares | Amount | Capital | Deficit | Gain (Loss) | Total | ||||||||||||||||||||||
Balance at December 31, 2018 | $ | — | 102,739,257 | $ | 102,739 | $ | 211,265,279 | $ | (160,563,961 | ) | $ | (20,248 | ) | $ | 50,783,809 | |||||||||||||
Issuance of stock options for services | — | — | — | 933,411 | — | — | 933,411 | |||||||||||||||||||||
Exercise of stock options for common stock | — | 65,000 | 65 | 89,285 | — | — | 89,350 | |||||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | — | 13,560 | 13,560 | |||||||||||||||||||||
Net income (loss) | — | — | — | — | (644,503 | ) | — | (644,503 | ) | |||||||||||||||||||
Balance at March 31, 2019 | — | 102,804,257 | 102,804 | 212,287,975 | (161,208,464 | ) | (6,688 | ) | 51,175,627 | |||||||||||||||||||
Issuance of stock options for services | — | — | — | 924,996 | — | — | 924,996 | |||||||||||||||||||||
Exercise of stock options for common stock | — | 125,000 | 125 | 192,425 | — | — | 192,550 | |||||||||||||||||||||
Other comprehensive gain (loss) | — | — | — | — | — | 28,446 | 28,446 | |||||||||||||||||||||
Net income (loss) | — | — | — | — | 10,959,948 | — | 10,959,948 | |||||||||||||||||||||
Balance at June 30, 2019 | $ | — | 102,929,257 | $ | 102,929 | $ | 213,405,396 | $ | (150,248,516 | ) | $ | 21,758 | $ | 63,281,567 | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Operating Activities: | ||||||||
Net income (loss) | $ | 23,945,624 | $ | (19,503,905 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 26,718 | 25,485 | ||||||
Non-cash change inright-of-use asset | 181,301 | — | ||||||
Stock-based compensation | 2,675,467 | 2,521,023 | ||||||
Change in accrued interest and accretion of discount on investments | (185,536 | ) | (405,082 | ) | ||||
(Increase) decrease in: | ||||||||
Accounts receivable, net | (10,095,352 | ) | — | |||||
Inventory | (543,789 | ) | — | |||||
Prepaid expenses and other current assets and deposits | (1,689,618 | ) | 356,924 | |||||
Increase (decrease) in: | ||||||||
Accounts payable | 1,809,662 | (604,591 | ) | |||||
Accrued expenses and other liabilities | 6,400,279 | (185,812 | ) | |||||
Operating lease liability | (204,724 | ) | — | |||||
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Net cash provided by (used in) operating activities | 22,320,032 | (17,795,958 | ) | |||||
Investing Activities: | ||||||||
Purchases of property and equipment | (19,370 | ) | (35,193 | ) | ||||
Purchases of investments | (34,725,401 | ) | (36,790,854 | ) | ||||
Proceeds from sales/maturities of investments | 40,310,595 | 7,600,000 | ||||||
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Net cash provided by (used in) investing activities | 5,565,824 | (29,226,047 | ) | |||||
Financing Activities: | ||||||||
Payment of employee withholding tax related to stock-based compensation | — | (4,448 | ) | |||||
Proceeds from exercise of stock options | 537,962 | 146,064 | ||||||
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Net cash provided by (used in) financing activities | 537,962 | 141,616 | ||||||
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Net increase (decrease) in cash and cash equivalents | 28,423,818 | (46,880,389 | ) | |||||
Cash and cash equivalents - beginning of period | 16,559,400 | 57,496,702 | ||||||
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Cash and cash equivalents - end of period | $ | 44,983,218 | $ | 10,616,313 | ||||
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Non-cash investing and financing activities: | ||||||||
Unrealized gain (loss) onavailable-for-sale securities | $ | 39,676 | $ | (45,948 | ) |
For the Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Operating Activities: | ||||||||
Net income (loss) | $ | 20,206,002 | $ | 10,315,445 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 42,953 | 20,186 | ||||||
Amortization of right-of-use | 721,541 | 120,051 | ||||||
Stock-based compensation | 3,313,813 | 1,858,407 | ||||||
Change in accrued interest and accretion of discount on investments | (3,646 | ) | (77,547 | ) | ||||
(Increase) decrease in: | ||||||||
Accounts receivable, net | 3,774,735 | (10,376,427 | ) | |||||
Inventory | 128,868 | (213,867 | ) | |||||
Prepaid expenses and other current assets and deposits | (3,170,179 | ) | 161,178 | |||||
Increase (decrease) in: | ||||||||
Accounts payable | 1,687,331 | 991,359 | ||||||
Accrued expenses and other liabilities | (5,473,075 | ) | 3,393,753 | |||||
Operating lease liability | (750,155 | ) | (135,123 | ) | ||||
Net cash provided by (used in) operating activities | 20,478,188 | 6,057,415 | ||||||
Investing Activities: | ||||||||
Purchases of property and equipment | — | (19,370 | ) | |||||
Purchases of investments | — | (29,772,428 | ) | |||||
Proceeds from maturities and sales of investments | 5,000,000 | 30,310,595 | ||||||
Net cash provided by (used in) investing activities | 5,000,000 | 518,797 | ||||||
Financing Activities: | ||||||||
Proceeds from exercise of stock options | 62,350 | 281,900 | ||||||
Net cash provided by (used in) financing activities | 62,350 | 281,900 | ||||||
Net increase (decrease) in cash and cash equivalents | 25,540,538 | 6,858,112 | ||||||
Cash and cash equivalents—beginning of period | 89,511,710 | 16,559,400 | ||||||
Cash and cash equivalents—end of period | $ | 115,052,248 | $ | 23,417,512 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for income taxes | $ | 49,500 | $ | — | ||||
Non-cash investing and financing activities: | ||||||||
Unrealized gain (loss) on available-for-sale | $ | (10,696 | ) | $ | 42,006 |
1. | Organization and Description of Business. |
LEMS.
11 (Stockholders’ Equity).
2. | Basis of Presentation and Significant Accounting Policies. |
a. |
|
2. | Basis of Presentation and Significant Accounting Policies (continued). |
|
b. |
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c. |
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d. |
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e. |
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isthat was classified inas trading securities. Trading securities are recorded at fair value based on the closing market price of the security. For trading securities, the Company recognizes realized gains and losses and unrealized gains and losses to earnings. At SeptemberJune 30, 20192020 and December 31, 2018, the only investment2019, there were 0 investments classified as trading securities, wasas the Company sold its interest in the short-term bond fund. Realized losses on trading securities were $0 and $4,980, respectively, for the three and nine months ended September 30,fund in 2019. There were no sales ofwas 0 realized or unrealized gain (loss) on trading securities for the three and ninesix months ended SeptemberJune 30, 2018.2020. Realized losses on trading securities during the three and six months ended June 30, 2019 were $0 and $4,980, respectively. Unrealized gain (loss) on trading securities was $0$36,664 and $89,405 respectively, for the three and ninesix months ended SeptemberJune 30, 2019 and $0 and ($29,430), respectively, for the three and nine months ended September 30, 2018 and is included in other income, net in the accompanying consolidated statements of operations.from the date of purchase as short-term investments.the accompanyingits consolidated balance sheets. The Company recordsoperations.operations and comprehensive income (loss). The Company recognizes a charge when the declines in the fair value below the amortized cost basis of its3.3 (Investments).
2. | Basis of Presentation and Significant Accounting Policies (continued). |
f. |
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g. |
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h. |
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i. |
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j. |
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2. | Basis of Presentation and Significant Accounting Policies (continued). |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Balances as of September 30, 2019 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 43,011,647 | $ | 43,011,647 | $ | — | $ | — | ||||||||
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|
|
|
|
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| |||||||||
Short-term investments: | ||||||||||||||||
Short-term bond fund | $ | 16,604,773 | $ | 16,604,773 | $ | — | $ | — | ||||||||
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| |||||||||
U.S. Treasuries | $ | 14,956,900 | $ | — | $ | 14,956,900 | $ | — | ||||||||
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|
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| |||||||||
Investments: | ||||||||||||||||
U.S. Treasuries | $ | 5,008,800 | $ | — | $ | 5,008,800 | $ | — | ||||||||
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|
|
|
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| |||||||||
Balances as of December 31, 2018 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 14,462,087 | $ | 14,462,087 | $ | — | $ | — | ||||||||
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| |||||||||
Short-term investments: | ||||||||||||||||
Short-term bond fund | $ | 26,541,349 | $ | 26,541,349 | $ | — | $ | — | ||||||||
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| |||||||||
U.S. Treasuries | $ | 10,380,864 | $ | — | $ | 10,380,864 | $ | — | ||||||||
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|
| |||||||||
Investments: | ||||||||||||||||
U.S. Treasuries | $ | 5,008,243 | $ | — | $ | 5,008,243 | $ | — | ||||||||
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|
|
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Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Balances as of June 30, 2020 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 19,628,370 | $ | 19,628,370 | $ | — | $ | — | ||||||||
U.S. Treasuries | $ | 84,990,900 | $ | — | $ | 84,990,900 | $ | — | ||||||||
Balances as of December 31, 2019 | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds | $ | 23,963,617 | $ | 23,963,617 | $ | — | $ | — | ||||||||
U.S. Treasuries | $ | 59,932,200 | $ | — | $ | 59,932,200 | $ | — | ||||||||
Short-term investments: | ||||||||||||||||
U.S. Treasuries | $ | 5,007,050 | $ | — | $ | 5,007,050 | $ | — | ||||||||
k. |
|
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s lease terms do not include options to extend or terminate the lease as it is not reasonably certain that it will exercise these options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease andnon-lease components, which are generally accounted for separately. Refer to Note 2.r. for discussion on adoption method.
l. |
|
2. | Basis of Presentation and Significant Accounting Policies (continued). |
|
athe Customer (its exclusive distributor) who subsequently resells Firdapse
As of September 30,2020 and 2019, all of the Company’s sales arewere to its Customer.
2. | Basis of Presentation and Significant Accounting Policies (continued). |
|
SeptemberJune 30, 2020receivables,receivable, net on the consolidated balance sheets.
2. | Basis of Presentation and Significant Accounting Policies (continued). |
operations and comprehensive income (loss). from sales of the collaborative product.payerpayor despite having health insurance.insurance, to the extent allowed by applicable law. The Company does not recognize any revenue related to these free products and the associated costs are classified in selling, general and administrative expenses in the Company’s consolidated statements of operations.collaboratorscollaborator could be required to make various payments to the Company, including upfront license fees, milestone payments based on achievement of regulatory approvals, and royalties on sales of products resulting from the collaborative agreement.ninesix months ended SeptemberJune 30, 2020 and 2019, and 2018,there was no royalty revenue was recognized.8, Collaborative Arrangement,7 (Collaborative Arrangement), for further discussion on the Company’s collaborative arrangement. CONCENTRATION OF RISK.The Company sells its product in the United States through an exclusive distributor to specialty pharmacies. Therefore, its distributor and specialty pharmacies account for all of its trade receivables and net product revenues. The creditworthiness of its Customer is continuously monitored, and the Company has internal policies regarding customer credit limits. The Company estimates an allowance for doubtful accounts primarily based on the credit worthiness of its Customer, historical payment patterns, aging of receivable balances and general economic conditions.
The Company currently has a single product with limited commercial sales experience, which makes it difficult to evaluate its current business, predict its future prospects and forecast financial performance and growth. The Company has invested a significant portion of its efforts and financial resources in the development and commercialization of the lead product, Firdapse®, and expects Firdapse® to constitute virtually all of product revenue for the foreseeable future. The Company’s success depends on its ability to effectively commercialize Firdapse®.
The Company relies exclusively on third parties to formulate and manufacture Firdapse® and its drug candidates. The commercialization of Firdapse® and any other drug candidates, if approved, could be stopped, delayed or made less profitable if those third parties fail to provide sufficient quantities of product or fail to do so at acceptable quality levels or prices. The Company does not intend to establish its own manufacturing facilities. The Company is using the same third-party contractors to manufacture, supply, store and distribute drug supplies for clinical trials and the commercialization of Firdapse®. If the Company is unable to continue its relationships with one or more of these third-party contractors, it could experience delays in the development or commercialization efforts as it locates and qualifies new manufacturers. The Company intends to rely on one or more third-party contractors to manufacture the commercial supply of drugs.
|
RESEARCH AND DEVELOPMENT. |
n. |
|
2. | Basis of Presentation and Significant Accounting Policies ( continued ). |
o. |
|
p. | ROYALTIES. |
q. | INCOME TAXES. |
2. | Basis of Presentation and Significant Accounting Policies (continued). |
r. | COMPREHENSIVE INCOME (LOSS). available-for-sale |
s. |
|
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Basic weighted average common shares outstanding | 102,974,105 | 102,641,504 | 102,864,571 | 102,598,740 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Common stock issuable upon the exercise of stock options | 4,071,129 | — | 2,957,038 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted weighted average common shares outstanding | 107,045,234 | 102,641,504 | 105,821,609 | 102,598,740 | ||||||||||||
|
|
|
|
|
|
|
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Basic weighted average common shares outstanding | 103,414,523 | 102,869,202 | 103,410,881 | 102,808,897 | ||||||||||||
Effect of dilutive securities | 3,315,900 | 3,059,768 | 3,022,981 | 2,290,033 | ||||||||||||
Dilutive weighted average common shares outstanding | 106,730,423 | 105,928,970 | 106,433,862 | 105,098,930 | ||||||||||||
t. | RECLASSIFICATIONS. |
u. | RECENTLY ISSUED ACCOUNTING STANDARDS. 2018-18, Collaborative Arrangements (Topic 808), which amends ASC 808 to clarify when transactions between participants in a collaborative arrangement under ASC 808 are within the scope of the FASB’s new revenue standard, ASU2014-09 (codified in ASC 606). The amendments require the application of ASC 606 existing guidance to determine the units of account that are distinct in a collaborative arrangement for purposes of identifying transactions with customers. If a unit of account within the collaborative arrangement is distinct and is with a customer, an entity shall apply the guidance in Topic 606 to that unit of account. In a transaction between collaborative participants, an entity is precluded by ASU2018-18 from presenting a transaction together with “revenue from contracts with customers” unless the unit of account is within the scope of ASC 606 and the entity applies the guidance in ASC 606 to such unit of account. The Company adopted the new standard on January 1, 2020. The Company has a collaboration agreement with Endo Ventures Limited (Endo). See Note 7 (Collaborative Arrangement). However, these amendments did not have an impact on the Company’s consolidated financial statements, as Endo does not meet the definition of a customer. |
2. | Basis of Presentation and Significant Accounting Policies (continued). |
|
In June 2018, the FASB issued ASUNo. 2018-07,Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting that largely aligns the accounting for share-based payment awards issued to employees and nonemployees. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. ASU2018-07 is effective for all entities for annual reporting periods beginning after December 15, 2018, including interim reporting periods within each annual reporting period, with early adoption permitted. The Company has adopted this standard as of January 1, 2019. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
3. |
Investments. |
|
Available-for-sale
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Amortized Cost | |||||||||||||
At September 30, 2019: | ||||||||||||||||
U.S. Treasuries - ST | $ | 14,956,900 | $ | 9,794 | $ | — | $ | 14,947,106 | ||||||||
U.S. Treasuries - LT | 5,008,800 | 9,634 | — | 4,999,166 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 19,965,700 | $ | 19,428 | $ | — | $ | 19,946,272 | ||||||||
|
|
|
|
|
|
|
| |||||||||
At December 31, 2018: | ||||||||||||||||
U.S. Treasuries - ST | $ | 10,380,864 | $ | — | $ | (1,835 | ) | $ | 10,382,699 | |||||||
U.S. Treasuries - LT | 5,008,243 | — | (18,413 | ) | 5,026,656 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 15,389,107 | $ | — | $ | (20,248 | ) | $ | 15,409,355 | |||||||
|
|
|
|
|
|
|
|
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Amortized Cost | |||||||||||||
At June 30, 2020: | ||||||||||||||||
U.S. Treasuries – Cash equivalents | $ | 84,990,900 | $ | — | $ | (1,191 | ) | $ | 84,992,091 | |||||||
At December 31, 2019: | ||||||||||||||||
U.S. Treasuries – Cash equivalents | $ | 59,932,200 | $ | 2,042 | $ | — | $ | 59,930,158 | ||||||||
U.S. Treasuries – ST | 5,007,050 | 7,463 | — | 4,999,587 | ||||||||||||
Total | $ | 64,939,250 | $ | 9,505 | $ | — | $ | 64,929,745 | ||||||||
2019. The Company did not hold any securities in an unrealized loss position for more than 12 months as of SeptemberJune 30, 2019.
2020.
September 30, 2019 | ||||
Due in one year or less | $ | 19,965,700 | ||
Due after one year | — | |||
|
| |||
$ | 19,965,700 | |||
|
|
June 30, 2020 | ||||
Due in one year or less | $ | 84,990,900 | ||
4. | Prepaid Expenses and Other Current Assets. |
September 30, 2019 | December 31, 2018 | |||||||
Prepaid research fees | $ | 372,784 | $ | 358,209 | ||||
Prepaid insurance | 151,474 | 800,261 | ||||||
Prepaid commercialization fees | 112,356 | 17,030 | ||||||
Prepaid subscription fees | 537,587 | 170,552 | ||||||
Prepaid manufacturing | 1,734,360 | — | ||||||
Other | 430,838 | 303,729 | ||||||
|
|
|
| |||||
Total prepaid expenses and other current assets | $ | 3,339,399 | $ | 1,649,781 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
Prepaid manufacturing costs | $ | 5,499,746 | $ | 1,526,013 | ||||
Prepaid insurance | 622,350 | 1,263,129 | ||||||
Prepaid subscription fees | 429,155 | 501,251 | ||||||
Prepaid research fees | 458,937 | 481,057 | ||||||
Prepaid commercialization expenses | 218,651 | 62,959 | ||||||
Other | 292,414 | 516,665 | ||||||
Total prepaid expenses and other current assets | $ | 7,521,253 | $ | 4,351,074 | ||||
5. | Operating Leases. |
For the Three Months Ended September 30, 2019 | For the Nine Months Ended September 30, 2019 | |||||||
Operating lease cost | $ | 74,079 | $ | 222,237 |
For the Three Months Ended June 30, 2020 | For the Six Months Ended June 30, 2020 | |||||||
Operating lease cost | $ | 65,434 | $ |
September 30, 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows | $ | 245,663 | ||
Right-of-use assets obtained in exchange for lease obligations: | ||||
Operating leases | $ | 15,915 |
June 30, 2020 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows | $ | 168,122 | ||
Right-of-use | ||||
Operating leases | $ | 19,255 |
September 30, 2019 | ||||
Operating leaseright-of-use assets | $ | 952,340 | ||
|
| |||
Other current liabilities | $ | 294,433 | ||
Operating lease liabilities, net of current portion | 725,700 | |||
|
| |||
Total operating lease liabilities | $ | 1,020,133 | ||
|
|
| ||||
|
Payments
June 30, 2020 | ||||
Operating lease right-of-use | $ | 71,711 | ||
Other current liabilities | $ | 197,896 | ||
Operating lease liabilities, net of current portion | — | |||
Total operating lease liabilities | $ | 197,896 | ||
Weighted average remaining lease term | 0.6 years | |||
Weighted average discount rate | 3.68% |
2019 (remaining three months) | $ | 84,061 | ||
2020 | 339,605 | |||
2021 | 349,788 | |||
2022 | 329,662 | |||
|
| |||
Total lease payments | 1,103,116 | |||
Less imputed interest | (82,983 | ) | ||
|
| |||
Total | $ | 1,020,133 | ||
|
|
2020 (remaining six months) | $ | |||
2021 | 28,860 | |||
2022 | — | |||
Total lease payments | 200,343 | |||
Less imputed interest | (2,447 | ) | ||
Total | $ | 197,896 | ||
6. |
|
Property and equipment, net consists of the following:
September 30, 2019 | December 31, 2018 | |||||||
Computer equipment | $ | 50,904 | $ | 52,704 | ||||
Furniture and equipment | 230,741 | 212,451 | ||||||
Leasehold improvements | — | 177,417 | ||||||
|
|
|
| |||||
281,645 | 442,572 | |||||||
Less: Accumulated depreciation | (140,557 | ) | (197,147 | ) | ||||
|
|
|
| |||||
Total property and equipment, net | $ | 141,088 | $ | 245,425 | ||||
|
|
|
|
Depreciation expense was $6,532 and $26,718, respectively, for the three and nine-month periods ended September 30, 2019 and $9,294 and $25,485, respectively for the three and nine-month periods ended September 30, 2018.
Accrued Expenses and Other Liabilities. |
September 30, 2019 | December 31, 2018 | |||||||
Accrued preclinical and clinical trial expenses | $ | 768,114 | $ | 821,633 | ||||
Accrued professional fees | 1,232,567 | 1,311,061 | ||||||
Accrued compensation and benefits | 1,739,719 | 1,941,449 | ||||||
Accrued license fees | 6,880,265 | 3,000,000 | ||||||
Operating lease liability | 294,433 | — | ||||||
Accrued variable consideration | 1,330,981 | — | ||||||
Deferred rent and lease incentive | — | 33,408 | ||||||
Accrued income tax | 1,058,039 | — | ||||||
Other | 531,174 | 66,436 | ||||||
|
|
|
| |||||
Current accrued expenses and other liabilities | 13,835,292 | 7,173,987 | ||||||
Lease liability -non-current | 725,700 | — | ||||||
Deferred rent and lease incentive –non-current | — | 154,799 | ||||||
|
|
|
| |||||
Non-current accrued expenses and other liabilities | 725,700 | 154,799 | ||||||
|
|
|
| |||||
Total accrued expenses and other liabilities | $ | 14,560,992 | $ | 7,328,786 | ||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
Accrued preclinical and clinical trial expenses | $ | 651,692 | $ | 1,183,513 | ||||
Accrued professional fees | 2,464,197 | 1,241,526 | ||||||
Accrued compensation and benefits | 2,212,733 | 3,064,645 | ||||||
Accrued license fees | 5,866,161 | 8,751,991 | ||||||
Accrued purchases | 216,967 | 1,313,310 | ||||||
Accrued contributions | 660,000 | 1,535,000 | ||||||
Operating lease liability | 197,896 | 300,518 | ||||||
Accrued variable consideration | 1,023,537 | 884,764 | ||||||
Accrued income tax | 1,081,912 | 1,533,696 | ||||||
Other | 30,502 | 172,332 | ||||||
Current accrued expenses and other liabilities | 14,405,597 | 19,981,295 | ||||||
Lease liability—non-current | — | 647,532 | ||||||
Non-current accrued expenses and other liabilities | — | 647,532 | ||||||
Total accrued expenses and other liabilities | $ | 14,405,597 | $ | 20,628,827 | ||||
7. | Collaborative Arrangement. |
For$2.0 million milestone payment on the commercial launch of the product by Par. As of June 30, 2020 and 2019, 0 milestone payments have been earned.
8. | Commitments and Contingencies. |
8. | Commitments and Contingencies (continued). |
See Note 13 (Subsequent Events).
9. | Agreements. |
a. |
|
|
b. |
|
10. | Income Taxes. |
expense.
11. | Stockholders’ Equity. |
2016 Shelf Registration Statement
On
vote.
At September
12. | Stock Compensation. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Research and development | $ | 242,867 | $ | 240,122 | $ | 803,800 | $ | 820,062 | ||||||||
Selling, general and administrative | 574,193 | 518,054 | 1,871,667 | 1,700,961 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total stock-based compensation | $ | 817,060 | $ | 758,176 | $ | 2,675,467 | $ | 2,521,023 | ||||||||
|
|
|
|
|
|
|
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Research and development | $ | 421,220 | $ | 273,212 | $ | 839,273 | $ | 560,933 | ||||||||
Selling, general and administrative | 1,373,242 | 651,784 | 2,474,540 | 1,297,474 | ||||||||||||
Total stock-based compensation | $ | 1,794,462 | $ | 924,996 | $ | 3,313,813 | $ | 1,858,407 | ||||||||
|
2020.
During the three and nine-month periods ended September 30, 2018, the Company granted seven-year term options to purchase an aggregate of 550,000 and 3,267,500995,000 shares, respectively, of the Company’s common stock to employees and directors. The Company recorded stock-based compensation related to stock options totaling $758,176$1,627,105 and $2,506,026,$3,010,777, respectively, during the three and nine-month
During the three and nine-month periods ended September 30, 2018, options to purchase 89,999125,000 shares and 136,665190,000 shares, respectively, of the Company’s common stock were exercised, with proceeds of $104,532$192,550 and $146,064,$281,900 respectively, to the Company.
Common
There were no grants of common Units
13. | Subsequent Events. |
|
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|
|
|
Overview
District Judge handling the case that she grant the FDA’s and Jacobus’ motions for summary judgement and deny Catalyst’s motion for summary judgement. We are currently conductingreviewing the Magistrate Judge’s decision, which we believe to be incorrect as a matter of law and contrary to the plain language of the Orphan Drug Act, and we intend to pursue the case further with the District Judge. The decision on whether to grant or deny our motion for summary judgement remains with the District Judge handling the case. We believe that if the Magistrate Judge’s recommendation is correct on the law, it means that the FDA has the authority to effectively eliminate the benefits of exclusivity under the Orphan Drug Act, which we believe will chill the incentive for drug companies like ourselves to spend the millions of dollars necessary to develop an orphan drug.
We previously conducted
future scientific forum
There can be no assurance as to whether we will be permitted to submit an sNDA for this indication, or, even if we are permitted to submit such application, whether it will ever be approved (and, even if it is approved, for what genetic subtypes of CMS it will be approved).
Because the FDA has granted Orphan Drug Designation for Firdapse® for the treatment of patients with CMS and Myasthenia Gravis (MG), if we are the first to receive approvals in the future for Firdapse® for the treatment of CMS orMuSK-MG, of which there can be no assurance, we would be eligible to receive seven years of marketing exclusivity for those indications added to our Firdapse® labeling.
We are conducting a3, ambulatory.3. The study, which is designed asbeing conducted at trial sites in Italy and Serbia, has enrolled the anticipated 12 subjects in a randomized (1:1), double-blind,2-period,2-treatment,to evaluateevaluating the safety, tolerability and potential efficacy of amifampridine in ambulatory patients diagnosed with SMA Type 3. The study is planned to include approximately 12 patients, and we currently expect to reporttop-line results from this study in the first half of 2020. Details of this trial are available on
In October 2019, we submitted an NDS
OnFirdapse
On December 18, 2018, we entered into a definitive agreement with Endo International plc’s subsidiary, Endo Ventures Limited (“Endo”), for the further development and commercialization of generic Sabril have received an$500,000, and$500,000. We will be entitled to receive a milestone payment of $2.0 million on the commercial launch of the product. Further, we will receive milestone payments based on achievement of regulatory approvals, and a sharing of defined net profits upon commercialization and we are obligated to share the costs of certain expenses for development.
development expenses.
Available
Prior
the collaborative agreement to fluctuate in future periods based on our collaborator’s ability to meet various regulatory milestones set forth in such agreement.
manufactured and distributed.
2020 and 2019.
FDA approval of Firdapse
Three months ended June 30, | Change | |||||||||||||||
2020 | 2019 | $ | % | |||||||||||||
Research and development expenses | $ | 3,928,423 | $ | 4,356,152 | (427,729 | ) | (9.8 | ) | ||||||||
Employee stock-based compensation | 421,220 | 273,212 | 148,008 | 54.2 | ||||||||||||
Total research and development expenses | $ | 4,349,643 | $ | 4,629,364 | (279,721 | ) | (6.0 | ) | ||||||||
Three months ended September 30, | Change | |||||||||||||||
2019 | 2018 | $ | % | |||||||||||||
Research and development expenses | $ | 4,354,172 | $ | 4,298,247 | 55,925 | 1.3 | % | |||||||||
Employee stock-based compensation | 242,867 | 240,122 | 2,745 | 1.1 | % | |||||||||||
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Total research and development expenses | $ | 4,597,039 | $ | 4,538,369 | 58,670 | 1.3 | % | |||||||||
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Six months ended June 30, | Change | |||||||||||||||
2020 | 2019 | $ | % | |||||||||||||
Research and development expenses | $ | 7,733,181 | $ | 7,376,390 | 356,791 | 4.8 | ||||||||||
Employee stock-based compensation | 839,273 | 560,933 | 278,340 | 49.6 | ||||||||||||
Total research and development expenses | $ | 8,572,454 | $ | 7,937,323 | 635,131 | 8.0 | ||||||||||
Research and development expenses for the nine-month periods ended September 30, 2019 and 2018 were approximately $12.5 million and $11.5 million, respectively, and represented approximately 26% and 56% of total operating costs and expenses for the nine-month periods ended September 30, 2019, and 2018 respectively. Research and development expenses for the nine-months ended September 30, 2019 and 2018 were as follows:
Nine months ended September 30, | Change | |||||||||||||||
2019 | 2018 | $ | % | |||||||||||||
Research and development expenses | $ | 11,730,562 | $ | 10,682,173 | 1,048,389 | 9.8 | % | |||||||||
Employee stock-based compensation | 803,800 | 820,062 | (16,262 | ) | (2.0 | %) | ||||||||||
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Total research and development expenses | $ | 12,534,362 | $ | 11,502,235 | 1,032,127 | 9.0 | % | |||||||||
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For the nine months ended September 30, 2019,2020, research and development expenses decreased approximately $0.3 million and increased $1,032,127,approximately $0.6 million, respectively, compared to the same period in 2018,2019, primarily attributable to the following:
headcount.
other neuromuscular diseases.
Three months ended September 30, | Change | |||||||||||||||
2019 | 2018 | $ | % | |||||||||||||
Selling | $ | 4,670,568 | $ | — | 4,670,568 | 0 | % | |||||||||
General and administrative | 2,823,031 | 3,126,180 | (303,149 | ) | (9.7 | %) | ||||||||||
Employee stock-based compensation | 574,193 | 518,054 | 56,139 | 10.8 | % | |||||||||||
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Total selling, general and administrative expenses | $ | 8,067,792 | $ | 3,644,234 | 4,423,558 | 121.4 | % | |||||||||
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Three months ended June 30, | Change | |||||||||||||||
2020 | 2019 | $ | % | |||||||||||||
Selling | $ | 5,621,780 | $ | 4,881,137 | 740,643 | 15.2 | ||||||||||
General and administrative | 3,838,336 | 3,454,801 | 383,535 | 11.1 | ||||||||||||
Employee stock-based compensation | 1,373,242 | 651,784 | 721,458 | 110.7 | ||||||||||||
Total selling, general and administrative expenses | $ | 10,833,358 | $ | 8,987,722 | 1,845,636 | 20.5 | ||||||||||
Nine months ended September 30, | Change | |||||||||||||||
2019 | 2018 | $ | % | |||||||||||||
Selling | $ | 14,655,613 | $ | — | 14,655,613 | 0 | % | |||||||||
General and administrative | 8,944,694 | 7,248,702 | 1,695,992 | 23.4 | % | |||||||||||
Employee stock-based compensation | 1,871,667 | 1,700,961 | 170,706 | 10.0 | % | |||||||||||
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Total selling, general and administrative expenses | $ | 25,471,974 | $ | 8,949,663 | 16,522,311 | 184.6 | % | |||||||||
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Six months ended June 30, | Change | |||||||||||||||
2020 | 2019 | $ | % | |||||||||||||
Selling | $ | 11,425,925 | $ | 9,985,045 | 1,440,880 | 14.4 | ||||||||||
General and administrative | 6,995,941 | 6,121,663 | 874,278 | 14.3 | ||||||||||||
Employee stock-based compensation | 2,474,540 | 1,297,474 | 1,177,066 | 90.7 | ||||||||||||
Total selling, general and administrative expenses | $ | 20,896,406 | $ | 17,404,182 | 3,492,224 | 20.1 | ||||||||||
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business.
Income Taxes.
March 31, 2019. Our effective income tax rate was 4.18%5.70% and 0.00%4.21% for the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. Differences in the effective tax and the statutory federal income tax rate of 21% isare driven by state income taxes and anticipated annual permanent differences, including orphan drug credit expense limitations and other items.
share, respectively), which excludes
We
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On DecemberJuly 23, 2016,2020, we filed a shelf registration statement with the SEC to sell up to $33.8$200 million of common stock, preferred stock, warrants to purchase common stock, debt securities and units consisting of one or more of such securities (the “2016“2020 Shelf Registration Statement”). This shelf registration statement The 2020 Shelf Registration Statement (file no.
July 31, 2020. As of the date of this Form10-Q,report, no offerings have been completed under the full amount of our 20162020 Shelf Registration Statement and $92.5 million of our 2017 Shelf Registration Statement remains available for future sales.
Statement.
$29,772,428.
Obligations and Arrangements.
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limiting the foregoing, “believes”, “anticipates”, “proposes”, “plans”, “expects”, “intends”, “may”, and other similar expressions are intended to identify forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or other achievements to be materially different from any future results, performanceperformances or achievements expressed or implied by such forward lookingforward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the section entitled “Item 1A – Risk Factors” in our 2019 Annual Report on Form
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our estimates regarding anticipated capital requirementsstate laws, rules and our needs for additional financing in the future;
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whether
whether
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whether
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changes
the
our
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whether
whether we will be the first company to receive approval of3,4-DAPfor the treatment of CMS;
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whether
even
whether Catalyst
the ability of our third-party suppliers and contract manufacturers to maintain compliance with current Good Manufacturing Practices (cGMP);
the ability of our distributor and the specialty pharmacies that distribute our product to maintain compliance with applicable law; and
our ability to maintain compliance with applicable rules relating to our patient assistance programs and our contributions to 501(c)(3) organizations that support LEMS patients.
Our current plans and objectives are based on assumptions relating to the commercialization of Firdapse
a. | We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of |
b. | During the three months ended |
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In 2018, we became aware that certain patents granted to Northwestern University (which patents have been licensed by Northwestern to a third party) for a new GABA aminotransferase inhibitor were developed fromCPP-115, which had previously been licensed to us by Northwestern. As a result, on October 26, 2018, we terminated the license agreement forCPP-115 and commenced an arbitration proceeding against Northwestern seeking damages for alleged breaches of the license agreement. Shortly thereafter, Northwestern filed counterclaims against us in the arbitration action seeking damages for alleged breaches by us of the license agreement. On May 21, 2019, we entered into a settlement agreement with Northwestern that resolved all pending disputes between the parties with no admission of liability by either party, released all claims of liability or wrongdoing between us and Northwestern, and dismissed the pending arbitration. Under the settlement agreement, we received $100,000 at the time the settlement agreement was executed and we will also be entitled to receive certain contingent compensation that will be reported when and if it is received.
In May 2019, the FDA approved an NDA for Jacobus Pharmaceuticals for
Additionally, fromlawsuit, the timing of any decision, or the likelihood of an appeal if our suit is successful.
The following is an additional risk factor regarding factors that you should consider that has recently arisen:
The FDA has approved Ruzurgi®, another formulation of amifampridine(3,4-DAP) for LEMS for the treatment of pediatric patients.
In May 2019, we became aware that Jacobus Pharmaceutical had been granted approval of an NDA for Ruzurgi®, their version of amifampridine(3,4-DAP) for pediatric LEMS patients (ages 6 to under 17). We believe that Jacobus is offering Ruzurgi® at a lower price than we are offering Firdapse®. In addition, while the NDA for Ruzurgi® only covers pediatric patients, we believe Ruzurgi® is being prescribedoff-label in adult patients. While we believe that this approval was violative of our statutory rights and was in multiple other respects arbitrary, capricious, and contrary to law, and we have filed suit to that effect, there can be no assurance that our claims will be successful. If Jacobus is able to successfully sell Ruzurgi®off-label for adult LEMS patients, it could have a material adverse effect on our business, financial condition and results of operations.
31.1 | Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Principal Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, has been formatted in Inline XBRL. |
Catalyst Pharmaceuticals, Inc. | ||
By: | /s/ Alicia Grande | |
Alicia Grande | ||
Vice President, Treasurer and Chief Financial Officer |
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