QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934.
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
March 31, 2022
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
Number: 001-32302
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| Delaware | 41-1350192 | |||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No. | |||||||
100 Princeton South, Suite 300
Ewing, New Jersey 08628
| 100 Princeton South, Suite 300, Ewing, NJ | 08628 | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.01 per share | ATRS | NASDAQ | ||||||||||||
| Large accelerated filer | ☒ |
| Accelerated filer | ☐ |
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Emerging growth company | ☐ |
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The number
Item 1. September 30, December 31, 2017 2016 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 27,433,489 $ 27,714,588 Short-term investments 9,976,984 — Accounts receivable 10,146,966 9,073,173 Inventories 7,942,376 5,326,962 Deferred costs 1,213,507 1,773,446 Prepaid expenses and other current assets 1,680,208 1,376,299 Total current assets 58,393,530 45,264,468 Equipment, molds, furniture and fixtures, net 17,296,719 17,867,412 Patent rights, net 1,630,785 2,044,608 Goodwill 1,095,355 1,095,355 Other assets 53,778 53,607 Total Assets $ 78,470,167 $ 66,325,450 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 8,245,154 $ 7,884,983 Accrued expenses and other liabilities 6,394,379 5,872,846 Deferred revenue 2,842,801 6,149,087 Total current liabilities 17,482,334 19,906,916 Long-term debt 24,791,214 — Deferred revenue – long term 200,000 1,200,000 Total liabilities 42,473,548 21,106,916 Stockholders’ Equity: Preferred Stock: $0.01 par, authorized 3,000,000 shares, none outstanding — — Common Stock: $0.01 par; 300,000,000 shares authorized; 156,425,904 and 155,167,677 issued and outstanding at September 30, 2017 and December 31, 2016, respectively 1,564,259 1,551,677 Additional paid-in capital 301,703,929 297,826,433 Accumulated deficit (266,570,874 ) (253,445,306 ) Accumulated other comprehensive loss (700,695 ) (714,270 ) 35,996,619 45,218,534 Total Liabilities and Stockholders’ Equity $ 78,470,167 $ 66,325,450 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue: Product sales $ 13,327,525 $ 11,049,840 $ 30,708,750 $ 30,580,889 Development revenue 1,485,091 2,101,203 7,894,640 6,466,974 Licensing revenue 19,486 38,618 1,057,204 128,040 Royalties 220,295 289,102 815,421 850,022 Total revenue 15,052,397 13,478,763 40,476,015 38,025,925 Cost of revenue: Cost of product sales 7,600,180 7,206,280 16,681,689 18,670,363 Cost of development revenue 922,717 827,441 3,677,363 3,457,197 Total cost of revenue 8,522,897 8,033,721 20,359,052 22,127,560 Gross profit 6,529,500 5,445,042 20,116,963 15,898,365 Operating expenses: Research and development 3,289,445 5,958,550 9,535,089 15,554,599 Selling, general and administrative 8,185,865 5,622,937 23,013,130 20,240,635 Total operating expenses 11,475,310 11,581,487 32,548,219 35,795,234 Operating loss (4,945,810 ) (6,136,445 ) (12,431,256 ) (19,896,869 ) Interest expense (625,938 ) — (794,129 ) — Other income 119,227 15,462 197,003 58,313 Net loss $ (5,452,521 ) $ (6,120,983 ) $ (13,028,382 ) $ (19,838,556 ) Basic and diluted net loss per common share $ (0.03 ) $ (0.04 ) $ (0.08 ) $ (0.13 ) Basic and diluted weighted average common shares outstanding 156,400,702 155,060,811 155,851,639 154,952,060 INCOME (LOSS) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss $ (5,452,521 ) $ (6,120,983 ) $ (13,028,382 ) $ (19,838,556 ) Foreign currency translation adjustment (3,621 ) 2,632 13,575 (7,820 ) Comprehensive loss $ (5,456,142 ) $ (6,118,351 ) $ (13,014,807 ) $ (19,846,376 ) Nine Months Ended September 30, 2017 2016 Cash flows from operating activities: Net loss $ (13,028,382 ) $ (19,838,556 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 2,371,453 1,886,823 Depreciation and amortization 1,520,197 1,371,538 Loss on disposal of equipment 22,600 17,785 Write-off of capitalized patent costs 45,600 — Accretion of interest expense 66,406 — Amortization of debt issuance costs 18,347 — Amortization of premiums and discounts on investment securities (16,638 ) 10,913 Changes in operating assets and liabilities: Accounts receivable (1,069,614 ) (624,232 ) Inventories (2,615,414 ) (999,158 ) Prepaid expenses and other assets (299,825 ) 2,922,527 Deferred costs 559,939 (762,413 ) Accounts payable 701,704 3,308,607 Accrued expenses and other current liabilities 549,929 (146,376 ) Deferred revenue (4,308,571 ) 1,156,309 Net cash used in operating activities (15,482,269 ) (11,696,233 ) Cash flows from investing activities: Purchase of investment securities (9,963,978 ) — Purchases of equipment, molds, furniture and fixtures (878,855 ) (4,278,643 ) Additions to patent rights (83,592 ) (103,788 ) Proceeds from maturities of investment securities — 12,000,000 Net cash (used in) provided by investing activities (10,926,425 ) 7,617,569 Cash flows from financing activities: Proceeds from issuance of long-term debt 25,000,000 — Payment of debt issuance costs (293,538 ) — Proceeds from exercise of stock options 1,670,149 24,071 Taxes paid related to net share settlement of equity awards (248,709 ) (64,096 ) Net cash provided by (used in) financing activities 26,127,902 (40,025 ) Effect of exchange rate changes on cash (307 ) 1,440 Net decrease in cash and cash equivalents (281,099 ) (4,117,249 ) Cash and cash equivalents: Beginning of period 27,714,588 32,898,676 End of period $ 27,433,489 $ 28,781,427 Supplemental disclosure of non-cash investing activities: Purchases of equipment, molds, furniture and fixtures recorded in accounts payable and accrued expenses $ 92,674 $ 552,556 Additions to patent rights recorded in accounts payable and accrued expenses $ 6,160 $ 23,369 (UNAUDITED) Basis of Presentation 2021 approximate fair value. warehousing and distribution operations are outsourced to September 30, December 31, 2017 2016 Inventories: Raw material $ 126,070 $ 142,491 Work in process 4,357,554 2,429,075 Finished goods 3,458,752 2,755,396 $ 7,942,376 $ 5,326,962 September 30, 2017 2017 $ — 2018 — 2019 3,075,781 2020 7,870,277 2021 8,602,959 Thereafter 6,513,483 $ 26,062,500 Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term (Years) Value Outstanding at December 31, 2016 11,313,909 $ 1.84 Granted 2,975,667 2.67 Exercised (1,062,693 ) 1.57 Cancelled/Forfeited (833,033 ) 2.68 Outstanding at September 30, 2017 12,393,850 2.01 7.3 $ 15,631,780 Exercisable at September 30, 2017 8,043,282 $ 1.93 6.2 $ 10,880,581 September 30, 2017 2016 Risk-free interest rate 1.8% 1.3% Annualized volatility 53.4% 51.6% Weighted average expected life, in years 6.0 6.0 Expected dividend yield 0.0% 0.0% Performance Stock Units Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2016 1,347,289 $ 1.50 822,658 $ 1.39 Granted 689,180 3.12 689,180 2.69 Vested/settled — (287,508 ) 1.49 Forfeited/expired (502,308 ) 2.16 (67,464 ) 1.70 Outstanding at September 30, 2017 1,534,161 $ 2.20 1,156,866 $ 2.12 2017 Award 2016 Award 2015 Award Closing stock price on grant date $ 2.66 $ 1.12 $ 2.18 Performance period starting price $ 2.17 $ 1.29 $ 2.52 Term of award (in years) 2.57 2.58 2.59 Volatility 54.6 % 70.1 % 60.5 % Risk-free interest rate 1.39 % 0.97 % 0.83 % Expected dividend yield 0.00 % 0.00 % 0.00 % Fair value per TSR PSU $ 3.10 $ 1.25 $ 1.71 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 United States of America $ 14,174,112 $ 12,036,590 $ 37,009,301 $ 33,631,332 Europe 750,470 1,215,218 3,018,099 3,829,809 Other 127,815 226,955 448,615 564,784 $ 15,052,397 $ 13,478,763 $ 40,476,015 $ 38,025,925 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Teva $ 7,663,701 $ 5,522,996 $ 17,043,954 $ 18,513,972 AMAG 1,767,702 2,369,950 6,338,275 3,275,832 McKesson 2,339,238 1,946,261 6,333,080 5,501,810 AmerisourceBergen 1,470,268 1,156,566 4,323,013 3,658,453 Ferring 723,502 1,246,300 3,018,098 3,960,689 operations. •our expectations regarding the continued commercialization of XYOSTED® (testosterone enanthate) injection and the continued growth in prescriptions and revenues related thereto; •our expectations about the development of a rescue pen for an undisclosed drug with our partner Pfizer Inc. (“Pfizer”) and potential future regulatory approval and future revenue from the same; •our expectations about the timing and outcome of pending or potential claims and litigation, including without limitation, the •our anticipated continued reliance on •our anticipated continued reliance on third parties to provide certain services for our products including logistics, warehousing, distribution, invoicing, contract administration and chargeback processing; •our sales and marketing plans; •our expectations about our future revenues, our cash •our estimates and expectations regarding the sufficiency of our cash resources, anticipated capital requirements and our performance results. Forward-looking statements involve known and unknown risks, uncertainties and assumptions, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. While we believe that we have a reasonable basis for each forward-looking statement contained in this quarterly report, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future about which we cannot be certain. Many factors may affect our ability to achieve our objectives, including: •delays in product introduction or unsuccessful marketing and •the timing and results of our or our partners’ research projects or clinical trials of product candidates in development; •our inability to compete successfully against new and existing competitors or to leverage our research and development capabilities •our inability to establish and maintain commercial capabilities, our inability to effectively market our •our inability to •our inability to effectively protect our intellectual property; •costs associated with future litigation and the outcome of such litigation; •adverse economic and political our Exchange Commission (“SEC”), including Current Reports on Form 8-K. We market and sell in the U.S. our proprietary product We are Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 OTREXUP® $ 4,623,326 $ 3,904,329 $ 13,110,489 $ 11,024,394 Auto injector and pen injector devices 7,946,313 5,943,786 14,489,839 15,836,179 Needle-free injector devices and components 757,886 1,201,725 3,108,422 3,720,316 Total product sales 13,327,525 11,049,840 30,708,750 30,580,889 Development revenue 1,485,091 2,101,203 7,894,640 6,466,974 Licensing revenue 19,486 38,618 1,057,204 128,040 Royalties 220,295 289,102 815,421 850,022 Total revenue $ 15,052,397 $ 13,478,763 $ 40,476,015 $ 38,025,925 NOCDURNA Makena Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Total revenue $ 15,052,397 $ 13,478,763 $ 40,476,015 $ 38,025,925 Total cost of revenue 8,522,897 8,033,721 20,359,052 22,127,560 Gross profit $ 6,529,500 $ 5,445,042 $ 20,116,963 $ 15,898,365 Gross profit percentage 43 % 40 % 50 % 42 % Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Product sales $ 13,327,525 $ 11,049,840 $ 30,708,750 $ 30,580,889 Cost of product sales 7,600,180 7,206,280 16,681,689 18,670,363 Product gross profit $ 5,727,345 $ 3,843,560 $ 14,027,061 $ 11,910,526 Product gross margin percentage 43 % 35 % 46 % 39 % Selling, General and Administrative Expenses taxes and $0.4 million in principal payments on our Term Loan, offset by $0.9 million in proceeds received from exercises of stock options. Net cash provided by financing activities for the three months ended March 31, 2021 included $3.3 million in proceeds from the exercise of stock options, partially offset by $1.6 million paid to taxing authorities in connection with net-share settled stock-based awards. Payments Due by Period Less than 1 - 3 3 - 5 More than Total 1 year years years 5 years Long-Term Debt Obligations $ 33,706,453 $ 2,217,882 $ 12,930,373 $ 18,558,198 $ — Operating Lease Obligations 1,882,226 629,600 896,282 356,344 — Total $ 35,588,679 $ 2,847,482 $ 13,826,655 $ 18,914,542 $ — the date of the financial statements and reported amounts of revenues and expenses during the reporting period. We Population/Analysis Cavg Lower limit of the 95% 2-sided C. I. Cavg % in range 300 – 1100 ng/dL n (%) Cmax <1500 ng/dL n (%) Cmax >1800 ng/dL n (%) Primary analysis* N=150 87.3 % 139 (92.7 %) 137 (91.3 %)** 0 % Completers N=137 94.8 % 135 (98.5 %) 137 (100 %) 0 % Protocol-Required Outcomes ≥65 % 75 % ≥85 % ≤5 % In addition, a hypothetical 10% appreciation or depreciation in foreign currencies against the U.S. dollar, assuming all other variables held constant, would not have a material impact on our financial position or operating results for the three months ended March 31, 2022. periods specified in the Securities and Exchange Commission’s rules and is accumulated and communicated to management, including results in future periods. XBRL Instance Document Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Label Linkbase Document Inline XBRL Taxonomy Extension Presentation Linkbase Document Cover Page Interactive Data File (the cover page interactive data does not appear in the Interactive Data File because its XBRL ANTARES PHARMA, INC.INDEXQuarterly Report on Form 10-QFor the Three Months Ended March 31, 2022TABLE OF CONTENTSPAGE33345152626PART II – OTHER INFORMATIONPART II.272727Item 2.31Item 3.31Item 4.31Item 5.31Item 6.3132PART I – FINANCIALFINANCIAL INFORMATIONItem 1.Item 1. FINANCIAL STATEMENTSCONDENSED CONSOLIDATED BALANCE SHEETSSee(UNAUDITED)March 31,
2022December 31,
2021Assets Current assets Cash and cash equivalents $ 61,715 $ 65,913 Short-term investments 498 1,245 Accounts receivable, net 58,131 56,697 Other receivables 26,006 26,311 Inventories, net 11,591 11,544 Contract assets 9,142 8,030 Prepaid expenses and other current assets 4,502 4,532 Total current assets 171,585 174,272 Deferred tax assets, net 33,860 33,043 Property and equipment, net 25,727 26,015 Operating lease right-of-use assets 4,499 3,774 Intangibles, net 17,690 17,879 Goodwill 1,095 1,095 Other long-term assets 1,202 1,427 Total assets $ 255,658 $ 257,505 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 19,878 $ 17,056 Accrued expenses and other liabilities 30,216 35,043 Current maturities of long-term debt, net 1,500 1,500 Operating lease liabilities, current 1,035 904 Deferred revenue 3,100 4,427 Total current liabilities 55,729 58,930 Long-term debt, less current maturities 17,891 18,241 Operating lease liabilities, long-term 5,063 4,576 Deferred revenue, long-term 1,207 — Total liabilities 79,890 81,747 Commitments and contingencies (Note 11) 0 0 Stockholders’ Equity Preferred Stock: $0.01 par; 3,000 shares authorized, none outstanding — — Common Stock: $0.01 par; 300,000 shares authorized; 170,580 and 170,042 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 1,706 1,701 Additional paid-in capital 353,406 351,079 Accumulated deficit (178,658) (176,337) Accumulated other comprehensive loss (686) (685) Total stockholders' equity 175,768 175,758 Total liabilities and stockholders’ equity $ 255,658 $ 257,505 The accompanying notesNotes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(UNAUDITED)Three Months Ended
March 31,2022 2021 Revenue Product sales, net $ 32,103 $ 29,135 Licensing and development revenue 4,191 4,984 Royalties 5,263 7,964 Total revenue, net 41,557 42,083 Operating expenses Cost of product sales 15,648 12,498 Cost of development revenue 3,119 3,947 Research and development 5,008 2,640 Selling, general and administrative 20,602 17,607 Total operating expenses 44,377 36,692 Operating income (loss) (2,820) 5,391 Other income (expense) Interest expense (174) (962) Other income (expense), net (144) (46) Total other expense, net (318) (1,008) Income (loss) before income taxes (3,138) 4,383 Income tax expense (benefit) (817) 590 Net income (loss) $ (2,321) $ 3,793 Earnings (loss) per common share Basic $ (0.01) $ 0.02 Diluted $ (0.01) $ 0.02 Weighted average common shares outstanding Basic 170,104 167,822 Diluted 170,104 174,908 SeeThe accompanying notesNotes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(in thousands)(UNAUDITED) Three Months Ended
March 31, 2022 2021 Net income (loss) $ (2,321) $ 3,793 Foreign currency translation adjustment (1) (10) Comprehensive income (loss) $ (2,322) $ 3,783 SeeThe accompanying notesNotes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(in thousands)(UNAUDITED)Common Stock AdditionalPaid-InCapitalAccumulated Deficit AccumulatedOtherComprehensiveLossTotalStockholders’EquityShares Amount Balance, December 31, 2021 170,072 $ 1,701 $ 351,079 $ (176,337) $ (685) $ 175,758 Common stock issued under equity compensation plan, net of shares withheld for taxes 165 2 (523) — — (521) Exercise of options 343 3 910 — — 913 Stock-based compensation — — 1,940 — — 1,940 Net income (loss) — — — (2,321) — (2,321) Other comprehensive income (loss) — — — — (1) (1) Balance, March 31, 2022 170,580 $ 1,706 $ 353,406 $ (178,658) $ (686) $ 175,768 Common Stock AdditionalPaid-InCapitalAccumulatedDeficitAccumulatedOtherComprehensiveLossTotalStockholders’Equity Shares Amount Balance, December 31, 2020 166,836 $ 1,668 $ 340,756 $ (222,626) $ (683) $ 119,115 Common stock issued under equity compensation plan, net of shares withheld for taxes 417 4 (1,623) — — (1,619) Exercise of options 1,545 16 3,325 — — 3,341 Stock-based compensation — — 1,605 — — 1,605 Net income (loss) — — — 3,793 — 3,793 Other comprehensive income (loss) — — — — (10) (10) Balance, March 31, 2021 168,798 $ 1,688 $ 344,063 $ (218,833) $ (693) $ 126,225 The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.5ANTARES PHARMA, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(UNAUDITED)Three Months Ended
March 31,2022 2021 Cash Flows from Operating Activities Net income (loss) $ (2,321) $ 3,793 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Deferred taxes (817) 590 Stock-based compensation 1,940 1,605 Depreciation and amortization 931 894 Changes in inventory reserve 549 40 Other 276 126 Changes in operating assets and liabilities: Accounts receivable (1,434) (731) Inventories, net (596) (1,438) Contract assets (1,112) (2,820) Prepaid expenses and other assets 30 650 Accounts payable 2,655 502 Accrued expenses and other liabilities (4,862) 1,136 Deferred revenue (120) (2,369) Net cash provided by (used in) operating activities (4,881) 1,978 Cash Flows from Investing Activities Purchases of property and equipment (81) (1,184) Proceeds from maturities of investment securities 996 — Purchases of investment securities (249) — Net cash provided by (used in) investing activities 666 (1,184) Cash Flows from Financing Activities Principal payments on long-term debt (375) — Proceeds from exercise of stock options 913 3,341 Taxes paid related to net share settlement of equity awards (521) (1,619) Net cash provided by (used in) financing activities 17 1,722 Effect of exchange rate changes on cash and cash equivalents — (1) Increase (decrease) in cash and cash equivalents (4,198) 2,515 Cash and cash equivalents Beginning of period 65,913 53,137 End of period $ 61,715 $ 55,652 Supplemental disclosure of cash flow information Cash paid for interest $ 148 $ 850 Cash paid for income taxes $ — $ 98 Supplemental disclosure of non-cash investing activities Purchases of property and equipment recorded in accounts payable and accrued expenses $ 632 $ 1,779 SeeThe accompanying notesNotes to Condensed Consolidated Financial Statements (Unaudited) are an integral part of these condensed consolidated financial statements.6NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)1.Description of BusinessNote 1. Description of BusinessAntares Pharma, Inc. (“Antares”Antares,” “we,” “our,” “us” or the “Company”) is an emerging,a specialty pharmaceutical company focused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies. The Company developstechnologies in targeted therapeutic areas. We develop, manufacture and manufactures,commercialize, for itselfourselves or with partners, novel therapeutic products using itsour advanced drug delivery technologysystems that are designed to enhance the existing drug compoundsprovide commercial or functional advantages, such as improved safety and delivery methods. The subcutaneous injection technology platforms include the VIBEX® pressure-assisted auto injector system suitable for brandedefficacy, convenience, improved tolerability, and generic injectable drugs in unit dose containers, reusable needle-free spring-action injector devices,enhanced patient comfort and disposable multi-dose pen injectors for use with standard cartridges. The Company hasadherence. We also seek product opportunities that complement and leverage our commercial platform. We have a portfolio of proprietary and partnered products, including approved commercial products and several partneredongoing product candidatesdevelopment programs in advancedvarious stages of developmentdevelopment. We have formed partnership arrangements with several different industry leading pharmaceutical companies.Our marketed proprietary products include:•XYOSTED® (testosterone enanthate) injection, indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone, and under active reviewthe first and only subcutaneous testosterone enanthate product for once-weekly, at-home self-administration to be approved by the U.S. Food and Drug Administration (“FDA”);•NOCDURNA® (desmopressin acetate), marketed in the United States (“U.S.”). The Company has formed significant strategic alliancesfor the treatment of nocturia due to nocturnal polyuria (“NP”) in adults who awaken at least two times per night to urinate; and•TLANDO® (testosterone undecanoate), an oral treatment for testosterone replacement therapy (“TRT”) indicated for conditions associated with a deficiency or absence of endogenous testosterone, or hypogonadism in adult males, approved by the FDA on March 28, 2022 with commercial launch expected in the second quarter of 2022.We are also party to various partnered product development and supply arrangements:•We developed and are the exclusive supplier of devices for Teva Pharmaceutical Industries, Ltd.Ltd’s (“Teva”) Epinephrine Injection USP products, the generic equivalent of EpiPen® and EpiPen® Jr., indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients;•Through our commercialization partner Teva, we sell Sumatriptan Injection USP, a generic equivalent to the Imitrex® STATdose Pen®, in the U.S. indicated for the acute treatment of migraine headaches and cluster headaches in adults;•In collaboration with AMAG Pharmaceuticals, Inc. (“AMAG”), Ferring Pharmaceuticals Inc.acquired by Covis Group S.a.r.l. (“CG”) (collectively CG and Ferring B.V. (together “Ferring”AMAG are herein after referred to as “Covis”), in November 2020, we developed a subcutaneous auto injector and has multiple ongoing internalare the exclusive supplier of devices and partneredthe final assembled and packaged commercial product development programs.The Company marketsof Makenasells its proprietary product OTREXUP® (methotrexate) injectionwho spontaneously delivered at least one preterm baby in the U.S., which was launched in February 2014.past;•We are the exclusive supplier of devices and the final assembled and packaged commercial product of OTREXUP®is the first subcutaneous methotrexate for once weekly self-administration with an easy-to-use, single dose, disposable auto injector approved by the FDA. OTREXUP® is (methotrexate) injection, indicated for adults with severe active rheumatoid arthritis, (“RA”), children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis. The Company,psoriasis, which we developed and sold to Otter Pharmaceuticals, LLC (a subsidiary of Assertio Holdings, Inc., together with its commercialization partner Teva, launched Sumatriptan Injection USP, indicatedAssertio Holdings, Inc., as guarantor, individually and collectively referred to as “Otter”) in December 2021 as discussed in Note 7; and•We developed and are the U.S.exclusive supplier of devices for the acute treatment of migraine and cluster headache in adults, in June 2016. In December 2015, the Company received FDA approval for an Abbreviated New Drug Application (“ANDA”) for 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors, aTeva’s generic equivalent to Imitrexof Forsteo® STATdose Pen®. Sumatriptan Injection USP represents (Teriparatide Injection) which is approved and currently sold by Teva in various countries outside the Company’s first ANDA approvalU.S.Additionally, we are developing other devices in collaboration with various pharmaceutical partners and advancing other internal research and development programs.7ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in December 2016. On October 20, 2017, the Company received a Complete Response Letter (the “CRL”) from the FDA for XYOSTEDTM, which identified two deficiencies and indicated that the NDA cannot be approved in its present form. The Company is assessing the contentthousands, except per share amounts)Note 2. Summary of the CRL, including the information that may be needed to address the deficiencies.Significant Accounting Policies2. and Significant Accounting PoliciesThe accompanying unaudited condensed consolidated financial statements, which include the accounts of Antares Pharma, Inc. and its two wholly-owned foreign subsidiaries, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) in the U.S. for interim financial information and with the instructions to Form 10-Q and Article 10 of the Securities and Exchange Commission's Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S.GAAP for complete financial statements. In the opinion of management,statements is not included. All intercompany accounts and transactions have been eliminated in consolidation. We believe all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited condensed consolidated financial statements and notesunaudited condensed footnote disclosures thereto should be read in conjunction with the Company’sour Annual Report on Form 10-K for the year ended December 31, 2016.2021. Operating results for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.InvestmentsThe primary objectives2022.Cash and Cash EquivalentsCash and cash equivalents represent demand deposits at commercial banks and highly liquid investments with an original maturity of three months or less. Cash equivalents, consisting of investments in money market funds and bank certificate of deposits, are remeasured and reported at fair value each reporting period based on quoted market prices, which is a Level 1 input within the Company’s investment policy arethree-level valuation hierarchy for disclosure of fair value measurements, and totaled $26,631 and $26,889 as of March 31, 2022 and December 31, 2021, respectively.InvestmentsFrom time to protect principal, maintain adequate liquidity and maximize returns. The Company’s investments consisttime, we also invest in bank certificates of U.S. Treasury bills and government agency notesdeposit that are classified as held-to-maturity because the Company has theof our intent and ability to hold the securities to maturity. Investments with original maturities ofgreater than three months but less than one year or less are classified as short-term.short-term investments on the Condensed Consolidated Balance Sheets. The investment securities are carried at their amortized cost and the fair value is determined by quoted market prices. At September 30, 2017, the Company’s investments had aprices for identical or similar securities. The carrying value of $9,976,984, which approximated fair value. The Company held noour short-term investments as of March 31, 2022 and December 31, 2016. Inventories are stated at the lower of cost or net realizable value. Cost isvalue with cost determined on a first-in, first-out basis. Certain components of the Company’sour products are provided by a limited number of vendors, and the Company’sour production, assembly,third-partiesthird-party suppliers where substantially all of the Company’sour inventory is located. Disruption of supply from key vendors or third-party suppliers may have a material adverse impact on our operations and financial results.Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the Company’s operations.straight-line method over an asset’s estimated useful life as follows:Useful Life Computer equipment and software 3-5 years Furniture, fixtures and office equipment 5-7 years Production molds, tooling and equipment 3-10 years Leasehold improvements Lesser of useful life or lease term Expenditures, including interest costs, for assets under construction and internal use software that are not yet ready for their intended use are capitalized and will be depreciated based on the above guidelines when placed in service. Costs associated with repairs and maintenance are expenses as incurred.Revenue RecognitionWe generate revenue from proprietary and partnered product sales, license and development activities and royalty arrangements. Revenue is recognized when or as we transfer control of the promised goods or services to the customer at the transaction price, which is the amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services.8ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)At inception of each contract, we identify the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determine the transaction price including any variable consideration, allocate the transaction price to the distinct performance obligations and determine whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We reassess our reserves for variable consideration at each reporting date and make adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known.We have elected to recognize the cost for freight and shipping activities as a fulfillment cost. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying goods are transferred to the customer. The Company providesrelated shipping and freight charges incurred are included in cost of product sales in the Consolidated Statements of Operations.Proprietary Product SalesWe sell our proprietary commercial products primarily to wholesale and specialty distributors. Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs.The determination of certain reserves and sales allowances requires us to make a number of judgements and estimates to reflect our best estimate of the transaction price and the amount of consideration to which we believe we would be ultimately entitled to receive. The expected value is determined based on unit sales data, contractual terms with customers and third-party payers, historical and estimated future percentage of rebates incurred on sales, historical and future insurance plan billings, any new or anticipated changes in programs or regulations that would impact the amount of the actual rebates, customer purchasing patterns, product expiration dates and levels of inventory in the distribution channel. Reserves for prompt payment discounts are recorded as a reduction in accounts receivable in the Condensed Consolidated Balance Sheets. Reserves for returns, distributor fees, rebates and customer co-pay support programs are included within current liabilities in the Condensed Consolidated Balance Sheets.Partnered Product SalesWe are party to several license, development, supply and distribution arrangements with pharmaceutical partners, under which we produce and are the exclusive supplier of certain products, devices and/or components. Revenue is recognized when or as control of the goods transfers to the customer as discussed below.We are the exclusive supplier of the Makena® subcutaneous auto injector product to Covis and beginning in December 2021, the exclusive supplier of OTREXUP® to Otter. Because these products are custom manufactured for each customer with no alternative use and we have a contractual right to payment for performance completed to date, control is continuously transferred to the customer as the product is produced pursuant to firm purchase orders. Revenue is recognized over time using the output method based on the contractual selling price and number of units produced. The amount of revenue recognized in excess of the amount shipped/billed to the customer, if any, is recorded as contract assets in the Condensed Consolidated Balance Sheets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.All other partnered product sales are recognized at the point in time in which control is transferred to the customer, which is typically upon shipment. Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no right of return. Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, such as volume-based pricing arrangements or profit sharing arrangements, if any. We recognize revenue, including the estimated variable consideration we expect to receive for contract margin on future commercial sales, upon shipment of the goods to our partner. The estimated variable consideration is recognized at an amount we believe is not subject to significant reversal based on historical experience and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.9ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)Licensing and Development RevenueWe have entered into several license, development and supply arrangements with pharmaceutical partners under which we grant a license to our device technology and know-how and provide research and development services that often involve multiple performance obligations and highly customized deliverables. For such arrangements, we identify each of the promised goods and services within the contract and the distinct performance obligations at inception and allocate consideration to each performance obligation based on relative standalone selling price, which is generally determined based on the expected cost plus mark-up.If the contract includes an enforceable right to payment for performance completed to date and performance obligations are satisfied over time, we recognize revenue over the development period using either the input or output method depending on which is most appropriate given the nature of the distinct deliverable. For other contracts that do not contain an enforceable right to payment for performance completed to date, revenue is recognized when control is transferred to the customer. Factors that may indicate that the transfer of control has occurred include the transfer of legal title, transfer of physical possession, the customer has obtained the significant risks and rewards of ownership of the assets and we have a present right to payment.Our typical payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations. We record a contract liability for cash received in advance of performance, which is presented within deferred revenue and deferred revenue, long-term in the Condensed Consolidated Balance Sheets and recognized as revenue in the Consolidated Statements of Operations when the associated performance obligations have been satisfied. We recognized $1,670 in licensing and development revenue in connection with contract liabilities that were outstanding as of December 31, 2021 and satisfied during the three months ended March 31, 2022.License fees and milestones received in exchange for the grant of a license to our functional intellectual property such as patented technology and know-how in connection with a partnered development arrangement are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is generally not distinct from the non-licensed goods or services to be provided under the contract. Milestone payments that are contingent upon the occurrence of future events are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal will not occur when the associated uncertainty is resolved.RoyaltiesWe earn royalties in connection with licenses granted under license and development arrangements with partners. Royalties are based upon a percentage of commercial sales of partnered products with rates ranging from mid-single digits to low double digits and are tiered based on levels of net sales. These sales-based royalties, for which the license was deemed the predominant element to which the royalties relate, are estimated and recognized in the period in which the partners’ commercial sales occur. The royalties are generally reported and payable to us within 45 to 60 days of the end of the period in which the commercial sales are made. We base our estimates of royalties earned on actual sales information from our partners when available or estimated prescription sales from external sources and estimated net selling price. If actual royalties received are different than amounts estimated, we would adjust the royalty revenue in the period in which the adjustment becomes known.Remaining Performance ObligationsRemaining performance obligations represent the transaction price of firm orders and development contract deliverables for which work has not been completed or orders fulfilled and excludes potential purchase orders under ordering-type supply contracts with indefinite delivery or quantity. As of March 31, 2022, the aggregate value of remaining performance obligations, excluding contracts with an original expected length of one year or less, was $13,989. We expect to recognize revenue on the remaining performance obligations over the next three years, with the majority being recognized in the next twelve months.10ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)Note 3. InventoriesInventories consisted of the following: March 31,
2022 December 31,
2021Raw material $ 325 $ 325 Work in process 8,615 6,784 Finished goods 2,651 4,435 Total inventories, net $ 11,591 $ 11,544 A reserve is recorded for potentially excess, dated or obsolete inventories based on an analysis of inventory on hand compared to forecasts offorecasted future sales, which was $1,000,000$764 and $900,000 at September 30, 2017$214 as of March 31, 2022 and December 31, 2016,2021, respectively. Inventories consistNote 4. Property and EquipmentProperty and equipment, net consisted of the following:March 31,
2022December 31,
2021Production molds, tooling and equipment $ 22,113 $ 22,069 Leasehold improvements 7,656 7,559 Furniture, fixtures and office equipment 912 907 Computer equipment and software 1,977 1,717 Construction and tooling in process 6,990 6,942 Total property and equipment 39,648 39,194 Less: Accumulated depreciation (13,921) (13,179) Total property and equipment, net $ 25,727 $ 26,015 Revenue Recognition — OTREXUP®The Company began detailing OTREXUP® to health care professionals in February 2014. OTREXUP® is sold in packages of four pre-filled, single-dose disposable auto injectors to wholesale pharmaceutical distributors, its customers, subject to rights of return within a period beginning six months prior to,Depreciation expense was $742 and ending 12 months following, product expiration.Prior to the first quarter of 2017, the Company could not reliably estimate expected returns of OTREXUP® at the time of shipment given its limited sales history of the product. Accordingly, the recognition of revenue was deferred on product shipments until the rights of return no longer existed, which occurred at the earlier of the time OTREXUP® units were dispensed through patient prescriptions or expiration of the right of return of the product. Patient prescriptions dispensed were estimated using third-party market prescription data. In the first quarter of 2017, the Company determined it had developed sufficient historical information to reasonably estimate future returns of OTREXUP® and began recognizing revenue, net of estimated returns, upon delivery to the distributors. As a result, the Company recognized an additional $1,297,054 for product shipped to distributors in previous periods that was not previously recognized as revenue at the time of shipment, net of the returns allowance established in the first quarter of 2017. The Company also recognized $254,425 of related product costs that had been previously deferred. The net impact of these changes resulted in a decrease in net loss of $1,042,629, less than $0.01 per share,$689 for the ninethree months ended September 30, 2017.Product sales revenue for OTREXUP® is presented netMarch 31, 2022 and 2021, respectively. We capitalized $0 and $17 interest costs associated with construction of estimated returnsproperty and product sales allowances for wholesaler discounts, prompt pay discounts, chargebacks, rebates and patient discount programs. The estimated product returns reserve was $650,000 as of September 30, 2017 and zero at December 31, 2016. Product sales allowances were $1,986,553 as of September 30, 2017 and $1,540,488 as of December 31, 2016.Product Sales AllowancesThe Company recognizes product sales allowances as a reduction of product sales inequipment during the same period the related revenue is recognized. Product sales allowances are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of our agreements with customers and third-party payors and the levels of inventory within the distribution channels that may result in future rebates or discounts taken. In certain cases, such as patient support programs, the Company recognizes the cost of patient discounts as a reduction of revenue based on estimated utilization. If actual future results vary, it may be necessary to adjust these estimates, which could have an effect on product revenue in the period of adjustment. Product sales allowances include:Wholesaler Distribution Fees. Distribution fees are paid to certain wholesale distributors based on contractually determined rates. The Company accrues the fee on shipment to the respective wholesale distributors and recognizes the fee as a reduction of revenue in the same period the related revenue is recognized.Prompt Pay Discounts. The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. The Company accounts for cash discounts by reducing accounts receivable by the prompt pay discount amount and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.Chargebacks. The Company provides discounts to authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs and various organizations under Medicaid contracts and regulations. These entities purchase products from the wholesale distributors at a discounted price, and the wholesale distributors then charge back to the Company the difference between the current wholesaleacquisition cost and the price the entity paid for the product. The Company estimates and accrues chargebacks based on estimated wholesaler inventory levels, current contract prices and historical chargeback activity. Chargebacks are recognized as a reduction of revenue in the same period the related revenue is recognized.Rebates. The Company participates in certain rebate programs, which provide discounted prescriptions to qualified insured patients. Under these rebate programs, the Company will pay a rebate to the third-party administrator of the program, generally two to three months after the quarter in which prescriptions subject to the rebate are filled. The Company estimatesended March 31, 2022 and accrues for these rebates based on current contract prices, historical and estimated percentages of product sold to qualified patients. Rebates are recognized as a reduction of revenue in the same period the related revenue is recognized.Patient Discount Programs. The Company offers discount card programs to patients for OTREXUP® in which patients receive discounts on their prescriptions that are reimbursed by the Company. The Company estimates the total amount that will be redeemed based on historical redemption experience and on estimated levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.Revenue Recognition — Sumatriptan InjectionUnder a license, supply and distribution agreement with Teva for an auto-injector product containing sumatriptan, the Company produces devices and assembles product for shipment to Teva, and Teva is responsible for commercial distribution and sale of the product. The Company is compensated, and recognizes revenue, at cost for shipments of product delivered to Teva. The Company is also entitled to receive 50 percent of the net profits from commercial sales made by Teva, payable to the Company within 45 days after the quarter in which the commercial sales are made by Teva. Sumatriptan Injection USP was launched for commercial sale in June 2016. Initially, given the limited access to sales data and the 45-day lag in reporting of the profit split from Teva, management was not able to estimate the profit margin the Company expected to receive from commercial sales made by Teva at the time of sale. Accordingly, prior to the third quarter of 2017, revenue from the profit sharing arrangement was recognized in the period following the commercial sales by Teva when amounts were reported and paid to the Company. Beginning in the third quarter of 2017, management determined it had developed sufficient history and is now able to obtain additional sales information in order to reasonably estimate and recognize revenue from the profit sharing arrangement when product is sold by Teva.3.Long-Term DebtNote 5. Long-term DebtTerm LoanOn June 6, 2017, the Companywe entered into a loan and security agreement (the “Loan Agreement”) with Hercules Capital, Inc., for a term loan of up to $35,000,000$35,000 (the “Term Loan”), under which we initially borrowed $25,000 (“Tranche I”). the proceeds of which are to bewere used for working capital and general corporate purposes. The Term Loan was secured by substantially all of our assets, excluding intellectual property, and accrued interest at a calculated prime-based variable rate with a maximum of 9.50%. The interest rate in effect as of March 31, 2021 was 8.50%. Payments under the loan were interest-only until the first advance of $25,000,000principal payment was funded upon execution ofdue.On June 26, 2019, we entered into a First Amendment (the “Amendment”) to the Loan Agreement, on June 6, 2017.which increased the aggregate principal amount available under the Term Loan from $35,000 to $50,000 and extended the interest-only payment period of the Term Loan to August 1, 2021. Under the termsAmendment, the interest-only period could be further extended to August 1, 2022 if we achieved a certain loan extension milestone, requested such extension by July 31, 2021, and paid an extension fee equal to one half of one percent of the principal amount outstanding. Upon signing of the Amendment, an additional $15,000 (“Tranche II”) was funded to us. The Term Loan Agreement,maturity date remained July 1, 2022; however, the Company may,Term Loan could be extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone. We were eligible, but is not obligated, to request one or more additional advances of at least $5,000,000$5,000, not to exceed $10,000,000$10,000 in the aggregate subject to the Company achieving certain corporate milestones and satisfying customary conditions. The Company must exercise its(“Tranche III”). Our option to request additional advances priorexpired on October 31, 2020.11ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)We were required to September 30, 2018.Thepay an end of term fee (“End of Term Loan is secured by substantially allCharge”) equal to 4.25% of Tranche I and 3.95% of the Company’s assets, excluding intellectual property, and will mature onborrowings under Tranche II, payable upon the earlier of July 1, 2022. The2022 or repayment of the Term Loan accrues interest at a calculated prime-based variable rate with a maximum interest rate of 9.50%. As of September 30, 2017, the interest rate was 8.75%. Payments under the Loan Agreement are interest only until the first principal payment is due on August 1, 2019, provided that the interest only period may be extended to February 1, 2020 if the Company achieves certain corporate milestones.Loan. The Loan Agreement also requires the Company to pay a fee equal to 4.25% of the total original principal amount of all term loan advances (“End of Term Charge”), which is due upon repayment of the Term Loan at either maturity or earlier repayment, and imposesimposed a prepayment fee of 1.0% to 3.0% if any or all of the balance iswas prepaid prior to the maturity date.AsIn July 2021, having previously met the loan extension milestone, we requested that the interest-only period be extended to August 1, 2022 and the maturity date be extended to July 1, 2024 in accordance with the terms of the Amendment. Hercules Capital, Inc. granted the extension of the interest-only period and maturity date and waived the extension fee. In June and September 30, 2017,2021, we made principal prepayments of $15,000 and $5,000, respectively, and paid a 1.0% prepayment fee.On November 1, 2021, we extinguished the carrying value ofLoan Agreement with Hercules Capital, Inc. and repaid the outstanding $20,000 principal on the Term Loan, was $24,791,214, which consistedalong with the 1.0% prepayment fee of the $25,000,000 principal balance outstanding$200 and the End of Term Charge accrual of $66,406,$1,655. All remaining unamortized debt issuance costs associated with the Term Loan were immediately amortized to interest expense.Credit FacilitiesOn November 1, 2021, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent for the lenders, (“Administrative Agent”) for credit facilities in an aggregate principal amount of up to $40,000 with a maturity date of November 1, 2024. The Credit Agreement provides for a $20,000 term loan facility (the “Term Loan Facility”) and a $20,000 revolving credit facility, $5,000 of which is available for the issuance of letters of credit and $1,000 of which is available for Swingline loans (the “Revolving Credit Facility”), (collectively the “Credit Facilities”), which are secured by substantially all of our assets. The Term Loan Facility was funded upon execution of the Credit Agreement with the proceeds used to repay our $20,000 Term Loan with Hercules Capital, Inc. and to pay fees and expenses incurred in connection with the early repayment. The Revolving Credit Facility remains available for future use and can be drawn upon for ongoing working capital requirements and other general corporate purposes as needed.As of March 31, 2022 and December 31, 2021, we had $19,625 and $20,000 outstanding under our Term Loan Facility, respectively, with a carrying value of $19,391 and $19,741, respectively, which consisted of the principal balance outstanding, less unamortized debt issuance costs of $275,192. The Company incurred debt issuance costs that along with the End of Term Charge, are being amortized/accrued to interest expense over the term of the Term Loan Facility using the effective interest rate method. The fair value of our debt is estimated to approximate the carrying value based on our understanding of current market conditions and rates we could obtain for similar loans.
As of March 31, 2022 and December 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility, including no outstanding letters of credit drawn from the Revolving Credit Facility or Swingline loans. Commitment fees are payable on the unused portion of the Revolving Credit Facility at rates between 0.30% and 0.45% based on our Consolidated Total Leverage Ratio, as defined in the Credit Agreement and below, remeasured quarterly. For the three months ended March 31, 2022, commitment fees incurred totaled $18.As defined in the Credit Agreement governing the Term Loan Facility, principal payments of the outstanding term loans are due in consecutive quarterly installments on the last business day of each of March, June, September and December, commencing on March 31, 2022. A principal payment of $375 was made on March 31, 2022. The Credit Agreement also requires prepayment of the outstanding loans under the Term Loan Facility, subject to certain exceptions, with (a) 100% of the net cash proceeds of (i) any incurrence or issuance of certain debt, other than debt permitted under the Credit Agreement; (ii) issuance of equity other than that associated with employee compensation; and (iii) certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions. We may voluntarily prepay outstanding loans under the Term Facility at any time without premium or penalty. All obligations under the Term Facility are secured, subject to certain exceptions, by substantially all of our assets and the assets of our subsidiaries.Borrowings made under the Credit Agreement bear interest at a rate per annum equal to either the Base Rate or LIBOR plus the Applicable Margin, as defined in the Credit Agreement. Swingline loans bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin. The Applicable Margin is based on the Consolidated Total Leverage Ratio, as defined in the Credit Agreement and below, remeasured quarterly. Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.0%. In the event of default, we no longer have the option to request LIBOR rate loans, Swingline Loans or Letters of Credit and all outstanding financial instruments will bear interest at a rate per annum of 2.0% in excess of the calculated interest rate.12ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)We have the option to select either the Base Rate or LIBOR as the rate of interest for the Term Loan and Revolving Credit Facilities, along with an interest period of either 1-month, 3-months or 6-months. Upon cessation of LIBOR on June 30, 2023, an appropriate benchmark replacement will be determined pursuant to the terms of the Credit Agreement. We have not yet evaluated the impact the cessation of LIBOR will have on our financial condition and results of operations. As of March 31, 2022, the Applicable Margin was 1.50% for Base Rate loans and 2.50% for LIBOR loans with a 1-month LIBOR selected as the rate of interest for the Term Loan Facility. The weighted average interest rate on the Term Loan Facility outstanding balance during the three months ended March 31, 2022 was approximately 2.65%.Under the Credit Agreement, we are subject to customary affirmative and negative covenants, including, among others, restrictions on our ability to incur debt; create liens; make investments; merge, consolidate or dispose of assets or subsidiaries; enter into transactions with affiliates; modify accounting practices, our year end and organizational documents; pledge assets; revise nature of business; perform sale leasebacks; and enter into any restrictive agreements and customary events of default (including payment defaults, covenant defaults, change of control defaults and bankruptcy defaults). The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to consolidated earnings before income, taxes, depreciation and amortization (“Consolidated EBITDA”) (“Consolidated Total Leverage Ratio”), as defined in the Credit Agreement” and the ratio of consolidated senior secured indebtedness to Consolidated EBITDA (“Consolidated Senior Secured Leverage Ratio”), as well as the ratio of Adjusted EBITDA to consolidated fixed charges (“Consolidated Fixed Charge Coverage Ratio”), as defined in the Credit Agreement. These covenants restrict our ability to purchase outstanding shares of our common stock. As of March 31, 2022 and December 31, 2021, we were in compliance with all affirmative, negative and financial covenants.Future principal payments under the term loan, including the End of Term Charge,Loan Facility are as follows:Future Principal Payments Remainder of 2022 $ 1,125 2023 1,500 2024 17,000 Total future principal payments $ 19,625 The Company believes that the carrying value of the Term Loan approximates its fair value based on the borrowing rates currently available for loans with similar terms. 4.Stockholders’ EquityOn August 11, 2017, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) under which the Company may offer and sell, from time to time and at its sole discretion, shares of its common stock havingNote 6. Share-based CompensationWe have an aggregate offering price of up to $30,000,000 through Cowen as the Company’s sales agent and/or as principal. Cowen may sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. The Company will pay Cowen a commission of 3.0% of the gross sales proceeds of any common stock sold through Cowen under the Sales Agreement. The Company is not obligated to make any sales of common stock under the Sales Agreement and no sales of common stock were made pursuant to the Sales Agreement in the period ended September 30, 2017.5.Share-Based CompensationThe Company’s 2008 Equity Compensation Plan (the “Plan”), which allows for grants in the form of incentive stock options, nonqualifiednon-qualified stock options, stock units, stock awards, stock appreciation rights, and other stock-based awards. All ofThe Plan was amended and restated in June 2021 to increase the Company’s officers, directors, employees, consultants and advisors are eligible to receive grants under the Plan. The maximumtotal number of shares authorized for issuance under the amended and restated Plan is 32,200,000 and the maximum number of shares of stock that may be granted to any one employee for qualified performance-based compensation during a calendar year is 4,000,000 shares. Options to purchase shares of common stock are granted at exercise prices not less than 100% of fair market value on the dates of grant. The term of each option is ten years and the options typically vest in quarterly installments over a three-year period with a minimum vesting period of one year. As of September 30, 2017, the Plan had approximately 6,400,000 shares available for grant. Stock option exercises are satisfied through the issuance of new shares.Stock OptionsThe following is a summary of stock option activitygrant under the Plan as of and for the nine months ended September 30, 2017: The per share weighted average fair values of all options granted during the nine months ended September 30, 2017 and 2016 were estimated as $1.62 and $0.54, respectively, on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below. Expected volatilities are based on the historical volatility of the Company’s stock price. The weighted average expected life is based on both historical and anticipated employee behavior.During the nine months ended September 30, 2017, stock option exercises resulted in cash proceeds to the Company of $1,670,149 and the issuance of 1,062,693 shares of common stock. Stock option exercises resulted in proceeds of $24,071 and the issuance of 21,492 shares of common stock in the nine months ended September 30, 2016.The Company recognized $1,680,437 and $1,572,710 of compensation expense related to stock options for the nine months ended September 30, 2017 and 2016, respectively, and $692,834 and $505,663 for the three months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was approximately $4,500,000 of total unrecognized compensation cost related to non-vested outstanding stock options that is expected to be recognized overby 10,000 shares. We also have a weighted average period of approximately 2.1 years.Long Term Incentive ProgramThe Company’s Board of Directors has approved a long termlong-term incentive program (“LTIP”) for the benefit of the Company’s senior executives. Pursuant, pursuant to the LTIP, the Company’swhich our senior executives have been awarded stock options, restricted stock units (“RSU”RSUs”) and performance stock units (“PSU”PSUs”) with targeted values based on values granted to similarly situated senior executives in the Company’s peer group.The stock options have a ten-year term, have an exercise price equal to the closing price of the Company’s common stock on the date of grant, vest in quarterly installments over three years, were otherwise granted on the same standard terms and conditions as other stock options granted pursuant to.Stock OptionsStock option activity under the Plan is as follows:Number of
Shares Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
ValueOutstanding as of December 31, 2021 15,577 $ 2.83 Granted 92 3.53 Exercised (343) 2.66 Cancelled / Forfeited (238) 3.56 Outstanding as of March 31, 2022 15,088 2.83 6.28 $ 19,976 Exercisable as of March 31, 2022 10,292 $ 2.45 5.17 $ 16,998 13ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)Long-term Incentive ProgramPSU and are included in the stock options table above. The RSUs vest in three equal annual installments. The PSU awards made to the senior executives vest and convert into shares of the Company’s common stock based on the Company’s attainment of certain performance goals as established by the Company’s Board of Directors over a performance period, which is typically three to five years.The performance stock unit awards and restricted stock unit awards grantedRSU award activity under the long-term incentive program are summarized in the following table:In 2017, 2016 and 2015, the LTIP awards include PSUs that may be earned based on the Company’s total shareholder return (“TSR”) relative to the Nasdaq Biotechnology Index (“NBI”) at the end of the performance period. The performance periodPlan is January 1, 2015 to December 31, 2017 for the 2015 award, January 1, 2016 to December 31, 2018 for the 2016 award and January 1, 2017 to December 31, 2019 for the 2017 award. Depending on the outcome of the performance goal, a recipient may ultimately earn a number of shares greater or less than their target number of shares granted, ranging from 0% to 150% of the PSUs granted. The fair values of the TSR PSUs granted was determined using a Monte Carlo simulation and utilized the following inputs and assumptions: The performance period starting price is measured as the average closing price over the last 20 trading days prior to the performance period start. follows:Performance Stock Units Restricted Stock Units Number ofShares WeightedAverage GrantDate FairValue Number ofSharesWeightedAverage GrantDate FairValueOutstanding as of December 31, 2021 1,328 $ 3.04 1,504 $ 3.62 Incremental shares earned 8 2.92 — — Cancelled / Forfeited (215) 2.93 — — Vested / Settled (305) 3.04 — — Outstanding as of March 31, 2022 816 $ 3.06 1,504 $ 3.62 The Monte Carlo simulation model also assumed correlations of returns of the prices of the Company’s common stock and the common stocks of the NBI companies and stock price volatilities of the NBI companies. The fair value of the target number of shares that can be earned under the TSR PSUs is being recognized as compensation expense over the performance period.In connection with PSU awards, the Company recognized compensation expense of $239,995 and $11,331 for the nine months ended September 30, 2017 and 2016, respectively. Compensation expense recognized in connection with RSU awards was $451,021 and $302,782 for the nine months ended September 30, 2017 and 2016, respectively.Shares issued in connection with LTIP awards that vested induring the ninethree months ended September 30, 2017March 31, 2022 and 20162021 were net-share settled such that the Companywe withheld shares with a value equivalent to the employees’ minimum statutory obligationtax obligations for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The totalWe withheld 140 and 348 shares withheldduring the three months ended March 31, 2022 and 2021, respectively, to satisfy tax obligations, were 97,586 and 65,575 in the nine months ended September 30, 2017 and 2016, respectively, and werewhich was determined based on the fair value of the shares on their vesting date as determined by the Company’sequal to our closing stock price. Total paymentsprice on such date. We paid $521 and $1,619 during the three months ended March 31, 2022 and 2021, respectively, to taxing authorities for the employees’ tax obligations, to the taxing authorities were $248,709 and $64,096 in the nine months ended September 30, 2017 and 2016, respectively, and arewhich is reflected as a cash outflow from financing activityactivities within the consolidated statementsCondensed Consolidated Statements of cash flows. These net-shareCash Flows. Net-share settlements hadhave the effect of share repurchases by the Company as they reducedreduce the number of shares that would have otherwise been issued as a result of the vestingvesting.Members of our Board of Directors also receive grants of RSUs that vest in full one year from the date of grant. Directors may elect to defer receipt of vested shares until retirement or separation from the Board. No shares were vested and did not representdeferred under this election during the three months ended March 31, 2022 and 2021.Share-based Compensation ExpenseCompensation costs incurred in connection with share-based awards are as follows:Three Months Ended
March 31,2022 2021 Stock options $ 1,004 $ 887 Restricted stock units 708 566 Performance stock units 228 152 Total share-based compensation expense $ 1,940 $ 1,605 Note 7. Sale of AssetsIn December 2021, we entered into an expenseasset purchase agreement (the “Asset Purchase Agreement”) with Otter Pharmaceuticals, LLC (a subsidiary of Assertio Holdings, Inc., together with Assertio Holdings, Inc., as guarantor, individually and collectively referred to as “Otter”) to sell certain worldwide assets used in the operation of the OTREXUP® product line for $44,021 of which we received $18,000 at closing and will receive the remaining $26,021 in installments over a one-year period. As of December 31, 2021, we recorded an increase to the Company.purchase price for estimated changes in closing inventory to be transferred. The Asset Purchase Agreement included the transfer of OTREXUP® patents, trademark and intellectual property, product finished goods and sample inventory, and certain other contracts associated with the OTREXUP® product line. Subject to the terms of the OTREXUP® Asset Purchase Agreement, we generally retained ownership (and related liabilities) of assets not solely related to the OTREXUP® product line. We also agreed via the execution of a separate supply agreement to continue to manufacture and supply OTREXUP® and sample products to Otter at cost plus mark-up. Further, we entered into a license agreement with Otter pursuant to which we granted Otter a worldwide, exclusive, fully paid-up license to certain patents relating to OTREXUP® that may relate to our other products.6.Significant Customers and Concentrations of Risk14RevenuesANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)We recorded the entire $38,591 gain on sale of assets in the Consolidated Statements of Operations for the year ended December 31, 2021 as all requirements of the agreement were determined to have been met and it was probable that a significant reversal of the gain would not occur. The gain included the purchase price of $44,021 adjusted for estimated changes in closing inventory to be transferred less the net book value of the assets sold and direct transaction costs. The remaining $26,311 purchase price to be received was classified as other receivables in the Consolidated Balance Sheets as of December 31, 2021, and we recognized $17,825 of net proceeds from the sale of assets in the Statements of Cash Flows for the year ended December 31, 2021. As of March 31, 2022, the receivable was reduced to $26,006 for payments to be made by Otter directly to our vendor for inventory purchased in the transaction.Note 8. Revenue, Significant Customers and Concentration of RiskWe disaggregate our revenue by type of goods and services and customer location are summarized as follows: location.Three Months Ended
March 31,2022 2021 Types of Goods and Services Proprietary product sales, net $ 17,276 $ 18,732 Partnered product sales 14,827 10,403 Total product revenue, net 32,103 29,135 Licensing and development revenue 4,191 4,984 Royalties 5,263 7,964 Total revenue, net $ 41,557 $ 42,083 Customer Location U.S. $ 40,096 $ 40,631 Europe 1,461 1,452 Total revenue, net $ 41,557 $ 42,083 Significant customersCustomers from which the Companywe derived 10% or more of itsour total net revenue in any of the periods presented are as follows:7.Three Months Ended
March 31,2022 2021 Teva 46% 43% McKesson Corporation 113% 13% Cardinal Health 111% 11% AmerisourceBergen Corporation 1<10% 13% 1 Revenue from sales to distributors, net of estimated sales returns and allowances based on shipments.Note 9. Income TaxesOur gross unrecognized tax benefits as of March 31, 2022 was $2,057 with no material changes during the three months then ended. There are no interest or penalties accrued in relation to unrecognized tax benefits. We will classify any future interest and penalties as a component of income tax expense. We are subject to federal and state examinations for the years 2018 and thereafter.15ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)Note 10. Earnings (Loss) per ShareBasic lossearnings (loss) per common share is computed by dividing net lossincome (loss) applicable to common stockholders by the daily weighted-average number of common shares outstanding for the applicable period. Diluted lossearnings (loss) per common share reflectsis computed in a similar manner, except that the weighted average number of shares outstanding is increased to reflect the potential dilution from the exercise or conversion of securities into common stock. PotentiallyDiluted earnings (loss) per share contemplates a complete conversion to common shares of all convertible instruments only if such instruments are dilutive in nature with respect to earnings (loss) per common share. The following table sets forth the computation for basic and diluted earnings (loss) per common share:Three Months Ended
March 31,2022 2021 Net income (loss) $ (2,321) $ 3,793 Weighted average common shares outstanding 170,104 167,822 Dilutive effects of stock options and share-based awardsissuable under equity compensation plans 1— 7,086 Weighted average dilutive common shares outstanding 170,104 174,908 Earnings (loss) per common share Basic $ (0.01) $ 0.02 Diluted $ (0.01) $ 0.02 Anti-dilutive common stock equivalents 23,178 471 1 For the three months ended March 31, 2022, 4,633 common stock options and other share-based awardsequivalents of potentially dilutive common stock were excluded from dilutive lossthe diluted earnings per share becausecalculation due to the loss from continuing operations.2 These common stock equivalents were outstanding for the period but were not included in the computation of diluted earnings (loss) per share for those periods as their effect wasinclusion would have had an anti-dilutive totaled 15,084,877effect.16ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)Note 11. Commitments and 14,100,835 at September 30, 2017 and 2016, respectively.Contingencies
Contingent Considerations8.Recent Accounting PronouncementsAccounting Pronouncements Recently AdoptedIn July 2015,October 2021, we entered into an exclusive license agreement (the “TLANDO® License Agreement”) with Lipocine for the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, Simplifyingproduct TLANDO® (testosterone undecanoate) in the MeasurementU.S., a twice-daily oral formulation of Inventory. The new standard changed the measurement principletestosterone for inventory from the lowertestosterone replacement therapy indicated for conditions associated with a deficiency or absence of costendogenous testosterone, or markethypogonadism in adult males. We paid Lipocine an upfront payment of $11,000 upon execution of agreement. Lipocine is eligible for additional milestone payments up to lower$10,000, minimum tiered royalty payments of cost and net realizable value. The Company adopted this standard during$4,500 over the first three years after commercialization has occurred and commercial milestones up to $160,000 based on net sales of TLANDO® in the U.S. FDA approval was granted on March 28, 2022 with commercial launch expected in the second quarter of 2017,2022. The additional milestone and the adoption did notcommercial milestone payments are contingent on future events and will be accrued when they are both probable and estimable.We also have an impact on the consolidated results of operations, cash flows or financial position of the Company.In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017, and the adoption did not have a significant impact on the Company’s consolidated financial statements. As required under previous GAAP, the Company had estimated forfeitures in determining its periodic compensation costs related to share-based awards. Upon adoption of the new standard, the Company has elected to recognize forfeitures as they occur, and recorded a cumulative effect adjustment to accumulated deficit and additional paid-in capital of $97,000, the net of which had no impact on the Company’s consolidated results of operations, cash flows or financial position.In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This new standard eliminates Step 2 from the goodwill impairment test. ASU 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 still allows the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company early adopted this standard effective January 1, 2017license and will apply the standard prospectively for its annual goodwill impairment tests. The adoption of the standard did not have an impact on the Company’s consolidated financial statements.Recent Accounting Pronouncements Not Yet AdoptedIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), supplemented with a number of subsequent amendments issued by the FASB and collectively referred to herein as “ASU 2014-09”. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model that requires a company to identify customer contracts, identify the separate performance obligations, determine the transaction price, allocate the transaction price to the separate performance obligations and recognize revenue when each performance obligation is satisfied. This guidance also requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about contract balances and remaining performance obligations, significant judgments made in determining the timing of satisfaction of performance obligations (over time or at a point in time), and estimates made in determining the transaction price and amounts allocated to performance obligations.The Company continues to monitor and evaluate the impact the adoption of this standard will have on its consolidated financial statements and has performed an initial review of its major contracts with customers. Based on the initial reviews, the Company believes the adoption of the new standard may accelerate the timing of revenue recognition for certain product sales and development revenue under certain license, development and supply agreements, and will require management to estimate and potentially recognize certain variable revenue streams such as royalties and profit sharing arrangements earlier at an amount it believes will not be subject to significant reversal.The Company anticipates adopting the new revenue recognition standard on the effective date of January 1, 2018 utilizing the modified retrospective method of adoption, under which the cumulative effect of the change is recognized as an adjustment to the opening balance of the accumulated deficit within the consolidated balance sheet, and prior reporting periods are not retrospectively adjusted. The Company anticipates recognizing a transition adjustment upon adoption, however the amountcannot currently be quantified, as the calculation of such will depend upon the open contracts and performance obligations as of the transition date. No significant changes to business processes or systems are currently expected to be necessary, as the processes and controls used in recording revenue transactions are largely manual.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This new standard requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. This new standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements and currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assetsdevelop LPCN 1111 (TLANDO XR) in the statementU.S., a potential once daily oral testosterone product containing testosterone tridecanoate in development for the treatment of financial position upon adoption of ASU 2016-02.In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance on determining which changes to terms and conditions of share-based awards requirehypogonadism in adult males, for an entity to apply modification accounting under Topic 718. This new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted. The adoption of ASU 2017-09 is not expected to have a significant impact on the Company’s consolidated financial statements.In May 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”). The amendments clarify that an entity should identify each distinct nonfinancial asset or in-substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. ASU 2017-05 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. The Company is currently evaluating the potential impact, if any, on its consolidated financial statements upon the adoption of ASU 2017-05 and expects to adopt the standard effective January 1, 2018.9.Subsequent EventsZOMAJET™ Asset Purchase AgreementOn October 10, 2017, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Ferring to sell the worldwide rights, including certain assets, related to the ZOMAJET™ needle-free auto injector device (the “Product”) for a total purchase price of $14.5 million. The purchase price isadditional $4,000 in license fees to be paid in four2 installments consistingupon exercise of the following: a $2.0 million upfront payment received upon entry intooption, if exercised. The option to license and develop LPCN 111 (TLANDO XR) will be accrued and expensed to research and development when and only if we decide to exercise our option. In April 2022, the Asset PurchaseTLANDOtransfer$4,000 was paid to Lipocine to extend the deadline in which we have to exercise the option to license and develop TLANDO XR to June 30, 2022. No decision had been made as of certain assets; a second installmentMarch 31, 2022 to exercise the option; therefore, no accrual was recorded.Pending LitigationFrom time to time, we may be involved in various legal matters generally incidental to our business. Although the results of $2.75 million payable upon deliverylitigation and claims cannot be predicted with certainty, after discussion with legal counsel, we are not aware of certain documentation and satisfaction of certain conditions primarily related to Product manufacturing; a third installment of $4.75 million payable upon satisfaction of certain conditions, including further document transfer,any matters for which the successful completionlikelihood of a regulatory audit byloss is probable and reasonably estimable and which could have a notified body, and a pilot manufacturing run under Ferring’s supervision; and a final installmentmaterial impact on our condensed consolidated financial condition, liquidity, or results of $5.0 million upon Ferring’s receipt of the CE Mark needed to continue to commercialize the Product in certain territories and the final transfer of certain Product-related inventory, equipment and agreements to Ferring (the “Completion Date”), which is expected to occur by the end of 2018.The Company will continue to manufacture and supply ZOMAJET™ devices until the Completion Date and will receive payment for devices manufactured and supplied to its partners, and a royalty on net product sales, in accordance with the existing license and supply agreements.LitigationOn October 23, 2017, Randy Smith filed a complaint in the District of New Jersey, captioned Randy Smith, Individually and on Behalf of All Others Similarly Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M. Powell (“Smith”), Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of persons who purchased or otherwise acquired Antares securities between December 21, 2016 and October 12, 2017, inclusive, asserting claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, against Antares, Robert F. Apple and Fred M. Powell. The Smith complaint contends that defendants made false and/or misleading statements and/or failed to disclose that: (i) Antares had provided insufficient data to the FDA in connection with the NDA for XYOSTEDTM®; and (ii) accordingly, Antares had overstated the approval prospects for XYOSTEDTM®. MotionsOn July 27, 2018, the court entered an order appointing Serghei Lungu as lead plaintiff, Pomerantz LLP as lead counsel, and Lite DePalma Greenberg, LLC as liaison counsel for plaintiff. On August 3, 2018, the appointmentparties submitted a stipulation and proposed order, setting forth an agreed-upon schedule for responding to the complaint, which the court granted. Pursuant to that order, plaintiff filed a Consolidated Amended Class Action Complaint on October 9, 2018. On November 26, 2018, defendants filed a motion to dismiss. Plaintiff filed an opposition to the motion on January 10, 2019 and defendants filed a reply in support of Lead Plaintiff are due December 22, 2017.their motion on February 25, 2019. On July 2, 2019, the court dismissed the complaint in its entirety without prejudice. On July 29, 2019, plaintiff filed a Consolidated Second Amended Class Action Complaint against the same parties alleging substantially similar claims. On September 12, 2019, defendants filed a motion to dismiss the Consolidated Second Amended Class Action Complaint. Plaintiffs’ opposition was filed on October 28, 2019 and defendants’ reply in support of their motion was filed on November 27, 2019. On April 28, 2020, the court dismissed the Consolidated Second Amended Class Action Complaint in its entirety. The court further ordered that plaintiff may file an amended complaint by May 29, 2020 and provide the court with a form of the amended complaint that indicates in what respect(s) it differs from the complaint which it proposes to amend. On May 29, 2020, plaintiff filed a Consolidated Third Amended Class Action Complaint and defendants filed a motion to dismiss on July 10, 2020. Briefing on defendants’ motion was complete on August 25, 2020. On February 26, 2021, the court granted defendants’ motion to dismiss with prejudice, and on March 29, 2021 the plaintiff filed a notice of appeal. On June 21, 2021, plaintiff-appellant filed his opening brief. Defendants-appellees’ response brief was filed on August 4, 2021 and plaintiff-appellant’s reply was filed on September 8, 2021. On January 25, 2022, the Third Circuit ruled in defendants’ favor affirming dismissal. Plaintiffs have not appealed to the U.S. Supreme Court, and the deadline for doing has passed.17ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)On January 12, 2018, a stockholder of the Company believes that the claimsfiled a derivative civil action, captioned Chiru Mackert, derivatively on behalf of Antares Pharma, Inc., v. Robert F. Apple, et al., in the SmithSuperior Court of New Jersey Chancery Division, Mercer County (Case No. C-000011-18). On January 17, 2018, another stockholder filed a derivative action lack merit and intends to defend them vigorously. Forward-Looking StatementsCertain statements in this report, including statements in the management’s discussionsame court, captioned analysis section set forth below, may be considered “forward-looking statements”Robert P. Roche, Jr. as that term is defineddefendants, and the Company as nominal defendant, and they assert claims for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets arising from the same facts underlying the Smith securities class action. The plaintiffs seek damages, corporate governance and internal procedure reforms and improvements, restitution, reasonable attorneys’ fees, experts’ fees, costs, and expenses. The parties have filed a stipulation and order consolidating the two actions and staying the proceedings pending the court’s decision on defendants’ motion to dismiss the Smith action; the motion to dismiss in Smith was granted on February 26, 2021 and a notice of appeal was filed on March 29, 2021. On January 25, 2022, the Third Circuit ruled in defendants’ favor affirming dismissal of the securities fraud class action. Plaintiffs have not appealed to the U.S. Supreme Court, and the deadline for doing so has passed.On January 17, 2018, a stockholder of the Company filed a derivative civil action, captioned Robert Clark, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (“Clark”) (Case No. 3:18-cv-00703-MAS-DEA), against Robert F. Apple, Thomas J. Garrity, Jacques Gonella, Leonard S. Jacob, Marvin Samson, Anton G. Gueth and Robert P. Roche, Jr. as defendants, and the Company as a nominal defendant. The action was filed in the U.S. PrivateDistrict Court for the District of New Jersey and asserts claims for breach of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and a violation of Section 14(a) of the Securities Litigation ReformExchange Act of 1995. Forward-looking1934. This complaint relates to the same facts underlying the Smith securities class action and the other derivative actions. The plaintiff in Clark seeks damages, corporate governance and internal procedure reforms and improvements, reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. The parties have filed a stipulation and order staying the action pending the court’s decision on defendants’ motion to dismiss the Smith action; the motion to dismiss in Smith was granted on February 26, 2021 and a notice of appeal was filed on March 29, 2021. After the expiration of all appeals related to the Smith dismissal, the parties shall submit a proposed order regarding the derivative action. On January 25, 2022, the Third Circuit ruled in defendants’ favor affirming dismissal of the securities fraud class action. Plaintiffs have not appealed to the U.S. Supreme Court, and the deadline for doing so has passed.See Note 12 for further discussion regarding ligation related to the Merger Agreement, as defined there.Note 12. Subsequent EventsMerger AgreementOn April 12, 2022, we entered into the Agreement and Plan of Merger (the “Merger Agreement”) with Halozyme Therapeutics, Inc., a Delaware corporation (“Halozyme”) and Atlas Merger Sub, Inc., a Delaware corporation (“Atlas”), a wholly owned subsidiary of Halozyme. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Atlas commenced a cash tender offer (the “Offer”) on April 26, 2022 to acquire all of the outstanding shares of common stock of Antares, $0.01 par value per share (the “Shares”), at a purchase price of $5.60 per share in cash (the “Offer Price”), without interest and subject to any withholding of taxes required by applicable legal requirements. Following the completion of the Offer and satisfaction or waiver of certain conditions set forth in the Merger Agreement, Atlas will merge with and into Antares, with Antares surviving as a wholly owned subsidiary of Halozyme (the “Merger”), and each Share issued and outstanding immediately prior to the effective time of the Merger (other than Shares (a) held by the Company, Halozyme, any other direct or indirect wholly owned subsidiary of Halozyme (other than Atlas) or by stockholders of the Company who have properly exercised and perfected their statutory rights of appraisal under Delaware law or (b) irrevocably accepted for purchase in the Offer) will be converted into the right to receive an amount in cash equal to the Offer Price, without interest and subject to any withholding of taxes required by applicable legal requirements.The obligation of Atlas to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including (1) that the number of Shares validly tendered in accordance with the terms of the Offer and not validly withdrawn, considered together with all other Shares otherwise beneficially owned by Halozyme or any of its wholly owned subsidiaries (including Atlas) (but excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been received, as defined by Section 251(h)(6) of the Delaware General Corporation Law (the “DGCL”)), would represent one more than 50% of the total number of Shares outstanding at the time of the expiration of the Offer, (2) the expiration or termination of the applicable waiting period (or any extension thereof) under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the “HSR Act”), as amended, and (3) and those other conditions set forth in the Merger Agreement.18ANTARES PHARMA, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except per share amounts)The acquisition is expected to close in the first half of 2022.Legal ProceedingsBetween April 27, 2022 and May 6, 2022, 7 complaints were filed in federal court by purported stockholders of the Company regarding the transactions contemplated by the Merger Agreement alleging violations of federal securities laws. The first complaint was filed on April 27, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Southern District of New York, captioned Shiva Stein v. Antares Pharma, Inc., et al., Case No. 1:22-cv-03426 (the “Stein Complaint”). The second complaint was filed on April 30, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Eastern District of New York, captioned Joe Berry v. Antares Pharma, Inc., et al., Case No. 1:22-cv-02483. The third complaint was filed on May 3, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Southern District of New York, captioned Joseph Ochoa v. Antares Pharma, Inc., et al., Case No. 1:22-cv-03550 (the “Ochoa Complaint”). The fourth complaint was filed on May 4, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Eastern District of New York, captioned Denise Redfield v. Antares Pharma, Inc., et al., Case No. 1:22-cv-02550. The fifth complaint was filed on May 5, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the District of Delaware, captioned Jordan Wilson v. Antares Pharma, Inc., et al., Case No. 1:22-cv-00604. The sixth complaint was also filed on May 5, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Eastern District of Pennsylvania, captioned Matthew Hopkins v. Antares Pharma, Inc., et al., Case No. 2:22-cv-01751. The seventh complaint was filed on May 6, 2022, by a purported Company stockholder against the Company and each member of the Board of Directors in the United States District Court for the Southern District of New York, captioned Richard Lawrence v. Antares Pharma, Inc., et al., Case No. 1:22-cv-03693 (the “Lawrence Complaint”).The plaintiffs generally contend that the Solicitation/Recommendation Statement on Schedule 14D-9, filed on April 26, 2022, contains alleged material misstatements or omissions regarding the transactions contemplated by the Merger Agreement. Each of the complaints, other than the Lawrence Complaint, allege violations of Section 14(d) of the Exchange Act, and all of the complaints allege violations of Section 14(e) of the Exchange Act and Rule 14d-9 thereunder against all defendants and violations of Section 20(a) of the Exchange Act against the individual defendants. Each of the complaints seek injunctive relief preventing the consummation of the Transactions, an award of plaintiff’s expenses including attorneys’ fees and expenses and such other relief the court may deem just and proper. Each of the complaints, other than the Ochoa Complaint, also seek rescissory damages or rescission to the extent the transactions contemplated by the Merger Agreement are consummated. Additionally, the Stein Complaint, the Ochoa Complaint and the Lawrence Complaint seek an accounting of damages. We believe the claims asserted in each of the complaints are without merit.19Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in six sections.•Forward-Looking Statements•Company Overview•Results of Operations•Liquidity and Capital Resources•Critical Accounting Policies and Use of Estimates•Off-Balance Sheet ArrangementsOur MD&A, the purpose of which is to provide investors and others with information that we believe to be necessary for understanding our financial condition, changes in financial condition and results of operations, should be read in conjunction with the condensed consolidated financial statements and related condensed footnotes included in Item 1 of Part I of this Quarterly Report on Form 10-Q. The terms “Antares,” “we,” “our,” “us” or the “Company” in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refer to Antares Pharma, Inc. and its wholly owned subsidiaries.Forward-Looking StatementsThis report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are subject to risks and uncertainties. Undue reliance should not be placed on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements may include words “expect,such as “anticipate,” “will,” “estimate,” “plan”,“expect,” “project,” “anticipate,“intend,” “should,” “intend,“plan,” “believe,” “hope,” “may,” “will,” “believe,” “continue” or other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property, our commercial operations and product development. In particular, these forward-looking statements include, among others, statements about:•our expectations regarding commercialization and sales of OTREXUP® (methotrexate) injection;•our expectations about the ongoing COVID-19 pandemic (the “Pandemic”) and any potential disruption or impact to our operations, financial position or cash flows;•our expectations regarding the commercialization of NOCDURNA® (desmopressin acetate) in the U.S. under a licensing agreement with Ferring International Center S.A. and its affiliates, (“Ferring”) and future sales and revenue from the same;•our expectations regarding the manufacturing and commercialization of TLANDO® in the U.S. under a licensing agreement with Lipocine Inc. (“Lipocine”), and future sales and revenue from the same;•our expectations regarding whether we will exercise the option for LPCN 1111 (“TLANDO XR”) and, if exercised, the future timing and success of the clinical development program for TLANDO XR and future FDA approval, market acceptance and revenue from the same;•our expectations regarding future sales of OTREXUP® (methotrexate) injection to Otter Pharmaceuticals, LLC (a wholly owned subsidiary of Assertio Holdings, Inc., together with Assertio Holdings, Inc., as guarantor, individually and collectively referred to as “Otter”), as well as the ability of Otter to pay remaining installment payments of the purchase price;•our expectations regarding the ability of our partner, Teva Pharmaceutical Industries, Ltd.’s (“Teva”), to continue to commercialize Epinephrine Injection USP, the generic equivalent version of EpiPen® (“generic epinephrine injection”), and any future revenue related thereto;20•our expectations regarding the ability of Covis Group S.a.r.l. (“CG”), who acquired AMAG Pharmaceuticals, Inc. (“AMAG”) (collectively CG and AMAG are herein after referred to as “Covis”) in November 2020, to continue to commercialize Makena® (hydroxyprogesterone caproate injection) and our continued future sales to Covis and royalty revenue from the same, in light of the U.S. Food and Drug Administration’s (“FDA”) proposal to withdraw approval of Makena®, and the timing and outcome of any hearings and future regulatory actions by the FDA;•our expectations regarding continued sales of Sumatriptan Injection USP to our partner, Teva, and Teva’s ability to distribute and sell Sumatriptan Injection USP;•our expectations regarding continued product development with Teva of the teriparatide disposable pen injector, Teva’s ability to obtain FDA approval and AB-rating for the product, and if approved, Teva’s ability to successfully commercialize the teriparatide disposable pen injector product outside the U.S.;Sumatriptan Injection USP;•our expectations regarding the continued development of XYOSTEDTM (testosterone enanthate) injection for testosterone replacement therapy and our intentions to request a meeting with the United States Food and Drug Administration (“FDA”) to further evaluate the deficiencies raised in the Complete Response Letter (“CRL”) to our New Drug Application (“NDA”) submitted for XYOSTEDTM (testosterone enanthate) injection to agree upon a path forward for a potential approval, and to work closely with the FDA to understand the nature of the deficiencies and resolve such deficiencies;•our expectations about our ability to adequately respond to the deficiencies in the CRL received from the FDA for XYOSTEDTM, whether any such response will be accepted by the FDA, our ability and timing to resubmit the NDA for XYOSTEDTM, and whether FDA approval will be received for XYOSTEDTM;•our expectations regarding continued product development with Teva, and potential FDA approval of the VIBEX® Epinephrine Pen (“epinephrine auto injector”), teriparatide disposable pen injector and exenatide disposable pen injector, and Teva’s ability to successfully commercialize each of those products;•our expectations regarding continued product development with our partner AMAG Pharmaceuticals, Inc. (“AMAG”), and potential FDA approval of an auto injector for Makena®;•our expectations about our development activities with Idorsia Pharmaceuticals Ltd (“Idorsia”) and the timing and successful completionresults of the salePhase 3 clinical trial of our worldwide rights, including certain assets,the drug device combination product for selatogrel, a new chemical entity being developed for the ZOMAJET™ needle-free auto injector devicetreatment of a suspected acute myocardial infarction (“AMI”) in adult patients with a history of AMI, and the potential future FDA and global regulatory approval of the same;•our expectations about the development of ATRS-1902 for adrenal crisis rescue, including the timing and results of clinical trials and our anticipated 505(b)(2) NDA filing with the FDA;•our expectations about our other internal and external research and development projects, including but not limited to ATRS-1901 and ATRS-1903, the timing and results of clinical trials, and our anticipated continued reliance on third parties in conducting studies, trials and other research and development activities;Ferring International Center S.A. (“Ferring”);pending securities class action and derivative actions;Smith complaint;our expectations regarding trends in pharmaceutical drug delivery characteristics;third-party contract manufacturers to manufacture, assemble and package our products;product development and commercialization plans regarding our other products and product candidates;the timing and results of our clinical trials, research and development projects;operations and maintain profitability;flowflows and our ability to support our operations;need for and ability to obtain additional financing,;•uncertainties as to the timing of the completion of the cash tender offer (the “Offer”) by Atlas Merger Sub, Inc., a Delaware corporation (“Atlas”), a wholly owned subsidiary of Halozyme Therapeutics, Inc., a Delaware corporation (“Halozyme”), and the subsequent merger of Atlas with and into the Company, with the Company surviving as a wholly owned subsidiary of Halozyme;•risks related to the satisfaction or waiver of the conditions to closing the proposed acquisition of the Company by Halozyme (including the failure to obtain necessary regulatory clearance) in the anticipated timeframe or at all;•uncertainties as to how many of the Company’s stockholders will tender their shares of the Company’s common stock in the Offer and the possibility that the acquisition does not close;•the possibility that competing offers may be made;•risks related to the timing (including possible delays) and receipt of clearance or expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), as amended, in connection with the transaction with Halozyme;•disruption from the transaction with Halozyme making it more difficult to maintain business and operational relationships;21•significant transaction costs; tax legislation; andour expectations and estimates with regard to current accounting practices and •the potential impact of new accounting pronouncements;pronouncements andour expectations•other statements regarding our financial and operating results for the year ending December 31, 2017.These forward-looking statements are based on assumptions that we have made in light ofconsidering our industry experience as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this quarterly report, you should understand that these statements are not guarantees ofPandemic;changes •potential business interruptions and/or delays inany financial or operational impact as a result of the regulatory review and approval process;our inability to adequately or timely respond to or address deficiencies identified in a CRL from the FDA;marketingcommercialization efforts by us or our partners;•interruptions in supply or an inability to adequately manage third party contract manufacturers to meet customer supply requirements;supply;•our inability to obtain or maintain adequate third-party payer coverage of marketed products;•actions by the FDA or other regulatory agencies with respect to our products or product candidates of our partners;•our inability to generate or sustain continued growth in product sales and royalties;•the lack of market acceptance of our and our partners’ products and future revenues from these products;•a decrease in business from our major customers and partners;andor our marketing capabilities; products and services or obtain and maintain arrangements with our customers, partners and manufacturers;attract and retain key personnel;obtain adequate third-party payor coverage of our marketed products;•changes or delays in the regulatory review and approval process; andour inability to attract and retain key personnel;conditions;conditions.The performance of our business andabilitysecurities may be adversely affected by these factors and by other factors common to obtain additional financing, reduce expensesother businesses or generate funds when necessary.In addition, you should refer to the “Risk Factors” sectionsgeneral economy. Forward-looking statements speak only as of this reportthe date on which such statements are made. Actual results could differ materially from those currently anticipated as a result of a number of risk factors, including, but not limited to, the risks and uncertainties discussed in Item 1A of Part II of our Annual Report on Form 10-K for the year ended December 31, 20162021 and Item 1A of Part II of this Quarterly Report on Form 10-Q.New risks and uncertainties emerge from time to time, and it is impossible for a discussion of other factors thatus to predict these events or how they may cause our actual results to differ materially from those describedaffect us. Forward-looking statements are qualified by our forward-looking statements. As a resultsome or all of these factors, we cannot assurerisk factors; therefore, you that theshould consider these forward-looking statements contained in this report will prove to be accuratewith caution and ifform your own critical and independent conclusions about the likely effect of these risk factors on our forward-looking statements prove to be inaccurate, the inaccuracy may be material.We encourage readers of this report to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Forward-looking statements speak only as of the date they are made. We do not intendundertake no obligation to update publiclyor revise any forward-looking statements included in this quarterly report to reflect circumstancesevents or events that occurcircumstances after the date the forward-looking statements areon which such statement is made, or to reflect the occurrence of unanticipated events except as required by law. In light of thethese risks and significant uncertainties, in these forward-looking statements, you should not regard thesethe forward-looking statements in this annual report as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame,timeframe, if at all.The following discussion You should carefully review the disclosures and analysis, the purposerisk factors described in Item 1A of which is to provide investors and others with information that we believe to be necessary for an understandingPart II of our financial condition, changesAnnual Report on Form 10-K for the year ended December 31, 2021, Item 1A of Part II of this Quarterly Report on Form 10-Q and in financial condition and results of operations, should be read in conjunctionother documents we file from time to time with the financial statements, notes theretoSecurities and other information contained in this report.Overview22Company and Product OverviewAntares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is an emerging,a specialty pharmaceutical company that focusesfocused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies. Our strategy is to identify new or existing approved drug formulations and apply our drug delivery technology to enhance the drug compounds and delivery methods.technologies that address patient needs in targeted therapeutic areas. We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using our advanced drug delivery systems that are designed to help improveprovide commercial or functional advantages, such as improved safety and efficacy, reduce side effects,convenience, improved tolerability, and enhanceenhanced patient comfort and adherence. Our subcutaneous injection technology platforms include the VIBEX® pressure-assisted auto injector system suitable for brandedWe also seek product opportunities that complement and generic injectable drugs in unit dose containers, reusable needle-free spring-action injector devices, and disposable multi-dose pen injectors for use with standard cartridges.leverage our commercial platform. We have a portfolio of proprietary and partnered products, including approved commercial products and severalongoing product candidatesdevelopment programs in advancedvarious stages of development and under active FDA review.development. We have formed significant strategic alliances and partnership arrangements with several different industry leading pharmaceutical companies including Teva, AMAG and Ferring.companies.OTREXUPXYOSTED® (methotrexate) (testosterone enanthate) injection which was launchedindicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone. XYOSTED® is the only FDA approved subcutaneous testosterone enanthate product for once-weekly, at-home self-administration.We market and sell NOCDURNA® (desmopressin acetate) indicated for the treatment of nocturia due to nocturnal polyuria (“NP”) in adults who awaken at least two times per night to urinate in the U.S. under an exclusive license agreement entered into in February 2014.October 2020 with Ferring. We began detailing NOCDURNA® with a soft launch in the fourth quarter of 2020 and executed a reintroduction of the product in 2021 through a comprehensive re-launch strategy to increase awareness and demand.In October 2021, we entered into an exclusive license agreement (the “TLANDO® License Agreement”) with Lipocine for the product TLANDO® (testosterone undecanoate) in the U.S., a twice-daily oral formulation of testosterone for testosterone replacement therapy indicated for conditions associated with a deficiency or absence of endogenous testosterone, or hypogonadism in adult males. TLANDO® was granted FDA approval on March 28, 2022 with commercialization anticipated in the second quarter of 2022. Under the terms of the TLANDO® License Agreement, we paid Lipocine an upfront payment of $11.0 million. Lipocine is eligible for additional milestone payments up to $10.0 million and tiered royalty and commercial milestones based on net sales of TLANDO® in the U.S. We are responsible for the manufacturing and commercialization of TLANDO®.The TLANDO® License Agreement also granted us the option to license and develop LPCN 1111 (TLANDO XR) in the U.S., a potential once daily oral testosterone product containing testosterone tridecanoate in development for the treatment of hypogonadism in adult males. If elected, upon exercise of the option, we will be required to pay an additional $4.0 million in license fees in two installments and will be responsible for additional development and commercial milestone payments as well as tiered royalties on net sales of TLANDO XR in the U.S. In addition, we will be responsible for completing the development program including the conduct of a Phase 3 clinical trial and applying for regulatory approval in the U.S. In April 2022, the TLANDO® License Agreement was amended (the “TLANDO® First Amendment”) and $0.5 million of the $4.0 million was paid to Lipocine to extend the deadline in which we have to exercise the option to license and develop TLANDO XR.In December 2021, we sold certain assets used in the operation of the OTREXUP® is product under an asset purchase agreement with Otter for $44.0 million, subject to finalization of changes in closing inventory to be transferred, with $18.0 million received at closing and an additional $26.0 million to be paid in installments over a one-year period. Prior to the first FDA-approvedasset sale, we marketed and sold OTREXUP® (methotrexate) injection, a subcutaneous methotrexate injection for once weekly self-administration with an easy-to-use, single dose, disposable auto injector, indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis. To date,psoriasis, as a proprietary product in the U.S. In conjunction with the asset sale, we have received FDA approvalentered into a supply agreement with Otter to manufacture the VIBEX® auto-injection system device at cost plus mark-up. Otter is responsible for dosage strengthsmanufacturing, formulation and testing of 7.5 mg, 10 mg, 12.5 mg, 15 mg, 17.5 mg, 20 mg, 22.5 mgmethotrexate and 25 mgthe corresponding prefilled syringe for assembly with the device manufactured by us, along with the commercialization and distribution of OTREXUP®.WithIn collaboration with Teva, we developed a version of our VIBEX® auto injector for use in a generic epinephrine auto injector product that was approved by the FDA. Teva’s Epinephrine Injection USP is indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients and was approved as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to the branded products EpiPen® and EpiPen Jr® and therefore, subject to state law, substitutable at the pharmacy. We are the exclusive supplier of the device and Teva is responsible for commercialization and distribution of the finished product, for which we also receive royalties on Teva’s net sales.Through our commercialization partner Teva, we launchedsell Sumatriptan Injection USP indicated in the U.S. for the acute treatment of migraine and cluster headache in adults,adults.23We are the exclusive supplier of the device, a variation of our VIBEX® QuickShot® subcutaneous auto injector developed by us, for the progestin hormone drug Makena® (hydroxyprogesterone caproate injection), indicated to help reduce the risk of preterm birth in June 2016. Wewomen pregnant with one baby and who spontaneously delivered one preterm baby in the past. As the exclusive supplier, we perform final assembly and packaging of the commercial product and receive royalties on Covis’ net sales of the product. In October 2020, following an FDA advisory committee meeting, Covis received notice that the FDA is proposing to withdraw approval of our Abbreviated New Drug Application (“ANDA”) for 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors,Makena® (hydroxyprogesterone caproate injection). Covis formally requested a generic equivalent to Imitrex® STATdose Pen®,public hearing in December 2015. Sumatriptan Injection USP represents the Company’s first ANDA approval of a complex generic and second product approved using the VIBEX® auto injector platform and is commercialized and distributed by Teva under the terms of a license, supply and distribution arrangement.We also have two gel-based products that are commercialized through our partners pursuant to licensing arrangements and make reusable, needle-free injection devices that administer injectable drugs, which are currently marketed primarily through our partner Ferring, for use with human growth hormone.On October 10, 2017, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Ferring to sell the worldwide rights, including certain assets, relatedresponse to the ZOMAJET™ needle-free auto injector device (the “Product”) forFDA’s proposal to withdraw its approval. In April 2022, the FDA granted Covis a total purchase price of $14.5 million. The purchase price isvirtual public hearing to be paidscheduled in four installments consisting of the following: a $2.0 million upfront payment received upon entry into the Asset Purchase Agreement and the transfer of certain assets; a second installment of $2.75 million payable upon delivery of certain documentation and satisfaction of certain conditions primarily relatedSeptember or October 2022. Covis has stated that it remains committed to Product manufacturing; a third installment of $4.75 million payable upon satisfaction of certain conditions, including further document transfer, the successful completion of a regulatory audit by a notified body, and a pilot manufacturing run under Ferring’s supervision; and a final installment of $5.0 million upon Ferring’s receipt of the CE Mark needed to continue to commercialize the Product in certain territories and the final transfer of certain Product-related inventory, equipment and agreements to Ferring (the “Completion Date”), which is expected to occur by the end of 2018.We will continue to manufacture and supply ZOMAJET™ devices until the Completion Date and will receive payment for devices and a royalty on net product sales in accordance with the existing license and supply agreements.Overview of Clinical, Regulatory and Product Development ActivitiesWe are developing XYOSTEDTM (testosterone enanthate) injection for testosterone replacement therapy, and submitted a 505 (b)(2) New Drug Application (“NDA”) to the FDA in December 2016. The NDA submission was accepted for standard review by the FDA and assigned a Prescription Drug User Fee Act (“PDUFA”) target date for completion of its review by October 20, 2017.On September 22, 2017, we received FDA labeling comments with regard to the NDA and responded to the comments on September 29, 2017. On October 11, 2017, we received a letter from the FDA stating that, as part of its ongoing review of the NDA, the FDA has identified deficiencies that preclude the continuation of the discussion of labeling and postmarketing requirements/commitments. On October 20, 2017, we received a Complete Response Letter (“CRL”) from the FDA regarding our NDA for XYOSTEDTM, which identified two deficiencies and indicated that the NDA cannot be approved in its current form. We are assessing the content of the CRL, including the information that may be needed to resolve the deficiencies, and intend to work closelyworking with the FDA to determine the appropriate responsesmaintain patient access to the deficiencies noted in the CRL.The clinical basis of our NDA submission for XYOSTEDTM included a multi-center, phase 3 clinical study (“QST-13-003”) evaluating the efficacy and safety of testosterone enanthate administered once-weekly by subcutaneous injection using the QuickShotMakena auto injector in adult males diagnosed with testosterone deficiency, in which positive top-line pharmacokinetic results that showed that the primary endpoint for this study was achieved. Based upon a written response we received from the FDA related to our clinical development program for XYOSTEDTM, we conducted an additional supplemental safety study QST-15-005. The study included a screening phase, as a treatment titration phase and a treatment phase for evaluation of safety and tolerability assessments, including laboratory assessments, adverse events and injection site assessments. In September 2016, we announced the successful completion of the QST-15-005 study. The results of these two studies formed the clinical basis of our NDA submission for XYOSTEDTM and are further discussed in the “Research and Development Programs” section below.The CRL for XYOSTEDTM identified two deficiencies relatedoption to the clinical data. Based on findings in studies QST-13-003 and QST-15-005, the FDA is concerned that XYOSTEDTM could cause a clinically meaningful increase in blood pressure. In addition, the CRL also raised a concern regarding the occurrence of depression and suicidality. The Company anticipates that the next step will beto request a meeting with the FDA to further evaluate the deficiencies raised and to agree upon a path forward for a potential approval of XYOSTEDTM.collaboratingalso developing with Teva on a VIBEX® auto injector pen containing epinephrine used for the treatment of severe allergic reactions (anaphylaxis). Teva submitted an amendment to the VIBEX® epinephrine pen ANDA in December 2014 and received a Complete Response Letter from the FDA in February 2016 in which, according to Teva, the FDA identified certain major deficiencies. Teva has disclosed that they submitted a response to this Complete Response Letter. We continue to work with Teva toward a potential approval of the epinephrine auto injector pen ANDA, which remains under active review at the FDA.Our other combination product development projects in collaboration with Teva include a multi-dose pen for a generic form of BYETTAForteo® (exenatide (teriparatide rDNA origin injection) for the treatment of diabetes,osteoporosis, and were developing another multi-dose pen for a generic form of ForteoBYETTA® (teriparatide [rDNA origin] (exenatide injection) for the treatment of osteoporosis.type 2 diabetes. On February 25, 2022, Teva filed an ANDA fornotified us that it was terminating the exenatide which was accepted byprogram and related agreement due to a lack of commercial viability. The termination is effective August 23, 2022. Teva continues to work through the U.S. regulatory process with the FDA in October 2014 and is currently under FDA review.for teriparatide using the ANDA pathway. In 2016, we announced that2020, Teva had settled the patent litigation with AstraZeneca Pharmaceuticals, LP, AstraZeneca AB, and Amylin Pharmaceuticals, LLC (collectively “AstraZeneca”launched Teriparatide Injection (“teriparatide”)relating to certain AstraZeneca U.S. patents and their drug, BYETTA® (exenatide). AstraZeneca and Teva entered into a settlement and license agreement pursuant to which AstraZeneca granted Teva a license to manufacture and commercialize, the generic version of BYETTAEli Lilly’s branded product Forsteo® described featuring the Antares multi-dose pen used platform in Teva’s ANDA. The settlement allows Teva to commercialize their exenatide product inseveral countries outside the U.S. beginning October 15, 2017 or earlier under certain circumstances. Teva also filed an ANDA for a generic version of Forteo® (teriparatide [rDNA origin] injection), which was accepted by the FDA in February 2016 and is currently under review. In response to Teva’s paragraph IV certification contained in Teva’s ANDA for teriparatide, Eli Lilly & Co (“Lilly”) filed a lawsuit against Teva alleging infringement of six U.S. patents related to Forteo® (teriparatide [rDNA origin] injection) resulting in a 30-month stay in FDA approval of the ANDA. The stay will expire in August 2018 unless the litigation is resolved sooner. Teva also successfully concluded a decentralized procedure registration process in Europe. According to Teva, the Public Assessment Report for the decentralized procedure has been published and the product was filed in 17 countries, which addresses the majority of the market value in Europe.In partnership with AMAG, we are currently developing a variation of our VIBEX® QuickShot® subcutaneous auto injector for use with AMAG’s Makena® (hydroxyprogesterone caproate injection) for the treatment of pre-term birth. Under a license, development and supply agreement, AMAG is responsible for the clinical development and preparation, submission and maintenance of all regulatory applications, the manufacture and supply of the drug, and the marketing, sale and distribution of the product. We are responsible for the design and development of the auto-injection device, the manufacturing and supply of the multi-dose pen utilized in Teva’s generic teriparatide product under an exclusive development, license and supply agreement with Teva, the scope of which is worldwide.In August 2018, we entered into a development agreement with Pfizer to develop a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot® auto injector and assemblyan undisclosed Pfizer drug. In 2021, we continued to work on this development program, and packagingwe expect to continue development of this product candidate.In November 2019, we entered into a global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. The new chemical entity selatogrel is being developed for the treatment of a suspected AMI in adult patients with a history of AMI. Idorsia will pay for the development of the finalcombination product and will be responsible for applying for and obtaining global regulatory approvals for the product. AMAG initiatedThe parties intend to enter into a pharmacokinetic (“PK”) study in October 2016separate commercial license and disclosed positive top line resultssupply agreement pursuant to which we will provide fully assembled and labelled product to Idorsia at cost plus mark-up. Idorsia will then be responsible for global commercialization of the product, pending FDA or foreign approval. We will be entitled to receive royalties on net sales of the commercial product. In June 2021, Idorsia announced it initiated its Phase 3 registration study to evaluate the efficacy and safety of self-administered subcutaneous selatogrel. The study will enroll approximately 14,000 patients who are at high risk of recurrent AMI, at approximately 250 sites in February 2017. Accordingapproximately 30 countries.We are also committed to AMAG,advancing our internal research and development programs and continue to invest in the study successfully demonstrated comparable bioavailability between subcutaneous injectiondevelopment of Makena® compared to intra muscular injection. AMAG submitted its sNDAour proprietary product pipeline. Our research and development efforts are focused primarily on leveraging our existing product and technology platforms by broadening their applications for use in other drug device combination products, as well as exploring new pharmaceutical products, technologies and drug delivery methods.We have initiated development of a proprietary drug device combination product for the Makena® subcutaneous auto injector in April 2017, which was accepted byurology oncology market, identified as ATRS-1901, and have conducted formulation development work and non-clinical studies to help advance this program. In 2020, we received a response from the FDA and given a PDUFA target action date of February 14, 2018.Critical Accounting PoliciesOur management’s discussion and analysis ofregarding our results of operations and financial condition is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”.) The preparation of our financial statements in accordance with GAAP requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. pre-IND (Investigational New Drug) submission.We have identified certaina program to develop a proprietary drug device combination product for the endocrinology market, an adrenal crisis pen, identified as ATRS-1902. The development program supports a proposed indication for the treatment of acute adrenal insufficiency, known as adrenal crisis, in adults and adolescents, using a novel proprietary auto-injector platform to deliver a liquid stable formulation of hydrocortisone. We conducted initial formulation work and developed a working prototype of a new device to support this program. We received a response from the FDA regarding our pre-IND submission and believe we have determined the regulatory and clinical path forward.In July 2021, the FDA accepted our IND for ATRS-1902 enabling us to initiate our Phase 1 clinical study. In January 2022, we announced the positive results from the Phase 1 clinical study and were granted Fast Track designation by the FDA. The positive results support the advancement of our significant accounting policies thatATRS-1902 development program to a pivotal clinical study using our Vai™ novel proprietary rescue pen platform to deliver a liquid stable formulation of hydrocortisone. We anticipate starting this pivotal clinical study in the second quarter of 2022 and expect to submit a 505(b)(2) NDA with the FDA by the end of 2022 pending the success of the pivotal clinical study.24We have initiated development of a proprietary drug device combination product utilizing our rescue pen technology for a rare immunology disorder, identified as ATRS-1903. Formulation development work has been conducted and we anticipate progressing this towards initial clinical testing to evaluate PK and tolerability in human subjects.Merger AgreementOn April 12, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which Halozyme and Atlas will acquire all of the outstanding common stock of Antares Pharma, Inc. for $5.60 per share in cash (the “Offer Price”), without interest and subject to any withholding of taxes required by applicable legal requirements. Under the terms of the Merger Agreement, Halozyme commenced an Offer to acquire all of the outstanding shares of Antares on April 26, 2022. The closing of the Offer will be subject to certain conditions, including the tender of shares representing at least a majority of the total number of Antares outstanding shares of common stock, the expiration or termination of the HSR waiting period, and other customary closing conditions. Following the successful completion of the Offer, Halozyme will acquire all remaining shares not tendered in the tender offer through a second-step merger at the same price. The acquisition is expected to close in the first half of 2022.COVID-19In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in China, and has since spread worldwide, including every state in the U.S. On March 11, 2020, the World Health Organization declared the outbreak a Pandemic and on March 13, 2020, the U.S. declared a national emergency with respect to the outbreak. The Pandemic has impacted global economic activity and led to disruptions in supply chain, labor shortages, business closures, travel restrictions and other health, safety and social distancing requirements.We have taken several measures to actively manage and help minimize the impact of the ongoing Pandemic on our business. We have implemented safety measures and protocols to protect the health and safety of our employees and comply with governmental and public health guidelines while working to ensure the sustainability of our business operations and continuity of product supply. We continue to monitor the situation, including COVID-19 variants, and potential effects on our business, suppliers, partners and workforce.We have implemented a hybrid work environment with the ability to shift remote as necessary to limit the number of individuals in our facilities to those necessary for essential functions such as research, development, manufacturing and supply. While our field-based team has resumed in-person interaction with fewer restrictions, we believe we are also well-positioned with our virtual capabilities to continue to engage healthcare professionals and patients through the ongoing Pandemic and beyond. Although, we have not experienced significant delays or disruption in our development programs or significant demand reductions for our partnered products due to the Pandemic, we continue to monitor the situation, including COVID-19 variants, for potential effects on our or our partners’ clinical trials or delays or disruptions in activities with the FDA.Although, we have taken measures to help minimize the potential impact of the Pandemic on our business, given the fluidity of the Pandemic and other macroeconomic factors, we are unable to estimate the impact the Pandemic has had on our operations or cash flows as of the date of this filing. We also believe there continues to be uncertainty around the most criticaltiming and duration of any potential future disruptions due to the understanding our resultsCOVID-19 variants and the magnitude of any potential impact. As a result, we are unable to estimate the potential impact on future operations and financial condition because they requireor cash flows as of the most subjective and complex judgments. The following supplements our critical accounting policies, which are fully described under “Management’s Discussion and Analysisdate of Financial Condition and Resultsthis filing. For more information on these risks see Item 1A of Operations” inPart I of our Annual Report on Form 10-K for the year ended December 31, 2016.Revenue Recognition—OTREXUP®We sell OTREXUP® in packages of four pre-filled, single-dose disposable auto injectors to wholesale pharmaceutical distributors, our customers, subject to rights of return within a period beginning six months prior to,2021 as filed with the Securities and ending 12 months following, product expiration. We began detailing OTREXUP® to health care professionals in February 2014.Prior to the first quarter of 2017, we could not reliably estimate expected returns of OTREXUP® at the time of shipment given our limited sales history of the product. Accordingly, the recognition of revenue was deferred on product shipments until the rights of return no longer existed, which occurred at the earlier of the time that OTREXUP® units were dispensed through patient prescriptions or expiration of the right of return of the product. Patient prescriptions dispensed were estimated using third-party market prescription data.In the first quarter of 2017, we determined we had developed sufficient historical information to reasonably estimate future returns of OTREXUP® and began recognizing revenue upon delivery to the distributors, net of estimated returns. Accordingly, we recognized $1,297,054 in revenue for product shipped to distributors in previous periods but not previously recognized as revenue at the time of shipment, net of the returns allowance established during the first quarter of 2017. We also recognized $254,425 of related product costs in the first quarter of 2017. The net impact of these changes resulted in a decrease to net loss of $1,042,629, or less than $0.01 per share, for the nine months ended September 30, 2017.Results of OperationsWe reported net lossesThe following is an analysis and discussion of $5,452,521 and $6,120,983our operations for the three months ended September 30, 2017 and 2016, respectively, and $13,028,382 and $19,838,556 forMarch 31, 2022 as compared to the nine months ended September 30, 2017 and 2016, respectively. Net loss per share was $0.03same period in 2021. Operating results for the three months ended September 30, 2017 as compared to $0.04 for the three months ended September 30, 2016, and $0.08 and $0.13 for the nine months ended September 30, 2017 and 2016, respectively. Operating results for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2017.2022.25Revenue, NetWe generate revenue from proprietary and partnered product sales, license and development activities and royalty arrangements. The following is an analysistable provides details about the components and discussiondrivers of our operations for the three and nine months ended September 30, 2017 as compared to the same periods in 2016.RevenuesTotal(in thousands) Three Months Ended
March 31,Increased / (Decreased) 2022 2021 $ % Proprietary product sales, net $ 17,276 $ 18,732 $ (1,456) (7.8) % Partnered product sales 14,827 10,403 4,424 42.5 % Total product revenue, net 32,103 29,135 2,968 10.2 % Licensing and development revenue 4,191 4,984 (793) (15.9) % Royalties 5,263 7,964 (2,701) (33.9) % Total revenue, net $ 41,557 $ 42,083 $ (526) (1.2) % Product Revenue, NetNet revenue from product sales for the three months ended September 30, 2017March 31, 2022 increased 10.2% over the same period in the prior year primarily driven by higher shipments of sumatriptan, epinephrine and 2016 was $15,052,397teriparatide auto injectors to Teva and $13,478,763, respectively, representing an increase in total revenue of 12% onXYOSTED® proprietary product sales. The overall increase was partially offset by a comparative basis. Revenue forreduction in OTREXUP® proprietary sales due to the nine months ended September 30, 2017 was $40,476,015 as compared to $38,025,925 for the nine months ended September 30, 2016, representing an increase of 6%. The following is a detailed discussionsale of the componentsOTREXUP® product line to Otter in December 2021.Sales of our proprietary products XYOSTED®and changes in revenue.ForSeptember 30, 2017 and 2016, we recognized revenue of $4,623,326 and $3,904,329, respectively, from sales of OTREXUP®, which isMarch 31, 2021) are presented net of estimated product returns and sales allowances. FDA approval was granted on March 28, 2022 to commercialize TLANDO® with no sales transacted in the three months ended March 31, 2022 prior to timing of the approval. The increasedecreases in revenueproprietary product sales of 7.8% for the three months ended September 30, 2017 as comparedMarch 31, 2022 was primarily attributable to a reduction in OTREXUP® proprietary sales due to the three months ended September 30, 2016 was drivensale of the OTREXUP® product line to Otter in December 2021 which is now commercialized by an increase in shipments to distributors and an underlyingOtter, partially offset by continued growth in prescriptions dispensed. However, as discussed in our “Critical Accounting Policies” above, we began recognizing revenue upon delivery to distributors, net of estimated returns, in the first quarter of 2017. Prior to the first quarter of 2017, due to lack of sufficient sales and returns history, revenue was initially deferred upon shipment to distributors and recognized based on estimated prescriptions dispensed or expiration of customer right of return. This change in estimation and recognition method may affect the comparability of revenues on a period over period basis.We recognized revenue of $13,110,489 and $11,024,394 from OTREXUP® sales for the nine months ended September 30, 2017 and 2016, respectively. The increase in OTREXUP® revenue for the nine months ended September 30, 2017 as compared with the same period in 2016 included the recognition of $1,297,054 in previously deferred revenue. If we underestimate or overestimate product returns for a given period, adjustments to revenue may be necessary in future periods. Auto injector and pen injector devicesWe also manufacture and sell devices, were $7,946,313components and $5,943,786fully assembled and packaged product to our partners. Partnered product sales increased 42.5% for the three months ended September 30, 2017 and 2016, respectively, and $14,489,839 and $15,836,179 for the nine months ended September 30, 2017 and 2016, respectively. We manufacture devices and sell fully assembled and packaged Sumatriptan Injection USP productMarch 31, 2022 primarily due to Teva. We also sell pre-launchquantities of injector devices for use with Teva’s generic epinephrine pen, and auto injector devices for use with AMAG’s Makena® in anticipation of potential approvals and launch of these products. The increase in auto injector product revenue for the three months ended September 30, 2017 as compared to the same period in 2016 was principally attributable to an increase in shipments of Sumatriptan Injection USP and the related profit earned under the margin sharing arrangement with Teva. Revenue from auto injector sales for the three months ended September 30, 2017 was principally attributable to sumatriptan product sold to Teva, totaling $6,400,000 including the profit sharing recognized during the quarter, and approximately $1,000,000 and $500,000 of pre-launch quantities of devices for use with Makena® and epinephrine, respectively. Revenue for the three months ended September 30, 2016 included approximately $3,400,000 inhigher shipments of sumatriptan, product at cost, $1,400,000 in auto-injector devices for use with Makena®epinephrine and $1,100,000 of pre-launch quantities of auto injector devices sold to Teva for use with their generic epinephrine product. The decrease in product revenue from sales ofteriparatide auto injectors for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 was a result of a significant reduction in sales of pre-launch quantities of auto-injectors for use with Teva’s generic epinephrine product. As previously discussed, Teva’s ANDA for the epinephrine auto injector is under review by the FDATeva.Licensing and Teva is targeting a launch in early 2018. The decrease in revenue from pre-launch shipments of epinephrine auto injectors was partially offset by a significant increase in sales of Sumatriptan Injection USP, which was launched in June 2016.Needle-free injector devicesDevelopment RevenueLicensing and componentsOur revenue from reusable needle-free injector devices and disposable components was $757,886 and $1,201,725 for the three months ended September 30, 2017 and 2016, respectively, and $3,108,422 and $3,720,316 for the nine months ended September 30, 2017 and 2016 respectively. Thesedevelopment revenues were generated primarily from sales to Ferring, which sells our needle-free injector for use with its hGH products in Europe, Asia and the U.S. We do not control our partners’ sales volume or inventory levels of our injectors and components, which can cause fluctuations in our product sales in comparative periods.On October 10, 2017, we announced the sale of the worldwide rights related to the ZOMAJET™ needle-free auto injector device and expect the transaction to be completed by the end of 2018. During the transfer and completion period, we will continue to manufacture and supply ZOMAJET™ devices until the completion date and will receive payment for devices and a royalty on net product sales in accordance with the existinginclude license and supply agreements.Development revenueDevelopment revenue typically represents amounts earned under arrangements with partners for which we develop new products on their behalf. Frequently, we receive up-front and milestone payments from our partners that are initially deferred and recognized as revenue over a development period or upon completion of defined deliverables. Development revenue was $1,485,091 and $2,101,203 for the three months ended September 30, 2017 and 2016, respectively, and was $7,894,640 and $6,466,974 for the nine months ended September 30, 2017 and 2016, respectively. The increase in development revenue recognized for the nine months ended September 30, 2017 as compared to 2016 was primarily a result of increases in development activities with AMAG for the Makena® auto injector product offset by reductions in revenue for development activities with Teva in connection with the epinephrine auto injector and pen injector programs. The decrease in development revenue for the three months ended September 30, 2017 as compared to the same period in 2016 was primarily a result of lower development revenue related to the Makena® auto injector development program with AMAG and the exenatide pen injector program with Teva.Licensing RevenueLicensing revenue represents amountsfees received from partners for the right to use certainour intellectual property. Generally, the up-frontproperty and amounts earned in joint development arrangements with partners under which we perform joint development activities or milestone payments received were initially deferreddevelop new products on their behalf. Licensing and recognized indevelopment revenue over the license period. We recognized $19,486 and $38,618decreased 15.9% for the three months ended September 30, 2017 and 2016, respectively and $1,057,204 and $128,040 for the nine months ended September 30, 2017 and 2016, respectively. The significant increaseMarch 31, 2022 primarily as a result of fluctuations in licensing revenue recognized in the nine months ended September 30, 2017 is due to the recognition of $1,000,000 in licensing fees previously received and initially deferred due to potential contractual refund rightstiming of the customer under certain circumstances. During the second quartervarious stages and phases of 2017, the License, Supply and Distribution Agreementdevelopment activities, along with Teva for Sumatriptan Injection USP was amended such that the refund provisions relating to the licensing fee was removed. Accordingly, we recognized the deferred revenuea decline in income, as the license had been delivered and there were no remaining obligations related to the license granted.
RoyaltiesRoyalty revenue was $220,295 and $289,102decreased 33.9% for the three months ended September 30, 2017 and 2016, respectively and $815,421 and $850,022 for the nine months ended September 30, 2017 and 2016, respectively. We receiveMarch 31, 2022, principally driven by a reduction in royalties from Ferring related to needle-free injector device sales andTeva on its net sales of ZOMACTONTM in the U.S.generic EpiPens®, andpartially offset by higher royalties from Covis on its net sales of gel-based products commercialized through partners.26Cost of Revenue and Gross ProfitThe following table summarizes our total revenue, cost of revenue and gross profit:Our gross profit was $6,529,500 and $20,116,963 for the three and nine months ended September 30, 2017, respectively, as compared to $5,445,042 and $15,898,365 for the three and nine months ended September 30, 2016, respectively. The increase in our gross profit for the nine months ended September 30, 2017 was primarily attributable to the recognition of $1,000,000 in licensing revenue previously deferred, for which there was no associated costs, the recognition of previously deferred revenue related to OTREXUP®product sales and other changesdevelopment revenue:(in thousands) Three Months Ended
March 31,Increased / (Decreased) 2022 2021 $ % Cost of product sales $ 15,648 $ 12,498 $ 3,150 25.2 % Cost of development revenue 3,119 3,947 (828) (21.0) % Total cost of revenue $ 18,767 $ 16,445 $ 2,322 14.1 % Fluctuations in ourcost of product sales is generally a function of the product revenue andmix. Proprietary products generally have a lower cost of sales which is summarizedas a percentage of revenue than partnered product sales. Accordingly, as partner sales increased and proprietary sales decreased in the following table and discussed below.Product gross profit increased incomparative period, the relative total cost of product sales for the three months ended September 30, 2017 as compared toMarch 31, 2022 increased.Cost of development revenue decreased 21.0% for the three months ended September 30, 2016,March 31, 2022 primarily due to, sales of OTREXUP® and to sales of Sumatriptan Injection USP, which is initially sold at cost to Teva, and profit recognizedconsistent with, the quarter over quarter decline in development revenue from the margin sharing arrangement in trailing periods. The increase in product gross profit for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 included the $1,042,629 net impact of recognizing previously deferred revenue and related product costs for OTREXUP® as described in “Critical Accounting Policies” above, and sales of Sumatriptan Injection USP, which was launched in June 2016. These increases were offset by the reduction in epinephrine auto injector device sales and the associated cost of sales. The cost of product sales includes product acquisition costs from third-party manufacturers and internal manufacturing overhead expenses.Other variations in revenue, cost of revenue and gross profit are attributable to ourpartnered development activities which fluctuate depending onas shown in the mix of development projects in progressrevenue table above.Research and stages of completion in each period. The cost of development revenue consists primarily of direct external costs, some of which may have been previously incurred and deferred. The cost of development revenue in each period was primarily related to revenue recognized under the Teva auto injector and pen injector programsDevelopment ExpensesResearch and development of the Makena® auto injector with AMAG. Research and DevelopmentResearch and development(“R&D”) expenses consist of external costs for clinical studies and analysis activities, formulation development, engineering design work and prototype development, FDA application fees, personnel costs and other general operating expenses associated with our research and developmentR&D activities. Research and development(in thousands) Three Months Ended
March 31,Increased / (Decreased) 2022 2021 $ % Research and development $ 5,008 $ 2,640 $ 2,368 89.7 % R&D expenses were $3,289,445 and $5,958,550increased 89.7% for the three months ended September 30, 2017 and 2016, respectively, and $9,535,089 and $15,554,599 for the nine months ended September 30, 2017 and 2016, respectively. The decrease in research and development costs on a comparative basis isMarch 31, 2022 primarily due to a decrease inhigher employee compensation expense, increased clinical development activities for our ongoing internal development programs including, but not limited to, ATRS-1901 and ATRS-1902, and higher fees for professional services. Overall, R&D expense fluctuates based on phases of development and timing of clinical studies, including internal and external clinical and development costs related to XYOSTEDTM for testosterone replacement therapy. We completed clinical trials and submitted our NDA for XYOSTEDTM to the FDA in the fourth quarter of 2016. On October 20, 2017, we received a CRL from the FDA regarding our NDAincurred.for XYOSTEDTM. See further discussion of our research and development activities related to XYOSTEDTM in the “Research and Development Programs” section below.(in thousands) Three Months Ended
March 31,Increased / (Decreased) 2022 2021 $ % Selling, general and administrative $ 20,602 $ 17,607 $ 2,995 17.0 % Selling, general and administrative expenses were $8,185,865 and $5,622,937increased 17.0% for the three months ended September 30, 2017March 31, 2022 primarily driven by increased sales and 2016, respectivelymarketing activities for XYOSTED® and $23,013,130NOCDURNA® and $20,240,635higher employee compensation expense due to the hiring of additional sales force and pre-launch costs in preparation for the nine months ended September 30, 2017 and 2016, respectively. The overall increaselaunch of TLANDO® in selling, general and administrative expenses was primarily attributable to an increase inthe second quarter of 2022, partially offset by the elimination of sales and marketing costs associatedrelated to the OTREXUP® product line which was sold to Otter in December 2021. General and administrative expenses also increased primarily due to higher employee compensation expense and legal fees.27Income Tax Expense (Benefit)(in thousands) Three Months Ended
March 31,Increased / (Decreased) 2022 2021 $ % Income tax expense (benefit) $ (817) $ 590 $ (1,407) (238.5) % Effective tax rate 26.0 % 13.5 % An income tax benefit was recorded in the three months ended March 31, 2022 due to the recognition of a $3.1 million loss before income taxes. The effective tax rate for the three months ended March 31, 2022 is primarily driven by the federal and state tax rates, along with discrete income tax items for compensation expense in connection with stock option exercises and vesting of performance stock units during the preparationfirst quarter of 2022, which favorably impacted the effective tax rate by 1.1%. Income tax expense recorded for the three months ended March 31, 2021 was driven by the generation of income before income taxes of $4.4 million. The effective income tax rate for the three months ended March 31, 2021 reflects a potential launchnet discrete income tax benefit related to share-based compensation expense in connection with stock option exercises and vesting of XYOSTEDTMperformance stock units during the first quarter of 2021, which favorably impacted the effective tax rate by 12.5%.Net Income (Loss) and Earnings (Loss) Per Common Share(in thousands, except per share amounts) Three Months Ended
March 31,Increased / (Decreased) 2022 2021 $ % Net income (loss) $ (2,321) $ 3,793 $ (6,114) (161.2) % Earnings (loss) per common share Basic $ (0.01) $ 0.02 $ (0.03) (150.0) % Dilutive $ (0.01) $ 0.02 $ (0.03) (150.0) % Liquidity and Capital ResourcesAt September 30, 2017,As of March 31, 2022, we had cash and cash equivalents of $27,433,489 and short-term investments of $9,976,984.$61.7 million. Our principal liquidity needs are to fund our product manufacturing costs, research and development activities, sales and for the payment ofmarketing and other general operating expenses. We have not historically generated, and do not currently expect to generate, enough revenue or operating cash flow to support or grow our operations and we continue to operate primarily by raising capital. Our primary sources of liquidity are proceeds from equity offeringsexpenses, as well as capital expenditures and debt issuance.service. We believe that the combination of our current cash and cash equivalents, short-term investments, projected product sales, development revenue milestones and royalties will provide us with sufficient funds to meet our obligations, including debt maturities, and support operations through at least the next twelve months from the date of this report.Long-Term We had an accumulated deficit as of March 31, 2022 of $178.7 million.If additional capital is needed to support our operations in the future, we may need to raise additional funds through financing, such as drawing on our current credit facility or issuance of additional debt. However, we may be unable to obtain such financing, or obtain it on favorable terms, in which case we may be required to curtail development of new products, limit expansion of operations or accept financing terms that are not as attractive as we may desire.Long-term Debt FinancingOn June 6, 2017,November 1, 2021, we entered into a loan and security agreementCredit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent for a term loanthe lenders, (“Administrative Agent”) for credit facilities in an aggregate principal amount of up to $35,000,000$40.0 million with a maturity date of November 1, 2024. The Credit Agreement consists of a $20.0 million term loan facility (the “Term Loan”Loan Facility”), the proceeds and a $20.0 million revolving credit facility, $5.0 million of which is available for the issuance of letters of credit and $1.0 million of which is available for swingline loans (the “Revolving Credit Facility”), (collectively the “Credit Facilities”), which are to be used for working capital and general corporate purposes.secured by substantially all of our assets. The first advance of $25,000,000Term Loan Facility was funded upon execution of the Credit Agreement with the proceeds used to repay our $20.0 million Term Loan Agreement on June 6, 2017. Underwith Hercules Capital, Inc. and to pay fees and expenses incurred in connection with the termsearly repayment.28The Revolving Credit Facility remains available for future use and is expected to request one or more additional advances of at least $5,000,000 not to exceed $10,000,000 in the aggregate, subject to the company achieving certainbe used for ongoing working capital requirements and other general corporate milestones and satisfying customary conditions. The option to request additional advances must be exercised prior to September 30, 2018.purposes as needed. Payments under the Term Loan AgreementFacility are due in consecutive quarterly installments on the last business day of each of March, June, September and December, commencing on March 31, 2022. Interest accrues at either the base rate or LIBOR plus the applicable margin, which varies based on our consolidated total leverage ratio and will initially be 1.50% for base rate loans and 2.50% for LIBOR loans. The transaction is expected to provide approximately $1.2 million in annual interest only untilexpense savings based on an interest rate of 2.59% (one-month LIBOR rate plus the firstapplicable margin of 2.50%) as of November 1, 2021.As of March 31, 2022 and December 31, 2021, we had $19.6 million and $20.0 million outstanding under our Term Loan Facility with a $0.4 million principal payment is duemade on August 1, 2019, provided thatMarch 31, 2022, and the Revolving Credit Facility remains available for future use. The weighted average interest only period may be extended to February 1, 2020 if certain corporate milestones are achieved. The Loan Agreement also requires us to pay a fee equal to 4.25% of the total original principal amount of all term loan advances (“End of Term Charge”), which is due upon repayment ofrate on the Term Loan at either maturity or earlier repayment.AtFacility outstanding balance during the Market Common Stock Offering ProgramOn August 11, 2017, we entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) under which we may offer and sell,three months ended March 31, 2022 was approximately 2.65%.Cash Flow ComparisonThe following table summarizes our cash flows from time to time at our sole discretion, shares of common stock having an aggregate offering price of up to $30,000,000 through Cowen as our sales agent and/or principal. Cowen may sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. We will pay Cowen a commission of 3.0% of the gross sales proceeds of any common stock sold through Cowen under the Sales Agreement. We are not obligated to make any sales of our common stock under the Sales Agreement and as of the date of this report we have not sold any common stock pursuant to the Sales Agreement.Net Cash Flows from total operations:Three Months Ended
March 31,(in thousands) 2022 2021 Total cash provided by (used in): Operating activities $ (4,881) $ 1,978 Investing activities 666 (1,184) Financing activities 17 1,722 Effect of exchange rate changes on cash — (1) Increase (decrease) in cash and cash equivalents (4,198) 2,515 Cash and cash equivalents, beginning of period 65,913 53,137 Cash and cash equivalents, end of period $ 61,715 $ 55,652 Operating ActivitiesOperating cash inflows are generated primarily from net product sales, license and development fees and royalties. Operating cash outflows consist principally of expenditures for manufacturing costs, personnel costs, general and administrative expenses, research and development projects,activities, and sales and marketing activities.costs. Fluctuations in cash used infrom operating activities are primarily a result of the timing of cash receipts and disbursements. Net cash usedThe change in operating activities was $15,482,269 for the nine months ended September 30, 2017 and $11,696,233 for the nine months ended September 30, 2016. For the nine months ended September 30, 2017, the increase in net cash used infrom operating activities was primarily driven bya result of the decrease in our inventory build, changes in accounts receivablenet income to a net loss, excluding non-cash activity, and deferred revenue, and other changes in operating assets and liabilities due to timing of cash receipts and cash payments. Net Cash Flows from disbursements, principally driven by a reduction in accrued liabilities, partially offset by an increase in accounts payable, slight decline in deferred revenue and a reduction in contract assets.Net cash provided by investing activities for the three months ended March 31, 2022 consisted of proceeds from maturities of investment securities of $1.0 million, partially offset by purchases of investment securities of $0.2 million and capital expenditures of $0.1 million. Net cash used in investing activities for the ninethree months ended September 30, 2017March 31, 2021 was $10,926,425 as compared to net cash provided by investing activities of $7,617,569 for the nine months ended September 30, 2016. The net cash outflow for the nine months ended September 30, 2017, was attributable to purchases of investment securities totaling $9,963,978 and paymentsprimarily for capital expenditures and patent acquisition costs, while the net cash inflow for the nine months ended September 30, 2016 was attributablerelated to our manufacturing facility.maturities of investment securities of $12,000,000, offset by payments for capital expenditures and patent acquisition costs totaling $4,278,643. Net Cash Flows from Financing ActivitiesCash flow provided by financing activities was $26,127,902 for the nine months ended September 30, 2017, and was primarily attributable to the receipt of $25,000,000 proceeds from debt issuance and $1,670,149 cash proceeds received from the exercise of stock options offset by payments of debt issuance costs and tax withholding payments in connection with settlement of share-based awards. The netNet cash used in financing activities was $40,025 for the ninethree months ended September 30, 2016, included the receiptMarch 31, 2022 consisted of $24,000 in proceeds from the exercise of stock options and $64,000 remitted$0.5 million paid to taxing authorities in connection with net-share settled share-based awards for which we withheld shares equivalent to the value of the employees’ minimum statutoryemployee's tax obligation for the applicable income and other employment taxes.Contractual Obligations29Critical Accounting EstimatesThe following table presentspreceding discussion and analysis of our contractual obligationsresults of operations and financial condition is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the related payments, including interest, due by periodreported amounts of assets and liabilities as of September 30, 2017:Off-Balance Sheet Arrangementsdo not have any off-balance sheet arrangements, including any arrangements with any structured finance, special purpose or variable interest entities.Researchbase our estimates on historical experience and Development ProgramsWe conduct clinical, regulatory, formulation development, parenteral device developmentvarious other factors that we believe are reasonable under the circumstances. Actual results could differ from these estimates, and commercial development activities for internalsignificant variances could materially impact our financial condition and partnered products. The following is a discussion of our significant research and development programs.XYOSTEDTM (testosterone enanthate) Injection (Formerly referred to as VIBEX® QuickShot® Testosterone or “QST”). We are developing XYOSTEDTM for self-administered weekly injections of testosterone enanthate for clinically diagnosed testosterone deficient men requiring testosterone replacement therapy. On December 5, 2012, we conducted a pre-IND (Investigational New Drug application) meeting with the FDA as part of preparing to initiate clinical development of XYOSTEDTM, establishing an agreed upon clinical path forward. In September 2013, we announced that the first patients were dosed in a clinical study evaluating the PK profile of testosterone enanthate administered weekly by subcutaneous injection at doses of 50 mg and 100 mg via the XYOSTEDTM auto injector device in testosterone deficient adult males. The study enrolled 39 patients at nine investigative sites in the U.S. On February 20, 2014, we announced positive top line results of this study that showed that the primary endpoint was achieved in that XYOSTEDTM treatment resulted in most patients achieving average levels of testosterone within the normal range from the first dose onward. On November 3, 2014, we announced that the last patient had been enrolled in a double-blind, multiple-dose, phase III study (QST-13-003) to evaluate the efficacy and safety of XYOSTEDTM administered subcutaneously once each week to testosterone-deficient adult males. Patients enrolled in this study had a documented diagnosis of hypogonadism or testosterone deficiency defined as having testosterone levels below 300 ng/dL. The study includes a screening phase, a treatment titration and efficacy phase and an extended treatment phase. One hundred fifty patients were enrolled in this study. Patients meeting all eligibility criteria were assigned to receive a starting dose of XYOSTEDTM once weekly for six weeks. Adjustments to dose could be made at week seven based upon the week six pre-dose blood level. The efficacy of XYOSTEDTM and dose adjustment to regulate testosterone levels were evaluated after 12 weeks of treatment.On February 25, 2015, we announced positive top-line pharmacokinetic results that showed that the primary endpoint was achieved in QST-13-003. The protocol for the study required that at the week 12 endpoint: (i) at least 75% of all patients’ Cavg are within the normal range of 300 to 1100 ng/dL, with a lower limit of a 95% 2-sided confidence interval of greater than or equal to 65%, (ii) at least 85% of patients’ Cmax are less than1500 ng/dL and (iii) no more than 5% of patients had a Cmax greater than 1800 ng/dL. The primary endpoint of the population that received one or more doses of XYOSTEDTM was met by 139 out of 150 patients, equating to 92.7% with a 95% confidence interval of 87.3% to 96.3%. Among the 137 patients that completed all 12 weeks of dosing and PK sampling, 98.5% were within the pre-defined range. The top-line results of the PK study are summarized in the table below.
operations.*All patients with 1 or more doses, Cavg 0-168 hours post week 12 injection or last measured concentration carried forward**Patients without a Cmax determination at week 12 are assigned above 1500 ng/dLOverall, the regimen demonstrated a mean (± standard deviation) steady state concentration of testosterone of 553.3 ± 127.3 ng/dL at 12 weeks. Participants in the study remained on XYOSTEDTM and were followed for an additional 40 weeks for the collection of safety data.After we initiated study QST-13-003, but before we announced positive top-line pharmacokinetic results in February 2015, we received written recommendations from the FDA related to our clinical development program for XYOSTEDTM. The recommendations received were in response to various clinical, chemistry, manufacturing and controls and user study submissions that we made through November 2014. We believe that we had already factored many of the recommendations cited in the advice letter into the protocol of the ongoing QST-13-003 study and into the protocols for planned human use studies as a result of guidance provided by the FDA at the May 2014 Type C meeting. Based on a single reported occurrence of hives in our phase 2 study, the FDA recommended that we create a larger safety database, including approximately 350 subjects exposed to XYOSTEDTM with approximately 200 subjects exposed for six months and approximately 100 subjects exposed for a year. We assessed the FDA’s comments in the advice letter and their impact on the timing of the filing of a NDA for XYOSTEDTM with the FDA. Based on the number of subjects in previous studies and in the current QST-13-003 study, we concluded that we would need additional subjects exposed to XYOSTEDTM for six months. The timing and design of the study to obtain the additional subjects and data required was determined based on further discussion with the FDA. We submitted our response to the FDA’s written recommendations in early March 2015.In October 2015, we announced that the last patient in study QST-13-003 received their week 52 treatment, which marked the end of the treatment phase of this study. In March 2016, we announced that the pharmacokinetic results of QST-13-003 were final and reported the results from the 52-week safety study. The safety population, defined as patients who received at least one dose of study drug, was comprised of 150 patients. The most common adverse reactions (incidence ≥5%) in this phase 3 study were increased hematocrit, hypertension, increased prostate-specific antigen, upper respiratory tract infection, sinusitis, injection site bruising and headache. Serious adverse events (SAE’s) reported included one case each of worsening depression, vertigo and suicide. None of the SAE’s were considered to be related to the study drug by the investigators, however the Company determined that the case of suicide could not be ruled out as potentially being related to study drug. There have been no reported adverse events consistent with urticaria (hives), pulmonary oil micro embolism (“POME”), anaphylaxis or major adverse cardiovascular eventsmaterial changes to the critical accounting estimates we believe to be most critical to understanding our results of operations and financial condition which are fully described in this study.In May 2015, we received an additional written update from the FDA related to our clinical development program for XYOSTEDTM. BasedAnnual Report on that update received from the FDA, we concluded there was an agreed upon path forwardForm 10-K for the completion of an additional study to support the filing of a NDA for XYOSTEDTM. In June 2015, we finalized and submitted the protocol for the study, and in August 2015, we enrolled the first patients in the study, which is known as QST-15-005. The study was a dose-blind, multiple-dose, concentration controlled 26-week supplemental safety and pharmacokinetic study of XYOSTEDTM, which included a screening phase, a treatment titration phase, and a treatment phase for evaluation of safety and tolerability assessments including laboratory assessments, adverse events and injection site assessment. Patients meeting all eligibility criteria were assigned to receive 75 mg of XYOSTEDTM once weekly for six weeks. According to the protocol, adjustments to dose could be made at week seven based upon the week six Ctrough value. XYOSTEDTM was provided to clinical sites at dosage strengths of 100 mg, 75 mg and 50 mg to be utilized in dose titration.In early November 2015, the Company announced that enrollment was complete in study QST-15-005. The safety population, defined as patients who received at least one dose of the study drug, consisted of 133 patients dosed with XYOSTEDTM. In June 2016, we announced that the last patient had completed treatment under the 26-week safety and pharmacokinetic phase 3 study QST-15-005, and in September 2016 we announced the results of the study. The most common adverse reactions (incidence ≥5%) in the QST-15-005 study were increased hematocrit, upper respiratory tract infection and injection site ecchymosis. There were four patients with treatment emergent SAE’s, which included one patient with transient visual impairment determined not to be drug related, one patient with appendicitis that was not drug related and one patient with deep vein thrombosis (“DVT”). The investigator attributed DVT as possibly drug related, which is consistent with known testosterone class SAE’s. The fourth patient had multiple hospitalizations related to septic arthritis and coronary artery disease, with a complicated clinical course post-angioplasty. These multiple reported events from the fourth patient were deemed not to be drug related. There were no reported adverse events consistent with urticaria, POME or anaphylaxis. The safety data collected also included an assessment of pain. Of the 965 injections assessed, pain was reported one time. In that instance, the pain reported was classified as mild.Based upon the completion of our clinical and development work and the results of the studies detailed above, we submitted a 505 (b) (2) New Drug Application for XYOSTEDTM to the FDA inyear ended December 2016. The NDA submission was accepted for standard review by the FDA and assigned a PDUFA target date for completion of its review by October 20, 2017.On September 22, 2017, we received FDA labeling comments with regard to the NDA and responded to the comments on September 29, 2017. On October 11, 2017, we received a letter from the FDA stating that, as part of its ongoing review of the NDA, the FDA has identified deficiencies that preclude the continuation of the discussion of labeling and postmarketing requirements/commitments. On October 20, 2017, we received the CRL from the FDA regarding our NDA for XYOSTEDTM, which identified two deficiencies and indicated that the NDA cannot be approved in its current form. We are assessing the content of the CRL, including the information that may be needed to resolve the deficiencies, and intend to work closely with the FDA to determine the appropriate responses to the deficiencies noted in the CRL.The CRL for XYOSTEDTM identified two deficiencies related to the clinical data. Based on findings in studies QST-13-003 and QST-15-005, the FDA is concerned that XYOSTEDTM could cause a clinically meaningful increase in blood pressure. In addition, the CRL also raised a concern regarding the occurrence of depression and suicidality. The Company anticipates that the next step will be to request a meeting with the FDA to further evaluate the deficiencies raised and to agree upon a path forward for a potential approval of XYOSTEDTM.Device Development Projects. We, along with our pharmaceutical partners, are engaged in research and development activities related to our VIBEX® disposable pressure assisted auto injectors and our disposable pen injectors. We have signed license agreements with Teva for our VIBEX® system for a product containing epinephrine and for our pen injector devices for use with generic versions of BYETTA® (exenatide) and Forteo® (teriparatide). We also have a license, development and supply agreement with AMAG for our auto injector device for use with its drug Makena®. The development programs consist of determination of the device design, development of prototype tooling, production of prototype devices for testing and clinical studies, and development of commercial tooling and assembly. We expect development related to these products to continue, however, the development timelines are generally controlled by our partners and the extent of near-term and future development will be dependent on decisions made by our partners. The following is a summary of the development stages for each of the products in development with Teva and AMAG.VIBEX® auto injector with Makena® (hydroxyprogesterone caproate injection)We are in the process of developing a variation of our VIBEX® QuickShot® auto injector for use with the progestin hormone drug Makena® under a license, development and supply agreement with AMAG. Under this arrangement, AMAG is responsible for the clinical development and preparation, and submission and maintenance of all regulatory applications. We are responsible for the design and development of the auto-injection device.AMAG initiated a PK study for the Makena® auto injector in October 2016 and announced positive top-line results of the study in February 2017. According to AMAG, the study successfully demonstrated comparable bioavailability between subcutaneous injection of Makena® compared to intra muscular injection. AMAG submitted its sNDA for the Makena® subcutaneous auto injector in April 2017, which was accepted by the FDA and given a PDUFA target action date of February 14, 2018.VIBEX® auto injector with epinephrineWe, in collaboration with Teva, have developed a VIBEX® auto injector device for a product containing epinephrine. Teva is responsible for development work on the drug epinephrine, and we are responsible for development of the device. Teva filed an ANDA for the VIBEX® epinephrine pen as a generic substitute of Mylan’s branded product, EpiPen®, which was accepted by the FDA, and amended in December 2014. We have scaled up the commercial tooling and molds for this product and delivered pre-launch quantities of the product in anticipation of a potential approval and launch. However, Teva received a Complete Response Letter to its ANDA for the VIBEX® epinephrine pen from the FDA in February 2016 in which, according to Teva, the FDA identified certain major deficiencies. Teva has disclosed that they submitted a response to the FDA’s Complete Response Letter. We continue to work with Teva toward a potential approval of the epinephrine auto injector pen ANDA, which remains under active review at the FDA.Exenatide disposable pen injectorWe have designed and produced a pen injector product for use with exenatide for Teva. Teva filed an ANDA for a generic version of BYETTA®, which was accepted by the FDA in October 2014 and is currently under review. Teva settled patent litigation with AstraZeneca relating to certain AstraZeneca U.S. patents and their drug, BYETTA® (exenatide). AstraZeneca and Teva entered into a settlement and license agreement pursuant to which AstraZeneca granted Teva a license to manufacture and commercialize the generic version of BYETTA® described in Teva’s ANDA. The settlement allows Teva to commercialize their exenatide product in the U.S., assuming FDA approval, beginning October 15, 2017 or earlier under certain circumstances.Teriparatide disposable pen injectorWe have designed and produced a multi-dose disposable pen injector for use with teriparatide for Teva and have delivered devices for a drug stability program to support a regulatory filing. Teva is developing this product for use in both Europe and the U.S. with the European clinical/regulatory team leading the development. Teva filed an ANDA for a generic version of Forteo® (teriparatide [rDNA origin] injection), which was accepted by the FDA and is currently under review. In response to Teva’s paragraph IV certification contained in Teva’s ANDA for teriparatide, Lilly filed a lawsuit against Teva alleging infringement of six U.S. patents related to Forteo® (teriparatide [rDNA origin] injection) resulting in a 30-month stay in FDA approval of the ANDA. The stay will expire in August 2018 unless the litigation is resolved sooner. Teva also successfully concluded a decentralized procedure registration process in Europe. According to Teva, the Public Assessment Report for the decentralized procedure has been published and the product was filed in 17 countries, which addresses the majority of the market value in Europe.Other Research and Development Costs. In addition to our development of XYOSTEDTM and our device development projects with Teva and AMAG, we incur direct costs associated with other internal research and development projects and indirect costs that include personnel costs, administrative and other operating costs related to managing our research and development activities.Foreign Currency Exchange RiskWe are exposed to foreign exchange rate fluctuations of the Swiss Franc to the U.S. dollar as the financial position and operating results of our subsidiaries in Switzerland are translated into U.S. dollars for consolidation. Our exposure to foreign exchange rate fluctuations also arises from transferring funds to our Swiss subsidiaries in Swiss Francs. In addition, we have exposure to exchange rate fluctuations between the Euro and the U.S. dollar in connection with a licensing agreement with Ferring, under which certain products sold to Ferring and royalties are denominated in Euros. Mostfor some of our product sales, including a portion of our product sales to Ferring, and our development and licensing fees and royalties are denominated in U.S. dollars, thereby significantly mitigating the risk of exchange rate fluctuations on trade receivables.transactions. We do not currently use derivative financial instruments to hedge against exchange rate risk. The effect of foreign exchange rate fluctuations on our financial results for the periodsthree months ended September 30, 2017March 31, 2022 was not material.Interest Rate RiskWe may beare directly exposed to changes in market interest rate risk and interest rate fluctuations as a result ofrates on our long-term debt financing we obtained on June 6, 2017. Our Term Loan, with a current outstanding principal of $25,000,000, accruesas our secured floating rate credit facility requires interest payments to be calculated at a calculated prime-based variablefloating rate withtied in part to LIBOR or, if LIBOR is no longer available, at a maximumreplacement rate as defined within the Credit Facility Agreement. As a result, changes in the floating interest rate can affect our operating results and liquidity. As of March 31, 2022, we had floating interest rate debt of $19.6 million outstanding carrying a floating interest rate of 9.50%approximately 2.73% (one-month LIBOR rate plus the applicable margin of 2.50%). The calculated prime-based variable rate was 8.75% at September 30, 2017. AnA hypothetical increase to the maximumof 1 percentage point in floating interest rate, of 9.50%assuming principal payments in accordance with the Credit Facility Agreement and all other variables held constant, would result in additional incremental$0.2 million increase in future annual interest expense of $187,500.expense.Item 4.Item 4. CONTROLS AND PROCEDURESOur management, under the supervision and with the participation of the Company’sour Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’sour disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)amended (the “Exchange Act”)) as of the end of the period covered by this report. The evaluation was performed to determine whether the Company’sour disclosure controls and procedures have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Companyus in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the timethe Company’sour principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, the Company’sour Chief Executive Officer and Chief Financial Officer have concluded that the Company’sour disclosure controls and procedures as of the end of the period covered by this report were effective.Internal Control over Financial ReportingThere have not been anywere no material changes in the Company’sour internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.30A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controlcontrols may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.31PART II - OTHER INFORMATIONItem 1.Item 1. LEGAL PROCEEDINGSOn October 23, 2017, Randy Smith filedThe information set forth under “Note 11. Commitments and Contingencies – Pending Litigation” and “Note 12. Subsequent Events – Legal Proceedings” to our condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q is incorporated herein by reference.Although the results of actual, pending or threatened legal proceedings and litigation cannot be predicted with certainty, we do not believe that there is a complaint inreasonable possibility that the Districtfinal outcome of New Jersey, captioned Randy Smith, Individually andthese matters will have a material adverse effect on Behalf of All Others Similarly Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M. Powell (“Smith”), Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of persons who purchasedour business or otherwise acquired Antares securities between December 21, 2016 and October 12, 2017, inclusive, asserting claims for purported violations of Sections 10(b) and 20(a)financial results. Regardless of the Securities Exchange Actfinal outcome, litigation could have an adverse impact on us because of 1934 against Antares, Robert F. Appledefense or settlement costs, diversion of management resources, harm to our reputation and Fred M. Powell. The Smith complaint contends that defendants made false and/or misleading statements and/or failed to disclose that: (i) Antares had provided insufficient data to the FDA in connection with the NDA for XYOSTEDTM;brand, and (ii) accordingly, Antares had overstated the approval prospects for XYOSTEDTM. Motions for the appointment of Lead Plaintiff are due December 22, 2017. The company believes that the claims in the Smith action lack merit and intends to defend them vigorously.other factors.Item 1A.Item 1A. RISK FACTORSIn addition to the risk factors and other information contained in this report, you should carefully consider the risk factors discussed in Item 1A of Part I “Item 1A. Risk Factors” inof our Annual Report on Form 10-K for the year ended December 31, 2016,2021, which could materially affect our business, financial condition or future results. The information below includes additional risk factors relating to the definitive merger agreement entered into with Halozyme Therapeutics, Inc. (“Halozyme”). The risks described in this reportbelow and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also may materially adversely affect our business, financial condition and/or operating results.Risks Related to Our Operations
TimingWe may not complete the pending transaction with Halozyme within the time frame we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations.On April 12, 2022, we entered into the Merger Agreement with Halozyme and resultsAtlas. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Atlas commenced the Offer on April 26, 2022 to acquire all of clinical trialsthe Shares at the Offer Price without interest and subject to demonstrateany withholding of taxes required by applicable legal requirements. The Merger will take place following the safetycompletion of the Offer and efficacythe satisfaction or waiver of products as well ascertain conditions set forth in the FDA’s approvalMerger Agreement, and each Share issued and outstanding immediately prior to the effective time of products are uncertain.Drug developmentthe Merger (other than Shares (a) held by the Company, Halozyme, any other direct or indirect wholly owned subsidiary of Halozyme (other than Atlas) or by stockholders of the Company who have properly exercised and perfected their statutory rights of appraisal under Delaware law or (b) irrevocably accepted for purchase in the Offer) will be converted into the right to receive an amount in cash equal to the Offer Price, without interest and subject to any withholding of taxes required by applicable legal requirements.The obligation of Atlas to purchase Shares tendered in the Offer is an inherently risky and uncertain process. Before obtaining regulatory approvals forsubject to the salesatisfaction or waiver of any new product candidates, we and our partners must demonstrate through preclinical studies and clinical trialsthe conditions set forth in the Merger Agreement, including (1) that the product is safenumber of Shares validly tendered in accordance with the terms of the Offer and effective for each intended use. Preclinicalnot validly withdrawn, considered together with all other Shares otherwise beneficially owned by Halozyme or any of its wholly owned subsidiaries (including Atlas) (but excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been received, as defined by the DGCL), would represent one more than 50% of the total number of Shares outstanding at the time of the expiration of the Offer, (2) the expiration or termination of the applicable waiting period (or any extension thereof) under the HSR Act and clinical studies may fail to demonstrate the safety(3) and effectiveness of a product. Likewise, we and our partners may not be able to demonstrate through clinical trials that a product candidate’s therapeutic benefits outweigh its risks. Even promising results from preclinical and early clinical studies do not always accurately predict results in later, large scale trials. A failure to demonstrate safety and efficacy could or would resultthose other conditions set forth in the failure to obtain regulatory approvals.The rate of patient enrollment sometimes delays completion of clinical studies. There is substantial competition to enroll patients in clinical trials and such competition has delayed clinical development of our products in the past. For example, patients may not enroll in clinical trials at the rate expected or patients may drop out after enrolling in the trials or during the trials. Delays in planned patient enrollment canMerger Agreement. As a result, in increased development costs and delays in regulatory approval. In addition, we rely oncollaboration partners that may control or make changes in trial protocol and design enhancements, or encounter clinical trial compliance-related issues, which may also delay clinical trials. Product supplies may be delayed or be insufficient to treat the patients participating in the clinical trials, or manufacturers or suppliers may not meet the requirements of the FDA or foreign regulatory authorities, such as those relating to cGMP. We and our partners may also experience delays in obtaining, or we and our partners may not obtain, required initial and continuing approval of our clinical trials from institutional review boards, FDA, or other applicable regulatory authorities. We cannot assure you that we or our partners will not experience delays or undesired results in these or any other clinical trials. Clinical trials may also be suspended, placed on hold, or terminated by us, institutional review boards, FDA, or other applicable regulatory authorities for a number of reasons, including failure to comply with the applicable regulatory requirements, including GCPs, and issues involving subject safety.We cannot assure you that the FDAtransaction with Halozyme will be completed, or foreign regulatory agenciesthat, if completed, it will approve, clear for marketing or certify any products developed by us or our partners, on a timely basis, if at all, or, if granted, that such approval will not subject the marketing of our products to certain limits or other costly and burdensome requirements. Such limits and requirements may include warnings, including black box warnings, limitationsbe exactly on the indicated use, including the applicable population, contraindications, Risk Evaluation and Mitigation Strategies, and post-approval studies and/or monitoring. The FDA or foreign regulatory authorities may not agree with the assessment by us or our clinical partners of the clinical data or they may interpret it differently. Such regulatory authorities may require additional or expanded clinical trials. On October 20, 2017, we received from the FDA the CRL for XYOSTEDTM which identified two deficiencies and indicated that the XYOSTEDTM NDA cannot be approved in its current form. We are assessing the content of the CRL, including the information that may be needed to resolve the deficiencies, which may include additional clinical trials. We intend to work closely with the FDA to determine the appropriate responses to the deficiencies notedterms set forth in the CRL. Any limitation on use imposed byMerger Agreement or within the FDA or delay in or failure to obtain FDA approvals or clearances of products developed by us and our partners would adversely affectexpected time frame.If the marketing of these products and our ability to generate product revenue, which would adversely affect our financial condition and results of operations.Before obtaining regulatory approvals for certain generic products, we and our partners must conduct limited clinical or other trials to show comparability totransaction is not completed within the branded products. A failure to obtain satisfactory results in these trials would prevent us from obtaining required regulatory approvals.Risks Related to Regulatory MattersThe CRL for XYOSTEDTM identified two deficiencies and indicated that the XYOSTEDTM NDA cannot be approved in its current form. To the extent that we are unable to resolve these deficiencies in a timely mannerexpected time frame or at all, or if we fail to obtain, or have delays in obtaining, regulatory approvals for any of our other products and product candidates, our business, financial condition and results of operations may be materially adversely affected.XYOSTEDTM and our other products and product candidates are subject to extensive and rigorous government regulation by the FDA and other foreign regulatory agencies. The FDA regulates the research, development, pre-clinical and clinical testing, manufacture, safety, effectiveness, record keeping, reporting, labeling, storage, approval, advertising, promotion, sale, distribution, import and export of pharmaceutical and medical device products. Failure to comply with FDA and other applicable regulatory requirements may, either before or after product approval, subject us to administrative or judicially imposed sanctions.In the United States, the FDA regulates drug and device products under the Federal Food, Drug, and Cosmetic Act (FFDCA), and its implementing regulations. XYOSTEDTM, as well as other of our products and product candidates are subject to regulation by the FDA as combination products, which means they are composed of both a drug product and device product. If marketed individually, each component would therefore be subject to different regulatory pathways and reviewed by different centers within the FDA. A combination product, however, is assigned to a center that will have primary jurisdiction over its pre-market review and regulation based on a determination of the product’s primary mode of action, which is the single mode of action that provides the most important therapeutic action. In the case of XYOSTEDTM and our other products and product candidates, the primary mode of action is attributable to the drug component of the product, which means that the Center of Drug Evaluation and Research (CDER) has primary jurisdiction over its pre-market development and review. Following product approval, however, our products may be subject to regulation under FDA’s drug and device requirements. We are not permitted to market our product candidates, including XYOSTEDTM, in the United States unless and until we obtain regulatory approval from the FDA. To market the product in the United States, we must submit to the FDA and obtain FDA approvala number of a marketing application. We have historically used FDA’s 505(b)(2) NDA and ANDA pathways. A 505(b)(2) NDA must be supported by extensive clinical and preclinical data, as well as extensive information regarding chemistry, manufacturing and controls, or CMC, to demonstrate the safety and effectiveness of the applicable product candidate. An ANDA must be supported by studies demonstrating that the product candidate is bioequivalent to the reference listed drug, as well as extensive informationregarding CMC.material risks. The number and types of preclinical studies and clinical trials that will be required varies depending on the product candidate, the approval pathway, the disease or condition that the product candidate is designed to target and the regulations applicable to any particular product candidate.Despite the time and expense associated with preclinical and clinical studies, failure can occur at any stage, and we could encounter problems that cause us to repeat or perform additional preclinical studies, CMC studies or clinical trials. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including, failure to receive FDA or IRB authorization to begin a trial, negative or inconclusive results, slow or insufficient subject enrollment, failure to obtain adequate clinical supply of product candidates, and failure by us, our partners, Contract Research Organizations, and clinical trial sites to follow the applicable regulatory requirements, including GCPs. The FDA and similar foreign authorities could also delay, limit or deny approval of a product candidate for many reasons, including because they:may not deem a product candidate to be adequately safe and effective;may not find the data from preclinical studies, CMC studies and clinical trials to be sufficient to support a claim of safety and efficacy;may interpret data from preclinical studies, CMC studies and clinical trials significantly differently than we do;may not approve the manufacturing processes or facilities associated with our product candidates;may not agree with the pathway that we have chosen for our product candidates, requiring us to pursue more difficult approval pathways, including full NDAs;may find that our reliance on a reference listed drug for an ANDA or 505(b)(2) application or literature for a 505(b)(2) application is not appropriate;may not agree with the design and/or implementation of our clinical and/or pre-clinical studies;may require us to conduct additional clinical and/or pre-clinical studies;may change approval policies (including with respect to our product candidates’ class of drugs) or adopt new regulations; ormay not accept a submission due to, among other reasons, the content or formatting of the submission.Significant delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow competitors, to bring products to market before we do. Additionally, based on the written recommendations from the FDA related to our clinical development program for XYOSTEDTM, we launched a supplemental safety study QST-15-005 with additional participants, which we completed in 2016 in support of our NDA submission for XYOSTEDTM. However, the FDA may have additional recommendations or require further trials and the timing, cost and design of any such study could negatively affect our business if we incur significant costs or delays. Products of this nature may carry with them the need to monitor safety in an on-going manner, called a Risk Evaluation Mitigation Strategy, or REMS. The REMS for testosterone products is well-defined, and a class-labeling letter has been issued to all approved testosterone replacement products that will likely include being part of a clinical outcomes trial intended to explore cardiovascular risks.Undesirable side effects caused by any product candidate that we develop, a lack of bioequivalence for ANDA product candidates, and/or an inability to demonstrate product candidate efficacy could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications or cause us to evaluate the future of our development programs.Undesirable side effects could also interrupt, delay, or halt clinical trials. The regulatory review and approval process is lengthy, expensive and inherently uncertain.In December 2016, we submitted the XYOSTEDTM NDA which was accepted for filing by FDA in February 2017. On October 20, 2017, we received from the FDA the CRL for XYOSTEDTM which identified two deficiencies and indicated that the XYOSTEDTM NDA cannot be approved in its current form. We are assessing the content of the CRL, including the information that may be needed to resolve the deficiencies, which may include additional clinical trials. We intend to work closely with the FDA to determine the appropriate responses to the deficiencies noted in the CRL. However, there can be no assurance that we will be able to resolve these deficiencies, and, even if we resolve these deficiencies, the FDA may find that overall, the benefits of XYOSTEDTM do not outweigh the risks identified in the FDA’s CRL.Failure to obtain, or delays in obtaining, regulatory approvals may:•adversely affect the commercialization of the current version of XYOSTEDTM or any products that we develop in the future;•adversely affect the commercialization of the current version of XYOSTEDTM or any products that we develop in the future;diminish any competitive advantages that may be attained; andadversely affect our ability to generate revenues.We may never receive approval for certain of our product candidates, and even if our product candidates are approved, the approval may be subject to limitations on the indicated uses for which the products may be marketed, distribution restrictions, or to other conditions of approval; may contain significant safety warnings, including boxed warnings, contraindications, and precautions; may not be approved with label statements necessary or desirable for successful commercialization; or may contain requirements for costly post‑market testing and surveillance or other requirements, including REMS, to monitor the safety or efficacy of the products. Moreover, any future actions or inquiries by the FDA with respect to the reference listed drug may require that we make changes to our labeling or, possibly, withdraw the product from the market. Any of the foregoing may impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.Risks Related to Our Common StockThe market price of our common stock has been, and may continuedecline to be volatile and fluctuate significantly, which could result in substantial losses for investors.The trading price forthe extent that current market prices of our common stock has been,reflects a market assumption that the transaction will be completed. We could be required to pay Halozyme a termination fee of $33 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. The failure to complete the transaction also may result in negative publicity and we expect itnegatively affect our relationship with our stockholders, employees, customers, regulators and other business partners. We may also be required to continuedevote significant time and resources to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement.32The pendency of the transaction with Halozyme could adversely affect, or disrupt, our business, financial results and/or operations.Our efforts to complete the transaction could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operation and our business. Uncertainty as to whether the transaction will be volatile. The price at which our common stock trades depends upon a number of factors, including our historical and anticipated operating results, our financial situation, clinical trial results, announcements of technological innovations or new products by us, our partners or our competitors,completed may affect our ability to recruit prospective employees or inability to raiseretain and motivate existing employees. Employee retention may be particularly challenging while the additional capital wetransaction is pending because employees may needexperience uncertainty about their roles following consummation of the transaction. A substantial amount of our management’s and employees’ attention is being directed toward the terms on which we raise it,completion of the transaction and general marketthus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and economic conditions. Someour relationship with customers, vendors, partners and manufacturers. For example, vendors, manufacturers, partners and other counterparties may defer decisions concerning working with us, or seek to change existing business relationships with us. Changes to or termination of these factors are beyondexisting business relationships could adversely affect our control. Broad market fluctuations may lowerresults of operations and financial condition, as well as the market price of our common stockstock. The adverse effects of the pendency of the transaction could be exacerbated by any delays in completion of the transaction or termination of the Merger Agreement.While the Merger Agreement is in effect, we are subject to restrictions on our business activities.While the Merger Agreement is in effect, we are subject to customary restrictions on our business activities, generally requiring us to conduct our business in the ordinary course, consistent with past practice, and subjecting us to a variety of specified limitations absent Halozyme’s prior consent. These limitations include, among other things, restrictions on our ability to enter into or amend certain contracts, take specified actions with respect to the compensation of certain employees, acquire or dispose of material assets, make certain investments, repurchase or issue securities, pay dividends, make certain capital expenditures, take certain actions relating to intellectual property, amend our organizational documents and incur certain indebtedness. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and may as a result materially and adversely affect the volume of trading in our stock, regardless of our financial condition,business, results of operations and financial condition.In certain instances, the Merger Agreement requires us to pay a termination fee to Halozyme, which could require us to use available cash that would have otherwise been available for general corporate purposes.Under the terms of the Merger Agreement, we may be required to pay Halozyme a termination fee of $33 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement, including, but not limited to, a change in the recommendation of our Board of Directors or a termination of the Merger Agreement by us to enter into an agreement for a “Superior Offer,” as defined in the Merger Agreement. If the Merger Agreement is terminated under such circumstances, we may be required to pay the termination fee under the Merger Agreement which may require us to use available cash that would have otherwise been available for general corporate purposes and other uses. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business or prospect. Amongoperations and financial condition, which in turn would materially and adversely affect the factors that may cause the market price of our common stock to fluctuate arestock.Litigation against us and members of our Board of Directors arising out of our acquisition by Halozyme may delay or prevent the risksproposed transaction.As described in Note 12 “Subsequent Events” to our condensed consolidated financial statements included in Item 1 of Part I of this “Risk Factors” sectionQuarterly Report on Form 10-Q, seven complaints have been filed by alleged stockholders of the Company against the Company and each of the members of our Board of Directors, purportedly in relation to the alleged omission of material facts related to the Merger from the Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) that was filed with the SEC by the Company in connection with the proposed Merger on April 26, 2022, in alleged violations of Section 14(e), 14(d) and 20(a) of the Securities Exchange Act of 1934.Plaintiffs seek, among other remedies, to enjoin the closing of the Merger or, in the event that the Merger is consummated, recover damages, costs and fees.Also, if the Company’s insurance provider were to deny coverage under the existing insurance policies covering such actions or should such policies fail to cover the costs of defending the lawsuits, we may incur substantial costs.We are not able to estimate any possible loss from this litigation at this time.It is possible that additional lawsuits may be filed in connection with the proposed Merger.33We have incurred, and will continue to incur, direct and indirect costs as a result of the pending transaction with Halozyme.We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the pending transaction. We must pay substantially all of these costs and expenses whether or not the transaction is completed. There are a number of factors including:fluctuations inbeyond our quarterly operating resultscontrol that could affect the total amount or the operating resultstiming of our competitors;34variance in our financial performance from the expectations•our ability to address the deficiencies identified in the CRL for XYOSTEDTM and ultimately receive product approval;changes in the estimation of the future size and growth rate of our markets;changes in accounting principles or changes in interpretations of existing principles, which could affect our financial results;failure of our products to achieve or maintain market acceptance or commercial success;conditions and trends in the markets we serve;changes in general economic, industry and market conditions;success of competitive products and services;changes in market valuations or earnings of our competitors;changes in our pricing policies or the pricing policies of our competitors;announcements of significant new products, contracts, acquisitions or strategic alliances by us or our competitors; changes in legislation or regulatory policies, practices or actions;the commencement or outcome of litigation involving our company, our general industry or both;recruitment or departure of key personnel;changes in our capital structure, such as future issuances of securities or the incurrence of debt;actual or expected sales of our common stock by our stockholders; andthe trading volume of our common stock.In addition, the stock markets, in general, the NASDAQ Capital Market and the market for specialty pharmaceutical companies in particular, may experience a loss of investor confidence. Such loss of investor confidence may result in extreme price and volume fluctuations in our common stock that are unrelated or disproportionate to the operating performance of our business, financial condition or results of operations. These broad market and industry factors may materially harm the market price of our common stock and expose us to securities class action litigation. For example, on October 23, 2017, Randy Smith filed a complaint in the District of New Jersey on behalf of a putative class of persons who purchased or otherwise acquired Antares securities against Antares, Robert F. Apple and Fred M. Powell. Litigation, even if unsuccessful, could be costly to defend and divert management’s attention and resources, which could further materially harm our financial condition and results of operations.None.None.Not applicable.None.Item 6.Item 6. EXHIBITS(a) Exhibit Index(a)Exhibit IndexExhibit No.DescriptionExhibit No. Description 31.1#3.1 31.1 31.2 31.2# 32.1 32.1## 32.2 32.2## 101.INS 101.INS#101.SCH 101.SCH#101.CAL 101.CAL#101.DEF Inline XBRL Taxonomy Extension Definition Document (filed herewith). 101.LAB#101.PRE 101.PRE#104 101.DEF#Taxonomy Extension Definition Document# Filed herewith.##Furnished herewith.35Table of ContentsSIGNATURESSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.ANTARES PHARMA, INC. (Registrant) November 7, 2017Date: May 10, 2022 /s/ Robert F. Apple Robert F. Apple President and Chief Executive Officer (Principal Executive Officer) November 7, 2017May 10, 2022 /s/ Fred M. Powell Fred M. Powell SeniorExecutive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 3236