Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 04, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | KALA PHARMACEUTICALS, INC. | |
Entity Central Index Key | 0001479419 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-38150 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-0604595 | |
Entity Address, Address Line One | 490 Arsenal Way, Suite 120 | |
Entity Address, City or Town | Watertown | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02472 | |
City Area Code | 781 | |
Local Phone Number | 996-5252 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | KALA | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 56,075,211 | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 45,526 | $ 85,449 |
Short-term investments | 113,594 | |
Accounts receivable, net | 7,455 | 11,563 |
Inventory | 7,538 | 4,648 |
Prepaid expenses and other current assets | 4,043 | 3,824 |
Total current assets | 178,156 | 105,484 |
Non-current assets: | ||
Property and equipment, net | 2,822 | 2,698 |
Long-term inventory | 2,689 | 3,778 |
Right-of-use assets | 28,344 | 29,781 |
Restricted cash and other long-term assets | 13,085 | 12,582 |
Total assets | 225,096 | 154,323 |
Current liabilities: | ||
Accounts payable | 2,222 | 2,518 |
Accrued expenses and other current liabilities | 15,851 | 20,929 |
Current portion of lease liabilities | 1,477 | 1,327 |
Total current liabilities | 19,550 | 24,774 |
Long-term liabilities: | ||
Long-term lease liabilities - less current portion | 27,549 | 28,673 |
Long-term debt | 71,967 | 71,184 |
Total long-term liabilities | 99,516 | 99,857 |
Total liabilities | 119,066 | 124,631 |
Commitments and Contingencies (Note 14) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 120,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 56,061,365 and 36,086,254 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 56 | 36 |
Additional paid-in capital | 474,648 | 325,112 |
Accumulated other comprehensive income | (3) | |
Accumulated deficit | (368,671) | (295,456) |
Total stockholders' equity | 106,030 | 29,692 |
Total liabilities and stockholders' equity | $ 225,096 | $ 154,323 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 56,061,365 | 36,086,254 |
Common stock, shares outstanding | 56,061,365 | 36,086,254 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Product revenues, net | $ 2,220 | $ 1,451 | $ 4,124 | $ 4,894 |
Costs and expenses: | ||||
Cost of product revenues | 701 | 668 | 1,814 | 1,261 |
Selling, general and administrative | 23,893 | 15,280 | 54,602 | 50,523 |
Research and development | 3,468 | 7,070 | 14,955 | 21,137 |
Total costs and expenses | 28,062 | 23,018 | 71,371 | 72,921 |
Loss from operations | (25,842) | (21,567) | (67,247) | (68,027) |
Other income (expense): | ||||
Interest and other income | 51 | 571 | 451 | 1,973 |
Interest and other expense | (2,157) | (2,180) | (6,419) | (6,335) |
Total interest and other expense | (2,106) | (1,609) | (5,968) | (4,362) |
Net loss | $ (27,948) | $ (23,176) | $ (73,215) | $ (72,389) |
Net loss per share-basic and diluted | $ (0.50) | $ (0.68) | $ (1.44) | $ (2.13) |
Weighted average shares outstanding-basic and diluted | 56,030,717 | 34,168,282 | 50,851,167 | 33,977,477 |
Statement of Comprehensive Income | ||||
Net loss | $ (27,948) | $ (23,176) | $ (73,215) | $ (72,389) |
Other comprehensive income (loss): | ||||
Change in unrealized gains/losses on investments | 14 | (3) | ||
Total other comprehensive income (loss) | 14 | (3) | ||
Total comprehensive loss | $ (27,934) | $ (23,176) | $ (73,218) | $ (72,389) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance as of beginning of period at Dec. 31, 2018 | $ 34 | $ 306,053 | $ (201,109) | $ 104,978 | |
Balance as of beginning of period (in shares) at Dec. 31, 2018 | 33,863,077 | ||||
Stockholders' Equity | |||||
At the market offering, net of sales agent commission | $ 1 | 2,129 | 2,130 | ||
At the market offering, net of sales agent commission (in shares) | 532,304 | ||||
Exercise of stock options | 42 | 42 | |||
Exercise of stock options (in shares) | 24,714 | ||||
Issuance under employee stock purchase plan | 545 | 545 | |||
Issuance under employee stock purchase plan (in shares) | 123,664 | ||||
Stock-based compensation expense | 7,750 | 7,750 | |||
Net loss | (72,389) | (72,389) | |||
Balance as of end of period at Sep. 30, 2019 | $ 35 | 316,519 | (273,498) | 43,056 | |
Balance as of end of period (in shares) at Sep. 30, 2019 | 34,543,759 | ||||
Balance as of beginning of period at Dec. 31, 2018 | $ 34 | 306,053 | (201,109) | 104,978 | |
Balance as of beginning of period (in shares) at Dec. 31, 2018 | 33,863,077 | ||||
Balance as of end of period at Dec. 31, 2019 | $ 36 | 325,112 | (295,456) | 29,692 | |
Balance as of end of period (in shares) at Dec. 31, 2019 | 36,086,254 | ||||
Balance as of beginning of period at Jun. 30, 2019 | $ 34 | 311,354 | (250,322) | 61,066 | |
Balance as of beginning of period (in shares) at Jun. 30, 2019 | 33,882,967 | ||||
Stockholders' Equity | |||||
At the market offering, net of sales agent commission | $ 1 | 2,129 | 2,130 | ||
At the market offering, net of sales agent commission (in shares) | 532,304 | ||||
Exercise of stock options | 3 | 3 | |||
Exercise of stock options (in shares) | 4,824 | ||||
Issuance under employee stock purchase plan | 545 | 545 | |||
Issuance under employee stock purchase plan (in shares) | 123,664 | ||||
Stock-based compensation expense | 2,488 | 2,488 | |||
Net loss | (23,176) | (23,176) | |||
Balance as of end of period at Sep. 30, 2019 | $ 35 | 316,519 | (273,498) | 43,056 | |
Balance as of end of period (in shares) at Sep. 30, 2019 | 34,543,759 | ||||
Balance as of beginning of period at Dec. 31, 2019 | $ 36 | 325,112 | (295,456) | 29,692 | |
Balance as of beginning of period (in shares) at Dec. 31, 2019 | 36,086,254 | ||||
Stockholders' Equity | |||||
Common stock offering, net of issuance cost and underwriting fees | $ 17 | 125,406 | 125,423 | ||
Common stock offering, net of issuance cost and underwriting fees (in shares) | 16,979,371 | ||||
Warrant exercises (in shares) | 16,144 | ||||
At the market offering, net of sales agent commission | $ 3 | 12,543 | 12,546 | ||
At the market offering, net of sales agent commission (in shares) | 2,352,671 | ||||
Exercise of stock options | 945 | 945 | |||
Exercise of stock options (in shares) | 312,528 | ||||
Issuance under employee stock purchase plan | 1,016 | 1,016 | |||
Issuance under employee stock purchase plan (in shares) | 314,397 | ||||
Stock-based compensation expense | 9,626 | 9,626 | |||
Change in fair value of investments | $ (3) | (3) | |||
Net loss | (73,215) | (73,215) | |||
Balance as of end of period at Sep. 30, 2020 | $ 56 | 474,648 | (3) | (368,671) | 106,030 |
Balance as of end of period (in shares) at Sep. 30, 2020 | 56,061,365 | ||||
Balance as of beginning of period at Jun. 30, 2020 | $ 56 | 469,627 | (17) | (340,723) | 128,943 |
Balance as of beginning of period (in shares) at Jun. 30, 2020 | 55,831,021 | ||||
Stockholders' Equity | |||||
Exercise of stock options | 7 | 7 | |||
Exercise of stock options (in shares) | 1,500 | ||||
Issuance under employee stock purchase plan | 746 | 746 | |||
Issuance under employee stock purchase plan (in shares) | 228,844 | ||||
Stock-based compensation expense | 4,268 | 4,268 | |||
Change in fair value of investments | 14 | 14 | |||
Net loss | (27,948) | (27,948) | |||
Balance as of end of period at Sep. 30, 2020 | $ 56 | $ 474,648 | $ (3) | $ (368,671) | 106,030 |
Balance as of end of period (in shares) at Sep. 30, 2020 | 56,061,365 | ||||
Stockholders' Equity | |||||
Accumulated other comprehensive income | $ (3) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | |
Issuance cost and underwriting fees | $ 8,475 |
Sales agent commission | $ 388 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (73,215) | $ (72,389) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 674 | 614 |
Non-cash operating lease cost | 1,437 | 1,307 |
Amortization of debt discount and other non-cash interest | 782 | 709 |
Stock-based compensation | 9,249 | 7,666 |
Change in operating assets and liabilities: | ||
Accounts receivable | 4,108 | (7,171) |
Prepaid expenses and other current assets | (223) | (167) |
Inventory | (1,423) | (4,379) |
Accounts payable | (332) | (3,284) |
Accrued expenses and other current liabilities | (4,882) | 3,454 |
Lease liabilities and other long-term liabilities | (950) | (868) |
Net cash used in operating activities | (64,775) | (74,508) |
Cash flows from investing activities: | ||
Purchases of property and equipment and intangible assets | (1,459) | (1,147) |
Purchases of short-term investments | (113,592) | |
Net cash used in investing activities | (115,051) | (1,147) |
Cash flows from financing activities: | ||
Proceeds from common stock offerings, net of underwriters' discounts and offering cost | 137,969 | 2,130 |
Payment of principal on finance lease | (24) | (30) |
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan | 1,961 | 587 |
Net cash provided by financing activities | 139,906 | 2,687 |
Net decrease in cash, cash equivalents and restricted cash: | (39,920) | (72,968) |
Cash, cash equivalents and restricted cash at beginning of period | 98,031 | 183,104 |
Cash, cash equivalents and restricted cash at end of period | 58,111 | 110,136 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Cash, cash equivalents, and restricted cash at end of period | 58,111 | 110,136 |
Cash and cash equivalents at end of period | 45,526 | 97,556 |
Non-cash investing and financing activities: | ||
Right-of-use asset obtained in exchange for finance lease obligation | 136 | |
Purchases of property and equipment in accounts payable | 34 | |
Supplemental disclosure: | ||
Cash paid for interest | $ 5,636 | 5,626 |
Right-of-use assets obtained in exchange of operating lease obligations | $ 1,852 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Nature of Business ® TM ® In January 2019, the Company launched its first commercial product, INVELTYS, in the United States. The Company expects to begin shipping its second commercial product, EYSUVIS, to wholesalers in the U.S. by the end of 2020 and for the full promotional launch to begin in January of 2021. The Company is engaged in preparing for the launch of EYSUVIS, the commercialization of INVELTYS, research and development activities, raising capital and recruiting skilled personnel. The Company is subject to a number of risks similar to those of other companies conducting high-risk, research and development of pharmaceutical product candidates and launching products for the first time. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies and the technical risks associated with the successful research, development and marketing of its product candidates. The Company’s success is dependent upon its ability to successfully commercialize its products, the success of its research and development efforts, its ability to obtain regulatory approval of its product candidates, its ability to raise additional capital when needed and, ultimately, attain profitable operations. The Company is also evaluating other opportunities for MPP nanosuspensions of LE, compounds in its receptor Tyrosine Kinase Inhibitor program, that inhibit the vascular endothelial growth factor, pathway, for the potential treatment of a number of retinal diseases, and novel next-generation anti-inflammatories designed to exhibit steroid-like anti-inflammatory action for eye disease with the goal of eliminating the risk of interocular pressure increase and cataract formation. Liquidity The Company believes that its existing cash, cash equivalents and short-term investments as of September 30, 2020, will enable it to fund its operating expenses, debt service obligations and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements were issued. This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the condensed consolidated financial statements are issued. As a result, the Company could deplete its available capital resources sooner than it currently expects. COVID-19 – hospitals, and was limited to conducting educational and promotional activities virtually, and the Company may be forced to suspend all or some in-person interactions again in the future. In addition, all office-based personnel have been instructed to work from home and the Company’s laboratory facilities, that support the Company’s early-stage research activities, are being utilized as necessary. The moratoria on routine medical appointments and elective surgeries that have occurred at times in many jurisdictions, including ocular surgeries, has adversely affected the market for INVELTYS, which is indicated for the treatment of inflammation and pain following ocular surgery, resulting in a significant reduction in the demand for INVELTYS. The effects of COVID-19 may also disrupt the launch and commercialization of EYSUVIS. The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments, including the length and severity of this pandemic and the impact on its customers, employees, vendors, and government agencies, all of which are uncertain and cannot be predicted. The Company cannot reasonably estimate the extent to which the disruption may materially impact its condensed consolidated results of operations or financial position. Use of Estimates Net Loss per Share The weighted average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, warrants and the assumed issuance of unvested RSUs and PSUs. Common stock equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for each of the three and nine months ended September 30, 2020 and 2019. Unaudited Interim Financial Information The unaudited condensed consolidated financial statements include the accounts of Kala Pharmaceuticals, Inc. and its wholly owned subsidiary, Kala Pharmaceuticals Security Corporation. All intercompany transactions and balances have been eliminated in consolidation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Annual Report. There have been no material changes to the significant accounting policies during the nine months ended September 30, 2020, other than the addition of the Investments section and certain updates to the Inventory section below. Investments Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in comprehensive loss on the condensed consolidated statements of operations and in accumulated other comprehensive loss on the condensed consolidated balance sheets. Realized gains and losses, interest income earned on the Company’s cash, cash equivalents and investments, and amortization or accretion of discounts and premiums on investments are included within other income (expense). The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. Inventory Inventory produced that will be used in a promotional sample program is expensed to selling, general and administrative expense when it is designated as a sample. Long-term inventory includes raw materials, work-in-progress and/or finished goods inventory with an anticipated consumption or sale beyond one year based on the Company’s forecasted expectations. Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measuremen In August 2018, the FASB issued ASU 2018-15 , Intangibles - Goodwill and Other - Internal-Use Software -Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) , |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company has short-term investments which are considered financial instruments that are measured on a recurring basis. ASC 820, Fair Value Measurements and Disclosures, ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s financial instruments consist primarily of cash, cash equivalents, and short-term investments in money market funds and short-term securities. Cash, cash equivalents and short-term investments are reported at their respective fair values on the Company’s condensed consolidated balance sheets. See Note 4, “Investments” for additional information. The following table sets forth the fair value of the Company’s financial assets by level within the fair value hierarchy as of September 30, 2020: Carrying Amount Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 45,526 $ 45,526 $ 45,526 $ — $ — Short-term investments 113,594 113,594 113,594 — — Total Assets $ 159,120 $ 159,120 $ 159,120 $ — $ — During the three and nine months ended September 30, 2020, there were no transfers between Level 1, Level 2, and Level 3. |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2020 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS Investments by security type consisted of the following as of September 30, 2020: September 30, 2020 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. treasury securities $ 50,484 $ 1 $ — $ 50,485 U.S. government agencies securities 63,113 — (4) 63,109 Total $ 113,597 $ 1 $ (4) $ 113,594 As of September 30, 2020, all of the Company’s investments had a contractual maturity within one year. The fair value of all of the Company’s investments are classified as short-term on its condensed consolidated balance sheets. |
REVENUE & ACCOUNTS RECEIVABLE,
REVENUE & ACCOUNTS RECEIVABLE, NET | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE & ACCOUNTS RECEIVABLE, NET | |
REVENUE & ACCOUNTS RECEIVABLE, NET | 5. REVENUE & ACCOUNTS RECEIVABLE, NET The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers Product revenues, net The Company sells INVELTYS to wholesalers and/or specialty distributors in the United States (collectively, “Customers”). These Customers subsequently resell the Company’s products to specialty and other retail pharmacies. In addition to agreements with Customers, the Company enters into arrangements with payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts for the purchase of the Company’s products. The goods promised in the Company’s product sales contracts represent a single performance obligation; as the promise to transfer the individual products to the Customer is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company recognizes revenue from product sales at the point the Customer obtains control of the product, which occurs upon delivery. The transaction price (“net sales price”) that is recognized as revenue for product sales includes the selling price to the Customer and an estimate of variable consideration. Components of variable consideration include prompt pay and other discounts, product returns, government rebates, third-party payor rebates, coverage gap rebates, incentives such as patient co-pay assistance, and other fees paid to Customers where a distinct good or service is not received. Variable consideration is recorded on the condensed consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third-party other than a Customer. The Company considers all relevant information when estimating variable consideration such as assessment of its current and anticipated sales and demand forecasts, information from third parties regarding the payor mix for products, information from third parties regarding the units remaining in the distribution channel, specific known market events and trends, industry data and current contractual and statutory requirements that are reasonably available. The Company includes estimated amounts in the net sales price to the extent it is determined probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Payment terms with Customers do not exceed one year and, therefore, the Company does not account for a significant financing component in its arrangements. The Company expenses incremental cost of obtaining a contract with a Customer when incurred as the period of benefit is less than one year. Reserves for Variable Consideration Trade Discounts and Allowances The Company provides its Customers with certain trade discounts and allowances including discounts for prompt payments and fees paid for distribution, data and administrative services. These discounts and fees are based on contractually-determined percentages and are recorded as a reduction of revenue and accounts receivable in the period in which the related product revenue is recognized. Chargebacks Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These components of variable consideration are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Reserves for chargebacks consist of credits the Company expects to issue for units that remain in the distribution channel at the end of each reporting period and that the Company expects will be sold to qualified healthcare providers, as well as chargebacks that Customers have claimed, but for which the Company has not yet issued a credit. Product Returns Consistent with industry practice, the Company has a product returns policy that provides Customers a right of return for product purchased within a specified period prior to and subsequent to the product’s expiration date. The Company estimates the amount of its products that may be returned and presents this amount as a reduction of revenue in the period the related product revenue is recognized, in addition to establishing a liability. The Company’s estimates for product returns are based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. Commercial Payor and Medicare Part D Rebates The Company contracts with certain third-party payors, primarily pharmacy benefit managers (“PBMs”) and health plans (“Plans”), for the payment of rebates with respect to utilization of its product. These rebates are based on contractual percentages applied to the amount of product prescribed to patients who are covered by the PBMs or the Plans with which it contracts. The Company estimates the rebates for commercial and Medicare Part D payors based on the contractual discount percentage, the various payor mix for the product as well as future rebates that will be made for product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. The Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program. Such estimates are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Government Rebates The Company is subject to discount obligations under Medicaid and other government programs. For Medicaid, reserves are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Centers for Medicaid and Medicare Services. The Company’s liability for these rebates consists of estimates of claims for the current period and estimated future claims that will be made for product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Co-pay Assistance Program The Company offers a co-pay assistance program (the “co-pay program”), which is intended to provide financial assistance to patients who may or may not be covered by commercial insurance or who opt out of Medicare Part D programs. The calculation of accruals for the co-pay program is based on actual claims processed during the period as well as an estimate of the number and cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. Allowances for estimated co-pay claims are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. The following table summarizes activity in each of the Company’s product revenue provision and allowance categories for the nine months ended September 30, 2020: Trade Discounts, Allowances and Rebates and Chargebacks (1) Product Returns (2) Incentives (3) Balance as of December 31, 2019 $ 1,783 $ 180 $ 10,044 Provision related to current period sales 725 — 4,576 Changes in estimate related to prior period sales 2 (66) 93 Credit/payments made (1,114) — (8,090) Balance as of March 31, 2020 $ 1,396 $ 114 $ 6,623 Provision related to current period sales 335 — 2,194 Changes in estimate related to prior period sales 3 (51) (234) Credit/payments made (1,336) 1 (3,013) Balance as of June 30, 2020 $ 398 $ 64 $ 5,570 Provision related to current period sales 1,235 — 7,584 Changes in estimate related to prior period sales (1) (1) (93) Credit/payments made (815) 1 (6,347) Balance as of September 30, 2020 $ 817 $ 64 $ 6,714 (1) Trade discounts, allowances and chargebacks include fees for distribution service fees, prompt pay and other discounts, and chargebacks. Trade discounts, allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s condensed consolidated balance sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets. (3) Rebates and incentives include managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances. Provisions for rebates and discounts are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets. Accounts Receivable, net Accounts receivable are reported on the condensed consolidated balance sheets at outstanding amounts due from Customers for product sales. The Company deducts sales discounts for prompt payments and contractual fees for service arrangements from accounts receivable. The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of Customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible. The Company recorded no allowance for doubtful accounts as of September 30, 2020 or September 30, 2019. The Company recorded an allowance of $817 and $1,107 for expected sales discounts, related to prompt pay discounts and contractual fee for service arrangements, to wholesalers and distributors as of September 30, 2020 and September 30, 2019, respectively. |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2020 | |
INVENTORY | |
INVENTORY | 6. Inventory consists of the following: September 30, December 31, 2020 2019 Raw materials $ 1,025 $ 1,387 Work in progress 4,979 4,166 Finished goods 4,223 2,873 Total inventory $ 10,227 $ 8,426 As of September 30, 2020, the Company had $7,538 of current inventory and $2,689 of long-term inventory. As of December 31, 2019, the Company had $4,648 of current inventory and $3,778 of long-term inventory. Work in progress inventory as of September 30, 2020 includes $1,127 related to the commercial production of pre-launch inventories of EYSUVIS to support the FDA approval of the product with an indication for the short-term (up to two weeks) treatment of the signs and symptoms of dry eye disease, which occurred in October 2020. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | 7. ACCRUED EXPENSES Accrued expenses consist of the following: September 30, December 31, 2020 2019 Compensation and benefits $ 6,212 $ 6,502 Accrued revenue reserves (1) 6,308 9,482 Development costs 172 1,600 Professional services 1,335 760 Commercial cost 788 930 Contract manufacturing 416 630 Other 620 1,025 Accrued expenses $ 15,851 $ 20,929 (1) There were additional revenue reserves included in accounts payable of $470 and $741, as of September 30, 2020 and December 31, 2019, respectively. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
LEASES | 8. LEASES Operating leases On February 28, 2018, the Company entered into a lease agreement for the lease of a portion of the building located at 490 Arsenal Way, Watertown, Massachusetts (the “Watertown Lease”) to be used as the Company’s corporate headquarters. The Company recognized the right-of-use asset and corresponding lease liability on November 15, 2018, by calculating the present value of lease payments, discounted at 9.9%, the Company’s estimated incremental borrowing rate, over the 13-year expected term. In connection with the Watertown Lease, the Company issued a letter of credit to the landlord for $2,057. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash on the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019. For the nine months ended September 30, 2020 and 2019, the variable lease expense for the Watertown Lease, which includes common area maintenance and real estate taxes, was $1,472 and $882 respectively. The remaining lease term was 11.1 years as of September 30, 2020. Vehicle Fleet lease During the year ended December 31, 2019, the Company entered into a master fleet lease agreement (the “Vehicle Fleet Lease”), pursuant to which it currently leases approximately 65 vehicles. In connection with the Vehicle Fleet Lease, the Company issued a letter of credit for $453, which was reported as restricted cash on the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019. The lease has an expected term of three years, which commenced upon the delivery of the vehicles in March 2019. As of September 30, 2020, the remaining lease term was 1.4 years. The components of lease expense and related cash flows were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Lease cost Operating lease cost $ 1,185 $ 1,185 $ 3,556 $ 3,428 Variable lease cost 404 371 1,472 882 Total lease cost $ 1,589 $ 1,556 $ 5,028 $ 4,310 Operating cash outflows from operating leases $ 1,431 $ 1,443 $ 4,561 $ 3,097 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2020 | |
DEBT | |
DEBT | 9. DEBT Athyrium Credit Facility On October 1, 2018, the Company entered into a credit agreement (the “Athyrium Credit Facility”), with Athyrium Opportunities III Acquisition LP (“Athyrium”) for up to $110,000. The Athyrium Credit Facility provided for a Term Loan A in the aggregate principal amount of $75,000 (the “Term Loan A”), and a Term Loan B in the aggregate principal amount of $35,000 (the “Term Loan B”). On October 1, 2018, the Company borrowed the entire principal amount of the Term Loan A. The Company did not satisfy the conditions to draw down any of the Term Loan B funds, and as a result, the Term Loan B funds are no longer available. The maturity date of the Athyrium Credit Facility is October 1, 2024, the six-year anniversary of the close. The Term Loan A bears interest at a rate of 9.875% per annum, with quarterly, interest-only payments until the fourth anniversary of the Term Loan A. The unpaid principal amount of the Term Loan A is due and payable in quarterly installments starting on the fourth anniversary of the loan. The Company may make voluntary prepayments, in whole or in part, and subject to certain exceptions, is required to make mandatory prepayments upon the occurrence of certain events of default as defined in the agreement, including but not limited to, the occurrence of a change of control. In addition, upon payment or repayment of any outstanding balance under the Athyrium Credit Facility, the Company will have to pay a 1% exit fee of the total principal payments (whether mandatory, voluntary, or at maturity) made throughout the term. The exit fee of $750 based on the $75,000 principal amount outstanding, will be accreted to the carrying amount of the debt using the effective interest method over the term of the loan. All mandatory and voluntary prepayments of the Athyrium Credit Facility are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs prior to the second anniversary of the applicable date of issuance, an amount equal to the amount by which (a) the present value of 105% of the principal prepaid plus all interest that would have accrued on such principal through such second anniversary exceeds (b) the amount of principal prepaid, (ii) if prepayment occurs on or after the second anniversary of the applicable date of issuance but prior to the third anniversary of such issuance, an amount equal to 3% of the principal prepaid, and (iii) if prepayment occurs on or after the third anniversary of the applicable date of issuance but prior to the fourth anniversary of such issuance, an amount equal to 2% of the principal prepaid. No prepayment premium is due on any principal prepaid after the fourth anniversary of the applicable date of issuance. The Athyrium Credit Facility includes features requiring (1) additional interest rate upon an event of default accrued at an additional 3% , or a total interest rate of 12.875% , and (2) the lender’s right to declare all outstanding principal and interest immediately payable upon an event of default. These two features were analyzed and determined to be embedded derivatives to be valued as separate financial instruments. These embedded derivatives were bundled and valued as one compound derivative in accordance with the applicable accounting guidance for derivatives and hedging transactions. The Company determined that, due to the unlikely event of default, the embedded derivatives have a de minimis value as of September 30, 2020. The derivative liability will be remeasured at fair value at each reporting date, with changes in fair value being recorded as other income (expense) in the condensed consolidated statements of operations. The Athyrium Credit Facility is secured by a pledge of substantially all of the Company’s assets and contains affirmative and negative covenants customary for financings of this type, including limitations on the Company’s and its subsidiaries’ ability to, among other things, incur and prepay additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, change in the nature of business, enter into sale and leaseback transactions, make distributions, and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the Athyrium Credit Facility also contains a financial covenant requiring the Company to maintain at least $10,000 of cash and cash equivalents. As a result of this financial covenant, the Company has recorded $10,000 as restricted cash as of September 30, 2020 and December 31, 2019. In connection with the Athyrium Credit Facility, the Company issued a warrant (“Warrant”), to purchase up to 270,835 shares of the Company’s common stock, at an exercise price per share of $12.18456. The Warrant is immediately exercisable as to 184,660 shares. The remaining 86,175 shares under the Warrant were exercisable only upon the Company’s draw of the Term Loan B and, as a result, the remaining 86,175 shares under the Warrant are no longer exercisable. The Warrant is exercisable through October 1, 2025 and is classified as an equity instrument. The Company allocated the proceeds from the Term Loan A to the Warrant using the relative fair value method. The fair value of the Warrant of $1,899 was recognized as equity with a corresponding debt discount of $1,980. In addition, the Company paid certain fees to Athyrium and other third-party service providers. These fees paid to Athyrium were recorded as a debt discount while the fees paid to other third-party service providers were recorded as debt issuance cost. These costs, along with the fair value of the Warrant of $1,899 are being amortized using the effective interest method over the term of the Athyrium Credit Facility. The amortization of debt discount and debt issuance cost is included in interest expense within the condensed consolidated statements of operations. As of September 30, 2020 and September 30, 2019, the effective interest rate was 11.63%, which takes into consideration the non-cash accretion of the exit fee and the amortization of the debt discount and issuance costs. During each of the three months ended September 30, 2020 and September 30, 2019, the Company recognized interest expense of $2,125, which consisted of amortization of the debt discount of $232, and the contractual coupon interest expense of $1,893. During the nine months ended September 30, 2020, and September 30, 2019, the Company recognized interest expense of $6,308 and $6,211, respectively. This consisted of amortization of debt discount of $671 and $595 for the periods ended September 30, 2020 and September 30, 2019, and the contractual coupon interest expense of $5,637 and $5,616 as of September 30, 2020 and September 30, 2019, respectively. The components of the carrying value of the debt as of September 30, 2020 and December 31, 2019 are detailed below: September 30, December 31, 2020 2019 Principal loan balance $ 75,000 $ 75,000 Unamortized debt discount and issuance cost (3,327) (3,999) Cumulative accretion of exit fee 294 183 Long-term debt, net $ 71,967 $ 71,184 The annual principal payments due under the Athyrium Credit Facility as of September 30, 2020 were as follows: Years Ending December 31, 2020 (remaining three months) $ — 2021 — 2022 16,665 2023 33,330 2024 25,005 Total $ 75,000 |
WARRANTS
WARRANTS | 9 Months Ended |
Sep. 30, 2020 | |
WARRANTS | |
WARRANTS | 10. WARRANTS The following table summarizes the common stock warrants outstanding as of September 30, 2020 and December 31, 2019, each exercisable into the number of shares of common stock set forth below as of the specified dates: Shares Exercisable at Exercise Expiration Exercisable September 30, December 31, Issued Price Date From 2020 2019 2013 $ 7.50 April 2021 July 2017 33,333 82,816 2014 $ 7.50 November 2024 July 2017 16,000 16,000 2016 $ 8.27 October 2026 September 2017 14,512 14,512 2018 $ 12.18 October 2025 October 2018 184,660 184,660 248,505 297,988 |
EQUITY FINANCINGS
EQUITY FINANCINGS | 9 Months Ended |
Sep. 30, 2020 | |
EQUITY FINANCINGS | |
EQUITY FINANCINGS | 11. EQUITY FINANCINGS On August 9, 2018, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on August 27, 2018 (the “2018 Shelf Registration”). Under the 2018 Shelf Registration, the Company may offer and sell up to $250,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities, purchase contracts, purchase units or any combination of such securities during the three-year period that commenced upon the 2018 Shelf Registration becoming effective. In connection with the filing of the 2018 Shelf Registration, the Company entered into a sales agreement (the “2018 Sales Agreement”) with Jefferies, LLC (“Jefferies”) pursuant to which the Company could issue and sell, from time to time, up to an aggregate of $50,000 of its common stock in an at-the-market equity offering (“ATM Offering”) through Jefferies, as sales agent. As of December 31, 2019, the Company issued 2,592,934 shares of its common stock under the ATM Offering, resulting in net proceeds to the Company of $13,059. During the first quarter of 2020, the Company issued an aggregate of 2,352,671 shares of its common stock under the ATM Offering, resulting in net proceeds to the Company of $12,546 . On March 10, 2020 , the Company notified Jefferies that it was suspending and terminating the prospectus related to the 2018 Sales Agreement. On March 11, 2020, the Company sold 16,000,000 shares of the Company’s common stock (the “2020 Offering Shares”) in an underwritten offering (the “2020 Offering”), pursuant to the 2018 Shelf Registration, at a public offering price of $7.89 per share, before underwriting discounts, commissions, and offering expenses, resulting in net proceeds of $118,207 . In addition, the underwriters of the 2020 Offering were granted the option for a period of 30 days to purchase up to an additional 2,400,000 shares of common stock offered in the public offering at the public offering price, less underwriting discounts, commissions and offering expenses. On April 3, 2020, the underwriters exercised their option and purchased an additional 979,371 shares of common stock at $7.89 per share, before underwriting discounts, commissions, and offering expenses, resulting in net proceeds to the Company of $7,216 . The total number of shares sold by the Company in the 2020 Offering was 16,979,371 , resulting in total net proceeds to the Company, after underwriting discounts, commissions, and offering expenses, of $125,423 . As of September 30, 2020, there was $18,334 of securities available to be issued under the 2018 Shelf Registration. On May 7, 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on May 19, 2020 (the “2020 Shelf Registration”). Under the 2020 Shelf Registration, the Company may offer and sell up to $350,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities or units during the three-year period that commenced upon the 2020 Shelf Registration becoming effective. In connection with the filing of the 2020 Shelf Registration, the Company entered into an amended and restated sales agreement with Jefferies pursuant to which the Company may issue and sell, from time to time, up to an aggregate of $75,000 of its common stock under its ATM Offering through Jefferies, as a sales agent. |
STOCKBASED COMPENSATION
STOCKBASED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
STOCKBASED COMPENSATION | |
STOCK-BASED COMPENSATION | 12. STOCK‑BASED COMPENSATION Stock Incentive Plans In July 2017, the Company’s 2017 Equity Incentive Plan (the “2017 Plan”) became effective. The 2017 Plan was established to provide equity-based ownership opportunities for employees, officers, directors, consultants, and advisors. On June 25, 2020, the 2017 Plan was amended to increase the number of shares of common stock authorized for issuance thereunder by 2,000,000 shares. As of September 30, 2020, there were 1,275,550 shares of common stock available for grant under the 2017 Plan. In addition, any shares of common stock subject to awards under the 2009 Plan that expire, are forfeited, or are otherwise surrendered, without having been fully exercised or resulting in any common stock being issued will become available for issuance under the 2017 Plan, up to an additional 2,262,070 shares, which is the number of shares issuable pursuant to outstanding awards granted under the prior plan. Also approved under the 2017 Plan is an annual increase for each of the years through December 31, 2027, equal to the least of (i) 3,573,766 shares of common stock, (ii) 4 % of the shares of common stock outstanding on December 31 of the prior year and (iii) an amount determined by the Board. Under the plans, the Board determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards. The exercise price of incentive stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the plans expire 10 years after the grant date, unless the Board sets a shorter term. Options granted under the plans generally vest over a four-year period. A portion of the unvested stock options will vest upon the sale of all or substantially all of the stock or assets of the Company. Inducement Stock Option Awards A summary of option activity for employee awards under the 2009 Plan, the 2017 Plan and inducement grants for the nine months ended September 30, 2020 is as follows: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (Years) (in thousands) Outstanding as of January 1, 2020 7,453,076 $ 7.46 7.7 $ 1,313 Granted 1,506,222 4.00 Exercised (312,528) 3.02 Forfeited (130,607) 7.43 Outstanding as of September 30, 2020 8,516,163 $ 7.01 7.4 $ 20,963 Vested or expected to vest as of September 30, 2020 8,516,163 $ 7.01 7.4 $ 20,963 Options exercisable as of September 30, 2020 5,031,572 $ 7.42 6.7 $ 12,277 The Company records stock-based compensation related to stock options granted at fair value. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The assumptions used in determining fair value of the stock options granted during the nine months ended September 30, 2020 and 2019, are as follows: Nine Months Ended September 30, 2020 2019 Expected volatility 80% – 81% 61% – 82% Risk-free interest rate 0.37% – 1.73% 1.44% – 2.58% Expected dividend yield 0% 0% Expected term (in years) 5.91 – 6.08 0.50 – 6.63 The Company derived the risk-free interest rate assumption from the U.S. Treasury rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. The Company based the expected dividend yield on its expectation of not paying dividends in the foreseeable future. The Company calculated the weighted-average expected term of options using the simplified method, as the Company lacks relevant historical data due to the Company’s limited operating experience. The expected volatility is based upon the historical volatility of comparable companies with publicly available share prices. The impact of forfeitures on compensation expense is recorded as they occur. During the three months ended September 30, 2020 and 2019, the weighted average grant-date fair value of options granted was $7.06 and $2.82, respectively. During the nine months ended September 30, 2020 and 2019, the weighted average grant-date fair value of options granted was $4.00 and $3.70, respectively. The fair value is being expensed over the vesting period of the options on a straight-line basis as the services are being provided. As of September 30, 2020 and 2019, there was $17,483 and $20,469, respectively, of unrecognized compensation cost related to the stock options granted, which is expected to be expensed over a weighted-average period of 2.40 years and 2.46 years, respectively. Stock-based compensation costs capitalized into inventory totaled $234 and $19 for the three months ended September 30, 2020 and 2019, respectively, and $535 and $355 for the nine months ended September 30, 2020 and 2019, respectively. Capitalized stock-based compensation is recognized as an expense in cost of product revenues when the related product is sold or in selling, general and administrative expense when the related sample is issued. Restricted Stock Units and Performance-Based Restricted Stock Units A summary of the outstanding RSUs and PSUs as of September 30, 2020 is as follows: Weighted Average Grant Date Shares Fair Value Unvested and outstanding balance as of December 31, 2019 — $ — Changes during the period: RSUs granted 263,560 11.70 PSUs granted 693,537 11.70 PSUs forfeited (10,330) 11.70 Unvested and outstanding balance as of September 30, 2020 946,767 $ 11.70 Employee Stock Purchase Plan The ESPP provides for two six-month offering periods each year; the first offering period begins on the first trading day on or after each January 1; the second offering period begins on the first trading day on or after each July 1. Under the ESPP, participating employees can authorize the Company to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of the Company’s common stock. At the conclusion of the period, participating employees can purchase shares of the Company’s common stock at 85% of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date. The fair value of the purchase rights granted under the ESPP was estimated on the date of grant, using the Black-Scholes option-pricing model. In January 2020, employees of the Company purchased an aggregate of 85,553 shares under the ESPP. In July 2020, employees of the Company purchased an aggregate of 228,844 shares under the ESPP. Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of product revenues $ 32 $ 60 $ 60 $ 101 Research and development 985 913 2,259 2,315 Selling, general and administrative 3,244 1,599 6,930 5,250 Total $ 4,261 $ 2,572 $ 9,249 $ 7,666 Reserved Shares September 30, December 31, 2020 2019 Warrant rights to acquire common stock 334,680 384,163 ESPP 484,772 438,307 Outstanding inducement stock option awards 746,300 705,500 2009 Plan 2,262,070 2,530,586 2017 Plan 7,832,923 4,429,849 Total 11,660,745 8,488,405 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | 13. INCOME TAXES The Company did not record a provision or benefit for income taxes during the three months ended September 30, 2020 and 2019. The Company continues to maintain a full valuation allowance for its U.S. federal and state deferred tax assets. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its generation of limited revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Management reevaluates the positive and negative evidence at each reporting period. Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards, which could be used annually to offset future taxable income. The Company recently completed an analysis and determined that an ownership change had occurred prior to December 31, 2019 and that such change has materially limited the net operating loss carryforwards and research and development tax credits available to offset future tax liabilities. The Company may be further limited by any changes that may have occurred or may occur subsequent to December 31, 2019. The Company files its corporate income tax returns in the United States and various states. All tax years since the date of incorporation remain open to examination by the major taxing jurisdictions (state and federal) to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (“IRS”) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax year. As of September 30, 2020 and 2019, the Company had no uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the three and nine months ended September 30, 2020 and 2019. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES. | 14. COMMITMENTS AND CONTINGENCIES License Agreement After 2016 and until the first commercial sale of product, which occurred in January 2019, the minimum annual payment was $38. Upon the first commercial sale of INVELTYS, the annual minimum payment increased to $112. The Company is obligated to pay JHU low single-digit running royalties based upon a percentage of net sales of the licensed products, which is applied to the annual minimum payment. The Company also has an obligation to pay JHU certain one-time development and commercial milestone payments. During the three months ended September 30, 2020 and 2019, the Company paid JHU $8 and $34, respectively, in royalty payments associated with the sale of INVELTYS. During the nine months ended September 30, 2020 and 2019, the Company paid JHU $44 and $334, respectively, in royalty payments associated with the sale of INVELTYS. The Company recorded other expenses related to the JHU agreement of $44 and $116 for the three months ended September 30, 2020 and 2019, respectively. The Company recorded other expenses related to the JHU agreement of $121 and $197 for the nine months ended September 30, 2020 and 2019, respectively. The Company is obligated to pay JHU a $150 milestone payment within 60 days of the first commercial sale of EYSUVIS in the United States. Litigation Other Commitments The Company has the following minimum purchase obligations for INVELTYS and EYSUVIS: Years Ending December 31, 2020 (remaining three months) $ — 2021 2,295 2022 5,390 2023 6,285 2024 7,875 Thereafter 26,124 Total minimum purchase commitments $ 47,969 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 15. SUBSEQUENT EVENTS On October 26, 2020, the FDA approved the Company’s New Drug Application for EYSUVIS (loteprednol etabonate ophthalmic suspension) 0.25% for the short-term (up to two weeks) treatment of the signs and symptoms of dry eye disease. Refer to Note 14, “Commitments and Contingencies” for additional commitments identified as a result of the FDA approval of EYSUVIS. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Investments | Investments Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in comprehensive loss on the condensed consolidated statements of operations and in accumulated other comprehensive loss on the condensed consolidated balance sheets. Realized gains and losses, interest income earned on the Company’s cash, cash equivalents and investments, and amortization or accretion of discounts and premiums on investments are included within other income (expense). The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. |
Inventory | Inventory Inventory produced that will be used in a promotional sample program is expensed to selling, general and administrative expense when it is designated as a sample. Long-term inventory includes raw materials, work-in-progress and/or finished goods inventory with an anticipated consumption or sale beyond one year based on the Company’s forecasted expectations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measuremen In August 2018, the FASB issued ASU 2018-15 , Intangibles - Goodwill and Other - Internal-Use Software -Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) , |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Carrying Amount Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 45,526 $ 45,526 $ 45,526 $ — $ — Short-term investments 113,594 113,594 113,594 — — Total Assets $ 159,120 $ 159,120 $ 159,120 $ — $ — |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INVESTMENTS | |
Schedule of investments by security type | September 30, 2020 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. treasury securities $ 50,484 $ 1 $ — $ 50,485 U.S. government agencies securities 63,113 — (4) 63,109 Total $ 113,597 $ 1 $ (4) $ 113,594 |
REVENUE & ACCOUNTS RECEIVABLE_2
REVENUE & ACCOUNTS RECEIVABLE, NET (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE & ACCOUNTS RECEIVABLE, NET | |
Schedule of co-pay assistance program | Trade Discounts, Allowances and Rebates and Chargebacks (1) Product Returns (2) Incentives (3) Balance as of December 31, 2019 $ 1,783 $ 180 $ 10,044 Provision related to current period sales 725 — 4,576 Changes in estimate related to prior period sales 2 (66) 93 Credit/payments made (1,114) — (8,090) Balance as of March 31, 2020 $ 1,396 $ 114 $ 6,623 Provision related to current period sales 335 — 2,194 Changes in estimate related to prior period sales 3 (51) (234) Credit/payments made (1,336) 1 (3,013) Balance as of June 30, 2020 $ 398 $ 64 $ 5,570 Provision related to current period sales 1,235 — 7,584 Changes in estimate related to prior period sales (1) (1) (93) Credit/payments made (815) 1 (6,347) Balance as of September 30, 2020 $ 817 $ 64 $ 6,714 (1) Trade discounts, allowances and chargebacks include fees for distribution service fees, prompt pay and other discounts, and chargebacks. Trade discounts, allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s condensed consolidated balance sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets. (3) Rebates and incentives include managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances. Provisions for rebates and discounts are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets. |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INVENTORY | |
Schedule of Inventory | Inventory consists of the following: September 30, December 31, 2020 2019 Raw materials $ 1,025 $ 1,387 Work in progress 4,979 4,166 Finished goods 4,223 2,873 Total inventory $ 10,227 $ 8,426 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | September 30, December 31, 2020 2019 Compensation and benefits $ 6,212 $ 6,502 Accrued revenue reserves (1) 6,308 9,482 Development costs 172 1,600 Professional services 1,335 760 Commercial cost 788 930 Contract manufacturing 416 630 Other 620 1,025 Accrued expenses $ 15,851 $ 20,929 (1) There were additional revenue reserves included in accounts payable of $470 and $741, as of September 30, 2020 and December 31, 2019, respectively. |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
Schedule of components of lease expense and related cash flows | The components of lease expense and related cash flows were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Lease cost Operating lease cost $ 1,185 $ 1,185 $ 3,556 $ 3,428 Variable lease cost 404 371 1,472 882 Total lease cost $ 1,589 $ 1,556 $ 5,028 $ 4,310 Operating cash outflows from operating leases $ 1,431 $ 1,443 $ 4,561 $ 3,097 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DEBT | |
Schedule of carrying value of debt | The components of the carrying value of the debt as of September 30, 2020 and December 31, 2019 are detailed below: September 30, December 31, 2020 2019 Principal loan balance $ 75,000 $ 75,000 Unamortized debt discount and issuance cost (3,327) (3,999) Cumulative accretion of exit fee 294 183 Long-term debt, net $ 71,967 $ 71,184 |
Schedule of maturities of long-term debt | September 30, December 31, 2020 2019 Principal loan balance $ 75,000 $ 75,000 Unamortized debt discount and issuance cost (3,327) (3,999) Cumulative accretion of exit fee 294 183 Long-term debt, net $ 71,967 $ 71,184 |
WARRANTS (Tables)
WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
WARRANTS | |
Schedule of outstanding warrants | The following table summarizes the common stock warrants outstanding as of September 30, 2020 and December 31, 2019, each exercisable into the number of shares of common stock set forth below as of the specified dates: Shares Exercisable at Exercise Expiration Exercisable September 30, December 31, Issued Price Date From 2020 2019 2013 $ 7.50 April 2021 July 2017 33,333 82,816 2014 $ 7.50 November 2024 July 2017 16,000 16,000 2016 $ 8.27 October 2026 September 2017 14,512 14,512 2018 $ 12.18 October 2025 October 2018 184,660 184,660 248,505 297,988 |
STOCKBASED COMPENSATION (Tables
STOCKBASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
STOCKBASED COMPENSATION | |
Summary of option activity for employee and non employee awards | Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (Years) (in thousands) Outstanding as of January 1, 2020 7,453,076 $ 7.46 7.7 $ 1,313 Granted 1,506,222 4.00 Exercised (312,528) 3.02 Forfeited (130,607) 7.43 Outstanding as of September 30, 2020 8,516,163 $ 7.01 7.4 $ 20,963 Vested or expected to vest as of September 30, 2020 8,516,163 $ 7.01 7.4 $ 20,963 Options exercisable as of September 30, 2020 5,031,572 $ 7.42 6.7 $ 12,277 |
Schedule of assumptions used in determining fair value of the stock options granted | Nine Months Ended September 30, 2020 2019 Expected volatility 80% – 81% 61% – 82% Risk-free interest rate 0.37% – 1.73% 1.44% – 2.58% Expected dividend yield 0% 0% Expected term (in years) 5.91 – 6.08 0.50 – 6.63 |
Schedule of stock based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of product revenues $ 32 $ 60 $ 60 $ 101 Research and development 985 913 2,259 2,315 Selling, general and administrative 3,244 1,599 6,930 5,250 Total $ 4,261 $ 2,572 $ 9,249 $ 7,666 |
Summary of the outstanding RSUs | Weighted Average Grant Date Shares Fair Value Unvested and outstanding balance as of December 31, 2019 — $ — Changes during the period: RSUs granted 263,560 11.70 PSUs granted 693,537 11.70 PSUs forfeited (10,330) 11.70 Unvested and outstanding balance as of September 30, 2020 946,767 $ 11.70 |
Schedule of reserved common stock shares upon exercise of rights under equity compensation plans | September 30, December 31, 2020 2019 Warrant rights to acquire common stock 334,680 384,163 ESPP 484,772 438,307 Outstanding inducement stock option awards 746,300 705,500 2009 Plan 2,262,070 2,530,586 2017 Plan 7,832,923 4,429,849 Total 11,660,745 8,488,405 |
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES. (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
Schedule of minimum purchase obligations | Years Ending December 31, 2020 (remaining three months) $ — 2021 2,295 2022 5,390 2023 6,285 2024 7,875 Thereafter 26,124 Total minimum purchase commitments $ 47,969 |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
Accumulated deficit | $ 368,671 | $ 295,456 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Recurring and Nonrecurring Fair value Measurements Within Hierarchy (Details) - Recurring $ in Thousands | Sep. 30, 2020USD ($) |
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | $ 159,120 |
Level 1 | Short-term investments | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 113,594 |
Level 1 | Cash and cash equivalents | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 45,526 |
Carrying Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 159,120 |
Carrying Value | Short-term investments | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 113,594 |
Carrying Value | Cash and cash equivalents | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 45,526 |
Fair Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 159,120 |
Fair Value | Short-term investments | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | 113,594 |
Fair Value | Cash and cash equivalents | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Financial assets by level within fair value hierarchy | $ 45,526 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair value measurement levels (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Transfer from level 1 to level 2, Assets | $ 0 | $ 0 |
Transfer from level 1 to level 2, Liabilities | 0 | 0 |
Transfer from level 2 to level 1, Liabilities | 0 | 0 |
Transfer into level 3, Assets | 0 | 0 |
Transfer out of level 3, Assets | 0 | 0 |
Transfer into level 3, Liability | 0 | 0 |
Transfer out of level 3, Liability | $ 0 | $ 0 |
INVESTMENTS (Details)
INVESTMENTS (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Investments by security type | |
Amortized Cost | $ 113,597 |
Gross Unrealized Gains | 1 |
Gross Unrealized Losses | (4) |
Fair Value | 113,594 |
U.S. treasury securities | |
Investments by security type | |
Amortized Cost | 50,484 |
Gross Unrealized Gains | 1 |
Fair Value | 50,485 |
U.S. government agencies securities | |
Investments by security type | |
Amortized Cost | 63,113 |
Gross Unrealized Losses | (4) |
Fair Value | $ 63,109 |
REVENUE & ACCOUNTS RECEIVABLE_3
REVENUE & ACCOUNTS RECEIVABLE, NET - Co-pay Assistance Program (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Trade Discounts, Allowances and Chargebacks | |||
Beginning balance | $ 398 | $ 1,396 | $ 1,783 |
Provision related to current period sales | 1,235 | 335 | 725 |
Changes in estimate related to prior period sales | (1) | 3 | 2 |
Credit/payments made | (815) | (1,336) | (1,114) |
Ending balance | 817 | 398 | 1,396 |
Product Returns | |||
Beginning balance | 64 | 114 | 180 |
Changes in estimate related to prior period sales | (1) | (51) | (66) |
Credit/payments made | 1 | 1 | |
Ending balance | 64 | 64 | 114 |
Rebates and Incentives | |||
Beginning balance | 5,570 | 6,623 | 10,044 |
Provision related to current period sales | 7,584 | 2,194 | 4,576 |
Changes in estimate related to prior period sales | (93) | (234) | 93 |
Credit/payments made | (6,347) | (3,013) | (8,090) |
Ending balance | $ 6,714 | $ 5,570 | $ 6,623 |
REVENUE & ACCOUNTS RECEIVABLE_4
REVENUE & ACCOUNTS RECEIVABLE, NET - Accounts Receivable, net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 |
Allowance for doubtful accounts | $ 0 | $ 1,107 | |
Sales discounts and contractual fee for service arrangements | |||
Allowance for doubtful accounts | $ 817 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory | ||
Raw Materials | $ 1,025 | $ 1,387 |
Work in Progress | 4,979 | 4,166 |
Finished Goods | 4,223 | 2,873 |
Total inventory | 10,227 | 8,426 |
Inventory | 7,538 | 4,648 |
Long-term inventory | 2,689 | $ 3,778 |
Commercial production of pre-launch inventories | ||
Inventory | ||
Work in Progress | $ 1,127 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Compensation and benefits | $ 6,212 | $ 6,502 |
Accrued revenue reserves | 6,308 | 9,482 |
Development costs | 172 | 1,600 |
Professional services | 1,335 | 760 |
Commercial cost | 788 | 930 |
Contract manufacturing | 416 | 630 |
Other | 620 | 1,025 |
Accrued expenses | 15,851 | 20,929 |
Accounts payable | ||
Accrued revenue reserves | $ 470 | $ 741 |
LEASES (Details)
LEASES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020USD ($)item | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)item | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Nov. 15, 2018 | |
Leases | ||||||
Restricted cash | $ 12,585 | $ 12,580 | $ 12,585 | $ 12,580 | ||
Variable lease cost | $ 404 | 371 | $ 1,472 | 882 | ||
Remaining lease term | 1 year 4 months 24 days | |||||
Number of vehicles leased under a master fleet lease agreement | item | 65 | 65 | ||||
Term of vehicle lease | 3 years | |||||
Amount borrowed | $ 453 | |||||
Lease cost | ||||||
Operating lease cost | $ 1,185 | 1,185 | $ 3,556 | 3,428 | ||
Variable Lease, Cost | 404 | 371 | 1,472 | 882 | ||
Total lease cost | 1,589 | 1,556 | 5,028 | 4,310 | ||
Operating cash outflows from operating leases | 1,431 | $ 1,443 | 4,561 | 3,097 | ||
Operating Lease, Right-of-Use Asset | $ 28,344 | $ 28,344 | $ 29,781 | |||
Watertown Lease | ||||||
Leases | ||||||
Lease term | 13 years | 13 years | ||||
Restricted cash | $ 2,057 | $ 2,057 | ||||
Discount rate (as a percent) | 9.90% | |||||
Variable lease cost | $ 1,472 | 882 | ||||
Remaining lease term | 11 years 1 month 6 days | |||||
Lease cost | ||||||
Variable Lease, Cost | $ 1,472 | $ 882 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Oct. 01, 2018 | |
Debt instruments | ||||||
Amount borrowed | $ 453 | |||||
Interest expense | $ 2,157 | $ 2,180 | $ 6,419 | $ 6,335 | ||
Term Loan A | ||||||
Debt instruments | ||||||
Interest rate (as a percent) | 9.875% | |||||
Aggregate principal amount | $ 75,000 | |||||
Term Loan B | ||||||
Debt instruments | ||||||
Aggregate principal amount | $ 35,000 |
DEBT - Athyrium Credit Facility
DEBT - Athyrium Credit Facility (Details) | Oct. 01, 2018USD ($)$ / sharesshares | Sep. 30, 2020USD ($)item$ / shares | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2020USD ($)item$ / sharesshares | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)shares |
Debt instruments | ||||||||
Warrant exercisable | shares | 248,505 | 297,988 | ||||||
Effective interest rate | 11.63% | 11.63% | 11.63% | 11.63% | ||||
Interest expense | $ 2,157,000 | $ 2,180,000 | $ 6,419,000 | $ 6,335,000 | ||||
Warrants 2018 | ||||||||
Debt instruments | ||||||||
Exercise Price | $ / shares | $ 12.18 | $ 12.18 | ||||||
Warrant exercisable | shares | 184,660 | 184,660 | ||||||
Athyrium Credit Facility | ||||||||
Debt instruments | ||||||||
Aggregate principal amount | $ 110,000,000 | $ 75,000,000 | $ 75,000,000 | $ 75,000,000 | ||||
Cumulative accretion of exit fee | $ 294,000 | $ 294,000 | 183,000 | |||||
Present value of prepayments if prepayment occurs prior to the second anniversary (as a percent) | 105.00% | |||||||
Prepayments if prepayment occurs on or after the second anniversary of the applicable date of issuance but prior to the third anniversary (as a percent) | 3.00% | |||||||
Prepayments if prepayment occurs on or after the third anniversary (as a percent) | 2.00% | |||||||
Prepayments if prepayment occurs after the fourth anniversary (as a percent) | 0.00% | |||||||
Additional interest rate upon an event of default accrued (as a percent) | 3.00% | |||||||
Total interest rate (as a percent) | 12.875% | |||||||
Number of features of embedded derivative | item | 2 | |||||||
Number of derivatives | item | 1 | 1 | ||||||
Financial covenant amount | $ 10,000,000 | |||||||
Restricted Cash and Cash Equivalents | $ 10,000,000 | 10,000,000 | ||||||
Debt issuance costs | $ 3,327,000 | $ 3,327,000 | $ 3,999,000 | |||||
Interest expense | 2,125,000 | $ 2,125,000 | 6,308,000 | 6,211,000 | ||||
Amortization of debt discount | 232,000 | 232,000 | 671,000 | 595,000 | ||||
Contractual coupon interest | $ 1,893,000 | $ 1,893,000 | $ 5,637,000 | $ 5,616,000 | ||||
Athyrium Credit Facility | Warrants 2018 | ||||||||
Debt instruments | ||||||||
Warrant to purchase shares of common stock | shares | 270,835 | |||||||
Exercise Price | $ / shares | $ 12.18456 | |||||||
Warrant exercisable | shares | 184,660 | |||||||
Remaining warrant exercisable upon condition | shares | 86,175 | |||||||
Initial fair value of the Warrant | $ 1,899,000 | |||||||
Unamortized discount | 1,980,000 | |||||||
Term Loan A | ||||||||
Debt instruments | ||||||||
Aggregate principal amount | $ 75,000,000 | |||||||
Interest rate (as a percent) | 9.875% | |||||||
Exit fee of the total principal payments (as a percent) | 1.00% | |||||||
Cumulative accretion of exit fee | $ 750 | |||||||
Term Loan B | ||||||||
Debt instruments | ||||||||
Aggregate principal amount | $ 35,000,000 |
DEBT - Carrying Value (Details)
DEBT - Carrying Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Oct. 01, 2018 |
Debt instruments | |||
Long-term debt, net | $ 71,967 | $ 71,184 | |
Athyrium Credit Facility | |||
Debt instruments | |||
Principal Loan Balance | 75,000 | 75,000 | $ 110,000 |
Unamortized debt discount and issuance cost | (3,327) | (3,999) | |
Cumulative accretion of exit fee | 294 | 183 | |
Long-term debt, net | $ 71,967 | $ 71,184 |
DEBT - Future annual principal
DEBT - Future annual principal payments (Details) - Athyrium Credit Facility $ in Thousands | Sep. 30, 2020USD ($) |
Maturities of long-term debt | |
2022 | $ 16,665 |
2023 | 33,330 |
2024 | 25,005 |
Total | $ 75,000 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Preferred stock warrants | ||
Shares Exercisable | 248,505 | 297,988 |
Warrants 2013 | ||
Preferred stock warrants | ||
Exercise Price | $ 7.50 | |
Shares Exercisable | 33,333 | 82,816 |
Warrants 2014 | ||
Preferred stock warrants | ||
Exercise Price | $ 7.50 | |
Shares Exercisable | 16,000 | 16,000 |
Warrants 2016 | ||
Preferred stock warrants | ||
Exercise Price | $ 8.27 | |
Shares Exercisable | 14,512 | 14,512 |
Warrants 2018 | ||
Preferred stock warrants | ||
Exercise Price | $ 12.18 | |
Shares Exercisable | 184,660 | 184,660 |
EQUITY FINANCINGS (Details)
EQUITY FINANCINGS (Details) - USD ($) $ / shares in Units, $ in Thousands | May 07, 2020 | Apr. 03, 2020 | Mar. 11, 2020 | Oct. 05, 2018 | Aug. 27, 2018 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Equity Offerings | ||||||||||
Net proceeds | $ 137,969 | $ 2,130 | ||||||||
Underwriters discount and offering costs | $ 66 | 8,475 | $ 66 | |||||||
Underwriter's option | ||||||||||
Equity Offerings | ||||||||||
Issuance of common stock | 979,371 | 2,400,000 | ||||||||
Period granted | 30 days | |||||||||
Price per share | $ 7.89 | |||||||||
Net proceeds | $ 7,216 | |||||||||
Shelf | ||||||||||
Equity Offerings | ||||||||||
Share authorized value (shelf) | $ 18,334 | |||||||||
Registration period | 3 years | 3 years | ||||||||
Sales agreement | $ 50,000 | |||||||||
Shelf | Maximum | ||||||||||
Equity Offerings | ||||||||||
Additional authorized value of securities | $ 350,000 | $ 250,000 | ||||||||
2020 Offering | ||||||||||
Equity Offerings | ||||||||||
Issuance of common stock | 16,979,371 | 16,000,000 | ||||||||
Price per share | $ 7.89 | |||||||||
Net proceeds | $ 125,423 | $ 118,207 | ||||||||
ATM | ||||||||||
Equity Offerings | ||||||||||
Issuance of common stock | 2,352,671 | 2,592,934 | ||||||||
Net proceeds | $ 12,546 | $ 13,059 | ||||||||
ATM | Maximum | ||||||||||
Equity Offerings | ||||||||||
Additional authorized value of securities | $ 75,000 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2017 | Jun. 25, 2020 | Dec. 31, 2019 | |
Stock-based compensation | ||||
Common stock available for future grant | 11,660,745 | 8,488,405 | ||
2017 Equity Incentive Plan | ||||
Stock-based compensation | ||||
Common stock available for future grant | 1,275,550 | 2,000,000 | ||
2017 Equity Incentive Plan | Maximum | ||||
Stock-based compensation | ||||
Common stock available for future grant | 2,262,070 | |||
2017 Equity Incentive Plan | Minimum | ||||
Stock-based compensation | ||||
Common stock available for future grant | 3,573,766 | |||
Percentage of aggregate number of common shares reserved for future issuance (as a percent) | 4.00% | |||
2009 plan | ||||
Stock-based compensation | ||||
Common stock available for future grant | 2,262,070 | 2,530,586 | ||
Number of shares outstanding | 8,516,163 | 7,453,076 | ||
Employee and Non-Employee Stock Options | ||||
Stock-based compensation | ||||
Common stock available for future grant | 746,300 | 705,500 | ||
Employee and Non-Employee Stock Options | 2009 plan | ||||
Stock-based compensation | ||||
Options Expiry Term | 10 years | |||
Vesting Period | 4 years | |||
ESPP | ||||
Stock-based compensation | ||||
Common stock available for future grant | 484,772 | 438,307 |
STOCK-BASED COMPENSATION - Indu
STOCK-BASED COMPENSATION - Inducement Stock Option Awards (Details) - Non-statutory Stock Options - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation | ||
Options Expiry Term | 4 years | |
Vesting Period | 3 years | |
Granted (in shares) | 40,800 | 175,500 |
Percentage of vesting of share-based compensation awards on the one year anniversary of the grant date | 25.00% | |
Anniversary of the share-based compensation arrangement | 1 year | |
Percentage of vesting of share-based compensation awards after the year anniversary of the grant date | 75.00% |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) - 2009 plan $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | |
Number of Shares | ||
Outstanding at the beginning of the period (in shares) | shares | 7,453,076 | |
Granted (in shares) | shares | 1,506,222 | |
Exercised (in shares) | shares | (312,528) | |
Forfeited | shares | (130,607) | |
Outstanding at the end of the period (in shares) | shares | 8,516,163 | 7,453,076 |
Vested and expected to vest (in shares) | shares | 8,516,163 | |
Options exercisable (in shares) | shares | 5,031,572 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 7.46 | |
Granted (in dollars per share) | $ / shares | 4 | |
Exercised (in dollars per share) | $ / shares | 3.02 | |
Forfeited (in dollars per share) | $ / shares | 7.43 | |
Outstanding at the end of the period (in dollars per share) | $ / shares | 7.01 | $ 7.46 |
Vested and expected to vest (in dollars per share ) | $ / shares | 7.01 | |
Options exercisable (in dollars per shares) | $ / shares | $ 7.42 | |
Weighted Average Remaining Contractual Term | ||
Weighted average period | 7 years 4 months 24 days | 7 years 8 months 12 days |
Vested and expected to vest | 7 years 4 months 24 days | |
Options exercisable | 6 years 8 months 12 days | |
Aggregate Intrinsic Value | ||
Outstanding at the beginning of the period (in dollars) | $ | $ 1,313 | |
Outstanding at the end of the period (in dollars) | $ | 20,963 | $ 1,313 |
Vested and expected to vest (in dollars) | $ | 20,963 | |
Options exercisable (in dollars) | $ | $ 12,277 |
STOCK-BASED COMPENSATION - Fair
STOCK-BASED COMPENSATION - Fair Value Assumptions (Details) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Assumptions used in determining fair value of the stock options granted | ||
Expected volatility (minimum) | 80.00% | 61.00% |
Expected volatility (maximum) | 81.00% | 82.00% |
Risk-free interest rate (minimum) | 0.37% | 1.44% |
Risk-free interest rate (maximum) | 1.73% | 2.58% |
Expected dividend yield | 0.00% | 0.00% |
Minimum | ||
Assumptions used in determining fair value of the stock options granted | ||
Expected term (in years) | 5 years 10 months 28 days | 6 months |
Maximum | ||
Assumptions used in determining fair value of the stock options granted | ||
Expected term (in years) | 6 years 29 days | 6 years 7 months 17 days |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation | ||||
Weighted average grant date fair value of options granted | $ 7.06 | $ 2.82 | $ 4 | $ 3.70 |
2009 plan | ||||
Stock-based compensation | ||||
Unrecognized compensation expense | $ 17,483 | $ 20,469 | $ 17,483 | $ 20,469 |
Weighted average expense recognition period | 2 years 4 months 24 days | 2 years 5 months 15 days |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation | ||||
Stock based compensation expense | $ 4,261 | $ 2,572 | $ 9,249 | $ 7,666 |
Cost of product revenues | ||||
Stock-based compensation | ||||
Stock based compensation expense | 32 | 60 | 60 | 101 |
Research and development | ||||
Stock-based compensation | ||||
Stock based compensation expense | 985 | 913 | 2,259 | 2,315 |
Selling, general and administrative | ||||
Stock-based compensation | ||||
Stock based compensation expense | $ 3,244 | $ 1,599 | $ 6,930 | $ 5,250 |
STOCK-BASED COMPENSATION - Comp
STOCK-BASED COMPENSATION - Compensation expense - INVELTYS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation | ||||
Stock based compensation expense | $ 4,261 | $ 2,572 | $ 9,249 | $ 7,666 |
Inventories | INVELTYS | ||||
Stock-based compensation | ||||
Stock based compensation expense | $ 234 | $ 19 | $ 535 | $ 355 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Units narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock based compensation expense | $ 4,261 | $ 2,572 | $ 9,249 | $ 7,666 | |
Non-vested and outstanding balance at end of period (in shares) | 946,767 | 946,767 | |||
RSU | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 263,560 | ||||
RSU | Second anniversary | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 50.00% | ||||
PSU | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 693,537 | ||||
RSU and PSU | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized stock-based compensation expense | $ 8,586 | $ 8,586 | |||
Weighted average expense recognition period | 1 year 4 months 28 days | ||||
Executive Officer | RSU | First anniversary | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 135,560 | ||||
Vesting percentage | 50.00% | ||||
Executive Officer | PSU | First anniversary | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 693,537 | ||||
Vesting percentage | 50.00% | ||||
Executive Officer | PSU | Second anniversary | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 50.00% | ||||
Director | RSU | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 128,000 |
STOCK-BASED COMPENSATION - RSU
STOCK-BASED COMPENSATION - RSU (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Shares | |
Non-vested and outstanding balance at end of period (in shares) | shares | 946,767 |
Weighted Average Grant Date Fair Value | |
Non-vested and outstanding balance at end of period (in dollars per share) | $ / shares | $ 11.70 |
RSU | |
Shares | |
Granted (in shares) | shares | 263,560 |
Forfeited (in shares) | shares | (10,330) |
Weighted Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 11.70 |
Forfeited (in dollars per shares) | $ / shares | $ 11.70 |
PSU | |
Shares | |
Granted (in shares) | shares | 693,537 |
Weighted Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 11.70 |
STOCK-BASED COMPENSATION - Empl
STOCK-BASED COMPENSATION - Employee Stock Purchase Plan (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2020shares | Jan. 31, 2020shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)itemshares | Sep. 30, 2019USD ($) | Dec. 31, 2018shares | |
Stock-based compensation | |||||||
Stock-based compensation expense | $ | $ 4,268 | $ 2,488 | $ 9,626 | $ 7,750 | |||
2017 Employee Stock Purchase Plan | |||||||
Stock-based compensation | |||||||
Shares Authorized | 223,341 | ||||||
Employee basic pay holding period | 6 months | ||||||
Number of offering periods | item | 2 | ||||||
Percentage of market value at which employee may purchase stock | 85.00% | ||||||
Issuance under employee stock purchase plan (in shares) | 228,844 | 85,553 | |||||
2017 Employee Stock Purchase Plan | Maximum | |||||||
Stock-based compensation | |||||||
Shares Authorized | 893,441 | 893,441 | |||||
Threshold percentage of share available to grant | 1.00% |
STOCK-BASED COMPENSATION - ESPP
STOCK-BASED COMPENSATION - ESPP Stock-based compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation | ||||
Stock based compensation expense | $ 4,261 | $ 2,572 | $ 9,249 | $ 7,666 |
Cost of product revenues | ||||
Stock-based compensation | ||||
Stock based compensation expense | 32 | 60 | 60 | 101 |
Research and development | ||||
Stock-based compensation | ||||
Stock based compensation expense | 985 | 913 | 2,259 | 2,315 |
Selling, general and administrative | ||||
Stock-based compensation | ||||
Stock based compensation expense | $ 3,244 | $ 1,599 | $ 6,930 | $ 5,250 |
STOCK-BASED COMPENSATION - Rese
STOCK-BASED COMPENSATION - Reserved Shares (Details) - shares | Sep. 30, 2020 | Dec. 31, 2019 |
Stock-based compensation | ||
Common stock shares reserved for future issuance | 11,660,745 | 8,488,405 |
2017 Employee Stock Purchase Plan | ||
Stock-based compensation | ||
Common stock shares reserved for future issuance | 7,832,923 | 4,429,849 |
ESPP | ||
Stock-based compensation | ||
Common stock shares reserved for future issuance | 484,772 | 438,307 |
Employee and Non-Employee Stock Options | ||
Stock-based compensation | ||
Common stock shares reserved for future issuance | 746,300 | 705,500 |
Warrants | ||
Stock-based compensation | ||
Common stock shares reserved for future issuance | 334,680 | 384,163 |
2009 plan | ||
Stock-based compensation | ||
Common stock shares reserved for future issuance | 2,262,070 | 2,530,586 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
INCOME TAXES | ||||
Uncertain tax positions | $ 0 | $ 0 | $ 0 | $ 0 |
Interest or penalties recorded | $ 0 | $ 0 | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES. - License Agreement (Details) - USD ($) $ in Thousands | Oct. 26, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Contingencies | |||||
Research and development expenses | $ 3,468 | $ 7,070 | $ 14,955 | $ 21,137 | |
The Johns Hopkins University ("JHU") | |||||
Contingencies | |||||
Minimum annual payment | 38 | ||||
License fee, if the company achieves the first commercial sale | 112 | ||||
First commercial sale milestone | 8 | 34 | 44 | 334 | |
Research and development expenses | $ 44 | $ 116 | $ 121 | $ 197 | |
Subsequent Event | The Johns Hopkins University ("JHU") | |||||
Contingencies | |||||
Milestone payment | $ 150 | ||||
Time within milestone payment must be made by first commercial sale of the product | 60 days |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES. - Future minimum obligations (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Minimum obligations due under its license agreements | |
2021 | $ 2,295 |
2022 | 5,390 |
2023 | 6,285 |
2024 | 7,875 |
Thereafter | 26,124 |
Total minimum purchase commitments | $ 47,969 |