UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
⌧ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021
OR
◻ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-36464
Agile Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
23-2936302 |
(State or other jurisdiction of incorporation or
|
(I.R.S. Employer Identification No.) |
101 Poor Farm Road
Princeton, New Jersey 08540
(Address including zip code of principal executive offices)
(609) 683-1880
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol |
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Name of exchange on which registered: |
Common stock, par value $0.0001 per share |
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AGRX |
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The Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ |
Accelerated filer ◻ |
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Non-accelerated filer ⌧ |
Smaller reporting company ⌧ |
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Emerging growth company ◻ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ⌧
There were 121,396,033 shares of the registrant’s common stock, $0.0001 par value, outstanding as of October 29, 2021.
Agile Therapeutics, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 2021
Table of Contents
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6 |
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6 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
35 |
35 |
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35 |
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36 |
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36 |
2
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes statements that are, or may be deemed, “forward-looking statements.” In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “designed,” “could,” “might,” “will,” “should,” “approximately” or, in each case, their negative or other variations thereon or comparable terminology, although not all forward-looking statements contain these words. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include statements regarding our current intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things, our ongoing and planned manufacturing and commercialization of Twirla®, the potential market acceptance and uptake of Twirla®, the development of our other potential product candidates, the strength and breadth of our intellectual property, our ongoing and planned clinical trials, the timing of and our ability to make regulatory filings and obtain and maintain regulatory approvals for our potential product candidates, the legal and regulatory landscape impacting our business, the degree of clinical utility of our products, particularly in specific patient populations, expectations regarding clinical trial data, our results of operations, financial condition, liquidity, prospects, growth and strategies, the length of time that we will be able to continue to fund our operating expenses and capital expenditures, our expected financing needs and sources of financing, the industry in which we operate and the trends that may affect the industry or us.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and healthcare, regulatory and scientific developments and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.
Some of the factors that we believe could cause actual results to differ from those anticipated or predicted include:
• | the effects of the ongoing COVID-19 pandemic on our commercialization efforts, clinical trials, supply chain, operations and the operations of third parties we rely on for services such as manufacturing, marketing support and sales support, as well as the effects of the COVID-19 pandemic on our potential customer base; |
3
Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q. You should also read carefully the factors described in the “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission on March 1, 2021 to better understand significant risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, any such inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard any of these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all.
This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data.
4
We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Twirla® is one of our trademarks used in this Form 10-Q. This Form 10-Q also includes trademarks, tradenames, and service marks that are the property of other organizations. Solely for convenience, our trademarks and tradenames referred to in this Form 10-Q may appear without the ® symbol, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.
5
Agile Therapeutics, Inc.
Part I — Financial Information
ITEM 1. Financial Statements
Agile Therapeutics, Inc.
Balance Sheets
(Unaudited)
(in thousands, except par value and share data)
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September 30, |
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December 31, |
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||
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2021 |
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2020 |
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Assets |
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Current assets: |
|
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|
|
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|
Cash and cash equivalents |
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$ |
14,735 |
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$ |
14,463 |
|
Marketable securities |
|
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— |
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40,008 |
|
Accounts receivable, net |
|
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1,309 |
|
|
865 |
|
Inventory, net |
|
|
3,460 |
|
|
— |
|
Prepaid expenses and other current assets |
|
|
2,258 |
|
|
1,449 |
|
Total current assets |
|
|
21,762 |
|
|
56,785 |
|
Property and equipment, net |
|
|
12,911 |
|
|
14,243 |
|
Right of use asset |
|
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37 |
|
|
138 |
|
Other non-current assets |
|
|
1,972 |
|
|
1,896 |
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Total assets |
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$ |
36,682 |
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$ |
73,062 |
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|
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Liabilities and stockholders’ equity |
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Current liabilities: |
|
|
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Accounts payable |
|
$ |
5,632 |
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$ |
3,867 |
|
Accrued expenses |
|
|
3,899 |
|
|
3,348 |
|
Lease liability, current portion |
|
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37 |
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|
138 |
|
Total current liabilities |
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9,568 |
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7,353 |
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Long-term debt |
|
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16,434 |
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|
16,381 |
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Total liabilities |
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|
26,002 |
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|
23,734 |
|
Commitments and contingencies (Note 11) |
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Stockholders’ equity |
|
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|
|
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|
Common stock, $.0001 par value, 150,000,000 shares authorized, 94,729,385 and 87,563,753 issued and outstanding at September 30, 2021 and December 31, 2020, respectively |
|
|
9 |
|
|
9 |
|
Additional paid-in capital |
|
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374,431 |
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|
361,539 |
|
Accumulated other comprehensive income |
|
|
— |
|
|
3 |
|
Accumulated deficit |
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|
(363,760) |
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|
(312,223) |
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Total stockholders’ equity |
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10,680 |
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|
49,328 |
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Total liabilities and stockholders’ equity |
|
$ |
36,682 |
|
$ |
73,062 |
|
See accompanying notes to unaudited financial statements.
6
Agile Therapeutics, Inc.
Statements of Operations
(Unaudited)
(in thousands, except per share and share data)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenues, net |
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$ |
1,287 |
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$ |
— |
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$ |
2,587 |
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$ |
— |
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Cost of product revenues |
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2,711 |
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— |
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5,017 |
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— |
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Gross profit (loss) |
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(1,424) |
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— |
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(2,430) |
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— |
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Operating expenses: |
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Research and development |
|
$ |
1,593 |
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$ |
3,663 |
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$ |
4,568 |
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$ |
10,488 |
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Selling and marketing |
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9,386 |
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7,723 |
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30,263 |
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12,616 |
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General and administrative |
|
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3,371 |
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3,270 |
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11,386 |
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9,208 |
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Total operating expenses |
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14,350 |
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14,656 |
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46,217 |
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32,312 |
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Loss from operations |
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(15,774) |
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(14,656) |
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(48,647) |
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(32,312) |
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Other income (expense) |
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Interest income |
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1 |
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37 |
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24 |
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|
284 |
|
Interest expense |
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(999) |
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|
(905) |
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|
(2,914) |
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(2,205) |
|
Total other income (expense), net |
|
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(998) |
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|
(868) |
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|
(2,890) |
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|
(1,921) |
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Loss before benefit from income taxes |
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(16,772) |
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|
(15,524) |
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|
(51,537) |
|
|
(34,233) |
|
Benefit from income taxes |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net loss |
|
$ |
(16,772) |
|
$ |
(15,524) |
|
$ |
(51,537) |
|
$ |
(34,233) |
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|
|
|
|
|
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|
|
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|
|
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Net loss per share (basic and diluted) |
|
$ |
(0.18) |
|
$ |
(0.18) |
|
$ |
(0.57) |
|
$ |
(0.41) |
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Weighted-average common shares (basic and diluted) |
|
|
93,757,215 |
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|
87,350,505 |
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|
90,048,183 |
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|
83,754,550 |
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Comprehensive loss: |
|
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|
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|
|
|
|
|
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|
|
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Net loss |
|
$ |
(16,772) |
|
$ |
(15,524) |
|
$ |
(51,537) |
|
$ |
(34,233) |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
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Unrealized loss on marketable securities |
|
|
— |
|
|
1 |
|
|
(3) |
|
|
11 |
|
Comprehensive loss |
|
$ |
(16,772) |
|
$ |
(15,523) |
|
$ |
(51,540) |
|
$ |
(34,222) |
|
See accompanying notes to unaudited financial statements.
7
Agile Therapeutics, Inc.
Statements of Changes in Stockholders’ Equity
(Unaudited)
(in thousands, except share data)
|
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|
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|
|
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|
|
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|
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|
|
|
|
|
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Common Stock |
|
Additional |
|
Accumulated |
|
|
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Total |
|||||||
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Number of |
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|
|
|
Paid-in |
|
Other Comprehensive |
|
Accumulated |
|
Stockholders' |
||||
|
|
Shares |
|
Amount |
|
Capital |
|
Income |
|
Deficit |
|
Equity |
|||||
Balance December 31, 2020 |
|
87,563,753 |
|
$ |
9 |
|
$ |
361,539 |
|
$ |
3 |
|
$ |
(312,223) |
|
$ |
49,328 |
Share-based compensation - stock options and RSUs |
|
— |
|
|
— |
|
|
742 |
|
|
— |
|
|
— |
|
|
742 |
Issuance of common stock pursuant to at-the market stock sales, net of expenses |
|
520,937 |
|
|
— |
|
|
960 |
|
|
— |
|
|
— |
|
|
960 |
Issuance of common stock upon exercise of stock options |
|
126,400 |
|
|
— |
|
|
75 |
|
|
— |
|
|
— |
|
|
75 |
Vesting of RSUs |
|
52,651 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Warrants issued in connection with long-term debt |
|
— |
|
|
— |
|
|
1,080 |
|
|
— |
|
|
— |
|
|
1,080 |
Unrealized net gain on marketable securities |
|
— |
|
|
— |
|
|
— |
|
|
(3) |
|
|
— |
|
|
(3) |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,128) |
|
|
(17,128) |
Balance March 31, 2021 |
|
88,263,741 |
|
$ |
9 |
|
$ |
364,396 |
|
$ |
— |
|
$ |
(329,351) |
|
$ |
35,054 |
Share-based compensation - stock options and RSUs |
|
— |
|
|
— |
|
|
843 |
|
|
— |
|
|
— |
|
|
843 |
Issuance of common stock pursuant to at-the market stock sales, net of expenses |
|
4,593,034 |
|
|
— |
|
|
6,349 |
|
|
— |
|
|
— |
|
|
6,349 |
Vesting of RSUs |
|
71,430 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Unrealized net gain on marketable securities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,637) |
|
|
(17,637) |
Balance June 30, 2021 |
|
92,928,205 |
|
$ |
9 |
|
$ |
371,588 |
|
$ |
— |
|
$ |
(346,988) |
|
$ |
24,609 |
Share-based compensation - stock options and RSUs |
|
— |
|
|
— |
|
|
887 |
|
|
— |
|
|
— |
|
|
887 |
Issuance of common stock pursuant to at-the market stock sales, net of expenses |
|
1,801,180 |
|
|
— |
|
|
1,956 |
|
|
— |
|
|
— |
|
|
1,956 |
Unrealized net gain on marketable securities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16,772) |
|
|
(16,772) |
Balance September 30, 2021 |
|
94,729,385 |
|
$ |
9 |
|
$ |
374,431 |
|
$ |
— |
|
$ |
(363,760) |
|
$ |
10,680 |
See accompanying notes to unaudited financial statements.
8
Agile Therapeutics, Inc.
Statements of Changes in Stockholders' Equity
(Unaudited)
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional |
|
Accumulated |
|
|
|
|
|
Total |
|||||
|
|
Number of |
|
|
|
|
Paid-in |
|
Other Comprehensive |
|
Accumulated |
|
|
Stockholders' |
|||
|
|
Shares |
|
Amount |
|
Capital |
|
Income |
|
Deficit |
|
|
Equity |
||||
Balance December 31, 2019 |
|
69,810,305 |
|
$ |
7 |
|
$ |
306,108 |
|
$ |
— |
|
$ |
(260,370) |
|
$ |
45,745 |
Share-based compensation - stock options and RSUs |
|
— |
|
|
— |
|
|
621 |
|
|
— |
|
|
— |
|
|
621 |
Issuance of common stock in public offering, net of expenses |
|
17,250,000 |
|
|
2 |
|
|
48,433 |
|
|
— |
|
|
— |
|
|
48,435 |
Issuance of common stock upon exercise of stock options |
|
152,907 |
|
|
— |
|
|
119 |
|
|
— |
|
|
— |
|
|
119 |
Warrants issued in connection with long-term debt |
|
— |
|
|
— |
|
|
3,570 |
|
|
— |
|
|
— |
|
|
3,570 |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7,883) |
|
|
(7,883) |
Balance March 31, 2020 |
|
87,213,212 |
|
$ |
9 |
|
$ |
358,851 |
|
$ |
— |
|
$ |
(268,253) |
|
$ |
90,607 |
Share-based compensation - stock options and RSUs |
|
— |
|
|
— |
|
|
839 |
|
|
— |
|
|
— |
|
|
839 |
Issuance of common stock upon exercise of stock options |
|
84,393 |
|
|
— |
|
|
166 |
|
|
— |
|
|
— |
|
|
166 |
Unrealized net gain on marketable securities |
|
— |
|
|
— |
|
|
— |
|
|
10 |
|
|
— |
|
|
10 |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(10,826) |
|
|
(10,826) |
Balance June 30, 2020 |
|
87,297,605 |
|
$ |
9 |
|
$ |
359,856 |
|
$ |
10 |
|
$ |
(279,079) |
|
$ |
80,796 |
Share-based compensation - stock options and RSUs |
|
— |
|
|
— |
|
|
647 |
|
|
— |
|
|
— |
|
|
647 |
Issuance of common stock upon exercise of stock options |
|
136,999 |
|
|
— |
|
|
210 |
|
|
— |
|
|
— |
|
|
210 |
Unrealized net gain on marketable securities |
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
1 |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(15,524) |
|
|
(15,524) |
Balance September 30, 2020 |
|
87,434,604 |
|
$ |
9 |
|
$ |
360,713 |
|
$ |
11 |
|
$ |
(294,603) |
|
$ |
66,130 |
See accompanying notes to unaudited financial statements.
9
Agile Therapeutics, Inc.
Statements of Cash Flows
(Unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||
|
|
September 30, |
||||
|
|
2021 |
|
2020 |
||
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(51,537) |
|
$ |
(18,709) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Noncash inventory reserve |
|
|
1,415 |
|
|
|
Depreciation |
|
|
1,546 |
|
|
8 |
Amortization |
|
|
102 |
|
|
82 |
Noncash stock-based compensation |
|
|
2,472 |
|
|
1,460 |
Noncash interest |
|
|
1,262 |
|
|
447 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(444) |
|
|
— |
Inventory |
|
|
(4,875) |
|
|
— |
Prepaid expenses and other assets |
|
|
(885) |
|
|
(686) |
Accounts payable and accrued expenses |
|
|
2,462 |
|
|
2,839 |
Lease liability |
|
|
(102) |
|
|
(90) |
Net cash used in operating activities |
|
|
(48,584) |
|
|
(14,649) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of marketable securities |
|
|
— |
|
|
(47,822) |
Sales and maturities of marketable securities |
|
|
39,729 |
|
|
— |
Acquisition of property and equipment |
|
|
(214) |
|
|
(222) |
Net cash provided by (used in) investing activities |
|
|
39,515 |
|
|
(48,044) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from issuance of common stock in public offering, net of offering costs |
|
|
— |
|
|
48,434 |
Proceeds from At-the-Market sales of common stock, net of offering costs |
|
|
9,266 |
|
|
— |
Proceeds from issuance of long-term debt |
|
|
— |
|
|
20,000 |
Debt financing costs paid |
|
|
— |
|
|
(1,059) |
Proceeds from exercise of stock options |
|
|
75 |
|
|
285 |
Net cash provided by financing activities |
|
|
9,341 |
|
|
67,660 |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
272 |
|
|
4,967 |
Cash and cash equivalents, beginning of period |
|
|
14,463 |
|
|
34,479 |
Cash and cash equivalents, end of period |
|
$ |
14,735 |
|
$ |
39,446 |
|
|
|
|
|
|
|
Supplemental disclosure of noncash financing activities |
|
|
|
|
|
|
Warrants issued in connection with long-term debt |
|
$ |
1,080 |
|
$ |
3,570 |
Supplemental cash flow information |
|
|
|
|
|
|
Interest paid |
|
$ |
1,782 |
|
$ |
1,498 |
See accompanying notes to unaudited financial statements.
10
1. Organization and Description of Business
Nature of Operations
Agile Therapeutics, Inc. (“Agile” or the “Company”) was incorporated in Delaware on December 22, 1997. Agile is a women’s healthcare company dedicated to fulfilling the unmet health needs of today’s women. The Company’s activities since inception have consisted principally of raising capital, performing research and development, including development of the Company’s lead product, Twirla, and more recently commercializing Twirla. The Company is headquartered in Princeton, New Jersey.
The Company’s sole approved product, Twirla®, also known as AG200-15, is a once-weekly prescription contraceptive patch that received approval from the U.S. Food and Drug Administration, or FDA, in February 2020. Substantially all of the Company’s resources are currently dedicated to commercializing Twirla in the United States. The Company has generated minimal product revenue to date and is subject to a number of risks similar to those of other early stage companies, including, but not limited to, dependence on key individuals, the difficulties and uncertainties inherent in the development of commercially usable products, market acceptance of products, protection of proprietary technology, the potential need to obtain additional capital necessary to fund the development of its products, competition from larger companies and compliance with FDA and other government regulations. If the Company does not successfully commercialize any product candidates, it will be unable to generate recurring product revenue or achieve profitability. The Company has incurred operating losses and negative cash flows from operating activities each year since inception. As of September 30, 2021, the Company had an accumulated deficit of approximately $364 million.
The Company expects to continue to incur significant operating expenses for the foreseeable future in connection with its ongoing activities, as the Company:
● | maintains a sales and marketing infrastructure to support the continued commercialization of Twirla in the United States; |
● | continues to evaluate additional line extensions for Twirla and initiates development of potential product candidates in addition to Twirla; |
● | maintains, leverages and expands the Company’s intellectual property portfolio; and |
● | adds operational, financial and management information systems and personnel, including personnel to support the Company’s product development and future commercialization efforts. |
The Company has financed its operations to date primarily through the issuance and sale of its common stock in both public and private offerings (see Note 8), private placements of its convertible preferred stock, venture loans, and non-dilutive grant funding.
Going Concern
As of September 30, 2021, the Company had cash and cash equivalents of $14.7 million. The Company closely monitors its cash, cash equivalents and marketable securities and will need to raise additional funds to meet its projected operating requirements, including the continued commercialization of Twirla, and exploring the advancement of its existing pipeline and its possible expansion through business development activities.
The Company has generated losses since inception, used substantial cash in operations and anticipates it will continue to incur net losses for the foreseeable future. The Company’s future success depends on its ability to obtain additional capital and/or implement various strategic alternatives, and there can be no assurance that any financing can be realized by the Company, or if realized, what the terms of any such financing may be, or that any amount that the Company is able to raise will be adequate. Based upon the foregoing, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern through the 12 months following the date on which this Quarterly Report on Form 10-Q is filed.
The Company continues to analyze various alternatives, including refinancing alternatives, asset sales and mergers and acquisitions. The Company’s future success depends on its ability to raise additional capital as
11
discussed above. The Company cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to it or, if available, will be on terms acceptable to the Company. If the Company issues additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of its common stock, and the Company’s current stockholders will experience dilution. If the Company is unable to obtain funds when needed or on acceptable terms, the Company then may be unable to continue the commercialization of Twirla, and may also be required to cut operating costs, and forego future development and other opportunities.
The unaudited financial statements as of September 30, 2021 have been prepared under the assumption that the Company will continue as a going concern for the next 12 months. The Company’s ability to continue as a going concern is dependent upon its uncertain ability to obtain additional capital, reduce expenditures and/or execute on its business plan and successfully commercialize Twirla. The unaudited financial statements as of September 30, 2021 do not include any adjustments that might result from the outcome of this uncertainty. If the Company is unable to continue as a going concern, it may have to liquidate its assets and may receive less than the value at which those assets are carried on the financial statements.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP has been condensed or omitted pursuant to such rules and regulations. These interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on March 1, 2021.
In the opinion of management, the unaudited interim financial statements reflect all adjustments, which are normal recurring adjustments, necessary for the fair presentation of the financial information for the interim periods presented. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period. Certain reclassifications have been made to prior periods to conform with current reporting. On the statement of operations, the Company has separated the presentation of selling and marketing expenses from total general and administrative expenses. To conform prior year amounts to the current period presentation, $7.7 million and $12.6 million was reclassified from general and administrative expenses to selling and marketing expenses for the three and nine months ended September 30, 2020, respectively.
The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has incurred recurring losses and negative cash flows from operations. If the COVID-19 pandemic or other factors impact the Company’s current business plan or its ability to generate revenue from the launch of Twirla, the Company believes it has the ability to revise its commercial plans, including curtailing sales and marketing spending, to allow it to continue to fund its operations.
2. Summary of Significant Accounting Policies
The Company’s complete listing of significant accounting policies is described in Note 2 to the Company’s audited financial statements as of December 31, 2020 included in its Annual Report on Form 10-K filed with the SEC.
Use of Estimates
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of revenue and expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, revenue recognition, the accounting for common
12
stock warrants, stock-based compensation, income taxes, and accounting for research and development costs. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.
Risks and Uncertainties
While Twirla has been approved by the FDA, other potential product candidates developed by the Company will require approval from the FDA prior to commercial sales. There can be no assurance that the Company’s other product candidates will receive the required approval. If the Company is denied approval or such approval is delayed, or is unable to obtain the necessary financing to complete development and approval, there could be a material adverse impact on the Company’s financial condition and results of operations.
It should be noted that current public health threats could adversely affect the Company’s ongoing or planned business operations. In particular, the ongoing COVID-19 pandemic has resulted in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, access restrictions, restrictions on public gatherings, and stay at home orders. The effect of these orders, government imposed quarantines and measures the Company has taken, such as implementing work-at-home policies, may negatively impact productivity, disrupt the Company’s business and could delay the Company’s commercialization timeline. The Company cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if the Company or any of the third parties with whom it engages, including personnel at third-party manufacturing facilities and other third parties with whom the Company conducts business, were to experience shutdowns or other business disruptions, the Company’s ability to conduct its business in the manner and on the timeline presently planned could be materially and adversely impacted. It is unknown how long these conditions will last and what the complete effect will be on the Company. While to date we have been able to continue to execute our overall business plan, some of our business activities have been slowed and taken longer to complete and we continue to adjust to the challenges of operating in a largely remote setting with our employees. We have only recently launched our commercial activities for Twirla and begun engaging with healthcare providers to promote Twirla. We expect that, as we broaden our sales detailing activities, in some instances our sales force may encounter challenges engaging with healthcare providers during this on-going pandemic. Although many areas of the United States have begun to re-open access to offices and other commercial facilities, there continue to be areas where restrictions remain in place, which may have the potential to affect our ability to conduct our business. Further, new variants, including those which are more easily transmissible or resistant to existing vaccines, may lead to new shutdowns or business disruptions in the future. The Company will continue to closely monitor events as they develop and evaluate alternative, mitigating measures it can implement if needed.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. All cash and cash equivalents are held in United States financial institutions. Cash and cash equivalents include money market funds that invest primarily in commercial paper and U.S. government and U.S. government agency obligations.
The Company maintains balances with financial institutions in excess of the Federal Deposit Insurance Corporation limit.
Marketable Securities
The Company may invest a portion of its excess cash balances in marketable securities, including U.S. government agency securities, and highly rated corporate bonds. The Company classifies all of its marketable securities as current assets on the balance sheet because they are available-for-sale and available to fund current operations. Marketable securities are stated at fair value with unrealized gains and losses included as a component of accumulated other comprehensive income (loss), which is a separate component of stockholders' equity, until such gains and losses are realized. If a decline in the fair value is considered other-than-temporary, based on available evidence, the unrealized loss is reclassified from accumulated other comprehensive income (loss) to the statements of operations. Realized gains and losses are determined on the specific identification method and are included in other income.
13
Trade Accounts Receivable and Allowances
Trade accounts receivable are amounts owed to the Company by its customers for product that has been delivered. The trade accounts receivable are recorded at the invoice amount, less prompt pay and other discounts, chargebacks, and an allowance for credit losses, if any. The allowance for credit losses represents the Company’s estimate of losses over the life of the receivables. The Company evaluates forward looking economic factors and uses professional judgment to determine the allowance for credit losses, as Twirla was commercially launched in December 2020 and historical data is not yet available. The credit loss reserves are reviewed and adjusted periodically. Credit loss reserves were not material as of September 30, 2021.
Trade accounts receivable are aged based on the contractual payment terms. When the collectability of an invoice is no longer probable, the Company will create a reserve for that specific receivable. If a receivable is determined to be uncollectible, it is charged against the general credit loss reserve or the reserve for the specific receivable, if one exists.
Fair Value of Financial Instruments
In accordance with Accounting Standards Codification (“ASC”) 825, Financial Instruments, disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Cash, cash equivalents, and marketable securities are carried at fair value (see Note 3).
Other financial instruments, including accounts receivable, accounts payable and accrued liabilities, are carried at cost, which approximates fair value given their short-term nature.
Inventory
Inventory is valued utilizing the weighted average costing method. The Company records an inventory reserve for losses associated with dated, expired, excess or obsolete items. This reserve is based on management’s current knowledge with respect to inventory levels, planned production and sales volume assumptions. During the third quarter of 2021, the Company established a reserve of approximately $1.4 million for inventory not expected to be sold prior to its shelf life date.
The Company’s third-party manufacturer, Corium, completed the validation of the commercial manufacturing process for Twirla in the fourth quarter of 2020. The costs associated with validation batches were expensed as research and development expenses during the period the costs were incurred. The Company used this validation product for commercial supplies and samples of Twirla into May 2021. Since the Company did not capitalize any validation product, all sales of this validation product had no associated product cost. During the nine months ended September 30, 2021, units sold with no associated product cost were approximately 3,000. Had such inventory been valued at acquisition cost, it would have resulted in an immaterial increase to cost of goods sold and a corresponding decrease to gross profit.
Property and Equipment
Property and equipment, consisting of computer equipment and manufacturing equipment, is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance, are charged to earnings in the period in which costs are incurred. Improvements and additions are capitalized in accordance with Company policy.
Long-Lived Assets
In accordance with ASC 360, Property, Plant and Equipment, the Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management does not believe the carrying values of any long-lived assets are impaired as of September 30, 2021.
14
Research and Development Expenses
Research and development expenses consist primarily of costs related to personnel, including salaries and other personnel-related expenses, expenses related to manufacturing, clinical trial expenses, consulting fees and support services used in product development. All research and development costs are charged to operations as incurred in accordance with ASC 730, Research and Development.
In certain circumstances, the Company is required to make advance payments to vendors for goods or services that will be received in the future for use in research and development activities. In such circumstances, the advance payments are deferred and are expensed when the activity has been performed or when the goods have been received.
Advertising Costs
The Company has elected to expense advertising costs when incurred. Advertising costs totaled $2.7 million and $0 for the three months ended September 30, 2021 and 2020, respectively, and totaled $8.8 million and $0 for the nine months ended September 30, 2021 and 2020, respectively.
Deferred Financing Costs
Costs directly attributable to the Company’s senior secured term loan (see Note 7) are deferred and reported as a reduction of the related term loan. These costs represent a 1% facility fee paid directly to the lender, legal fees and other costs related to the term loan and are being amortized over the term of the loan. Amortization of deferred financing costs charged to interest expense was $69,000 for each of the three months ended September 30, 2021 and 2020, and was $208,000 and $162,000 for the nine months ended September 30, 2021 and 2020, respectively.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to credit risk consist principally of cash, cash equivalents, marketable securities and accounts receivable. The Company invests its cash, cash equivalents and marketable securities in debt instruments and interest-bearing accounts in United States financial institutions, the balances of which exceed federally insured limits. The Company has not recognized any losses from credit risks on such accounts. The Company mitigates credit risk by limiting the investment type and maturity to securities that preserve capital, maintain liquidity and have a high credit quality. The Company has no financial instruments with off balance sheet risk of accounting loss.
Major customers of the Company are defined as those constituting greater than 10% of its total revenue. In the three months ended September 30, 2021, the Company had sales to three customers that individually accounted for more than 10% of its total revenue. Each of these customers had sales of $0.4 million, which represented 92% of total revenues in the quarter. Accounts receivable related to these three customers comprised 35%, 34%, and 27%, respectively, as of September 30, 2021.
Revenue Recognition
The Company recognizes revenue from the sale of its product, Twirla, in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606). The provisions of ASC 606 require the following steps to determine revenue recognition: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
In accordance with ASC 606, the Company recognizes revenue at the point in time when its performance obligation is satisfied by transferring control of the promised goods or services to a customer. In accordance with the Company’s contracts with customers, control of the product is transferred upon the conveyance of title, which occurs when the product is sold to and received by a customer. The Company’s customers are located in the United States and consist primarily of wholesale distributors. Trade accounts receivable due to the Company from contracts with its customers are stated separately in the balance sheet, net of various allowances as described in the Trade Accounts Receivable and Allowance policy.
15
The amount of revenue recognized by the Company is equal to the amount of consideration that is expected to be received from the sale of product to its customers. Revenue is only recognized when it is probable that a significant reversal will not occur in future periods. To determine whether a significant reversal will occur in future periods, the Company assesses both the likelihood and magnitude of any such potential reversal of revenue.
Twirla is sold to customers at the Wholesale Acquisition Cost (WAC). However, the Company records product revenue, net of reserves for applicable variable consideration. These types of variable consideration items reduce revenue and include the following:
• | Distribution services fees; |
• | Prompt pay and other discounts; |
• | Product returns; |
• | Chargebacks; |
• | Rebates; and |
• | Co-payment assistance. |
An estimate for each variable consideration item is made and is recorded in conjunction with the revenue being recognized. Generally, if the estimated amount is payable to a customer, it is recorded as a reduction to accounts receivable. If the estimated amount is payable to an entity other than a customer, it is recorded as a current liability. An estimated amount of variable consideration may differ from the actual amount. At each balance sheet date, these provisions are analyzed, and adjustments are made if necessary. Any adjustments made to these provisions would affect net product revenue and earnings in the current period.
In accordance with ASC 606, the Company must make significant judgments to determine the estimate for certain variable consideration. For example, the Company must estimate the percentage of end-users that will obtain the product through public insurance such as Medicaid or through private commercial insurance. To determine these estimates, the Company relies on industry standard data and trend analysis as historical sales data for Twirla are not yet available based on the December 2020 launch date. Once historical data becomes available, the Company will incorporate Twirla specific data into its estimates of variable consideration.
The Company uses the following specific considerations to estimate variable consideration.
Distribution services fees – The Company pays distribution service fees to its wholesale distributors. These fees are a contractually fixed percentage of WAC and are calculated at the time of sale based on the purchase amount. The Company records these fees as contra trade accounts receivable on the balance sheet.
Prompt pay and other discounts – The Company incentivizes its customers to pay their invoices on time through prompt pay discounts. These discounts are an industry standard practice and the Company offers a prompt pay discount to each wholesale distributor customer. The specific prompt pay terms vary by customer and are contractually fixed. Prompt pay discounts are typically taken by the Company’s customers, so an estimate of the discount is recorded at the time of sale based on the WAC. Prompt pay discount estimates are recorded as contra trade accounts receivable on the balance sheet.
The Company may also give other discounts to its customers to incentivize purchases and promote customer loyalty. The terms of such discounts may vary by customer. These discounts reduce gross product revenue at the time the revenue is recorded.
Product returns – Customers have the right to return product that is within six months or less of the labeled expiration date or that is past the expiration date by no more than twelve months. Twirla was commercially launched in December 2020 and with limited historical sales data, an estimate for product returns as of September 30, 2021 was made based on industry-standard data and trend analysis. As time passes and historical data becomes available, the Company will use historical sales and return data to estimate future product returns.
Chargebacks – Certain government entities and indirect customers (for example group purchasing organizations and 340B covered entities) will be able to purchase the product at a price discounted below WAC. The difference between the price paid by the government or other indirect purchaser and the price paid by the
16
wholesale distributor will be charged back to the Company. The Company estimates the amount in chargebacks based on the expected number of claims and related cost that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Estimated chargebacks are recorded as contra trade accounts receivable on the balance sheet.
Rebates – The Company will be subject to mandatory discount obligations under the Medicaid and Tricare programs. The Company is currently in the process of finalizing these agreements with Medicaid and Tricare. The rebate amounts for these programs are determined by statutory requirements or contractual arrangements. Rebates are owed after the product has been dispensed to an end user and the Company has been invoiced. Rebates for Medicaid and Tricare are typically invoiced in arrears. The Company estimates the amount in rebates based on the expected number of claims and related cost that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Rebate estimates are recorded as other current liabilities on the balance sheet.
Co-payment assistance - The Company offers a co-payment assistance program to commercially insured patients whose insurance requires a co-payment to be made when filling their prescription. This is a voluntary program that is intended to provide financial assistance to patients meeting certain eligibility requirements. The Company estimates the amount of co-payment assistance based on the expected number of claims and related cost that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Co-payment assistance estimates are recorded as other current liabilities on the balance sheet.
Provisions for the revenue reserves described above totaled $0.6 million and $0.9 million for the three- and nine-months ending September 30, 2021, respectively. As of September 30, 2021, reserves on the balance sheet associated with variable consideration were $0.5 million.
Warrants
The Company accounts for its warrants to purchase common stock in accordance with ASC 480, Distinguishing Liabilities from Equity.
In connection with entering into a senior secured term loan facility in February 2020, the Company issued warrants to purchase 1,400,000 shares of its common stock. In connection with an amendment to that facility in February 2021, the Company issued a warrant to purchase 450,000 shares of the Company’s common stock. These warrant instruments qualify for equity classification and have been allocated based upon the relative fair value of the base instrument and the warrant. See Note 7 for additional information.
In connection with an underwritten public offering completed in October 2021, the Company issued warrants to purchase 13,333,324 shares of its common stock. This offering also triggered an adjustment to the exercise price of the existing warrants mentioned above, which the Company is currently reviewing. See Notes 7 and 12 for additional information.
Income Taxes
The Company accounts for deferred taxes using the asset and liability method as specified by ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and the tax basis of assets and liabilities, operating losses and tax credit carryforwards. Deferred income taxes are measured using the enacted tax rates and laws that are anticipated to be in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits which are not expected to be realized. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.
The Company has adopted the authoritative guidance on accounting for and disclosure of uncertainty in tax positions which prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company has no uncertain tax positions as of September 30, 2021 that qualify for either recognition or disclosure in the financial statements under this guidance.
17
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation. The Company grants stock options for a fixed number of shares to employees and non-employees with an exercise price equal to no less than the fair value of the shares at grant date. Compensation cost is recognized for all share-based payments granted and is based on the grant-date fair value estimated using the weighted-average assumption of the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility and expected term. The Company elects to account for forfeitures when they occur. The equity instrument is not considered to be issued until the instrument vests. As a result, compensation cost is recognized over the requisite service period with an offsetting credit to additional paid-in capital.
The Company also awards restricted stock units (“RSUs”) to employees and its board of directors. RSUs are generally subject to forfeiture if employment terminates prior to the completion of the vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse.
Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, common stock warrants, unvested RSUs and stock options are considered to be potentially dilutive securities but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive, and therefore, basic and diluted net loss per share were the same for all periods presented.
The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share for the three months ended September 30, 2021 and 2020, respectively, because to do so would be anti-dilutive (in common equivalent shares):
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). This guidance simplifies the accounting for income taxes by, among other things, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws. The Company adopted ASU 2019-12 effective January 1, 2021. The adoption of this standard did not have a material impact on its financial statements.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). The guidance is effective for the Company on January 1, 2022. The Company is currently evaluating the impact of adopting this standard and does not expect the guidance to have a material impact on its financial statements.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying financial statements.
18
3. Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, describes the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
● | Level 1 — Quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets consist of cash and cash equivalents. The Company has no Level 1 liabilities. |
● | Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities. Level 2 assets consist of marketable securities. The Company has no Level 2 liabilities. |
● | Level 3 — Unobservable inputs that are supported by little or no market data and which require internal development of assumptions about how market participants price the fair value of the assets or liabilities. The Company has no Level 3 assets or liabilities. |
The following table sets forth the Company’s financial instruments measured at fair value by level within the fair value hierarchy as of September 30, 2021 and December 31, 2020 (in thousands):
There were no transfers between Level 1, 2 or 3 during 2021 or 2020.
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
||
|
|
2021 |
|
2020 |
|
||
Prepaid insurance |
|
$ |
1,186 |
|
$ |
680 |
|
Other |
|
|
1,072 |
|
|
769 |
|
Total prepaid expenses and other current assets |
|
$ |
2,258 |
|
$ |
1,449 |
|
19
5. Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
6. Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The Company adopted ASU No. 2016-02 on January 1, 2019.
The Company has no finance leases and one operating lease for office space in Princeton, NJ. Operating lease expense was $38,000 and $113,000 for the three and nine months ended September 30, 2021, respectively. The current operating lease is set to expire on December 31, 2021.
Operating cash flows used for operating leases during the three and nine months ended September 30, 2021 were $35,000 and $102,000, respectively. As of September 30, 2021, the weighted-average remaining lease term was 0.25 years and the weighted average discount rate was 15.2%.
Future minimum lease payments under non-cancellable leases as of September 30, 2021 were as follows (in thousands):
|
|
|
|
2021 |
|
$ |
38 |
Total |
|
$ |
38 |
Less: Interest |
|
|
(1) |
Present value of lease liability |
|
$ |
37 |
In addition to the above lease, the Company has entered into a lease for new office space that has not yet commenced. This lease will commence on the later of December 1, 2021 or the date on which certain building improvements are substantially completed, all as set forth in the lease (the “Commencement Date”). The term of the lease is forty months following the Commencement Date. Upon the Commencement Date, prepaid costs and minimum guarantees specified in the agreement will be combined to establish an operating lease ROU asset and operating lease liability.
7. Credit Agreement and Guaranty
On February 10, 2020 (the “Closing Date”), the Company entered into a Credit Agreement and Guaranty with Perceptive Credit Holdings III, LP, a related party (“Perceptive”), for a senior secured term loan credit facility of up to $35.0 million, (the “Perceptive Credit Agreement”), which was amended in February 2021 (“Amended Perceptive Credit Agreement”) to increase the total amount available to the Company to $45.0 million. A first tranche of $5.0 million was funded on execution of the Perceptive Credit Agreement. A second tranche of $15.0 million was funded as a result of the approval of Twirla by the FDA. While another $25.0 million is available in two separate tranches upon the achievement of certain revenue milestones, we do not believe we will achieve these milestones.
The facility will mature on February 10, 2024 (“Maturity Date”). The Company is scheduled to make interest-only payments on the loans under the Amended Perceptive Credit Agreement until February 10, 2023. Thereafter, the Company is required to make monthly principal payments in an amount equal to 1.50% of the principal amount of the outstanding loans until the Maturity Date.
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Borrowings under the Amended Perceptive Credit Agreement will accrue interest at an annual rate equal to the London Interbank Offered Rate for one-month deposits (“LIBOR”) plus 10.25%, provided that LIBOR shall not be less than 1.5%. The rate of interest in effect as of the Closing Date and at September 30, 2021 was 11.75%. Upon the occurrence and during the continuance of any event of default under the Amended Perceptive Credit Agreement, the interest rate automatically increases by 3.0% per annum.
The Company may prepay any outstanding loans in whole or in part. Any such prepayment of the loans is subject to a prepayment fee of 8.0% if such prepayment occurs after February 10, 2021 and on or prior to February 10, 2022; 4.0% if such prepayment occurs after February 10, 2022 and on or prior to February 10, 2023; and 2.0% if such prepayment occurs after February 10, 2023 and prior to the Maturity Date.
All of the Company’s obligations under the Amended Perceptive Credit Agreement are secured by a first-priority lien and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property.
The Amended Perceptive Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customary for similar financings. The negative covenants restrict or limit the ability of the Company to, among other things and subject to certain exceptions contained in the Amended Perceptive Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to the Company’s business activities; make certain investments or restricted payments (each as defined in the Amended Perceptive Credit Agreement); change its fiscal year; pay dividends; repay other certain indebtedness; engage in certain affiliate transactions; or enter into, amend or terminate any other agreements that have the impact of restricting the Company’s ability to make loan repayments under the Amended Perceptive Credit Agreement. In addition, the Company must (i) at all times prior to the Maturity Date maintain a minimum cash balance of $3.0 million; and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ending June 30, 2021, report revenues for the trailing 12-month period that exceed the amounts set forth in the Amended Perceptive Credit Agreement, which range from $10.2 million for the fiscal quarter ending September 30, 2021 to $87.1 million for the fiscal quarter ending December 31, 2023. At September 30, 2021, the Company was in compliance with the cash balance covenant, but not in compliance with the revenue covenant. The Company obtained a written waiver from the lender with respect to the Company’s failure to meet the revenue covenant for the three months ended September 30, 2021.
In connection with the Perceptive Credit Agreement, the Company issued to Perceptive two warrants to purchase an aggregate of 1,400,000 shares of the Company’s common stock (together, the “2020 Perceptive Warrants”). The first warrant is exercisable for 700,000 shares of common stock at an exercise price of $3.74 per share. The second warrant is exercisable for 700,000 shares of common stock at an exercise price of $4.67 per share. The 2020 Perceptive Warrants expire on February 10, 2027. In connection with the Amended Perceptive Credit Agreement, the Company issued to Perceptive a warrant to purchase 450,000 shares of the Company’s common stock (the “2021 Perceptive Warrant” and, together with the 2020 Perceptive Warrants, the “Perceptive Warrants”) at an exercise price of $2.87 per share. The 2021 Perceptive Warrant expires on February 26, 2028. The Perceptive Warrants contain anti-dilution provisions and other warrant holder protections. The public offering that the Company completed in October 2021 triggered an adjustment to the exercise price of the Perceptive Warrants, which the Company is currently reviewing. The Perceptive Warrants are not exercisable to the extent that Perceptive would beneficially own more than 19.99% of the Company’s common stock as a result of the exercise.
The Company allocated the proceeds of $20.0 million in accordance with ASC 470 based on the relative fair values of the debt and the Perceptive Warrants. The relative fair value of the Perceptive Warrants of approximately $3.6 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt. The significant assumptions used in preparing the option pricing model for valuing the Perceptive Warrants issued include (i) volatility (70.0%), (ii) risk free interest rate of 1.47% (estimated using treasury bonds with a 7-year life), (iii) strike prices of $3.74 and $4.67 for the common stock warrants, (iv) fair value of common stock ($4.01) and (v) expected life (7 years). The fair value of the 2021 Perceptive Warrants of approximately $1.1 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt. The significant assumptions used in preparing the option pricing model for valuing the 2021 Perceptive Warrants issued include (i) volatility (103.5%), (ii) risk free interest rate of 1.15% (estimated using treasury bonds with a 7-year life), (iii) strike price of $2.87 for the common stock warrant, (iv) fair value of common stock ($2.87) and (v) expected life (7 years). The fair value of the warrants as well as the debt issue costs incurred in connection with the entry into the Perceptive Credit Agreement, including a facility fee of 1% of the total amount of
21
loans available under the facility, are presented as a direct deduction from the carrying amount of the term loan on the consolidated balance sheet as detailed below (in thousands).
|
|
|
|
|
|
September 30, |
|
|
|
2021 |
|
Notes payable |
|
$ |
20,000 |
Debt issuance costs |
|
|
(620) |
Warrant discount |
|
|
(2,946) |
Long-term debt |
|
$ |
16,434 |
The fair value of the warrants and the debt issue costs are being amortized utilizing the effective interest method over the term of the loan. The Company recorded interest expense for the amortization of the fair value of the warrants and debt issue costs of $399,000 and $303,000 for the three months ended September 30, 2021 and 2020, respectively, and $1,132,000 and $707,000 for the nine months ended September 30, 2021 and 2020, respectively.
8. Stockholders’ Equity
Shelf Registration Statement
On October 2, 2020, the Company filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $200.0 million (the “2020 Shelf Registration Statement”). On October 14, 2020, the 2020 Shelf Registration Statement was declared effective by the SEC. In the future, the Company may periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered. At the time any of the securities covered by the 2020 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.
Public Offerings
In February 2020, the Company completed a public offering of 17,250,000 shares of its common stock at a price of $3.00 per share. Proceeds from the public offering, net of underwriting discounts, commissions and offering expenses were approximately $48.4 million.
In October 2021, the Company completed a public offering of 26,666,648 shares of its common stock and warrants to purchase 13,333,324 shares of its common stock at a combined price of $0.85 per share of common stock and one-half of a warrant to purchase one share of common stock. Proceeds from the public offering, net of underwriting discounts, commissions and offering expenses were approximately $21.1 million.
ATM Sales Agreement
In March 2021, the Company entered into a common stock sales agreement (the “Sales Agreement”) under which the Company may sell up to an aggregate of $50.0 million in gross proceeds through the sale of shares of common stock from time to time in “at-the-market” equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended). The Company agreed to pay a commission of up to 3% of the gross proceeds of any common stock sold under the Sales Agreement. During the nine months ended September 30, 2021, the Company issued and sold 6,915,151 shares of common stock under the Sales Agreement resulting in net proceeds to the Company of approximately $9.3 million. The Company’s ability to access additional capital though the sale of equity securities will be limited by the number of authorized shares of common stock available to the Company pursuant to its certificate of incorporation.
Stock-Based Compensation Expense
Stock-based compensation expense was allocated as follows (in thousands):
22
9. Accumulated Other Comprehensive Income
The change in accumulated other comprehensive income, which is reported as a component of stockholders’ equity, for the nine months ended September 30, 2021 is summarized below (in thousands):
|
|
|
|
|
|
Unrealized |
|
|
|
Gain on |
|
|
|
Marketable |
|
|
|
Securities |
|
Balance December 31, 2020 |
|
$ |
3 |
Other comprehensive income |
|
|
(3) |
Balance September 30, 2021 |
|
$ |
— |
No amounts were classified out of accumulated other comprehensive income during the nine months ended September 30, 2021.
10. Income Taxes
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which includes numerous modifications to income tax provisions, including a limitation on business interest expense and net operating loss provisions and the acceleration of alternative minimum tax credits. Given the Company’s history of losses, the CARES Act did not have a material impact on its income tax provision.
11. Commitments and Contingencies
The Company has several firm purchase commitments, primarily related to the manufacture and supply of Twirla and the supply of a field force of sales representatives to provide certain detailing services, sales operation services, compliance services, and training services. Future firm purchase commitments under these agreements, the last of which ends in 2030, total $10.6 million. This amount does not represent all of the Company’s anticipated purchases in the future, but instead represents only purchases that are the subject of contractually obligated minimum purchases. The minimum commitments disclosed are determined based on non-cancelable minimum spend in 2021 or termination amounts. Additionally, the Company purchases products and services as needed with no firm commitment.
The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial position. As of September 30, 2021, the Company has not recorded a provision for any contingent losses.
12. Subsequent Event
On October 13, 2021 the Company completed a public offering of 26,666,648 shares of its common stock and warrants to purchase 13,333,324 shares of its common stock at a combined offering price of $0.85 per share of common stock and one-half of a warrant to purchase one share of common stock. The warrants have an exercise price of $0.85 per share of common stock, are exercisable immediately, and will expire five years from the date of issuance. Proceeds from the public offering, net of underwriting discounts, commissions and offering expenses were approximately $21.1 million.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2021. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part 1, Item 1A, “Risk Factors” of our Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Dollars in the text and in tabular format are presented in thousands, except per share data, or as otherwise indicated.
Overview
We are a women’s healthcare company dedicated to fulfilling the unmet health needs of today’s women. We have remained steadfast in our commitment to innovate in women’s healthcare where there continues to be unmet needs – not only in contraception – but also in other meaningful women’s health therapeutic areas.
Our first product, Twirla, which was approved in February 2020 and launched in early December 2020, is a once-weekly prescription combination hormonal contraceptive patch. It delivers a dose of estrogen consistent with commonly prescribed combined hormonal contraceptives, or CHCs, and lower than the estrogen dose found in other marketed contraceptive patches. We believe there is a market need for a contraceptive patch that is designed to deliver approximately 30 mcg of estrogen and 120 mcg of progestin in a convenient, non-daily dosage form that may support compliance in a noninvasive fashion. Twirla leverages our proprietary transdermal patch technology called Skinfusion®. Skinfusion is designed to allow drug delivery through the skin while promoting patch adhesion and patient comfort and wearability, which may help support compliance.
With the approval of Twirla we are now focused on our advancement as a commercial company. During 2021, we plan to continue implementing our commercialization plan for Twirla, and ultimately, pursuing opportunities to broaden our portfolio to address areas of unmet medical need in women’s health.
Our Strategy
Our near-term goal is to establish an initial franchise in the multi-billion dollar U.S. hormonal contraceptive market built on approval of Twirla in the U.S. Our resources are currently focused on the commercialization of Twirla. We also expect to explore possible expansion through business development activities, such as acquiring access to new products through in-licensing, co-promotion or other collaborative arrangements.
Our current priorities are as follows:
● | Continue to implement our commercialization plans for Twirla to ensure a successful launch in the United States, including maintaining a sales and marketing team and implementing a healthcare compliance program; |
● | Expand coverage and reimbursement for Twirla in the United States from private and public third-party payors; |
● | Expand access to Twirla through multiple business channels including third-party payor contracts, retail and specialty pharmacies, telemedicine and government contracting; |
● | Maintain and manage the supply chain for Twirla to support commercialization of Twirla across the United States; |
● | Evaluate the advancement of our existing pipeline and its possible expansion through business development activities; and |
24
● | Complete and submit the proposed protocols for the two FDA required post-marketing commitment studies. |
It should be noted that current public health threats could adversely affect our ongoing or planned business operations. In particular, the ongoing COVID-19 pandemic resulted in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, access restrictions, restrictions on public gatherings, and stay at home orders. The effect of these orders, government imposed quarantines and measures we have taken, such as implementing work-at-home policies, may negatively impact productivity, disrupt our business and/or could adversely affect our commercialization plans and results. We cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including personnel at third-party manufacturing facilities and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timeline presently planned could be materially and adversely impacted. It is unknown how long these conditions will last and what the complete effect will be on us. During the pandemic, some of our business activities have been slowed and taken longer to complete and we continue to adjust to the challenges of operating in a largely remote setting with our employees. We launched our commercial activities for Twirla and began engaging with healthcare providers to promote Twirla in December 2020. In some instances our sales force has encountered challenges engaging with healthcare providers during this on-going pandemic. Although many areas of the United States have begun to re-open access to offices and other commercial facilities, there continue to be areas where restrictions remain in place, which may have the potential to affect our ability to conduct our business. Further, new variants, including those which are more easily transmissible or resistant to existing vaccines, may lead to new shutdowns or business disruptions in the future. Overall, we recognize the challenges of launching in a pandemic, will continue to closely monitor events as they develop and plan for alternative and mitigating measures that we can implement if needed.
Financial Overview
Since our inception in 1997, we have devoted substantial resources to developing and seeking regulatory approval for Twirla, building our intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations. We incurred research and development expenses of $13.5 million, $9.9 million and $9.8 million during the years ended December 31, 2020, 2019 and 2018, respectively. We incurred research and development expenses of $1.6 million and $3.7 million for the three months ended September 30, 2021 and 2020, respectively. We incurred research and development expenses of $4.6 million and $10.5 million for the nine months ended September 30, 2021 and 2020, respectively. While we anticipate that a portion of our operating expenses will continue to be related to research and development as we plan our post marketing studies, which include both our post marketing requirement and post marketing commitment to the FDA, and evaluate the development of our pipeline, our operating expenses have substantially shifted towards ongoing commercialization activities for Twirla.
We have funded our operations primarily through sales of common stock, convertible preferred stock, convertible promissory notes and term loans. As of September 30, 2021, and December 31, 2020, we had $14.7 million and $54.5 million in cash, cash equivalents and marketable securities, respectively.
In February 2020, we entered into a Credit Agreement and Guaranty with Perceptive Credit Holdings III, LP, a related party (“Perceptive”), for a senior secured term loan credit facility of up to $35.0 million (the “Perceptive Credit Agreement”), which was amended in February 2021 (“Amended Perceptive Credit Agreement”) to add a fourth tranche of $10.0 million, which is subject to the same interest rate and 1% fee payable upon the drawing of a tranche as set forth in the Amended Perceptive Credit Agreement. A first tranche of $5.0 million was funded on execution of the Perceptive Credit Agreement. A second tranche of $15.0 million was funded as a result of the approval of Twirla by the FDA. While another $25.0 million is available in two separate tranches upon the achievement of certain revenue milestones, we do not believe we will achieve these milestones. The facility will be interest only until the third anniversary of the closing date.
In February 2020, we completed a public offering of 17,250,000 shares of our common stock at a price of $3.00 per share. Proceeds from the public offering, net of underwriting discounts, commissions and offering expenses were approximately $48.4 million.
25
In March 2021, we entered into a common stock sales agreement (the “2021 ATM Agreement”) under which we are authorized to sell up to an aggregate of $50.0 million in gross proceeds through the sale of shares of common stock from time to time in “at-the-market” equity offerings (as defined in Rule 415 promulgated under the Securities Act of 1933, as amended). We agreed to pay a commission of up to 3% of the gross proceeds of any common stock sold under this agreement. During the nine months ended September 30, 2021, we issued and sold a total of 6,915,151 shares of common stock under the 2021 ATM Agreement resulting in net proceeds of approximately $9.3 million.
In October 2021, we completed a public offering of 26,666,648 shares of our common stock and warrants to purchase 13,333,324 shares of our common stock at a combined price of $0.85 per share of common stock and one-half of a warrant to purchase one share of common stock. Proceeds from the public offering, net of underwriting discounts, commissions and offering expenses were approximately $21.1 million.
Moving forward, we plan to monitor our cash, cash equivalents and marketable securities balances, in an effort to ensure we have adequate liquidity to fund the operations of the Company. If the COVID-19 pandemic or other factors impact our current business plan or our ability to generate revenue from the launch of Twirla, we believe we have the ability to revise our commercial plans, including curtailing sales and marketing spending, to allow us to continue to fund our operations. In addition, we believe we may have the potential to access additional capital through the 2021 ATM Agreement, selling additional debt or equity securities or obtaining a line of credit or other loan as required. Our ability to access additional capital through the sale of equity securities will be limited by the number of authorized shares of common stock available to us pursuant to our certificate of incorporation.
We have generated minimal revenue and have never been profitable for any year. Our net loss was $51.9 million, $18.6 million and $19.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. Our net loss was $16.8 million and $15.5 million for the three months ended September 30, 2021 and 2020, respectively. Our net loss was $51.5 million and $34.2 million for the nine months ended September 30, 2021 and 2020, respectively. We expect to incur significant operating expenses for the foreseeable future as we continue to commercialize Twirla, advance our other potential product candidates and expand our research and development programs.
Going Concern
As of September 30, 2021, we had cash and cash equivalents of $14.7 million. We closely monitor our cash and cash equivalents and will need to raise additional funds through debt issuances or the issuance and sale of our common stock to meet our projected operating requirements, including the continued commercialization of Twirla, the exploration and potential advancement of our existing pipeline and our possible expansion through business development activities.
Our future success depends on our ability to raise additional capital and/or implement various strategic alternatives. There can be no assurance that we can realize any financing, or if realized, what the terms of any such financing may be, or that any amount that we are able to raise will be adequate. Based upon the foregoing, management has concluded that there is substantial doubt about our ability to continue as a going concern through the 12 months following the date on which this Quarterly Report on Form 10-Q is filed.
We continue to analyze various alternatives, including refinancing alternatives, potential asset sales and mergers and acquisitions. We cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities to raise funds, whether through the issuance of equity or convertible debt securities, or any combination thereof, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders will experience dilution. Moreover, our ability to sell equity securities is limited by the number of authorized shares of common stock available to us pursuant to our certificate of incorporation. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, including Twirla, or grant licenses on terms that may not be favorable to us. If we are unable to obtain funds when needed or on acceptable terms, we then may be
26
unable to complete the commercialization of Twirla and may also be required to further cut operating costs, forego future development and other opportunities and may need to seek bankruptcy protection.
The financial statements as of September 30, 2021 have been prepared under the assumption that we will continue as a going concern for the next 12 months. Our ability to continue as a going concern is dependent upon our uncertain ability to obtain additional capital, reduce expenditures and/or execute on our business plan and successfully launch Twirla. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We do not own any manufacturing facilities and rely on our contract manufacturer, Corium, for all aspects of the manufacturing of Twirla. We will need to continue to invest in the manufacturing process for Twirla, and incur significant expenses, in order to be capable of supplying projected commercial quantities of Twirla. We expect to incur significant expenses in order to create an infrastructure to support the commercialization of Twirla, including sales, marketing, distribution, medical affairs and compliance functions. We will need to generate significant revenue to achieve profitability, and we may never do so.
Financial Operations Overview
Revenue
To date, we have generated minimal revenue from product sales. In the future, in addition to revenue from product sales, we may generate revenue from license fees, milestone payments or royalties from the sale of products developed using our intellectual property. Our ability to generate revenue and become profitable depends on our ability to successfully commercialize Twirla and any product candidates that we may advance in the future. If we fail to successfully commercialize Twirla, or any other product candidates we advance in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, could be adversely affected.
Cost of Product Revenues
Cost of product revenues include direct and indirect costs related to the manufacturing of Twirla sold, including packaging services, freight, obsolescence, and allocation of overhead costs that are primarily fixed such as depreciation, salaries and benefits, and insurance. We expect these relatively fixed costs to become less significant as a percentage of sales with anticipated volume increases. There was no direct cost of product revenue on approximately 3,000 units sold in the nine months ended September 30, 2021, as those units were validation inventory which was previously expensed as research and development expense in the fourth quarter of 2020.
Research and Development Expenses
Since our inception and through approval of Twirla by the FDA in February 2020, we focused our resources on our research and development activities. Research and development expenses consist primarily of costs incurred for the development of Twirla and other current and future potential product candidates, and include:
● | expenses incurred under agreements with contract research organizations, or CROs, and investigative sites that conduct our clinical trials and preclinical studies; |
● | employee-related expenses, including salaries, benefits, travel and stock-based compensation expenses; |
● | the cost of acquiring, developing and manufacturing clinical trial materials, including the supply of our potential product candidates; and |
● | costs associated with research, development and regulatory activities. |
Research and development costs are expensed as incurred. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or information provided to us by our third-party vendors.
Research and development activities are central to our business model and to date, our research and development expenses have related primarily to the development of Twirla. Product candidates in later stages of
27
clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis, as the majority of our past and planned expenses have been and will be in support of Twirla.
For the three months ended September 30, 2021 and 2020, our research and development expenses were approximately $1.6 million and $3.7 million, respectively. For the nine months ended September 30, 2021 and 2020, our research and development expenses were approximately $4.6 million and $10.5 million, respectively. The following table summarizes our research and development expenses by functional area.
It is difficult to determine with any certainty the exact duration and completion costs of any of our future clinical trials of Twirla or our current and future potential product candidates we may advance. It is also difficult to determine if, when or to what extent we will generate revenue from the commercialization and sale of Twirla or our potential product candidates that obtain regulatory approval.
Future research and development costs incurred for our potential product candidates and required post-marketing studies will depend on a variety of factors, including the uncertainties of future clinical trials and preclinical studies, the rate of subject enrollment, access to additional capital, and significant and changing government regulation. For the foreseeable future, we expect the current public health crisis to have a negative effect on the conduct of clinical trials. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the U.S. Food and Drug Administration (“FDA”) or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in enrollment in any of our clinical trials, or experience issues with our manufacturing capabilities, we could be required to expend significant additional financial resources and time with respect to the development of that product candidate. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, coupled with an assessment of each product candidate’s commercial potential. Substantially all of our resources are currently dedicated to commercializing Twirla.
Selling and Marketing Expenses
Selling and marketing expenses consist principally of the cost of salaries and related costs for personnel in sales and marketing, our contract sales force, brand building, advocacy, market research and consulting. Selling and marketing expenses are expensed as incurred.
For the three months ended September 30, 2021 and 2020, our selling and marketing expenses totaled approximately $9.4 million and $7.7 million, respectively. For the nine months ended September 30, 2021 and 2020, our selling and marketing expenses totaled approximately $30.3 million and $12.6 million, respectively. Our commercial launch of Twirla in the United States utilized a contract sales force. We anticipate that our selling and marketing expenses will increase in the future as our commercialization efforts continue. These increases will likely include increased costs for brand building, advocacy, market research and consulting, and the costs of maintaining our contract sales force.
28
General and Administrative Expenses
General and administrative expenses consist principally of salaries and related costs for personnel in executive, finance and administrative functions including payroll taxes and health insurance, stock-based compensation and travel expenses. Other general and administrative expenses include facility-related costs, insurance and professional fees for legal, patent review, consulting and accounting services. General and administrative expenses are expensed as incurred.
For the three months ended September 30, 2021 and 2020, our general and administrative expenses totaled approximately $3.4 million and $3.3 million, respectively. For the nine months ended September 30, 2021 and 2020, our general and administrative expenses totaled approximately $11.4 million and $9.2 million, respectively. We anticipate that our general and administrative expenses will increase in the future as our recently added administrative positions are maintained on a full-year basis. These increases will likely include legal and accounting services, stock registration and printing fees, addition of new personnel to support compliance and communication needs, increased insurance premiums, outside consultants and investor relations.
Critical Accounting Policies and Significant Judgments and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. On an ongoing basis, our actual results may differ significantly from our estimates.
There have been no material changes to our critical accounting policies and estimates from the information discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K, as filed with the SEC on March 1, 2021.
Results of Operations
Comparison of the Three Months Ended September 30, 2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
||||
|
|
September 30, |
|
|
|
||||
|
|
(In thousands) |
|
|
|
||||
|
|
2021 |
|
2020 |
|
Change |
|||
|
|
|
|
|
|
|
|
|
|
Revenues, net |
|
$ |
1,287 |
|
$ |
— |
|
$ |
1,287 |
Cost of product revenues |
|
|
2,711 |
|
|
— |
|
|
2,711 |
Gross profit |
|
|
(1,424) |
|
|
— |
|
|
(1,424) |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
1,593 |
|
$ |
3,663 |
|
$ |
(2,070) |
Selling and marketing |
|
|
9,386 |
|
|
7,723 |
|
|
1,663 |
General and administrative |
|
|
3,371 |
|
|
3,270 |
|
|
101 |
Total operating expenses |
|
|
14,350 |
|
|
14,656 |
|
|
(306) |
Loss from operations |
|
$ |
(15,774) |
|
$ |
(14,656) |
|
|
(1,118) |
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1 |
|
|
37 |
|
|
(36) |
Interest expense |
|
|
(999) |
|
|
(905) |
|
|
(94) |
Total other income (expense), net |
|
|
(998) |
|
|
(868) |
|
|
(130) |
Loss before benefit from income taxes |
|
|
(16,772) |
|
|
(15,524) |
|
|
(1,248) |
Benefit from income taxes |
|
|
— |
|
|
— |
|
|
— |
Net loss |
|
$ |
(16,772) |
|
$ |
(15,524) |
|
$ |
(1,248) |
29
Revenues. Revenue, net consists of sales of Twirla, which was approved by the FDA in February 2020 and launched in the US in December 2020, and reflects the shipment of Twirla to specialty distributors, net of estimates for applicable variable consideration, which consist primarily of wholesale distribution fees, prompt pay and other discounts, rebates, chargebacks, product returns and co-pay assistance programs.
Cost of product revenues. Cost of product revenues totaled $2.7 million and consist of direct and indirect costs related to the manufacturing of Twirla sold, including packaging services, freight, obsolescence, and allocation of overhead costs that are primarily fixed such as depreciation, salaries and benefits, and insurance. Cost of product revenues included approximately $1.4 million of obsolescence reserves for inventory not expected to be sold prior to its shelf life date.
Research and development expenses. Research and development expenses decreased by $2.1 million, or 57%, from $3.7 million for the three months ended September 30, 2020 to $1.6 million for the three months ended September 30, 2021. This decrease in research and development expenses was primarily due to a decrease in manufacturing commercialization expenses of $2.0 million for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. This decrease reflects costs to conduct validation work for the commercial manufacturing of Twirla by Corium, our contract manufacturer, which was completed in 2020.
Selling and marketing expenses. Selling and marketing expenses increased by $1.7 million, or 22%, from $7.7 million for the three months ended September 30, 2020 to $9.4 million for the three months ended September 30, 2021. This overall increase in selling and marketing expenses is due to increases related to our commercialization activities such as our contract sales force, brand building, advocacy, market research and consulting.
General and administrative expenses. General and administrative expenses increased by $0.1 million, or 3%, from $3.3 million for the three months ended September 30, 2020 to $3.4 million for the three months ended September 30, 2021. This increase in general and administrative expense was primarily due to higher personnel and insurance costs partially offset by lower professional fee expenses related to legal fees and decreased use of financial consultants.
Interest income. Interest income comprises interest earned on cash, cash equivalents and marketable securities.
Interest expense. Interest expense is attributable to our term loan with Perceptive and includes the amortization of the discount associated with allocating value to the common stock warrants issued to Perceptive and the amortization of the deferred financing costs associated with the term loan. Interest expense increased by $0.1 million, from $0.9 million for the three months ended September 30, 2020 to $1.0 million for the three months ended September 30, 2021.
30
Comparison of the Nine Months Ended September 30, 2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
||||
|
|
September 30, |
|
|
|
||||
|
|
(In thousands) |
|
|
|
||||
|
|
2021 |
|
2020 |
|
Change |
|||
|
|
|
|
|
|
|
|
|
|
Revenues, net |
|
$ |
2,587 |
|
$ |
— |
|
$ |
2,587 |
Cost of product revenues |
|
|
5,017 |
|
|
— |
|
|
5,017 |
Gross profit |
|
|
(2,430) |
|
|
— |
|
|
(2,430) |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
4,568 |
|
$ |
10,488 |
|
$ |
(5,920) |
Selling and marketing |
|
|
30,263 |
|
|
12,616 |
|
|
17,647 |
General and administrative |
|
|
11,386 |
|
|
9,208 |
|
|
2,178 |
Total operating expenses |
|
|
46,217 |
|
|
32,312 |
|
|
13,905 |
Loss from operations |
|
$ |
(48,647) |
|
$ |
(32,312) |
|
|
(16,335) |
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
24 |
|
|
284 |
|
|
(260) |
Interest expense |
|
|
(2,914) |
|
|
(2,205) |
|
|
(709) |
Total other income (expense), net |
|
|
(2,890) |
|
|
(1,921) |
|
|
(969) |
Loss before benefit from income taxes |
|
|
(51,537) |
|
|
(34,233) |
|
|
(17,304) |
Benefit from income taxes |
|
|
— |
|
|
— |
|
|
— |
Net loss |
|
$ |
(51,537) |
|
$ |
(34,233) |
|
$ |
(17,304) |
Revenues. Revenue, net consists of sales of Twirla, which was approved by the FDA in February 2020 and launched in the US in December 2020, and reflects the shipment of Twirla to specialty distributors, net of estimates for applicable variable consideration, which consist primarily of wholesale distribution fees, prompt pay and other discounts, rebates, chargebacks, product returns and co-pay assistance programs.
Cost of product revenues. Cost of product revenues totaled $5.0 million and consist of direct and indirect costs related to the manufacturing of Twirla sold, including packaging services, freight, and allocation of overhead costs that are primarily fixed such as depreciation, salaries and benefits, and insurance. During the nine months ended September 30, 2021, approximately 14% of the product sold consisted of validation inventory which was previously expensed as research and development expense in the fourth quarter of 2020. Cost of product revenues included approximately $1.4 million of obsolescence reserves for inventory not expected to be sold prior to its shelf life date.
Research and development expenses. Research and development expenses decreased by $5.9 million, or 56%, from $10.5 million for the nine months ended September 30, 2020 to $4.6 million for the nine months ended September 30, 2021. This decrease in research and development expenses was primarily due to the following:
● | a decrease in manufacturing commercialization expenses of $6.7 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. This decrease reflects costs to conduct validation work for the commercial manufacturing of Twirla by Corium, our contract manufacturer, which was completed in 2020; and |
● | an increase in clinical development expenses of $1.4 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. This increase reflects higher costs as we evaluate additional line extensions for Twirla and initiate development of potential product candidates in addition to Twirla and higher medical education costs for the nine months ended September 30, 2021. |
31
Selling and marketing expenses. Selling and marketing expenses increased by $17.6 million, or 140%, from $12.6 million for the nine months ended September 30, 2020 to $30.3 million for the nine months ended September 30, 2021. This overall increase in selling and marketing expenses is due to increases related to our commercialization activities such as hiring our contract sales force, brand building, advocacy, market research and consulting.
General and administrative expenses. General and administrative expenses increased by $2.2 million, or 24%, from $9.2 million for the nine months ended September 30, 2020 to $11.4 million for the nine months ended September 30, 2021. This increase in general and administrative expense was primarily due to:
● | an increase in salaries and wages of $1.0 million, due to increased headcount for the nine months ended September 30, 2021; |
● | an increase in professional fee expenses of $0.7 million primarily related to investor relations expenses and increased use of financial consultants; and |
● | an increase in insurance expense of $0.4 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. |
Interest income. Interest income comprises interest earned on cash, cash equivalents and marketable securities.
Interest expense. Interest expense is attributable to our term loan with Perceptive and includes the amortization of the discount associated with allocating value to the common stock warrants issued to Perceptive and the amortization of the deferred financing costs associated with the term loan. Interest expense increased by $0.7 million, from $2.2 million for the nine months ended September 30, 2020 to $2.9 million for the nine months ended September 30, 2021.
Liquidity and Capital Resources
At September 30, 2021, we had cash and cash equivalents totaling $14.7 million. We invest a portion of our cash equivalents in short-term highly liquid, interest-bearing investment-grade and government securities in order to preserve principal.
The following table sets forth the primary sources and uses of cash for the periods indicated:
Operating Activities
We incurred significant costs in the area of research and development, including CRO fees, manufacturing, regulatory and other clinical trial costs, as Twirla was being developed. With the approval of Twirla early in 2020, our operating expenses shifted substantially to selling and marketing as we built out our commercial infrastructure. Net cash used in operating activities was $48.6 million for the nine months ended September 30, 2021 and consisted primarily of a net loss of $51.5 million and a $3.8 million net increase in working capital, offset by a non-cash inventory reserve of $1.4 million, non-cash stock-based compensation expense of $2.5 million, depreciation expense of $1.5 million, and $1.4 million of other non-cash charges, primarily interest expense. Net cash used in operating activities was $30.0 million for the nine months ended September 30, 2020 and consisted primarily of a net loss of $34.2 million, offset by non-cash stock-based compensation expense of $2.1 million, $1.0 million of other non-cash charges, primarily interest expense, and a net increase in operating assets and liabilities of $1.1 million.
32
Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2021 was $39.5 million and primarily represents net sales and maturities of marketable securities. Cash used in investing activities for the nine months ended September 30, 2020 primarily represents the purchase of marketable securities.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2021 was $9.3 million, which consists of net proceeds of $9.3 million from the sale of 6,915,151 shares of our common stock under the 2021 ATM Agreement, and stock option proceeds of $0.1 million. Net cash provided by financing activities for the nine months ended September 30, 2020 was $67.9 million which consists of net proceeds of $48.4 million received from the issuance of 17,250,000 shares of our common stock through a public offering, and proceeds of $20.0 million from the Perceptive term loan. These proceeds were partially offset by debt financing costs of $1.0 million.
Funding Requirements and Other Liquidity Matters
We closely monitor our cash, cash equivalents and marketable securities balances, in an effort to ensure we have adequate liquidity to fund the operations of the Company. If the COVID-19 pandemic or other factors impact our current business plan or our ability to generate revenue from the launch of Twirla, we believe we have the ability to revise our commercial plans, including curtailing sales and marketing spending, to allow us to continue to fund our operations. In addition, on October 2, 2020 we filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $200.0 million (the “2020 Shelf Registration Statement”). On October 14, 2020, the 2020 Shelf Registration Statement was declared effective by the SEC. Prior to the 2020 Shelf Registration Statement, we had filed a universal shelf registration statement in November 2018 for the issuance of up to $100.0 million of securities, which we refer to as the 2018 Shelf Registration Statement, which was declared effective by the SEC on November 14, 2018.
On February 21, 2020, we filed a prospectus supplement to our 2018 Shelf Registration Statement registering a public offering of 17,250,000 shares of common stock at a price of $3.00 per share. Proceeds from the public offering, net of underwriting discounts, commissions and offering expenses were approximately $48.4 million.
On March 18, 2021, we filed a prospectus supplement to our 2020 Shelf Registration Statement registering an at-the-market offering program we entered into for the sale of up to $50.0 million of shares of our common stock. During the nine months ended September 30, 2021, we sold 6,915,151 shares of our common stock under the at-the-market program resulting in net proceeds of approximately $9.3 million.
On October 8, 2021, we filed a prospectus supplement to our 2020 Shelf Registration Statement registering a public offering of 26,666,648 shares of common stock sold together with warrants to purchase up to 13,333,324 shares of our common stock at a combined offering price of $0.85 per share of common stock and one-half of a warrant to purchase one share of common stock. The warrants have an exercise price of $0.85 per share, are exercisable immediately, and will expire five years from the date of issuance. On October 13, 2021, we completed the offering and realized proceeds of approximately $21.1 million, net of underwriting discounts, commissions and offering expenses.
We believe we may have the potential to access additional capital through the 2021 ATM, selling additional debt or equity securities or obtaining a line of credit or other loan as required. Our ability to access additional capital though the sale of equity securities will be limited by the number of authorized shares of common stock available to us pursuant to our certificate of incorporation.
We expect to continue to incur significant operating expenses for the foreseeable future in connection with our ongoing activities as we:
• |
maintain a sales and marketing infrastructure to support the continued commercialization of Twirla in the United States; |
33
• |
continue to evaluate additional line extensions for Twirla and initiate development of potential product candidates in addition to Twirla; |
• |
maintain, leverage and expand our intellectual property portfolio; and |
• |
add operational, financial and management information systems and personnel, including personnel to support our product development and future commercialization efforts. |
Contractual Obligations and Commitments
In April 2020, we entered into a Manufacturing and Commercialization Agreement (“the Commercialization Agreement”) with Corium, Inc. for the manufacture and supply of Twirla. Under the terms of the Commercialization Agreement, Corium is to be the exclusive supplier of Twirla for ten years. The Commercialization Agreement includes a fixed price per unit for two years depending on annual purchase volume and quarterly minimum purchase amounts. As of September 30, 2021, the amount committed for purchases through the first quarter of 2022 is $7.0 million.
In April 2020, we entered into a project agreement (the “Project Agreement”) with inVentiv Commercial Services, LLC (“inVentiv”) under which inVentiv will provide a field force of sales representatives to provide certain detailing services, sales operation services, compliance services and training services with respect to Twirla to the Company in exchange for an up-front implementation fee and a fixed annual fee. The Project Agreement has an initial term of two years from August 24, 2020, the date of the first activity undertaken by inVentiv to detail Twirla (the “Deployment Date”), unless earlier extended upon the mutual written agreement of the parties. We may terminate the Project Agreement for any reason upon timely notice after the first anniversary of the Deployment Date; provided, however, that if we terminate the Project Agreement prior to the eighteen month anniversary of the Deployment Date, we will be obligated to pay inVentiv a termination fee, the amount of which varies depending on the date of termination. As of September 30, 2021, the minimum amount committed totals $3.6 million.
The following table summarizes our contractual obligations and commitments as of September 30, 2021 that will affect our future liquidity:
Our operating lease commitment relates to our lease of office space in Princeton, New Jersey. On November 11, 2020, we entered into an extension for this location through December 31, 2021 and simultaneously reduced the amount of space we are leasing. On August 6, 2021, we signed a lease for new office space that commences on the later of December 1, 2021 or the date on which certain building improvements are substantially completed, all as set forth in the lease (the “Commencement Date”). The term of the lease is forty months following the Commencement Date. Minimum rent payments over the term of the lease total approximately $1.2 million.
Recent Accounting Pronouncements
See Note 2 to our financial statements that discusses new accounting pronouncements.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.
34
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are exposed to market risks in the ordinary course of our business. Market risk is the risk of change in fair value of a financial instrument due to changes in interest rates, equity prices, financing, exchange rates or other factors. These market risks are principally limited to interest rate fluctuations.
We had cash, cash equivalents and marketable securities of $14.7 million and $54.5 million at September 30, 2021 and December 31, 2020, respectively, consisting primarily of funds in cash, money market accounts and corporate and government debt securities. The primary objective of our investment activities is to preserve principal and liquidity while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of our investment portfolio, we do not believe an immediate 10.0% increase in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.
Our results of operations and cash flows are subject to fluctuations due to changes in interest rates. We do not believe that we are materially exposed to changes in interest rates. We do not currently use interest rate derivative instruments to manage exposure to interest rate changes. We estimate that a 1% unfavorable change in interest rates would not have a material effect on interest expense for the nine months ended September 30, 2021.
Inflation Risk
Inflation generally affects us by increasing our cost of labor and pricing of contracts and agreements. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the nine months ended September 30, 2021.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective, at the reasonable assurance level, in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes to Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II: Other Information
Item 1. Legal Proceedings.
We are not currently subject to any material legal proceedings.
35
Item 1A. Risk Factors.
There have been no material changes during the quarter ended September 30, 2021 to our risk factors as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2020.
Item 6. Exhibits.
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which is incorporated herein by reference.
Exhibit Index
|
|
|
Exhibit |
|
|
Number |
|
Description of Document |
10.1 |
|
|
|
|
|
10.2 |
|
|
|
|
|
10.3 |
|
|
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1** |
|
|
|
|
|
32.2** |
|
|
|
|
|
101 |
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 formatted in Inline Extensible Business Reporting Language (XBRL): (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Stockholders’ Equity, (v) Statements of Cash Flows, and (vi) the Notes to Financial Statements. |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
** The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates them by reference.
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
Date: November 2, 2021 |
Agile Therapeutics, Inc. |
|
|
|
|
|
By: |
/s/ Alfred Altomari |
|
|
Alfred Altomari |
|
|
President and Chief Executive Officer
|
|
|
|
Date: November 2, 2021 |
|
|
|
|
|
|
By: |
/s/ Dennis P. Reilly |
|
|
Dennis P. Reilly |
|
|
Senior Vice President and Chief Financial Officer
|
37
Exhibit 10.1
LEASE AGREEMENT
between
500 COLLEGE ROAD VENTURE, LLC
Landlord
and
AGILE THERAPEUTICS, INC.
Tenant
Dated: August 6, 2021
Premises: Suite 310 of the Building located at
500 College Road East
Princeton, New Jersey 08540
TABLE OF CONTENTS
|
Page |
|
|
LEASE AGREEMENT |
1 |
|
|
ARTICLE I. BASIC LEASE INFORMATION |
1 |
|
|
SECTION 1.01. BUILDING |
1 |
SECTION 1.02. DEMISED PREMISES |
1 |
SECTION 1.03. BASE RENT |
1 |
SECTION 1.04. SECURITY DEPOSIT |
2 |
SECTION 1.05. TERM |
2 |
SECTION 1.06. TENANT’S PRO RATA SHARE |
2 |
SECTION 1.07. TENANT’S ELECTRICITY CHARGE |
2 |
SECTION 1.08. BROKERS |
3 |
SECTION 1.09. ADDRESSES FOR LANDLORD AND TENANT |
3 |
ARTICLE II. DEFINITIONS |
4 |
|
|
SECTION 2.01. ASSESSED VALUATION |
4 |
SECTION 2.02. BASE YEAR |
4 |
SECTION 2.03. BUILDING SYSTEMS |
4 |
SECTION 2.04. BUILDING STRUCTURE |
4 |
SECTION 2.05. COMMENCEMENT DATE |
4 |
SECTION 2.06. COMMON AREA |
5 |
SECTION 2.07. ENVIRONMENTAL CLAIMS |
5 |
SECTION 2.08. ENVIRONMENTAL LAW |
5 |
SECTION 2.09. EXPIRATION DATE |
6 |
SECTION 2.10. HAZARDOUS MATERIALS |
6 |
SECTION 2.11. LANDLORD’S WORK |
6 |
SECTION 2.12. LEASE YEAR |
6 |
SECTION 2.13. MORTGAGE |
6 |
SECTION 2.14. MORTGAGEE |
6 |
SECTION 2.15. OPERATING COST BASE |
6 |
SECTION 2.16. OPERATING YEAR |
6 |
SECTION 2.17. PARKING AREA |
6 |
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TABLE OF CONTENTS
(continued)
Page
SECTION 2.18. REAL ESTATE TAX BASE |
7 |
SECTION 2.19. RENT |
7 |
SECTION 2.20. TAX YEAR |
7 |
SECTION 2.21. TAXES |
7 |
SECTION 2.22. TENANT’S PARTIES OR TENANT PARTIES |
7 |
SECTION 2.23. TERM |
8 |
SECTION 2.24. BUSINESS DAYS |
8 |
ARTICLE III. PREPARATION OF THE DEMISED PREMISES |
8 |
|
|
SECTION 3.01. LANDLORD’S WORK |
8 |
SECTION 3.02. NO REPRESENTATION |
8 |
ARTICLE IV. TERM |
8 |
|
|
SECTION 4.01. TERM |
8 |
SECTION 4.02. COMMENCEMENT DATE |
8 |
SECTION 4.03. EXPIRATION DATE |
8 |
ARTICLE V. RENT. |
9 |
|
|
SECTION 5.01. BASE RENT |
9 |
SECTION 5.02. TAX INCREASE AMOUNT |
9 |
SECTION 5.03. OPERATING COST INCREASE AMOUNT |
10 |
SECTION 5.04. PAYMENT OF RENT OR ADDITIONAL RENT |
16 |
SECTION 5.05. SECURITY DEPOSIT |
17 |
ARTICLE VI. SIGNS |
18 |
|
|
SECTION 6.01. BUILDING DIRECTORY(S): |
18 |
SECTION 6.02. TENANT DOOR SIGNAGE |
18 |
ARTICLE VII. REPAIRS, ALTERATIONS, COMPLIANCE, SURRENDER |
19 |
|
|
SECTION 7.01. REPAIRS AND MAINTENANCE BY LANDLORD |
19 |
SECTION 7.02. REPAIRS AND MAINTENANCE BY TENANT |
19 |
SECTION 7.03. APPROVAL BY LANDLORD OF IMPROVEMENTS |
20 |
SECTION 7.04. EMERGENCY REPAIRS |
21 |
SECTION 7.05. ELECTRICAL LINES |
21 |
-ii-
TABLE OF CONTENTS
(continued)
Page
SECTION 7.06. SURRENDER OF PREMISES |
21 |
ARTICLE VIII. SERVICE AND UTILITIES |
22 |
|
|
SECTION 8.01. LANDLORD’S SERVICES |
22 |
SECTION 8.02. ELECTRICITY |
24 |
ARTICLE IX. USE AND OPERATION |
25 |
|
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SECTION 9.01. USE |
25 |
SECTION 9.02. RULES AND REGULATIONS |
26 |
SECTION 9.03. RESTRICTION ON TENANT’S ACTIVITIES |
26 |
SECTION 9.04. COMPLIANCE WITH LAW |
27 |
ARTICLE X. TRANSFER OF INTEREST, PRIORITY OF LIEN |
27 |
|
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SECTION 10.01. ASSIGNMENT AND SUBLETTING |
27 |
SECTION 10.02. SUBORDINATION |
31 |
SECTION 10.03. ATTORNMENT |
31 |
SECTION 10.04. TRANSFER OF LANDLORD’S INTEREST |
31 |
SECTION 10.05. MORTGAGEE’S RIGHTS |
32 |
ARTICLE XI. COMMON AREA |
32 |
|
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SECTION 11.01. USE OF COMMON AREA |
32 |
SECTION 11.02. LANDLORD’S RIGHTS |
32 |
SECTION 11.03. LICENSE NUMBERS |
33 |
SECTION 11.04. PARKING AREAS |
33 |
ARTICLE XII. DESTRUCTION OR DAMAGE. |
33 |
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SECTION 12.01. RENT ABATEMENT |
33 |
SECTION 12.02. TERMINATION BY LANDLORD |
34 |
SECTION 12.03. LANDLORD’S OBLIGATION TO REBUILD |
34 |
SECTION 12.04. LANDLORD’S LIABILITY |
34 |
ARTICLE XIII. CONDEMNATION |
34 |
|
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SECTION 13.01. DEFINITIONS |
34 |
SECTION 13.02. TAKING OF DEMISED PREMISES |
35 |
-iii-
TABLE OF CONTENTS
(continued)
Page
SECTION 13.03. TAKING FOR TEMPORARY USE |
35 |
SECTION 13.04. DISPOSITION OF AWARDS |
36 |
ARTICLE XIV. TENANT’S INSURANCE. |
36 |
|
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SECTION 14.01. GENERAL INSURANCE |
36 |
ARTICLE XV. INDEMNIFICATION AND LIABILITY |
39 |
|
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SECTION 15.01. INDEMNIFICATION |
39 |
SECTION 15.02. WAIVER AND RELEASE |
40 |
SECTION 15.03. LIABILITY OF LANDLORD |
40 |
ARTICLE XVI. DEFAULT, REMEDIES |
40 |
|
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SECTION 16.01. DEFAULT |
40 |
SECTION 16.02. LANDLORD’S REMEDY |
41 |
SECTION 16.03. LANDLORD’S RE-ENTRY |
42 |
SECTION 16.04. LANDLORD’S ADDITIONAL REMEDIES |
42 |
SECTION 16.05. WAIVER OF RIGHT OF REDEMPTION |
43 |
SECTION 16.06. LANDLORD’S RIGHT TO PERFORM FOR ACCOUNT OF TENANT |
43 |
SECTION 16.07. ADDITIONAL REMEDIES, WAIVERS, ETC |
43 |
SECTION 16.08. INTENTIONALLY OMITTED |
44 |
ARTICLE XVII. TENANT’S ESTOPPEL CERTIFICATE |
44 |
ARTICLE XVIII. RIGHT OF ACCESS |
44 |
ARTICLE XIX. COVENANT OF QUIET ENJOYMENT. |
44 |
ARTICLE XX. HAZARDOUS MATERIALS |
45 |
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SECTION 20.01. COMPLIANCE WITH ENVIRONMENTAL LAWS |
45 |
ARTICLE XXI. TENANT’S BANKRUPTCY |
48 |
ARTICLE XXII. INTENTIONALLY OMITTED |
49 |
ARTICLE XXIII. TELECOMMUNICATIONS |
49 |
SECTION 23.01. TELECOMMUNICATIONS |
49 |
-iv-
TABLE OF CONTENTS
(continued)
Page
ARTICLE XXIV. WI-FI ACCESS |
50 |
SECTION 24.01. WI-FI ACCESS |
50 |
ARTICLE XXV. MISCELLANEOUS |
50 |
SECTION 25.01. INTERPRETATION |
50 |
SECTION 25.02. CONSTRUCTION OF WORDS AND PHRASES |
51 |
SECTION 25.03. WRITTEN AGREEMENT REQUIRED |
51 |
SECTION 25.04. NOTICES |
52 |
SECTION 25.05. METHOD OF PAYMENT |
52 |
SECTION 25.06. SUCCESSORS AND ASSIGNS |
52 |
SECTION 25.07. TENANT |
52 |
SECTION 25.08. HOLD OVER |
52 |
SECTION 25.09. INTEREST AND LATE CHARGE |
53 |
SECTION 25.10. NON-WAIVER |
53 |
SECTION 25.11. BROKER |
53 |
SECTION 25.12. NOT RECORD THE LEASE |
54 |
SECTION 25.13. TENANT FINANCIAL STATEMENTS |
54 |
SECTION 25.14. MECHANICS’ LIENS |
54 |
SECTION 25.15. CORPORATE AUTHORITY |
54 |
SECTION 25.16. FORCE MAJEURE |
55 |
SECTION 25.17. BLOCKED PERSON |
55 |
SECTION 25.18. GOVERNING LAW |
55 |
SECTION 25.19. RENEWAL OPTION |
55 |
SECTION 25.20. TENANT’S LICENSING REQUIREMENTS |
56 |
SECTION 25.21. EXISTING FURNITURE |
57 |
SECTION 25.22. COUNTERPARTS; ELECTRIC SIGNATURES |
57 |
-v-
TABLE OF CONTENTS
(continued)
Page
EXHIBITS TO LEASE
Exhibit A |
Outline or Floor Plan of Demised Premises |
A-1 |
Exhibit B |
Landlord’s Work |
B-1 |
Exhibit B-1 |
Preliminary Space Plan |
B-2 |
Exhibit B-2 |
Workletter |
B-3 |
Exhibit C |
Rules and Regulations |
C-1 |
Exhibit D |
Janitorial Services |
D-1 |
Exhibit E |
Holiday Schedule |
E-1 |
Exhibit F |
Legal Description of Land |
F-1 |
Exhibit H |
Existing Furniture |
H-1 |
-vi-
LEASE AGREEMENT
THIS AGREEMENT OF LEASE (this “Lease”) dated August 6, 2021, between 500 COLLEGE ROAD VENTURE, LLC, a New Jersey limited liability company, havi ng an office address c/o Bergman Realty Corporation, 555 U.S. Highway 1 South, Suite 210, Iselin, New Jersey 08830 (hereinafter called “Landlord”) and AGILE THERAPEUTICS, INC., a Delaware corporation having an office address prior to the Commencement Date of 101 Poor Farm Road, Princeton, New Jersey 08540, Attention: Tristen Herrstrom, SVP, Human Resources & Administration (hereinafter cal led “Tenant”).
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord the Demised Premises (hereinafter defined) for the Term (hereinafter defined) and at the rent and on all of the terms and conditions set forth herein. Intending to be legally bound hereunder and in consideration of $1.00 and other good and valuable consideration, Landlord and Tenant hereby agree with each other as follows:
ARTICLE I. BASIC LEASE INFORMATION.
Section l.01. Building:
The Building is located at 500 College Road East, Princeton, New Jersey 08540 (the “Building”). The Building and the land upon which the Building is located (the “Land”) (which Land is more particularly described on Exhibit F attached hereto), are sometimes referred to collectively as the “Real Estate” or the “Property”.
Section 1.02. Demised Premises:
The “Demised Premises” is the portion of the Building leased to Tenant consisting of approximately 13,774 rentable square feet of area (inclusive of the allocable Common Areas as defined in Section 2.06 hereof) located in suite #310, as more particularly described on the Floor Plan or outline of the Demised Premises, attached hereto as Exhibit A, which area is agreed to be deemed the area of the Demised Premises for all purposes of this Lease and shall not be revised on account of any inaccuracies of measurement. The Demised Premises includes any alterations, additions or repairs made thereto. This computation of rentable square footage shall be binding and conclusive on the parties, and their successors and assigns. Tenant shall have the right to use the Building’s fitness center, bike share program, conference center and cafe (at no cost to Tenant other than for purchases at the cafe, standard set-up/clean-up charges for using the conference facilities, and fitness class/private trainer charges or the like, if offered) subject to the Landlord’s reasonable rules and regulations pertaining to same.
Section 1.03. Base Rent:
Base Rent shall be as of the Commencement Date at the rate of $26 per rentable square foot for each rentable square foot of the Demised Premises (i.e., 13,774), which Base Rent in respect of the Demised Premises shall be escalated annually by $0.50 on the anniversary of the Commencement Date. Assuming a Commencement Date of December 1, 2021, the Tenant’s payment of Base Rent during the Term shall be as follows:
Section 1.04. Security Deposit:
Tenant has deposited with Landlord the sum of NINETY-FOUR THOUSAND THREE HUNDRED FIFTY AND 00/100 ($94,350.00) DOLLARS as the Security Deposit, to be governed by Section 5.05 hereof.
Section 1.05. Term:
The Term of this Lease shall be forty (40) months commencing on the Commencement Date and expiring on the last day of the month which is forty (40) full calendar months following the Commencement Date (the “Expiration Date”). If the Commencement Date occurs after December 1, 2021 as described in Section 2.05, the Expiration Date shall be postponed (and the Base Rent schedule in Section 1.03 above shall be adjusted) so that the Term shall be forty (40) months plus the remaining number of days in the month on which the Commencement Date actually occurs if such date is other than the first day of a month (and if such date is other than the first day of a month then the Monthly Base Rent for that initial partial month shall be at the monthly rate of $29,843.67 pro-rated based on a thirty (30) day month).
Section 1.06. Tenant’s Pro Rata Share:
The Tenant’s Pro Rata Share shall be the ratio of the total rentable square footage of the Demised Premises to the total square footage of the Building. The Landlord and Tenant have determined that Tenant’s Pro Rata Share is 8.70% based upon the Building rentable area of 158,235 square feet. This determination of Tenant’s Pro Rata Share shall be binding and conclusive on the parties, and their successors and assigns. The Tenant’s Pro-Rata Share shall apply to the Tenant’s payment of the Tax Increase Amount, pursuant to Section 5.02 and the Operating Cost Increase Amount, pursuant to Section 5.03.
Section 1.07. Tenant’s Electricity Charge:
The Tenant shall pay the annual sum of TWENTY-FOUR THOUSAND SEVEN HUNDRED NINETY-THREE AND 20/100 ($24,793.20) DOLLARS payable in equal monthly installments of TWO THOUSAND SIXTY-SIX AND 10/100 ($2,066.10) DOLLARS for the Tenant’s Electric Charges. The Tenant’s Electricity Charge is based upon the rate of ONE and 80/100 ($1.80/sq.ft.) Dollars per rentable square foot of the Demised Premises per annum (subject to adjustment pursuant to Section 8.02).
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Section 1.08. Brokers:
Landlord’s Broker: |
Jones Lang LaSalle Brokerage, Inc.
400 Alexander Park Drive
|
|
|
Tenant’s Broker: |
Jones Lang LaSalle Brokerage, Inc.
8 Campus Drive, Suite 305
|
Section 1.09. Addresses for Landlord and Tenant:
Landlord’s Address: |
500 College Road Venture, LLC
E-mail: michael@bergmanrealty.com |
|
|
Tenant’s Address: |
Prior to the Commencement Date: |
|
|
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Agile Therapeutics, Inc.
E-mail: therrstrom@agiletherapeutics.com |
|
|
|
After the Commencement Date: |
|
|
|
Agile Therapeutics, Inc.
500 College Road East, Suite 310
Attention: Tristen Herrstrom, SVP, Human Resources &
E-mail: therrstrom@agiletherapeutics.com |
|
|
with a copy of any default notice to: |
|
|
|
|
Morgan, Lewis & Bockius LLP 101 Park Avenue New York, New York 10178 Attention: J. Goodwin Bland, Esq. E-mail: j.bland@morganlewis.com |
3
ARTICLE II. DEFINITIONS.
As used herein, the terms below have the following meanings:
Section 2.01. Assessed Valuation:
The assessed valuation of the Property, including any added assessments for improvements to the Property (as same may change from time to time as a result of Landlord successfully reducing the Assessed Valuation, reassessment by the municipality or otherwise), as such is determined by an appropriate taxing authority or by final administrative proceedings. Taxes shall be calculated based upon the Property being fully assessed by the municipality.
Section 2.02. Base Year:
The Base Year for determining Tax Increase Amount and Operating Cost Increase Amount shall be the calendar year 2022.
Section 2.03. Building Systems:
The HVAC, life safety, plumbing, electrical, elevator, water, sewer, fire alarm and suppression systems and mechanical systems for the Demised Premises and the Building.
Section 2.04. Building Structure:
The Building’s exterior walls, roof, elevator shafts, footings, foundations, structural portions of load-bearing walls, structural floors and subfloors and structural columns and beams.
Section 2.05. Commencement Date:
The Commencement Date of this Lease shall be the later of (a) December 1, 2021, and (b) the date upon which occurs the Substantial Completion of the Base Building Work (subject to the penultimate sentence of this paragraph below) and Landlord’s Work in accordance with Law. If the Substantial Completion of the Base Building Representations and Landlord’s Work is delayed by Tenant Delays, then the Commencement Date shall be the date the Landlord’s Work and Base Building Representations would have been Substantially Completed, as reasonably estimated by Landlord, without the Tenant Delays. Notwithstanding anything to the contrary contained herein, Landlord represents to Tenant that on the Commencement Date and as part of the Base Building Work at Landlord’s cost (and not part of Landlord’s Cap) (i) the Demised Premises and Building Structure will be structurally sound and free from leaks, and the Demised Premises will be demised, broom clean, and in compliance with Law, (ii) the Demised Premises will be free from asbestos and other Hazardous Materials in violation of existing Law, (iii) there will be a valid temporary or permanent Certificate of Occupancy permitting the Permitted Use, (iv) the Common Areas will be in good working order, and (v) the Building Systems serving the Demised Premises will be in good working order (items (i) – (v) above being hereinafter referred to as the “Base Building Representations”) , with the following modifications to the Building’s HVAC system: the boiler providing heat to the Building will be replaced; the 30 ton RTU providing cooling to the
4
atrium will be replaced; the building management system (BMS) will be upgraded; the filters on the nine heat pumps serving the Demised Premises will be upgraded from MERV-8 to MERV-13 as and where reasonably able, and any heat pumps in the Demised Premises found not to be functioning will be repaired or replaced; two of the three cooling towers will be retrofitted with new water treatment systems (two have been retrofitted already) (items (i) – (v) above, including the above modifications to the Building’s HVAC system, collectively, the “Base Building Work”). Notwithstanding the foregoing, the Commencement Date shall occur once the Landlord’s Work is Substantially Completed even though the Base Building Work is not Substantially Completed as long as the Base Building Representations are true on the Commencement Date and Landlord has commenced the Base Building Work and is working diligently to Substantially Complete the Base Building Work. Subject to any Force Majeure, manufacturer delivery delays, Tenant Delay or township delays in approving plans, issuing permits, inspecting work, etc.,, Landlord shall use commercially reasonable efforts to Substantially Complete the above modifications to the Building’s HVAC system on or prior to December 1, 2021.
Section 2.06. Common Area:
Without limitation, the lobbies, hallways, entryways, stairs, vending areas, elevators, driveways, sidewalks, parking areas, curbs, public rest rooms, loading areas, trash facilities, landscaped areas and all other areas and facilities of the Building and the Land provided and designated from time to time by Landlord for the general nonexclusive use and convenience of Tenant with other tenants and their respective employees, invitees, licensees or other visitors, as they may be increased, decreased, modified, altered or otherwise changed from time to time before, during or after the Term, so long as such change to the Common Areas does not materially interfere with or materially disrupt the Tenant’s access or use of the Demised Premises as contemplated in this Lease.
Section 2.07. Environmental Claims:
Any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations, proceedings, consent orders or consent agreements (collectively, “Claims”) relating in any way to any Environmental Law, including without limitation (i) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment relating to Hazardous Materials.
Section 2.08. Environmental Law:
Any applicable federal, state or local statute, law, rule, regulation, ordinance, code, or rule of common law now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment or Hazardous Materials (including health and safety as it relates to Hazardous Materials).
5
Section 2.09. Expiration Date:
The last day of the Term of the Lease, plus, at the time of reference, any Renewal Term.
Section 2.10. Hazardous Materials:
Any substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “contaminants” or “pollutants,” or words of similar import, under any applicable Environmental Law.
Section 2.11. Landlord’s Work:
The work to be completed by the Landlord for the Demised Premises as set forth in the attached Exhibit B.
Section 2.12. Lease Year:
Each Lease Year during the Term of the Lease, beginning with the Commencement Date. The first Lease Year shall include the balance of the month in which the Commencement Date occurs.
Section 2.13. Mortgage:
Any mortgage, which may now or hereafter affect, encumber or be a lien upon the Property, and any renewals, modifications, consolidations, replacements and extensions thereof.
Section 2.14. Mortgagee:
Any holder of a Mortgage and its successors and assigns.
Section 2.15. Operating Cost Base:
The total dollar amount of Operating Costs incurred during the Base Year.
Section 2.16. Operating Year:
Operating Year shall mean any calendar year.
Section 2.17. Parking Area:
Those portions of the Property adjacent to the Building designated for parking by Landlord, which Landlord may assign and re-assign from time to time, so long as such assignment or re- assignment to the Parking Area does not materially interfere with or materially disrupt the Tenant’s access or use of the Demised Premises as contemplated in this Lease or require the Tenant to incur any costs. At no additional cost to Tenant (except to the extent included in Operating Costs), Tenant shall be permitted to use a total of fifty-four (54) parking spaces in common with other tenants of the Building to be governed by Section 11.04 hereof, which is based upon a parking ratio of four (4) parking spaces for each 1,000 square feet of rentable area then being leased hereunder. Landlord represents that there are currently no reserved parking spaces at the Property
6
other than as required by governmental laws, rules or regulations (i.e. handicap spaces), in connection with the proper operation of the Property (i.e. spaces for deliveries) or other commercially reasonable reasons (i.e. to accommodate an old person). In the event Landlord designates reserved parking spaces for reasons other than the reasons described in the previous sentence or the like, Tenant shall then be entitled to a commercially reasonable number of reserved parking spaces).
Section 2.18. Real Estate Tax Base:
The dollar amount of real estate Taxes payable during the Base Year, determined by multiplying the Assessed Valuation (as same may change from time to time as a result of Landlord successfully reducing the Assessed Valuation, reassessment by the municipality or otherwise) by the tax rate for the Base Year.
Section 2.19. Rent:
The Rent includes the Base Rent and Additional Rent for Tenant’s Electricity Charge, Tax Increase Amount, Operating Cost Increase Amount (each as defined herein) and any other charges payable by Tenant to Landlord hereunder. Notwithstanding anything to the contrary contained in this Lease, non-recurring items of Additional Rent shall be due and payable by Tenant no later than thirty (30) days after an invoice from Landlord is furnished to Tenant therefor.
Section 2.20. Tax Year:
Tax Year shall mean any calendar year.
Section 2.21. Taxes:
All real estate taxes, charges and assessments imposed upon the Property which are levied with respect to the Building and/or Land or with respect to the improvements, fixtures and equipment located in the Building and/or the Common Areas (less any refunds or rebates of Taxes actually received by the Landlord with respect to any period during the Term for the benefit of the Tenant, tenants and the Landlord), and all fees, expenses and costs incurred by Landlord in connection with tax appeal to reduce the Assessed Valuation. Taxes shall not include (i) any income taxes, capital gains taxes, franchise taxes and/or transfer taxes imposed upon any transfer by the Landlord of the Property, (ii) any tax or increase in Taxes that directly results solely from the sale or refinancing of the Property; (iii) taxes imposed on, or computed as a function of, net income or net profits (including, without limitation, any federal, state or local net income or net profits tax); (iv) any inheritance, estate, gift, transfer, excise, capital stock, succession tax; (v) increase in Taxes which directly results solely from the creation of additional rentable area on the Property; or (vii) any interest charges or penalties incurred by the fault of Landlord as a result of the Landlord’s failure to timely pay any tax which the Landlord is obligated to pay, when due.
Section 2.22. Tenant’s Parties or Tenant Parties:
Tenant’s employees, officers, directors, shareholders, partners, members, managing members, licensees, subtenants, assignees, contractors, subcontractors, vendors, successors and invitees.
7
Section 2.23. Term:
The Term of the Lease which shall be from the Commencement Date to the Expiration Date, including any applicable Renewal Term.
Section 2.24. Business Days.
“Business Day” or “business day” means Monday through Friday, except Holidays.
ARTICLE III. PREPARATION OF THE DEMISED PREMISES.
Section 3.01. Landlord’s Work:
Section 3.02. No Representation:
Landlord has made and makes no representations, covenants or warranties with respect to the Demised Premises, the Building or the Property except as expressly set forth in this Lease.
ARTICLE IV. TERM.
Section 4.01. Term:
The Term of this Lease shall commence on the Commencement Date and shall expire on the Expiration Date unless sooner terminated or extended pursuant to the terms hereof.
Section 4.02. Commencement Date:
The Commencement Date shall be the date set forth in Section 2.05 hereof (subject to adjustment as set forth in said Section 2.05).
Section 4.03. Expiration Date:
The Expiration Date shall be the last day of the Term. If this Lease is canceled or terminated prior to the Expiration Date by reason of an Event of Default (as hereinafter defined),
8
Tenant’s liability under the provisions of this Lease shall continue as set forth in Article XVI hereof.
ARTICLE V. RENT.
Section 5.01. Base Rent:
Tenant shall pay Base Rent to Landlord, in the amount set forth in Section 1.03, without notice or demand, in equal monthly installments beginning on the Commencement Date (except that the first monthly installment shall be due upon the execution of this Lease). If the Commencement Date is a day other than the first day of the month, the first installment of Base Rent and Additional Rent shall be prorated for each day commencing with the Commencement Date up to and including the last day of that month. Each subsequent installment shall be due on the first day of each month during the Term. If the Expiration Date occurs on a day other than the last day of any month, Base Rent and Additional Rent for the last month of the Term shall be pro- rated in the same manner.
Section 5.02. Tax Increase Amount:
9
on the Tax Statement, and (6) any Extra Taxes due as set forth below. Any Tax Increase Amount for a period of less than a full Tax Year shall be ratably apportioned.
Section 5.03. Operating Cost Increase Amount:
10
thereafter, except for the Base Year, Landlord shall present to Tenant a reasonably detailed statement (the “Operating Statement”) showing, inter alia, the Operating Cost Increase Amount, if any, due by the Tenant for such applicable Operating Year (the date upon which the Operating Statement is presented to Tenant being hereinafter referred to as the “Billing Date”), which Operating Statement, at the option of Landlord, shall include a breakdown of Operating Costs into different categories of Operating Costs or such other commercially reasonable form of Operating Statement. Each Operating Statement shall indicate the monthly Operating Cost Increase Amount to be paid by the Tenant for the current Operating Year or ensuing Operating Year and the calculation of such monthly Operating Cost Increase Amount based on the Operating Cost budget for such applicable Operating Year.
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records upon which the Operating Statement and Reconciliation Statement and/or Tax Statement is based, provided Tenant pays all sums due as shown on the Operating Statement and Reconciliation Statement and/or Tax Statement prior to any audit and the Tenant shall not be in default under the Lease, beyond any applicable grace or cure period. Such audit shall be conducted promptly after Tenant’s notice of dispute is given to Landlord. The fee for any audit conducted on Tenant’s behalf shall be borne solely by Tenant; provided however that if the examination reveals that the Landlord has overstated the Operating Costs and/or Taxes by more than five percent (5%), Landlord shall reimburse Tenant for the reasonable costs and expenses of such examination within thirty (30) days following Tenant’s demand. In no event shall any audit be performed by a firm retained on a contingency fee basis. The audit shall commence within thirty (30) days after Landlord makes Landlord’s books and records available to Tenant’s auditor and shall conclude within ninety (90) days after commencement. The audit shall be conducted where Landlord maintains its books and records and shall not unreasonably interfere with the conduct of Landlord’s business. Tenant and its auditors shall treat any audit in a confidential manner and to the extent required by Landlord, shall each execute Landlord’s reasonable confidentiality agreement for Landlord’s benefit prior to commencing the audit. Tenant shall deliver a copy of such audit to Landlord within five (5) business days of receipt by Tenant. This Section 5.03 (d) shall not be construed to limit, suspend, or abate Tenant’s obligation to pay the Operating Cost Increase Amount or Tax Increase Amount when due (including any underpayment for a prior Operating Year as shown on the Reconciliation Statement or for a prior Tax Year as shown on the Tax Statement). Landlord shall have the right, at its sole expense, to have Tenant’s audit reviewed by a reputable third party certified public accountant selected by Landlord, whose determination shall be based upon generally accepted accounting principles and which shall be conclusive and binding on both Landlord and Tenant. If, as a result of Tenant’s inspection of Landlord’s books and records or the audit of Landlord’s books and records and review by an independent certified public accountant, an error is discovered in the Reconciliation Statement and/or Tax Statement, Landlord shall revise the Reconciliation Statement and/or Tax Statement accordingly and any overpayment by Tenant shall be refunded by Landlord to Tenant within thirty (30) days and any underpayment shall be paid by Tenant within thirty (30) days after written demand for payment. Any audit and subsequent adjustment in payment shall be deemed to be conclusive of settlement of the dispute. If Tenant does not notify Landlord of a dispute within one hundred twenty (120) days of receipt of any Reconciliation Statement and/or Tax Statement, Tenant shall be deemed to have accepted Landlord’s Reconciliation Statement and/or Tax Statement.
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improvements made in order to comply with any applicable laws and/or regulations taking effect after the Commencement Date; and (iii) improvements made to improve the health, safety and welfare of the Building and its tenants (including but not limited to those pertaining to sprinklers and fire suppression systems). Any such capital improvements shall be amortized over their respective useful lives on a straight line basis, based on generally accepted accounting principles or such other reasonable basis for determining such useful life, as determined by Landlord’s architect or engineer. Such amortized amount shall include interest at the greater of: (i) seven percent (7%) per annum or (ii) three percent (3%) over the prime rate of interest announced in the Wall Street Journal, as such may change from time to time;
(g) | The term “Operating Costs” shall not include or be deemed or construed to include: |
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No item of expense shall be counted more than once either as an inclusion or an exclusion from Operating Costs. Notwithstanding anything to the contrary contained herein, Landlord agrees to cap increases in Controllable Operating Costs to five percent (5%) per year from the previous Operating Year on a cumulative basis. “Controllable Operating Costs” include all Operating Costs excluding non-controllable expenses, which include but are not limited to: snow removal, utilities, insurance, nonrecurring items, repairs and maintenance (other than the cost of contracted services for HVAC, elevators, landscaping, cleaning, etc.) and the cost of compliance with any laws, codes, rules, regulations, etc. pursuant to Section 5.03 (f) (xiv) above.
Section 5.04. Payment of Rent or Additional Rent:
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expressly provided herein). Notwithstanding anything to the contrary contained in this Lease, non- recurring items of Additional Rent shall be due and payable by Tenant no later than thirty (30) days after an invoice from Landlord is furnished to Tenant therefor.
Section 5.05. Security Deposit:
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ARTICLE VI. SIGNS.
Section 6.01. Building Directory(s):
Landlord at its cost shall include Tenant’s name on the directory of tenants in the entrance lobby area of the Building and a floor directory of tenants on each of the floors (if applicable). As of the date hereof, both of such directories exist for the Building.
Section 6.02. Tenant Door Signage:
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ARTICLE VII. REPAIRS, ALTERATIONS, COMPLIANCE, SURRENDER.
Section 7.01. Repairs and Maintenance by Landlord:
Landlord shall make or cause to be made necessary repairs, replacements and maintenance to the Common Areas of the Building, and Landlord shall make or cause to be made necessary repairs, replacements and maintenance to the Building or Real Estate including the roof, foundation, floors, exterior walls, windows, any load-bearing interior walls of the Demised Premises; and the electrical, plumbing, HVAC and mechanical systems (except for such systems and fixtures which are located in the Demised Premises and/or serve only the Demised Premises, which shall be Tenant’s sole responsibility), except for any damage to the Building or Real Estate caused by (i) any act, omission or negligence of Tenant, Tenant’s agents or invitees; (ii) the failure of Tenant to perform or comply with any terms, conditions or covenants in this Lease; or (iii) any Alterations, installations, additions or improvements made or to be made by Tenant. Damage set forth in (i), (ii) and (iii) will be repaired by Landlord at Tenant’s reasonable expense. All of Landlord’s repairs, replacements and maintenance shall be as is reasonably customarily provided for Comparable Buildings.
Section 7.02. Repairs and Maintenance by Tenant:
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Section 7.03. Approval by Landlord of Improvements:
After completion of Landlord’s Work and Base Building Work, Tenant may not make alterations, additions or improvements to the Demised Premises (“Alterations”), or any part thereof (other than interior improvements or alterations of a decorative nature which shall not require Landlord’s consent), without the prior written consent of Landlord, not to be unreasonably withheld or delayed, but it shall be deemed reasonable for Landlord to withhold consent if any Alterations would adversely affect the Building Systems and/or the Building’s Structure. The parties agree that the Base Building Work and Landlord’s Work are not Alterations. Prior to starting any work, Tenant furnish Landlord with (i) copies of any plans and specifications (or if no construction permit is required and plans and specifications are not customarily required for work of the kind proposed (such as, for example, painting or other cosmetic alterations), a reasonably accurate description of the work to be performed), (ii) any permits that may be required by law for performing such work or improvements (other than the Certificate of Occupancy) and (iii) copies of certificates of insurance, for the coverage amounts required herein, for each and every contractor and/or vendor performing work in or about the Demised Premises for Tenant. In all events, Landlord shall be permitted to approve, at its sole and absolute discretion, the contractors to be used by Tenant for HVAC work, plumbing work, mechanical work or electrical work, which approval shall not be unreasonably withheld or delayed, provided that such contractors charge commercially reasonable fees. Landlord agrees to respond to any written request for approval of any plans and specifications (and confirmation if same contain Specialty Alterations) and contractors within seven (7) business days after receipt thereof by Landlord. Any permitted Alterations shall be performed lien free, in a good and workmanlike manner and using Building standard or better quality materials in accordance with all requirements of any applicable governmental authority, the terms and conditions of all required insurance policies and any other provisions relating to Tenant’s work herein contained. Tenant’s Alterations shall be performed in such a manner as to cause a minimum of interference with other construction activities currently in progress at the same time in the Building or as to any other tenant’s use or occupancy of their leased premises. Tenant shall reimburse Landlord within thirty (30) days after rendition of a bill for all of Landlord’s actual reasonable out-of-pocket costs incurred in connection with any Alterations, including all management, engineering, outside consulting, and construction fees incurred by or on behalf of Landlord for the review and approval of Tenant’s plan and specifications and for the monitoring of construction of the Alterations. Without Landlord’s prior written consent, Tenant shall not use any portion of the Common Areas in connection with the making of any Alterations. Any Alterations made by Tenant shall become the property of Landlord upon installation and shall remain on and be surrendered with the Demised Premises upon the expiration or sooner termination of this Lease, unless Landlord requires the removal of any such Alterations, which are not customary for a business office (“Specialty Alterations”), and the parties agree that Tenant’s cabling and wiring are not a Specialty Alteration. Notwithstanding anything to the contrary contained herein, Landlord agrees that there are no Specialty Alterations on the Preliminary Space Plan. If Landlord requires the removal of such Specialty Alterations, it shall so notify Tenant at the time of its approval of same (and failing such notice by the Landlord at the time of such approval with respect to any such Alteration, the Tenant shall have no such removal obligation with respect to such Alteration), and Tenant shall at its sole cost and expense, forthwith and with all due diligence (but in any event not later than ten (10) business days after the expiration or earlier termination of the Lease) remove all or any portion of any such Specialty Alterations made by Tenant which are designated by Landlord to be removed (including without
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limitation stairs, if applicable) and repair and restore the Demised Premises in a good and workmanlike manner to their original condition, reasonable wear and tear, casualty and condemnation excepted. Tenant agrees to indemnify, defend and hold Landlord harmless from and against any and all loss, liability, damage cost or expense (including, without limitation, reasonable attorney’s fees, disbursements and court costs) resulting from such work. The foregoing indemnity shall survive the expiration or earlier termination of this Lease. Landlord’s consent to or approval of any Alterations, (or the plans or specifications therefore) shall not constitute a representation or warranty by Landlord, nor Landlord’s acceptance, that the same comply with sound architectural and/or engineering practices or with all applicable laws and insurance requirements, and Tenant shall be solely responsible for ensuring all such compliance.
Section 7.04. Emergency Repairs:
If, in an emergency, it shall become necessary to make any repairs or replacements otherwise required to be made by Tenant, Landlord may enter the Demised Premises, and proceed to make or cause such repairs or replacements to be made at its expense. Landlord shall give Tenant advance notice of such emergency. Within thirty (30) days after Landlord renders a bill for such repairs or replacements, Tenant shall reimburse Landlord for the reasonable cost of making such repairs.
Section 7.05. Electrical Lines:
Tenant may not install any electrical equipment that overloads the lines in the Demised Premises, the Building or the Property or which will interfere with the use thereof by other tenants of the Building unless Landlord approves same in the Plans and Specifications or as provided for in Section 7.03 above; provided, however, Landlord agrees to furnish electric service to the Demised Premises equal to the Electric Capacity. If Tenant makes such installation, Landlord may require Tenant, at Tenant’s sole cost and expense, to make whatever alterations and/or repairs are necessary and which are in compliance with the terms and conditions of all required insurance policies and all requirements of applicable governmental authorities. Tenant shall be responsible or liable for all damages anywhere in the Building caused by any electrical overload attributable to Tenant.
Section 7.06. Surrender of Premises:
On the Expiration Date, Tenant shall quit and surrender the Demised Premises together with all alterations, fixtures, (except trade fixtures), installations, additions and improvements which may have been made in or attached thereto, vacant, broom clean, and in good condition and repair, ordinary wear and tear, casualty and condemnation excepted, unless Landlord provides otherwise in writing with respect to Specialty Alterations. On or before the Expiration Date, Tenant at its expense, shall remove from the Demised Premises all of Tenant’s moveable property which is not attached to, or built into, the Demised Premises (including, without limitation Tenant’s furniture, partitions, work stations, and all other personal property of Tenant) except such items thereof as Tenant shall have expressly agreed in writing with Landlord were to remain and to become the property of Landlord, and shall fully repair any damage to the Demised Premises or the Building resulting from such removal. Any moveable personal property of Tenant, or any subtenant or occupant, which shall remain in or on the Demised Premises after the termination of
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this Lease may, at the option of Landlord and without notice, be deemed to have been abandoned by such Tenant, subtenant or occupant, and may either be retained by Landlord as its property or be disposed of, without accountability, in such manner as Landlord may see fit. Tenant shall reimburse Landlord for any reasonable cost or expense incurred by Landlord in carrying out the foregoing. Landlord shall not be responsible for any loss or damage occurring to any such property owned by Tenant or any subtenant or occupant. Tenant’s obligations under this Section 7.06 shall survive the Expiration Date.
ARTICLE VIII. SERVICE AND UTILITIES
Section 8.01. Landlord’s Services:
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difference between the cost of delivery of electricity as of the date of this Lease and any increases in the costs thereof that may occur from time to time. Payment for After Hours Use of services shall be deemed Additional Rent and shall be paid to Landlord monthly, together with Base Rent. Landlord shall not charge Tenant for the cost of any security services which are currently being provided.
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evidence substantiating the foregoing) and Tenant’s failure to stop such excessive use of electric or water within ten (10) business days of such notice, Tenant shall procure the prior written consent of Landlord for the use thereof, which consent shall not be unreasonably withheld or delayed, and if Landlord does consent, Landlord may cause a water meter or electric current meter to be installed so as to measure the amount of such excess water and electric current. The reasonable cost of any such meters shall be paid for by Tenant as Additional Rent. Tenant agrees to pay as Additional Rent to Landlord promptly within thirty (30) days after written demand for payment, the reasonable cost of all such excess water and electric current consumed (as shown by said meters, if any, or, if none, as reasonably estimated by Landlord) at the rates charged for such services by the local public utility or agency, as the case may be, furnishing the same, plus any additional expense incurred in keeping account of the water and electric current so consumed.
Section 8.02. Electricity:
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ARTICLE IX. USE AND OPERATION.
Section 9.01. Use:
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of this type and in compliance with all applicable Laws and insurance requirements. Tenant shall conduct its business in the Demised Premises so as not to create any nuisance or unreasonably interfere with other tenants or Landlord in its management of the Building. Tenant shall not knowingly conduct or permit to be conducted in the Demised Premises any activity, or place any equipment in or about the Demised Premises or the Building, which will invalidate the insurance coverage in effect or materially increase the rate of fire insurance or other insurance on the Demised Premises or the Building; provided, however, Tenant’s Permitted Use in and of itself shall not be deemed to violate this sentence. If any invalidation of coverage or material increase in the rate of fire insurance or other insurance occurs or is threatened by any insurance company due to activity conducted from the Demised Premises, or any act or omission by Tenant, or its agents, employees, representatives, or contractors, and Landlord provides reasonable evidence substantiating the foregoing, such statement or threat shall be conclusive evidence that the material increase in such rate is due to such act of Tenant or the contents or equipment in or about the Demised Premises, and, as a result thereof, Tenant shall be liable for such increase and shall be considered Additional Rent payable with the next monthly installment of Base Rent due under this Lease; provided, however, Tenant’s Permitted Use shall not in and of itself be deemed to violate this sentence. In no event shall Tenant introduce or permit to be kept on the Demised Premises or brought into the Building any dangerous, noxious, radioactive or explosive substance, other than such materials and in such quantities which are normal and customary in office space of this type and in compliance with all applicable Laws and insurance requirements.
Section 9.02. Rules and Regulations:
The rules and regulations in effect as of this date are set forth in Exhibit C annexed hereto, and with any changes made therein by the Landlord if, with respect to any such changes, (i) the Landlord shall have given notice of the particular changes to the Tenant, (ii) such changes shall not materially adversely affect the conduct of the Tenant’s business in the Demised Premises, and (iii) such changes shall not increase the Rent. Tenant shall observe all Rules and Regulations established by Landlord from time to time for the Building and the Property, provided Tenant shall be given at least five (5) days’ notice of any changes therein. Landlord shall not enforce the Rules and Regulations in a discriminatory manner against Tenant.
Section 9.03. Restriction on Tenant’s Activities:
(a)Garbage: (i) Tenant shall handle and dispose of all rubbish and garbage in accordance with the Rules and Regulations established by Landlord.
(ii)Landlord shall provide rubbish and garbage removal in accordance with the cleaning specifications incorporated as part of Exhibit D.
(iii)Tenant shall arrange for any rubbish and garbage removal in excess of the quantity to be disposed of by Landlord pursuant to the cleaning specifications set forth in Exhibit D at Tenant’s sole expense.
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may not dispose of any substances therein which may clog, erode or damage the pipelines and conduits of the Demised Premises, the Building or the Real Estate.
Section 9.04. Compliance With Law:
ARTICLE X. TRANSFER OF INTEREST, PRIORITY OF LIEN.
Section 10.01. Assignment and Subletting:
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10.01(k) hereof, sublet or license the Demised Premises or any part thereof or assign this Lease only to an affiliated company of Tenant (such as (1) a parent, division or subsidiary of Tenant, or an entity controlled, controlling or under common control with Tenant, or (2) in connection with a merger or acquisition of Tenant, or (3) to a corporation or other business entity which is the surviving entity resulting from a merger or consolidation with, or other reorganization of, Tenant, its successors or assigns, completed in accordance with applicable statutory provisions for the merger, consolidation or reorganization, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation, or reorganization the liabilities of the corporations or other business entities participating in such merger, consolidation or reorganization are assumed by the corporation or other business entity surviving such merger, consolidation or reorganization, or (4) to a corporation or other business entity acquiring all or substantially all of the assets of Tenant, or (5) to a corporation or other business entity acquiring all or substantially all of the outstanding stock or other ownership interest of Tenant), provided, however, Tenant shall continue to be liable and responsible for the full performance of all obligations under this Lease.
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For the purposes of this Lease, but except as otherwise provided in Section 10.01(a), a merger, reorganization or dissolution involving Tenant, or any transfer of this Lease by operation of law, shall be deemed to be an assignment of this Lease, and furthermore, the sale, issuance or transfer of any voting capital stock of Tenant or voting capital stock of any corporate entity which directly or indirectly controls Tenant or the sale, issuance or transfer of any interest in any non- corporate entity which directly or indirectly controls Tenant, which sale, issuance or transfer results in a change in the direct or indirect voting control of Tenant, shall be deemed to be an assignment of this Lease, except that the foregoing shall not be applicable to stock which is traded on the New York Stock Exchange, the American Stock Exchange, or any other nationally recognized stock exchange. Except as otherwise provided in Section 10.01(a), if Tenant is a partnership, trust or unincorporated association, then the sale, issuance or transfer of a controlling interest therein or of an interest therein which would result in a change in the voting control of Tenant, or the sale, issuance or transfer of a majority interest in or a change in the voting control of any partnership, trust or unincorporated association or corporation which directly or indirectly controls Tenant, or the sale, issuance or transfer of any portion of any general partnership or managing interest in Tenant or in any such entity, shall be deemed to be an assignment of this Lease.
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and performance. Accordingly, if Tenant defaults beyond any applicable notice and cure period, Landlord may collect annual Base Rent and Additional Rent from the assignee or subtenant, as the case may be, and in either such event, Landlord may apply any amounts so collected to the annual Base Rent and Additional Rent hereunder without thereby waiving any provisions hereof or releasing Tenant from liability for the performance of its obligations hereunder.
(g)Landlord’s consent to any assignment or sublease hereunder shall not be deemed a consent to any further proposed assignment or sublease, which shall be governed by this Section 10.01.
(h)Intentionally omitted.
(i)Upon any request to assign or sublet, the Tenant shall pay to the Landlord the Assignment/Sublet fee of $1,000 to defray Landlord’s (or Landlord’s agent’s) costs at the time any such written request for Landlord’s consent is made by the Tenant. Tenant shall also reimburse Landlord, within twenty (20) days after written demand for payment, for all of Landlord’s (or Landlord’s agent’s) reasonable costs and expenses (including reasonable legal fees) in connection with any proposed assignment or subletting, regardless of whether or not Landlord’s consent is obtained.
(j)Tenant hereby indemnifies, defends and holds Landlord and Landlord’s agents harmless from and against any and all losses, liability, damages, costs and expenses (including reasonable attorneys’ fees) resulting from any claims that may be made against Landlord and/or Landlord’s agents by (i) any assignee or subtenant or proposed assignee or subtenant, or (ii) any brokers or other persons claiming a commission or similar compensation in connection with the assignee or subtenant or the proposed assignment or sublease or termination of this Lease.
(k)Tenant shall pay to Landlord, within ten (10) days of Tenant’s receipt thereof, fifty (50%) percent of the excess profits, if any, of all compensation received by Tenant for a sublet or assignment over the total Rent allocable to the portion of the Demised Premises covered thereby, after deducting the reasonable and customary out-of-pocket transaction costs incurred by Tenant in connection such subletting or assignment.
(l)Tenant may, without Landlord’s prior written consent and without being subject to Landlord’s recapture and profit splitting rights, permit a Space Occupant (as hereinafter defined) to occupy offices and/or to use office space within the Demised Premises, subject, however, to compliance with Tenant’s obligations under this Lease, and provided that (i) the Space Occupants shall not occupy more than ten percent (10%) of the square footage within the Demised Premises in the aggregate, (ii) the portions of the Demised Premises occupied by the Space Occupants shall be physically part of, and not separately demised from, the remainder of the Demised Premises occupied by Tenant, and (iii) no Space Occupant shall have a separate entrance. Tenant shall provide notice to Landlord of a Space Occupant’s occupancy of any portion of the Demised Premises no later than thirty (30) days prior to the date the Space Occupant first takes occupancy within the Demised Premises. Space Occupants shall not have any right or interest in this Lease or the Demised Premises other than a license and their use of the Demised Premises shall be subject to the terms of this Lease including, without limitation, the obligation to provide all insurance as required pursuant to Article XIV of this lease and shall provide Landlord of proof of same prior to taking occupancy. Tenant shall
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cause the Space Occupants to comply with all the terms and conditions of this Lease. Tenant shall not be relieved of any of Tenant’s obligations hereunder on account of any Space Occupant(s) occupying offices or office space within the Demised Premises. As used herein, the term “Space Occupant” means any person that is a service provider to Tenant or otherwise has a bona fide business relationship with Tenant.
Section 10.02. Subordination:
Section 10.03. Attornment:
If the Demised Premises, the Building or the Real Estate are encumbered by a mortgage and such mortgage is foreclosed, or if same are sold pursuant to such foreclosure or by reason of a default under said mortgage, (a) Tenant shall not disaffirm this Lease or any of its obligations hereunder, and (b) at the request of the applicable Mortgagee or purchaser at such foreclosure or sale, Tenant shall attorn to such Mortgagee or purchaser pursuant to the executory terms of this Lease and execute a new lease for the Demised Premises setting forth all of the provisions of this Lease except that the term of such new lease shall be for the balance of the Term.
Section 10.04. Transfer of Landlord’s Interest:
The term “Landlord” as used in this Lease means only the owner or the Mortgagee in possession of the Demised Premises, the Building or the Property for the time being. In the event of any sale of, the Building or the Property, or in the event the Building or Property is leased to any person (subject to this Lease), Landlord shall be and hereby is entirely freed and relieved of all of its covenants, obligations and liability hereunder accruing thereafter. This Section 10.04 shall be applicable to each owner from time to time, and shall not be limited to the first owner of the Building or the Property.
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Section 10.05. Mortgagee’s Rights:
ARTICLE XI. COMMON AREA.
Section 11.01. Use of Common Area:
During the Term, the following privileges to use certain portions of the Property in common with Landlord and any designee of Landlord, subject to the terms of this Lease and Landlord’s Rules and Regulations, are hereby granted to Tenant and Tenant’s Parties:
(i)the non-exclusive license to use the Common Area as defined under Section 2.06; and
(ii)the non-exclusive privilege to use the entrance and exit ways designated by Landlord from time to time for access to the Demised Premises from a public street or highway adjacent to the Property through the appropriate entrances and exits so designated.
Section 11.02. Landlord’s Rights:
Notwithstanding anything to the contrary, Landlord shall have the following rights:
(ii)to prohibit parking or passage of motor vehicles in areas previously designated for such and to change the location of exclusively marked parking spaces;
(iii)to temporarily close any of the Common Area for repair, maintenance, alteration or improvements;
(iv)to build additions to the Building or erect additional buildings or improvements, permanent or temporary, on the Common Area;
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(v)to create paths, walks or other means of cross access through the Property to other properties of the Landlord;
(vi)to modify the location of Parking Areas provided any of such modification of the Parking Area is in compliance with the parking requirements of the township.
Landlord agrees that it shall exercise such rights in a manner that minimizes any inconvenience to Tenant and does not unreasonably interfere with Tenant’s ability to occupy, access and use the Demised Premises.
Section 11.03. License Numbers:
In order to restrict the use by Tenant’s employees of areas designated or which may be designated by Landlord as handicapped, reserved, visitor or restricted Parking Areas, Tenant agrees that it will, at any time requested by Landlord, furnish Landlord with the license numbers of any vehicle of Tenant and Tenant’s Agents.
Section 11.04. Parking Areas:
ARTICLE XII. DESTRUCTION OR DAMAGE.
Section 12.01. Rent Abatement:
If the Demised Premises shall be partially or totally damaged or destroyed by fire or other casualty, the Base Rent and Additional Rent payable hereunder shall be abated to the extent that the Demised Premises shall have been rendered untenantable and for the period from the date of such damage or destruction to the date it is rendered tenantable. Should Tenant reoccupy a portion of the Demised Premises for office use during the period any restoration work is taking place and prior to the date same is made completely tenantable, Base Rent allocable to such portion shall be payable by Tenant from the date of such occupancy.
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Section 12.02. Termination by Landlord:
If the Building shall be damaged or destroyed by fire or other casualty so as to require an expenditure in Landlord’s reasonable opinion of more than 25% of the full insurable value of the Building or if the Demised Premises are completely destroyed or so badly damaged by fire or other casualty that, in Landlord’s reasonable opinion (delivered to Tenant within thirty (30) days after such fire or casualty), repairs to the Demised Premises cannot be completed within one hundred eighty (180) days from the date of the damage or destruction, then in either such case, Landlord may terminate this Lease by giving Tenant written notice within thirty (30) days after the date of the casualty and Tenant’s receipt of Landlord’s notice, specifying the date of termination of this Lease (which shall be no earlier than thirty (30) days after such termination notice). In such event, Tenant shall forthwith quit, surrender and vacate the Demised Premises without prejudice, however, to Landlord’s rights and remedies against Tenant as of the date of termination or as to those rights which survive such termination. In the event of termination, the Base Rent and Additional Rent payable hereunder shall be abated from the date of damage or destruction.
Section 12.03. Landlord’s Obligation to Rebuild:
If all or any portion of the Demised Premises is damaged by fire or other casualty and if Landlord has not elected to terminate this Lease, Landlord shall, within a reasonable time after such occurrence, shall repair or rebuild the Demised Premises or such portion to its condition immediately prior to the Commencement Date reasonable wear and tear excepted. Notwithstanding the above provisions of this Section 12.03, if the restoration of the Demised Premises, as required of the Landlord, is not substantially completed by Landlord within one hundred eighty (180) days after the Landlord’s insurance carrier(s) makes available insurance proceeds for the restoration of the Demised Premises, (as such date may be extended by one day for each day of delay caused by force majeure conditions beyond the control of Landlord and/or which are caused by the Tenant’s and/or any of the Tenant Parties’ physical interference with the Landlord’s repairs and restoration work, or Tenant’s failure to cooperate with the Landlord’s restoration of the Demised Premises), then Tenant shall, have the right, by written notice to the Landlord, to terminate this Lease, and such notice of termination shall be effective and binding on Landlord and Tenant as of sixty (60) days following the giving of such written notice, unless, Landlord substantially completes such repair and restoration work required of Landlord prior to the end of the sixty (60) day period following the giving of such written notice.
Section 12.04. Landlord’s Liability:
Landlord shall not be obligated to pay any damages, compensation or claim for inconvenience, loss of business or annoyance arising from any casualty, or repair or restoration of any portion of the Demised Premises or of the Building pursuant to this Article.
ARTICLE XIII. CONDEMNATION
Section 13.01. Definitions:
As used herein, the following words have the following meanings:
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(i)Taking: The deprivation of or damage to the Demised Premises, the Building or the Property or any portion thereof, as the result of the exercise by a governmental authority of any power of eminent domain, condemnation, or purchase under threat thereof.
(ii)Taking Date: With respect to any Taking, the date on which the condemning authority shall have the right to possession of the Demised Premises, the Building or the Property or any portion thereof.
(iii)Award: The proceeds of any Taking, less all expenses in connection therewith, including reasonable attorney’s fees.
Section 13.02. Taking of Demised Premises:
Section 13.03. Taking for Temporary Use:
If there is a Taking of the Demised Premises for temporary use, this Lease shall continue in full force and effect, and Tenant shall continue to comply with all the provisions thereof, except as such compliance shall be rendered impossible or impracticable by reason of such Taking. The Base Rent and Additional Rent shall be abated during the course of such Taking to the extent and for the period of time that the Demised Premises shall have been rendered untenantable.
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Section 13.04. Disposition of Awards:
All Awards shall belong to Landlord without any participation by Tenant. Tenant hereby assigns to Landlord any share of any Award, which may be granted to Tenant, except Tenant shall be entitled to make a separate claim with regard to the unamortized cost of any leasehold improvements paid for by Tenant and Tenant’s moving and relocation expenses, provided same does not diminish Landlord’s Award
ARTICLE XIV. TENANT’S INSURANCE.
Section 14.01. General Insurance:
(i)Tenant, at Tenant’s expense, during the Term, shall obtain and keep in full force and effect:
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(4)Umbrella – Umbrella form or Excess liability insurance providing, at a minimum coverage over the commercial general liability insurance policy, referred to in (2) herein, with a limit of not less than $3,000,000 per occurrence and per aggregate.
(ii)Tenant’s insurance policies shall contain a provision that no act or omission of Tenant shall affect or limit the obligation of the insurer to pay the amount of any loss sustained. If Tenant receives any notice of cancellation or any other notice from the insurance carrier which may materially adversely affect the coverage of the insureds under Tenant’s insurance policies, then Tenant shall immediately deliver to Landlord a copy of such notice.
(iii)Tenant shall cause Tenant’s insurance policies to be issued by reputable and independent insurers that are (x) permitted to do business in the State of New Jersey, and (y) rated in Best’s Insurance Guide, or any successor thereto, as having a general policyholder rating of A and a financial rating of at least VII (it being understood that if such ratings are no longer issued, then such insurer’s financial integrity shall conform to the standards that constitute such ratings from Best’s Insurance Guide as of the date hereof).
(iv)Tenant has the right to satisfy Tenant’s obligation to carry Tenant’s property policy and liability policy with a blanket insurance policy if such blanket insurance policy provides, on a per occurrence basis or per location basis, that a loss that relates to any other location does not impair or reduce the level of protection available for the Demised Premises below the amount required by this Lease.
(v)Subject to the provisions of this Section 14.01, Tenant and Landlord shall each obtain an appropriate clause in, or endorsement on, any insurance policy carried by the insured party pursuant to which the insurance companies waive subrogation or consent to a waiver of right of recovery. Tenant and Landlord also each agrees that, having obtained such clauses or endorsements of waiver of subrogation or consent to a waiver of right of recovery, such insured party shall not make any claim against or seek to recover from the other party for any loss or damage to its property or the property of others resulting from fire or other hazards covered by the insured party’s insurance policies; provided, however, that the release, discharge, exoneration and covenant not to sue herein contained shall be limited by and be coextensive with the terms and provisions of the waiver of subrogation clause or endorsements or clauses or endorsements consenting to a waiver of right of recovery.
(vi)If the payment of an additional premium is required for the inclusion of a waiver of subrogation provision as described in Section 14.01(v) hereof, then Tenant or Landlord shall advise the other party of the amount of any such additional premiums and the other party at its own election may, but shall not be obligated to, pay such additional premium. If such other party does not elect to pay such additional premium, then the insured party shall not be required to obtain such waiver of subrogation provision.
(vii)If Tenant or Landlord is unable to obtain the inclusion of such waiver of subrogation provision even with the payment of an additional premium, then such party shall attempt to name the other party as an additional insured (but not a loss payee) under the applicable insurance policy. If the payment of an additional premium is required for naming the other party as an additional insured (but not a loss payee), then such party shall advise the other party of the
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amount of any such additional premium and the other party at its own election may, but shall not be obligated to, pay such additional premium. If the other party does not elect to pay such additional premium or if it is not possible to have the other party named as an additional insured (but not loss payee), even with the payment of an additional premium, then (in either event) such party shall so notify the other party and such party shall not have the obligation to name the other party as an additional insured.
(viii)On or prior to the Commencement Date, Tenant shall deliver to the Landlord appropriate certificates of insurance required to be carried by Tenant pursuant to this Section 14.01, including evidence of waivers of subrogation and naming of additional insureds in either case as required by Section 14.01. Tenant shall deliver to the Landlord evidence of each renewal or replacement of a policy at least ten (10) days prior to the expiration of such policy. If Tenant fails to timely obtain and deliver to the Landlord the aforesaid certificates and evidence, Landlord may, on five (5) days’ notice to Tenant, but shall not be obligated to, purchase all insurance required by Section 14.01(a) of the Lease on behalf of Tenant and add the reasonable cost of such insurance as additional rent payable with the next installment of Base Rent. Tenant’s failure to timely obtain, deliver and/or keep in force and effect the insurance, certificates and evidence shall (y) be regarded as an Event of Default hereunder entitling Landlord to exercise any or all of the remedies provided in this Lease, and/or (z) be deemed a Tenant Delay pursuant to Section 2.3 of Exhibit B-2 if said failure delays Tenant’s occupancy of the Demised Premises following Landlord’s Substantial Completion (as defined in Section 5.1 of Exhibit B-2) of same.
(ix)Landlord shall have the right, at any time and from time to time during the Term, on not less than thirty (30) days’ notice to Tenant, to require that Tenant increase the amounts and/or types of coverage required to be maintained under this Section 14.01 to the amounts or coverages then customary for similar class office buildings in the vicinity of the Building (“Comparable Buildings”).
(x)Intentionally omitted.
(xi)Any contractors performing Alterations for the Tenant in the Demised Premises shall carry commercial general liability insurance and worker’s compensation and disability insurance coverage while performing any such Alterations in the Demised Premises. Such commercial general liability coverage to be maintained by Tenant’s contractors shall be for such limits of liability as reasonably required by the Landlord, but in no event shall be less than $1,000,000 per occurrence with at least a $2,000,000 minimum general aggregate limit. The Landlord and the managing agent shall be named as an additional insured on such commercial general liability policy to be maintained by Tenant’s contractor. Evidence of such required coverage shall be submitted to the Landlord prior to the commencement of any such Alterations by the Tenant. While any such Alterations are continuing in the Demised Premises, such policies shall be non-cancellable without at least ten (10) days written notice to the Landlord.
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ARTICLE XV. INDEMNIFICATION AND LIABILITY.
Section 15.01. Indemnification:
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Section 15.02. Waiver and Release:
Tenant will not be entitled to make, nor will Tenant make, any claim, and Tenant waives any claim, for money damages (nor will Tenant claim any money damages by way of setoff, counterclaim or defense) based upon any claim or assertion by Tenant that Landlord has unreasonably withheld or unreasonably delayed its consent or approval with respect to any provision of this Lease providing for such consent or approval. Tenant’s sole remedy will be an action or proceeding to enforce any such provision, or for specific performance, injunction or declaratory judgment.
Section 15.03. Liability of Landlord:
ARTICLE XVI. DEFAULT, REMEDIES.
Section 16.01. Default:
Each of the following shall constitute an Event of Default:
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(i)the failure of Tenant to pay any Rent, Additional Rent or any other charge required to be paid by Tenant hereunder within (5) business days after Tenant receives notice from Landlord that such payment is overdue (provided, however, that with respect to payments of Rent, Additional Rent or any other charges paid on an installment basis (e.g. Base Rent, Tax Increase Amount, Operating Cost Increase Amount, Tenant’s Electricity Charge) Tenant shall be entitled to only one (1) written notice of such default within any twelve (12) month period, and after the first (1st) written notice in any twelve (12) month period, an Event of Default shall be deemed to occur if Tenant shall fail to pay any such Rent, Additional Rent or any other charge required to be paid by Tenant hereunder or other payment herein provided on an installment basis for within five (5) business days of its due date);
Section 16.02. Landlord’s Remedy:
At any time after the occurrence of an Event of Default, Landlord may give written notice to Tenant specifying such Event(s) of Default and stating that the Lease and the Term shall terminate five (5) business days after the giving of such notice, unless Tenant cures the Event of Default. At the expiration of such five (5) business days, if Tenant has not cured the Event of
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Default, this Lease and the Term and all of the right, title and interest of the Tenant hereunder shall wholly cease and expire, and Tenant shall quit and surrender the Demised Premises to the Landlord. Notwithstanding such termination, surrender, and the expiration of Tenant’s right, title, and interest, Tenant’s liability and responsibility under all of the provisions of this Lease shall continue.
Section 16.03. Landlord’s Re-Entry:
If this Lease shall be terminated as provided in Section 16.02, above, Landlord, or its agents or employees, may re-enter the Demised Premises at any time and remove therefrom Tenant, Tenant’s agents, and any subtenants, licensees, concessionaires or invitees, together with any of its or their property, either by summary dispossess proceedings or by any suitable action or proceeding at law or otherwise. In the event of such termination, Landlord may repossess and enjoy the Demised Premises. Landlord shall be entitled to the benefits of all provisions of law respecting the speedy recovery of lands and tenements, or proceedings in forcible entry and detainer (to the extent permitted under applicable law). Landlord shall not be liable in any way in connection with any action it takes pursuant to the foregoing. Notwithstanding any such re- entry, repossession, dispossession or removal, Tenant’s liability and responsibility under all of the provisions of this Lease shall continue.
Section 16.04. Landlord’s Additional Remedies:
In case of re-entry, repossession or termination of this Lease, whether the same is the result of the institution of summary or other proceedings, Tenant shall remain liable (in addition to accrued liabilities) to the extent legally permissible for: (i) the Base Rent and Additional Rent, and all other charges provided for herein until the date this Lease would have expired had such termination, re-entry or repossession not occurred; and all reasonable expenses which Landlord may have incurred in re-entering the Demised Premises, repossessing the same; making good any Event of Default of Tenant; painting, altering or dividing the Demised Premises; combining or placing the same in proper repair; protecting and preserving the same by placing therein watchmen and caretakers; reletting the same (including attorney’s fees and disbursements, Marshall’s fees, brokerage fees, in so doing); and any reasonable expenses which Landlord may incur during the occupancy of any new tenant; less (ii) the net proceeds of any reletting. Tenant agrees to pay to Landlord the difference between items (i) and (ii) hereinabove with respect to each month, at the end of such month. Any suit brought by Landlord to enforce collection of such difference for any one month shall not prejudice Landlord’s right to enforce the collection of any difference for any subsequent month. In addition to the foregoing, Tenant shall pay to Landlord such sums as the court may adjudge reasonable as attorney’s fees with respect to any successful lawsuit or action instituted by Landlord to enforce the provisions hereof. Landlord hereby agrees that it shall use commercially reasonable efforts to relet the Demised Premises, so as to mitigate the damages otherwise payable by Tenant hereunder; provided, however, in no event shall Landlord be expected to relet the Demised Premises (i) before leasing other available space in the Building, (ii) to a party that is not reasonably creditworthy; or (iii) for a proposed use that is not in keeping with the standards of the Building. Landlord may relet the whole or any part of said Demised Premises for the whole of the unexpired period of this Lease, or longer, or from time to time for shorter periods, for any rental then obtainable, giving such concessions of rent and making such special repairs, alterations, decorations and paintings for any new tenant as it may in its sole and absolute discretion deem
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advisable (all of which, without limitation, Tenant shall be liable for pursuant to this Section 16.04) and may collect and receive the rents therefor.
Section 16.05. Waiver of Right of Redemption:
Tenant hereby expressly waives (to the extent legally permissible), for itself and all persons claiming by, through, or under it, any right of redemption or for the restoration of the operation of this Lease under any present or future law in case Tenant shall be dispossessed for any cause, or in case Landlord shall obtain possession of the Demised Premises as herein provided.
Section 16.06. Landlord’s Right to Perform for Account of Tenant:
If an Event of Default shall occur hereunder, Landlord may, at any time, cure said Event of Default for the account and at the reasonable expense of Tenant. Tenant shall pay, on demand, to Landlord, with interest at the maximum legal rate, if any, otherwise at 18% per year, the amount so paid, expended, or incurred by the Landlord and any reasonable expense of Landlord including reasonable attorney’s fees incurred in connection with such Event of Default; and all of the same shall be deemed to be Additional Rent.
Section 16.07. Additional Remedies, Waivers, etc.:
With respect to the rights and remedies of and waivers by Landlord:
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Section 16.08. INTENTIONALLY OMITTED.
ARTICLE XVII. TENANT’S ESTOPPEL CERTIFICATE.
At any time within fifteen (15) days after written request by Landlord, Tenant shall certify to Landlord, any Mortgagee, assignee of a Mortgagee, any purchaser, or any other person, specified by Landlord, by reasonable written instrument, duly executed and acknowledged, (i) whether or not Tenant is in possession of the Demised Premises; (ii) whether or not this Lease is unmodified and in full force and effect (or if there has been modification, that the same is in full force and effect as modified and setting forth such modification); (iii) whether or not there are then existing set-offs or defenses against the enforcement of any right or remedy of Landlord, or any duty or obligation of Tenant (and if so, specifying the same); (iv) the dates, if any, to which any Rent of other charges have been paid in advance; and (v) such other matters relating to this Lease as may be reasonably requested by Landlord, any Mortgagee or any of their designees.
ARTICLE XVIII. RIGHT OF ACCESS
Landlord may enter upon the Demised Premises, or any portion thereof (with laborers and materials, as required), with notice to Tenant and at reasonable times, for the purpose of: (i) inspecting same; (ii) making such repairs, replacements or alterations which it may be required to perform as herein provided or which it may reasonably deem desirable for the Demised Premises; (iii)showing the Demised Premises to prospective purchasers or lenders; or (iv) showing the Demised Premises to prospective replacement tenants during the last twelve (12) months of the Term (subject to any right of Tenant to renew or extend the Term of Lease); provided that in case of (i)-(iv) (a) Landlord uses commercially reasonable efforts to minimize interference with respect to Tenant’s operations therein and to protect Tenant’s property and personnel from loss and injury; and (b) Tenant shall have the right, except in the case of an emergency, to designate an employee or other representative of Tenant to accompany Landlord, Landlord’s agents, guests and invitees when they enter and access the Demised Premises, and Landlord shall, except in the case of an emergency, comply with said right of Tenant. Should Tenant vacate or abandon the Demised Premises following the expiration or earlier termination of the Term, Landlord may enter upon the Demised Premises, for the purpose of making improvements, repairs, replacements or alterations in order to prepare the Demised Premises for the next tenant.
ARTICLE XIX. COVENANT OF QUIET ENJOYMENT.
Landlord covenants that if Tenant pays the Base Rent, Additional Rent and all other charges provided for herein, performs all of its obligations provided for hereunder, and observes all of the other provisions hereof, Tenant shall, at all times during the Term, peaceably and quietly have, hold and enjoy the Demised Premises, without any interruption or disturbance from Landlord, subject to the terms hereof.
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ARTICLE XX. HAZARDOUS MATERIALS.
Section 20.01. Compliance with Environmental Laws:
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any person relating to Environmental Claims, and such detailed reports of any such Environmental Claim, as may reasonably be requested by Landlord.
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and a copy of same shall be promptly submitted to the Landlord. Tenant shall bear all costs and expenses, including reasonable attorney fees, expert/consultant fees, including those for the LSRP, and costs or expenses of investigation and/or remediation, incurred by Landlord or the Tenant in connection with any actions required of the Tenant to comply with SRRA.
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required by any governmental authority; (ii) contesting, defending, settling or otherwise resolving complaints, directives or other demands by any such governmental authority; (iii) bringing claims against, defending against and settling or otherwise resolving claims brought by, or otherwise establishing liability of or to third parties; and/or (iv) implementing any measures necessary to satisfy the agreements or other terms resulting from any such negotiation, litigation, direction by a governmental authority, or other resolution of such matters.
ARTICLE XXI. TENANT’S BANKRUPTCY
If the Tenant assumes this Lease and proposes to assign the same pursuant to the provisions of any bankruptcy law to any Person who shall have made a bona fide offer to accept an assignment of this Lease on terms acceptable to the Tenant, then written notice of such proposed assignment, setting forth (i) the name and address (in the United States) of such Person, (ii) all of the terms and conditions of such offer and (iii) the adequate assurance to be provided the Landlord to assure such Person’s future performance under this Lease, including the assurance referred to in Section 365(b)(3) of the Bankruptcy Code, shall be given to the Landlord by the Tenant. Any Person, to which this Lease is assigned pursuant to the provisions of any bankruptcy law, shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of such assignment. As part of providing the Landlord with adequate assurance with respect to any proposed assignment in bankruptcy of this Lease, the financial condition and net worth of any such assignee shall, at the time of such assignment, be at least equal or greater than the financial condition of the Tenant as of the Commencement Date of the Lease and/or the anticipated date of such assignment, whichever is greater. Any such assignee shall upon demand sign and deliver to the Landlord an instrument confirming such assumption and such net worth. Nothing contained in this Article shall in any way constitute a waiver of the provisions of this Lease relating to assignment of the Lease pursuant to Section 10.01. The Tenant shall not by virtue of this Article have any further rights relating to assignment of this Lease other than those expressly
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granted in any bankruptcy law. The term “Tenant” as used in this Article includes any trustee, other judicial custodian, government trustee, debtor in possession, receiver, custodian or other similar officer or legal representative of the Tenant. The term “Person” as used in this Article shall mean any individual, corporation, partnership, limited liability company, trust, estate or other form of entity or association.
ARTICLE XXII. INTENTIONALLY OMITTED.
ARTICLE XXIII. TELECOMMUNICATIONS.
Section 23.01. Telecommunications:
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Telecommunication Service providers that service the Building from time to time through the telecommunication closet on the floor of the Building where the Demised Premises are located.
ARTICLE XXIV. WI-FI ACCESS
Section 24.01. Wi-Fi Access:
ARTICLE XXV. MISCELLANEOUS.
Section 25.01. Interpretation:
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25.19 hereof, any reference herein to any extension or renewal of the Term or any period during which Tenant may be in possession after the Expiration Date shall not be deemed to imply that any extension or renewal of the Term is contemplated hereby or that Tenant shall be permitted to remain in possession after the expiration of the Term.
Section 25.02. Construction of Words and Phrases:
Section 25.03. Written Agreement Required:
No amendment, alteration, modification of or addition to the Lease will be valid or binding unless expressed in writing and signed by Landlord and Tenant.
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Section 25.04. Notices:
Every notice, request, consent, approval, waiver or other communication under this Lease shall be deemed to have been given if in writing by (i) registered or certified mail, return receipt requested, postage prepaid, (ii) independent overnight courier (e.g., Federal Express), or (iii) personal delivery, addressed:
Section 25.05. Method of Payment:
Except as otherwise expressly provided herein, Landlord shall have the right to specify the manner of payment of Base Rent and Additional Rent during the Term of this Lease, and all amounts payable under this Lease shall be payable in coin or currency of the United States of America.
Section 25.06. Successors and Assigns:
Subject to the provisions hereof, this Lease shall bind and inure to the benefit of the parties and their respective successors, representatives, heirs and assigns.
Section 25.07. Tenant:
Any restrictions on or requirements imposed upon Tenant hereunder shall be deemed to extend to any Tenant’s subtenants, concessionaires and licensees and it shall be Tenant’s obligation to cause the foregoing persons to comply with such restrictions or requirements.
Section 25.08. Hold Over:
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based upon one and one quarter (1.25) times the monthly Rent in effect for the last month of the Term or any renewal periods and the second and third months of any hold over shall be based upon one and one half (1.50) times the monthly Rent in effect for the last month of the Term or any renewal periods.
Section 25.09. Interest and Late Charge:
Section 25.10. Non-Waiver:
The failure of Landlord to insist upon strict performance of any covenants or conditions of this Lease or Landlord’s failure to exercise any option herein conferred in any one or more instances shall not be construed as a waiver or relinquishment of any such covenants, conditions or options, but the same shall be and remain in full force and effect. If the Landlord pursues any remedy granted by the terms of this Lease or pursuant to applicable law, it shall not be construed as a waiver or relinquishment of any other remedy afforded thereby.
Section 25.11. Broker:
Tenant and Landlord each represents that there are no broker(s) other than the Broker(s) set forth in Section 1.08, if any, responsible for bringing about or negotiating this Lease. Tenant and Landlord agrees to defend, indemnify, and hold each other harmless from and against any and all claims for brokerage commission or compensation with regard to the Demised Premises by any other broker claiming or alleging to have acted on behalf of or to have dealt with Tenant or
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Landlord, and Landlord agrees to indemnify Tenant in connection with any claims of Brokers. Landlord will pay any fees or commissions due the Broker(s) pursuant to a separate agreement with any such Broker. The provisions of this Section shall survive the expiration or earlier termination of this Lease.
Section 25.12. Not Record the Lease:
Landlord and Tenant agree that neither party shall record the Lease against the Property.
Section 25.13. Tenant Financial Statements:
If Tenant is no longer a publicly traded company, then within ten (10) days of Landlord’s request (but only if Landlord’s request is the result of a request from a prospective purchaser or lender), Tenant shall furnish to Landlord, a copy of its financial statement for Tenant’s fiscal year just ended. Tenant acknowledges that this undertaking is of substantial value to Landlord because Landlord’s rights to such financial statements may affect the availability or cost of Landlord’s financing. The Landlord shall maintain the confidentiality of any such financial statements delivered by the Tenant to the Landlord; provided, however, Landlord may disclose such financial statements to Landlord’s employees, agents, successors, assigns, accountants, attorneys, financial advisors, and actual and potential lenders, investors and purchasers, all in the ordinary course of business provided they sign a commercially reasonable confidentiality agreement. Tenant shall not be required to provide any financial statements that are not typically prepared by Tenant in the ordinary course of its business.
Section 25.14. Mechanics’ Liens:
Tenant shall not do or cause anything to be done whereby the Property may be encumbered by a mechanic’s lien. If any mechanic’s or materialman’s lien is filed against the Property as a result of any additions, alterations, repairs, installations, improvements or any other work or act of Tenant, Tenant shall discharge or bond same within thirty (30) days from the date Tenant receives notice of the filing of the lien. If Tenant shall fail to discharge or bond the lien, Landlord may bond or pay the lien or claim for the account of Tenant without inquiring into the validity of the lien or claim and Tenant shall reimburse Landlord for its reasonable costs within thirty (30) days after written demand for payment.
Section 25.15. Corporate Authority:
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Section 25.16. Force Majeure:
Landlord and Tenant shall not be liable for any delays and other events beyond the reasonable control of such party defined herein as Force(s) Majeure(s), and including, without limitation: acts of God; strikes, lock-outs or other labor difficulty; explosion, sabotage, accident riot or civil commotion; act of war or terrorism; fire or other casualty; requirements of governing authorities or inability to obtain necessary governmental permits and approvals (and the period of any such delay shall be deemed added to the time provided for the performance of any obligation by Landlord or Tenant, except those related to Tenant’s payment of Rent and other sums due under this Lease).
Section 25.17. Blocked Person:
The Landlord and Tenant each warrants and represents to each other that they are not listed on The United States Treasury Department’s Office of Foreign Asset Control’s list of specially Designated National and Blocked Persons.
Section 25.18. Governing Law:
This Lease shall be governed by and construed pursuant to the Laws of the State of New Jersey.
Section 25.19. Renewal Option:
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appraiser with the qualifications specified above. This third appraiser shall, within five (5) business days, choose either the determination of Landlord’s appraiser or Tenant’s appraiser and such choice of this third appraiser shall be final and binding on Landlord and Tenant. Each party shall pay its own costs for its real estate appraiser and shall equally share the costs of any third appraiser. As soon as Landlord and Tenant have agreed to the Base Rent for the Renewal Term, the parties shall execute an amendment to the Lease confirming the extension of the Term and the adjusted Base Rent.
(i)Tenant’s timely exercise of this option by providing Landlord its Exercise Notice within the time frame described in paragraph (a) above;
(ii)Tenant shall not be in default under the terms and conditions of this Lease beyond the applicable grace period for the cure thereof at the time Tenant exercises its option;
(iii)Intentionally omitted;
(iv)Tenant shall have no further renewal options other than the option to extend for the Renewal Term set forth in paragraph (a) above; and
(v)Landlord shall have no obligation to do any work with respect to the Demised Premises.
Section 25.20. Tenant’s Licensing Requirements:
Notwithstanding anything to the contrary contained herein, the Landlord shall reasonably cooperate with the Tenant, at no cost expense to Landlord, in the Tenant applying for any applicable governmental incentive award and/or New Jersey licensing requirements in connection with Tenant’s business, including without limitation, the New Jersey Department of Health Wholesale Drug and Medical Device Business Registration, including without limitation, upon notice from Tenant, on or about September 1, 2021, Landlord will (a) permit access to the Demised Premises on a prescheduled day for state inspectors to inspect the Demised Premises, with 2-3 Tenant employees also in the Demised Premises on such inspection day, and (b) prior to such inspection day, Landlord will cooperate with Tenant to provide for the following (1) the entrance to the Demised Premises shall have a secure lock in working order (provided, however, it is understood that the glass entrance door which is ultimately to be used as the entrance door will not be installed by September 1, 2021), (2) the electricity shall be turned on and the electricity and lights shall be working in the Demised Premises, (3) the installation of Tenant’s name on the electronic directory in the Building entrance lobby and/or Tenant may install any temporary door/suite signage; and (4) one of the storage areas in the Demised Premises shall have a locking door accessible by Tenant.
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Section 25.21. Existing Furniture:
At no cost or expense to Tenant, Landlord has agreed to leave, and Tenant has agreed to accept, the existing furniture, an approximate list of which is attached hereto as Exhibit H (the “Furniture”), in the Demised Premises, and Landlord, at its expense, prior to the Commencement Date, will remove any existing furniture not on Exhibit H . The Furniture shall remain in the Demised Premises during the Term of the Lease, and Tenant shall be entitled to use the Furniture at no additional cost. At the end of the Term Tenant shall leave the Furniture in the Demised Premises in the condition which existed on the date hereof, reasonable wear and tear, casualty and condemnation excepted.
Section 25.22. Counterparts; Electric Signatures:
This Lease may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart. Any counterpart of this Lease may be executed and delivered by electronic transmission (including, without limitation, e-mail) or by portable document format (pdf) and shall have the same force and effect as an original.
-----SIGNATURES ON FOLLOWING PAGE-----
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IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and sealed this Lease as of the day and year first above written.
LANDLORD: |
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500 COLLEGE ROAD VENTURE, LLC |
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By: |
/s/ Michael Bergman |
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Name: |
Michael Bergman |
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Title: |
Authorized Signatory |
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TENANT: |
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AGILE THERAPEUTICS, INC. |
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By: |
/s/ Tristen Herrstrom |
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Name: |
Tristen Herrstrom |
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Title: |
SVP, HR & Administration |
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EXHIBIT ”A”
OUTLINE OR FLOOR PLAN OF DEMISED PREMISES
Exhibit A
EXHIBIT “B”
LANDLORD’S WORK
Landlord shall, at its sole cost and expense but not to exceed a cap (the “Landlord’s Cap”) of $15.00 per rentable square foot of the Demised Premises ($206,610.00), provide for design, permitting, oversight and construction of the following Landlord’s Work to the Demised Premises substantially in accordance with the preliminary space plan (the “Preliminary Space Plan”) attached hereto as Exhibit “B-1”, using Building standard quantities and quality of materials and finishes unless otherwise noted below or as shown on the Preliminary Space Plan:
1. | Patching, sanding and painting of the Demised Premises (Tenant to choose color from Landlord’s samples), including, without limitation, removal of the map by the cafe; |
2. | New carpet tile throughout the Demised Premises based on areas that are currently carpeted (Tenant to choose from Landlord’s samples); |
3. | Fixing/replacement of all damage and/or stained ceiling tiles; |
4. | Provide IT room with anti static vinyl flooring and sufficient electrical capacity and cooling to accommodate Tenant’s IT needs which may include the installation of a supplemental HVAC to be installed, maintained, metered by Landlord at a location reasonably determined by Landlord at Tenant’s sole cost and expense; |
5. | Build out one (1) private office as provided on the Preliminary Space Plan to match existing office standard finishes, size and location to be confirmed by Tenant; |
6. | Replace split door from mail room to corridor with fire rated door and replace split door from mail room into main office area with door; |
7. | Remove a portion of upper cabinetry in pantry opposite sink at Tenant’s election; and |
8. | Create an IT room in existing mail room per the Preliminary Space Plan and install door and remove mill work at Tenant’s election and comply with applicable building codes. |
In addition to the foregoing, the former Deloitte reception desk shall be removed and the third floor lobby Common Area shall be renovated to the Building’s new standard lobby specifications.
Landlord’s Work shall be performed in accordance with the provisions of the workletter (“Workletter”) set forth in Exhibit “B-2” attached hereto and made a part hereof.
EXHIBIT ”B-1”
PRELIMINARY SPACE PLAN
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EXHIBIT ”B-2”
WORKLETTER
1.General.
1.1The purpose of this Workletter is to set forth (i) how Landlord’s Work will be constructed, (ii) who will do the construction of Landlord’s Work, and (iii) who will pay for the construction of Landlord’s Work.
1.2Except as defined in this Workletter to the contrary, all capitalized terms used in this Workletter have the same meanings as the defined terms in the Lease.
1.3The terms, conditions and requirements of the Lease, except where clearly inconsistent or inapplicable to this Workletter, are incorporated into this Workletter.
1.4To the extent required, upon execution of the Lease, Landlord will hire, at its sole cost and expense, Landlord’s architect, who will prepare a set of fileable plans & specifications (“Plans & Specifications”) based on the Landlord’s Work and the Preliminary Space Plan. The Plans & Specifications will be sent to Tenant who will have five (5) business days to either approve the Plans & Specifications or advise Landlord in detail as to the portions of the Plans & Specifications which are not approved; provided, however, that Tenant may only disapprove the Plans & Specifications to the extent they are inconsistent with the Preliminary Space Plan. If Tenant does not respond within such five (5) business day period or does not specify with reasonable detail the reasons for disapproval, then the Plans & Specifications will be deemed approved. If the Tenant timely and otherwise properly disapproves the Plans & Specifications by notice to the Landlord setting forth in reasonable detail the reasons for disapproval, Landlord’s architect shall revise the Plan & Specifications and deliver the revised complete Plans & Specifications to Tenant within five (5) business days of Tenant giving timely notice of its objection to Landlord. In addition, Landlord shall revise and deliver revised complete Plans & Specifications to Tenant within five (5) business days of any governmental authorities’ objections to the Plans & Specifications.
1.5Except for Landlord’s Work and Base Building Work, the Demised Premises shall be delivered to Tenant in “as-is” condition. Other than Landlord’s Work and Base Building Work, any additional work, improvements or upgrades that exceed Landlord’s Cap that Tenant elects to have Landlord complete (“Additional Work”) shall be at Tenant’s sole cost and expense, including, but not limited to: (1) telephone wiring and computer cable installation (including panel location); (2) additional electrical outlets, dedicated lines, light switches or other electrical needs; (3) private security alarm system; (4) supplemental air conditioning, (5) furniture, including any system partitions modular workstations furniture, and (6) any other work not specifically identified above (including any other Early Entry Work set forth in Section 4.2). Tenant shall notify Landlord of any Additional Work it desires to have Landlord complete as Early Entry Work
pursuant to Section 4.2or as a Change Order pursuant to Section 3 or by the Tenant as to Early Entry Work pursuant to Section 4.2.
1.6Landlord’s Work (unless otherwise specifically provided herein or in the Preliminary Space Plan) and Base Building Work shall consist of the materials, manufactures, design, capacity, quality, finish and color of the standards adopted by Landlord for the Building and, where quantities are specified in the Plans & Specifications or otherwise, such quantities shall include any existing installations to the extent usable and used in the performance of Landlord’s Work and Base Building Work. Whenever possible and practicable, Landlord will use the items and materials designated in the Plans & Specifications for the construction of Landlord’s Work; provided, however, that if Landlord determines in its reasonable judgment that it is not practical or efficient to use such materials, Landlord, upon notice to Tenant, shall have the right to substitute items and materials of comparable quality and utility.
1.7Landlord shall complete Landlord’s Work and Base Building Representations in a good and workmanlike manner in accordance with the Plans & Specifications, subject to any Change Orders, as provided herein, and all applicable laws and regulations. Subject to any Tenant Delay, Landlord shall use commercially reasonable efforts to Substantially Complete Landlord’s Work and Base Building Representations on or prior to December 1, 2021. In the event Landlord does not Substantially Complete the Landlord’s Work and Base Building Representations and obtain a certificate of occupancy for the Permitted Use (or other form of governmental approval permitting Tenant’s occupancy of the Demised Premises for the Permitted Use) by February 1, 2022 (the “Outside Completion Date”), which Outside Completion Date shall be extended on a day- for-day basis for (1) each day of “Force Majeure,” as defined in Section 25.16 of the Lease, (2) for each day of Tenant Delays (as defined in Section 2.3 below), or (3) township delays in approving plans, issuing permits, inspecting work, etc., and as a result, Tenant cannot take occupancy of the Demised Premises for the purpose of conducting its business operations, then Tenant shall be entitled to an abatement of one (1) day of Base Rent for each day of delay beyond the Outside Completion Date until Landlord’s Work and the Base Building Representations are Substantially Complete.
2.Procedures.
2.1Landlord may, without Tenant’s consent but on prior notice to Tenant, make all changes to the Plans & Specifications required by any governmental authorities or to cause the Plans & Specifications to be in compliance with applicable legal requirements.
2.2As soon as reasonably practicable following the execution and delivery of the Lease and completion of the Plans & Specifications, Landlord shall instruct the general contractor or subcontractors engaged by Landlord to commence the construction of the Base Building Work and Landlord’s Work in accordance with sound construction industry practice and procedure, applicable legal requirements and the Plans & Specifications, and subject to Landlord obtaining of all permits and approvals of governmental authorities required under applicable legal requirements for the Base Building Work and Landlord’s Work.
2.3Reference to the term “Tenant Delay” shall include any and all matters referred as a Tenant Delay in this Exhibit B-2, as well as any delay in the completion of Landlord’s Work due to Change Orders (as defined below), Additional Work requests, Tenant’s delays in giving necessary approvals, installing telephone equipment/computer cabling (including obtaining any low voltage permits that may be required for such installation), installing its workstations or other furniture that requires final electrical inspections, and any other actions or inactions of Tenant that reasonably cause a delay in the Substantial Completion Date as set forth in Section 5.2 (and thus delaying the Commencement Date), but only to the extent that any such act, omission or delay actually delays or impedes the performance of Landlord’s Work beyond the date that Landlord’s Work would have been Substantially Completed but for such act, omission or delay; provided, however, there shall be no Tenant Delay unless Landlord notifies Tenant (which may be by email) of the Tenant Delay at the time of the Tenant Delay.
4.Designation of Tenant’s Construction Agent; Entry by Tenant and Its Agents.
4.1Tenant hereby designates Tristen Herrstrom, (Phone) 1-609-683-1880, x 6510, (Cell) 1-609-462-4975, e-mail: therrstrom@agiletherapeutics.com as its authorized agent (“Tenant’s Construction Agent”) for the purpose of submitting to Landlord and authorizing any Change Orders and for the purpose of consulting with Landlord as to any and all aspects of Landlord’s Work. Tenant’s Construction Agent shall have the right to inspect the Demised Premises during the course of Landlord’s Work provided Tenant’s Construction Agent shall make a prior appointment with Landlord and/or its contractor at a mutually convenient time. Upon request of Tenant, Landlord agrees to permit Tenant’s Construction Agent to attend meetings (frequency and scheduling of which shall be as determined by Landlord) with Landlord’s architect, engineer, and general contractor for purposes of informing Tenant of the progress of the Landlord’s Work.
4.2Except as hereinafter provided, neither Tenant nor its agents, employees, invitees or independent contractors shall enter the Demised Premises during the performance of Landlord’s Work and Base Building Work without prior notice to Landlord. Tenant shall have the right to enter the Demised Premises prior to the Substantial Completion of Landlord’s Work and Base Building Work solely for the following purposes: (i) installation of telecommunication and audio/visual wiring and equipment such as installation of Tenant’s telephone, computer, or other data communication wiring and equipment including low voltage electrical required for same, (ii) installation of security and alarm systems including low voltage electrical required for same, (iii) installation of workstations, and (iv) installation of supplemental air-conditioning equipment, generators and other Landlord approved items, in each case as approved by Landlord pursuant to this Lease (collectively, the “Early Entry Work”). If Tenant or its contractor shall enter upon the Demised Premises or any other part of the Building for any purpose prior to the Commencement Date, Tenant shall indemnify and save Landlord harmless from and against any and all obligations, liabilities, causes of actions, damages, losses, costs and expenses (including reasonable attorney’s fees), arising from or claimed to arise as a result of: (i) any act, neglect or failure to act of Tenant or anyone entering the Demised Premised or Building with Tenant’s permission, or (ii) any other reason whatsoever arising out of Tenant’s or its contractor’s entry upon the Demised Premises or Building, except Tenant’s indemnity shall not cover the negligence or willful misconduct of Landlord. Such access to the Demised Premises by Tenant and/or its contractor prior to the Commencement Date shall not be deemed to be use and occupancy by Tenant of the Demised Premises whereby the Tenant shall have taken possession of the Demised Premises for purposes of determining the Commencement Date, but shall otherwise be subject to all of the terms of this Lease, except Tenant does not have to pay Rent during such access. Tenant shall not be charged for the use of the freight elevator or Tenant Electric Charges, during the Tenant’s move into the Demised Premises.
4.3All Early Entry Work shall be coordinated with Landlord’s scheduling requirements and shall be subject to Tenant not interfering with the performance of Landlord’s Work and Base Building Work and/or any other work being performed in the Building at the same time. If the performance by Tenant of the Early Entry Work in the Demised Premises interferes with the performance by Landlord of Landlord’s Work and Base Building Work and/or any other work being performed in the Building at the same time, Landlord shall, notwithstanding the foregoing, have the right to notify Tenant of such interference (which notification may be oral) and Tenant shall immediately discontinue such interference. If the Substantial Completion of Landlord’s Work and Base Building Representations is delayed by reason of interference with the performance of Landlord’s Work and Base Building Representations caused by Tenant performing the Early Entry Work, Landlord’s Work and Base Building Representations shall be deemed to be Substantially Completed for the purposes of determining the Commencement Date as of the date Landlord’s Work and Base Building Representations would have been Substantially Completed but for such Tenant Delay.
4.4Subject to compliance with this Lease, Tenant shall have the right, at Tenant’s sole cost and expense, to install its own access security and other security in the Demised Premises, provided that the Tenant shall provide a sufficient amount of access cards and/or other keys and codes for such system to the Landlord permitting the Landlord to gain access to the Demised Premises and to all rooms and closets therein to enable the Landlord to perform its obligations under this Lease.
5.1The term “Substantial Completion” or “Substantially Completed” shall mean the completion of Landlord’s Work and Base Building Representations pursuant to the Plans & Specifications (except for Punch List items), including without limitation, the Landlord’s obtaining all required governmental approvals so the Tenant can use and occupy the Demised Premises for the Permitted Uses (including a temporary or permanent Certificate of Occupancy, if required).
5.2Landlord shall notify Tenant of the anticipated date of Substantial Completion of Landlord’s Work and Base Building Representations (the “Substantial Completion Date”) in a notice given at least five (5) business days prior to the Substantial Completion Date stated therein. Landlord and Tenant shall thereupon set a mutually convenient time on or prior to such date for Tenant’s Construction Agent, the Tenant’s architect (if required by the Tenant), Landlord and Landlord’s contractor to inspect the Demised Premises and Landlord’s Work and Base Building Representations, at which time Tenant’s Construction Agent shall prepare and submit to Landlord a list of Punch List items, if any, to be completed. “Punch List” shall mean a list setting forth those faults, defects and omissions in the Landlord’s Work and Base Building Representations, which are in the nature of minor or cosmetic faults, defects and omissions. Upon completion of the inspection, Tenant’s Construction Agent shall acknowledge in writing that Substantial Completion of Landlord’s Work and Base Building Representations have occurred, subject to any Punch List items to be completed as set forth below in Section 5.3. At such time, Landlord’s Work and Base Building Representations shall be deemed to be Substantially Completed and satisfactory in all respects and the Commencement Date shall be deemed to have occurred on the date set forth in Landlord’s notice. If the Substantial Completion Date shall be delayed by reason of any of the matters set forth herein which could constitute a Tenant Delay, the Demised Premises shall be deemed Substantially Completed for the purposes of determining the Commencement Date as of the date that the Demised Premises would have been Substantially Completed but for any such Tenant Delay, as determined by Landlord in its reasonable discretion.
5.3The taking of possession of the Demised Premises by Tenant shall be conclusively deemed that the Demised Premises and the Building were in good and satisfactory condition and that any work to be performed by Landlord was satisfactorily and Substantially Complete, except for latent defects and completion of the Punch List items. The Landlord and the Tenant shall mutually agree upon a Punch List to be prepared by Tenant and Landlord within thirty (30) days following the date Landlord’s Work and Base Building Representations are Substantially Complete. Landlord and its employees, contractors and agents shall have access to the Demised Premises at all reasonable times for the performance of Punch List items and for the storage of materials reasonably required in connection therewith, and Tenant will use all commercially reasonable efforts to avoid any interference with the performance of Punch List items. Landlord shall use reasonable efforts to minimize interference with Tenant’s use and occupancy of the Demised Premises during the performance of Punch List items. There shall be no liability on the part of Landlord, by reason of inconvenience, annoyance or injury to business arising from the performance of Punch List items or the storage of any materials in connection therewith and Tenant shall not be entitled to any abatement of Rent on account therefor. Landlord shall use diligent efforts to complete any Punch List Items within thirty (30) days, or as soon as reasonably practicable following the date the Punch List is prepared.
6.1Except as expressly set forth herein, Landlord has no other agreement with Tenant and Landlord has no other obligation to do any other work or pay any amounts with respect to the Demised Premises. Any other work in the Demised Premises which may be permitted by Landlord pursuant to the terms and conditions of the Lease shall be done at Tenant’s sole cost and expense and in accordance with the terms and conditions of the Lease.
6.2This Workletter shall not be deemed applicable to any additional space added to the original Demised Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Demised Premises or any additions thereto in the event of a renewal or extension of the initial term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement thereto.
6.3The failure by Tenant to pay any monies due Landlord pursuant to this Workletter within thirty (30) days of the date due shall be deemed an event of default under the Lease for which Landlord shall be entitled to exercise all remedies available to Landlord for nonpayment of Rent and Landlord, may, if it so elects, discontinue construction of Landlord’s Work and Base Building Representations until all such sums are paid and Tenant has otherwise cured such event of default (and any delay in the performance of Landlord’s Work and Base Building Representations resulting therefrom shall be deemed to be a Tenant Delay). All late payments shall bear interest in accordance with Section 25.09 of the Lease.
6.4Upon notice to Tenant, any changes, as may be required by any governmental authority affecting Landlord’s Work and Base Building Work, may be complied with by Landlord in completing Landlord’s Work and Base Building Work and shall not be deemed to be a violation of the Plans & Specifications. Any such corrective work shall be deemed accepted by Tenant.
EXHIBIT ”C”
RULES AND REGULATIONS
Tenant agrees to comply with the following rules and regulations and with such reasonable modifications thereof and additions thereto as Landlord may make for the Building, it being agreed Landlord shall not be responsible for any non-observance thereof by other tenants.
equipment or machinery other than that commonly used in a normal office operation without first obtaining the prior written consent of the Landlord.
regulations or ordinances, nor shall Tenant use any space in the Demised Premises for living quarters, whether temporary or permanent.
EXHIBIT ”D”
JANITORIAL SERVICES
General Cleaning Office Area
Cleaning Service provided five (5) days per week.
Cleaning hours Monday through Friday, between 5:30 p.m. and before 8:00 a.m. of the following day.
On the last day of the week the work will be done after 5:30 p.m. Friday, but before 8:00 a.m. Monday.
No cleaning on holidays.
Furniture will be dusted and desk tops will be wiped clean. However, desks with loose papers on the top will not be cleaned.
Window sills and baseboards to be dusted and washed when necessary.
Office wastepaper baskets will be emptied nightly.
Cartons or refuse in excess of that which can be placed in wastebaskets will not be removed. Tenants are required to label such unusual refuse and place near wastebaskets.
Cleaners will not remove nor clean non paper tea or coffee cups or mugs or similar containers; also if such liquids are spilled in wastebaskets the wastebaskets will be emptied but not otherwise cleaned (and Tenant shall be responsible for the cleaning of and/or damage to any carpet resulting from any such liquids in wastebaskets).
Vinyl tile floors will be swept daily.
All rugs will be carpet swept nightly.
Carpets will be vacuumed every night.
All closet shelving, coat racks, etc. will be dusted weekly.
Seat cushions on chairs, sofas, etc. will be vacuumed weekly.
Common Area Lavatories
All lavatory floors to be swept and washed with disinfectant nightly.
Tile walls and dividing partitions to be washed and disinfected weekly.
Basins, bowls, urinals to be washed and disinfected daily.
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Mirrors, shelves, plumbing work, bright work, and enamel surfaces cleaned nightly.
Waste receptacles and wash dispensaries to be filled with appropriate tissues, towels, and soap supplied by Landlord.
Main Lobby Elevators, Building Exterior and Corridors
Wipe and wash all floors in main lobby nightly.
Wipe and/or vacuum floors nightly.
Polish or vacuum floors weekly in elevators.
Elevator cab to be wiped daily and thoroughly cleaned and polished weekly.
Lobby walls, glass, etc., to be wiped clean daily and thoroughly cleaned and polished weekly.
Lobby entrance doors, windows to be washed weekly.
Exterior windows will be cleaned when necessary but not less two (2) times per year.
Miscellaneous Services
Sweep sidewalk in front of building entrances daily.
Remove snow and ice from sidewalks when accumulation reaches 3” or more.
Remove snow from parking areas when accumulation reaches 3” or more.
Keep stairways clean at all times.
Keep custodian’s room and mechanical rooms clean and in orderly condition at all times.
Work Excluded
Cleaning services do not include the shampooing of carpet, nor washing nor polishing, nor waxing of furniture, files, cabinets, wastebaskets or other personal property of Tenant. When such work is necessary, Tenant may make necessary arrangements for same directly with Landlord’s cleaning employees.
In addition, Tenant acknowledges that the above cleaning is not medical cleaning and that any additional cleaning, including medical cleaning, shall be the sole responsibility of Tenant.
EXHIBIT “E”
HOLIDAY SCHEDULE
NEW YEAR’S DAY
MEMORIAL DAY
INDEPENDENCE DAY
LABOR DAY
THANKSGIVING DAY
CHRISTMAS DAY
EXHIBIT ”F”
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE TOWNSHIP OF PLAINSBORO, COUNTY OF MIDDLESEX, STATE OF NEW JERSEY AND IS DESCRIBED AS FOLLOWS:
BEGINNING at a point in the Westerly line of College Road East, 100 feet in width, said point bearing the following two courses from a point formed by the intersection of the Northerly prolongation of the Easterly line of said College Road East with the Westerly prolongation of the Southerly line of Research Way 100 feet in width and running thence;
A. | Along said Northerly prolongation in a Southerly direction and along said Easterly line of College Road East in a Southerly direction the various courses and distances thereof, a total distance of 635.28 feet to a point; thence |
B. | South 87 degrees 43 minutes 47 seconds West, 100.00 feet to the aforesaid beginning point and running; thence |
(1) | Along said Westerly line of College Road East, South 02 degrees 16 minutes 13 seconds East 769. 79 feet to a point; thence |
(2) | Still along said Westerly line of College Road East and continuing along a curve bearing to the left in a Southerly direction having a radius of 5550.00 feet, an arc length of 327.55 feet, the chord of said curve bearing South 03 degrees 57 minutes 39 seconds East 327.50 feet to a point; thence |
(3) | Along other lands of Trustees of Princeton University (Tax Lot 12.12) South 84 degrees 20 minutes 54 seconds West 622.06 feet to a point in the Easterly line of other lands of said Trustees of Princeton University (common open space) (Tax Lot 13.01): thence |
(4) | Along the Easterly line of the last mentioned lands, the following two courses; North 04 degrees 37 minutes 12 seconds East 251.27 feet to a point: thence |
(5) | North 00 degrees 52 minutes 37 seconds West 912.78 feet to a point; thence |
(6) | Still along the last mentioned lands, the following four courses; South 87 degrees 54 minutes 24 seconds East 130.00 feet to a point of curve; thence |
(7) | Along a curve bearing to the left in an Easterly direction having a radius of 1902.63 feet. an arc length of 261.47 feet the chord of said curve bearing North 88 degrees 09 minutes 23 seconds East 261.26 feet to a point of tangency; thence |
(8) | North 84 degrees 13 minutes 10 seconds East 141.82 feet to a point of curve; thence |
(9) | Along a curve bearing to the right in a Southeasterly direction having a radius of 25.00 feet, an arc length of 40.80 feet, the chord of said curve bearing South 49 degrees 01 minutes 32 seconds East 36.42 feet to the point and place of BEGINNING, |
BEING ALSO KNOWN AS (REPORTED FOR INFORMATIONAL PURPOSES ONLY):
Block 701, Lot 8 on the official tax map of the Township of Plainsboro, County of Middlesex, State of New Jersey.
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EXHIBIT H
EXISTING FURNITURE
Chairs
-20 high back chairs in the main conference room
-124 wheeled office chairs
-26 legged chairs
Desks, Cabinets & Credenzas
-24 large workstations with desk and upper and lower cabinets
-30 small workstations with lower cabinets
-13 office desks and credenzas
-13 office upper cabinets
Conference Room Tables & Credenzas
-1 large conference room table for 20 chairs and 1 rack of Creston A/V equipment
-1 medium conference room table for 10 chairs and 1 credenza
-1 small conference room table for 8 chairs, 1 credenza and a 55” Samsung TV monitor
-1 A/V presentation room oval table for 8 chairs
-6 small huddle room round tables for 4 chairs and 1 credenza
-1 small huddle room rectangular table for 5 chairs
File Cabinets
-20 large 5-drawer file cabinets
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-49 small 3-drawer file cabinets
Appliances
-2 double door stainless refrigerators
-1 dish washer
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Exhibit 10.2
Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) the type of information that the registrant customarily and actually treats as private and confidential.
SECOND AMENDMENT TO
PROJECT AGREEMENT
(DETAILING – FIELD TEAM AND TELESOLUTIONS)
This Second Amendment (the “Amendment”) dated January 1, 2021 (the “Effective Date”) is made by and between inVentiv Commercial Services, LLC, a Syneos Health® group company, with an office at 500 Atrium Drive, Somerset, N.J. 08873 (“Syneos Health”) and Agile Therapeutics, Inc. with an office located at 100 Poor Farm Road, Princeton, New Jersey 08540 (the “Client”). Syneos Health and Client may each be referred to herein as a “Party” and, collectively, as the “Parties.”
W I T N E S S E T H:
WHEREAS, Syneos Health and Client are parties to a Project Agreement (Detailing – Field Team and Telesolutions) made as of April 30, 2020 and amended on June 1, 2020 (together, the “Agreement”); and
WHEREAS, Syneos Health and Client desire to amend the Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, it is agreed as follows:
1.Except as provided in this Amendment, the terms and conditions set forth in the Agreement shall remain unaffected by execution of this Amendment. To the extent any provisions or terms set forth in this Amendment conflict with the terms set forth in the Agreement, the terms set forth in this Amendment shall govern and control. Terms not otherwise defined herein, shall have the meanings set forth in the Agreement.
2.The table in Amended and Restated Exhibit F, Section I(b), “Fixed Monthly Fees,” is hereby deleted in its entirety and replaced with the table below:
3.This Amendment may be executed simultaneously in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Execution and delivery of this Amendment by exchange of facsimile copies or via pdf file bearing the facsimile signature of a party hereto shall constitute a valid and binding
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execution and delivery of this Amendment by such party. Such facsimile copies and/or pdf versions shall constitute enforceable original documents.
4.The terms of this Amendment are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and may not be contradicted by evidence of any prior or contemporaneous agreement. The Parties further intend that this Amendment constitute the complete and exclusive statement of its terms and shall supersede any prior agreement with respect to the subject matter hereof.
WHEREFORE, the parties hereto have caused this Amendment to be executed by their duly authorized representatives.
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AGILE THERAPEUTICS, INC. |
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INVENTIV COMMMERCIAL SERVICES, |
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LLC |
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By: |
/s/ Al Altomari |
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By: |
/s/ Todd Tomasoski |
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Name: |
Al Altomari |
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Name: |
Todd Tomasoski |
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Title: |
Chairman and CEO |
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Title: |
Vice President, Global Deal Management |
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Date: |
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Date: |
Mar 9, 2021 |
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Syneos Health Project Code: 7007244
Exhibit 10.3
Information in this exhibit identified by [***] is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) the type of information that the registrant customarily and actually treats as private and confidential.
THIRD AMENDMENT TO
PROJECT AGREEMENT
(DETAILING – FIELD TEAM)
This Third Amendment (the “Amendment”) entered into as of the last date of signature herein and made effective as of July 1, 2021 (the “Amendment Effective Date”) is made by and between Syneos Health Commercial Services, LLC, f/k/a inVentiv Commercial Services LLC, with an office at 500 Atrium Drive, Somerset, N.J. 08873 (“Syneos Health”) and Agile Therapeutics, Inc. with an office located at 100 Poor Farm Road, Princeton, New Jersey 08540 (the “Client”). Syneos Health and Client may each be referred to herein as a “Party” and, collectively, as the “Parties.”
W I T N E S S E T H:
WHEREAS, Syneos Health and Client are parties to a Project Agreement (Detailing – Field Team) made as of April 30, 2020, First Amendment to Project Agreement (Detailing – Field Team) dated June 1, 2020 and Second Amendment to Project Agreement (Detailing – Field Team) dated January 1, 2021 (collectively, the “Agreement”); and
WHEREAS, Syneos Health and Client desire to amend the Agreement as set forth
herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, it is agreed as follows:
1.Except as provided in this Amendment, the terms and conditions set forth in the Agreement shall remain unaffected by execution of this Amendment. To the extent any provisions or terms set forth in this Amendment conflict with the terms set forth in the Agreement, the terms set forth in this Amendment shall govern and control. Terms not otherwise defined herein, shall have the meanings set forth in the Agreement.
2. |
The Agreement is hereby amended as follows: |
(a) |
Section 2, “The Services,” is hereby amended to include a new Exhibit G “Digital Amplifier Services” as set forth in the attached hereto and made a part hereof. |
(b) |
New Sections 7 through 9 is hereby added as follows: |
7. |
Ad Placement |
Notwithstanding anything to the contrary set forth in the Agreement, to the extent the Services include media purchasing/placement services (“Ad Placement Offerings”), Syneos Health (or its Affiliate) is authorized to purchase and place ad content provided to Syneos Health by Client, including by the use of technology and services from third parties as required to facilitate such Media Offerings (“Placement Vendors”), on behalf of Client Syneos Health will use commercially reasonable efforts to ensure that
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Syneos Health Project Code: 7007244
Placement Vendors perform their obligations, but Syneos Health does not guarantee any Placement Vendor’s performance or the success of the Services.
8. |
Client Responsibilities |
For all media placed by Syneos Health for Client as part of the Services, Client, using its own legal advisors, is solely responsible for (i) obtaining and resolving legal, usage and talent issues (including, without limitation, claims substantiation issues), (ii) its final decision to approve the use and publication of any creative materials in connection with the Services and the selection of applicable vendors and methods of targeting used for the Services, (iii) ensuring that all representations and descriptions regarding Client’s business and its competitors’ organizations, products, services and industry comply with all legal and regulatory requirements, directives, and guidelines and are accurate and supportable by competent and relatable tests or other objective data, (iv) ensuring it complies with applicable privacy laws in providing or using any data or personal information related to the Services, and (v) if applicable, providing Syneos Health with any viewability, brand safety, or inclusion/exclusion site requirements within a reasonable time prior to campaign launch. SYNEOS HEALTH SHALL PERFORM THE SERVICES WITHIN ITS CONTROL IN ACCORDANCE WITH APPLICABLE LAW, BUT CLIENT ACKNOWLEDGES THAT THE ABILITY TO DELIVER TARGETING ADS MAY BRING HEIGHTENED SCRUTINY TO CLIENT AS AN ADVERTISER FROM THE PRESS AND CONSUMER GROUPS, REGULATORS, PRIVACY ACTIVISTS, LEGISLATORS, INDUSTRY GROUPS AND SELF- REGULATORY BODIES. IN FURTHERANCE OF THE FOREGOING, CLIENT ACKNOWLEDGES AND AGREES THAT ITS AUTHORIZATION, PROVISION OR USE OF ANY DATA IN CONNECTION WITH THE SERVICES CARRIES CERTAIN INHERENT RISKS AND THAT SYNEOS HEALTH’S PERFORMANCE OF THE SERVICES ON BEHALF OF CLIENT IN ACCORDANCE WITH CLIENT’S AUTHORIZATION AND INSTRUCTIONS DOES NOT CONSTITUTE A BREACH OF SYNEOS HEALTH’S OBLIGATIONS UNDER THIS AGREEMENT.
9. |
Service Analysis & Algorithms |
Provided that Syneos Health removes any Client product identifying information, Syneos Health may use relevant project data for the purpose of refining and improving its overall services and offerings, evaluating its performance under the Agreement, and for business development and analytics purposes. Notwithstanding anything to the contrary herein or in the Agreement, (i) the Syneos Health Algorithms are not deliverables or work product (as either may be defined by the Agreement), (ii) Client receives no right or license to the Syneos Health Algorithms, and (iii) as between Syneos Health and Client, Syneos Health will own all intellectual property and other proprietary rights in and to the Syneos Health Algorithms and all derivatives, improvements, or changes thereto. “Syneos Health Algorithms” means Syneos Health’s (or its licensor’s) proprietary algorithms, methods, machine learning capabilities, and all other associated materials, equipment, systems, software, documentation, tools, algorithms, dictionaries models, frameworks, utilities, operating systems, data, and databases.
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3. |
The Amended and Restated Exhibit A, is hereby amended as follows: |
(a) |
The Amended and Restated Exhibit A-1 “Field Operations Services,” Section |
1.0 is hereby amended and restated to include additional scope pursuant to the Analytics and Reporting Field Operations Services in Sub-Section 3.7.3 to read as follows:
3.7.3 Custom Analysis & Insights.
Additional work-effort will require work estimates and Change of Scope as detailed in Section 3.1.1(d), to be coordinated by the PM.
As a result of some of the changes Syneos Health will be allocating analytics support to Client. This should enhance current reporting Client is receiving as there will be more insights applied, as well as the opportunity to better handle ad hoc reporting needs (the “Analyst Services”).
4.The Amended and Restated Exhibit F, “Compensation – Fixed Fees, Variable Fees and Pass-through Costs,” is amended as follows:
(a) |
Section I(b), “Fixed Monthly Fee,” is hereby amended to include new subsections (ii) and (iii) as follows: |
(ii)Effective July 1, 2021 ending December 31, 2021, Client shall pay Syneos Health a fixed monthly fee for [***] operations manager (the “OM”) per the table below (the “OM Fixed Monthly Fee”), pro-rated for any partial months:
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PERIOD |
OM
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July 1 - September 30, 2021 |
[***] |
October 1 - October 31 2021 |
[***] |
November 1 - November 30, 2021 |
[***] |
December 1 - December 31 2021 |
[***] |
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Syneos Health Project Code: 7007244
(iii)Client shall pay Syneos Health a [***] Fee for Digital Amplifier Services as set forth in the table below:
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Digital Amplifier Period |
Digital Amplifier
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[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
5.This Amendment may be executed simultaneously in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Execution and delivery of this Amendment by exchange of facsimile copies or via pdf file bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Amendment by such party. Such facsimile copies and/or pdf versions shall constitute enforceable original documents.
6.The terms of this Amendment are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and may not be contradicted by evidence of any prior or contemporaneous agreement. The Parties further intend that this Amendment constitute the complete and exclusive statement of its terms and shall supersede any prior agreement with respect to the subject matter hereof.
WHEREFORE, the parties hereto have caused this Amendment to be executed by their duly authorized representatives.
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AGILE THERAPEUTICS, INC. |
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SYNEOS HEALTH COMMERCIAL |
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SERVICES, LLC |
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By: |
/s/ Al Altomari |
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By: |
/s/ Todd Tomasoski |
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Name: |
Al Altomari |
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Name: |
Todd Tomasoski |
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Title: |
Chairman and CEO |
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Title: |
Vice President, Global Deal Management |
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Date: |
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Date: |
Sep 27, 2021 |
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Syneos Health Project Code: 7007244
EXHIBIT G
DIGITAL AMPLIFIER SERVICES
Overview:
The total estimated budget set forth in this Work Order is [***]. The budget covers the following Services, performed in efforts to increase HCP awareness of the Agile Therapeutics Twirla Program.
[***]HCPs will be targeted for Phase 1 and ~approximately [***]for Phase 2 of the campaign.
Scope of Work:
Syneos’ KineticTM will partner with Client to develop and launch a digital amplifier campaign against [***]HCP targets.
Services & Fees:
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Description of Work |
Requiredmaterials |
Setup Time |
Fee |
Total |
Digital Amplifier:
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Coordinated media and messaging [***]
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Pricing includes [***]
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Process includes Digital Linking of [***]
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Bi-weekly campaign reporting (XLS or PDF dashboard)
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[***] Rx Lift Analysis to be delivered
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[***]
[***]
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[***]
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[***]
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[***] |
[***] |
[***] |
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Syneos Health Project Code: 7007244
Scope Assumptions
· |
[***] |
Timeline:
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Milestone |
Date |
[***] |
[***] |
[***] |
[***] |
[***][***] [***][***] |
[***] [***] |
[***] [***] [***] |
[***] [***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
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Syneos Health Project Code: 7007244
Exhibit 31.1
CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Alfred Altomari, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Agile Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: November 2, 2021 |
/s/ Alfred Altomari |
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Alfred Altomari |
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Chief Executive Officer
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Exhibit 31.2
CERTIFICATION OF PERIODIC REPORT PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Dennis P. Reilly, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Agile Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Ay |
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Date: November 2, 2021 |
/s/ Dennis P. Reilly |
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Dennis P. Reilly |
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Chief Financial Officer
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Exhibit 32.1
STATEMENT OF CHIEF EXECUTIVE OFFICER OF
AGILE THERAPEUTICS, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Agile Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Alfred Altomari, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: November 2, 2021 |
/s/ Alfred Altomari |
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Alfred Altomari |
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Chief Executive Officer
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Exhibit 32.2
STATEMENT OF CHIEF ACCOUNTING OFFICER OF
AGILE THERAPEUTICS, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Agile Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Dennis P. Reilly, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
M |
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Date: November 2, 2021 |
/s/ Dennis P. Reilly |
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Dennis P. Reilly |
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Chief Financial Officer
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