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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 March 31, 2020

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 001-31938

 

ACORDA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

13-3831168

(State or other jurisdiction of incorporation

or organization)

 

(I.R.S. Employer

Identification No.)

 

420 Saw Mill River Road, Ardsley, New York

 

10502

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (914) 347-4300

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

 

 

Common Stock $0.001 par value

 

ACOR

 

Nasdaq Global 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

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

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  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at May 4, 2020

Common Stock, $0.001 par value per share

 

47,984,514 shares

 

 


 

ACORDA THERAPEUTICS, INC.

TABLE OF CONTENTS

 

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

1

 

Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019

 

1

 

Consolidated Statements of Operations (unaudited) for the Three-month Periods Ended March 31, 2020 and 2019

 

2

 

Consolidated Statements of Comprehensive Loss (unaudited) for the Three-month Periods Ended March 31, 2020 and 2019

 

3

 

Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three-month Periods Ended March 31, 2020 and 2019

 

4

 

Consolidated Statements of Cash Flows (unaudited) for the Three-month Periods Ended March 31, 2020 and 2019

 

6

 

Notes to Consolidated Financial Statements (unaudited)

 

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

36

Item 4.

Controls and Procedures

 

37

PART II—OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

38

Item 1A.

Risk Factors

 

38

Item 6.

Exhibits

 

40

Signatures

 

 

41

 

 


 

This Quarterly Report on Form 10-Q contains forward‑looking statements relating to future events and our future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Stockholders are cautioned that such statements involve risks and uncertainties, including: we may not be able to successfully market Inbrija or any other products under development; the COVID-19 pandemic, including related quarantines and travel restrictions, and the potential for the illness to affect our employees or consultants or those that work for other companies we rely upon, could have a material adverse effect on our business operations or product sales; we may need to raise additional funds to finance our operations, repay outstanding indebtedness or satisfy other obligations, and we may not be able to do so on acceptable terms or at all; risks associated with complex, regulated manufacturing processes for pharmaceuticals, which could affect whether we have sufficient commercial supply of Inbrija to meet market demand; third party payers (including governmental agencies) may not reimburse for the use of Inbrija or our other products at acceptable rates or at all and may impose restrictive prior authorization requirements that limit or block prescriptions; competition for Inbrija, Ampyra and other products we may develop and market in the future, including increasing competition and accompanying loss of revenues in the U.S. from generic versions of Ampyra (dalfampridine) following our loss of patent exclusivity; the ability to realize the benefits anticipated from acquisitions, among other reasons because acquired development programs are generally subject to all the risks inherent in the drug development process and our knowledge of the risks specifically relevant to acquired programs generally improves over time; the risk of unfavorable results from future studies of Inbrija (levodopa inhalation powder) or from our other research and development programs, or any other acquired or in-licensed programs; the occurrence of adverse safety events with our products; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or class action litigation; failure to protect our intellectual property, to defend against the intellectual property claims of others or to obtain third party intellectual property licenses needed for the commercialization of our products; and failure to comply with regulatory requirements could result in adverse action by regulatory agencies. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s beliefs and assumptions. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make, and investors should not place undue reliance on these statements. In addition to the risks and uncertainties described above, we have included important factors in the cautionary statements included in this report and in our Annual Report on Form 10-K for the year ended December 31, 2019, particularly in the “Risk Factors” section (as updated by the disclosures in our subsequent quarterly reports, including this report), that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. Forward-looking statements in this report are made only as of the date hereof, and we do not assume any obligation to publicly update any forward-looking statements as a result of developments occurring after the date of this report.

We and our subsidiaries own several registered trademarks in the U.S. and in other countries. These registered trademarks include, in the U.S., the marks “Acorda Therapeutics,” our stylized Acorda Therapeutics logo, “Biotie Therapies,” “Ampyra,” “Inbrija,” and “ARCUS.” Also, our marks “Fampyra” and “Inbrija” are registered marks in the European Community Trademark Office and we have registrations or pending applications for these marks in other jurisdictions. Our trademark portfolio also includes several registered trademarks and pending trademark applications in the U.S. and worldwide for potential product names or for disease awareness activities. Third party trademarks, trade names, and service marks used in this report are the property of their respective owners.

 

 

 


 

PART I

Item 1.  Financial Statements

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

(In thousands, except share data)

 

March 31, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

32,417

 

 

$

62,085

 

Restricted cash

 

 

13,175

 

 

 

12,836

 

Short term investments

 

 

50,477

 

 

 

63,754

 

Trade accounts receivable, net of allowances of $498 and $682, as of

   March 31, 2020 and December 31, 2019, respectively

 

 

14,969

 

 

 

22,083

 

Prepaid expenses

 

 

27,395

 

 

 

11,574

 

Inventory, net

 

 

25,566

 

 

 

25,221

 

Other current assets

 

 

4,286

 

 

 

3,560

 

Total current assets

 

 

168,285

 

 

 

201,113

 

Property and equipment, net of accumulated depreciation

 

 

142,500

 

 

 

142,527

 

Intangible assets, net of accumulated amortization

 

 

390,311

 

 

 

402,329

 

Right of use asset, net of accumulated amortization

 

 

22,450

 

 

 

23,450

 

Restricted cash

 

 

30,270

 

 

 

30,270

 

Other assets

 

 

11

 

 

 

29

 

Total assets

 

$

753,827

 

 

$

799,718

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

12,073

 

 

$

26,257

 

Accrued expenses and other current liabilities

 

 

36,968

 

 

 

39,077

 

Current portion of loans payable

 

 

592

 

 

 

603

 

Current portion of liability related to sale of future royalties

 

 

11,209

 

 

 

10,836

 

Current portion of lease liabilities

 

 

7,846

 

 

 

7,746

 

Current portion of acquired contingent consideration

 

 

1,940

 

 

 

1,866

 

Total current liabilities

 

 

70,628

 

 

 

86,385

 

Convertible senior notes

 

 

195,349

 

 

 

192,774

 

Derivative liability

 

 

32,881

 

 

 

59,409

 

Non-current portion of acquired contingent consideration

 

 

74,460

 

 

 

78,434

 

Non-current portion of lease liabilities

 

 

21,757

 

 

 

22,996

 

Non-current portion of loans payable

 

 

24,713

 

 

 

25,495

 

Deferred tax liability

 

 

16,391

 

 

 

9,581

 

Non-current portion of liability related to sale of future royalties

 

 

10,964

 

 

 

13,565

 

Other non-current liabilities

 

 

10

 

 

 

259

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value. Authorized 1,000,000 shares at March 31,

   2020 and December 31, 2019; no shares issued as of March 31,

   2020 and December 31, 2019, respectively

 

 

 

 

 

 

Common stock, $0.001 par value. Authorized 80,000,000 shares at March 31,

   2020 and December 31, 2019; issued 47,734,146 and 47,730,396 shares,

   including those held in treasury, as of March 31, 2020 and

   December 31, 2019, respectively

 

 

48

 

 

 

48

 

Treasury stock at cost (29,304 shares at March 31, 2020 and

  December 31, 2019)

 

 

(638

)

 

 

(638

)

Additional paid-in capital

 

 

981,364

 

 

 

979,388

 

Accumulated deficit

 

 

(673,281

)

 

 

(666,809

)

Accumulated other comprehensive (loss) income

 

 

(819

)

 

 

(1,169

)

Total stockholders’ equity

 

 

306,674

 

 

 

310,820

 

Total liabilities and stockholders’ equity

 

$

753,827

 

 

$

799,718

 

 

 

See accompanying Unaudited Notes to Consolidated Financial Statements

1


 

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited)

 

(In thousands, except per share data)

 

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

Revenues:

 

 

 

 

 

 

 

 

Net product revenues

 

$

24,672

 

 

$

41,334

 

Royalty revenues

 

 

3,427

 

 

 

2,803

 

Total net revenues

 

 

28,099

 

 

 

44,137

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,843

 

 

 

8,799

 

Research and development

 

 

7,705

 

 

 

16,028

 

Selling, general and administrative

 

 

41,108

 

 

 

52,725

 

Amortization of intangible assets

 

 

7,691

 

 

 

2,564

 

Asset impairment

 

 

4,131

 

 

 

 

Change in fair value of derivative liability

 

 

(26,528

)

 

 

 

Changes in fair value of acquired contingent consideration

 

 

(3,682

)

 

 

7,400

 

Total operating expenses

 

 

34,268

 

 

 

87,516

 

Operating loss

 

 

(6,169

)

 

 

(43,379

)

Other (expense) income, net:

 

 

 

 

 

 

 

 

Interest and amortization of debt discount expense

 

 

(7,566

)

 

 

(6,424

)

Interest income

 

 

312

 

 

 

1,496

 

Other expenses

 

 

(42

)

 

 

 

Realized loss on foreign currency transactions

 

 

(5

)

 

 

(13

)

Total other expense, net

 

 

(7,301

)

 

 

(4,941

)

Loss before taxes

 

 

(13,470

)

 

 

(48,320

)

Benefit from income taxes

 

 

6,998

 

 

 

715

 

Net loss

 

$

(6,472

)

 

$

(47,605

)

 

 

 

 

 

 

 

 

 

Net loss per share—basic

 

$

(0.14

)

 

$

(1.00

)

Net loss per share—diluted

 

$

(0.14

)

 

$

(1.00

)

Weighted average common shares outstanding used in

   computing net loss per share—basic

 

 

47,703

 

 

 

47,472

 

Weighted average common shares outstanding used in

   computing net loss per share—diluted

 

 

47,703

 

 

 

47,472

 

 

See accompanying Unaudited Notes to Consolidated Financial Statements

2


 

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(unaudited)

 

(In thousands)

 

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

 

Net loss

 

$

(6,472

)

 

$

(47,605

)

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

387

 

 

 

(1,609

)

 

Unrealized (loss) income on available for sale debt securities

 

 

(37

)

 

 

178

 

 

Other comprehensive income (loss), net of tax

 

 

350

 

 

 

(1,431

)

 

Comprehensive loss

 

$

(6,122

)

 

$

(49,036

)

 

 

See accompanying Unaudited Notes to Consolidated Financial Statements

3


 

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Number

of

shares

 

 

Par

value

 

 

Treasury stock

 

 

Additional

paid-in

capital

 

 

Accumulated

deficit

 

 

Accumulated

other

comprehensive

income

 

 

Total

stockholders

equity

 

Balance at December 31, 2019

 

 

47,730

 

 

$

48

 

 

$

(638

)

 

$

979,388

 

 

$

(666,809

)

 

$

(1,169

)

 

$

310,820

 

Compensation expense for

   issuance of stock options

   to employees

 

 

 

 

 

 

 

 

 

 

 

1,976

 

 

 

 

 

 

 

 

 

1,976

 

Compensation expense for

   issuance of restricted

   stock to employees

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

350

 

 

 

350

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,472

)

 

 

 

 

 

(6,472

)

Balance at March 31, 2020

 

 

47,734

 

 

$

48

 

 

$

(638

)

 

$

981,364

 

 

$

(673,281

)

 

$

(819

)

 

$

306,674

 

 

See accompanying Unaudited Notes to Consolidated Financial Statements

 

4


 

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity (Continued)

(unaudited)

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Number

of

shares

 

 

Par

value

 

 

Treasury stock

 

 

Additional

paid-in

capital

 

 

Accumulated

deficit

 

 

Accumulated

other

comprehensive

income

 

 

Total

stockholders

equity

 

Balance at December 31, 2018

 

 

47,508

 

 

$

48

 

 

$

(2,133

)

 

$

1,005,105

 

 

$

(393,843

)

 

$

2,806

 

 

$

611,983

 

Compensation expense for

   issuance of stock options

   to employees

 

 

 

 

 

 

 

 

 

 

 

2,745

 

 

 

 

 

 

 

 

 

2,745

 

Compensation expense for

   issuance of restricted

   stock to employees

 

 

49

 

 

 

 

 

 

 

 

922

 

 

 

 

 

 

 

 

 

922

 

Exercise of stock options

 

 

2

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Purchase of Treasury Stock

 

 

4

 

 

 

 

 

 

(52

)

 

 

 

 

 

 

 

 

 

 

 

(52

)

Other comprehensive loss,

   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,431

)

 

 

(1,431

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47,605

)

 

 

 

 

 

(47,605

)

Balance at March 31, 2019

 

 

47,563

 

 

$

48

 

 

$

(2,185

)

 

$

1,008,796

 

 

$

(441,448

)

 

$

1,375

 

 

$

566,586

 

 

See accompanying Unaudited Notes to Consolidated Financial Statements

5


 

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited)

 

(In thousands)

 

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(6,472

)

 

$

(47,605

)

Adjustments to reconcile net loss to net cash (used in) provided by

   operating activities:

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

1,976

 

 

 

3,667

 

Amortization of net premiums and discounts on investments

 

 

(47

)

 

 

(521

)

Amortization of debt discount and debt issuance costs

 

 

4,054

 

 

 

4,717

 

Depreciation and amortization expense

 

 

10,077

 

 

 

4,850

 

Asset impairment

 

 

4,131

 

 

 

 

Change in acquired contingent consideration obligation

 

 

(3,682

)

 

 

7,400

 

Non-cash royalty revenue

 

 

(3,016

)

 

 

(2,467

)

Deferred tax (benefit) provision

 

 

6,796

 

 

 

(1,092

)

Change in derivative liability

 

 

(26,528

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in accounts receivable

 

 

7,114

 

 

 

2,777

 

(Increase) decrease in prepaid expenses and other current assets

 

 

(16,548

)

 

 

7,602

 

Increase in inventory

 

 

(345

)

 

 

(2,451

)

Decrease in other assets

 

 

17

 

 

 

 

Decrease in accounts payable, accrued expenses and other current

   liabilities

 

 

(15,920

)

 

 

(54,042

)

Decrease in other non-current liabilities

 

 

(387

)

 

 

(331

)

Net cash used in operating activities

 

 

(38,779

)

 

 

(77,496

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,245

)

 

 

(24,655

)

Purchases of intangible assets

 

 

 

 

 

 

Purchases of investments

 

 

 

 

 

(48,685

)

Proceeds from maturities of investments

 

 

13,288

 

 

 

55,219

 

Net cash provided by (used in) investing activities

 

 

11,043

 

 

 

(18,121

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Debt issuance costs

 

 

(981

)

 

 

 

Proceeds from issuance of common stock and option exercises

 

 

 

 

 

24

 

Purchase of treasury stock

 

 

 

 

 

(52

)

Repayment of loans payable

 

 

(597

)

 

 

(614

)

Net cash used in financing activities

 

 

(1,578

)

 

 

(642

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(15

)

 

 

(177

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(29,330

)

 

 

(96,436

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

105,192

 

 

 

294,351

 

Cash, cash equivalents and restricted cash at end of period

 

$

75,862

 

 

$

197,915

 

Supplemental disclosure:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

12

 

 

$

18

 

Cash paid for taxes

 

 

63

 

 

 

19

 

 

See accompanying Unaudited Notes to Consolidated Financial Statements

 

 

6


 

ACORDA THERAPEUTICS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

(1) Organization and Business Activities

Acorda Therapeutics, Inc. (“Acorda” or the “Company”) is a biopharmaceutical company focused on developing therapies that restore function and improve the lives of people with neurological disorders.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information, Accounting Standards Codification (ASC) Topic 270-10 and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments considered necessary for a fair presentation have been included in the interim periods presented and all adjustments are of a normal recurring nature. The Company has evaluated subsequent events through the date of this filing. Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. When used in these notes, the terms “Acorda” or “the Company” mean Acorda Therapeutics, Inc. The December 31, 2019 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. You should read these unaudited interim condensed consolidated financial statements in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K, for the year ended December 31, 2019.

(2) Summary of Significant Accounting Policies

Our significant accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses” (Topic 326), ASU 2018-13, “Fair Value Measurement (Topic 820), ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”, and, ASU 2018-18, “Collaborative Arrangements” (Topic 808). Other than the adoption of the new accounting guidance, our significant accounting policies have not changed materially from December 31, 2019.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the statement of cash flows:

 

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

(In thousands)

Beginning of period

 

 

End of period

 

 

Beginning of period

 

 

End of period

 

Cash and cash equivalents

$

62,085

 

 

$

32,417

 

 

$

293,564

 

 

$

197,093

 

Restricted cash

 

12,836

 

 

 

13,175

 

 

 

532

 

 

 

567

 

Restricted cash non-current

 

30,270

 

 

 

30,270

 

 

 

255

 

 

 

255

 

Total Cash, cash equivalents and restricted cash per statement of cash flows

$

105,191

 

 

$

75,862

 

 

$

294,351

 

 

$

197,915

 

Amounts included in restricted cash represent those amounts in escrow related to the 6% semi-annual interest portion, payable in cash or stock, of the convertible note exchange completed in December 2019 payable within the next 12 months and those amounts required to be set aside to cover the Company’s self-funded employee health insurance costs over the next 12 months. Restricted cash non-current represents those amounts in escrow related to the 6% semi-annual interest portion, payable in cash or stock, of the convertible note exchange completed in December 2019 payable subsequent to the next twelve months and cash collateralized standby letters of credit in connection with obligations under facility leases due to the long-term nature of the letters of credit.

7


 

Inventory

The major classes of inventory were as follows:

(In thousands)

 

March 31, 2020

 

 

December 31, 2019

 

Raw materials

 

$

1,796

 

 

$

1,753

 

Work-in-progress

 

 

3,905

 

 

 

13,509

 

Finished goods

 

 

19,866

 

 

 

9,959

 

Total

 

$

25,566

 

 

$

25,221

 

The Company reviews inventory, including inventory purchase commitments, for slow moving or obsolete amounts based on expected product sales volume and provides reserves against the carrying amount of inventory as appropriate.

Foreign Currency Translation

The functional currency of operations outside the United States of America is deemed to be the currency of the local country, unless otherwise determined that the United States dollar would serve as a more appropriate functional currency given the economic operations of the entity. Accordingly, the assets and liabilities of the Company’s foreign subsidiary, Biotie, are translated into United States dollars using the period-end exchange rate; income and expense items are translated using the average exchange rate during the period; and equity transactions are translated at historical rates. Cumulative translation adjustments are reflected as a separate component of equity. Foreign currency transaction losses and gains are recognized in the period incurred and are reported as other (expense) income, net in the statement of operations.

Segment and Geographic Information

The Company is managed and operated as one business which is focused on developing therapies that restore function and improve the lives of people with neurological disorders. The entire business is managed by a single management team that reports to the Chief Executive Officer, who is the chief operating decision maker. The Company does not operate separate lines of business with respect to any of its products or product candidates and the Company does not prepare discrete financial information with respect to separate products or product candidates or by location. Accordingly, the Company views its business as one reportable operating segment. Net product revenues reported are derived from the sales of Inbrija and Ampyra in the U.S. for the three-month periods ended March 31, 2020 and 2019.

Impairment of Long-Lived Assets

The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful lives of its long-lived assets, including identifiable intangible assets subject to amortization and indefinite lived intangible assets not subject to amortization and property plant and equipment, may warrant revision or that the carrying value of the assets may be impaired. Factors the Company considers important that could trigger an impairment review include significant changes in the use of any assets, changes in historical trends in operating performance, changes in projected operating performance, results of clinical trials, stock price, loss of a major customer and significant negative economic trends. Based on the Company’s evaluation for the three-month period ended March 31, 2020, the Company determined that its indefinite lived intangible asset BTT1023 was fully impaired and recorded an asset impairment in its consolidated statement of operations. The Company also determined that its finite lived intangible assets were not impaired for the three-month period ended March 31, 2020.

Subsequent Events

Subsequent events are defined as those events or transactions that occur after the balance sheet date, but before the financial statements are filed with the Securities and Exchange Commission. The Company completed an evaluation of the impact of any subsequent events through the date these financial statements were issued, and determined there were no subsequent events required disclosure in these financial statements.  

8


 

Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequently amended by ASU 2019-04 and ASU 2019-05 which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. This new standard amends the current guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model known as current expected credit loss (CECL) model that is based on expected losses rather than incurred losses. Under the new guidance, an entity will recognize as an allowance its estimate of expected credit losses. The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The amendment in this ASU eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public business entities will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a significant impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The ASU clarifies certain aspects of ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which was issued in April 2015. Specifically, the ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).” The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have an impact on the consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18, Collaborative arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. ASU 2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a significant impact on the consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740 and removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years with early adoption permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”: The amendments in this update are to clarify, correct errors in, or make minor improvements to a variety of ASC topics. The changes in ASU 2020-03 are not expected to have a significant effect on current accounting practices. The ASU improves various financial instrument topics in the Codification to increase stakeholder awareness of the amendments and to expedite the improvement process by making the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The ASU is effective for fiscal years beginning after December 15, 2020 with early application permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

 

9


 

(3) Revenue

In accordance with ASC 606, the Company recognizes revenue when the customer obtains control of a promised good or service, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the good or service. ASC 606 outlines a five-step process for recognizing revenue from contracts with customers: i) identify the contract with the customer, ii) identify the performance obligations in the contract, iii) determine the transaction price, iv) allocate the transaction price to the separate performance obligations in the contract, and v) recognize revenue associated with the performance obligations as they are satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, the Company determines the performance obligations that are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon receipt of the product by the customer.

ASC 606 requires entities to record a contract asset when a performance obligation has been satisfied or partially satisfied, but the amount of consideration has not yet been received because the receipt of the consideration is conditioned on something other than the passage of time. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g. receivable), before the entity transfers a good or service to the customer. We did not have any contract assets or any contract liabilities as of March 31, 2020 and 2019.

The following table disaggregates our revenue by major source:

 

(In thousands)

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

Revenues:

 

 

 

 

 

 

 

Net product revenues:

 

 

 

 

 

 

 

Ampyra

$

20,124

 

 

$

40,067

 

Inbrija

 

4,354

 

 

 

1,267

 

Other

 

194

 

 

 

 

Total net product revenues

 

24,672

 

 

 

41,334

 

Royalty revenues

 

3,427

 

 

 

2,803

 

Total net revenues

$

28,099

 

 

$

44,137

 

 

(4) Share-based Compensation

During the three‑month periods ended March 31, 2020 and 2019, the Company recognized share-based compensation expense of $2.0 million and $3.7 million, respectively. Activity in options and restricted stock during the three-month period ended March 31, 2020 and related balances outstanding as of that date are reflected below. The weighted average fair value per share of options granted to employees for the three-month periods ended March 31, 2020 and 2019 were approximately $0.99 and $7.41, respectively.

The following table summarizes share-based compensation expense included within the consolidated statements of operations:

 

 

 

For the three-month period ended March 31,

 

(In thousands)

 

2020

 

 

2019

 

Research and development expense

 

$

415

 

 

$

701

 

Selling, general and administrative expense

 

 

1,479

 

 

 

2,816

 

Cost of Sales

 

 

81

 

 

 

150

 

Total

 

$

1,976

 

 

$

3,667

 

 

10


 

A summary of share-based compensation activity for the nine-month period ended March 31, 2020 is presented below:

Stock Option Activity

 

 

 

Number of

Shares

(In thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Term

 

 

Intrinsic

Value

(In thousands)

 

Balance at January 1, 2020

 

 

10,469

 

 

$

22.96

 

 

 

 

 

 

 

 

 

Granted

 

 

60

 

 

 

1.54

 

 

 

 

 

 

 

 

 

Cancelled

 

 

(804

)

 

 

28.44

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

9,725

 

 

$

22.37

 

 

 

5.4

 

 

$

 

Vested and expected to vest at

    March 31, 2020

 

 

9,676

 

 

$

22.46

 

 

 

5.4

 

 

$

 

Vested and exercisable at

    March 31, 2020

 

 

7,065

 

 

$

28.53

 

 

 

4.0

 

 

$

 

Restricted Stock and Performance Stock Unit Activity

 

(In thousands)

 

 

 

 

Restricted Stock and Performance Stock Units

 

Number of Shares

 

Nonvested at January 1, 2020

 

 

425,397

 

Granted

 

 

 

Vested

 

 

(3,750

)

Forfeited

 

 

(27,866

)

Nonvested at March 31, 2020

 

 

393,781

 

 

Unrecognized compensation cost for unvested stock options, restricted stock awards and performance stock units as of March 31, 2020 totaled $11.7 million and is expected to be recognized over a weighted average period of approximately 1.7 years.

During the three‑month period ended March 31, 2020, the Company did not make any repurchases of shares.

(5) Loss Per Share

The following table sets forth the computation of basic and diluted loss per share for the three-month periods ended March 31, 2020 and 2019:

 

(In thousands, except per share data)

 

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

Basic and diluted

 

 

 

 

 

 

 

 

Net loss

 

$

(6,472

)

 

$

(47,605

)

Weighted average common shares outstanding used in

   computing net loss per share—basic

 

 

47,703

 

 

 

47,472

 

Plus: net effect of dilutive stock options and restricted

   common shares

 

 

 

 

 

 

Weighted average common shares outstanding used in

   computing net loss per share—diluted

 

 

47,703

 

 

 

47,472

 

Net loss per share—basic

 

$

(0.14

)

 

$

(1.00

)

Net loss per share—diluted

 

$

(0.14

)

 

$

(1.00

)

 

11


 

Securities that could potentially be dilutive are excluded from the computation of diluted loss per share when a loss from continuing operations exists or when the exercise price exceeds the average closing price of the Company’s common stock during the period, because their inclusion would result in an anti-dilutive effect on per share amounts.

The following amounts were not included in the calculation of net loss per diluted share because their effects were anti-dilutive:

 

(In thousands)

 

Three-month period ended March 31, 2020

 

 

Three-month period ended March 31, 2019

 

Denominator

 

 

 

 

 

 

 

 

Stock options and restricted common shares

 

 

18,857

 

 

 

8,544

 

 

Performance share units are excluded from the calculation of net loss per diluted share as the performance criteria has not been met for the three-month periods ended March 31, 2020 and 2019. Additionally, the impact of the convertible senior notes was determined to be anti-dilutive and excluded from the calculation of net loss per diluted share for the three-month periods ended March 31, 2020 and 2019.

(6) Income Taxes

On March 27, 2020, the CARES Act was signed into law, which enacted several tax favorable, business-related provisions. The Company reviewed the enacted provisions to determine which provisions should be considered for the three-month period ended March 31, 2020. Under the new law, the CARES Act provides that NOLs arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, can be carried back to each of the five taxable years preceding the taxable year of such loss. The Company has considered the impact to the tax provision for the carryback of net operating losses to prior periods of taxable income incurred within the period allowed under the CARES Act. The result of carrying back these losses allowed the Company to realize certain deferred tax assets and a corresponding release of the valuation allowance of approximately $1.8 million.

The Company’s effective income tax rate differs from the U.S. statutory rate primarily due to an increase in the valuation allowance offset by the benefit of net operating loss carryback under the CARES act recorded at 21% to recover taxes paid at the previous statutory rate of 35%.

For the three-month periods ended March 31, 2020 and 2019, the Company recorded a benefit of $7.0 million and $0.7 million for income taxes, respectively. The effective income tax rates for the Company for the three-month periods ended March 31, 2020 and 2019 were 52.0% and 1.5%, respectively. The variances in the effective tax rates for the three-month period ended March 31, 2020 as compared to the three-month period ended March 31, 2019 are primarily due to an increase in the valuation allowance offset by the benefit of net operating loss carryback under the CARES act recorded at 21% to recover taxes paid at the previous statutory rate of 35%.

The Company continues to evaluate the realizability of its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any changes to the valuation allowance or deferred tax assets and liabilities in the future would impact the Company's income taxes.

The Company has ongoing state examinations in Massachusetts, New Jersey and Minnesota which cover multiple years. There have been no proposed adjustments at this stage of the examinations.

(7) Fair Value Measurements

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, exchange rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability. The Company’s Level 1 assets consist of investments in a Treasury money market fund and U.S. government securities. The Company’s level 2 assets consist of investments in

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corporate bonds and commercial paper which are categorized as short-term investments for investments with original maturities between three months and one year. The Company’s Level 3 liabilities represent acquired contingent consideration related to the acquisition of Civitas which are valued using a probability weighted discounted cash flow valuation approach and derivative liabilities related to conversion options for the convertible senior notes due December 2024 which are valued using a binomial model. For assets and liabilities not accounted for at fair value, the carrying values of these accounts approximates their fair values at March 31, 2020, except for the fair value of the Company’s convertible senior notes due June 2021, which was approximately $59.7 million and the fair value of the Company’s convertible senior notes due December 2024, which was approximately $187.0 million as of March 31, 2020. The Company estimates the fair value of its notes utilizing market quotations for the debt (Level 2).

 

(In thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Assets Carried at Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds