|
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
for the quarterly period ended March 31, 2019
|
|
OR
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State of incorporation)
|
45-0705648
(I.R.S. Employer Identification No.)
|
540 Gaither Road, Suite 400
Rockville, Maryland 20850
(Address of principal executive offices)
|
(410) 522‑8707
(Registrant’s telephone number,
including area code)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, $0.001 par value
|
CERC
|
Nasdaq Capital Market
|
Large accelerated filer
¨
|
|
Accelerated filer
¨
|
Non-accelerated filer
þ
|
|
Smaller reporting company
þ
|
Emerging growth company
þ
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
16,121,388
|
|
|
$
|
10,646,301
|
|
Accounts receivable, net
|
|
2,718,396
|
|
|
3,157,555
|
|
||
Other receivables
|
|
5,531,025
|
|
|
5,469,011
|
|
||
Inventory, net
|
|
1,046,982
|
|
|
1,110,780
|
|
||
Prepaid expenses and other current assets
|
|
1,248,465
|
|
|
1,529,516
|
|
||
Restricted cash, current portion
|
|
77,846
|
|
|
18,730
|
|
||
Total current assets
|
|
26,744,102
|
|
|
21,931,893
|
|
||
Property and equipment, net
|
|
1,477,067
|
|
|
586,512
|
|
||
Intangibles assets, net
|
|
30,160,621
|
|
|
31,239,468
|
|
||
Goodwill
|
|
16,411,123
|
|
|
16,411,123
|
|
||
Restricted cash, net of current portion
|
|
77,118
|
|
|
81,725
|
|
||
Total assets
|
|
$
|
74,870,031
|
|
|
$
|
70,250,721
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
1,249,470
|
|
|
$
|
1,446,141
|
|
Accrued expenses and other current liabilities
|
|
21,815,097
|
|
|
19,731,373
|
|
||
Income taxes payable
|
|
1,814,650
|
|
|
2,032,258
|
|
||
Long-term debt, current portion
|
|
1,050,000
|
|
|
1,050,000
|
|
||
Contingent consideration, current portion
|
|
2,205,647
|
|
|
1,956,807
|
|
||
Total current liabilities
|
|
28,134,864
|
|
|
26,216,579
|
|
||
Long-term debt, net of current portion
|
|
14,303,540
|
|
|
14,327,882
|
|
||
Contingent consideration, net of current portion
|
|
6,796,641
|
|
|
7,093,757
|
|
||
Deferred tax liability, net
|
|
75,179
|
|
|
69,238
|
|
||
License obligations
|
|
1,250,000
|
|
|
1,250,000
|
|
||
Other long-term liabilities
|
|
1,189,277
|
|
|
385,517
|
|
||
Total liabilities
|
|
51,749,501
|
|
|
49,342,973
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock—$0.001 par value; 200,000,000 shares authorized at March 31, 2019 and December 31, 2018; 42,753,659 and 40,804,189 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
|
|
42,754
|
|
|
40,804
|
|
||
Preferred stock—$0.001 par value; 5,000,000 shares authorized at March 31, 2019 and December 31, 2018; 2,857,143 shares issued and outstanding at March 31, 2019 and December 31, 2018
|
|
2,857
|
|
|
2,857
|
|
||
Additional paid-in capital
|
|
128,747,037
|
|
|
119,082,157
|
|
||
Accumulated deficit
|
|
(105,672,118
|
)
|
|
(98,218,070
|
)
|
||
Total stockholders’ equity
|
|
23,120,530
|
|
|
20,907,748
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
74,870,031
|
|
|
$
|
70,250,721
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
|
||||
Product revenue, net
|
|
$
|
5,411,443
|
|
|
$
|
4,260,119
|
|
Sales force revenue
|
|
—
|
|
|
222,656
|
|
||
Total revenues, net
|
|
5,411,443
|
|
|
4,482,775
|
|
||
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
||||
Cost of product sales
|
|
1,947,892
|
|
|
863,624
|
|
||
Research and development
|
|
3,401,189
|
|
|
1,649,778
|
|
||
General and administrative
|
|
2,716,983
|
|
|
2,918,916
|
|
||
Sales and marketing
|
|
3,108,902
|
|
|
1,524,816
|
|
||
Amortization expense
|
|
1,078,847
|
|
|
1,017,408
|
|
||
Change in fair value of contingent consideration
|
|
180,402
|
|
|
262,769
|
|
||
Total operating expenses
|
|
12,434,215
|
|
|
8,237,311
|
|
||
Loss from operations
|
|
(7,022,772
|
)
|
|
(3,754,536
|
)
|
||
Other (expense) income:
|
|
|
|
|
||||
Change in fair value of warrant liability and unit purchase option liability
|
|
(47,577
|
)
|
|
(23,251
|
)
|
||
Other (expense) income, net
|
|
(9,400
|
)
|
|
18,655
|
|
||
Interest expense, net
|
|
(207,941
|
)
|
|
(100,402
|
)
|
||
Total other expense, net
|
|
(264,918
|
)
|
|
(104,998
|
)
|
||
Net loss before taxes
|
|
(7,287,690
|
)
|
|
(3,859,534
|
)
|
||
Income tax expense
|
|
166,358
|
|
|
23,313
|
|
||
Net loss
|
|
$
|
(7,454,048
|
)
|
|
$
|
(3,882,847
|
)
|
Net loss per share of common stock, basic and diluted
|
|
$
|
(0.13
|
)
|
|
$
|
(0.12
|
)
|
Net loss per share of preferred stock, basic and diluted
|
|
$
|
(0.67
|
)
|
|
$
|
—
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(7,454,048
|
)
|
|
$
|
(3,882,847
|
)
|
Adjustments to reconcile net loss provided by (used in) to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1,098,478
|
|
|
1,023,040
|
|
||
Stock-based compensation
|
|
596,693
|
|
|
242,824
|
|
||
Deferred taxes
|
|
5,941
|
|
|
15,913
|
|
||
Amortization of inventory fair value associated with acquisition of TRx and Avadel
|
|
22,603
|
|
|
45,450
|
|
||
Non-cash interest expense
|
|
—
|
|
|
105,451
|
|
||
Change in fair value of warrant liability and unit purchase option liability
|
|
47,577
|
|
|
23,251
|
|
||
Change in fair value of contingent consideration and long-term royalty obligation
|
|
180,402
|
|
|
262,769
|
|
||
Other
|
|
21,412
|
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
439,159
|
|
|
104,671
|
|
||
Other receivables
|
|
(62,014
|
)
|
|
371,663
|
|
||
Inventory, net
|
|
41,195
|
|
|
(554,445
|
)
|
||
Prepaid expenses and other assets
|
|
281,051
|
|
|
(71,085
|
)
|
||
Escrowed cash receivable
|
|
—
|
|
|
(2,065
|
)
|
||
Accounts payable
|
|
(196,671
|
)
|
|
1,866,960
|
|
||
Income taxes payable
|
|
(217,608
|
)
|
|
7,400
|
|
||
Accrued expenses and other liabilities
|
|
2,074,278
|
|
|
160,627
|
|
||
Net cash used in operating activities
|
|
(3,121,552
|
)
|
|
(280,423
|
)
|
||
Investing activities
|
|
|
|
|
||||
Acquisition of business
|
|
—
|
|
|
(1
|
)
|
||
Purchase of property and equipment
|
|
(165,969
|
)
|
|
(19,224
|
)
|
||
Net cash used in investing activities
|
|
(165,969
|
)
|
|
(19,225
|
)
|
||
Financing activities
|
|
|
|
|
||||
Proceeds from exercise of stock options and warrants
|
|
94,177
|
|
|
363,390
|
|
||
Proceeds from underwritten public offering, net
|
|
8,975,960
|
|
|
—
|
|
||
Payment of contingent consideration
|
|
(228,678
|
)
|
|
—
|
|
||
Payment of long-term debt
|
|
(24,342
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
|
8,817,117
|
|
|
363,390
|
|
||
Increase in cash, cash equivalents and restricted cash
|
|
5,529,596
|
|
|
63,742
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
10,746,756
|
|
|
2,605,499
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
16,276,352
|
|
|
$
|
2,669,241
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
262,500
|
|
|
$
|
44,003
|
|
Cash paid for taxes
|
|
$
|
378,025
|
|
|
$
|
—
|
|
Supplemental disclosures of non-cash activities
|
|
|
|
|
||||
Leased asset obtained in exchange for new operating lease liability
|
|
$
|
743,025
|
|
|
$
|
—
|
|
Debt assumed in Avadel Pediatric Products acquisition
|
|
$
|
—
|
|
|
$
|
(15,075,000
|
)
|
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
16,121,388
|
|
|
$
|
2,523,927
|
|
Restricted cash, current
|
|
77,846
|
|
|
13,955
|
|
||
Restricted cash, non-current
|
|
77,118
|
|
|
131,359
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
16,276,352
|
|
|
$
|
2,669,241
|
|
|
Stockholders’ Equity
|
||||||||||||||||||||||||||||
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
||||||||||||||||||
|
Common stock
|
|
Preferred Stock
|
|
paid‑in
|
|
Contingently issuable stock
|
|
Accumulated
|
stockholders’
|
|||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
Amount
|
|
deficit
|
|
equity
|
||||||||||||||
Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, December 31, 2017
|
31,266,989
|
|
|
$
|
31,268
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
83,338,136
|
|
|
$
|
2,655,464
|
|
|
$
|
(58,165,260
|
)
|
|
$
|
27,859,608
|
|
Exercise of stock options and warrants
|
143,346
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
363,247
|
|
|
|
|
|
|
363,390
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242,824
|
|
|
—
|
|
|
—
|
|
|
242,824
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
(3,882,847
|
)
|
|
(3,882,847
|
)
|
|||||||
Balance, March 31, 2018
|
31,410,335
|
|
|
$
|
31,411
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
83,944,207
|
|
|
$
|
2,655,464
|
|
|
$
|
(62,048,107
|
)
|
|
$
|
24,582,975
|
|
Three Months Ended March 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, December 31, 2018
|
40,804,189
|
|
|
$
|
40,804
|
|
|
2,857,143
|
|
|
$
|
2,857
|
|
|
$
|
119,082,157
|
|
|
$
|
—
|
|
|
$
|
(98,218,070
|
)
|
|
$
|
20,907,748
|
|
Issuance of shares of common stock in underwritten public offering, net of offering costs
|
1,818,182
|
|
|
1,818
|
|
|
—
|
|
|
—
|
|
|
8,974,142
|
|
|
—
|
|
|
|
|
8,975,960
|
|
|||||||
Exercise of stock options and warrants
|
31,288
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
94,146
|
|
|
—
|
|
|
|
|
94,177
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
596,693
|
|
|
—
|
|
|
—
|
|
|
596,693
|
|
||||||
Restricted Stock Units vested during period
|
100,000
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,454,048
|
)
|
|
(7,454,048
|
)
|
||||||
Balance, March 31, 2019
|
42,753,659
|
|
|
$
|
42,754
|
|
|
2,857,143
|
|
|
$
|
2,857
|
|
|
$
|
128,747,037
|
|
|
$
|
—
|
|
|
$
|
(105,672,118
|
)
|
|
$
|
23,120,530
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Prescribed dietary supplements
|
|
$
|
1,791
|
|
|
$
|
2,231
|
|
Prescription drugs
|
|
3,620
|
|
|
2,029
|
|
||
Sales force revenue
|
|
—
|
|
|
223
|
|
||
Total revenue
|
|
$
|
5,411
|
|
|
$
|
4,483
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
|
March 31,
|
|
March 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||||
|
|
Common stock
|
|
Preferred stock
|
|
Common stock
|
|
Preferred stock
|
||||||||
Net loss per share, basic and diluted
|
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Allocation of undistributed net loss
|
|
$
|
(5,537,787
|
)
|
|
$
|
(1,916,261
|
)
|
|
$
|
(3,882,847
|
)
|
|
$
|
—
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares
|
|
41,284,168
|
|
|
2,857,143
|
|
|
31,316,246
|
|
|
—
|
|
||||
Basic and diluted net loss per share
|
|
$
|
(0.13
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2019
|
|
2018
|
||
Stock options
|
|
4,345,305
|
|
|
3,909,384
|
|
Warrants on common stock
|
|
4,024,708
|
|
|
18,986,659
|
|
Restricted Stock Units
|
|
345,000
|
|
|
—
|
|
Underwriters' unit purchase option
|
|
40,000
|
|
|
40,000
|
|
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
At February 16,
2018 (preliminary)
|
Measurement Period Adjustments
|
At February 16,
2018 (as adjusted)
|
||||||
|
|
|
|
|
||||||
Inventory
|
|
$
|
2,549,000
|
|
$
|
(1,831,000
|
)
|
$
|
718,000
|
|
Prepaid assets
|
|
—
|
|
570,000
|
|
570,000
|
|
|||
Intangible assets
|
|
16,453,000
|
|
1,838,000
|
|
18,291,000
|
|
|||
Accrued expenses
|
|
—
|
|
(362,000
|
)
|
(362,000
|
)
|
|||
Fair value of debt assumed
|
|
(15,272,303
|
)
|
197,303
|
|
(15,075,000
|
)
|
|||
Fair value of contingent consideration
|
|
(7,875,165
|
)
|
(44,835
|
)
|
(7,920,000
|
)
|
|||
Total net liabilities assumed
|
|
(4,145,468
|
)
|
367,468
|
|
(3,778,000
|
)
|
|||
Consideration exchanged
|
|
241,000
|
|
(240,999
|
)
|
1
|
|
|||
Goodwill
|
|
$
|
4,386,468
|
|
$
|
(608,467
|
)
|
$
|
3,778,001
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
At February 16,
2018 (preliminary)
|
Measurement Period Adjustments
|
At February 16,
2018 (as adjusted)
|
Useful Life
|
||||||
|
|
|
|
|
|
||||||
Acquired Product Marketing Rights - Karbinal
|
|
$
|
6,221,000
|
|
$
|
(21,000
|
)
|
$
|
6,200,000
|
|
10 years
|
Acquired Product Marketing Rights - AcipHex
|
|
2,520,000
|
|
283,000
|
|
2,803,000
|
|
10 years
|
|||
Acquired Product Marketing Rights - Cefaclor
|
|
6,291,000
|
|
1,320,000
|
|
7,611,000
|
|
7 years
|
|||
Acquired Developed Technology - Flexichamber
|
|
1,131,000
|
|
546,000
|
|
1,677,000
|
|
10 years
|
|||
Acquired IPR&D - LiquiTime formulations
|
|
290,000
|
|
(290,000
|
)
|
—
|
|
Indefinite
|
|||
Total
|
|
$
|
16,453,000
|
|
$
|
1,838,000
|
|
$
|
18,291,000
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
At November 17,
2017 (preliminary)
|
Measurement Period Adjustments
|
At November 17, 2017 (as adjusted)
|
||||||
|
|
|
|
|
||||||
Cash
|
|
$
|
18,900,000
|
|
$
|
—
|
|
$
|
18,900,000
|
|
Common stock (including contingently issuable shares)
|
|
8,514,419
|
|
—
|
|
8,514,419
|
|
|||
Contingent payments
|
|
2,576,633
|
|
(1,210,000
|
)
|
1,366,633
|
|
|||
Total consideration transferred
|
|
$
|
29,991,052
|
|
(1,210,000
|
)
|
28,781,052
|
|
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
At November 17,
2017 (preliminary)
|
Measurement Period Adjustments
|
At November 17, 2017 (as adjusted)
|
||||||
|
|
|
|
|
||||||
Fair value of assets acquired:
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
11,068
|
|
$
|
—
|
|
$
|
11,068
|
|
Accounts receivable, net
|
|
2,872,545
|
|
—
|
|
2,872,545
|
|
|||
Inventory
|
|
495,777
|
|
—
|
|
495,777
|
|
|||
Prepaid expenses and other current assets
|
|
134,281
|
|
—
|
|
134,281
|
|
|||
Other receivables
|
|
—
|
|
2,764,515
|
|
2,764,515
|
|
|||
Identifiable Intangible Assets:
|
|
|
|
—
|
|
|||||
Acquired product marketing rights - Metafolin
|
|
10,465,000
|
|
1,522,000
|
|
11,987,000
|
|
|||
PAI sales and marketing agreement
|
|
2,334,000
|
|
219,000
|
|
2,553,000
|
|
|||
Acquired product marketing rights - Millipred
|
|
4,714,000
|
|
342,000
|
|
5,056,000
|
|
|||
Acquired product marketing rights - Ulesfia
|
|
555,000
|
|
(555,000
|
)
|
—
|
|
|||
Total assets acquired
|
|
21,581,671
|
|
4,292,515
|
|
25,874,186
|
|
|||
|
|
|
|
|
||||||
Fair value of liabilities assumed:
|
|
|
|
|
||||||
Accounts payable
|
|
192,706
|
|
—
|
|
192,706
|
|
|||
Accrued expenses and other current liabilities
|
|
4,850,422
|
|
3,764,515
|
|
8,614,937
|
|
|||
Deferred tax liability
|
|
839,773
|
|
78,840
|
|
918,613
|
|
|||
Total liabilities assumed
|
|
5,882,901
|
|
3,843,355
|
|
9,726,256
|
|
|||
Total identifiable net assets
|
|
15,698,770
|
|
449,160
|
|
16,147,930
|
|
|||
Fair value of consideration transferred
|
|
29,991,052
|
|
(1,210,000
|
)
|
28,781,052
|
|
|||
Goodwill
|
|
$
|
14,292,282
|
|
$
|
(1,659,160
|
)
|
$
|
12,633,122
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
At November 17,
2017 (preliminary) |
Measurement Period Adjustments
|
At November 17, 2017 (as adjusted)
|
Useful Life
|
||||||
|
|
|
|
|
|
||||||
Acquired product marketing rights - Metafolin
|
|
$
|
10,465,000
|
|
$
|
1,522,000
|
|
$
|
11,987,000
|
|
15 years
|
PAI sales and marketing agreement
|
|
2,334,000
|
|
219,000
|
|
2,553,000
|
|
2 years
|
|||
Acquired product marketing rights - Millipred
|
|
4,714,000
|
|
342,000
|
|
5,056,000
|
|
4 years
|
|||
Acquired product marketing rights - Ulesfia
|
|
555,000
|
|
(555,000
|
)
|
—
|
|
|
|||
Total
|
|
$
|
18,068,000
|
|
$
|
1,528,000
|
|
$
|
19,596,000
|
|
|
|
Three Months Ended
|
||
|
March 31,
|
||
|
2018
|
||
|
|
||
|
|
||
Total revenues, net
|
$
|
6,187,775
|
|
Net loss
|
$
|
(4,928,446
|
)
|
Basic and diluted net loss per share of common stock
|
$
|
(0.16
|
)
|
Basic and diluted net loss per share of preferred stock
|
$
|
—
|
|
•
|
Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.
|
•
|
Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model‑derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
|
•
|
Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.
|
|
|
March 31, 2019
|
||||||||||
|
Fair Value Measurements Using
|
|||||||||||
|
Quoted prices in
|
|
Significant other
|
|
Significant
|
|||||||
|
active markets for
|
|
observable
|
|
unobservable
|
|||||||
|
identical assets
|
|
inputs
|
|
inputs
|
|||||||
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|||||||
Assets
|
|
|
|
|
|
|
||||||
Investments in money market funds*
|
|
$
|
13,965,626
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
||||||
Contingent consideration
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,002,288
|
|
Warrant liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,750
|
|
Unit purchase option liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,993
|
|
|
|
December 31, 2018
|
||||||||||
|
Fair Value Measurements Using
|
|||||||||||
|
Quoted prices in
|
|
Significant other
|
|
Significant
|
|||||||
|
active markets for
|
|
observable
|
|
unobservable
|
|||||||
|
identical assets
|
|
inputs
|
|
inputs
|
|||||||
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|||||||
Assets
|
|
|
|
|
|
|
||||||
Investments in money market funds*
|
|
$
|
7,324,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
||||||
Contingent consideration
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,050,564
|
|
Warrant liability**
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,950
|
|
Unit purchase option liability**
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,216
|
|
|
|
Warrant
|
|
Unit purchase
|
|
Contingent
|
|
|
||||||||
|
|
liability
|
|
option liability
|
|
consideration
|
|
Total
|
||||||||
Balance at December 31, 2018
|
|
$
|
2,950
|
|
|
$
|
7,216
|
|
|
$
|
9,050,564
|
|
|
$
|
9,060,730
|
|
Payment of contingent consideration
|
|
—
|
|
|
—
|
|
|
(228,678
|
)
|
|
(228,678
|
)
|
||||
Change in fair value
|
|
14,800
|
|
|
32,777
|
|
|
180,402
|
|
|
227,979
|
|
||||
Balance at March 31, 2019
|
|
$
|
17,750
|
|
|
$
|
39,993
|
|
|
$
|
9,002,288
|
|
|
$
|
9,060,031
|
|
|
|
Warrant liability
|
|
Unit purchase option liability
|
|
Contingent consideration
|
|
Royalty Obligation
|
|
Total
|
||||||||||
Balance at December 31, 2017
|
|
$
|
8,185
|
|
|
$
|
26,991
|
|
|
$
|
2,576,633
|
|
|
$
|
—
|
|
|
$
|
2,611,809
|
|
Issuance of contingent consideration and royalty
|
|
—
|
|
|
—
|
|
|
7,875,165
|
|
|
240,744
|
|
|
8,115,909
|
|
|||||
Change in fair value
|
|
7,405
|
|
|
15,846
|
|
|
199,283
|
|
|
63,486
|
|
|
286,020
|
|
|||||
Balance at March 31, 2018
|
|
$
|
15,590
|
|
|
$
|
42,837
|
|
|
$
|
10,651,081
|
|
|
$
|
304,230
|
|
|
$
|
11,013,738
|
|
|
|
As of
|
||||||
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Sales returns and allowances
|
|
$
|
4,249,977
|
|
|
$
|
3,972,510
|
|
Medicaid rebates
|
|
2,758,384
|
|
|
2,237,269
|
|
||
Minimum sales commitments, royalties payable, and purchase obligations
|
|
10,808,083
|
|
|
9,662,901
|
|
||
Compensation and benefits
|
|
1,679,572
|
|
|
1,953,065
|
|
||
Research and development expenses
|
|
1,123,051
|
|
|
278,132
|
|
||
Sales and marketing
|
|
938,437
|
|
|
1,112,378
|
|
||
General and administrative
|
|
187,465
|
|
|
235,721
|
|
||
Other
|
|
70,128
|
|
|
279,397
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
21,815,097
|
|
|
$
|
19,731,373
|
|
Number of shares
|
|
Exercise price
|
|
Expiration
|
||
underlying warrants
|
|
per share
|
|
date
|
||
22,328*
|
|
$
|
8.40
|
|
|
October 2020
|
2,380*
|
|
$
|
8.68
|
|
|
May 2022
|
4,000,000
|
|
$
|
12.50
|
|
|
June 2024
|
4,024,708
|
|
|
|
|
||
|
|
|
|
|
||
*Accounted for as a liability instrument (see Note 6)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Research and development
|
|
$
|
57,376
|
|
|
$
|
11,497
|
|
General and administrative
|
|
489,953
|
|
|
207,382
|
|
||
Sales and marketing
|
|
49,364
|
|
|
23,945
|
|
||
Total stock-based compensation
|
|
$
|
596,693
|
|
|
$
|
242,824
|
|
|
|
Options Outstanding
|
|||||||||||
|
|
Number of shares
|
|
Weighted average exercise price
|
|
Grant date fair value of options
|
|
Weighted average remaining contractual term (in years)
|
|||||
Balance at December 31, 2018
|
|
3,746,597
|
|
|
$
|
4.16
|
|
|
|
|
|
7.79
|
|
Granted
|
|
134,379
|
|
|
$
|
4.78
|
|
|
$
|
334,624
|
|
|
|
Exercised
|
|
(31,288
|
)
|
|
$
|
3.01
|
|
|
|
|
|
||
Forfeited
|
|
(4,383
|
)
|
|
$
|
4.25
|
|
|
$
|
11,297
|
|
|
|
Balance at March 31, 2019
|
|
3,845,305
|
|
|
$
|
4.19
|
|
|
|
|
|
7.61
|
|
Exercisable at March 31, 2019
|
|
2,269,081
|
|
|
$
|
4.56
|
|
|
|
|
|
6.76
|
|
|
Options Outstanding
|
|||||||||||
|
|
Number of shares
|
|
Weighted average exercise price
|
|
Weighted average remaining contractual term (in years)
|
|
Aggregate intrinsic value (1)
|
|||||
Balance at December 31, 2018
|
|
500,000
|
|
|
$
|
4.24
|
|
|
9.24
|
|
|
||
Granted
|
|
—
|
|
|
|
|
|
|
|
|
|||
Balance at March 31, 2019
|
|
500,000
|
|
|
$
|
4.24
|
|
|
8.99
|
|
$
|
800,000
|
|
Exercisable at March 31, 2019
|
|
—
|
|
|
|
|
|
|
|
Service-based options
|
|
|
Expected dividend yield
|
|
—%
|
Expected volatility
|
|
55%
|
Expected life (in years)
|
|
5.0 - 6.25
|
Risk-free interest rate
|
|
2.23 - 2.59%
|
|
|
|
|
RSUs outstanding
|
|||||
|
|
Number of shares
|
|
Weighted average grant date fair value
|
|||
Non-vested RSUs at December 31, 2018
|
|
445,000
|
|
|
$
|
4.27
|
|
Vested
|
|
(100,000
|
)
|
|
$
|
4.24
|
|
Non-vested RSUs at March 31, 2019
|
|
345,000
|
|
|
$
|
4.27
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Property and equipment, net
|
|
$
|
737,658
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Other long-term liabilities
|
|
$
|
1,189,277
|
|
|
$
|
—
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Operating lease cost*
|
|
$
|
54,606
|
|
|
$
|
47,559
|
|
|
|
|
||
|
|
Undiscounted Cash Flows
|
||
April 1, 2019 through December 31, 2019
|
|
$
|
—
|
|
2020
|
|
155,815
|
|
|
2021
|
|
169,510
|
|
|
2022
|
|
173,748
|
|
|
2023
|
|
178,092
|
|
|
Thereafter
|
|
1,183,290
|
|
|
Total lease payments
|
|
$
|
1,860,455
|
|
Less implied interest
|
|
$
|
(671,178
|
)
|
Total
|
|
$
|
1,189,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Q2 2019 - Q4 2019*
|
|
2020*
|
|
2021
|
|
2022
|
|
Total*
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Minimum Purchase Obligations
|
|
$
|
942,994
|
|
|
1,265,378
|
|
|
—
|
|
|
—
|
|
|
$
|
2,208,372
|
|
Minimum Royalties
|
|
2,250,000
|
|
|
3,000,000
|
|
|
—
|
|
|
—
|
|
|
5,250,000
|
|
||
Total
|
|
$
|
3,192,994
|
|
|
4,265,378
|
|
|
—
|
|
|
—
|
|
|
$
|
7,458,372
|
|
•
|
Advancing our pipeline of compounds through development and to regulatory approval;
|
•
|
Pursuing targeted, differentiated preclinical and clinical stage product candidates;
|
•
|
Acquiring or licensing rights to clinically meaningful and differentiated products that are already on the market for pediatric use or in late-stage development for pediatric indications; and
|
•
|
Growing sales of the existing commercial products in our portfolio, including by identifying and investing in growth opportunities such as new indications and new geographic markets.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Product revenue, net
|
|
$
|
5,411
|
|
|
$
|
4,260
|
|
Sales force revenue
|
|
$
|
—
|
|
|
$
|
223
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Preclinical expenses
|
|
$
|
879
|
|
|
$
|
887
|
|
Clinical expenses
|
|
1,590
|
|
|
341
|
|
||
CMC expenses
|
|
435
|
|
|
107
|
|
||
Internal expenses not allocated to programs:
|
|
|
|
|
|
|
||
Salaries, benefits and related costs
|
|
435
|
|
|
240
|
|
||
Stock-based compensation expense
|
|
57
|
|
|
11
|
|
||
Other
|
|
5
|
|
|
64
|
|
||
|
|
$
|
3,401
|
|
|
$
|
1,650
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Salaries, benefits, and related costs
|
|
$
|
1,230
|
|
|
$
|
617
|
|
Legal, consulting, and other professional expenses
|
|
887
|
|
|
1,986
|
|
||
Stock-based compensation expense
|
|
469
|
|
|
207
|
|
||
Other
|
|
131
|
|
|
109
|
|
||
|
|
$
|
2,717
|
|
|
$
|
2,919
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Salaries, benefits, and related costs
|
|
$
|
1,838
|
|
|
$
|
952
|
|
Logistics, insurance, and other commercial operations expenses
|
|
339
|
|
|
91
|
|
||
Stock-based compensation expense
|
|
70
|
|
|
24
|
|
||
Advertising and marketing expense
|
|
815
|
|
|
177
|
|
||
Other
|
|
47
|
|
|
280
|
|
||
|
|
$
|
3,109
|
|
|
$
|
1,524
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Amortization of intangible assets
|
|
$
|
1,079
|
|
|
$
|
1,017
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Change in fair value of warrant liability and unit purchase option liability
|
|
$
|
(48
|
)
|
|
$
|
(23
|
)
|
Other (expense) income, net
|
|
(9
|
)
|
|
19
|
|
||
Interest expense, net
|
|
(208
|
)
|
|
(100
|
)
|
||
|
|
$
|
(265
|
)
|
|
$
|
(104
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(3,122
|
)
|
|
$
|
(280
|
)
|
Investing activities
|
|
(166
|
)
|
|
(19
|
)
|
||
Financing activities
|
|
8,817
|
|
|
363
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
5,530
|
|
|
$
|
64
|
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
SIGNATURES
|
|||
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|||
|
|
|
|
Cerecor Inc.
|
|||
|
|
|
|
Date: May 9, 2019
|
|
/s/ Joseph M. Miller
|
|
|
|
|
Joseph M. Miller
|
|
|
|
Chief Financial Officer
|
|
|
|
(on behalf of the registrant and as the registrant’s principal executive officer, principal financial officer and principal accounting officer)
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cerecor 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; and
|
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.
|
Date: May 9, 2019
|
|
/s/ Joseph M. Miller
|
|
|
|
|
Joseph M. Miller
|
|
|
|
Chief Financial Officer
|
|
|
|
(Registrant’s principal executive officer, principal financial officer and principal accounting officer)
|
|
|
|
|
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 Registrant.
|
Date: May 9, 2019
|
|
/s/ Joseph M. Miller
|
|
|
|
|
Joseph M. Miller
|
|
|
|
Chief Financial Officer
|
|
|
|
(Registrant’s principal executive officer, principal financial officer and principal accounting officer)
|
|