|
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
for the quarterly period ended September 30, 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
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
5,250,651
|
|
|
$
|
10,646,301
|
|
Accounts receivable, net
|
|
4,955,771
|
|
|
3,157,555
|
|
||
Other receivables
|
|
208,204
|
|
|
5,469,011
|
|
||
Inventory, net
|
|
402,267
|
|
|
1,110,780
|
|
||
Prepaid expenses and other current assets
|
|
1,670,019
|
|
|
1,529,516
|
|
||
Restricted cash, current portion
|
|
102,214
|
|
|
18,730
|
|
||
Total current assets
|
|
12,589,126
|
|
|
21,931,893
|
|
||
Property and equipment, net
|
|
1,496,431
|
|
|
586,512
|
|
||
Intangible assets, net
|
|
26,595,239
|
|
|
31,239,468
|
|
||
Goodwill
|
|
16,411,123
|
|
|
16,411,123
|
|
||
Restricted cash, net of current portion
|
|
101,945
|
|
|
81,725
|
|
||
Total assets
|
|
$
|
57,193,864
|
|
|
$
|
70,250,721
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
826,472
|
|
|
$
|
1,446,141
|
|
Accrued expenses and other current liabilities
|
|
13,133,895
|
|
|
19,731,373
|
|
||
Income taxes payable
|
|
1,014,454
|
|
|
2,032,258
|
|
||
Long-term debt, current portion
|
|
1,050,000
|
|
|
1,050,000
|
|
||
Contingent consideration, current portion
|
|
1,237,401
|
|
|
1,956,807
|
|
||
Total current liabilities
|
|
17,262,222
|
|
|
26,216,579
|
|
||
Long-term debt, net of current portion
|
|
14,254,856
|
|
|
14,327,882
|
|
||
Contingent consideration, net of current portion
|
|
6,236,084
|
|
|
7,093,757
|
|
||
Deferred tax liability, net
|
|
98,061
|
|
|
69,238
|
|
||
License obligations
|
|
—
|
|
|
1,250,000
|
|
||
Other long-term liabilities
|
|
1,121,367
|
|
|
385,517
|
|
||
Total liabilities
|
|
38,972,590
|
|
|
49,342,973
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock—$0.001 par value; 200,000,000 shares authorized at September 30, 2019 and December 31, 2018; 44,106,794 and 40,804,189 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
|
|
44,107
|
|
|
40,804
|
|
||
Preferred stock—$0.001 par value; 5,000,000 shares authorized at September 30, 2019 and December 31, 2018; 2,857,143 shares issued and outstanding at September 30, 2019 and December 31, 2018
|
|
2,857
|
|
|
2,857
|
|
||
Additional paid-in capital
|
|
134,085,981
|
|
|
119,082,157
|
|
||
Accumulated deficit
|
|
(115,911,671
|
)
|
|
(98,218,070
|
)
|
||
Total stockholders’ equity
|
|
18,221,274
|
|
|
20,907,748
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
57,193,864
|
|
|
$
|
70,250,721
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Product revenue, net
|
|
$
|
5,513,276
|
|
|
$
|
4,074,786
|
|
|
$
|
15,374,123
|
|
|
$
|
13,045,824
|
|
License and other revenue
|
|
100,000
|
|
|
—
|
|
|
100,000
|
|
|
—
|
|
||||
Sales force revenue
|
|
—
|
|
|
—
|
|
|
—
|
|
|
296,875
|
|
||||
Total revenues, net
|
|
5,613,276
|
|
|
4,074,786
|
|
|
15,474,123
|
|
|
13,342,699
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of product sales
|
|
1,435,061
|
|
|
3,111,290
|
|
|
3,241,131
|
|
|
5,397,872
|
|
||||
Research and development
|
|
1,743,435
|
|
|
1,047,877
|
|
|
8,857,220
|
|
|
3,780,352
|
|
||||
Acquired in-process research and development
|
|
—
|
|
|
18,723,952
|
|
|
—
|
|
|
18,723,952
|
|
||||
General and administrative
|
|
2,679,396
|
|
|
1,884,293
|
|
|
7,778,386
|
|
|
7,833,612
|
|
||||
Sales and marketing
|
|
2,630,545
|
|
|
2,310,760
|
|
|
8,676,298
|
|
|
5,889,137
|
|
||||
Amortization expense
|
|
1,037,414
|
|
|
1,065,398
|
|
|
3,195,108
|
|
|
3,315,843
|
|
||||
Impairment of intangible assets
|
|
—
|
|
|
159,687
|
|
|
1,449,121
|
|
|
1,861,562
|
|
||||
Change in fair value of contingent consideration
|
|
(197,219
|
)
|
|
84,844
|
|
|
(1,009,168
|
)
|
|
360,850
|
|
||||
Total operating expenses
|
|
9,328,632
|
|
|
28,388,101
|
|
|
32,188,096
|
|
|
47,163,180
|
|
||||
Loss from operations
|
|
(3,715,356
|
)
|
|
(24,313,315
|
)
|
|
(16,713,973
|
)
|
|
(33,820,481
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of warrant liability and unit purchase option liability
|
|
35,491
|
|
|
(2,994
|
)
|
|
6,823
|
|
|
(22,329
|
)
|
||||
Other (expense) income, net
|
|
(15,000
|
)
|
|
—
|
|
|
(24,400
|
)
|
|
18,655
|
|
||||
Interest expense, net
|
|
(205,938
|
)
|
|
(234,854
|
)
|
|
(613,624
|
)
|
|
(577,664
|
)
|
||||
Total other expense, net
|
|
(185,447
|
)
|
|
(237,848
|
)
|
|
(631,201
|
)
|
|
(581,338
|
)
|
||||
Net loss before taxes
|
|
(3,900,803
|
)
|
|
(24,551,163
|
)
|
|
(17,345,174
|
)
|
|
(34,401,819
|
)
|
||||
Income tax expense
|
|
115,651
|
|
|
52,412
|
|
|
348,427
|
|
|
92,076
|
|
||||
Net loss
|
|
$
|
(4,016,454
|
)
|
|
$
|
(24,603,575
|
)
|
|
$
|
(17,693,601
|
)
|
|
$
|
(34,493,895
|
)
|
Net loss per share of common stock, basic and diluted
|
|
$
|
(0.07
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(1.05
|
)
|
Net loss per share of preferred stock, basic and diluted
|
|
$
|
(0.35
|
)
|
|
$
|
—
|
|
|
$
|
(1.56
|
)
|
|
$
|
—
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(17,693,601
|
)
|
|
$
|
(34,493,895
|
)
|
Adjustments to reconcile net loss provided by (used in) operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
3,266,313
|
|
|
3,333,416
|
|
||
Impairment of intangible assets
|
|
1,449,121
|
|
|
1,861,562
|
|
||
Stock-based compensation
|
|
1,942,196
|
|
|
1,796,387
|
|
||
Acquired in-process research and development, including transaction costs
|
|
—
|
|
|
18,723,952
|
|
||
Deferred taxes
|
|
28,823
|
|
|
(47,994
|
)
|
||
Amortization of inventory fair value associated with acquisition of TRx and Avadel's pediatric products
|
|
107,272
|
|
|
262,419
|
|
||
Non-cash interest expense
|
|
—
|
|
|
327,224
|
|
||
Change in fair value of warrant liability and unit purchase option liability
|
|
(6,823
|
)
|
|
22,328
|
|
||
Change in fair value of contingent consideration
|
|
(1,009,168
|
)
|
|
360,850
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(1,798,216
|
)
|
|
(73,513
|
)
|
||
Other receivables
|
|
5,260,807
|
|
|
(3,072,729
|
)
|
||
Inventory, net
|
|
601,241
|
|
|
(226,735
|
)
|
||
Prepaid expenses and other assets
|
|
(140,503
|
)
|
|
27,571
|
|
||
Escrowed cash receivable
|
|
—
|
|
|
3,752,390
|
|
||
Accounts payable
|
|
(619,669
|
)
|
|
172,243
|
|
||
Income taxes payable
|
|
(1,017,804
|
)
|
|
(64,100
|
)
|
||
Accrued expenses and other liabilities
|
|
(6,573,918
|
)
|
|
6,186,178
|
|
||
License obligations
|
|
(1,250,000
|
)
|
|
—
|
|
||
Net cash used in operating activities
|
|
(17,453,929
|
)
|
|
(1,152,446
|
)
|
||
Investing activities
|
|
|
|
|
||||
Acquisition of Avadel's pediatric products
|
|
—
|
|
|
(1
|
)
|
||
Cash acquired from the acquisition of Ichorion Therapeutics, Inc.
|
|
—
|
|
|
1,429,876
|
|
||
Purchase of property and equipment
|
|
(262,011
|
)
|
|
(65,057
|
)
|
||
Net cash (used in) provided by investing activities
|
|
(262,011
|
)
|
|
1,364,818
|
|
||
Financing activities
|
|
|
|
|
||||
Proceeds from exercise of stock options and warrants
|
|
257,993
|
|
|
508,746
|
|
||
Proceeds from sales of common stock under employee stock purchase plan
|
|
127,537
|
|
|
8,400
|
|
||
Restricted stock units withheld for taxes
|
|
(33,959
|
)
|
|
—
|
|
||
Proceeds from sale of shares pursuant to private placement, net
|
|
3,737,400
|
|
|
3,857,106
|
|
||
Proceeds from underwritten public offering, net
|
|
8,975,960
|
|
|
—
|
|
||
Payment of contingent consideration
|
|
(567,911
|
)
|
|
(137,008
|
)
|
||
Payment of long-term debt
|
|
(73,026
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
|
12,423,994
|
|
|
4,237,244
|
|
||
(Decrease) increase in cash, cash equivalents and restricted cash
|
|
(5,291,946
|
)
|
|
4,449,616
|
|
||
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
|
|
$
|
5,454,810
|
|
|
$
|
7,055,115
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
787,500
|
|
|
$
|
262,500
|
|
Cash paid for taxes
|
|
$
|
1,326,025
|
|
|
$
|
—
|
|
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
|
)
|
|
|
September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
5,250,651
|
|
|
$
|
6,838,353
|
|
Restricted cash, current
|
|
102,214
|
|
|
37,027
|
|
||
Restricted cash, non-current
|
|
101,945
|
|
|
179,735
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
5,454,810
|
|
|
$
|
7,055,115
|
|
|
Common stock
|
|
Preferred Stock
|
|
Additional paid‑in
|
|
Contingently issuable stock
|
|
Accumulated
|
Total stockholders’
|
|||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
Amount
|
|
deficit
|
|
equity
|
||||||||||||||
Three Months Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, June 30, 2018
|
33,790,686
|
|
|
$
|
33,792
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
87,241,204
|
|
|
$
|
—
|
|
|
$
|
(68,055,580
|
)
|
|
$
|
19,219,416
|
|
Issuance of shares pursuant to common stock private placement, net of offering costs
|
1,000,000
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
3,856,106
|
|
|
—
|
|
|
—
|
|
|
3,857,106
|
|
||||||
Issuance of shares in acquisition of Ichorion assets
|
5,798,735
|
|
|
5,774
|
|
|
—
|
|
|
—
|
|
|
19,965,780
|
|
|
—
|
|
|
—
|
|
|
19,971,554
|
|
||||||
Exercise of stock options and warrants
|
90,213
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
118,182
|
|
|
—
|
|
|
—
|
|
|
118,272
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
945,132
|
|
|
—
|
|
|
—
|
|
|
945,132
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,603,575
|
)
|
|
(24,603,575
|
)
|
||||||
Balance, September 30, 2018
|
40,679,634
|
|
|
$
|
40,656
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
112,126,404
|
|
|
$
|
—
|
|
|
$
|
(92,659,155
|
)
|
|
$
|
19,507,905
|
|
Nine Months Ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, December 31, 2017
|
31,266,989
|
|
|
$
|
31,268
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
83,338,136
|
|
|
$
|
2,655,464
|
|
|
$
|
(58,165,260
|
)
|
|
$
|
27,859,608
|
|
Issuance of contingently issuable shares in acquisition of TRx
|
2,349,968
|
|
|
2,350
|
|
|
|
|
|
|
2,653,114
|
|
|
(2,655,464
|
)
|
|
—
|
|
|
—
|
|
||||||||
Issuance of shares pursuant to common stock private placement, net of offering costs
|
1,000,000
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
3,856,106
|
|
|
—
|
|
|
—
|
|
|
3,857,106
|
|
||||||
Issuance of shares in acquisition of Ichorion assets
|
5,798,735
|
|
|
5,774
|
|
|
—
|
|
|
—
|
|
|
19,965,780
|
|
|
—
|
|
|
—
|
|
|
19,971,554
|
|
||||||
Exercise of stock options and warrants
|
243,942
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
508,501
|
|
|
—
|
|
|
—
|
|
|
508,745
|
|
||||||
Shares purchased through employee stock purchase plan
|
20,000
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
8,380
|
|
|
—
|
|
|
—
|
|
|
8,400
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,796,387
|
|
|
—
|
|
|
—
|
|
|
1,796,387
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,493,895
|
)
|
|
(34,493,895
|
)
|
||||||
Balance, September 30, 2018
|
40,679,634
|
|
|
$
|
40,656
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
112,126,404
|
|
|
$
|
—
|
|
|
$
|
(92,659,155
|
)
|
|
$
|
19,507,905
|
|
Nine Months Ended September 30, 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
|
|
||||||
Issuance of shares pursuant to common stock private placement, net of offering costs
|
1,200,000
|
|
|
1,200
|
|
|
|
|
|
|
3,736,200
|
|
|
|
|
|
|
3,737,400
|
|
||||||||||
Exercise of stock options and warrants
|
74,952
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
257,918
|
|
|
—
|
|
|
—
|
|
|
257,993
|
|
||||||
Restricted Stock Units vested during period
|
172,500
|
|
|
173
|
|
|
—
|
|
|
—
|
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted Stock Units withheld for taxes
|
(6,969
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(33,952
|
)
|
|
—
|
|
|
—
|
|
|
(33,959
|
)
|
||||||
Shares purchased through employee stock purchase plan
|
43,940
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
127,493
|
|
|
—
|
|
|
—
|
|
|
127,537
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,942,196
|
|
|
—
|
|
|
—
|
|
|
1,942,196
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,693,601
|
)
|
|
(17,693,601
|
)
|
||||||
Balance, September 30, 2019
|
44,106,794
|
|
|
$
|
44,107
|
|
|
2,857,143
|
|
|
$
|
2,857
|
|
|
$
|
134,085,981
|
|
|
$
|
—
|
|
|
$
|
(115,911,671
|
)
|
|
$
|
18,221,274
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Prescribed dietary supplements
|
|
$
|
2,318
|
|
|
$
|
2,097
|
|
|
$
|
5,909
|
|
|
$
|
5,767
|
|
Prescription drugs
|
|
3,195
|
|
|
1,978
|
|
|
9,465
|
|
|
7,279
|
|
||||
License and other revenue
|
|
100
|
|
|
—
|
|
|
100
|
|
|
—
|
|
||||
Sales force revenue
|
|
—
|
|
|
—
|
|
|
—
|
|
|
297
|
|
||||
Total revenue
|
|
$
|
5,613
|
|
|
$
|
4,075
|
|
|
$
|
15,474
|
|
|
$
|
13,343
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
September 30,
|
||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||
|
|
Common stock
|
|
Preferred stock
|
|
Common stock
|
|
Preferred stock
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Allocation of undistributed net loss
|
|
$
|
(3,019,101
|
)
|
|
$
|
(997,353
|
)
|
|
$
|
(24,603,575
|
)
|
|
$
|
—
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares
|
|
43,244,481
|
|
|
2,857,143
|
|
|
34,648,641
|
|
|
—
|
|
||||
Basic and diluted net loss per share
|
|
$
|
(0.07
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
||||||||||||||
|
|
September 30,
|
||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||
|
|
Common stock
|
|
Preferred stock
|
|
Common stock
|
|
Preferred stock
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Allocation of undistributed net loss
|
|
$
|
(13,238,766
|
)
|
|
$
|
(4,454,835
|
)
|
|
$
|
(34,493,895
|
)
|
|
$
|
—
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares
|
|
42,453,928
|
|
|
2,857,143
|
|
|
32,749,291
|
|
|
—
|
|
||||
Basic and diluted net loss per share
|
|
$
|
(0.31
|
)
|
|
$
|
(1.56
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Three and Nine Months Ended
|
|
||
|
|
September 30,
|
|
||
|
|
2019
|
|
2018
|
|
Stock options
|
|
5,297,124
|
|
4,119,187
|
|
Warrants on common stock
|
|
4,024,708
|
|
18,905,064
|
|
Restricted Stock Units
|
|
267,500
|
|
445,000
|
|
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)
|
||||||
|
|
|
|
|
||||||
Acquired Product Marketing Rights - Karbinal
|
|
$
|
6,221,000
|
|
$
|
(21,000
|
)
|
$
|
6,200,000
|
|
Acquired Product Marketing Rights - AcipHex
|
|
2,520,000
|
|
283,000
|
|
2,803,000
|
|
|||
Acquired Product Marketing Rights - Cefaclor
|
|
6,291,000
|
|
1,320,000
|
|
7,611,000
|
|
|||
Acquired Developed Technology - Flexichamber
|
|
1,131,000
|
|
546,000
|
|
1,677,000
|
|
|||
Acquired IPR&D - LiquiTime formulations
|
|
290,000
|
|
(290,000
|
)
|
—
|
|
|||
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)
|
||||||
|
|
|
|
|
||||||
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
|
|
$
|
18,068,000
|
|
$
|
1,528,000
|
|
$
|
19,596,000
|
|
|
Nine Months Ended
|
||
|
September 30,
|
||
|
2018
|
||
|
|
||
Total revenues, net
|
$
|
15,047,699
|
|
Net loss
|
$
|
(35,539,494
|
)
|
Basic and diluted net loss per share of common stock
|
$
|
(1.09
|
)
|
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.
|
|
|
September 30, 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*
|
|
$
|
3,221,364
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
||||||
Contingent consideration
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,473,485
|
|
Warrant liability**
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
850
|
|
Unit purchase option liability**
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,493
|
|
|
|
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
|
|
—
|
|
|
—
|
|
|
(567,911
|
)
|
|
(567,911
|
)
|
||||
Change in fair value due to Lachlan Settlement
|
|
—
|
|
|
—
|
|
|
(1,277,150
|
)
|
|
(1,277,150
|
)
|
||||
Other changes in fair value
|
|
(2,100
|
)
|
|
(4,723
|
)
|
|
267,982
|
|
|
261,159
|
|
||||
Balance at September 30, 2019
|
|
$
|
850
|
|
|
$
|
2,493
|
|
|
$
|
7,473,485
|
|
|
$
|
7,476,828
|
|
|
|
Warrant
|
|
Unit purchase
|
|
Contingent
|
|
|
||||||||
|
|
liability
|
|
option liability
|
|
consideration
|
|
Total
|
||||||||
Balance at December 31, 2017
|
|
$
|
8,185
|
|
|
$
|
26,991
|
|
|
$
|
2,576,633
|
|
|
$
|
2,611,809
|
|
Issuance of contingent consideration
|
|
—
|
|
|
—
|
|
|
7,920,000
|
|
|
7,920,000
|
|
||||
Payment of contingent consideration
|
|
—
|
|
|
—
|
|
|
(137,008
|
)
|
|
(137,008
|
)
|
||||
Purchase price allocation measurement period adjustment of contingent consideration
|
|
—
|
|
|
—
|
|
|
(1,210,000
|
)
|
|
(1,210,000
|
)
|
||||
Change in fair value
|
|
6,145
|
|
|
16,183
|
|
|
360,850
|
|
|
383,178
|
|
||||
Balance at September 30, 2018
|
|
$
|
14,330
|
|
|
$
|
43,174
|
|
|
$
|
9,510,475
|
|
|
$
|
9,567,979
|
|
|
|
As of
|
||||||
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Sales returns and allowances
|
|
$
|
5,143,150
|
|
|
$
|
3,972,510
|
|
Medicaid rebates
|
|
2,603,632
|
|
|
2,237,269
|
|
||
Minimum sales commitments, royalties payable, and purchase obligations
|
|
957,243
|
|
|
9,662,901
|
|
||
Compensation and benefits
|
|
1,993,211
|
|
|
1,953,065
|
|
||
Research and development expenses
|
|
1,409,738
|
|
|
278,132
|
|
||
Sales and marketing
|
|
125,494
|
|
|
1,112,378
|
|
||
General and administrative
|
|
775,163
|
|
|
235,721
|
|
||
Other
|
|
126,264
|
|
|
279,397
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
13,133,895
|
|
|
$
|
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
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Research and development
|
|
$
|
176,261
|
|
|
$
|
32,202
|
|
|
$
|
354,347
|
|
|
$
|
64,077
|
|
General and administrative
|
|
473,905
|
|
|
843,122
|
|
|
1,139,241
|
|
|
1,599,703
|
|
||||
Sales and marketing
|
|
168,627
|
|
|
69,809
|
|
|
448,608
|
|
|
132,607
|
|
||||
Total stock-based compensation
|
|
$
|
818,793
|
|
|
$
|
945,133
|
|
|
$
|
1,942,196
|
|
|
$
|
1,796,387
|
|
|
|
Options Outstanding
|
|||||||||||
|
|
Number of shares
|
|
Weighted average exercise price per share
|
|
Weighted average grant date fair value of options
|
|
Weighted average remaining contractual term (in years)
|
|||||
Balance at December 31, 2018
|
|
3,746,597
|
|
|
$
|
4.16
|
|
|
|
|
|
7.8
|
|
Granted
|
|
2,618,264
|
|
|
$
|
5.71
|
|
|
$
|
8,076,475
|
|
|
|
Exercised
|
|
(75,178
|
)
|
|
$
|
3.44
|
|
|
|
|
|
||
Forfeited
|
|
(902,767
|
)
|
|
$
|
5.16
|
|
|
$
|
2,640,665
|
|
|
|
Expired
|
|
(389,792
|
)
|
|
$
|
5.03
|
|
|
$
|
992,343
|
|
|
|
Balance at September 30, 2019
|
|
4,997,124
|
|
|
$
|
4.74
|
|
|
|
|
|
8.2
|
|
Exercisable at September 30, 2019
|
|
2,155,081
|
|
|
$
|
4.36
|
|
|
|
|
|
6.9
|
|
|
Options Outstanding
|
|||||||||||
|
|
Number of shares
|
|
Weighted average exercise price per share
|
|
Weighted average remaining contractual term (in years)
|
|
Aggregate intrinsic value (1)
|
|||||
Balance at December 31, 2018
|
|
500,000
|
|
|
$
|
4.24
|
|
|
9.2
|
|
|
||
Granted
|
|
300,000
|
|
|
$
|
4.98
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
|
|
|
|
|
||||
Forfeited
|
|
(500,000
|
)
|
|
$
|
4.24
|
|
|
|
|
|
||
Balance at September 30, 2019
|
|
300,000
|
|
|
$
|
4.98
|
|
|
9.65
|
|
$
|
—
|
|
Exercisable at September 30, 2019
|
|
—
|
|
|
|
|
|
|
|
Service-based options
|
|
|
Expected dividend yield
|
|
—%
|
Expected volatility
|
|
55%
|
Expected life (in years)
|
|
5.0 - 6.25
|
Risk-free interest rate
|
|
1.47 - 2.59%
|
|
|
|
Market-based options
|
|
|
Expected dividend yield
|
|
—%
|
Expected volatility
|
|
60%
|
Expected life (in years)
|
|
10
|
Risk-free interest rate
|
|
2.32%
|
|
|
RSUs Outstanding
|
|||||
|
|
Number of shares
|
|
Weighted average grant date fair value
|
|||
Unvested RSUs at December 31, 2018
|
|
445,000
|
|
|
$
|
4.27
|
|
Granted
|
|
295,000
|
|
|
$
|
4.98
|
|
Vested
|
|
(172,500
|
)
|
|
$
|
4.52
|
|
Forfeited
|
|
(300,000
|
)
|
|
$
|
4.24
|
|
Unvested RSUs at September 30, 2019
|
|
267,500
|
|
|
|
|
|
As of
|
||||||
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Property and equipment, net
|
|
$
|
719,113
|
|
|
$
|
—
|
|
Other current liabilities
|
|
$
|
114,387
|
|
|
$
|
—
|
|
Other long-term liabilities
|
|
$
|
1,121,367
|
|
|
$
|
—
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating lease cost*
|
|
$
|
32,326
|
|
|
$
|
47,371
|
|
|
$
|
126,467
|
|
|
$
|
144,172
|
|
|
|
|
||
|
|
Undiscounted Cash Flows
|
||
October 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
|
|
$
|
(624,701
|
)
|
Total
|
|
$
|
1,235,754
|
|
•
|
Advancing our pipeline of compounds through development and to regulatory approval;
|
•
|
Acquiring or licensing rights to targeted, complimentary differentiated preclinical and clinical stage pipeline assets;
|
•
|
Developing go-to-market strategy in preparation to quickly and effectively market, launch, and distribute each of our assets that receive marketing approval; and
|
•
|
Opportunistically out-licensing rights to indications or geographies.
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Product revenue, net
|
|
$
|
5,513
|
|
|
$
|
4,075
|
|
License and other revenue
|
|
100
|
|
|
—
|
|
||
|
|
$
|
5,613
|
|
|
$
|
4,075
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Preclinical expenses
|
|
$
|
140
|
|
|
$
|
120
|
|
Clinical expenses
|
|
718
|
|
|
473
|
|
||
CMC expenses
|
|
1,360
|
|
|
18
|
|
||
Internal expenses not allocated to programs:
|
|
|
|
|
|
|||
Salaries, benefits and related costs
|
|
581
|
|
|
324
|
|
||
Stock-based compensation expense
|
|
176
|
|
|
31
|
|
||
Other
|
|
(1,232
|
)
|
|
82
|
|
||
|
|
$
|
1,743
|
|
|
$
|
1,048
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Salaries, benefits and related costs
|
|
$
|
852
|
|
|
$
|
1,139
|
|
Legal, consulting and other professional expenses
|
|
1,197
|
|
|
(203
|
)
|
||
Stock-based compensation expense
|
|
474
|
|
|
843
|
|
||
Other
|
|
156
|
|
|
105
|
|
||
|
|
$
|
2,679
|
|
|
$
|
1,884
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Salaries, benefits and related costs
|
|
$
|
1,629
|
|
|
$
|
1,456
|
|
Logistics, insurance and other commercial operations expenses
|
|
370
|
|
|
338
|
|
||
Stock-based compensation expense
|
|
169
|
|
|
70
|
|
||
Advertising and marketing expense
|
|
423
|
|
|
415
|
|
||
Other
|
|
39
|
|
|
32
|
|
||
|
|
$
|
2,630
|
|
|
$
|
2,311
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Amortization of intangible assets
|
|
$
|
1,037
|
|
|
$
|
1,065
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Change in fair value of contingent consideration
|
|
$
|
(197
|
)
|
|
$
|
85
|
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Change in fair value of warrant liability and unit purchase option liability
|
|
$
|
35
|
|
|
$
|
(3
|
)
|
Other expense, net
|
|
(15
|
)
|
|
—
|
|
||
Interest expense, net
|
|
(206
|
)
|
|
(235
|
)
|
||
|
|
$
|
(186
|
)
|
|
$
|
(238
|
)
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Income tax expense
|
|
$
|
116
|
|
|
$
|
52
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Product revenue, net
|
|
$
|
15,374
|
|
|
$
|
13,046
|
|
License and other revenue
|
|
100
|
|
|
—
|
|
||
Sales force revenue
|
|
—
|
|
|
297
|
|
||
|
|
$
|
15,474
|
|
|
$
|
13,343
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Preclinical expenses
|
|
$
|
1,686
|
|
|
$
|
1,403
|
|
Clinical expenses
|
|
3,999
|
|
|
1,122
|
|
||
CMC expenses
|
|
2,551
|
|
|
157
|
|
||
Internal expenses not allocated to programs:
|
|
|
|
|
|
|||
Salaries, benefits and related costs
|
|
1,489
|
|
|
809
|
|
||
Stock-based compensation expense
|
|
354
|
|
|
64
|
|
||
Other
|
|
(1,222
|
)
|
|
225
|
|
||
|
|
$
|
8,857
|
|
|
$
|
3,780
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Salaries, benefits and related costs
|
|
$
|
3,308
|
|
|
$
|
2,614
|
|
Legal, consulting and other professional expenses
|
|
2,858
|
|
|
3,324
|
|
||
Stock-based compensation expense
|
|
1,139
|
|
|
1,600
|
|
||
Other
|
|
473
|
|
|
296
|
|
||
|
|
$
|
7,778
|
|
|
$
|
7,834
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Salaries, benefits and related costs
|
|
$
|
5,269
|
|
|
$
|
4,086
|
|
Logistics, insurance and other commercial operations expenses
|
|
1,053
|
|
|
847
|
|
||
Stock-based compensation expense
|
|
449
|
|
|
133
|
|
||
Advertising and marketing expense
|
|
1,726
|
|
|
728
|
|
||
Other
|
|
179
|
|
|
95
|
|
||
|
|
$
|
8,676
|
|
|
$
|
5,889
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Amortization of intangible assets
|
|
$
|
3,195
|
|
|
$
|
3,316
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Impairment of intangible assets
|
|
$
|
1,449
|
|
|
$
|
1,862
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Change in fair value of contingent consideration
|
|
$
|
(1,009
|
)
|
|
$
|
361
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Change in fair value of warrant liability and unit purchase option liability
|
|
$
|
7
|
|
|
$
|
(22
|
)
|
Other (expense) income, net
|
|
(24
|
)
|
|
19
|
|
||
Interest expense, net
|
|
(614
|
)
|
|
(578
|
)
|
||
|
|
$
|
(631
|
)
|
|
$
|
(581
|
)
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Income tax expense
|
|
$
|
348
|
|
|
$
|
92
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Net cash (used in) provided by:
|
|
|
|
|
||||
Operating activities
|
|
$
|
(17,454
|
)
|
|
$
|
(1,152
|
)
|
Investing activities
|
|
(262
|
)
|
|
1,365
|
|
||
Financing activities
|
|
12,424
|
|
|
4,237
|
|
||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(5,292
|
)
|
|
$
|
4,450
|
|
•
|
delays in reaching an agreement with or failure in obtaining authorization from the FDA, other regulatory authorities or institutional review boards, or IRBs, to commence or amend a clinical trial;
|
•
|
imposition of a Clinical Hold or trial termination following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities, or due to concerns about trial design, or a decision by the FDA, other regulatory authorities, IRBs or the company, or recommendation by a data safety monitoring board, to place the trial on hold or otherwise suspend or terminate clinical trials at any time for safety issues or for any other reason;
|
•
|
delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites;
|
•
|
deviations from the trial protocol by clinical trial sites and investigators, or failing to conduct the trial in accordance with regulatory requirements;
|
•
|
failure of our third parties, such as CROs, to satisfy their contractual duties or meet expected deadlines;
|
•
|
failure to enter into agreements with third parties to obtain the results of clinical trials;
|
•
|
delays in the importation and manufacture of clinical supply;
|
•
|
delays in the testing, validation and delivery of the clinical supply of the product candidates to the clinical sites;
|
•
|
for clinical trials in selected subject populations, delays in identification and auditing of central or other laboratories and the transfer and validation of assays or tests to be used to identify selected subjects;
|
•
|
delays in recruiting suitable subjects to participate in a trial;
|
•
|
delays in having subjects complete participation in a trial or return for post‑treatment follow‑up;
|
•
|
delays caused by subjects dropping out of a trial due to side effects or disease progression;
|
•
|
delays in adding new investigators and clinical trial sites;
|
•
|
withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; or
|
•
|
changes in government regulations or administrative actions or lack of adequate funding to continue the clinical trials.
|
•
|
the size and nature of the subject population;
|
•
|
the number and location of clinical sites we enroll;
|
•
|
the proximity of subjects to clinical sites;
|
•
|
perceived risks and benefits of the product candidate under trial;
|
•
|
competition with other companies for clinical sites or subjects;
|
•
|
competing clinical trials;
|
•
|
the eligibility and exclusion criteria for the trial;
|
•
|
the design of the clinical trial;
|
•
|
effectiveness of publicity for the clinical trials;
|
•
|
inability to obtain and maintain subject consents;
|
•
|
ability to monitor subjects adequately during and after the administration of the product candidate and the ability of subjects to comply with the clinical trial requirements;
|
•
|
risk that enrolled subjects will drop out or be withdrawn before completion; and
|
•
|
clinicians’ and subjects’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
|
•
|
our methodology, including our screening technology, might not successfully identify medically relevant potential product candidates;
|
•
|
our competitors may develop alternatives that render our product candidates obsolete;
|
•
|
we may encounter product manufacturing difficulties that limit yield or produce undesirable characteristics that increase the cost of goods, cause delays or make the product candidates unmarketable;
|
•
|
our product candidates may cause adverse effects in subjects, even after successful initial toxicology studies, which may make the product candidates unmarketable;
|
•
|
our product candidates might not be capable of being produced in commercial quantities at an acceptable cost, or at all;
|
•
|
our product candidates might not demonstrate a meaningful benefit to subjects;
|
•
|
our potential collaboration partners may change their development profiles or plans for potential product candidates or abandon a therapeutic area or the development of a partnered product; and
|
•
|
our reliance on third party clinical trials may cause us to be denied access to clinical results that may be significant to further clinical development.
|
•
|
the FDA or comparable foreign regulatory authorities may disagree on the design or implementation of our clinical trials, including the methodology used in our trial, our chosen endpoints, our statistical analysis, or our proposed product indication. For instance, the FDA may find that the designs that we are utilizing in our planned clinical trial do not support an adequate and well‑controlled study. The FDA also might not agree with the various disease scales and evaluation tools that we may use in our clinical trials to assess the efficacy of our product candidates. Further, the FDA might not agree with our endpoints and/
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with our development plans for our product candidates;
|
•
|
our failure to demonstrate to the satisfaction of the FDA or comparable regulatory authorities that a product candidate is safe and effective for its proposed indication;
|
•
|
our clinical trials may fail to meet the level of statistical significance required for approval;
|
•
|
we may fail to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;
|
•
|
data collected from clinical trials of our product candidates may be insufficient to support the submission and filing of an NDA, other submission or to obtain marketing approval, and FDA may require additional studies to show that our product candidates are safe or effective;
|
•
|
we may fail to obtain approval of the manufacturing processes or facilities of third‑party manufacturers with whom we contract for clinical and commercial supplies; or
|
•
|
there may be changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.
|
•
|
we may suspend marketing of, or withdraw or recall, such product;
|
•
|
regulatory authorities may withdraw approvals of such product;
|
•
|
regulatory authorities may require additional warnings on the label or other label modifications;
|
•
|
the FDA or other regulatory bodies may issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings about such product;
|
•
|
the FDA may require the establishment or modification of a REMS or other restrictions on marketing and distribution, or a comparable foreign regulatory authority may require the establishment or modification of a similar strategy that may, for instance, require us to issue a medication guide outlining the risks of such side effects for distribution to patients or restrict distribution of our products and impose burdensome implementation requirements on us;
|
•
|
regulatory authorities may require that we conduct post‑marketing studies; and
|
•
|
we could be sued and held liable for harm caused to subjects or patients.
|
•
|
issue Warning Letters or Untitled Letters;
|
•
|
mandate modifications to promotional materials or labeling, or require us to provide corrective information to healthcare practitioners;
|
•
|
require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;
|
•
|
seek an injunction or impose civil or criminal penalties or monetary fines, restitution or disgorgement, as well as imprisonment;
|
•
|
suspend or withdraw marketing approval;
|
•
|
suspend or terminate any ongoing clinical studies;
|
•
|
refuse to approve pending applications or supplements to applications filed by us;
|
•
|
debar us from submitting marketing applications, exclude us from participation in federal healthcare programs, require a corporate integrity agreement or deferred prosecution agreements, debar us from government contracts and refuse future orders under existing contracts;
|
•
|
suspend or impose restrictions on operations, including restrictions on marketing, distribution or manufacturing of the product, or the imposition of costly new manufacturing requirements or use of alternative suppliers; or
|
•
|
seize or detain products, refuse to permit the import or export of products, or request that we initiate a product recall.
|
•
|
different regulatory requirements for approval of drugs in foreign countries;
|
•
|
challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;
|
•
|
foreign reimbursement, pricing and insurance regimes;
|
•
|
unexpected changes in tariffs, trade barriers and regulatory requirements;
|
•
|
economic weakness, including inflation, or political instability in particular foreign economies and markets;
|
•
|
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
|
•
|
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;
|
•
|
foreign taxes;
|
•
|
difficulties staffing and managing foreign operations;
|
•
|
workforce uncertainty in countries where labor unrest is more common than in the United States;
|
•
|
potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign regulations;
|
•
|
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
|
•
|
business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
|
•
|
the efficacy and safety profile of our product candidates, including relative to marketed products and product candidates in development by third parties;
|
•
|
prevalence and severity of any side effects of our product candidates;
|
•
|
relative convenience and ease of administration of our product candidates;
|
•
|
cost effectiveness of our product candidates;
|
•
|
the claims we may make for our product candidates based on the approved label or any restrictions placed upon our marketing and distribution of our product candidates;
|
•
|
the time it takes for our product candidates to complete clinical development and receive marketing approval;
|
•
|
how quickly and effectively we alone, or with a partner, can market, launch, and distribute any of our product candidates that receive marketing approval;
|
•
|
the ability to commercialize any of our product candidates that receive marketing approval;
|
•
|
the price of our products, including in comparison to branded or generic competitors and relative to alternative treatments;
|
•
|
potential or perceived advantages of disadvantages over alternative treatments;
|
•
|
the ability to collaborate with others in the development and commercialization of new products;
|
•
|
whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare;
|
•
|
the ability to establish, maintain and protect intellectual property rights related to our product candidates;
|
•
|
the entry of generic versions of our products onto the market;
|
•
|
the number of products in the same therapeutic class as our product candidates;
|
•
|
the effect of current and future healthcare laws on our drug candidates;
|
•
|
the ability to secure favorable managed care formulary positions, including federal healthcare program formularies;
|
•
|
the ability to manufacture commercial quantities of any of our product candidates that receive marketing approval;
|
•
|
acceptance of any of our product candidates that receive marketing approval by physicians and other healthcare providers; and
|
•
|
potential post-marketing commitments imposed on regulatory authorities, such as patient registries.
|
•
|
an annual, nondeductible fee payable by any entity that manufactures or imports specified branded prescription drugs and biologic agents;
|
•
|
revised the definition of “average manufacturer price,” or AMP, for reporting purposes, which can increase the amount of Medicaid drug rebates manufacturers are required to pay to states, and created a separate AMP for certain categories of drugs provided in non‑retail outpatient settings;
|
•
|
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
|
•
|
a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
|
•
|
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries under their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;
|
•
|
extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;
|
•
|
expansion of eligibility criteria for Medicaid programs in certain states;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
|
•
|
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians;
|
•
|
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and
|
•
|
enacted substantial new provisions affecting compliance which may affect our business practices with healthcare practitioners.
|
•
|
decreased demand for any product candidates or products that we may develop;
|
•
|
termination of clinical trial sites or entire trial programs;
|
•
|
injury to our reputation and significant negative media attention;
|
•
|
withdrawal of clinical trial participants;
|
•
|
significant costs to defend the related litigation;
|
•
|
substantial monetary awards to trial subjects or patients;
|
•
|
loss of revenue;
|
•
|
product recalls, withdrawals or labeling, marketing or promotional restrictions;
|
•
|
diversion of management and scientific resources from our business operations;
|
•
|
the inability to commercialize any products that we may develop; and
|
•
|
a decline in our stock price.
|
•
|
the federal Anti‑Kickback Statute prohibits persons from, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for the furnishing or arranging for the furnishing, or the purchase, lease or order, or arranging for or recommending purchase, lease or order, of any good or service for which payment may be made under a federal healthcare program such as Medicare or Medicaid;
|
•
|
the civil federal False Claims Act imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent; knowingly making, using or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government; conspiring to defraud the government by getting a false or fraudulent claim paid or approved by the government; or knowingly making, using or causing to be made or used a false record or statement
|
•
|
the criminal federal False Claims Act imposes criminal fines or imprisonment against individuals or entities who willfully make or present a claim to the government knowing such claim to be false, fictitious or fraudulent;
|
•
|
the Veterans Health Care Act requires manufacturers of covered drugs to offer them for sale on the Federal Supply Schedule, which requires compliance with applicable federal procurement laws and regulations and subjects us to contractual remedies as well as administrative, civil and criminal sanctions;
|
•
|
the federal Health Insurance Portability and Accountability Act and its related regulations ("HIPAA") impose criminal liability for, among other actions, knowingly and willfully executing a scheme to defraud any healthcare benefit program, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, or knowingly and willfully making false statements relating to healthcare matters;
|
•
|
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and its implementing regulations, also imposes obligations on certain covered entity health care providers, health plans, and health care clearinghouses as well as their business associates that perform certain services involving individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, as well as directly applicable privacy and security standards and requirements;
|
•
|
the civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent;
|
•
|
the federal Physician Sunshine Act, created under Section 6002 of the Affordable Care Act and its implementing regulations, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined above) and their immediate family members;
|
•
|
the FCPA prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations; and
|
•
|
analogous or similar state, federal, and foreign laws, regulations, and requirements such as state anti‑kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non‑governmental third‑party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; laws, regulations, and requirements applicable to the award and performance of federal contracts and grants and state, federal and foreign laws that govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
|
•
|
our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
|
•
|
inability of marketing personnel to develop effective marketing materials;
|
•
|
the inability of sales personnel to obtain access to physicians or educate adequate numbers of physicians on the clinical benefits of our products to achieve market acceptance;
|
•
|
the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines;
|
•
|
the costs associated with training sales personnel on legal compliance matters and monitoring their actions;
|
•
|
liability for sales personnel failing to comply with the applicable legal requirements; and
|
•
|
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
|
•
|
collaborators have significant discretion in determining the amount and timing of the efforts and resources that they will apply to these collaborations;
|
•
|
collaborators might not perform their obligations as expected;
|
•
|
the nonclinical studies and clinical trials conducted as part of these collaborations might not be successful;
|
•
|
collaborators might not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on nonclinical study or clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;
|
•
|
collaborators may delay nonclinical studies and clinical trials, provide insufficient funding for nonclinical studies and clinical trials, stop a nonclinical study or clinical trial or abandon a product candidate, repeat or conduct new nonclinical studies or
|
•
|
we might not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates;
|
•
|
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;
|
•
|
product candidates developed in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates;
|
•
|
a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval might not commit sufficient resources to the marketing and distribution of any such product candidate;
|
•
|
disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of any product candidates, may cause delays or termination of the research, development or commercialization of such product candidates, may lead to additional responsibilities for us with respect to such product candidates or may result in litigation or arbitration, any of which would be time consuming and expensive;
|
•
|
collaborators might not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;
|
•
|
disputes may arise with respect to the ownership or inventorship of intellectual property developed pursuant to our collaborations;
|
•
|
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;
|
•
|
the terms of our collaboration agreement may restrict us from entering into certain relationships with other third parties, thereby limiting our options; and
|
•
|
collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
|
•
|
the development of certain of our current or future product candidates may be terminated or delayed;
|
•
|
our cash expenditures related to development of certain of our current or future product candidates would increase significantly and we may need to seek additional financing, which might not be available on favorable terms, or at all;
|
•
|
we may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for which we have not budgeted;
|
•
|
we will bear all of the risk related to the development of any such product candidates;
|
•
|
we may have to expend unexpected efforts and funds if we are unable to obtain the results of third-party clinical trials; and
|
•
|
the competitiveness of any product candidate that is commercialized could be reduced.
|
•
|
reliance on the third parties for regulatory compliance and quality assurance;
|
•
|
the possible breach of the manufacturing agreements by the third parties because of factors beyond our control;
|
•
|
the possible misappropriation of our proprietary information, including trade secrets and know-how;
|
•
|
the possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on their own business priorities;
|
•
|
the disruption and costs associated with changing suppliers, including additional regulatory filings;
|
•
|
failure to satisfy their contractual duties or obligations;
|
•
|
inability to meet our product specifications and quality requirements consistently;
|
•
|
delay or inability to procure or expand sufficient manufacturing capacity;
|
•
|
manufacturing and/or product quality issues related to manufacturing development and scale-up;
|
•
|
costs and validation of new equipment and facilities required for scale-up;
|
•
|
failure to comply with applicable laws, regulations, and standards, including cGMP and similar foreign standards;
|
•
|
deficient or improper record-keeping;
|
•
|
contractual restrictions on our ability to engage additional or alternative manufacturers;
|
•
|
inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;
|
•
|
termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;
|
•
|
reliance on a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell our product candidates or any future product candidate in a timely fashion, in sufficient quantities or under acceptable terms;
|
•
|
lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier;
|
•
|
lack of access or licenses to proprietary manufacturing methods used by third-party manufacturers to make our product candidates;
|
•
|
operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or regulatory sanctions related to the manufacture of our or other company’s products;
|
•
|
carrier disruptions or increased costs that are beyond our control; and
|
•
|
failure to deliver our products under specified storage conditions and in a timely manner.
|
•
|
significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or cease operations altogether;
|
•
|
seek strategic alliances for research and development programs at an earlier stage than we would otherwise desire or on terms less favorable than might otherwise be available; or
|
•
|
relinquish, or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop or commercialize ourselves.
|
•
|
the initiation, progress, timing, costs and results of preclinical and clinical studies for our product candidates and future product candidates we may develop;
|
•
|
the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more studies than we currently expect to perform;
|
•
|
the cost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents or other intellectual property rights;
|
•
|
the effect of competing technological and market developments;
|
•
|
market acceptance of any approved product candidates;
|
•
|
the costs of acquiring, licensing or investing in additional businesses, products, product candidates and technologies;
|
•
|
the cost and timing of selecting, auditing and potentially validating a manufacturing site for commercial‑scale manufacturing; and
|
•
|
the cost of developing our sales, marketing and distribution capabilities to accommodate any of our product candidates for which we receive marketing approval and that we determine to commercialize ourselves or in collaboration with our partners.
|
•
|
exposure to unknown liabilities;
|
•
|
disruption of our business and diversion of our management’s time and attention in order to develop acquired products, product candidates or technologies;
|
•
|
incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions or to fund the operations;
|
•
|
higher than expected acquisition and integration costs;
|
•
|
write‑downs of assets or goodwill or impairment charges;
|
•
|
increased amortization expenses;
|
•
|
difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;
|
•
|
impairment of relationships with key suppliers or other counterparties of any acquired businesses due to changes in management and ownership; and
|
•
|
inability to retain key employees of any acquired businesses.
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•
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our ability to generate significant product revenues, cash flows and a profit;
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•
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the development status of our product candidates, and when any of our product candidates receive marketing approval;
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•
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our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;
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•
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our failure to commercialize our product candidates, if approved;
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•
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the success of competitive products or technologies;
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•
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regulatory actions with respect to our products or our competitors’ products;
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•
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actual or anticipated changes in our growth rate relative to our competitors;
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•
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announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments;
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•
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results of preclinical studies and clinical trials of our product candidates or those of our competitors;
|
•
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regulatory or legal developments in the United States and other countries;
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•
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developments or disputes concerning patent applications, issued patents or other proprietary rights;
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•
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the recruitment or departure of key personnel;
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•
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the level of expenses related to any of our product candidates or clinical development programs;
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•
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the results of our efforts to discover, develop, in‑license or acquire additional product candidates or products;
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•
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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
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•
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the performance of third parties on whom we rely to manufacture our products and product candidates, supply API and conduct our clinical trials, including their ability to comply with regulatory requirements;
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•
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variations in our financial results or those of companies that are perceived to be similar to us;
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•
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variations in the level of expenses related to our product candidates or preclinical and clinical development programs, including relating to the timing of invoices from, and other billing practices of, our CROs and clinical trial sites;
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•
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fluctuations in the valuation of companies perceived by investors to be comparable to us;
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•
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warrant or share price and volume fluctuations attributable to inconsistent trading volume levels of our warrants or shares;
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•
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announcement or expectation of additional financing efforts;
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•
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sales of our warrants or shares of our common stock by us, our insiders or our other security holders;
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•
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changes in the structure of healthcare payment systems;
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•
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changes in operating performance and stock market valuations of other pharmaceutical companies;
|
•
|
market conditions in the pharmaceutical and biotechnology sectors;
|
•
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our execution of collaborative, co‑promotion, licensing or other arrangements, and the timing of payments we may make or receive under these arrangements;
|
•
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additional state and federal healthcare reform measures that could put downward pricing pressure on our products;
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•
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the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC
|
•
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announcement related to litigation;
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•
|
fluctuations in quarterly operating results, as well as differences between our actual financial and operating results and those expected by investors;
|
•
|
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
|
•
|
changes in financial estimates by any securities analysts who follow our warrants or shares of common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our warrants or shares of common stock;
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•
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ratings downgrades by any securities analysts who follow our warrants or shares of common stock;
|
•
|
the development and sustainability of an active trading market for our shares of common stock;
|
•
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future sales of our shares of common stock by our officers, directors and significant stockholders;
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•
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other events or factors, including those resulting from war, incidents of terrorism, natural disasters or responses to these events;
|
•
|
changes in accounting principles; and
|
•
|
general economic, industry and market conditions.
|
•
|
the provisions of Section 404(b) of the Sarbanes‑Oxley Act of 2002, or Sarbanes‑Oxley Act, requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;
|
•
|
the “say on pay” provisions (requiring a non‑binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non‑binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of our chief executive officer.
|
•
|
the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and
|
•
|
any rules that the Public Company Accounting Oversight Board may adopt requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.
|
•
|
authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue without stockholder approval;
|
•
|
prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders
|
•
|
prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
eliminating the ability of stockholders to call a special meeting of stockholders; and
|
•
|
establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|
10.1#
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
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: November 14, 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: November 14, 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: November 14, 2019
|
|
/s/ Joseph M. Miller
|
|
|
|
|
Joseph M. Miller
|
|
|
|
Chief Financial Officer
|
|
|
|
(Registrant’s principal executive officer, principal financial officer and principal accounting officer)
|
|