Form10-K
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | |||||
(State or other jurisdiction of incorporation or organization) | 35-2089858 (I.R.S. Employer Identification No.) |
4131 ParkLake Avenue, Suite 225, Raleigh, | 27612 | |||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||||||
Common stock, par value | BDSI | The Nasdaq |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to thisForm 10-K. ☐
Large accelerated filer | ☐ | Accelerated filer | ☒ | ||||||||||||
Non-accelerated filer | Smaller reporting company | ☐ | |||||||||||||
Emerging growth company | ☐ |
| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
1 |
A variety
|
•the domestic and international regulatory process and related laws, rules and regulations governing our technologies and our approved and proposed products and formulations, including: (i) the timing, status and results of our, or our commercial partners’ filings with the U.S. Food and Drug Administration and its foreign equivalents, (ii) the timing, status and results ofnon-clinical work and clinical studies, including regulatory review thereof and (ii) the heavily regulated industry in which we operate our business generally;
•our ability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our products and product candidates;
|
•our ability, to generate commercially viable products andor the market acceptanceability of our BEMA technology platformcommercial partners or licensors, to actually develop, commercialize, secure raw materials or active pharmaceutical ingredients in sufficient quantities, manufacture or distribute our products, including for BELBUCA and our proposed products and product candidates;
•our ability to finance our operations on acceptable terms, either through the raising of capital, the incurrence of convertible or other indebtedness or through strategic financing or commercialization partnerships;
our expectations about the potential market sizes and market participation potential for our approved or proposed products;
•the protection and control afforded by our patents or other intellectual property, and any interest in patents or other intellectual property that we license, of our or our partners’ ability to enforce our rights under such owned or licensed patents or other intellectual property;
•the outcome of ongoing or potential future litigation (and related activities, including inter partes reviews, inter partes reexaminations and “Paragraph IV” litigations) or other claims or disputes relating to our business, technologies, patents, products or processes;
•our expected revenues (including sales, milestone payments and royalty revenues) from our products or product candidates and any related commercial agreements of ours;
•the ability of our manufacturing partners to supply us or ourany commercial partners with clinical or commercial supplies of our products in a safe, timely and regulatory compliant manner and the ability of such partners to address any regulatory issues that have arisen or may in the future arise;
•our ability to retain members of our management team and our employees; and
•competition existing today or that will likely arise in the future.
available to us on the date hereof. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this Report and the documents we have filed with the SEC.
|
Our marketed products address serious and debilitating conditions, including chronic pain, opioid dependence and opioid-induced constipation.
An overview of our products and their therapeutic areas is set out below.
being increasingly seen as a complementary asset.
Opioid Induced Constipation and Opioid Dependence
pain on a daily basis.
A number of products are competitors to BELBUCA, including BuTrans® from Purdue Pharma L.P., or Purdue, a transdermal formulation of buprenorphine which also has a generic equivalent available. Other competitors are U.S. Drug Enforcement Agency, or the DEA, Schedule II opioids such as OxyContin® from Purdue, Pharma L.P., or Purdue,as well as Xtampza ER and Nucynta® ER from Depomed, Inc./ Collegium Pharmaceutical, Inc., or Collegium, and multiple generic Schedule II oral opioid formulations, such as
Other manufacturers are working to develop alternative buprenorphine formulations for treatment of acute or chronic pain. In July 2018, the FDA issued a complete response letter for sublingual buprenorphine spray for the treatment ofmoderate-to-severe acute pain being developed by Insys Therapeutics, Inc., or Insys. Relmada Therapeutics, Inc., or Relmada, is developing an oral, enteric-coated buprenorphine (BuTab) for chronic pain and opioid dependence indications. In December 2015, Relmada announced topline results of aproof-of-concept pharmacokinetic study in healthy volunteers which showed that the product can be delivered at therapeutic levels through the gastrointestinal route, though the bioavailability remained low. No further development is noted.
•In July 2012, the FDAFederal Drug Administration (or "FDA") approved a class-wide REMSRisk Evaluation and Mitigation Strategy (or "REMS") program for the extended release and long-acting opioids. The class-wide REMS program consists of a REMS-compliant educational program offered by an accredited provider of continuing medical education, patient counseling materials and a medication guide. BELBUCA falls within the existing class-wide REMS program.
•In August 2014, the DEA published its final ruling in the Federal Register its final ruling moving hydrocodone combination products (such as Vicodin, Lortab, Norco, etc.) from Schedule III to the more-restrictive Schedule II, as recommended by the Assistant Secretary for Health of HHS and as supported by the DEA’s own evaluation of relevant data. As a result of the ruling, hydrocodone containing products are now classified in the same category (Schedule II) as morphine and oxycodone.
|
•In March 2016, the U.S. Department of Health and Human Services, (or "HHS")’s Centers for Disease Control and Prevention, or the CDC, issued guidelines for prescribing opioids for chronic pain. CDC developed and published the CDC Guideline for Prescribing Opioids for Chronic Pain to provide recommendations for the prescribing of opioid pain medication for patients 18 and older in primary care settings. Recommendations focus on the use of opioids in treating chronic pain. The guidelines advocate use of non-pharmacologic therapy and non-opioid pharmacologic therapy as first line therapy for chronic pain. When starting opioid therapy for chronic pain, clinicians are advised to prescribe immediate-release opioids instead of extended-release/long-acting, or ER/LA, opioids and to prescribe the lowest effective dosage. Clinicians were directed to reassess patient’s medication needs when considering doses of 50 morphine milligram equivalents, or MME or greater and should avoid increasing total daily doses to 90 MME or greater. A sharp reduction in prescriptions among Primary Care Physicians and an increase among Pain Specialists are evidence of the shift in prescribing and in the dynamics of pain treatment.
•In September 2017, the CDC removed the MME conversion factors for buprenorphine from its online oral MME data file. And, in 2018, it included a statement in the MME data file noting “Buprenorphine doses are not expected to be associated with overdose risk in the same dose-dependent manner as doses for full agonist opioids”.
•In December 2018May 2019, the Health and Human Services Pain Management Best Practices Inter-Agency Task Force issued a Drafttheir Final Report on Pain Management Best Practices: Updates, Gaps, Inconsistencies, and Recommendations. The report identifies that one of the barriers in pain management best practices is “lack“include lack of coverage and reimbursement for buprenorphine as well as the lack of education and understanding oftraining on the proper usage limitof buprenorphine. There has been a lack of access to buprenorphine treatment for chronic pain.” The draft report then makes
|
2020.2016 National Survey on Drug Use and Health, in 2016, 2.1 million people in the United StatesU.S. had an opioid use disorder.–along– along with counseling and support – to work toward recovery. On average, treatment lasts a coupleseveral months, reflecting relatively high dropout rates, but a significant number of people remain on buprenorphine treatment chronically, with nearlyone-quarter of patients still on therapy after nine months.$3.5$3.2 billion in 2018,2019, an increase of 13%6% over 20172018, according to Symphony Health. The market has grown steadily as a result of the rapidly escalating problem of prescription opioid misuse and abuse, a recent resurgence of heroin use, the growing number of physicians treating opioid dependence, and the inclusion of addiction treatment as an essential benefit in the Affordable Care Act.The buprenorphine products currently marketed for Due to the treatmententrance of opioid dependence include Suboxone®, a sublingual film formulation generic equivalents, the dollar value of buprenorphine and naloxone, Zubsolv®,a sublingual tablet of buprenorphine and naloxone, and multiple generic formulations of both buprenorphine and buprenorphine/naloxone tablets. Suboxone® film, thethis market leader with approximately 65% of total buprenorphine/naloxone prescriptions, achieved sales of over $2 billionis anticipated to decline in the U.S. in 2018 per Symphony Health data.While limited information is available, a sublingual spray formulation of buprenorphine/naloxone is in development from Insys and is currently in Phase I development studies.According to the National Cancer Institute, there are approximately 14.5 million people in the United States diagnosed with or living with cancer. (or BTCP).or BTCP. BTCP episodes have a rapid onset that peaks in three to five minutes and can last several minutes to an hour, and usually occur several times per day.
competitors include the sublingual tablet formulation of fentanyl (Abstral®) and a nasal spray formulation of fentanyl (Lazanda®). In addition, multiple generic formulations of Actiq® are currently available. All of the fentanyl based products are subject to the Transmucosal Immediate Release Fentanyl (TIRF) REMS Access Program, which was designed to ensure informed risk-benefit decisions before initiating treatment with a transmucosal fentanyl product, and while patients are on treatment, to ensure appropriate use.
TheHealth.
•adhere to buccal mucosa in seconds and dissolve in minutes;
•permit absorption without patients being required to move the product around in the mouth for absorption, thus avoiding patient intervariability;
•allow for unidirectional drug flow into the mucosa as a result of a backing layer on the side of the BEMA film facing into the patient’s mouth
•provide a reproducible delivery rate, not susceptible to varying or intermittent contact with oral membranes; and
•dissolve completely, leaving no residual product or waste and avoiding patient removal, and the possibility for diversion or disposal of partially used product.
Product/Formulation | Indication | Development Status | Commercial Status | |||||||||||||||||
BELBUCA | ||||||||||||||||||||
Management of pain severe enough to require daily,around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate | Approval: U.S. in October 2015; Canada in June 2017 | BDSI markets in U.S. | ||||||||||||||||||
Symproic | the treatment of opioid-induced constipation in adult patients with chronic non-cancer pain | Approval: U.S. in March 2017 | BDSI markets in U.S.; licensed from Shionogi in April 2019 | |||||||||||||||||
BUNAVAIL | Treatment of opioid dependence | Approval: U.S. in June 2014 | BDSI markets in U.S.* | |||||||||||||||||
ONSOLIS/BREAKYL /PAINKYL (U.S./E.U./Taiwan trade names, respectively) | Breakthrough cancer pain in opioid tolerant patients | Approval: U.S. in July 2009; Canada in May 2010; E.U. in October 2010 and Taiwan in July 2013 | Partnership with Mylan in all regions except North America, Taiwan and South Korea; partnership with TTY in | |||||||||||||||||
and any proposed drug products and formulations under development noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological competition in the industry from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the field is intense and is expected to increase.
In
Strong
•Schedule III designation by DEA, which indicates less abuse and addiction potential compared Schedule II opioids, which include oxycodone, hydrocodone and morphine;
Published•published studies have shown that buprenorphine’s physiologic effects reach a plateau, and this ceiling effect may result in a lower risk of overdose related respiratory depression;
Favorable•favorable tolerability with a low incidence of constipation and low discontinuation rate;
Flexible•flexible dosing options with 7seven available strengths
Buccal•buccal administration to optimize buprenorphine delivery.
As prescribers are increasingly being guided to monitor total daily morphine milligram equivalents for their patients taking opioids, the CDC has indicated that “buprenorphine doses are not expected to be associated with overdose risk in the same dose-dependent manner as doses for full agonist opioids.”
Because of the safety, tolerability and efficacy benefits associated with buprenorphine, we believe that BELBUCA is a clearshould be the first-line long-acting opioid for patients with pain severe enough to require daily,around-the-clock, long-term opioid treatment for which alternative treatments, such asnon-opioids or immediate release opioids, are inadequate.
In January 2012, we announced the signing of a worldwide licensing and development agreement for BELBUCA (with Endo, which we refer to herein as the Endo Agreement), under which we granted to Endo the exclusive, worldwide rights to develop and commercialize BELBUCA for the treatment of chronic pain. On October 26, 2015, we and Endo announced the FDA approval of BELBUCA. BELBUCA became commercially available from Endo in February 2016. Endo reported favorable early healthcare provider feedback and positive patient experience with regards to efficacy, tolerability and the buccal film formulation.
On December 8, 2016, we announced an agreement with Endo terminating Endo’s licensing of rights for BELBUCA. This announcement followed a strategic decision made by Endo to discontinue commercial efforts of its branded pain business. Pursuant to the Endo Termination Agreement, we reacquired BELBUCA, which transition became effective on January 6, 2017.
Given the greaterWe believe that there are long-term growth opportunities withfor BELBUCA and we have transitionedfocus our primary commercial emphasis to BELBUCA. We revised our BUNAVAIL-focused commercial efforts initially leveraging our existing sales force to capitalizeprimarily on commercial synergies with BELBUCA.
Canada
2019.
Other Regions
For commercialization of BELBUCA in other regions outside the U.S. and Canada,Puerto Rico for the treatment of OIC in adults with chronic non-cancer pain.
December.
In May 2017 we announced that the FDA had approved a Supplemental New Drug Application (known as an sNDA) for BUNAVAIL revising the BUNAVAIL indication to include induction, or the initial process undertaken when a patient is transitioned from the abused opioid responsible for their addiction. BUNAVAIL contains the partial opioid agonist buprenorphine, which binds to the same receptors as opiate drugs but has a higher affinity. Naloone, an opioid antagonist, is included as an abuse deterrent.
BUNAVAIL provides an alternative treatment utilizing the advanced BEMA drug delivery technology. BUNAVAIL provides the highest bioavailability of any buprenorphine-containing product for opioid dependence, allowing for effective treatment with half the dose compared to Suboxone® film. Additionally, BUNAVAIL offers convenient and discrete buccal administration and avoids the need for patients to avoid talking and swallowing during administration. BUNAVAIL has demonstrated an excellent tolerability
profile with a 68% reduction at the end of 12 weeks in the incidence of constipation in a Phase 3 trial in patients converted from Suboxone® sublingual tablets or film to BUNAVAIL.
As noted above, in January 2017 with the reacquisition of BELBUCA, we transitioned our primary commercial emphasis from BUNAVAIL to BELBUCA. Our BUNAVAILBELBUCA; and with the licensing of Symproic in April 2019, our commercial efforts are now focused on current BUNAVAILprescribersthe continued growth of BELBUCA and on increasing prescriptions related to current, upcoming and future managed care contracts where BUNAVAIL is placed in a favorable formulary position. We believeSymproic. In March 2020, we announced that in this structure, and with the increases in our sales force size, we can maintain an appropriate share of voice.
are discontinuing marketing for BUNAVAIL.
North America
In September 2007, we secured an exclusive licensing and supply agreement with Mylan Pharmaceuticals, Inc, for the commercialization rights for We currently license ONSOLIS under which Mylan was responsible for the sales, marketing and distribution of ONSOLIS in the U.S., Canada and Mexico. ONSOLIS was commercially launched in the United States in October 2009. ONSOLIS was approved by the Canadian regulatory authorities in May 2010 and was the first product approved in Canada for the management of breakthrough cancer pain. Mylan Valeant Pharma Canada Inc., a joint venture between Mylan and Valeant Canada Limited was responsible for promotion of ONSOLIS in Canada. ONSOLIS was launched in Canada in the third quarter of 2011
On January 27, 2015, we announced that we had entered into the Assignment Agreement with Mylan to return to us the marketing authorizations for ONSOLIS for the U.S. and the right to seek marketing authorizations for ONSOLIS in Canada and Mexico. On May 11, 2016, we announced the signing of a licensing agreement under which we granted the exclusive rights to develop and commercialize ONSOLIS in the U.S. to Collegium. On December 8, 2017, we received a90-day notice from Collegium regarding the return of the U.S. rights to ONSOLIS from Collegium; which transition went into effect on March 8, 2018.
Although we have generated licensing-related and other revenue to date from the commercial sales of ONSOLIS, BREAKYL and PAINKYL, such revenue has been limited to date due to multiple factors, including a highly restrictive Risk Evaluation and Mitigation Strategy, or REMS, imposed by the FDA.
On December 29, 2011, the FDA approved a “class-wide” REMS program covering all transmucosal fentanyl products under a single risk management program. The program, which is referred to as the Transmucosal Immediate Release Fentanyl, or TIRF, REMS Access Program, was designed to ensure informed risk-benefit decisions before initiating treatment with a transmucosal fentanyl product, and while patients are on treatment, to ensure appropriate use. The TIRF REMS program was implemented in March 2012. The approved program covers all marketed transmucosal fentanyl products under a single program which will enhance patient safety while limiting the potential administrative burden on prescribers and their patients. Having one common program also ended the disparity in prescribing requirements for ONSOLIS compared to similar products and provided ONSOLIS with the opportunity for retail and inpatient facility access.
We are assessing options for U.S. commercialization of ONSOLIS, including the use of our current sales force, or potentiallyout-licensing the product. Regulatory documentation to qualify an alternate manufacturer was submitted to FDA in June 2018. In October 2018, BDSI received notification of FDA’s approval of Tapemark as the new ONSOLIS manufacturer.
Europe
We initially granted commercialization and distribution rights for ONSOLIS on a worldwide basis (except in South Korea and Taiwan) to Meda AB, a leading international specialty pharmaceutical company based in Sweden that was subsequently acquired by Mylan N.V. (which we refer to herein as Mylan). Mylan secured access to additional markets through acquisition of European businesses from Valeant Pharmaceuticals International. Since September 2006, we secured an exclusive licensing and supply agreement with Mylan for the commercialization rights for BEMA Fentanyl in the European Union, or E.U., which is being marketed in Europe under the trade name BREAKYL. BREAKYL received marketing authorization from the European regulatory authorities in October 2010 and has been launched in over thirteen European countries including Germany, France and the U.K. . The sales royalties to be received by us will be the same for all Mylan territories as agreed to for Europe. In Europe, multiple formulations of fentanyl have been approved and launched for the treatment of BTCP, including ONSOLIS/BREAKYL, as well as Abstral®, Effentora®, and Instanyl® (intranasal fentanyl spray).
Additional Territories
In 2010, we licensed commercialization rights for ONSOLIS for South Korea and TTY Biopharm Co., Ltd., or TTY, for Taiwan wherewhich markets the product is marketed as PAINKYL.
In May 2010, we announced a commercial partnership with Kunwha Pharmaceutical Co. Ltd. for the exclusive rights to develop and commercialize ONSOLIS in the Republic of Korea known as the Kunwha License Agreement. Those rights were subsequently returned to us due to changes in the market dynamics and the Kunwha License Agreement was terminated on August 31, 2015.
In October 2010, a commercial partnership with TTY was announced, providing commercialization rights for Taiwan. This agreement resulted in potential milestone payments of up to $1.3 million (including an upfront payment of $0.3 million) along with royalties based on sales. Milestones were achieved in November 2011 and July 2013 relating to the NDA submission and regulatory approval, respectively, in Taiwan, where the product is marketed under the brand name PAINKYL. TTY launched PAINKYL in Taiwan, and to Mylan N.V., which markets the product as BREAKYL in 2015.
Buprenorphine Extended Release Injection Product Candidate
In 2014, we entered into an exclusive agreement with Evonik Corporation (or Evonik) to develop and commercialize a proprietary, injectable microparticle formulation of buprenorphine potentially capable of providing 30 days of continuous therapy following a single subcutaneous injection. Microsphere-based, long acting buprenorphine injection has the ability to change the treatment paradigm in opioid dependence. Such a dosage form has the opportunity to improve therapy compliance through continuous delivery of drug for up to 30 days and addresses challenges regarding patient adherence to long-term buprenorphine treatment, which is critical to successfully manage opioid dependence and the potential for misuse and diversion.
As part of the agreement, we had the right to license the product(s) following the attainment of Phase 1 ready formulations. At that point, Evonik could receive downstream payments for milestones related to regulatory filings and subsequent NDA approvals as well as product royalties. Evonik has the exclusive rights to develop the formulation and manufacture the product(s).
In 2015, we completed initial development work and preclinical studies which have resulted in the identification of a formulation we believe is capable of providing 30 days of continuous buprenorphine treatment. During apre-IND meeting with the FDA in November 2015, the FDA requested an additional study to assess the fate of the polymers used in the formulation. In 2016, we completed this study as well as additional preclinical work and other activities to support a planned Phase 1 clinical study. We submitted an Investigational New Drug application (or IND) for this product candidate to the FDA in December 2016 and have completed steps necessary to initiate a Phase 1 clinical study. Subsequently, the agreement has terminated and the options granted therein have expired. We continue to evaluate whether or not to advance this particular program.
In terms of potential competition for Buprenorphine ER Injection, there are two products that have recently become commercially available and one that has received tentative approval from the FDA.
In May 2016, Probuphine®, a subcutaneous implantable rod containing buprenorphine from Braeburn Pharmaceuticals, Inc., or Braeburn was approved. In December 2012, Titan Pharmaceuticals, or Titan, announced the signing of a license agreement with Braeburn. In May 2018 Braeburn returned the rights to Titan and Titan has subsequently initiated the commercialization of Probuphine® through internal efforts.
In November 2017, Sublocade™, a buprenorphine extended release injection for subcutaneous use from Indivior was approved. Sublocade™ is the first once-monthly injectable buprenorphine formulation and was approved for the treatment of moderate to severe opioid use disorder in patients who have initiated treatment with a transmucosal buprenorphine-containing product followed by dose adjustment for a minimum of seven days. Indivior announced commercial availability of Sublocade™ March 1, 2018.
In December 2018, Brixadi™, an extended-release buprenorphine injection from Braeburn was granted tentative approval by the FDA. Brixadi™ can be dosed weekly or monthly depending upon the dose administered.
Europe.
We intend to materially finance our commercialization and distribution efforts and our working capital needs primarily through:
•commercializing our approved products such as BELBUCA and BUNAVAIL;
•partnering with other pharmaceutical companies, , to assist in the distribution and commercialization of our products, for which we could expect to receive an upfront payment, milestones and/or royalty payments; and
•securing proceeds from public and private financings and other potential strategic transactions.
Key Commercial Licensing Agreements
Endo Licensing Agreement for BELBUCA and its Termination
On January 6, 2012, we entered into a world-wide licensing and development agreement for BELBUCA with Endo, which was subsequently terminated. Under terms of the agreement, Endo was responsible for the manufacturing, distribution, marketing and sales of BELBUCAon a worldwide basis. The agreement called for Endo to commercialize BELBUCA outside the U.S. through its own efforts or through regional partnerships.
The FDA’s approval of BELBUCA triggered a milestone payment to us from Endo of $50 million, of which $20 million had been deferred for future revenue recognition as the payment was contingently refundable in the event a generic product was commercially launched during the patent extension period. As mentioned below, the obligations of this milestone were extinguished upon the closing of the termination agreement. This $20 million was recognized as revenue in January 2017.
On December 8, 2016 we announced we had entered into a termination agreement with Endo (“the Endo Termination Agreement”) terminating Endo’s licensing of rights for BELBUCA, which transaction closed on January 6, 2017. As a result of the agreement, the world-wide rights to BELBUCA were transferred back to us.
At the closing of the transactions by the Endo Termination Agreement we purchased from Endo the following assets (the “Assets”): (i) BELBUCA product inventory andwork-in-progress, (ii) material manufacturing contracts related to BELBUCA, (iii) BELBUCA-related domain names and trademarks (including the BELBUCA trademark), (iv) BELBUCA-related manufacturing equipment, and (v) allpre-approval regulatory submissions, including any INDs and NDAs, regulatory approvals and post-approval regulatory submissions concerning BELBUCA. The purchase price for the Assets (which we refer to as the Asset Purchase Price) was equal to the sum of: (i) the aggregate book value of the portion of the transferred product inventory forecasted to be used or sold by the Company, (ii) the aggregate book value ofwork-in-progress inventory, and (iii) the assumption of any assumed liabilities. Upon Closing, we accepted transfer of the Assets and assumed and agreed to discharge when due all applicable liabilities assumed by us, which consisted of post-closing obligations for liabilities and payments associated with the Assets, the assumed contracts related to the Assets and applicable taxes (with the obligation forpre-closing and other certain liabilities resulting from the acts or omissions of Endo being retained by Endo).
In conjunction with the Endo Termination Agreement, we also entered into a distribution agreement (the “Distribution Agreement”) with Par Pharmaceuticals, Inc. (or “Par”) for the distribution of an authorized generic BELBUCA product after the launch of a generic BELBUCA product by a third party. The Distribution Agreement covers distribution within the entire United States, has an initial term of three years after the launch of a generic BELBUCA product by a third party, an initial automatic renewal period of two years, and additional automaticone-year renewal periods thereafter, which will occur unless either party provides written notice of termination an agreed upon period of time prior to the expiration of the initial term or any renewal term. In exchange for distribution rights of the generic product, Par will pay us an agreed upon base purchase price and a deferred purchase price equal to a percentage of profit (as such term is specifically agreed to in the Distribution Agreement) with respect to units of each dosage strength of generic product. During the term of the Distribution Agreement, Par is precluded from manufacturing for sale in the United States, or distributing in the United States, any equivalent product, provided that nothing prohibits Par from continuing or undertaking to develop any equivalent product or selling such equivalent product outside of the U.S. The Distribution Agreement contains customary termination provisions for bankruptcy, withdrawal of product from the market, and regulatory and legislative changes, as
well as a termination right for insufficient profits or Par’s acquisition by or of a party challenging our patents with respect to BELBUCA.
Mylan Licensing Agreements for ONSOLIS
North American Agreement. On September 5, 2007, we entered into a definitive License and Development Agreement with Mylan and our subsidiary Arius pursuant to which we and Arius agreed to grant to Mylan an exclusive commercial license to market, sell, and, following regulatory approval, continue development of ONSOLIS in the United States, Mexico and Canada (which we refer to as the Mylan North American License).
Pursuant to such license agreement, we are to receive the following future milestones:
sales milestones equaling an aggregate of $30 million will be payable at:
$10.0 million when and if annual sales meet or exceed $75.0 million;
$10.0 million when and if annual sales meet or exceed $125.0 million; and
$10.0 million when and if annual sales meet or exceed $175.0 million.
European Agreement. In 2006, we announced collaboration with Mylan to develop and commercialize BEMA Fentanyl (marketed as BREAKYL™ in Europe). Under terms of the agreement, we granted Mylan rights to the European development and commercialization of BREAKYL, in exchange for an upfront fee of $2.5 million and a $2.5 million milestone payment (received in 2008) for completion of Phase 3 clinical trials. Mylan managed the regulatory submission in Europe that led to approval in October 2010. Mylan exclusively commercializes BREAKYL in Europe.
In 2009, we received a $3 million payment in exchange for amending the European agreement to provide Mylan the worldwide rights to ONSOLIS, except for South Korea and Taiwan. The sales royalties to be received by us will be the same for all territories as agreed to for Europe. In addition, various terms of the European agreements have been modified to reflect the rights and obligations of both us and Mylan in recognition of the expansion of the scope of the European agreements.
On January 27, 2015, we entered into an assignment and revenue sharing agreement with Mylan (which we refer to as the ARS Agreement) to return to us the marketing authorization for ONSOLIS in the U.S. and the right to seek marketing authorizations for ONSOLIS in Canada and Mexico. Under the ARS Agreement, financial terms were established that enable Mylan to share a significant portion of the proceeds of milestone and royalty payments received by us from any new North American partnership for ONSOLIS that may be executed by us. Following the return of the U.S. marketing authorization from Mylan, we submitted a prior approval supplement for the new formulation to the FDA in March 2015, which was approved in August 2016.
Collegium License and Development Agreement for ONSOLIS and its Termination
On May 11, 2016, we entered into a definitive License and Development Agreement (which we refer to as the Collegium Agreement) with Collegium under which we granted Collegium the exclusive rights to develop and commercialize ONSOLIS in the U.S. Under the terms of the Collegium Agreement, Collegium was to be responsible for the manufacturing, distribution, marketing and sales of ONSOLIS in the U.S. We were obligated to use commercially reasonable efforts to continue the transfer of manufacturing to the anticipated manufacturer for ONSOLIS and to submit a corresponding Prior Approval Supplement (the “Supplement”) to the FDA with respect to the current NDA for ONSOLIS. Following approval of the Supplement, the NDA and manufacturing responsibility for ONSOLIS (including the manufacturing relationship with our manufacturer, subject to our entering into an appropriate agreement with such manufacturer that is acceptable and assignable to Collegium) was to be transferred to Collegium.
Pursuant to such license agreement, we received:
$2.5 million upfrontnon-refundable payment, (received in June 2016); and
reimbursement to us for apre-determined amount of the remaining expenses associated with the ongoing transfer of the manufacturing of ONSOLIS;
The execution of the Collegium Agreement also required the execution of a definitive termination agreement between us and Mylan embodying royalty-sharing terms, returning ONSOLIS-related assets and rights in the U.S., Canada, and Mexico to us, and including certain other provisions. In addition, our royalty obligations to CDC IV, LLC (or CDC IV), an entity that originally provided funding for the development of ONSOLIS, and its assignees will remain in effect. CDC IV provided funding for the development of ONSOLIS in the past.
On December 8, 2017, Collegium provided us the required90-day notice regarding termination of the license and development agreement for ONSOLIS between us and Collegium. Collegium’s decision to terminate the license involved their execution of a
license agreement to commercialize Nucynta® (tapentadol) Immediate Release and Nucynta® ER (tapentadol). The license and development agreement for ONSOLIS between us and Collegium formally ended on March 8, 2018 and we received our assets back from Collegium.
Key Collaborative, Supply and Manufacturing Agreements
|
|
|
|
|
•Tapemark. Effective January 6, 2017, we assumed Endo’s agreement with The Tapemark Company, or Tapemark, to convert the BELBUCA laminate (bulk product) into individual dosage units which were then transferred to Sharp for secondary packaging and supply of BELBUCA finished product. Tapemark continued to provide such services for BELBUCA through 1st quarter of 2018 as we transitioned the converting and primary packaging operations for BELBUCA over to |
We initiated a program to qualify Tapemark as an alternate commercialpackaging site in 2018. Tapemark remains qualified to conduct converting and primary packaging of BELBUCA and we continue to explore other opportunities to utilize Tapemark’s contract manufacturing site for ONSOLIS. This program was necessary since previous effortsservices going forward.
written amendment up to two consecutive 6-month periods.
We and CDC IV entered intoare also party to a Royalty Purchase and Amendment Agreement, dated September 5, 2007 (the “RPAA”)or the RPAA, pursuant to which we grantedpay CDC IV a 1% royalty on sales of BELBUCA. The RPAA royalty term shall terminate upon the next BEMA product,earlier of (i) such time at which was BUNAVAIL, including an active pharmaceutical ingredient other than fentanyl, to receive FDA approval. In connection with the 1% royalty grant: (i) CDC IV shall have the option to exchange its royalty rights to BUNAVAIL in favor of royalty rights to a substitute BEMA product, (which CDC subsequently exchanged for BELBUCA) (ii) we shall have the right, no earlier than six (6) months prior to the initial commercial launch of BUNAVAIL or BELBUCA, to propose in writing and negotiate the key terms pursuant to which it would repurchase the royalty from CDC IV, (iii) CDC IV’s right to the royalty shall immediately terminate at any time if annual net sales of BUNAVAIL or BELBUCA equal less than $7.5 million in any calendar year following the third (3rd) anniversary of initial launch of the product and CDC IV receives $18,750 in three (3) consecutive quarters as payment for CDC IV’s 1% royalty during such calendar year and (iv) CDC IV shall have certain information rights with respect to BUNAVAIL or BELBUCA.
In April 2016, CDC IV exercised its right pursuant to(ii) upon the RPAA to exchange its royalty rights tolast commercial sale of BELBUCA anywhere in the next BEMA product which was BUNAVAIL, in favor of royalty rights to the Substitute BEMA product which was BELBUCA (the CDC IV Option).
On November 21, 2016 we entered into an Amended and Restated CDLA with CDC IV and Athyrium LLC that did not materially change the rights of the parties under the CDLA, but merely clarified and memorialized in a single agreement the rights and obligations of our company, CDC IV and Athyrium under the CDLA and its various amendments as described above.
world.
prevailed in this case, and the patent expiration date of US Patent No. 7,579,019 is now extended from January 31, 2019 to January 22, 2020.
With respect to trademarks, “BDSI®,” “BEMA®”, “BELBUCA®”and “BUNAVAIL®” are registered trademarks of BioDelivery Sciences International, Inc. ONSOLIS® and BREAKYL are also trademarks owned by BioDelivery Sciences International, Inc. PAINKYL™ is a trademark owned by TTY Biopharm.
The steps required before a pharmaceutical product may be marketed in the United States include:
|
|
|
|
|
|
|
In addition to obtaining FDA approval for each product, each product-manufacturing establishment must be registered with, and approved by, the FDA. Manufacturing establishments are generally subject to biennial inspections by the FDA and must comply with the FDA’s Good Manufacturing Practices and with other federal and local regulations.
Nonclinical Testing
Nonclinical testing includes laboratory evaluations of the active drug substance and formulation, as well as tissue culture and animal studies to assess the safety and potential efficacy of the investigational product. Nonclinical tests must be conducted by laboratories that comply with FDA Good Laboratory Practices regulations. Nonclinical testing is inherently risky, and the results can be unpredictable or difficult to interpret. The results of nonclinical testing are submitted to the FDA as part of an IND and are reviewed by the FDA prior to the commencement of clinical trials. Unless the FDA places a clinical hold on an IND, clinical studies may begin thirty (30) days after the IND is submitted.
We have relied and intend to continue to rely on third party contractors to perform nonclinical trials.
Clinical Research
Clinical research involves administration of the investigational product to healthy volunteers and/or to patients under the supervision of a qualified investigator. Clinical trials must be conducted in accordance with Good Clinical Practices following protocols acceptable to FDA that detail the objectives of the study, the parameters to be used to monitor safety and the efficacy and the planned evaluation of results. Each protocol must be submitted to the FDA prior to its conduct. Further, each clinical study must be conducted under the auspices of an independent institutional review board that protects the rights and welfare of the study subjects. The drug product used in clinical trials must be manufactured according to Good Manufacturing Practices.
Clinical research is typically conducted in three sequential phases, but the phases may overlap and not all phases may be necessary when developing investigational products that will utilize the FDA’s 505(b)(2) approval process. Phase 1 studies are typically performed in normal healthy volunteers to assess the safety (adverse side effects), absorption, metabolism,bio-distribution, excretion, and food and drug interactions of the investigational drug product. Additional studies may be performed to assess abuse potential as well as limited measures of pharmacologic effect. Phase 2 is the proof of principle stage and involves studies in a limited number of patients in order to:
assess the potential efficacy of the product for specific, targeted indications;
identify the range of doses and dose regimens likely to be effective for the indication; and
identify possible adverse events and safety risks.
When there is evidence that the product may be effective and has an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to establish the clinical efficacy and safety profile of the product within a larger population at geographically dispersed clinical study sites. Phase 3 frequently involves randomized controlled trials and, whenever possible, studies are conducted in a manner so that neither the patient nor the investigator knows what treatment is being administered. We, or the FDA, may suspend clinical trials at any time if it is believed that the individuals participating in such trials are being exposed to unacceptable health risks.
New Drug Application and FDA Approval Process
The results of the pharmaceutical and manufacturing development work, nonclinical studies and clinical studies are submitted to the FDA in the form of an NDA for approval to market and sell the product. The testing and approval process is likely to require substantial time and effort. In addition to the results of nonclinical and clinical testing, the NDA applicant must submit detailed information about chemistry, manufacturing and controls that will describe how the product is made, packaged, labeled, and tested through the manufacturing process. The manufacturing process continues to develop throughout the period of clinical trials such that, at the time of the NDA, it has been demonstrated that there is control of the process and the product can be made consistently at commercial scale.
The NDA review process involves FDA investigation into the details of the manufacturing process, as well as the design and analysis of each of the nonclinical and clinical studies. This review includes inspection of the manufacturing facility, the data recording process for the clinical studies, the record keeping at a sample of clinical trial sites and a thorough review of the results for each nonclinical and clinical study. Through this review, the FDA reaches a decision about the risk-benefit profile of a product candidate. If the benefit outweighs the risk, the FDA begins negotiation with the company on the content of an acceptable package insert and an associated REMS plan if required.
The NDA review process is affected by many factors, including the severity of the disease, the availability of alternative treatments, and the risks and benefits demonstrated in clinical trials. Consequently, there is a risk that approval may not be granted on a timely basis, if at all. The FDA may deny approval of an NDA if applicable regulatory criteria are not satisfied. Moreover, if regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which it may be marketed, require additional testing or information, or require post-marketing testing (Phase 4) and surveillance to monitor the safety of a company’s product if it does not believe the NDA contains adequate evidence of its safety. Finally, product approvals may be withdrawn if compliance with regulatory standards is not maintained or health problems are identified that would alter the risk-benefit
analysis for the product. Post-approval studies may be conducted to explore the use of the product for new indications or populations such as pediatrics.
Among the conditions for NDA approval is the requirement that any prospective manufacturer’s quality control and manufacturing procedures conform to Good Manufacturing Practices and the specifications approved in the NDA. In complying with standards set forth in these regulations, manufacturers must continue to expend time, money and effort in the area of quality control and quality assurance to ensure full technical compliance. Manufacturing establishments, both foreign and domestic, also are subject to inspections by or under the authority of the FDA and by other federal, state or local agencies. Additionally, in the event ofnon-compliance, the FDA may issue warning letters and/or seek criminal and civil penalties, enjoin manufacture, seize product or revoke approval.
Risk Evaluation and Mitigation Strategy
BELBUCA is approved in Canada, and
In 2019, after learning that Purdue would no longer be marketing BELBUCA in Canada, BDSI requested that Purdue ask Health Canada to cancel its registration and approval there. BDSI has no plans at the moment to market BELBUCA outside of the U.S.
and development may involve the controlled use of hazardous materials, chemicals and radioactive compounds. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of any accident, we could be held liable for any damages that result and any such liability could exceed our resources.
Research and Development
Most of our research and development relating to our BEMA and other technologies has been conducted through third parties in collaboration with us.
Research and development expenses have historically consisted of product development expenses incurred in identifying, developing and testing product candidates. Product development expenses consist primarily of labor, benefits and related employee expenses for personnel directly involved in product development activities; fees paid to professional service providers for monitoring and analyzing clinical trials; regulatory costs; costs of contract research and manufacturing of inventory used in testing and clinical trials. For the years ended December 31, 2018, 2017 and 2016, we spent approximately $4.9 million, $13.0 million and $18.9 million, respectively, on research and development, and such expenses represented approximately 8%, 18% and 28%, respectively, of our total operating expenses for such fiscal years.
|
As of the date of this report, we do not have any plans to launch ONSOLIS in the U.S. Symproic.2018,2019, we have recorded significant losses. Our accumulated deficit at December 31, 20182019 was approximately $351.3$366.6 million. As of December 31, 2018,2019, we had working capital of approximately $44.5 million, and until our product revenue grows more substantially, we will continue to use our working capital to maintain our operations.$63.8 million. Our ability to generate revenue and achieve profitability depends upon our ability, alone or with others, to effectively market and sell our products, secure and maintain payer access and manufacture our products to meet demand. We may be unable to achieve any or all of these goals consistently.Although licensing-related and other revenue to date, we have only recently begun to generate revenue from the commercial sales of our approved products, — BELBUCA BUNAVAIL and ONSOLIS.BUNAVAIL. In the case of BELBUCA, our approval hasinitially generated milestone revenue from our prior commercial partner Endo. However, in January 2017, we obtainedre-acquired the commercialization rights back tofor BELBUCA and are utilizing our internal sales force to sell our product. In the case of Symproic, we acquired rights to the product in April 2019, and commenced the commercial launch of the product using our own sales force shortly thereafter. In the case of BUNAVAIL, sales have been challenging since we commenced the commercial launch of the product in November 2014 and, are subject to the risks of launching a new product. There is a riskin March 2020, we announced that we will be unable to generate sustained and predictable revenues from product sales.are discontinuing marketing for BUNAVAIL. In the case of ONSOLIS, sales have been adversely affected by: (i) the lack of a uniform REMS program at the time of the launch of ONSOLIS, and (ii) certainpost-FDA manufacturing issues associated with ONSOLIS, which have led to the temporary suspension of manufacturing and marketing of ONSOLIS in the USU.S. and Canada.as a company in self-commercializing pharmaceutical products, which heightens the risks related to our self-commercialization of BELBUCA and BUNAVAIL.Prior to our decision to commercialize BUNAVAIL, we had relied on third parties to manage sales and marketing efforts for us, including Mylan for ONSOLIS and Endo for BELBUCA until January 2017. commercializing Symproic. therefore have limited experience as a company in commercializing a product,Symproic, and our sales, marketing and distribution capabilities are fairly new.related to this product have only been recently established. As such, we may not achieve success in marketing and promoting BELBUCA and BUNAVAIL,Symproic, or any other products we develop or acquire in the future or products we may commercialize through the exercise ofco-promotion rights. Specifically, to optimize the commercial potential of BELBUCA and BUNAVAIL,Symproic, we must execute upon our commercialization plan effectively and efficiently. In addition, we must continually assess and modify our commercialization plan to adapt to the promotional response. Further, we must continue to focus and refine our marketing campaign to ensure a clear and understandable physician-patient dialogue around BELBUCA and BUNAVAILSymproic as an appropriate therapies.therapy. In addition, we must provide our sales force with the highest quality training, support, guidance and oversight for them to effectively promote BELBUCA and BUNAVAIL.Symproic. If we fail to perform these commercial functions in the highest quality manner, BELBUCA and BUNAVAIL willSymproic may not achieve its maximum commercial potential or any level of success at all. The deterioration or loss of our sales force would materially and adversely impact our ability to generate sales revenue, which would hurt our results of operations. Finally, we are competing and expect to compete with other companies that currently have extensive and well-funded marketing and sales operations, and our marketing and sales efforts may be unable to compete against these other companies, which would also hurt our resultsability to obtain market acceptance of operations.BUNAVAIL,Symproic, sales of BELBUCA or BUNAVAILSymproic may be adversely affected.certifymake patent certifications to the FDA, such as certification to the FDA that the new product that is subject to the ANDA will
not infringe an already approved product’s listed patents or that such patents are invalid (otherwise known as a Paragraph IV Certification).
In October 2017, we announcedForm 10-K. We believe that we had entered into a settlement agreement with Teva that resolved our BUNAVAIL patent litigation against Teva pending in the U.S. District Court for the District of Delaware. As part of the Settlement Agreement, which is subject to review by the U.S. Federal Trade Commission and the U.S. Department of Justice, we entered into anon-exclusive license agreement with Teva that permits Teva to first begin selling its generic version of BUNAVAIL in the U.S. on July 23, 2028 or earlier under certain circumstances. Other terms of the agreement are confidential.
In February 2018, we announced that we had entered into a Settlement Agreement with Teva that resolves our previously reported BELBUCA, patent litigation against Teva pending in the United States District Court for the District of Delaware. As part of the settlement agreement, which is subject to review by the U.S. Federal Trade Commission and the U.S. Department of Justice, we entered into anon-exclusive license agreement with Teva that permits Teva to first begin selling its generic version of BELBUCA in the U.S. on January 23, 2027 or earlier under certain circumstances. Other terms of the agreement are confidential.
As such, we have been and maywill continue to be subject to ANDA-related litigation, which is costly and distracting and has the potential to impair the long-term value of our products.
required substantial amounts of cash since inception, and we expect to spend substantial amounts of our financial resources on our commercialization and development efforts going forward. Our business currently generates a limited amount of revenue from product sales and milestone revenues,, and such current sources of revenue may not be sufficient to meet our present and short-term capital requirements. Therefore, given that we plan to continue to spend on commercialization activities (including those relating to BELBUCA and BUNAVAIL)Symproic) as well as potentially on other strategic initiatives, there is a risk that we may require additional capital to fund these activities. We may also need to raise additional funds sooner if we choose to expand more rapidly than we presently anticipate or due to other unanticipated factors. If adequate funds are unavailable, we may be required to delay, reduce the scope of or eliminate one or more of our commercialization programs or marketing efforts, anyefforts.
operations and cause the price of our common stock to decline.
•time and costs involved in obtaining regulatory (including FDA) clearance and addressing regulatory and other issues that may arise post-approvalpost-FDA approval (such as we have experienced with ONSOLIS and, to a lesser extent, with BELBUCA and BUNAVAIL)Symproic);
•costs involved in preparing, filing, prosecuting, maintaining and enforcing (through litigation or other means) our patents, trademarks and other intellectual property;
•costs of developing sales, marketing and distribution channels and our ability to sell our products;
•costs involved in establishing manufacturing capabilities for commercial quantities of our products;
•costs we may incur in acquiring new technologies or products;
•competing technological and market developments;
•market acceptance of our products;
•costs for recruiting and retaining employees and consultants;
•costs for training physicians; and
•legal, accounting, insurance and other professional and business-related costs.
We may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding sooner than anticipated. We may seek to raise any necessary additional funds through equity or debt financings, collaborative arrangements with corporate partners or other sources, which may have a material effect on our current or future business prospects.
Our additional financing requirements could result in dilution to existing stockholders.
The additional financings which we have undertaken and which we may in the future require, have and may be obtained through one or more transactions that have diluted or could dilute (either economically or in percentage terms) the ownership interests of our stockholders. Further, we may not be able to secure such additional financing on terms acceptable to us, if at all. We have the authority to issue additional shares of common stock and preferred stock, as well as additional classes or series of ownership interests or debt obligations which may be convertible into any one or more classes or series of ownership interests. We are authorized to issue 125 million shares of common stock and 5 million shares of preferred stock. Such securities may be issued without the approval or other consent of our stockholders.
•incur additional indebtedness;
•enter into a merger, consolidation or certain changing of control events without complying with the terms of the loan agreement;
•change the nature of our business;
•change our organizational structure or type;
•amend, modify or waive any of our material agreements or organizational documents;
•grant certain types of liens on our assets;
•make certain investments;
•pay cash dividends;
and•enter into material transactions with affiliates; and
On December 8, 2017, we received therequired 90-day notice from Collegium regarding termination of the License Agreementlicense agreement and the effective date of termination iswas March 8, 2018. We are assessing our commercial options for ONSOLIS. UntilHowever, as of the date of this Report, we have no such time that we commercialize or licenseplans to reintroduce ONSOLIS in the U.S., which indicates we will not receive additional revenues from this product.
BELBUCA.
successfully market BELBUCA.
candidates.
Acceptance of our technologies product candidates or products in the marketplace is uncertain and failure to achieve market acceptance will prevent or delay our ability to generate material revenues.
•regulatory clearance of marketing claims for the uses that we are developing;
•demonstration of the advantages, safety and efficacy of our products and technologies;
•pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and other health plan administrators;
•ability to attract corporate partners, including pharmaceutical companies, to assist in commercializing our products;
•regulatory programs such as the class-wide REMS for ONSOLIS BELBUCA and BUNAVAILBELBUCA or market (including competitive) forces that may make it more difficult for us to penetrate a particular market segment; and
•ability to timely and effectively manufacture and market our products.
the lives of our executives or any of our employees. This lack of insurance means that we may not have adequate compensation for the loss of the services of these individuals.
•incur significant costs in legal expenses for defending against an intellectual property infringement suit;
• delay the launch of, or cease selling, making, importing, incorporating or using one or more or all of our technologies and/or formulations or products that incorporate the challenged intellectual property, which would adversely affect our revenue;
• obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or
• redesign our formulations or products, which would be costly and time-consuming.
BELBUCA.
We are dependent on third party suppliers for key components of our delivery technologies products and product candidates.
products.
•delays associated with development andnon-clinical and clinical trials due to an inability to timely obtain a single or limited source component;
• inability to timely obtain sufficient quantities of API and an adequate supply of required components; and
• reduced control over pricing, quality and timely delivery.
We have limited manufacturing experience and therefore depend on third parties to formulate and manufacture our products. We may not be able to secure or maintain the manufacture of sufficient quantities or at an acceptable cost necessary to successfully commercialize or continue to sell our products.
Our management’s expertise has primarily been in commercial operations. Our management’s experience in the manufacturing of pharmaceutical products is more limited and we have limited equipment and no facilities of our own from which these activities could be performed. Therefore, we are fully dependent on third parties for our formulation development, manufacturing and the packaging of our products. This is particularly true with respect to ARx and Sharp, the primary manufacturers of our approved and commercialized product, BELBUCA and BUNAVAIL. We also rely on LTS, the manufacturer for BREAKYL in the E.U. This reliance exposes us to the risk of not being able to directly oversee the production and quality of the manufacturing process and provide ample commercial supplies to formulate sufficient product to conduct clinical trials and maintain adequate supplies to meet market demand for our products.
Furthermore, these third-party contractors, whether foreign or domestic, may experience regulatory compliance difficulty, mechanical shut downs, employee strikes, or any other unforeseeable acts that may delay or limit production, which could leave our commercial partners with inadequate supplies of product to sell, especially when regulatory requirements or customer demand necessitate the need for additional product supplies. Our inability to adequately establish, supervise and conduct (either ourselves or through third parties) all aspects of the formulation and manufacturing processes, and the inability of third party manufacturers like ARx, Sharp and LTS to consistently supply quality product when required would have a material adverse effect on our ability to commercialize and sell our products. We have faced risks associated with reliance on key third party manufacturers in the past and may be faced with such risks in the future. Any future manufacturing interruptions or related supply issues could have an adverse effect on our company, including loss of sales and royalty revenue and claims by or against us or our partners for breach of contract.
We may be unable to engage qualified distributors. Even if engaged, these distributors may:
•fail to satisfy financial or contractual obligations to us;
•fail to adequately market our formulations or products;
•cease operations with little or no notice to us; or
•offer, design, manufacture or promote competing formulations or products.
There also continues to be a REMS in place for buprenorphine for the treatment of opioid dependence referred to as the BTOD (Buprenorphine-containing Transmucosal products for Opioid Dependence) REMS. BUNAVAIL falls within the existing REMS, which is far less cumbersome and includes a medication guide and healthcare professional and patient education. Given the existence of a REMS in both the extended release and long-acting opioid and opioid dependence markets, we anticipate our products will fit within the existing REMS and will avoid the issues initially encountered with ONSOLIS, where a REMS program was yet to be developed.
Risks Related to Our Products in Development and Regulation
We depend in large part on our BEMA drug delivery technology, and the loss of access to this technology would terminate or delay the further development of our products, injure our reputation or force us to pay higher fees.
We depend, in large part, on our BEMA drug delivery technology. The loss of this key technology would seriously impair our business and future viability, and could result in delays in developing, introducing or maintaining our products and formulations until equivalent technology, if available, is identified, licensed and integrated. In addition, any defects in the BEMA technology or other technologies we gain access to in the future could prevent the implementation or impair the functionality of our products or formulations, delay new product or formulation introductions or injure our reputation. If we are required to acquire or enter into license agreements with third parties for replacement technologies, we could be subject to higher fees, milestone or royalty payments, assuming we could access such technologies at all.
Our development activities and the
Our failure to complete or meet key milestones relating to the development of our technologies and proposed products and formulations would significantly impair the viability of our company.
In order to be commercially viable, we must develop, obtain regulatory approval for, manufacture, introduce, market and distribute formulations or products incorporating our technologies. For each drug that we formulate with our drug delivery technologies, we must meet a number of critical developmental milestones, including:
demonstration of the benefit from delivery of each specific drug through our drug delivery technologies;
demonstration, throughnon-clinical and clinical trials, that our drug delivery technologies are safe and effective; and
establishment of a viable Good Manufacturing Process capable of potentialscale-up.
The estimated required capital and time-frames necessary to achieve these developmental milestones is subject to inherent risks, many of which may be beyond our control. As such, we may not be able to achieve these or similar milestones for any of our proposed product candidates or other product candidates in the future. Our failure to meet these or other critical milestones would adversely affect the viability of our company.
If users of our products and product candidates are unable to obtain adequate reimbursement from third-party payers, or if new restrictive legislation is adopted, market acceptance of our proposed formulations or products may be limited and we may not achieve material revenues.
The ability of our company to commercialize BELBUCA and BUNAVAIL,Symproic, or any partners with which we have a licensing arrangement to sell ONSOLIS will depend in part on the extent to which appropriate reimbursement levels for the cost of our proposed formulations and products and related treatments are obtained by governmental authorities, private health insurers and other organizations, such as HMOs. Consumers and third-party payers are increasingly challenging the prices charged for drugs and medical services. Also, the trend toward managed health carehealthcare in the United States,U.S., which could control or significantly influence the purchase of health carehealthcare services and drugs, as well as legislative proposals to reform health carehealthcare or reduce government insurance programs, may all result in lower prices for or rejection of our drugs.
technology.
•government and health administration authorities;
•private health maintenance organizations and health insurers; and
•other healthcare payers.
passed.
maintain regulatory compliance, our products may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information;
•the federal healthcare programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
•federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; and
•state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
past and may face such challenges in the future, and adjustments to or restatements of our financial statements or accounting policies based on such challenges could have a material adverse effect on our public stock price and our reputation.
Additionally, on November 9, 2018, we filed a
Shares eligible for future sale may adversely affect
We have a material number of shares of common stock underlying securities of our company, the future sale of which could depress the price of our publicly-traded stock. As of March 14, 2019: (i) 5,629,608 shares of common stock are issuable upon exercise
of outstanding stock options at a weighted average exercise price of $3.34 per share, (ii) 2,302,018 restricted stock units eligible to be converted shares of our common stock (iii) 2,093,155 shares of Series A eligible to be converted into shares of our common stock (iv) 3,100 Series B eligible to be converted into shares of our common stock and (v) 2,136,020 common stock shares underlying outstanding warrants at an average exercise price of $2.60 per share.
In addition, from time to time, certain ofmay prevent or frustrate attempts by our stockholders may be eligible to sell allreplace or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended, which we refer to herein as the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, after satisfying a six month holding period: (i) affiliated stockholder (or stockholders whose shares are aggregated) may, under certain circumstances, sell within any three month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale and(ii) non-affiliated stockholders may sell without such limitations, provided we areremove our current in our public reporting obligations. Rule 144 also permits the sale of securities bynon-affiliates that have satisfied a one year holding period without any limitation or restriction. Any substantial sale of our common stock pursuant to Rule 144 or pursuant to any resale report may have a material adverse effect on the market price of our securities.
Furthermore, sales of our common stock by our directors, officers, or employees may occur as a result of sales effected pursuant to predetermined trading plans adopted under the safe-harbor afforded by SECRule 10b5-1.
Our certificate of incorporation and bylaws contain provisions that may discourage, delay or prevent a change in our management team that stockholders may consider favorable.
management.
•authorizing the issuance of “blank check” preferred stock without any need for action by stockholders;
•limiting the ability of stockholders to call special meetings of stockholders;
•permitting stockholder action by written consent;
•establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings;
•requiring a super-majority vote of our stockholders to remove directors of our company; and
•providing that our stockholders may only remove our directors for “cause” (as defined in our bylaws).
|
|
|
Readers are advised that the following disclosure regarding our ongoing litigations with MonoSol RX, dba Aquestive Therapeutics
Indivior PLC (formerly RB Pharmaceuticals Ltd.) and Aquestive Therapeutics (formerly MonoSol Rx)
Litigation related to BUNAVAIL
On October 29, 2013, Reckitt Benckiser, Inc., RB Pharmaceuticals Limited, and Aquestive (collectively, the RB Plaintiffs) filed an action against us relatingContingencies" to our BUNAVAIL productconsolidated financial statements included in the United States District Court for the Eastern DistrictPart IV of North Carolina (“EDNC”) for alleged patent infringement. BUNAVAIL is a drug approved for the maintenance treatment of opioid dependence. The RB Plaintiffs claim that the formulation for BUNAVAIL, which has never been disclosed publicly, infringes its US Patent No. 8,475,832 (the ‘832 Patent). On May 21, 2014, the Court granted our motion to dismiss.
On January 22, 2014, Aquestive initiated aninter partesreview (“IPR”)this Report on U.S. Patent No. 7,579,019, the ‘019 Patent. The PTAB upheld all claims of our ‘019 Patent in 2015 and this decision was not appealed by Aquestive.
On September 20, 2014, we proactively filed a declaratory judgment action in the United States District Court for the EDNC requesting the Court to make a determination that our BUNAVAIL product does not infringe the ‘832 Patent, US Patent No. 7,897,080 (the “‘080 Patent”) and US Patent No. 8,652,378 (the “‘378 Patent”). We invalidated the “‘080 Patent” in its entirety in aninter partesreexamination proceeding. We invalidated all relevant claims of the ‘832 Patent in an IPR proceeding. And, in an IPR proceeding for the ‘378 Patent, in its decision not to institute the IPR proceeding the PTAB construed the claims of the ‘378 Patent narrowly. Shortly thereafter, by joint motion of the parties, the ‘378 Patent was subsequently removed from the action.
On June 6, 2016, in an unrelated case in which Indivior and Aquestive asserted the ‘832 Patent against other parties, the Delaware District Court entered an order invalidating other claims in the ‘832 Patent. Indivior and Aquestive cross-appealed all adverse findings in that decision to the Court of Appeals for the Federal Circuit in CaseNo. 17-2587. Our declaratory judgment action remains stayed pending the outcome of that cross-appeal by Indivior and Aquestive.
On September 22, 2014, the RB Plaintiffs filed an action against us (and our commercial partner) relating to our BUNAVAIL product in the United States District Court for the District of New Jersey for alleged patent infringement. The RB Plaintiffs claim that BUNAVAIL, whose formulation and manufacturing processes have never been disclosed publicly, infringes its patent U.S. Patent No. 8,765,167 (the ‘167 Patent. As with prior actions by the RB Plaintiffs, we believe this is another anticompetitive attempt by the RB Plaintiffs to distract our efforts from commercializing BUNAVAIL. We strongly refute as without merit the RB Plaintiffs’ assertion of patent infringement. On our motion, this case was transferred to the Eastern District of North Carolina. A Joint Motion to Stay the case was granted and the case is now stayed until a final resolution of the ‘167 IPRs discussed directly below. We will continue to vigorously defend this case.
On October 28, 2014, we filed multiple IPR petitions on certain claims of the ‘167 Patent. The USPTO instituted three of the four IPR petitions. The PTAB upheld the claims and denied collateral estoppel applied to the PTAB decisions in March 2016. We appealed to Court of Appeals for the Federal Circuit. The USPTO intervened with respect to whether collateral estoppel applied to the PTAB. On June 19, 2018, we filed a motion to remand the case for further consideration by the PTAB in view of intervening authority. On July 31, 2018, the Federal Circuit vacated the decisions, and remanded the ‘167 Patent IPRs for further consideration on the merits.
Litigation related to BELBUCA
On January 13, 2017, Aquestive filed a complaint in the United States District Court for the District of New Jersey alleging BELBUCA infringes the ‘167 Patent. In lieu of answering the complaint, we filed motions to dismiss the complaint and, in the
alternative, to transfer the case to the EDNC. On July 25, 2017, the New Jersey Court administratively terminated the case pending the parties submission of a joint stipulation of transfer because the District of New Jersey was an inappropriate venue. This case was later transferred to the Delaware District Court. On October 31, 2017 we filed motions to dismiss the complaint and, in the alternative, to transfer the case to the EDNC. On October 16, 2018, denying the motion to dismiss as moot, the Delaware District Court granted our motion to transfer the case to the EDNC. The case is now pending in the EDNC. We strongly refute as without merit Aquestive’s assertion of patent infringement and will vigorously defend the lawsuit.
Teva Pharmaceuticals USA (formerly Actavis)
On February 8, 2016, we received a notice relating to a Paragraph IV certification from Teva Pharmaceuticals USA, or Teva, (formerly Actavis) seeking to find invalid three Orange Book listed patents relating specifically to BUNAVAIL. The Paragraph IV certification related to an ANDA filed by Teva with the FDA for a generic formulation of BUNAVAIL. The patents subject to Teva’s certification were the ‘019 Patent, U.S. Patent No. 8,147,866 (the “‘866 Patent”) and 8,703,177 (the “‘177 Patent”).
On March 18, 2016, we asserted three different patents against Teva, the ‘019 Patent, the ‘866 Patent, and the ‘177 Patent. Teva did not raisenon-infringement positions about the ‘019 and the ‘866 Patents in its Paragraph IV certification. Teva did raise anon-infringement position on the ‘177 Patent but we asserted in our complaint that Teva infringed the ‘177 Patent either literally or under the doctrine of equivalents.
On December 20, 2016 the USPTO issued U.S. Patent No. 9,522,188 (“the ‘188 Patent”), and this patent was properly listed in the Orange Book as covering the BUNAVAIL product. On February 23, 2017 Teva sent a Paragraph IV certification adding the 9,522,188 to its ANDA. An amended Complaint was filed, adding the ‘188 Patent to the litigation.
On January 31, 2017, we received a notice relating to a Paragraph IV certification from Teva relating to Teva’s ANDA on additional strengths of BUNAVAIL and on March 16, 2017, we brought suit against Teva and its parent company on these additional strengths. On June 20, 2017, the Court entered orders staying both BUNAVAIL suits at the request of the parties.
On May 23, 2017, the USPTO issued U.S. Patent 9,655,843 (the “‘843 Patent”) relating to the BEMA technology, and this patent was properly listed in the Orange Book as covering the BUNAVAIL product.
Finally, on October 12, 2017, we announced that we had entered into a settlement agreement with Teva that resolved our BUNAVAIL patent litigation against Teva pending in the U.S. District Court for the District of Delaware. As part of the Settlement Agreement,Form 10-K, which is subject to reviewincorporated into this item by the U.S. Federal Trade Commission and the U.S. Department of Justice, we have entered into anon-exclusive license agreement with Teva that permits Teva to first begin selling its generic version of BUNAVAIL in the U.S. on July 23, 2028 or earlier under certain circumstances. Other terms of the agreement are confidential.
We received notices regarding Paragraph IV certifications from Teva on November 8, 2016, November 10, 2016, and December 22, 2016, seeking to find invalid two Orange Book listed patents relating specifically to BELBUCA. The Paragraph IV certifications relate to three ANDAs filed by Teva with the FDA for a generic formulation of BELBUCA. The patents subject to Teva’s certification were the ‘019 Patent and the ‘866 Patent. We filed complaints in Delaware against Teva on December 22, 2016 and February 3, 2017 in which we asserted against Teva the ‘019 Patent and the ‘866 Patent. Teva did not contest infringement of the claims of the ‘019 Patent and did not contest infringement of the claims of the ‘866 Patent.
The ‘019 Patent had already been the subject of an unrelated IPR before the USPTO under which we prevailed, and all claims of the ‘019 Patent survived. Aquestive’s request for rehearing of the final IPR decision regarding the ‘019 Patent was denied by the USPTO on December 19, 2016. Aquestive did not file a timely appeal at the Federal Circuit.
On May 23, 2017, the USPTO issued U.S. Patent 9,655,843 (the “‘843 Patent”) relating to the BEMA technology, and this patent was properly listed in the Orange Book as covering the BELBUCA product.
On August 28, 2017, the Court entered orders staying both BELBUCA suits at the request of the parties.
In February 2018, we announced that we had entered into a settlement agreement with Teva that resolved our BELBUCA patent litigation against Teva pending in the U.S. District Court for the District of Delaware. As part of the settlement agreement, which is subject to review by the U.S. Federal Trade Commission and the U.S. Department of Justice, we have granted Teva anon-exclusive license (for which we will receive no current or future payments) that permits Teva to first begin selling the generic version of our BELBUCA product in the U.S. on January 23, 2027 or earlier under certain circumstances (including, for example, upon (i) the delisting of thepatents-in-suit from the U.S. FDA Orange Book, (ii) the granting of a license by us to a third party to launch another
generic form of BELBUCA at a date prior to January 23, 2027, or (iii) the occurrence of certain conditions regarding BELBUCA market share). Other terms of the Agreement are confidential.
Alvogen
On September 7, 2018, we filed a complaint for patent infringement in Delaware against Alvogen Pb Research & Development LLC, Alvogen Malta Operations Ltd., Alvogen Pine Brook LLC, Alvogen, Incorporated, and Alvogen Group, Incorporated (collectively, “Alvogen”), asserting that Alvogen infringes our Orange Book listed patents for BELBUCA, including U.S. Patent Nos. 8,147,866 and 9,655,843, both expiring in July of 2027, and U.S. Patent No. 9,901,539, expiring in December of 2032. This complaint follows receipt by us on July 30, 2018 of a Paragraph IV Patent Certification from Alvogen stating that Alvogen had filed an ANDA with the FDA for a generic version of BELBUCA Buccal Film (75 mcg, 150 mcg, 300 mcg, 450 mcg, 600 mcg, 750 mcg and 900 mcg). Because we initiated a patent infringement suit to defend the patents identified in the Paragraph IV notice within 45 days after receipt of the Paragraph IV Certification, the FDA is prevented from approving the ANDA until the earlier of 30 months or a decision in the case that each of the patents is not infringed or invalid. Alvogen’s notice letter also does not provide any information on the timing or approval status of its ANDA.
In its Paragraph IV Certification, Alvogen does not contest infringement of at least several independent claims of each of the ’866, ’843, and ’539 patents. Rather, Alvogen advances only invalidly arguments for these independent claims. We believe that we will be able to prevail on our claims of infringement of these patents, particularly as Alvogen does not contest infringement of certain claims of each patent. Additionally, as we have done in the past, we intend to vigorously defend our intellectual property against assertions of invalidity. Each of the three patents carry a presumption of validity, which can only be overcome by clear and convincing evidence.
2018 Arkansas Opioid Litigation
On March 15, 2018, the State of Arkansas, and certain counties and cities in that State, filed an action in the Circuit Court of Arkansas, Crittenden County against multiple manufacturers, distributors, retailers, and prescribers of opioid analgesics, including our company. We were served with the complaint on April 27, 2018. The complaint specifically alleged that we licensed our branded fentanyl buccal soluble film ONSOLIS to Collegium, and Collegium is also named as a defendant in the lawsuit. ONSOLIS is not presently sold in the United States and the license agreement with Collegium was terminated prior to Collegium launching ONSOLIS in the United States. Therefore, on June 28, 2018, we moved to dismiss the case against us and most recently, on July 6, 2018, the plaintiffs filed a notice to voluntarily dismiss us from the Arkansas case, without prejudice.
Chemo Research, S.L
On March 1, 2019, we filed a complaint for patent infringement in Delaware against Chemo Research, S.L., Insud Pharma S.L., IntelGenx Corp., and IntelGenx Technologies Corp. (collectively, “Defendants”), asserting that the Defendants infringe our Orange Book listed patents for BELBUCA, including U.S. Patent Nos. 8,147,866 and 9,655,843, both expiring in July of 2027, and U.S. Patent No. 9,901,539 expiring December of 2032. This complaint follows a receipt by us on January 31, 2019, of a Notice Letter from Chemo Research S.L. stating that it has filed with the FDA an ANDA containing a Paragraph IV Patent Certification, for a generic version of BELBUA Buccal Film in strengths 75 mcg, 150 mcg, 300 mcg, 450 mcg, and 900 mcg. Because we initiated a patent infringement suit to defend the patents identified in the Notice Letter within 45 days after receipt, the FDA is prevented from approving the ANDA until the earlier of 30 months or a decision in the case that each of the patents is not infringed or invalid. Chemo Research S.L.’s Notice Letter also does not provide any information on the timing or approval status of its ANDA.
We believe that we will be able to prevail in this lawsuit. As we have done in the past, we intend to vigorously defend our intellectual property against assertions of invalidity.
|
|
Our
Prior to November, our common stock was listed on the NASDAQ Capital Market.
12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | |||||||||||||||||||
BioDelivery Sciences Int’l, Inc. | $ | 100.00 | $ | 204.07 | $ | 81.32 | $ | 29.71 | $ | 50.08 | $ | 62.82 | ||||||||||||
Nasdaq Composite (U.S. Companies) | 100.00 | 113.40 | 119.89 | 128.89 | 165.29 | 158.87 | ||||||||||||||||||
Nasdaq Biotechnology | 100.00 | 134.10 | 149.42 | 117.02 | 141.66 | 128.45 | ||||||||||||||||||
NYSE Pharmaceutical | 100.00 | 113.83 | 115.67 | 102.88 | 116.42 | 121.52 |
12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | ||||||||||||||||||||||||||||||
BioDelivery Sciences Int’l, Inc. | $ | 100.00 | $ | 39.85 | $ | 14.56 | $ | 24.54 | $ | 30.78 | $ | 52.58 | |||||||||||||||||||||||
Nasdaq Composite (U.S. Companies) | 100.00 | 105.73 | 113.66 | 145.76 | 140.10 | 189.45 | |||||||||||||||||||||||||||||
Nasdaq Global Select | 100.00 | 106.11 | 114.16 | 146.62 | 141.23 | 191.51 | |||||||||||||||||||||||||||||
Nasdaq Biotechnology | 100.00 | 111.42 | 87.26 | 105.64 | 95.79 | 119.17 | |||||||||||||||||||||||||||||
NYSE Pharmaceutical | 100.00 | 101.62 | 90.38 | 102.28 | 106.76 | 122.68 |
|
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Statements of Operations Data: | ||||||||||||||||||||
Total revenue (1) | $ | 55,640 | $ | 61,985 | $ | 15,546 | $ | 48,231 | $ | 38,944 | ||||||||||
Operating loss | (23,648 | ) | (29,420 | ) | (63,935 | ) | (35,179 | ) | (38,740 | ) | ||||||||||
Net (loss) income (2) (3) | (46,367 | ) | 5,285 | (67,138 | ) | (37,672 | ) | (54,218 | ) | |||||||||||
Diluted net (loss) income per share | (0.73 | ) | 0.09 | (1.25 | ) | (0.72 | ) | (1.12 | ) | |||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash, short-term and long-term investments | $ | 43,822 | $ | 21,195 | $ | 32,019 | $ | 83,560 | $ | 70,472 | ||||||||||
Total assets (4) | 108,533 | 88,101 | 51,720 | 102,772 | 88,840 | |||||||||||||||
Long-term liabilities | 57,252 | 53,075 | 50,097 | 42,993 | 4,402 | |||||||||||||||
Accumulated deficit | (351,288 | ) | (305,056 | ) | (310,341 | ) | (243,203 | ) | (205,531 | ) | ||||||||||
Total stockholders’ equity (deficit) | 29,742 | 8,877 | (17,665 | ) | 31,696 | 54,396 | ||||||||||||||
Statements of Cash Flows Data: | ||||||||||||||||||||
Net cash flows from operating activities | $ | (24,113 | ) | $ | (32,451 | ) | $ | (53,982 | ) | $ | (3,732 | ) | $ | (28,833 | ) |
|
|
|
|
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||||||
Statements of Operations Data: | |||||||||||||||||||||||||||||
Total revenue (1) | $ | 111,389 | $ | 55,640 | $ | 61,985 | $ | 15,546 | $ | 48,231 | |||||||||||||||||||
Operating income (loss) | 3,736 | (23,648) | (29,420) | (63,935) | (35,179) | ||||||||||||||||||||||||
Net (loss) income (2) (3) | (15,305) | (46,367) | 5,285 | (67,138) | (37,672) | ||||||||||||||||||||||||
Diluted net (loss) income per share | (0.18) | (0.73) | 0.09 | (1.25) | (0.72) | ||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||
Cash, short-term and long-term investments | $ | 63,888 | $ | 43,822 | $ | 21,195 | $ | 32,019 | $ | 83,560 | |||||||||||||||||||
Total assets (4) (5) | 182,905 | 108,533 | 88,101 | 51,720 | 102,772 | ||||||||||||||||||||||||
Long-term liabilities | 59,148 | 57,252 | 53,075 | 50,097 | 42,993 | ||||||||||||||||||||||||
Accumulated deficit | (366,593) | (351,288) | (305,056) | (310,341) | (243,203) | ||||||||||||||||||||||||
Total stockholders’ equity (deficit) | 69,764 | 29,742 | 8,877 | (17,665) | 31,696 | ||||||||||||||||||||||||
Statements of Cash Flows Data: | |||||||||||||||||||||||||||||
Net cash flows from operating activities | $ | 11,072 | $ | (24,113) | $ | (32,451) | $ | (53,982) | $ | (3,732) |
|
•On pain; wepain. We seek to continue to build a well-balanced, diversified, high-growth specialty pharmaceutical company. Through our industry-leading commercialization infrastructure, BDSI iswe are executing the commercialization of our existing products. As part of our corporate growth strategy, we have licensed, and will continue to explore opportunities to acquire or license, additional products that meet the needs of patients living with debilitating chronic conditions and treated primarily by therapeutic specialists. As we gainhistorical clinicalcommercial strategy for BELBUCA is to further drive continued adoption in the large long-acting opioid (LAO) market based on its unique profile coupled with growing physician interest, policy tailwinds, and regulatory development strategy has focused primarily on our abilityexpanding payer access. We aim to useleverage the specialized commercial infrastructure we established for BELBUCA as a vehicle to enable commercial growth in Symproic, which is being increasingly seen as a complementary asset.Food and Drug Administration, orPuerto Rico, for the FDA’s, 505(b)(2) approval process to obtain more timelytreatment of OIC in adults with chronic non-cancer pain.efficient approvala selling stockholder of new formulations12,000,000 shares of previously approved, active therapeutics incorporated into our drug-delivery technology. Because the 505(b)(2) approval process is designed to address new formulations of previously approved drugs, we believe it has the potential to be more cost efficient and expeditious, with less regulatory approval risk than otherFDA-approval approaches.Our CompanyWe are a publicly listed company. Our common stock at a public offering price of $5.00 per share. The gross proceeds from our portion of the offering (10,000,000 shares), before deducting the underwriter discounts and commission and other offering expenses, were $50.0 million, or $47.6 million net proceeds.listed on The Nasdaq Capital Market underexpected to result in an estimated $1.5 million in annual interest cost savings compared to the symbol “BDSI.” Weprevious debt facility.incorporated inadded to the statebroad-market Russell 3000® Index as well as the Russell 2000® Index at the conclusion of Indiana in 1997 and reincorporated as a Delaware-based corporation in 2002.2018 and Beyond HighlightsFebruary 6, 2018,July 9, 2019, we announced that we had entered into a Settlement Agreement with Teva that resolves our previously reportedseveral regional healthcare plans improved patient access to BELBUCA patent litigation against Teva pending induring the United States District Court for the Districtsecond quarter of Delaware.
On May 7, 2018, we announced the appointment of Herm Cukier as our new Chief Executive Officer and member of our board of directors, effective as of May 8, 2018.
On May 22, 2018, we announced the closing of the $50 million registered direct offering of newly designated Series B Stock.this year. The offering closed on May 21, 2018, yielding net proceeds of $8048.0 millionregional U.S. insurance plans enhanced BELBUCA’s coverage to BDSI. As part of the financing closing, Broadfin Managing Partner Kevin Kotler joined our board, along with Todd Davis and Peter Greenleaf. Furthermore, Peter Greenleaf has been named Chairman of our Board of Directors. In addition, and effective as of the closing, Thomas W. D’Alonzo, Barry I. Feinberg, Samuel P. Sears, Jr. and Timothy C. Tyson have each resigned and retired from the Board.
On July 20, 2018, we extended an offer to Dr. Thomas Smith, as our Chief Medical Officer and member of our Executive Leadership Team effective July 30, 2018.
On August 2, 2018, in connection with our 2018 Annual Meeting of Stockholders, our stockholders approved, among other matters, (i) amending our Certificate of Incorporation to increase the number of authorized shares of Common Stock from 75,000,000 to 125,000,000; and (ii) to ratify the issuance and sale of our Series B Preferred Stock, par value $.001 per share, and to approve the issuance of Common Stock issuable upon the conversion of the Series B Preferred Stock as required by and in accordance with NASDAQ Marketplace Rule 5635(d).
On October 29, 2018, we announced the appointment of James Vollins as General Counsel and member of our Executive Leadership Team effective November 5, 2018. Mr. Vollins serves as our Chief Compliance Officer and Corporate Secretary. We also announced the enhanced title of Scott Plesha to President and Chief Commercial Officer of the Company.
On November 9, 2018, we filed a shelf registration statement (as amended on January 18, 2019) which registered up to $150 million of our securities for potential future issuance and such registration statement was became effective on February 7, 2019.
On January 15, 2019, we announced the appointment of Terry Coelho as Chief Financial Officer. Ms. Coelho will also serve as our principal financial officer and principal accounting officer. Ms. Coelho replaced Ernest De Paolantonio in these positions effective as of January 15, 2019. Mr. De Paolantonio will remain at our Company past such date in order to allow for an orderly transition.
On February 4, 2019 – we announced that a leading national managed care organization has moved BELBUCA into preferred status across all its commercial formularies from its previous position ofnot-covered effective February 1, 2019. In addition, patients will no longer require a prior authorizationor initiated coverage for BELBUCA, which means that an additional six million covered lives now have access to receive their BELBUCA script. This significant improvement in access for more than 7BELBUCA. These six million covered lives brings the total number of Americanscommercial lives with preferred access forto BELBUCA to more than 115 million.
BELBUCAproducts. As of the date of this report, three products that are approved by the FDA; the fourth product, while we are not actively studying it at this time, we are evaluating further development opportunities. The three approvedFDA. Three of our products utilize our patented BEMA thin film drug delivery technology.indicateda buccal film that contains buprenorphine, a Schedule III opioid, and was approved by the FDA in October 2015 for the management of chronicuse in patients with pain severe enough to require daily,around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. This product was originally licensed on a worldwide basis to Endo. On October 26, 2015, we announced with Endo that the FDA approved BELBUCA. BELBUCA was launched by Endo in February 2016. On December 7, 2016, we entered into an agreement with Endo terminating Endo’s licensing of rights for BELBUCA. This followed a strategic decision made by Endo to discontinue commercial efforts in the branded pain business. On January 6, 2017, we announced the closing of the transaction to reacquire the license to BELBUCAis differentiated from Endo. As a result, the worldwide rights to BELBUCA were transferred back to us. Behind a revised commercialization plan, we are leveraging our existing sales force to capitalize on commercial synergies with BUNAVAIL. This effort is a focused commercial approach targeting identified healthcare providers which we believe createother opioids and has the potential to incrementally grow BELBUCA sales without the requirement for significant resources. We also will explore other options for longer-term growth for BELBUCA. Since the initial launch in February 2017, we further expanded our sales force beginning in January 2018 and again in September to support the commercialization efforts. BELBUCA and BUNAVAIL are currently supported by a field force of approximately 113 sales representatives, thirteen regional sales managers and two area directors. As previously disclosed, the launch has been more challenging becauseaddress some of the increased scrutiny over the prescribing ofmost critical issues facing healthcare providers treating chronic pain with prescription opioids that is driven by the Centers for Disease Control and Prevention guidelines issued in March 2016. The difference that BELBUCA as Schedule III offers over Schedule II opioids, such as oxycodone, hydrocodone, morphine, etc., include higher safety index, lower addiction, diversion and abuse risks accompanied by a dose-ceiling effect on respiratory depression, but not on analgesia. The approval of BELBUCA carries a standard post-approval requirement by the FDA to conduct a study to determine the effect of BELBUCA on QT prolongation (i.e. an abnormal lengthening of the heartbeat). Also required is a study assessing the safety and efficacy of BELBUCA in pediatric patients and participation in a consortium with other holders of NDAs for long-acting opioids to assess and better understand the risk of– abuse, misuse, addiction and the risk of overdose. Compared to currently marketed products and products under development, we believe that BELBUCA is differentiated based on the following features:opioids. Both studiesa low incidence of constipation and low discontinuation rate;pending. Prescriptionlong-term growth opportunities for BELBUCA and we focus our commercial efforts primarily on BELBUCA. Our sales force is focused on current BELBUCA prescribers, chronic pain management specialists, and clinicians we believe have the greatest opportunity to be adopters of BELBUCA. As of January 2020, BELBUCA had formulary coverage for more than 96% of commercial lives.significantly increased since promotion began.a material adverse effect on our future revenue potential and would negatively affect investor confidence in our company and our public stock price.
SYMPROIC Symproic is a peripherally acting mu-opioid receptor antagonist, or PAMORA, and was approved by the FDA on March 23, 2017 for the treatment of opioid-induced constipation in adult patients with chronic non-cancer pain, including patients with chronic pain related to prior cancer or its treatment who do not require frequent (e.g., weekly) opioid dosage escalation. OIC occurs primarily via activation of enteric mu-receptors in the small intestine and proximal colon, which results in harder stool and less frequent and less effective defecation. Because OIC results from the specific effects of opioids, it differs mechanistically from other forms of constipation, and deserves dedicated medical management. Compared to currently marketed products and products under development for OIC, we believe that Symproic is differentiated based on the following features: •strong and durable efficacy observed in randomized, double-blind, placebo controlled clinical trials of 12 week and 52 week duration in OIC patients; •OIC relief that was more frequent, more complete, with less straining than patients taking placebo •recommended by the American Gastroenterological Association for patients with laxative refractory OIC; •adverse event profile comparable to placebo, with low rates of abdominal pain observed across the phase III program; and •the only prescription OIC medication with the convenience of once daily dosing, with only a tablet strength, and that can be taken with or without food and with or without laxatives. 28 Because of the durable efficacy, tolerability and convenience benefits, we believe that Symproic is a best-in-class PAMORA that reliably provides durable relief of OIC, which frees both the patient and the healthcare provider to focus on treating the patient’s chronic pain. We believe that there are long-term growth opportunities for Symproic. According to data from Symphony Health, in 2019 Symproic prescription volume grew over 60%, capturing 10% of the PAMORA market. In 2019 the PAMORA market declined by 3%, with over 585,000 PAMORA prescriptions dispensed. The growth rate of the PAMORAs has slowed, driven by a decline in opioid prescription rates. As of January 2020, Symproic had formulary coverage for more than 95% of commercial lives. The risks to our company associated with Symproic include: (i) unexpected product safety issues; (ii) inability to continue to supply product in adequate quantities to meet the commercial demand; (iii) inability to manufacture adequate supplies for commercial use; (iv) failure of our sales force to effectively sell the product and, (v) inadequate reimbursement. BUNAVAIL In June 2014, BUNAVAIL (buprenorphine and naloxone buccal film) was approved by the FDA for the maintenance treatment of opioid dependence as part of a complete treatment plan to include counseling and psychosocial support. BUNAVAIL contains the partial opioid agonist buprenorphine, which binds to the same receptors as opiate drugs but has a higher affinity, and naloxone, an opioid antagonist and an abuse deterrent. In March 2020, we announced that we are discontinuing marketing for BUNAVAIL. ONSOLIS In July 2009, ONSOLIS (fentanyl buccal soluble film) was approved |
|
ONSOLIS is approved in the U.S., the EU (where it is marketed as BREAKYL) and Taiwan (where it is marketed as PAINKYL), for the management of pain that “breaks through” the effects of other medications being used to control persistent pain, or breakthrough pain, in cancer patients 18 years of age and older who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain. We refer to breakthrough pain in opioid tolerant adult patients with cancer.cancer as BTCP. ONSOLIS utilizes our BEMA thin film drug delivery technologyprovides significant reduction in combinationpain for patients suffering from BTCP in a convenient formulation with fentanyl. The commercial rightsa range of doses to ONSOLIS were originally licensedallow patients to Mylan, a subsidiarytitrate to an adequate level of Mylan N.V., in 2006 and 2007pain control. We are not currently assessing options for all territories worldwide except for Taiwan (where it is licensedU.S. commercialization of ONSOLIS. Given current declining market conditions, we have no plans to TTY) and South Korea. The marketing authorization for ONSOLIS was returned to us in early 2015 as part of an assignment and revenue sharing agreement with Mylan forintroduce the United States, Canada and Mexico. Such agreement also facilitated the approval of a new formulation of ONSOLISproduct in the U.S. We are currently assessing our commercial options for ONSOLIS. On January 27, 2015, we announced that we had entered into an assignment and revenue sharing agreement with Mylan to return to us the marketing authorizations for ONSOLISat this time. The product is no longer a strategic asset for the U.S. and the right to seek marketing authorizations for ONSOLIS in Canada and Mexico. On May 11, 2016, we announced the signing of a licensing agreement under which we granted the exclusive rights to commercialize ONSOLIS in the U.S. to Collegium. Under terms of the agreement, Collegium was responsible for the manufacturing, distribution, marketing and sales of ONSOLIS in the U.S. Mylan continues to commercialize ONSOLIS under the brand name BREAKYL in the E.U. However, on December 8, 2017, Collegium provided us the required90-day notice regarding termination of the license and development agreement for ONSOLIS between us and Collegium. The license and development agreement for ONSOLIS between us and Collegium formally ended on March 8, 2018. Previous efforts to extend our supply agreement with our original ONSOLIS manufacturer Aveva, who was subsequently acquired by Apotex, were unsuccessful and the agreement expired. However, an alternate supplier was identified and data to support qualification of the new manufacturer was submitted to the FDA in June 2018. On October 22, 2018, we received notification of FDA’s approval of the regulatory submission and the new ONSOLIS manufacturer. We are currently assessing options to commercialize ONSOLIS including partnership or introducing ONSOLIS utilizing the company’s existing pain sales force.
Buprenorphine Extended Release Injection is an injectable, extended-release, microparticle formulation of buprenorphine for the treatment of opioid dependence and chronic pain, the rights to which were secured when we entered into a definitive development and exclusive license option agreement from Evonik in October 2014. In 2015, we completed initial development work and preclinical studies which have resulted in the identification of a formulation we believe can provide 30 days of continuous buprenorphine treatment. We submitted an IND for this product candidate to the FDA in December 2016. Subsequently, the agreement has terminated and the options granted therein have expired. We continue to evaluate whether or not to further advance this particular program.
We expect to continue our development of pharmaceutical products and related drug delivery technologies, some of which will be funded by our commercialization agreements. We will continue to seek additional license agreements, which may include upfront payments.agreements. We anticipate that funding for the next several years will come primarily from earnings from sales of BELBUCA and BUNAVAIL,Symproic, and milestone payments and royalties from Mylan and TTY, potential sales of securities and collaborative development agreements, including those with pharmaceutical companies.
We have, since our founding, received revenue in the form of: (i) product sales from our BELBUCA and BUNAVAIL products, (ii) contract revenue from Endo related to an upfront,non-refundable payment for a license of our BELBUCA product in 2012, (iii) payment from Endo for certain patent-related milestones (iv) royalty revenue from Mylan for sales of BREAKYL and ONSOLIS, (vi) upfrontnon-refundable license and milestone payments from Mylan in 2007, 2008, 2009 and 2012 (vi) contract revenue from Endo related to two full database locks in 2014, (vii) contract revenue from Endo upon FDA acceptance of the filed NDA of our BELBUCA product in 2015 and subsequent regulatory approval, (viii) and sponsored research revenue from both Endo and Mylan. Only the BELBUCA and BUNAVAIL product sales and BREAKYL royalty revenues have the potential to be repeating or predictable.
Readers are cautioned thatperiod-to-period comparisons of our operating results should not be relied upon as predictive of future performance. Our prospects must be considered in light of the risks, expenses and difficulties normally encountered by companies that are involved in the commercialization of their products and related technologies, particularly companies in new and rapidly changing markets such as pharmaceuticals, drug delivery and biotechnology. We must maintain our relationships with our key commercial partners and address regulatory, legal and/or commercial issues and risks that relate to our business from time to time, many of which could impact, perhaps negatively, our planned operations. We may not be able to appropriately address these risks and difficulties.
TTY.
statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. We review all significant estimates affecting the consolidated financial statements on a recurring basis and records the effect of any necessary adjustments prior to their issuance. Significant estimates of our include: revenue recognition, sales allowances such as returns of product sold, government program rebates, customer coupon redemptions, wholesaler/pharmacy discounts, product service fees, rebates and chargebacks, sales bonuses, stock-based compensation, inventory, fixed assets,
2017.
2017.
upon their grant-date fair value. That cost is recognized over the period during which the employee is required to provide service in exchange for the award.
2018 | 2017 | 2016 | ||||
Expected price volatility | 60.34%-68.77% | 68.76%-78.79% | 62.65%-80.78% | |||
Risk-free interest rate | 2.05%-3.00% | 1.77%-2.05% | 0.56%-1.70% | |||
Weighted average expected life in years | 6 years | 6 years | 6 years | |||
Dividend yield | — | — | — |
the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We consider the carrying amount of our cash and cash equivalents to approximate fair value due to short-term nature of this instrument.
Product sales
Under the new accounting guidance, we recognize revenue onpolicies” for more information related to, (i) product sales, when control of the promised goods is transferred(ii) performance obligations, (iii) adjustments to our customers in an amount that reflects the consideration expected to be received in exchange for transferring those goods. We account for a contract when we have approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. When determining whether the customer has obtained control of the goods, we consider any future performance obligations. Generally, there is no post-shipment obligations on product sold.
Performance obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our product sales contracts have a single performance obligation as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and therefore, not distinct. Our performance obligations are satisfied at a point in time. The multiple performance obligations are not allocated based off of the obligations but based off of standard selling price.
Adjustments to product sales
We recognize product sales net of estimated allowances for rebates, price adjustments, returns, chargebacks and prompt payment discounts. A significant majority of our adjustments to gross product revenues are the result of accruals for our commercial contracts, retail consumer subsidy programs, and Medicaid rebates.
We establish allowances for estimated rebates, chargebacks and product returns based on numerous qualitative and quantitative factors, including:
the number of and specific contractual terms of agreements with customers;
estimated levels of inventory in the distribution channel;
historical rebates, chargebacks and returns of products;
direct communication with customers;
anticipated introduction of competitive products or generics;
anticipated pricing strategy changes by us and/or our competitors;
analysis of prescription data gathered by a third-party prescription data provider;
the impact of changes in state and federal regulations; and
the estimated remaining shelf life of products.
In our analyses, we use prescription data purchased from a third-party data provider to develop estimates of historical inventory channel sell-through. We utilize an internal analysis to compare historical net product shipments to estimated historical prescriptions written. Based on that analysis, management develops an estimate of the quantity of product in the channel which may be subject to various rebate, chargeback and product return exposures. To estimate months of ending inventory in our distribution channel, we divide estimated ending inventory in the distribution channel by our recent prescription data, not considering any future anticipated demand growth beyond the succeeding quarter. Monthly for each product line, we prepare an internal estimate of ending inventory units in the distribution channel by adding estimated inventory in the channel at the beginning of the period, plus net product shipments for the period, less estimated prescriptions written for the period. This is done for each product line by applying a rate of historical activity for rebates, chargebacks and product returns, adjusted for relevant quantitative and qualitative factors discussed above, to the potential exposed product estimated to be in the distribution channel. In addition, we receive daily information from the wholesalers regarding their sales and actual on hand inventory levels of our products. This enables us to execute accurate provisioning procedures.
Product returns-Consistent with industry practice, we offer contractual return rights that allow our customers to return our products within an18-month period that begins six months prior to and ends twelve months after expiration of the products.
Rebates- The liability for government program rebates is calculated based on historical and current rebate redemption and utilization rates contractually submitted by each program’s administrator.
Price adjustments and chargebacks-Our estimate of price adjustments and chargebacks are based on its estimated mix of sales to various third-party payers, which are entitled either contractually or statutorily to discounts from our listed prices of our products. If the sales mix to third-party payers is different from our estimates, we may be required to pay higher or lower total price adjustments and/or chargebacks than it had estimated, and such differences may be significant.
From time to time, we offer certain promotional product-related incentives to our customers. These programs include certain product incentives to pharmacy customers and other sales stocking allowances. We have voucher programs for BELBUCA and BUNAVAIL whereby we offer apoint-of-sale subsidy to retail consumers. We estimate our liabilities for these voucher programs based on the actual redemption rates as reported to us by a third-party claims processing organization. We account for the costs of these special promotional programs as price adjustments, which are a reduction of gross revenue.
Prompt payment discounts-We typically offers our wholesale customers a prompt payment discount of 2% as an incentive to remit payments within the first 30 to 37 days after the invoice date depending on the customer and the products purchased.
Gross To Net Accruals
A significant majority of our(iv) gross to net adjustments to gross product revenues are the result of accruals for our voucher program and rebates related to Medicare Part D, the Part D Coverage Gap, Medicaid, and commercial contracts with most of those programs having an accrual to payment cycle of anywhere from one to three months. In addition to this relatively short accrual to payment cycle, we receive daily information from the wholesalers regarding their sales of our products and actual on hand inventory levels of its products. This enables us to execute accurate provisioning procedures. Consistent with the pharmaceutical industry, the accrual to payment cycle for returns is longer and can take several years depending on the expiration of the related products.
Prior to January 2017, we were recording sales when prescriptions were filled. However, beginning in January 1, 2017, we began recording revenue based on asell-in method, as we now have achieved the ability to record salesex-factory.
accruals.
Product Royalty Revenues
For the year ended December 31,2019, depreciation expense included accelerated depreciation for BUNAVAIL specific equipment due to the March 2020 announcement to discontinue marketing of BUNAVAIL.
On December 22, 2017,
We recorded federal income tax benefit during 2018 due to the impact of the 2018 Tax Cuts and Jobs Act. For years beginning after December 31, 2017, the Act repeals corporate AMT. The credit becomes refundable in an amount equal to 50% of the excess of the credit foreffective rate, (iii) the tax year over the amounteffects of the credit allowable for the year against regular tax liability. We recorded state income tax expensetemporary differences and net operating losses that give rise to significant components of $0.05 million due to state audit findings related to prior periods. We have recognized valuation allowances for all deferred tax assets for years ending 2018 and 2017.
We are required to reduce any deferred tax asset by a valuation allowance if, based on an assessmentliabilities and (iv) our federal and state net operating loss carry forward (“NOLs”).
One or more of our legal entities file income tax returns in the U.S. federal jurisdiction and various U.S. state jurisdictions. Our income tax returns are subject to audit by the tax authorities in those jurisdictions. Significant disputes may arise with authorities involving issues of the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and the interpretation of the relevant facts. We are no longer subject to U.S. federal or state tax examinations for years ended on or before December 31, 2014.
Results of Operations
2018
connection with the discontinuation of the marketing of BUNAVAIL.
Research and Development Reimbursements.
Contract Revenues. We recognized $0.8 million and $21.2 million in contract revenue during the years ended 2018 and 2017, respectively. We recognized $1.0$0.2 million in contract revenue during the year ended December 31,2019 related to milestone revenues associated with PAINKYL from TTY. We recognized $0.8 million in contract revenue during the year ended 2018, which was composed of $1.0 million in contract revenue related to our former license agreement with Purdue, which was for the Canadian commercial launch and related milestones. Due to the termination of the Purdue contract in March 2019, the aforementioned contract revenue was offset by the reversal of $0.2 million in milestone revenue. Contract revenue in 2017 includes $20 million from Endo related toas a patent extension that was previously recorded as deferred revenue because all or a portionresult of such $20 million was contingently refundable to Endo if a third party generic product was introduced in the U.S. during the patent extension period from 2020 to 2027. However, due to the termination agreement with Endo signed on December 7, 2016 which terminatedof the BELBUCA license to Endo effective January 6, 2017, the deferred $20 million was recognized as revenue in January 2017. The remaining $1.2 million in contract revenues during 2017 was related to ouraforementioned license agreement with Purdue Canada.
in March 2019.
specific equipment.
The increase in selling, general and administrative expenses during 2019 is due primarily to the increase in compensation expense related to our expansion efforts, medical affairs expenses, increased marketing efforts and expenses related to the acquisition of Symproic.
Bargain Purchase Gain.During the year ended December 31, 2017, we recorded the value of the bargain purchase gain of the BELBUCA acquisition from Endo totaling $27.3 million to income. There was no such amount recorded duringCompany’s Annual Report on Form 10-K for the year ended December 31, 2018 nor 2016.
Income Tax Expenseon page 43 under Part II, Item 7, “Management’s Discussion and Tax Net Operating Loss Carryforwards. We have a federal net operating loss carry forward, or NOLs,Analysis of approximately $279 million as of December 31, 2018. Under Section 382Financial Position and 383 of the Internal Revenue Code, if an ownership
change occurs with respect to a “loss corporation”, as defined, there are annual limitations on the amount of the NOLs and other deductions, which are available to us. The portion of the NOLs incurred prior to May 16, 2006 is subject to this limitation. As such, the use of these NOLs to offset taxable income is limited to approximately $1.5 million per year. Our State NOLs are approximately $264 million as of December 31, 2018. These loss carryforwards expire between 2024 and 2037 for federal NOLs and 2030 for state NOL generated prior to December 31, 2017. The federal NOLs generated in 2018 of $3.28 million will have an indefinite carryforward life due to tax reform. Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined that we have no uncertain income tax positions at December 31, 2018.
Expenditures for Research and Development Programs (2018 vs. 2017)
Our research and development expenditures for our approved products and product candidates are as follows in thousands:
Year Ended December 31, | Cumulative through December 31, | |||||||||||
2018 | 2017 | 2018 | ||||||||||
BELBUCA | $ | 3,869 | $ | 8,497 | $ | 126,566 | ||||||
BUNAVAIL | 418 | 2,185 | 41,303 | |||||||||
ONSOLIS | 615 | 1,254 | 3,669 | |||||||||
Buprenorphine ER Injection | (14 | ) | 885 | 9,771 | ||||||||
Clonidine Topical Gel* | 15 | 219 | 27,534 |
|
Results of Operations,
For the Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016
Product Sales. We recognized $34.9 million and $8.3 million in product sales during the years ended 2017 and 2016, respectively, from our products BELBUCA and BUNAVAIL. The increase in 2017 over 2016 is a result of the reacquisition of BELBUCA in January 2017.
Product Royalty Revenues. We recognized $5.1 million and $3.6 million in product royalty revenue during the years ended 2017 and 2016, respectively. The increase in product royalty revenues in 2017 can be attributed to timing of BREAKYL sales from Mylan and PAINKYL sales from TTY.
Research and Development Reimbursements. We recognized $0.8 million and $1.1 million of reimbursable revenue during the years ended 2017 and 2016, respectively,” which relates to our license agreement with Collegium and composed of reimbursement to us for apre-determined amount of the remaining expenses associatedwas filed with the ongoing transfer of the manufacturing of ONSOLIS.
Contract Revenues. We recognized $21.2 million and $2.5 million in contract revenue during the years ended 2017 and 2016, respectively. Contract revenue in 2017 includes $20 million from EndoSEC on March 14, 2019.
Cost of Sales. We incurred $19.5 million and $11.3 million in cost of sales during the years ended 2017 and 2016, respectively. In 2017, we had minimum $1.5 million contractual royalty due to CDC related to our ONSOLIS and BREAKYL product. Also, in 2017, we incurred $15.8 million in cost of sales for BELBUCA and BUNAVAIL royalties paid, lower of cost or net realized value, plus $0.6 million related depreciation of manufacturing equipment and $0.2 million in immediate expensing of certain production that did not meet specifications during product validation and batch size scale up and yield losses. Also included in 2017 was $1.0 million in cost of sales for BREAKYL, $0.3 million in cost of sales for PAINKYL and $0.1 million cost of sales related to ONSOLIS. In 2016, we had $1.9 million contractual royalty due to Mylan related to our ONSOLIS licensing arrangement with Collegium and a standard, minimum $1.5 million contractual royalty due to CDC related to our ONSOLIS and BREAKYL product. Also, in 2016, we incurred $6.3 million in cost of sales for BUNAVAIL plus $0.6 million related depreciation of manufacturing equipment and $0.2 million in immediate expensing of certain production that did not meet specifications during product validation and batch size scale up. Also included in 2016 was $0.7 million in cost of sales for BREAKYL and $0.1 million cost of sales related to BELBUCA.
Selling, General and Administrative Expenses. During the years ended December 31, 2017 and 2016, selling, general and administrative expenses totaled $58.9 million and $49.3 million, respectively. Selling, general and administrative costs include BELBUCA and BUNAVAIL sales, marketing, and commercial expenses. These costs also include legal expenses for patent defense, professional fees, wages and stock-based compensation expense. The increase in selling, general and administrative expenses in 2017 can be attributed to the increased marketing related to our 2017 reacquisition of BELBUCA and expansion of our sales force as a result.
Interest Expense, Net. During the year ended December 31, 2017, we had net interest expense of $8.6 million, consisting of $4.4 million of scheduled interest payments and $1.0 million of related amortization of discount and loan costs and $0.6 million of warrant interest expense all related to the February 2017 CRG Term Loan Agreement. In addition, we had remaining $0.9 million of scheduled interest payments and $1.4 million of related amortization of discount, loan costs and loan pay off and $0.2 million of warrant interest expense all related to the July 2013 secured loan facility from MidCap, which was paid off with the CRG term loan. During the year ended December 31, 2016 we had net interest expense of $3.3 million, consisting of $2.9 million of scheduled interest payments and $0.4 million of related amortization of discount and loan costs associated with the July 2015 secured loan facility from MidCap.
Bargain Purchase Gain.During the year ended December 31, 2017, we recorded the value of the bargain purchase gain of the BELBUCA acquisition from Endo totaling $27.3 million to income. There was no such amount recorded during the year ended December 31, 2016.
Income Tax Expense and Tax Net Operating Loss Carryforwards. We had federal and state NOLs of approximately $263 million and $292 million, respectively at December 31, 2017 as compared to federal and state NOLs of $225 million and $258 million, respectively as of December 31, 2016. These loss carryforwards expire principally beginning in 2020 through 2035 for federal and 2030 for state purposes, respectively. In accordance with GAAP, it is required that a deferred tax asset be reduced by a valuation allowance if, based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount which is more likely than not to be realized. As a result, we recorded a valuation allowance with respect to all of our deferred tax assets. Under Section 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a “loss corporation” (as defined in the Internal Revenue Code), there are annual limitations on the amount of the net operating loss and other deductions which are available to us.
Expenditures for Research and Development Programs (2017 vs. 2016)
Our research and development expenditures for our approved products and product candidates are as follows in thousands:
Year Ended December 31, | Cumulative through December 31, | |||||||||||
2017 | 2016 | 2017 | ||||||||||
BELBUCA | $ | 8,497 | $ | 31 | $ | 122,697 | ||||||
BUNAVAIL | 2,185 | 5,161 | 40,885 | |||||||||
ONSOLIS | 1,254 | 1,487 | 3,054 | |||||||||
Buprenorphine ER Injection | 885 | 5,674 | 9,785 | |||||||||
Clonidine Topical Gel* | 219 | 6,525 | 27,519 |
|
Revenues
The following table summarizes(i) net product sales for BELBUCA, Symproic and BUNAVAIL, and (ii) the years ended December 31 in thousands:
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
BELBUCA | $ | 45,988 | $ | 26,980 | $ | — | ||||||
% of net product sales | 89 | % | 77 | % | 0 | % | ||||||
BUNAVAIL | 5,422 | 7,942 | 8,266 | |||||||||
% of net product sales | 11 | % | 23 | % | 100 | % | ||||||
|
|
|
|
|
| |||||||
Net product sales | $ | 51,410 | $ | 34,922 | $ | 8,266 |
•Developing a robust medical affairs plan for BELBUCA and defining future clinical studies, publications, congress activities, and educational initiatives to deliver on the strategic imperatives in order to inform all stakeholders on the attributes of BELBUCA in order that it can become an option for patients suffering with chronic pain’
•Planning public policy initiatives and developing policy expertise in order to capitalize on federal and state tailwinds that focus on safer opioid options in chronic pain;
•Providing Pharmacovigilance, orregulatory, pharmacovigilance, PV, and drug safety support for BELBUCA, BUNAVAIL,Symproic, and ONSOLIS.
2019:
Additionally, three scientific manuscripts were submitted (and accepted) to tier-one pain journals in 2019 and will be published in 2020. Finally, four scientific abstracts regarding BELBUCA were submitted, accepted, and presented at PAINWeek 2019.
ONSOLIS.We had been collaborating with our U.S. partner Collegium on the ongoing transfer of manufacturing (including the production of registration batches) toward the submission of a Prior Approval Supplement to the FDA. In December 2017,March 2020, we announced the termination of our U.S. ONSOLIS agreement with Collegium. that we were discontinuing marketing for BUNAVAIL.
Buprenorphine Extended Release Injection.In 2014, we entered into an agreement with Evonikamortized may have to develop and commercialize a long-acting buprenorphine injection capable of providing 30 days of continuous buprenorphine blood concentrations following a single monthly injection. In 2015, we completed initial development work and preclinical studies which have resultedbe replaced in the identificationfuture, the cash requirements for which are not reflected in EBITDA;
expense and although it has been and will continue to be for the foreseeable future a recurring expense for our business, these expenses do not affect our cash position; and
Year Ended December 31, | |||||||||||||||||
Reconciliation of GAAP net income/(loss) to EBITDA (non-GAAP) | 2019 | 2018 | 2017 | ||||||||||||||
GAAP net income/(loss) | $ | (15,305) | $ | (33,867) | $ | 5,285 | |||||||||||
Add back: | |||||||||||||||||
Provision for income taxes | 5 | 14 | (15,972) | ||||||||||||||
Net interest expense | 19,036 | 10,206 | (18,733) | ||||||||||||||
Depreciation and amortization | 8,748 | 6,188 | 6,119 | ||||||||||||||
EBITDA | $ | 12,484 | $ | (17,459) | $ | (23,301) | |||||||||||
Reconciliation of GAAP net income/(loss) to Non-GAAP net income/(loss) | |||||||||||||||||
GAAP net income/(loss) | (15,305) | (33,867) | 5,285 | ||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||
Stock-based compensation expense | 5,416 | 5,941 | 14,800 | ||||||||||||||
Amortization of intangible assets | 6,981 | 5,157 | 5,425 | ||||||||||||||
Amortization of warrant discount | 448 | 1,076 | 832 | ||||||||||||||
Non-recurring financial impact of debt refinance | 11,866 | — | — | ||||||||||||||
Non-recurring financial impact of BUNAVAIL discontinuation | 3,750 | 0 | 0 | ||||||||||||||
Non-recurring financial impact of bargain purchase gain | 0 | 0 | (27,336) | ||||||||||||||
Non-GAAP net income/(loss) | $ | 13,156 | $ | (21,693) | $ | (994) |
development agreements ,and the commercialization of our BELBUCA, Symproic and BUNAVAIL products. We intend to finance our commercialization and working capital needs from existing cash, earnings from the commercialization of BELBUCA and BUNAVAIL,Symproic, royalty revenue, new sources of debt and equity financing, existing and new licensing and commercial partnership agreements and, potentially, through the exercise of outstanding common stock options and warrants to purchase common stock.
On May 11, 2016, we and Collegium executed a definitive License and Development Agreement under which we granted to Collegium the exclusive rights to develop and commercialize ONSOLIS in the U.S, resulting in a milestone of $2.5 million paid to us in June 2016.
During 2016, we received cumulative payments totaling $1.3 million which related to royalties based on product purchased in Europe by Mylan of BREAKYL.
During 2016, we received cumulative payments totaling $0.9 which related to royalties based on product purchased in Taiwan by TTY of PAINKYL.
On December 8, 2016, we announced that we had entered into an agreement Endo terminating Endo’s licensing of rights for BELBUCA. The closing of the Termination Agreement, and the formal termination of the BELBUCA license to Endo and closing of the transactions occurred on January 6, 2017.
On July 12, 2017, we, along with Purdue Pharma (Canada) announced that we had signed an exclusive agreement for the licensing, distribution, marketing and sale of BELBUCA in Canada. In return for the licensing and distribution rights to BELBUCA in Canada, we were eligible to receive upfront and potential milestones of up to CAD 4.5 million as well as royalties on net sales, including approximately CAD 1.5 million (0.5 million CAD and 1.0 million CAD received August 2017 and October 2017, respectfully).
During 2017, we received cumulative payments totaling $2.2 million which related to royalties based on product purchased in Europe by Mylan of BREAKYL.
During 2017, we received cumulative payments totaling $1.2 million which related to royalties based on product purchased in Taiwan by TTY of PAINKYL.
On May 22, 2018, we announced the closing of the $50 million registered direct offering of newly designated Series B Stock. The offering closed on May 21, 2018, yielding net proceeds of $47.9 million to us.
During 2018, we received cumulative payments totaling $1.8 million which related to royalties based on product purchased in Europe by Mylan of BREAKYL.
During 2018, we received cumulative payments totaling $1.5 million which related to royalties based on product purchased in Taiwan by TTY of PAINKYL.
During 2018, we received cumulative payments totaling $1.0 million which related to milestones and royalties based on product purchased in Canada by Purdue of BELBUCA.
CRG Term Loan Agreement
On February 21, 2017, we entered into a term loan agreement, or the Term Loan Agreement with CRG, as administrative agent and collateral agent, and the lenders named in the Term Loan Agreement (the “Lenders”). We utilized approximately $29.4 million of the initial loan proceeds under the Term Loan Agreement to repay all the amounts owed by us under the 2015 MidCap Credit Agreement.
Pursuant to the Term Loan Agreement, we borrowed $45.0 million from the Lenders as of the Closing Date and were eligible to borrow up to an additional $15.0 million contingent upon achievement of certain conditions. On December 26, 2017, we were eligible and elected to receive the Second Draw for gross proceeds of $15.0 million.
After the payoff of the MidCap Credit Agreement, we utilized the initial proceeds under the Term Loan Agreement (after deducting loan origination costs and broker and other fees) of approximately $13.7 million, plus any additional amounts borrowed in the future, for general corporate purposes and working capital. The original Term Loan Agreement hada six-year term with three years of interest-only payments, (from 2017-2019). On May 16, 2018, we entered into an amendment to our Term Loan Agreement with CRG. Pursuant to the amendment: (i) the interest only period of the Loan Agreement was extended by one year, and certain milestones previously required for the extended interest only period have been removed; (ii) the “PIK” period (under which a portion
of the interest accrued under the Loan Agreement can be deferred to maturity) will also be extended for a year, (to 2020); (iii) amortization of the loan principal can be deferred until maturity (making the payment of the loan a “balloon” payment) if we achieve and maintain a market capitalization of $200 million prior to the conclusion of the interest only period (provided that if we achieve, and thereafter falls below a $200 million market capitalization, amortization of the loan principal will resume); and (iv) certain our revenue targets, the failure of which would create an event of default under the loan, have been recalculated. Interest on the amounts borrowed under the Term Loan Agreement accrues at an annual fixed rate of 12.50%, 3.5% of which may be deferred during the interest-only period by adding such amount to the aggregate principal loan amount. On each borrowing date (including the Closing Date), we are required to pay CRG a financing fee based on the loan drawn on that date. We are also required to pay the Lenders a final payment fee equivalent to 9% of the original loan amount upon repayment of the loans in full, in addition to prepayment amounts described below.
At December 31, 2018,2019, we had cash of approximately $43.8$63.9 million. We used $24.1generated $11.1 million of cash in operations during the year ended December 31, 20182019 and had stockholders’ equity of $29.7$69.8 million, versus stockholders’ equity of $8.9$29.7 million at December 31, 2017.2018. We believe that we have sufficient current cash, along with expected proceeds from sales, to manage the business as currently planned.
Also, product development timelines and agreements with our development partners, the ability to scale up or reduce personnel and associated costs are factors considered throughout the product development life cycle. Available resources may be consumed more rapidly than currently anticipated, resulting in the need for additional funding.
•public equity markets;
•private equity financings;
•commercialization agreements and collaborative arrangements;
sale of product royalty;
•grants and new license revenues;
•equipment financing;
•public or private debt; and
•exercise of existing warrants and options.
Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
Operating lease obligations | $ | 1,300 | $ | 351 | $ | 730 | $ | 219 | $ | — | ||||||||||
Secured loan facility | 61,784 | — | 30,892 | 30,892 | — | |||||||||||||||
Interest on secured loan facility | 22,568 | 5,638 | 11,292 | 5,638 | — |
Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
Minimum royalty expenses* | 12,750 | 1,500 | 3,000 | 3,000 | 5,250 | |||||||||||||||
Purchase obligations** | 1,508 | 493 | 1,015 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total contractual cash obligations | $ | 99,910 | $ | 7,982 | $ | 46,929 | $ | 39,749 | $ | 5,250 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period Total Less than
1 year1-3 years 3-5 years More than
5 yearsOperating lease obligations $ 949 $ 360 $ 589 $ — $ — Secured loan facility 60,000 — 13,846 46,154 — Interest on secured loan facility 23,932 5,997 11,614 6,321 — Minimum royalty expenses* 11,250 1,500 3,000 3,000 3,750 Purchase obligations** 1,885 1,363 522 — — Total contractual cash obligations $ 98,016 $ 9,220 $ 29,571 $ 55,475 $ 3,750
|
United States.U.S. The Federal Deposit Insurance Corporation covers $0.25 million for substantially all depository accounts. As of December 31, 2018,2019, we had approximately $43.6$65.1 million, which exceeded these insured limits.limited, butand may in the future have increased, clinicalcommercial, manufacturing and commercial manufacturingclinical agreements which are denominated in Euros CAD or other foreign currencies. As a result, our financial results could be affected by factors such as a change in the foreign currency exchange rate between the U.S. dollar and theor Euro CAD or other applicable currencies, or by weak economic Canada or elsewhere in the world. Such amounts are currently immaterial to our financial position or results of operations. We are not currently engaged in any foreign currency hedging activities.Item 8.Financial Statements and Supplementary Data.
|
|
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our as defined inRules 13a-15(e) and15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, at December 31, 2018, such disclosure controls and procedures were effective.Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in ourthe reports filedthat the Company files or submittedsubmits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified byin the SEC. Disclosure controlsSEC's rules and procedures include, without limitation, controlsforms and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure.
provide reasonable assurance of achieving their objectives. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2019.
|
|
|
|
|
Name | Age | Position(s) Held | |||||||||||||
Peter S. Greenleaf | 50 | Chairman of the Board and Director | |||||||||||||
Mark A. Sirgo, Pharm.D. | 66 | Vice Chairman of the Board and Director | |||||||||||||
Herm Cukier | 53 | Chief Executive Officer and Director | |||||||||||||
Scott M. Plesha | 55 | President and Chief Commercial Officer | |||||||||||||
Mary Theresa Coelho | 58 | Chief Financial Officer and Treasurer | |||||||||||||
Thomas B. Smith, M.D. | 59 | Chief Medical Officer | |||||||||||||
James Vollins | 51 | General Counsel, Chief Compliance Officer and Corporate Secretary | |||||||||||||
Frank E. O’Donnell, Jr., M.D. | 70 | Director | |||||||||||||
| 69 | Director | |||||||||||||
Todd C. Davis | 59 | Director | |||||||||||||
Kevin Kotler | 48 | Director | |||||||||||||
Vanila Singh, M.D., MAMC | 49 | Director |
2009 to 2010, he served as President, Chief Executive Officer, and board member at Reverion Pharmaceuticals, Inc., astart-up company associated with Weill Cornell Medical College. From 2005 to 2008, he served as Chief Marketing Officer and member of the Executive Committee at Organon Biosciences, which was acquired by Schering-Plough.Schering-
Dr. O’DonnellO'Donnell is a former
William
Ernest R. De Paolantonio,CPA, MBA, served as our Chief Financial Officer and Treasurer from October 2013 to January 2019. Mr. De Paolantonio remains at our Company to allow for an orderly transition to the new CFO. Mr. De Paolantonio has over 35 years of varied financial and business experience in the pharmaceutical industry. Prior to joining the company, he served as the Chief Financial Officer of CorePharma LLC, a private specialty generic company, and was directly involved in the financial and commercial strategy to establish Core’s proprietary labeled portfolio of products. In addition, he previously served in finance and controllership positions in roles of increasing responsibility at Colombia Laboratories, where he was also responsible for business development and logistics, including supply chain management for the company’s first commercial product launch. Mr. De Paolantonio has served in various financial positions in senior management at Taro Pharmaceuticals where he was the Corporate Controller, Watson Pharmaceuticals where he was Executive Director of Finance, Group Controller and responsible for managing the Corporation’s supply chain of Active Pharmaceutical Ingredients, and GlaxoSmithKline where he began his career in finance and spent over 17 years in areas of increasing responsibility including; Manufacturing, Corporate Finance, R&D and U.S. Pharmaceuticals where he was Group Controller. Mr. De Paolantonio received his Bachelor of Arts Degree from Lycoming College; his MBA in Finance at Saint Joseph’s University and is a licensed CPA.
served as Vice President, Pharmaceutical Development and Manufacturing at Salix Pharmaceuticals, where since 2001 he established the Pharmaceutical Development and Manufacturing team and contributed to
•evaluates the independence and performance of, and assesses the qualifications of, our independent auditorregistered public accounting firm and engages such independent auditor;
•approves the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services and approves in advance anynon-audit service and fees therefor to be provided by the independent auditor;
•reviews the financial statements to be included in our Annual Report on Form10-K and Quarterly Reports on Form10-Q and reviews with management and the independent auditorsregistered public accounting firm the results of the annual audit and reviews of our quarterly financial statements;
•oversees all aspects of our systems of internal accounting and financial reporting control; and
•provides oversight in connection with legal, ethical and risk management compliance programs established by management and the board, including compliance with requirements of Sarbanes-Oxley and makes recommendations to the board of directors regarding corporate governance issues and policy decisions.
Nominating and Corporate Governance Committee
2019.
2019.
December 9, 2019.
ethics is also available in print, without charge, upon written request to 4131 ParkLake Avenue, Suite #225, Raleigh, NC 27612. Attn: James Vollins.
None
Compensation Committee Report
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2018.
This Report was submitted by the following members of the Compensation Committee of the Board:
Todd C. Davis, Chairman
Peter C. Greenleaf
Kevin Kotler
The information contained in the foregoing Compensation Committee Report shall not be deemed to be “soliciting material” or “filed” with the SEC, nor shall such information be incorporated by reference into a future filing under the Securities Act or the Exchange Act, except to the extent BioDelivery Sciences International, Inc. specifically incorporates this Report by reference therein.
Compensation Discussion and Analysis
The Compensation Committee of our board of directors has the responsibility to review, determine and approve the compensation for our executive officers. Further, the Compensation Committee oversees our overall compensation strategy, including compensation policies, plans and programs that cover all employees.
We employed seven executive officers, each of whom served as a “Named Executive Officer” (or NEO) for purposes of SEC reporting during 2018: (1) Herm Cukier, our Chief Executive Officer; (2) Mark A. Sirgo, Pharm.D., our former President and Chief Executive Officer who retired on January 2, 2018 and who continues to serve as Vice Chairman of our board of directors; (3) Ernest R. De Paolantonio, CPA, MBA, our retiring Treasurer and Chief Financial Officer; (4) Scott Plesha, our President and Chief Commercial Officer; (5) Dr. Thomas Smith, our Chief Medical Officer; (6) James Vollins, our General Counsel, Chief Compliance Officer and Corporate Secretary and (7) Niraj Vasisht, Ph.D., our former Senior Vice President and Chief Technology Officer who retired on February 4, 2018.
This Compensation Discussion and Analysis sets forth a discussion of the compensation for our NEOs as of December 31, 2018 as well as a discussion of our philosophies underlying the compensation for our NEOs and our employees generally.
Objectives of Our Compensation Program
The Compensation Committee’s philosophy seeks to align the interests of our stockholders, officers and employees by tying compensation to individual performance and the Company’s performance, both short-term in the form of salary and annual cash bonus payments, and long-term in the form of incentive equity awards. The objectives of our compensation program enhance our ability to:
attract and retain qualified and talented individuals;
share the risks and rewards of our business with our NEOs and employees; and
provide reasonable and appropriate incentives to our team for building long-term value within our company, in each case in a manner comparable to companies similar to ours.
In addition, we strive to be competitive with other similarly-situated companies in our industry. The process of developing and commercializing pharmaceutical products is a long-term proposition and outcomes may not be measurable for several years. Therefore, to build long-term value for our stockholders, and to achieve our business objectives, we believe that we must compensate our officers and employees in a competitive and fair manner that reflects our current activities but also reflects contributions to building long-term value.
We utilize the services of the Radford Group, an AON consulting company (which we refer to herein as Radford) to review compensation programs of peer companies to assist the Compensation Committee in determining the compensation levels for our
NEOs, as well as for other employees of ours. Radford is a recognized independent consulting company and services clients throughout the United States.
The companies that comprise our peer group are selected and reviewed no less frequently than biennially. The current peer group used to evaluate compensation for the fiscal year ended December 31, 2018 was approved by the Compensation Committee in September 2017 and includes the following companies:
|
| |
With respect to our employees andnon-senior management, we will also take into consideration regional market data in determining appropriate compensation packages, and we have in the past relied on Radford to provide us with such data.
Elements of Our Compensation Program and Why We Chose Each
Main Compensation Components
Our company-wide compensation program, including for our NEOs, is broken down into three main components: base salary, performance cash bonuses and potential long-term compensation in the form of stock options or restricted stock units (or RSUs). We believe these three components constitute the minimum essential elements of a competitive compensation package in our industry. We also have a Performance Long Term Incentive Plan (which we refer to herein as the LTIP) for our NEOs and selected senior officers, which compensates such employees with RSUs based on our achievement of certainpre-determined revenue performance goals.
Salary
Base salary is used to recognize the experience, skills, knowledge and responsibilities required of our NEOs as well as recognizing the competitive nature of the biopharmaceutical industry. This is determined partially by evaluating our peer companies as well as the degree of responsibility and experience levels of our NEOs and their overall contributions to our company. Base salary is one component of the compensation package for NEOs; the other components being cash bonuses, annual equity grants, a long-term incentive plan and our benefit programs. Base salary is determined in advance whereas the other components of compensation are awarded in varying degrees following an assessment of the performance of a NEO. This approach to compensation reflects the philosophy of our board of directors and its Compensation Committee to emphasize and reward, on an annual basis, performance levels achieved by our NEOs, and to provide appropriate retention incentives based on future performance.
Performance Cash Bonus Plan
We have a performance cash bonus plan under which bonuses are paid to our NEOs based on achievement of our performance goals and objectives established by the Compensation Committee and/or our board of directors as well as on individual performance. The bonus program is discretionary and is intended to: (i) strengthen the connection between individual compensation and our achievements; (ii) encourage teamwork among all disciplines within our company; (iii) reinforce ourpay-for-performance philosophy by awarding higher bonuses to higher performing employees; and (iv) help ensure that our cash compensation is competitive. Depending on our company’s cash position, the Compensation Committee and our board of directors have the discretion after consulting with our NEOs to not pay (or pay more limited) cash bonuses in order that we may conserve cash and support ongoing development programs and commercialization efforts. Regardless of our cash position, we consistently grant annual merit-based stock
options (and, more recently in the case of senior executives, RSUs) to continue incentivizing both our senior management and our employees.
Based on their employment agreements, each NEO is assigned a target payout under the performance cash bonus plan, expressed as a percentage of base salary for the year. Actual payouts under the performance cash bonus plan are based on the achievement of corporate performance goals and an assessment of individual performance. For the NEOs, the corporate goals receive the highest weighting to ensure that the bonus system for our management team is closely tied to our corporate performance. Each employee also has specific individual goals and objectives as well that are tied to the overall corporate goals. For employees,mid-year andend-of-year progress is reviewed with the employees’ managers.
Equity Incentive Compensation
We view long-term compensation, currently in the form of stock options and RSUs, which generally vest in annual increments over three years (other than awards under our LTIP, which vest immediately if awarded, and performance based awards as described below), as a tool to align the interests of our NEOs and employees generally with the creation of stockholder value, to motivate our employees to achieve and exceed corporate and individual objectives and to encourage them to remain employed by us. While cash compensation is a significant component of employees’ overall compensation, the Compensation Committee and our board of directors (as well as our NEOs) believe that the driving force of any employee working in a growing pharmaceutical company should be strong equity participation. We believe that this not only creates the potential for substantial longer term corporate value but also serves to motivate employees and retain their loyalty and commitment with appropriate personal compensation over a longer period of time. Our equity awards are granted under our 2011 Equity Incentive Plan (as the same may be amended, supplemented or superseded from time to time, which we refer to herein as the Plan).
During 2018, we granted equity incentive awards with two types of vesting: time-based and performance-based.
Time-based vesting. The Compensation Committee believes that because time-vested stock options and RSUs have a three-year vesting schedule that begins one year after the date of the award, the equity grants constitute a significant retention incentive and a tool to foster continuity of management, an important factor for a company with a relatively low number of employees.
Performance-based vesting. Based on the Compensation Committee’s review in 2017 of market practices, pronouncements by corporate governance advisory services and discussions with our institutional investors, beginning with the annual equity awards granted to senior executives (including our NEOs) in February 2017 and February 2018,one-half of the RSUs granted were performance-based and vest over a three-year period based on the level of achievement of specified predetermined net revenue and operating income targets, with the remainingone-half being time-vested as described above.
On January 31, 2019, the Compensation Committee determined that 1/3rd of the 2018 performance-based RSUs would vest at a rate of 100% according to the achievement of the aforementioned targets. Such RSUs will vest on the first open window after the filing of our Annual Report on Form10-K.
Performance Long Term Incentive Plan
In December 2012, in anticipation of the commencement of revenue generating operations by our company by means of product commercialization, the Compensation Committee approved our LTIP. The LTIP is designed as an incentive for our senior management (including our NEOs) to generate revenue for us.
The LTIP consists of RSUs (which we refer to herein as Performance RSUs), which are rights to acquire shares of our common stock upon satisfaction of performance-based goals. All Performance RSUs granted under the LTIP will be granted under the Plan as “Performance Compensation Awards” under such plan. The participants in the LTIP are either NEOs or senior officers of ours.
The term of the LTIP began with our fiscal year ended December 31, 2012 and lasts through our fiscal year ended December 31, 2019. The total number of Performance RSUs covered by the LTIP is 1,078,000, of which an aggregate of 978,000 were awarded in 2012 (and an aggregate of 35,000 in 2015). The Performance RSUs under the LTIP are subject to potential vesting each year over the eight-year term of the LTIP depending on the achievement of revenue by us, as reported in our Annual Report on Form10-K. During years 2013 through 2018, a cumulative total of 139,882 Performance RSUs vested. Performance RSUs will be valued on the day of issuance and will vest annually on the last day preceding the first open trading window after filing our Annual Report on Form10-K based on the revenue achieved during the prior fiscal year as a proportion of the total cumulative revenue target for the entire term of the LTIP (which we call the Predefined Cumulative Revenue). Predefined Cumulative Revenue is a predefined aggregate revenue target for the entire term of the LTIP that was determined by the
Compensation Committee in conjunction with our executive management. The Predefined Cumulative Revenue may be adjusted by the Compensation Committee upon the occurrence of extraordinary corporate events during the term of the LTIP (such as acquisitions by us of revenue generating businesses or assets).
Other Compensation
In addition to the main components of compensation outlined above, we also provide contractual severance and/or change in control benefits to the NEOs as well as to Terry Coelho, who was appointed as our Chief Financial Officer as of January 15, 2019, (see “Appointment of Chief Financial Officer” below), to Joseph Lockhart, our Senior Vice President Operations and to Albert J. Medwar, our former Senior Vice President, Corporate and Business Development (who retired from our company on April 1, 2018 and received a retirement benefits package that included equity features). Ernest R. De Paolantonio, our former Treasurer and Chief Financial Officer, executed a transitional service and separation agreement with us on January 23, 2019 and received contractual severance benefits as a condition of his retirement (see “De Paolantonio Retirement Agreement”). The change in control benefits for all applicable persons has a “double trigger.” A double-trigger means that the executive officers will receive the change in control benefits described in the agreements only if there is both (1) a Change in Control of our company (as defined in the agreements) and (2) a termination by us of the applicable person’s employment “without cause” or a resignation by the applicable persons for “good reason” (as defined in the agreements) within a specified time period prior to or following the Change in Control. We believe this double trigger requirement creates the potential to maximize stockholder value because it prevents an unintended windfall to management as no benefits are triggered solely in the event of a Change in Control while providing appropriate incentives to act in furtherance of a change in control that may be in the best interests of the stockholders. We believe these severance or change in control benefits are important elements of our compensation program that assist us in retaining talented individuals at the executive and senior management levels and that these arrangements help to promote stability and continuity of our executives and senior management team. We also believe that the interests of our stockholders will be best served if the interests of these members of our management are aligned with theirs. Furthermore, we believe that providing change in control benefits lessens or eliminates any potential reluctance of members of our management to pursue potential change in control transactions that may be in the best interests of the stockholders. Finally, we believe that it is important to provide severance benefits to members of our management to promote stability and to focus on the job at hand.
We also provide benefits to the executive officers that are generally available to all regular full-time employees of ours, including our medical and dental insurance, life insurance and a 401(k) match for all individuals who participate in the 401(k) plan. Currently, we do not provide any perquisites to any of our NEOs. Further, we do not have pension arrangements or post-retirement health coverage for our executive officers or employees. We also do not have deferred compensation plans other than allowing senior executive recipients of RSUs to defer payment of RSUs that may vest in future years, subject to compliance with Section 409A of the Internal Revenue Code (or the Code) and related rules.
All our employees not specifically under contract are“at-will” employees, which means that their employment can be terminated at any time for any reason by either us or the employee. Our NEOs (as well as certain of our senior managers) have employment agreements that provide lump sum compensation in the event of their termination without cause or, under certain circumstances, upon a Change of Control.
Determination of Compensation Amounts
Many factors impact the determination of compensation amounts for our NEOs, including the individual’s role in our company and individual performance, length of service with us, competition for talent, individual compensation package, assessments of internal pay equity and industry data. Stock price performance has generally not been a significant factor in determining annual compensation because the price of our common stock is subject to a variety of factors outside of our control.
Industry Survey Data
In collaboration with our compensation advisor, our Compensation Committee establishes a list of peer companies to best ensure that we are compensating our executives on a fair and reasonable basis, as set forth above under the heading “Objectives of our Compensation Program.” We also utilize data for below-executive level personnel, which data focuses onsimilarly-sized life science companies in the Southeastern region of the United States. The availability of peer data is used by the Compensation Committee strictly as a guide in determining compensation levels regarding salaries, cash bonuses and annual equity grants to all employees. However, the availability of this data does not imply that the Compensation Committee is under any obligation to exactly follow peer companies in compensation matters.
Determination of Base Salaries
As a guideline for NEO base salary, we perform formal benchmarking against respective comparable positions in our established peer group. Our guideline is to set targeted NEO salary ranges between the 25th and 50th percentile for comparable positions within our peer group. We then adjust salaries based on our assessment of our NEOs’ levels of responsibility, experience, overall compensation structure and individual performance. The Compensation Committee has the discretion if it believes circumstances warrant, to go above the 50th percentile of the peer group. The Compensation Committee is not obliged to raise salaries purely on the availability of data. Merit-based increases to salaries of executive officers are based on our assessment of individual performance and the relationship to applicable salary ranges. Cost of living adjustments may also be a part of that assessment. The Compensation Committee, in recent years, has tended to maintain cash compensation levels at or near the 50th percentile but to exceed that level in determining equity compensation. The emphasis on equity compensation reflects the Committee’s objective, given that we have only recently engaged in revenue generating operations, to incentivize personnel and to preserve cash in a prudent manner and yet reward personnel for outstanding performance.
Performance Cash Bonus Plan
Concurrently with the beginning of each calendar year, preliminary corporate goals that reflect our business priorities for the coming year are prepared by our NEOs with input from other officers. The draft goals are presented to the Compensation Committee and our full board at the beginning of each year and discussed, revised as necessary, and then approved by our board of directors. The Compensation Committee then reviews the final goals to determine and confirm their appropriateness for use as performance measurements for purposes of the bonus program. The goals may bere-visited during the year and potentially restated in the event of significant changes in corporate strategy or the occurrence of significant corporate events. Following the agreement of our board of directors on the corporate objectives, the goals are then shared with all employees in a formal meeting(s) and are reviewed periodically throughout the year at monthly staff meetings and quarterly board of director meetings.
The performance cash bonus plan for our executive officers and employees in 2018 was adopted by the Compensation Committee in February 2018. The plan sets forth target bonus opportunities, as a percentage of salary, based on the level of responsibility of the position, ranging up to 55% of salary for Herm Cukier, our CEO, up to 45% of salary for our NEOs and up to 30% of salary for certain other officers. In setting these percentages, the Compensation Committee determined that the above percentages were reasonable and in line with our peer group. Each employee has the opportunity to achieve a targeted amount, depending on how corporate goals and objectives are achieved, with variances on an “employee by employee” basis to be determined by our Compensation Committee in consultation with senior executives and employees’ direct reports.
Determination of Equity Incentive Compensation
To assist us in assessing the reasonableness of our equity grant amounts, historically we have reviewed information supplied by our compensation consultant. Such information included equity data from a cross-section of the companies in the above-mentioned surveys. Initially,on-hire stock option grant amounts have generally been targeted at the 25th to 50th percentile for that position or similar industry position, adjusted for internal equity, experience level of the individual and the individual’s total mix of compensation and benefits provided in his or her offer package. Initialon-hire grants typically vest over three years.
Beginning in January 2016, the Compensation Committee expanded its criteria for equity awards, considering not only the financial value of awards, but also the “burn rate” (meaning the number of shares awarded as a percentage of total outstanding shares). These two criteria (i.e. financial value and burn rate) often result in disparate computations when contrasted to peer group criteria. Accordingly, the Compensation Committee has attempted to equitably balance those two factors to achieve appropriate equity awards.
In early 2017 and early 2018, with respect to equity awards to senior executives, including NEOs,one-half of the RSUs were awarded in the form of time-based RSUs, as have been exclusively awarded to those executives in recent years, and for the first time,one-half of the RSUs were in the form of performance-based RSUs as described above. In early 2019, the Compensation Committee further expanded upon its prior equity grant philosophy and decided to make award decisions that were more in line with current industry standards.
For a discussion of equity awards made in early 2019, see “Equity Awards in January 2019” under “Compensation Decisions For Performance in 2018” below.
Equity Grant Practices
All stock options and/or RSUs granted to the NEOs and other executives are approved by the Compensation Committee. Exercise prices for options are set using a30-day volume weighted average price method, which we define as the closing price of our common stock on the Nasdaq Capital Market on the trading day of the date of grant and the 30 trading days preceding that date. RSU grants are valued on the day of issuance and are vested (in the case of either time-based or performance-based vesting), if earned on
the last day preceding an open trading window after filing our Annual Report on Form10-K. Grants are generally made: (i) on the employee’s start date and (ii) at board of director meetings held each January or February and following annual performance reviews. However, grants have been made at other times during the year. The size ofyear-end grants for each NEO is assessed against our internal equity guidelines. Current market conditions for grants for comparable positions and internal equity may also be assessed. Also, grants may be made relating to promotions orjob-related changes in responsibilities. In addition, on occasion, the Compensation Committee may make special awards for extraordinary individual or our company performance.
Compensation Setting Process
At the first of the year, meetings of our board of directors and the Compensation Committee, overall corporate performance and relative achievement of the corporate goals for the prior year are assessed. The relative achievement of each goal is assessed, and the summation of the individual components results in an overall corporate goal rating, expressed as a percentage.
Also, near the end of the year, the CEO evaluates the individual performance of each NEO (other than himself) and provides the Compensation Committee with an assessment of the performance of such NEO. In determining the individual performance ratings of the NEOs, we assess performance against many factors, including each NEO’s relative contributions to our corporate goals, demonstrated career growth, level of performance in the face of available resources and other challenges, and the respective officer’s department’s overall performance. This assessment is conducted in a holistic fashion, in contrast to the summation of individual components as is done to arrive at the corporate goal rating.
Following a qualitative assessment of each individual NEO’s performance, our policies provide guidelines for translating this performance assessment into a numerical rating. Both the initial qualitative assessment and the translation into a numerical rating are made by the Compensation Committee on a discretionary basis. We believe that conducting a discretionary assessment for the individual component of the NEOs’ performance provides for flexibility in the evaluation of our NEOs and their adaptability to addressing potential changes in our priorities throughout the year.
The Compensation Committee looks to the CEO’s performance assessments of the other NEOs and his recommendations regarding a performance rating for each, as well as input from the other members of our board of directors. These recommendations may be adjusted by the Compensation Committee prior to finalization. For the CEO, the Compensation Committee evaluates his performance, taking into consideration input from the other members of our board of directors, and considers the achievement of overall corporate objectives by both the CEO specifically and our company generally. The CEO is not present during the Compensation Committee’s deliberations regarding his compensation.
The CEO may also present any recommended changes to base salary and recommendations for annual equity grant amounts for NEOs and other senior executives.
The Compensation Committee has the authority to directly engage, at our expense, any compensation consultants or other advisors (such as Radford) that it deems necessary to determine the amount and form of employee, executive and director compensation. In determining the amount and form of employee, executive and director compensation, the Compensation Committee has reviewed and discussed historical salary information as well as salaries for similar positions at comparable companies. However, the availability of this data does not imply that the Compensation Committee is under any obligation to exactly follow peer companies’ compensation practices.
We paid consultant fees to Radford of $0.1 million in 2018. NEOs may have indirect input in the compensation results for other executive officers by virtue of their participation in the performance review and feedback process for the other executive officers.
Compensation Decisions for Performance in 2018
General Assessment of Management Performance in 2018
The Compensation Committee and our board of directors conducted the performance and compensation review for 2018 in January 2019. The Compensation Committee compared performance as elaborated below.
The key corporate objectives for 2018 included the following:
(1) Key financial objectives including targeted revenue and cash on hand, (2) commercial objectives including BELBUCA sales and preferred coverage, (3) organizational objectives including hiring of key NEOs and sales team expansions, (4) operational objectives including cost of goods reductions and improve production and inventory efficiencies, (5) medical objectives including development of medical communication and data generation plans, and (6) legal objectives including continued success in ongoing and prospective litigation with respect to our intellectual property and patent portfolio.
The Compensation Committee determined that the Company had achieved all 2018 key objectives as established and exceeded expectations of targeted performance measures.
2018 Cash Bonus Calculations
After reviewing the achievement of the corporate goals and objectives for 2018 as noted above, the Compensation Committee determined that all NEOs should be awarded a cash bonus at 110% of their target, adjusting for time-served during 2018 for newly hired NEOs. A cash bonus pool, equal to 110% of the aggregate of individual bonus opportunities of all other employees, was established with our executives having the authority to award individual bonuses from that pool with respect to these employees who reported to them. The cost of all such cash bonuses for 2018 performance (but paid in March 2019) was approximately $0.8 million for NEOs and approximately $0.7 million for employees.
Equity Awards in January 2019
On January 31, 2019, the total amount of stock options awarded to our NEOs and senior executives was 1,120,000, which options vest annually inone-third equal increments beginning one year after the date of grant and had an approximate Black Scholes value of $4.4 million.
The total amount of the RSUs awarded to our NEOs and senior executives was 190,250, having an approximate value on the date preceding the grant of $0.9 million based on a share price of $4.50.
All RSUs and stock options awarded in January 2019 were granted pursuant to the Plan, as amended.
Individual Compensation of Herm Cukier, our Chief Executive Officer
Mr. Cukier, who joined our Company May 2018, received a base salary of $570,000 in 2018.
Mr. Cukier was awarded a cash bonus for 2018 in the amount of $231,050, which is 110% of his target bonus of 55% of his base salary in 2018, after further adjustment for time served during 2018, a calculation consistent with our cash bonus policy. Mr. Cukier was also granted in January 2019, 540,000 stock options and 93,750 RSUs, which are subject to time-based vesting.
Individual Compensation of Ernest R. De Paolantonio, our Chief Financial Officer during 2018.
Mr. De Paolantonio’s received a base salary of $370,000 in 2018.
Mr. De Paolantonio was awarded a cash bonus for 2018 in the amount of $162,800, which is 110% of his target bonus of 40% of his base salary in 2018, a calculation consistent with our cash bonus policy.
Individual Compensation of Scott Plesha, our President and Chief Commercial Officer
Mr. Plesha, who joined our Company in August 2015 and promoted to President in January 2018, received a base salary of $365,000 in 2018.
Mr. Plesha was awarded a cash bonus for 2018 in the amount of $180,675, which is 110% of his target bonus of 40% of his base salary in 2018, a calculation consistent with our cash bonus policy. Mr. Plesha was also granted in January 2019, 245,000 stock options and 40,000 RSUs, which are subject to time-based vesting.
Individual Compensation of Dr. Thomas Smith, our Chief Medical Officer
Dr. Smith, who joined our Company in July 2018, received a base salary of $345,000 in 2018.
Dr. Smith was awarded a cash bonus for 2018 in the amount of $50,094, which is 110% of his target bonus of 40% of his base salary in 2018, after further adjustment for time served during 2018, a calculation consistent with our cash bonus policy. Dr. Smith was also granted in January 2019, 130,000 stock options and 23,000 RSUs, which are subject to time-based vesting.
Individual Compensation of James Vollins, our General Counsel, Chief Compliance Officer and Corporate Secretary
Mr. Vollins, who joined our Company in November 2018, received a base salary of $310,000 in 2018.
Mr. Vollins’ target bonus is 40% of his base salary in 2018, a calculation consistent with our cash bonus policy. Mr. Vollins was also granted in January 2019, 65,000 stock options and 11,500 RSUs, which are subject to time-based vesting.
Appointment of Chief Financial Officer
Ms. Coelho joined our Company in January 2019 and receives a base salary of $385,000. Ms. Coelho’s target bonus is 45% of her base salary for 2019, a calculation consistent with our cash bonus policy.
De Paolantonio Retirement Agreement
On January 23, 2019, we entered into a Transitional Service and Separation Agreement (the “Separation Agreement”) with Mr. De Paolantonio, our former Chief Financial Officer and Treasurer. Unless Mr. De Paolantonio resigns, or his employment is terminated earlier, Mr. De Paolantonio will continue as a senior advisor to the Company until April 30, 2019, at which time his employment with us will end (the “Retirement Date”).
The Separation Agreement provides for, among other things, Mr. De Paolantonio to (i) continue to receive his current base salary, (ii) remain eligible to participate in our group employee benefit plans as a regular full-time employee, and (iii) continue to vest in his outstanding equity awards until his Retirement Date. At the termination of his employment with us, provided that, among other things, Mr. De Paolantonio is not terminated by us for “cause,” Mr. De Paolantonio will be entitled to receive (a) aone-time cash payment of $0.36 million, subject to applicable deductions and withholdings, representing one full year of his current base salary, provided that Mr. De Paolantonio has not breached any of his continuing obligations, including that he signs and does not revoke a general release of claims against us, (b) his target annual incentive compensation for 2018 (subject to determination by the board of directors of the Company), and (c) a monthly cash payment for three months in an amount equal to the actual costs of continuation of Mr. De Paolantonio’s group health and dental insurance under the Consolidated Omnibus Reconciliation Act of 1985.
Additionally, the option exercise period for the vested incentive stock options granted to Mr. De Paolantonio on October 1, 2013 shall be extended through the remainder of the option period which ends on October 17, 2023. All time-based restricted stock units held by Mr. De Paolantonio that would have vested had Mr. De Paolantonio remained employed by us through December 31, 2020 shall be deemed vested as of the Retirement Date, and all time-based restricted stock units held by Mr. De Paolantonio that by their terms vest after December 31, 2020 will be forfeited as of the Retirement Date. Subject to Mr. De Paolantonio’s service through the Retirement Date, all performance-based restricted stock units shall remain outstanding and eligible to vest with respect to our performance through December 31, 2020 and any performance-based restricted stock units that do not vest based upon performance through December 31, 2020 shall be forfeited.
Accounting and Tax Considerations
ASC 718. On January 1, 2006, we began accounting for share-based payments in accordance with the requirements of Accounting Standards Codification 718 (ASC 718), Share-Based Payments. To date, the adoption of ASC 718 has not impacted our stock option granting practices.
Internal Revenue Code Section 162(m).Generally, Section 162(m) of the Code (“Section 162(m)”) disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid in any fiscal year to certain specified executive officers. For taxable years beginning before January 1, 2018 (i) these executive officers consisted of a public corporation’s chief executive officer and up to three other executive officers (other than the chief financial officer) whose compensation is required to be disclosed to stockholders under the Exchange Act because they are our most highly-compensated executive officers and (ii) qualifying “performance-based compensation” was not subject to this deduction limit if specified requirements are met.
Pursuant to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), for taxable years beginning after December 31, 2017, the remuneration of a public corporation’s chief financial officer is also subject to the deduction limit. In addition, subject to certain transition rules (which apply to remuneration provided pursuant to written binding contracts which were in effect on November 2, 2017 and which are not subsequently modified in any material respect), for taxable years beginning after December 31, 2017, the exemption from the deduction limit for “performance-based compensation” is no longer available. Consequently, for fiscal years beginning after December 31, 2017, all remuneration in excess of $1 million paid to a specified executive will not be deductible. These changes will cause more of our compensation to be non-deductible under Section 162(m) in the future and will eliminate the Company’s ability to structure performance-based awards to be exempt from Section 162(m).
In designing our executive compensation program and determining the compensation of our executive officers, including our named executive officers, our compensation committee considers a variety of factors, including the potential impact of the Section 162(m) deduction limit. However, our compensation committee will not necessarily limit executive compensation to that which is or may be deductible under Section 162(m). The deductibility of some types of compensation depends upon the timing of an executive officer’s vesting or exercise of previously granted rights. Further, interpretations of and changes in the tax laws, and other factors beyond our compensation committee’s control also affect the deductibility of compensation. Our compensation committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent consistent with its compensation goals and will continue to monitor developments under Section 162(m).
To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, our compensation committee has not adopted a policy that all compensation must be deductible. Our compensation committee believes that our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expense.
Section 409A. Section 409A of the Code generally changed the tax rules that affect most forms of deferred compensation that were not earned and vested prior to 2005. Under Section 409A, deferred compensation is defined broadly and may potentially cover compensation arrangements such as severance or change in control pay outs and the extension of the post-termination exercise periods of stock options. We take Code Section 409A into account, where applicable, in determining the timing of compensation paid to our executive officers in order to comply with, or be exempt from, its requirements.
|
Summary Compensation Table
| ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and principal
positionYear Salary
($)Bonus
($)Stock
Awards
($)(10)Option
Awards
($)(10)Non-Equity
Incentive
Plan
Compensation
($)Nonqualified
Deferred
Compensation
Earnings
($)All Other
Compensation
($)Total
($)Herm Cukier, Chief Executive Officer and Director 2019 582,496 — 433,125 1,549,800 — 355,135 (1) 16,966 (2) 2,937,522 2018 359,539 50,000 (3) 526,000 1,288,000 — 231,050 14,459 2,469,048 Terry Coelho, Chief Financial officer and Treasurer 2019 362,022 — 235,400 282,768 — 190,575 (1) 34,198 (4) 1,104,963 Scott M. Plesha, President and Chief Commercial Officer 2019 375,669 — 184,800 703,150 — 205,200 (1) 35,040 (5) 1,503,859 2018 371,080 — 332,813 — — 180,675 34,423 918,991 2017 296,920 — 92,500 — — 83,138 32,466 505,024 Thomas Smith, M.D., Chief Medical Officer 2019 352,564 — 106,260 373,100 — 156,200 (1) 25,326 (6) 1,013,450 2018 139,327 25,000 (3) — 165,944 — 50,094 3,441 383,806 James Vollins, General Counsel, Chief Compliance Officer and Corporate Secretary 2019 310,714 — 53,130 186,550 — 148,800 (1) 29,563 (7) 728,757 2018 41,731 35,000 (3) — 210,269 — — 351 287,351 Ernest DePaolantonio, Former Principle Accounting Officer (8) 2019 127,385 — 120,500 — — — 410,250 (9) 658,135 2018 370,000 162,800 294,000 — — — 32,790 859,590 2017 350,000 98,000 351,500 — — — 32,632 832,132
Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stocks or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Closing stock price on Award date ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||||||||||||||||||||||||||
Name | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||
Mark A. Sirgo, | 3/23/18 | (1) | 285,305 | $ | 613,406 | |||||||||||||||||||||||||||||||||||||||||||
Herm Cukier | 5/8/18 | (2) | 200,000 | $ | 526,000 | |||||||||||||||||||||||||||||||||||||||||||
6/4/18 | 800,000 | $ | 2.18 | $ | 2.60 | $ | 1,288,000 | |||||||||||||||||||||||||||||||||||||||||
Scott Plesha | 2/18/18 | (3) | 62,500 | 62,500 | $ | 262,500 | ||||||||||||||||||||||||||||||||||||||||||
10/17/18 | (4) | 18,750 | $ | 70,313 | ||||||||||||||||||||||||||||||||||||||||||||
Thomas Smith, M.D. | 8/1/18 | 117,691 | $ | 2.93 | $ | 2.55 | $ | 165,944 | ||||||||||||||||||||||||||||||||||||||||
James Vollins | 11/5/18 | 89,476 | $ | 3.46 | $ | 3.85 | $ | 210,269 | ||||||||||||||||||||||||||||||||||||||||
Ernest R. De | 2/18/18 | (3) | 70,000 | 70,000 | $ | 294,000 | ||||||||||||||||||||||||||||||||||||||||||
Niraj Vasisht, | 2/18/18 | (1) | 198,129 | $ | 416,071 |
|
|
|
|
2019
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stocks or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Closing stock price on Award date ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) (4) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Herm Cukier | 1/31/2019 | (1) | 540,000 | $ | 3.90 | $ | 4.62 | $ | 1,549,800 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/31/2019 | (2) | 93,750 | $ | 433,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
322,905 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terry Coelho | 1/17/2019 | (1) | 107,109 | $ | 3.73 | $ | 4.28 | $ | 282,768 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2019 | (2) | 55,000 | $ | 235,400 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
173,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scott Plesha | 1/31/2019 | (1) | 245,000 | $ | 3.90 | $ | 4.62 | $ | 703,150 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/31/2019 | (2) | 40,000 | $ | 184,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
170,820 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas Smith, M.D. | 1/31/2019 | (1) | 130,000 | $ | 3.90 | $ | 4.62 | $ | 373,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/31/2019 | (2) | 23,000 | $ | 106,260 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
142,140 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James Vollins | 1/31/2019 | (1) | 65,000 | $ | 3.90 | $ | 4.62 | $ | 186,550 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/31/2019 | (2) | 11,500 | $ | 53,130 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
124,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ernest DePaolantonio | 2/28/2019 | (3) | 25,000 | $ | 120,500 |
The following is a description of our current executive employment agreements:
3.7% increase from 2019 and an amount consistent with our compensation philosophy.
disability; provided that, in that event, Mr. Cukier (or his estate, as applicable) shall be entitled to receive a prorated bonus at target for the year in which such termination occurs and any earned but unpaid bonus for the fiscal year prior to the fiscal year in which such termination occurred.
in full.
3.8% increase from 2019 and an amount consistent with our compensation philosophy.
salary
plus a prorated target annual bonus.We may terminate Dr. Smith’s employment agreement without cause and Dr. Smith may resign without notice. We may immediately terminate Dr. Smith’s employment agreement for Cause (as defined in his agreement). Upon the termination of Dr. Smith’s employment for any reason, Dr. Smith will continue to receive payment of any base salary earned but unpaid through the date of termination and any other payment or benefit to which he is entitled under the applicable terms of any applicable company arrangements. If Dr. Smith is terminated during the term of the employment agreement other than for Cause, (as defined in the employment agreement)including due to his death or disability, Dr. Smith is entitled to a lump sum severance payment equal to one times the amount of his annual base salary. In the event that such termination is within six months following a Change of Control (as defined in the employment agreement), the lump sum paid to Dr. Smith will equal to one times the amount of his then current annual base salary.
9.0% increase from 2019 and an amount consistent with our compensation philosophy.
Ernest R. De Paolantonio, CPA, MBA, Chief Financial Officer, Secretary and Treasurer – Mr. De Paolantonio’s prior employment agreement, dated October 1, 2013, included a base salary of $300,000, target bonus of up to 40% of his base salary (which was subject to modification by our Compensation Committee), and other employee benefits. Under the terms of his agreement in 2018, Mr. De Paolantonio received a base salary of $370,000 and a bonus of $98,000, which bonus was related to 2017 performance.
On January 23, 2019, the Company entered into a transitional service and separation agreement with Mr. De Paolantonio. Unless Mr. De Paolantonio resigns or his employment is terminated earlier, Mr. De Paolantonio will continue as a senior advisor to us until April 30, 2019, at which time his employment with us will end. (See Compensation Discussion and Analysis for details on Mr. De Paolantonio’s separation agreement.)
Mr. De Paolantonio’s transitional service and separation agreement also includes2-yearnon-competition andnon-solicitation and confidentiality covenants on terms identical to the prior employment agreement. Under the terms of this agreement, he was also entitled to the following benefits: medical, dental, life, disability and 401(k).
In July 2011, our
as amended ("2011 Equity Incentive Plan
EIP"). Our 2011 Equity Incentive PlanEIP was originally comprised of 4,200,000 shares of our common stock. The purpose of the 2011 Equity Incentive Plan is: (i) to align our interests and recipients of options under the plan by increasing the proprietary interest of such recipients in our growth and success, and (ii) to advance our interests by providing additional incentives to officers, key employees and well-qualifiednon-employee directors and consultants who provide services to us, who are responsible for our management and growth, or otherwise contribute to the conduct and direction of our business, operations and affairs. The Compensation Committee of our board of directors administers our incentive plan, selects the persons to whom options are granted and fixes the terms of such options. In July 2013, 2014, 2015 and in December 2017, our stockholders approved increases to our 2011 Equity Incentive PlanEIP in the amounts of 2,600,000, 2,000,000, 2,250,000 and 7,100,000, respectively.
In July 2019, our stockholders approved our 2019 Stock Option Incentive Plan ("2019 Plan") discussed below. As a result, no additional shares may be issued under the 2011 EIP. Options to purchase 4,369,045 shares of common stock were outstanding and exercisable as of December 31, 2019 under the 2011 EIP.
Options issued during 2018 to directors and employees under the 2011 Equity Incentive Plan totaled 2,549,177 shares, at exercise prices ranging from $2.07 to $3.72.
2019.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OPTION AWARDS (1) | STOCK AWARDS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Options Exercise Prices ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Herm Cukier | 228,205 | 533,334 | — | 2.18 | 6/14/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 540,000 | — | 3.90 | 1/31/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 133,334 | (2) | 842,671 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 93,750 | (3) | — | 592,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terry Coelho | — | 107,109 | — | 3.73 | 1/17/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 55,000 | (4) | — | — | 347,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scott Plesha | — | 245,000 | — | 3.90 | 1/31/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 8,334 | (5) | — | 8,334 | (5) | 123,336 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 41,667 | (6) | — | 41,667 | (6) | 462,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 40,000 | (3) | — | 252,800 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas Smith, M.D. | 39,230 | 78,461 | — | 2.93 | 8/1/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 130,000 | — | 3.90 | 1/31/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 23,000 | (3) | — | — | 145,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James Vollins | — | 59,651 | — | 3.46 | 11/5/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 65,000 | — | 3.90 | 1/31/2029 | 11,500 | (3) | — | — | 72,680 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ernest DePaolantonio | 55,659 | — | — | 5.39 | 10/17/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 54,999 | (7) | 347,594 |
OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END
OPTION AWARDS(1) | STOCK AWARDS | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Options Exercise Prices ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not vested ($) | |||||||||||||||||||||||||||
Mark A. Sirgo, Pharm.D(7) | — | — | — | — | — | — | — | 327,170 | (2) | 1,210,529 | ||||||||||||||||||||||||||
25,000 | — | — | 3.47 | 7/20/21 | — | — | — | — | ||||||||||||||||||||||||||||
22,369 | — | — | 3.55 | 2/25/21 | — | — | — | — | ||||||||||||||||||||||||||||
37,348 | — | — | 3.90 | 1/21/20 | — | — | — | — | ||||||||||||||||||||||||||||
25,000 | — | — | 5.40 | 7/22/19 | — | — | — | — | ||||||||||||||||||||||||||||
100,000 | — | — | 4.83 | 4/30/19 | — | — | — | — | ||||||||||||||||||||||||||||
9,175 | — | — | 3.05 | 1/22/19 | — | — | — | — | ||||||||||||||||||||||||||||
Herm Cukier | — | 800,000 | — | 2.18 | 6/14/28 | — | — | — | — | |||||||||||||||||||||||||||
— | — | — | — | — | — | — | 200,000 | (3) | 740,000 | |||||||||||||||||||||||||||
Scott Plesha | — | — | — | — | — | — | — | 11,666 | (4) | 43,164 | ||||||||||||||||||||||||||
— | — | — | — | — | 16,667 | (5) | — | 16,667 | (5) | 123,336 | ||||||||||||||||||||||||||
— | — | — | — | — | 62,500 | (6) | — | 62,500 | (6) | 462,500 | ||||||||||||||||||||||||||
Thomas Smith, M.D. | — | 117,691 | — | 2.93 | 8/1/28 | — | — | — | — | |||||||||||||||||||||||||||
James Vollins | — | 89,476 | — | 3.46 | 11/5/28 | — | — | — | — | |||||||||||||||||||||||||||
Ernest R. De Paolantonio, CPA MBA | — | — | — | — | — | — | — | 31,781 | (2) | 117,590 | ||||||||||||||||||||||||||
— | — | — | — | — | — | — | 30,000 | (4) | 111,000 | |||||||||||||||||||||||||||
— | — | — | — | — | 63,333 | (5) | — | 63,333 | (5) | 468,664 | ||||||||||||||||||||||||||
55,659 | — | — | 5.39 | 10/17/23 | 70,000 | (6) | — | 70,000 | (6) | 518,000 | ||||||||||||||||||||||||||
Niraj Vasisht, Ph.D.(8) | 14,297 | — | — | 1.96 | 2/15/22 | — | — | — | — | |||||||||||||||||||||||||||
12,105 | — | — | 3.55 | 2/25/21 | — | — | — | — | ||||||||||||||||||||||||||||
25,000 | — | — | 3.47 | 1/25/21 | — | — | — | — | ||||||||||||||||||||||||||||
17,686 | — | — | 3.90 | 1/21/20 | — | — | — | — |
|
|
|
|
|
|
|
|
(7)Unvested stock awards consist of RSUs (as defined under the 2011 EIP), which are rights to acquire shares of our common stock. These time-based RSUs vest March 2020.
OPTION AWARDS | STOCK AWARDS | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
Mark A. Sirgo, Pharm.D. | — | — | 1,799,782 | 4,664,266 | ||||||||||||
Herm Cukier | — | — | — | — | ||||||||||||
Scott Plesha | — | — | 124,400 | 261,240 | ||||||||||||
Thomas Smith, M.D. | — | — | — | — | ||||||||||||
James Vollins | — | — | — | — | ||||||||||||
Ernest R. De Paolantonio, CPA MBA | — | — | 107,307 | 306,109 | ||||||||||||
Niraj Vasisht, Ph.D. | 61,908 | 31,043 | 622,586 | 1,874,667 |
2019:
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||||||||||||||||||||||||
Herm Cukier | 38,461 | 178,596 | 66,666 | 314,664 | ||||||||||||||||||||||||||||||||||
Terry Coelho | — | — | — | — | ||||||||||||||||||||||||||||||||||
Scott Plesha | — | — | 69,998 | 343,234 | ||||||||||||||||||||||||||||||||||
Thomas Smith, M.D. | — | — | — | — | ||||||||||||||||||||||||||||||||||
James Vollins | 29,825 | 78,441 | — | — | ||||||||||||||||||||||||||||||||||
Ernest DePaolantonio | — | — | 221,816 | 1,082,317 |
Nonqualified Deferred Compensation
Name | If Company Terminates Executive Without Cause or Executive Resigns with Good Reason($) | Termination Following a Change in Control without Cause or Executive Resigns with Good Reason($) | ||||||
Mark A. Sirgo, Pharm.D.(1) | — | — | ||||||
|
|
|
| |||||
Total Sirgo cash and benefits | $ | — | $ | — | ||||
|
|
|
| |||||
Herm Cukier | ||||||||
Cash severance payment | $ | 1,140,000 | $ | 1,140,000 | ||||
Pro-rata bonus | 203,560 | 517,060 | ||||||
Accrued and unused vacation time | 21,923 | 21,923 | ||||||
Acceleration of options(2) | 1,216,000 | 1,216,000 | ||||||
Acceleration of restricted stock units(3) | — | 740,000 | ||||||
|
|
|
| |||||
Total Cukier cash and benefits | $ | 2,581,483 | $ | 3,634,983 | ||||
|
|
|
| |||||
Scott Plesha | ||||||||
Cash severance payment | $ | 365,000 | $ | 365,000 | ||||
Pro-rata bonus | 164,250 | 164,250 | ||||||
Accrued and unused vacation time | 14,038 | 14,038 | ||||||
Acceleration of options | — | — | ||||||
Acceleration of restricted stock units(3) | — | 629,000 | ||||||
|
|
|
| |||||
Total Plesha cash and benefits | $ | 543,288 | $ | 1,172,288 | ||||
|
|
|
| |||||
Ernest R. De Paolantonio, CPA | ||||||||
Cash severance payment | $ | 360,000 | $ | 360,000 | ||||
Pro-rata bonus | 144,000 | 144,000 | ||||||
Accrued and unused vacation time | 13,846 | 13,846 | ||||||
Acceleration of options | — | — | ||||||
Acceleration of restricted stock units(3) | — | 1,215,254 | ||||||
|
|
|
| |||||
Total De Paolantonio cash and benefits | $ | 517,846 | $ | 1,733,100 | ||||
|
|
|
| |||||
Thomas Smith, MD. | ||||||||
Cash severance payment | $ | 0 | $ | 345,000 | ||||
Pro-rata bonus | 58,225 | 58,225 | ||||||
Accrued and unused vacation time | 5,268 | 5,268 | ||||||
Acceleration of options(2) | 90,622 | 90,622 | ||||||
Acceleration of restricted stock units | — | — | ||||||
|
|
|
| |||||
Total Smith cash and benefits | $ | 154,115 | $ | 499,115 | ||||
|
|
|
| |||||
James Vollins | ||||||||
Cash severance payment | $ | — | $ | 310,000 | ||||
Pro-rata bonus | 19,025 | 19,025 | ||||||
Accrued and unused vacation time | 3,672 | 3,672 | ||||||
Acceleration of options(2) | 21,474 | 21,474 | ||||||
Acceleration of restricted stock units | — | — | ||||||
|
|
|
| |||||
Total Vollins cash and benefits | $ | 44,171 | $ | 354,171 | ||||
|
|
|
| |||||
Niraj Vasisht, Ph.D.(4) | — | — | ||||||
|
|
|
| |||||
Total Vasisht cash and benefits | $ | — | $ | — | ||||
|
|
|
|
|
|
|
|
Name | Termination Without Cause ($) | Resignation With Good Reason ($) | Termination Following a Change in Control ($) | Termination Following Death or Disability ($) | ||||||||||||||||||||||
Herm Cukier | ||||||||||||||||||||||||||
Cash severance payment | $ | 1,174,200 | $ | 1,174,200 | $ | 1,174,200 | $ | — | ||||||||||||||||||
Bonus (3) | 322,905 | 322,905 | 322,905 | 322,905 | ||||||||||||||||||||||
Accrued and unused vacation time | 22,581 | 22,581 | 22,581 | 22,581 | ||||||||||||||||||||||
Acceleration of options (1) | 4,459,571 | 4,459,571 | 4,459,571 | — | ||||||||||||||||||||||
Acceleration of restricted stock units (2) | — | — | 676,771 | — | ||||||||||||||||||||||
Total Cukier cash and benefits | $ | 5,979,257 | $ | 5,979,257 | $ | 6,656,028 | $ | 345,486 | ||||||||||||||||||
Terry Coelho | ||||||||||||||||||||||||||
Cash severance payment | 385,000 | 385,000 | 577,500 | 385,000 | ||||||||||||||||||||||
Bonus | 173,250 | 173,250 | 173,250 | 173,250 | ||||||||||||||||||||||
Accrued and unused vacation time | 14,808 | 14,808 | 14,808 | 14,808 | ||||||||||||||||||||||
Acceleration of options (1) | — | — | 277,412 | — | ||||||||||||||||||||||
Acceleration of restricted stock units (2) | — | — | 347,600 | — | ||||||||||||||||||||||
Total Coelho cash and benefits | $ | 573,058 | $ | 573,058 | $ | 1,390,570 | $ | 573,058 | ||||||||||||||||||
Scott Plesha | ||||||||||||||||||||||||||
Cash severance payment | $ | 379,600 | $ | — | $ | 379,600 | $ | 379,600 | ||||||||||||||||||
Bonus | 170,820 | — | 170,820 | 170,820 | ||||||||||||||||||||||
Accrued and unused vacation time | 14,600 | 14,600 | 14,600 | 14,600 | ||||||||||||||||||||||
Acceleration of options (1) | — | — | 592,900 | — | ||||||||||||||||||||||
Acceleration of restricted stock units (2) | — | — | 884,813 | — | ||||||||||||||||||||||
Total Plesha cash and benefits | $ | 565,020 | $ | 14,600 | $ | 2,042,733 | $ | 565,020 | ||||||||||||||||||
Thomas Smith, MD. | ||||||||||||||||||||||||||
Cash severance payment | $ | 355,350 | $ | 0 | $ | 355,350 | $ | 355,350 | ||||||||||||||||||
Pro-rata bonus | 142,140 | — | 142,140 | 142,140 | ||||||||||||||||||||||
Accrued and unused vacation time | 13,667 | 13,667 | 13,667 | 13,667 | ||||||||||||||||||||||
Acceleration of options (1) | — | — | 713,572 | — | ||||||||||||||||||||||
Acceleration of restricted stock units (2) | — | — | 145,360 | — | ||||||||||||||||||||||
Total Smith cash and benefits | $ | 511,157 | $ | 13,667 | $ | 1,370,089 | $ | 511,157 | ||||||||||||||||||
James Vollins | ||||||||||||||||||||||||||
Cash severance payment | $ | 310,000 | $ | 0 | $ | 310,000 | $ | 310,000 | ||||||||||||||||||
Bonus | 124,000 | 0 | 124,000 | 124,000 | ||||||||||||||||||||||
Accrued and unused vacation time | 11,923 | 11,923 | 11,923 | 11,923 | ||||||||||||||||||||||
Acceleration of options (1) | 0 | 0 | 327,902 | 0 | ||||||||||||||||||||||
Acceleration of restricted stock units (2) | — | — | 72,680 | 0 | ||||||||||||||||||||||
Total Vollins cash and benefits | $ | 445,923 | $ | 11,923 | $ | 846,505 | $ | 445,923 | ||||||||||||||||||
Ernest DePaolantonio (4) | — | — | — | — | ||||||||||||||||||||||
Total Mr. DePaolantonio cash and benefits | $ | — | $ | — | $ | — | $ | — |
•annualized salary in fiscal year 2018;
•annual bonus payment received for performance in fiscal year 2018;
•grant date fair value of stock option exercises and RSU grants in fiscal year 2018;
•company-paid 401(k) Plan match made during fiscal year 2018;2019; and
•auto and phone allowance paid in fiscal year 2018.
2019.
157 170 employees), and (iii) since we have an odd number of employees when not including the CEO, we used ranked employee number 7985 on the list as our (“Median Employee”). In 2018,2019, we experienced a substantialmodest increase in our headcount. Accordingly, we determined it was appropriate to re-calculate our Median Employee for 2018.
The annualized total compensation for fiscal year 20182019 for our CEO was $2,679,509$2,937,522 and for the Median Employee was $125,563.$127,193. We estimate that the resulting ratio of our CEO’s pay to the pay of our Median Employee for fiscal year 20182019 is 2123 to 1.
Name (a) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (12) | Option Awards ($)(12) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||
Peter S. Greenleaf ± | 27,088 | 300,931 | (1) | 90,472 | (2) | — | — | — | 418,491 | |||||||||||||
Frank E. O’Donnell, Jr. | 62,052 | (3) | 189,000 | (4) | — | — | — | 11,728(5) | 262,780 | |||||||||||||
William M. Watson | 66,997 | 293,405 | (6) | 77,183 | (7) | — | — | — | 437,584 | |||||||||||||
Todd C. Davis ± | 28,022 | 257,941 | (8) | 67,854 | (9) | — | — | — | 353,817 | |||||||||||||
Kevin Kotler ± | 23,352 | 257,941 | (8) | 67,854 | (9) | — | — | — | 349,147 | |||||||||||||
Samuel P. Sears, Jr. * | 74,375 | 26,813 | (10) | 9,694 | (12) | — | — | — | 110,882 | |||||||||||||
Thomas W. D’Alonzo * | 53,750 | 26,813 | (10) | 9,694 | (12) | — | — | — | 90,257 | |||||||||||||
Barry I. Feinberg * | 61,875 | 26,813 | (10) | 9,694 | (12) | — | — | — | 98,382 | |||||||||||||
Timothy C. Tyson * | 48,750 | 26,813 | (10) | 9,694 | (12) | — | — | — | 85,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (13) | Option Awards ($) (13) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Peter S. Greenleaf (1) | 72,500 | — | — | — | — | — | 72,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark A. Sirgo, PharmD. (2) | 51,250 | 210,600 | (3) | 58,275 | (4) | — | — | — | 320,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Frank E. O’Donnell, Jr. (5) | 53,750 | 210,600 | (3) | 58,275 | (4) | — | — | — | 322,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
W. Mark Watson (6) | 70,000 | — | — | — | — | — | 70,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Todd C. Davis (7) | 75,000 | — | — | — | — | — | 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin Kotler (8) | 62,500 | — | — | — | — | — | 62,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vanila Singh, M.D. MAMC (9) | 4,298 | (10) | 99,360 | (11) | 347,520 | (12) | — | — | — | 451,178 |
•$45,000 annual cash retainer to each board member.
•$10,00025,000 annual cash retainer to the Lead Director.
•$20,000 annual cash retainer to the Chairman of the Audit Committee.
•$15,000 annual cash retainer to the Chairman of the Compensation Committee.
•$10,000 annual cash retainer to the Chairman of the Nominating & Corporate Governance Committee.
•$10,000 annual cash retainer to eachnon-Chairman Audit Committee member.
•$7,500 annual cash retainer to eachnon-Chairman Compensation Committee member.
•$5,000 annual cash retainer to eachnon-Chairman Nominating & Corporate Governance Committee member.
•$7,500 annual cash retainer to each Special Committee member.
30,000•8,000 restricted stock units of our common stock per year, to each director.
•5,000 additional restricted stock units of our common stock per year to the Lead Director.
15,000•48,000 stock options of our common stock per year, to each director.
•5,000 additional stock options of our common stock per year to the Lead Director.
•New directors will earn apro-rated portion (based on months to be served in the fiscal year in which they join) of cash and restricted stock units.
In August 2018, we granted our directors upfront awards of options and restricted stock units to cover the options and restricted stock units they would be entitled to receive over the next four years, subject to vesting over such four-year period. Options granted to directors expire in 10 years and are outstanding for the life of the option, as long as service criteria is met.
Compensation Committee Interlocks and Insider Participation
Company | ||||||||
AcelRx Pharmaceuticals, Inc. | Cumberland Pharmaceuticals, Inc. | |||||||
Adamis Pharmaceuticals | DURECT Corporation | |||||||
Alimera Sciences, Inc. | KemPharm | |||||||
Antares Pharma, Inc. | Neos Therapeutics, Inc. | |||||||
BioCryst Pharmaceuticals, Inc. | Recro Pharma | |||||||
Collegium Pharmaceutical | Sorrento Therapeutics | |||||||
Corium | Strongbridge BioPharma plc | |||||||
CTI BioPharma Corp. | Vivus, Inc. |
|
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage of Class as of March 14, 2019(1) | ||||||
venBio Select Advisor LLC (2) | 4,725,700 | 6.67 | % | |||||
Broadfin Capital, LLC (3) | 4,375,066 | 6.18 | % | |||||
Stonepine Capital Management (4) | 3,981,867 | 5.62 | % | |||||
Herm Cukier (5) | 0 | * | ||||||
Scott M. Plesha (6) | 224,004 | * | ||||||
Mary Theresa Coelho (7) | 0 | * | ||||||
Thomas Smith, M.D.(8) | 0 | * | ||||||
James Vollins(9) | 0 | * | ||||||
Peter S. Greenleaf(10) | 5,726 | * | ||||||
Mark A. Sirgo, Pharm.D. (11) | 2,699,259 | 3.80 | % | |||||
Frank E. O’Donnell, Jr., M.D.(12) | 628,687 | * | ||||||
William M. Watson (13) | 16,110 | * | ||||||
Todd C. Davis (14) | 421,352 | * | ||||||
Kevin Kotler (15) | 4,379,751 | 6.19 | % | |||||
All Directors and Officers as a group (11 persons) | 8,047,598 | 11.75 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage of Class as of March 6, 2020,(1) | ||||||||||||
Blackrock Inc. (2) | 7,304,342 | 7.58 | % | |||||||||||
Broadfin Capital, LLC (3) | 6,722,289 | 6.98 | % | |||||||||||
Nantahala Capital Management (4) | 4,846,167 | 5.03 | % | |||||||||||
Herm Cukier (5) | 510,652 | * | ||||||||||||
Mary Theresa Coelho (6) | 12,018 | * | ||||||||||||
Scott M. Plesha (7) | 345,670 | * | ||||||||||||
Thomas Smith, M.D. (8) | 87,302 | * | ||||||||||||
James Vollins (9) | 25,500 | * | ||||||||||||
Peter S. Greenleaf (10) | 38,952 | * | ||||||||||||
Mark A. Sirgo, Pharm.D. (11) | 1,559,595 | 1.62 | % | |||||||||||
Frank E. O’Donnell, Jr., M.D.(12) | 767,038 | * | ||||||||||||
W. Mark Watson (13) | 53,219 | * | ||||||||||||
Todd C. Davis (14) | 248,537 | * | ||||||||||||
Kevin Kotler (15) | 6,732,912 | 6.99 | % | |||||||||||
Vanila Singh, M.D. MAMC (16) | — | * | ||||||||||||
All Directors and Officers as a group (12 persons) | 10,381,395 | 10.66 | % |
Included in beneficial ownership table | Not included in beneficial ownership table | ||||||||||||||||||||||||||||||||||||||||||||||
Name of Director or Officer | Shares owned | Options exercisable within 60 days | RSUs vesting within 60 days | Total | Options unexercisable | RSUs unvested | |||||||||||||||||||||||||||||||||||||||||
Herm Cukier | 35,781 | 408,205 | 66,666 | 510,652 | 793,824 | 219,748 | (1) | ||||||||||||||||||||||||||||||||||||||||
Mary Theresa Coelho | 12,018 | — | — | 12,018 | 220,071 | 67,238 | |||||||||||||||||||||||||||||||||||||||||
Scott M Plesha | 205,669 | 81,667 | 58,334 | 345,670 | 321,909 | 100,943 | (1) | ||||||||||||||||||||||||||||||||||||||||
Thomas Smith , M.D. | 4,739 | 82,563 | — | 87,302 | 275,250 | 37,979 | |||||||||||||||||||||||||||||||||||||||||
James Vollins | 3,833 | 21,667 | — | 25,500 | 224,119 | 32,576 | |||||||||||||||||||||||||||||||||||||||||
Peter S Greenleaf | 24,788 | 14,164 | — | 38,952 | 50,000 | 87,500 | |||||||||||||||||||||||||||||||||||||||||
Mark A Sirgo, Pharm.D. | 1,478,124 | 22,500 | 58,971 | 1,559,595 | — | — | |||||||||||||||||||||||||||||||||||||||||
Frank E. O'Donnell, Jr. M.D. | 548,754 | 22,500 | 195,784 | 767,038 | — | 30,000 | (1) | ||||||||||||||||||||||||||||||||||||||||
W. Mark Watson | 35,979 | 17,240 | — | 53,219 | 37,500 | 75,000 | |||||||||||||||||||||||||||||||||||||||||
Todd C Davis | 237,914 | 10,623 | — | 248,537 | 37,500 | 75,000 | |||||||||||||||||||||||||||||||||||||||||
Kevin Kotler | 6,722,289 | (2) | 10,623 | — | 6,732,912 | 37,500 | 75,000 | ||||||||||||||||||||||||||||||||||||||||
Vanila Singh, M.D. MAMC | — | — | — | — | 96,000 | 16,000 |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | Weighted- average exercise price of outstanding options, warrants and rights (2) | Number of securities remaining available for future issuance | |||||||||
Equity compensation plans approved by security holders | 8,708,126 | $ | 2.73 | 1,874,086 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 8,708,126 | $ | 2.73 | 1,874,086 |
|
|
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | Weighted- average exercise price of outstanding options, warrants and rights (2) | Number of securities remaining available for future issuance | |||||||||||||||||
Equity compensation plans approved by security holders | 7,145,530 | 3.64 | 13,539,076 | |||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
Total | 7,145,530 | 3.64 | 13,539,076 |
|
|
2017 totaled $216,000, and $188,500, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.2017 were $131,776, and $149,839, respectively. The fees were provided in consideration of services consisting of review and update procedures associated with registration statements and other SEC filings.2017 were $34,600, and $42,460, respectively. The fees were provided in consideration of services consisting of preparation of tax returns and related tax advice.2018.2019. Consistent with the Audit Committee’s responsibility for engaging our independent auditors, all audit and permittednon-audit services requirepre-approval by the Audit Committee. The full Audit Committee approves proposed services and fee estimates for these services. The Audit Committee chairperson has been designated by the Audit Committee to approve any audit-related services arising during the year that were notpre-approved by the Audit Committee. Anynon-audit service must be approved by the full Audit Committee. Services approved by the Audit Committee chairperson are communicated to the full Audit Committee at its next regular meeting and the Audit Committee reviews services and fees for the fiscal year at each such meeting. Pursuant to these procedures, the Audit Committee approved the foregoing services provided by Cherry Bekaert LLP.
|
The following exhibits are filed with this Report.
| ||||||||
Transition Period and Separation of Employment, dated January 23, 2019 by and between the Company and Ernest De Paolantonio, | ||||||||
10.30 | ||||||||
10.31 | ||||||||
10.32+ | ||||||||
10.34 | 2019 Stock Option and Incentive Plan, filed with DEF14A, dated June 17, 2019. | |||||||
10.35 | ||||||||
10.36 | ||||||||
10.37 | ||||||||
10.38 | ||||||||
10.39 | ||||||||
21.1* | ||||||||
23.1* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1# | ||||||||
32.2# | ||||||||
101.ins | ||||||||
XBRL Instance Document | ||||||||
101.sch | ||||||||
XBRL Taxonomy Extension Schema Document | ||||||||
101.cal | ||||||||
XBRL Taxonomy Calculation Linkbase Document | ||||||||
101.def | ||||||||
XBRL Taxonomy Definition Linkbase Document | ||||||||
101.lab | ||||||||
XBRL Taxonomy Label Linkbase Document | ||||||||
101.pre | ||||||||
XBRL Taxonomy Presentation Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, | ||||||||
2018 | 2017 | |||||||
ASSETS |
| |||||||
Current assets: | ||||||||
Cash | $ | 43,822 | $ | 21,195 | ||||
Accounts receivable, net | 13,627 | 8,852 | ||||||
Inventory, net | 5,406 | 6,091 | ||||||
Prepaid expenses and other current assets | 3,188 | 3,610 | ||||||
|
|
|
| |||||
Total current assets | 66,043 | 39,748 | ||||||
Property and equipment, net | 3,072 | 3,778 | ||||||
Goodwill | 2,715 | 2,715 | ||||||
BELBUCA license and distribution rights, net | 36,000 | 40,500 | ||||||
Other intangible assets, net | 703 | 1,360 | ||||||
|
|
|
| |||||
Total assets | $ | 108,533 | $ | 88,101 | ||||
|
|
|
| |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
| |||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 21,539 | $ | 26,149 | ||||
|
|
|
| |||||
Total current liabilities | 21,539 | 26,149 | ||||||
Notes payable, net | 51,652 | 47,660 | ||||||
Other long-term liabilities | 5,600 | 5,415 | ||||||
|
|
|
| |||||
Total liabilities | 78,791 | 79,224 | ||||||
Commitments and contingencies (Notes 7 and 17) | ||||||||
Stockholders’ equity: | ||||||||
Preferred Stock, 5,000,000 shares authorized; Series ANon-Voting Convertible Preferred Stock. $.001 par value, 2,093,155 shares outstanding at both December 31, 2018 and December 31, 2017, respectively; Series BNon-Voting Convertible Preferred Stock, $.001 par value, 3,100 and 0 shares outstanding at December 31, 2018 and December 31, 2017, respectively. | 2 | 2 | ||||||
Common Stock, $.001 par value; 125,000,000 and 75,000,000 shares authorized at December 31, 2018 and December 31, 2017, respectively; 70,793,725 and 55,904,072 shares issued;70,778,234 and 55,888,581 shares outstanding at September 30, 2018 and December 31, 2017, respectively. | 71 | 56 | ||||||
Additionalpaid-in capital | 381,004 | 313,922 | ||||||
Treasury stock, at cost, 15,491 shares | (47 | ) | (47 | ) | ||||
Accumulated deficit | (351,288 | ) | (305,056 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 29,742 | 8,877 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 108,533 | $ | 88,101 | ||||
|
|
|
|
December 31, | |||||||||||||||||
2019 | 2018 | ||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash | $ | 63,888 | $ | 43,822 | |||||||||||||
Accounts receivable, net | 38,790 | 13,627 | |||||||||||||||
Inventory, net | 11,312 | 5,406 | |||||||||||||||
Prepaid expenses and other current assets | 3,769 | 3,188 | |||||||||||||||
Total current assets | 117,759 | 66,043 | |||||||||||||||
Property and equipment, net | 2,075 | 3,072 | |||||||||||||||
Goodwill | 2,715 | 2,715 | |||||||||||||||
License and distribution rights, net | 60,309 | 36,000 | |||||||||||||||
Other intangible assets, net | 47 | 703 | |||||||||||||||
Total assets | $ | 182,905 | $ | 108,533 | |||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable and accrued liabilities | $ | 53,993 | $ | 21,539 | |||||||||||||
Total current liabilities | 53,993 | 21,539 | |||||||||||||||
Notes payable, net | 58,568 | 51,652 | |||||||||||||||
Other long-term liabilities | 580 | 5,600 | |||||||||||||||
Total liabilities | 113,141 | 78,791 | |||||||||||||||
Commitments and contingencies (Notes 7 and 17) | |||||||||||||||||
Stockholders’ equity: | |||||||||||||||||
Preferred Stock, 5,000,000 shares authorized; 2,714,300 shares issued; Series A Non-Voting Convertible Preferred Stock. $0.001 par value, 2,093,155 shares outstanding at both December 31, 2019 and December 31, 2018, respectively; Series B Non-Voting Convertible Preferred Stock, $0.001 par value, 618 and 3,100 shares outstanding at December 31, 2019 and December 31, 2018 respectively. | 2 | 2 | |||||||||||||||
Common Stock, $.001 par value; 175,000,000 and 125,000,000 shares authorized at December 31, 2019 and December 31, 2018 respectively; 96,189,074 and 70,793,725 shares issued;96,173,583 and 70,778,234 shares outstanding at December 31, 2019 and December 31, 2018, respectively. | 96 | 71 | |||||||||||||||
Additional paid-in capital | 436,306 | 381,004 | |||||||||||||||
Treasury stock, at cost, 15,491 shares | (47) | (47) | |||||||||||||||
Accumulated deficit | (366,593) | (351,288) | |||||||||||||||
Total stockholders’ equity | 69,764 | 29,742 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 182,905 | $ | 108,533 |
Year Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Revenues: | ||||||||||||
Product sales | $ | 51,410 | $ | 34,922 | $ | 8,266 | ||||||
Product royalty revenues | 3,389 | 5,070 | 3,646 | |||||||||
Research and development reimbursements | — | 799 | 1,134 | |||||||||
Contract revenue | 841 | 21,194 | 2,500 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | 55,640 | 61,985 | 15,546 | |||||||||
|
|
|
|
|
| |||||||
Cost of sales | 15,783 | 19,496 | 11,258 | |||||||||
|
|
|
|
|
| |||||||
Expenses: | ||||||||||||
Research and development | 4,903 | 13,040 | 18,878 | |||||||||
Selling, general and administrative | 58,602 | 58,869 | 49,345 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 63,505 | 71,909 | 68,223 | |||||||||
|
|
|
|
|
| |||||||
Loss from operations | (23,648 | ) | (29,420 | ) | (63,935 | ) | ||||||
|
|
|
|
|
| |||||||
Interest expense | (10,192 | ) | (8,577 | ) | (3,267 | ) | ||||||
Bargain purchase gain | — | 27,336 | — | |||||||||
Other (expense) income, net | (14 | ) | (26 | ) | 64 | |||||||
|
|
|
|
|
| |||||||
Loss before income taxes | (33,854 | ) | (10,687 | ) | (67,138 | ) | ||||||
|
|
|
|
|
| |||||||
Income tax benefit | (13 | ) | 15,972 | — | ||||||||
|
|
|
|
|
| |||||||
Net (loss) income | (33,867 | ) | 5,285 | (67,138 | ) | |||||||
Beneficial conversion feature of convertible preferred stock | (12,500 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net (loss) income attributable to common stockholders | $ | (46,367 | ) | $ | 5,285 | $ | (67,138 | ) | ||||
|
|
|
|
|
| |||||||
Basic: | ||||||||||||
Weighted average common stock shares outstanding | 63,165,063 | 55,355,802 | 53,679,134 | |||||||||
|
|
|
|
|
| |||||||
Basic (loss) earnings per share | $ | (0.73 | ) | $ | 0.10 | $ | (1.25 | ) | ||||
|
|
|
|
|
| |||||||
Diluted: | ||||||||||||
Diluted weighted average common stock shares outstanding | 63,165,063 | 56,402,479 | 53,679,134 | |||||||||
|
|
|
|
|
| |||||||
Diluted (loss) earnings per share | $ | (0.73 | ) | $ | 0.09 | $ | (1.25 | ) | ||||
|
|
|
|
|
|
Year Ended December 31, | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||
Product sales | $ | 107,888 | $ | 51,410 | $ | 34,922 | |||||||||||||||||||||||
Product royalty revenues | 3,341 | 3,389 | 5,070 | ||||||||||||||||||||||||||
Research and development reimbursements | — | — | 799 | ||||||||||||||||||||||||||
Contract revenue | 160 | 841 | 21,194 | ||||||||||||||||||||||||||
Total revenues | 111,389 | 55,640 | 61,985 | ||||||||||||||||||||||||||
Cost of sales | 21,590 | 15,783 | 19,496 | ||||||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||||
Research and development | — | 4,903 | 13,040 | ||||||||||||||||||||||||||
Selling, general and administrative | 86,063 | 58,602 | 58,869 | ||||||||||||||||||||||||||
Total expenses | 86,063 | 63,505 | 71,909 | ||||||||||||||||||||||||||
Income (loss) from operations | 3,736 | (23,648) | (29,420) | ||||||||||||||||||||||||||
Interest expense | (19,040) | (10,192) | (8,577) | ||||||||||||||||||||||||||
Bargain purchase gain | — | — | 27,336 | ||||||||||||||||||||||||||
Other income (expense), net | 4 | (14) | (26) | ||||||||||||||||||||||||||
Loss before income taxes | (15,300) | (33,854) | (10,687) | ||||||||||||||||||||||||||
Income tax (expense) benefit | (5) | (13) | 15,972 | ||||||||||||||||||||||||||
Net (loss) income | (15,305) | (33,867) | 5,285 | ||||||||||||||||||||||||||
Beneficial conversion feature of convertible preferred stock | — | (12,500) | — | ||||||||||||||||||||||||||
Net (loss) income attributable to common stockholders | $ | (15,305) | $ | (46,367) | $ | 5,285 | |||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||||||
Weighted average common stock shares outstanding | 83,213,704 | 63,165,063 | 55,355,802 | ||||||||||||||||||||||||||
Basic (loss) earnings per share | $ | (0.18) | $ | (0.73) | $ | 0.10 | |||||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||||||
Diluted weighted average common stock shares outstanding | 83,213,704 | 63,165,063 | 56,402,479 | ||||||||||||||||||||||||||
Diluted (loss) earnings per share | $ | (0.18) | $ | (0.73) | $ | 0.09 |
Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||
Balances, January 1, 2016 | 2,093,155 | $ | 2 | — | $ | — | 52,730,799 | $ | 53 | $ | 274,891 | $ | (47 | ) | $ | (243,203 | ) | $ | 31,696 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 14,931 | — | — | 14,931 | ||||||||||||||||||||||||||||||
Stock option exercises | — | — | — | — | 147,426 | — | 297 | — | — | 297 | ||||||||||||||||||||||||||||||
Restricted stock awards | — | — | — | — | 592,065 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Common stock issuance upon retirement | — | — | — | — | 663,221 | 1 | 2,459 | — | — | 2,460 | ||||||||||||||||||||||||||||||
Issuance of warrants | — | — | — | — | — | — | 49 | — | — | 49 | ||||||||||||||||||||||||||||||
Equity finance costs | — | — | — | — | — | — | 40 | — | — | 40 | ||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (67,138 | ) | (67,138 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Balances, December 31, 2016 | 2,093,155 | $ | 2 | — | $ | — | 54,133,511 | $ | 54 | $ | 292,667 | $ | (47 | ) | $ | (310,341 | ) | $ | (17,665 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 14,801 | — | — | 14,801 | ||||||||||||||||||||||||||||||
Stock option exercises | — | — | — | — | 202,519 | — | 439 | — | — | 439 | ||||||||||||||||||||||||||||||
Restricted stock awards | — | — | — | — | 1,568,042 | 2 | (2 | ) | — | — | — | |||||||||||||||||||||||||||||
Issuance of warrants | — | — | — | — | — | — | 6,017 | — | — | 6,017 | ||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 5,285 | 5,285 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Balances, December 31, 2017 | 2,093,155 | $ | 2 | — | $ | — | 55,904,072 | $ | 56 | $ | 313,922 | $ | (47 | ) | $ | (305,056 | ) | $ | 8,877 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 5,941 | — | — | 5,941 | ||||||||||||||||||||||||||||||
Stock option exercises | — | — | — | — | 350,441 | — | 670 | — | — | 670 | ||||||||||||||||||||||||||||||
Restricted stock awards | — | — | — | — | 1,733,731 | 2 | (2 | ) | — | — | — | |||||||||||||||||||||||||||||
Common stock issuance upon retirement | — | — | — | — | 2,249,925 | 2 | (2 | ) | — | — | — | |||||||||||||||||||||||||||||
Series B issuance, net of issuance costs | — | — | 5,000 | — | — | — | 47,986 | — | — | 47,986 | ||||||||||||||||||||||||||||||
Series B conversion to Common Stock | — | — | (1,900 | ) | — | 10,555,556 | 11 | (11 | ) | — | — | — | ||||||||||||||||||||||||||||
Series B beneficial conversion feature | — | — | — | — | — | — | 12,500 | — | (12,500 | ) | — | |||||||||||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | — | — | — | — | — | 135 | 135 | ||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (33,867 | ) | (33,867 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Balances, December 31, 2018 | 2,093,155 | $ | 2 | 3,100 | $ | — | 70,793,725 | $ | 71 | $ | 381,004 | $ | (47 | ) | $ | (351,288 | ) | $ | 29,742 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2017 | 2,093,155 | $ | 2 | — | $ | — | 54,133,511 | $ | 54 | $ | 292,667 | $ | (47) | $ | (310,341) | $ | (17,665) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 14,801 | — | — | 14,801 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises | — | — | — | — | 202,519 | — | 439 | — | — | 439 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards | — | — | — | — | 1,568,042 | 2 | (2) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants | — | — | — | — | — | — | 6,017 | — | — | 6,017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 5,285 | 5,285 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2017 | 2,093,155 | $ | 2 | — | $ | — | 55,904,072 | $ | 56 | $ | 313,922 | $ | (47) | $ | (305,056) | $ | 8,877 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 5,941 | — | — | 5,941 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises | — | — | — | — | 350,441 | — | 670 | — | — | 670 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards | — | — | — | — | 1,733,731 | 2 | (2) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issuance upon retirement | — | — | — | — | 2,249,925 | 2 | (2) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series B issuance, net of issuance costs | — | — | 5,000 | — | — | — | 47,986 | — | — | 47,986 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series B conversion to Common Stock | — | — | (1,900) | — | 10,555,556 | 11 | (11) | — | — | �� | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series B beneficial conversion feature | — | — | — | — | — | — | 12,500 | — | (12,500) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | — | — | — | — | — | 135 | 135 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (33,867) | (33,867) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2018 | 2,093,155 | $ | 2 | 3,100 | $ | — | 70,793,725 | $ | 71 | $ | 381,004 | $ | (47) | $ | (351,288) | $ | 29,742 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | 5,418 | — | — | 5,418 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises | — | — | — | — | 799,800 | — | 2,319 | — | — | 2,319 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock awards | — | — | — | — | 806,661 | 1 | (1) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series B conversion to Common Stock | — | — | (2,482) | — | 13,788,888 | 14 | (14) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering, net of finance costs | — | — | — | — | 10,000,000 | 10 | 47,580 | — | — | 47,590 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (15,305) | (15,305) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2019 | 2,093,155 | $ | 2 | 618 | $ | — | 96,189,074 | $ | 96 | $ | 436,306 | $ | (47) | $ | (366,593) | $ | 69,764 |
Year Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Operating activities: | ||||||||||||
Net (loss) income | $ | (33,867 | ) | $ | 5,285 | $ | (67,138 | ) | ||||
Adjustments to reconcile net (loss) income to net cash flows used in operating activities | ||||||||||||
Depreciation | 740 | 693 | 437 | |||||||||
Accretion of debt discount and loan costs | 4,138 | 2,392 | 397 | |||||||||
Amortization of intangible assets | 5,157 | 5,425 | 971 | |||||||||
(Recovery from) provision for inventory obsolescence | (56 | ) | 243 | — | ||||||||
Impairment loss on equipment | 78 | — | — | |||||||||
Stock-based compensation expense | 5,941 | 14,801 | 14,931 | |||||||||
Deferred income taxes | 40 | (15,972 | ) | — | ||||||||
Bargain purchase gain | — | (27,336 | ) | — | ||||||||
Changes in assets and liabilities, net of effect of acquisition: | ||||||||||||
Accounts receivable | (4,640 | ) | (5,884 | ) | (862 | ) | ||||||
Inventories | 741 | 2,448 | (810 | ) | ||||||||
Prepaid expenses and other assets | 422 | 526 | (203 | ) | ||||||||
Accounts payable and accrued expenses | (2,807 | ) | 6,644 | (1,546 | ) | |||||||
Deferred revenue | — | (21,716 | ) | (159 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash flows used in operating activities | (24,113 | ) | (32,451 | ) | (53,982 | ) | ||||||
|
|
|
|
|
| |||||||
Investing activities: | ||||||||||||
BELBUCA acquisition | (1,951 | ) | (5,853 | ) | — | |||||||
Purchase of equipment | (112 | ) | (11 | ) | (405 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash flows used in investing activities | (2,063 | ) | (5,864 | ) | (405 | ) | ||||||
|
|
|
|
|
| |||||||
Financing activities: | ||||||||||||
Proceeds from sales of securities, net of costs incurred | — | — | 40 | |||||||||
Proceeds from exercise of stock options | 670 | 439 | 297 | |||||||||
Issuance of common stock | — | — | 2,460 | |||||||||
Issuance of warrants | — | — | 49 | |||||||||
Proceeds from issuance of Series B preferred stock | 50,000 | — | — | |||||||||
Payment on note payable | — | (30,000 | ) | — | ||||||||
Proceeds from notes payable | — | 60,000 | — | |||||||||
Equity finance costs | (1,417 | ) | — | — | ||||||||
Payment of deferred financing fees | (450 | ) | (2,948 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net cash flows from financing activities | 48,803 | 27,491 | 2,846 | |||||||||
|
|
|
|
|
| |||||||
Net change in cash and cash equivalents | 22,627 | �� | (10,824 | ) | (51,541 | ) | ||||||
Cash and cash equivalents at beginning of year | 21,195 | 32,019 | 83,560 | |||||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents at end of year | $ | 43,822 | $ | 21,195 | $ | 32,019 | ||||||
|
|
|
|
|
| |||||||
Cash paid for interest | $ | 6,053 | $ | 5,285 | $ | 2,870 | ||||||
|
|
|
|
|
|
Year Ended December 31, | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||||||||
Net (loss) income | $ | (15,305) | $ | (33,867) | $ | 5,285 | |||||||||||||||||||||||
Adjustments to reconcile net (loss) income to net cash flows provided by (used in) operating activities | |||||||||||||||||||||||||||||
Depreciation | 1,846 | 740 | 693 | ||||||||||||||||||||||||||
Accretion of debt discount and loan costs | 11,508 | 4,138 | 2,392 | ||||||||||||||||||||||||||
Amortization of intangible assets | 6,981 | 5,157 | 5,425 | ||||||||||||||||||||||||||
Provision for (recovery from) inventory obsolescence | 197 | (56) | 243 | ||||||||||||||||||||||||||
Impairment loss on equipment | — | 78 | — | ||||||||||||||||||||||||||
Stock-based compensation expense | 5,416 | 5,941 | 14,801 | ||||||||||||||||||||||||||
Deferred income taxes | — | 40 | (15,972) | ||||||||||||||||||||||||||
Bargain purchase gain | — | — | (27,336) | ||||||||||||||||||||||||||
Changes in assets and liabilities, net of effect of acquisition: | |||||||||||||||||||||||||||||
Accounts receivable | (25,163) | (4,640) | (5,884) | ||||||||||||||||||||||||||
Inventories | (6,102) | 741 | 2,448 | ||||||||||||||||||||||||||
Prepaid expenses and other assets | (581) | 422 | 526 | ||||||||||||||||||||||||||
Accounts payable and accrued expenses | 32,275 | (2,807) | 6,644 | ||||||||||||||||||||||||||
Deferred revenue | — | — | (21,716) | ||||||||||||||||||||||||||
Net cash flows provided by (used in) operating activities | 11,072 | (24,113) | (32,451) | ||||||||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||
Product acquisitions | (30,685) | (1,951) | (5,853) | ||||||||||||||||||||||||||
Acquisitions of equipment | (79) | (112) | (11) | ||||||||||||||||||||||||||
Net cash flows used in investing activities | (30,764) | (2,063) | (5,864) | ||||||||||||||||||||||||||
Financing activities: | |||||||||||||||||||||||||||||
Proceeds from exercise of stock options | 2,321 | 670 | 439 | ||||||||||||||||||||||||||
Proceeds from issuance of common stock, less underwriters discount | 48,000 | — | — | ||||||||||||||||||||||||||
Proceeds from issuance of Series B preferred stock | — | 50,000 | — | ||||||||||||||||||||||||||
Payment on note payable | (67,346) | — | (30,000) | ||||||||||||||||||||||||||
Proceeds from notes payable | 59,987 | — | 60,000 | ||||||||||||||||||||||||||
Equity finance costs | (410) | (1,417) | — | ||||||||||||||||||||||||||
Payment of deferred financing fees | — | (450) | (2,948) | ||||||||||||||||||||||||||
Loss on refinancing of former debt | (2,794) | — | — | ||||||||||||||||||||||||||
Net cash flows provided by financing activities | 39,758 | 48,803 | 27,491 | ||||||||||||||||||||||||||
Net change in cash and cash equivalents | 20,066 | 22,627 | (10,824) | ||||||||||||||||||||||||||
Cash and cash equivalents at beginning of year | 43,822 | 21,195 | 32,019 | ||||||||||||||||||||||||||
Cash and cash equivalents at end of year | $ | 63,888 | $ | 43,822 | $ | 21,195 | |||||||||||||||||||||||
Cash paid for interest | $ | 6,809 | $ | 6,053 | $ | 5,285 |
|
wholly-owned.
The Company’s historical clinical and regulatory development strategy has focused primarily on its ability to use the U.S. Food and Drug Administration’s (“FDA’s”) 505(b)(2) approval process to obtain more timely and efficient approval of new formulations of previously approved, active therapeutics incorporated into the Company’s drug-delivery technology.
Key components used in the manufacture
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
|
be available in sufficient volumes within required time frames, if at all, to meet
The Company sellssold its BELBUCA, Symproic and BUNAVAIL products primarily to large national wholesalers, which in turn may resell the products to smaller or regional wholesalers, retail pharmacies, chain drug stores, government agencies and other third parties. The following table lists the Company’s customers that individually comprise greater than 10% of total accounts receivable:
December 31, | ||||||||
Customers | 2018 | 2017 | ||||||
Customer A | 47 | % | 47 | % | ||||
Customer B | 22 | % | 22 | % | ||||
Customer C | 25 | % | 26 | % | ||||
|
|
|
| |||||
Total | 94 | % | 95 | % | ||||
|
|
|
|
December 31, | ||||||||||||||||||||
Customers | 2019 | 2018 | ||||||||||||||||||
Customer A | 42 | % | 47 | % | ||||||||||||||||
Customer B | 35 | % | 22 | % | ||||||||||||||||
Customer C | 18 | % | 25 | % | ||||||||||||||||
Total | 95 | % | 94 | % |
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Inventory is composed of the following at December 31:
2018 | 2017 | |||||||
Raw Materials & Supplies | $ | 645 | $ | 1,338 | ||||
Work-in-process | 2,093 | 3,135 | ||||||
Finished Goods | 2,855 | 1,861 | ||||||
Finished Goods Reserve | (187 | ) | (243 | ) | ||||
|
|
|
| |||||
Total Inventories | $ | 5,406 | $ | 6,091 | ||||
|
|
|
|
2019 | 2018 | ||||||||||
Raw Materials & Supplies | $ | 624 | $ | 645 | |||||||
Work-in-process | 6,198 | 2,093 | |||||||||
Finished Goods | 4,874 | 2,855 | |||||||||
Finished Goods Reserve | (384) | (187) | |||||||||
Total Inventories | $ | 11,312 | $ | 5,406 |
2018.
2017.
Estimated | ||||||
Licenses | 15 years | |||||
BELBUCA license and distribution rights | 10 years | |||||
Symproic license and distribution rights | 12 years | |||||
U.S. product rights | 8-12 years | |||||
EU product rights | 7-11 years |
2017.
Product sales
As discussed further below
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Performance obligations
•estimated levels of inventory in the distribution channel;
•historical rebates, chargebacks and returns of products;
•direct communication with customers;
•anticipated introduction of competitive products or generics;
•anticipated pricing strategy changes by the Company and/or its competitors;
•analysis of prescription data gathered by a third-party prescription data provider;
•the impact of changes in state and federal regulations; and
•the estimated remaining shelf life of products.
In connection with the March 2020 announcement of the discontinuation of marketing of BUNAVAIL, the 2019 results include a one-time reserve of $2.2 million for additional BUNAVAIL product returns.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
BELBUCA Symproic and BUNAVAIL whereby the Company offers apoint-of-sale subsidy to retail consumers. The Company estimates its liabilities for these voucher programs based on the actualcurrent utilization and historical redemption rates as reported to the Company by a third-party claims processing organization. The Company accounts for the costs of these special promotional programs as price adjustments, which are a reduction of gross revenue.
Cost
Product development
$13.0 million, respectively.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Shipping and handling costs
2018 | 2017 | 2016 | ||||
Expected price volatility | 60.34%-68.77% | 68.76%-78.79% | 62.65%-80.78% | |||
Risk-free interest rate | 2.05%-3.00% | 1.77%-2.05% | 0.56%-1.70% | |||
Weighted average expected life in years | 6 years | 6 years | 6 years | |||
Dividend yield | — | — | — |
2019 | 2018 | 2017 | |||||||||||||||
Expected price volatility | 61.66%-64.10% | 60.34%-68.77% | 68.76%-78.79% | ||||||||||||||
Risk-free interest rate | 1.36%-2.66% | 2.05%-3.00% | 1.77%-2.05% | ||||||||||||||
Weighted average expected life in years | 6 years | 6 years | 6 years | ||||||||||||||
Dividend yield | — | — | — |
Recent
Level 1 | Level 2 | Level 3 | Balance | |||||||||||||||||||||||
Cash and cash equivalents | $ | 63,888 | — | — | $63,888 |
for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. In July 2018, the FASB issued ASU No. 2018-10,
Codification Improvements to Topic 842 (Leases), which amends narrow aspects of the guidance issued in the amendments in ASU 2016-02, and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows entities to recognize a cumulative-effect adjustment from the application of ASU 2016-02 to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, the Company adopted Topic 842 using the modified retrospective method as of January 1, 2019 and will not restate comparative periods. TheBIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
|
In the first quarter of 2018, the Company adopted Topic 606. Under the standard, revenue
Recent accounting pronouncements-issued, not yet adopted
a material impact on its consolidated financial statements.
ASU2016-02, issuedreceived. In March 2020 the Company announced it will discontinue marketing of BUNAVAIL in 2020.
Balance at January 1, 2018 | Year ended December 31, 2018 | Balance at December 31, 2018 | |||||||||||||||
Accounts receivable with customers | $ | 8,987 | $ | 4,640 | $ | 13,627 |
However, unlike current GAAP which requires only capital leases to be recognized on the balance sheet, the new ASU will require both types of leases (i.e., operating and finance leases) to be recognized on the balance sheet. The FASB lessee accounting model will continue to account for both types of leases. The finance lease will be accounted for in substantially the same manner as capital leases are accounted for under existing GAAP. The operating lease will be accounted for in a manner similar to operating leases under existing GAAP, except that lessees will recognize a lease liability and aright-of-use asset for all of those leases. The new standard requires a modified-retrospective approach to adoption and is effective for interim and annual periods beginning on January 1, 2019 but may be adopted earlier. In addition, the standard will require that the Company update its systems, processes and controls it uses to track, record and account for its lease portfolio.
The impact of the adoption of Topic 842 on the accompanying consolidated balance sheet as of January 1, 2019 is as follows (in thousands):
December 31, 2018 | Adjustments Due to the Adoption of Topic 842 | January 1, 2019 | ||||||||||||||||||||||||
Right-of-use asset | Lease liability | |||||||||||||||||||||||||
Property and equipment, net | $ | 3,072 | $ | 939 | $ | — | $ | 4,011 | ||||||||||||||||||
Current liabilities | $ | 21,539 | $ | — | $ | 212 | $ | 21,751 | ||||||||||||||||||
Other long-term liabilities | $ | 5,600 | $ | — | $ | 822 | $ | 6,422 |
Twelve months ended December 31, | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Lease Cost | ||||||||||||||||||||
Operating lease cost | ||||||||||||||||||||
Operating lease | $ | 328 | $ | 325 | ||||||||||||||||
Variable lease costs | $ | 13 | $ | 2 | ||||||||||||||||
Total lease cost | $ | 341 | $ | 327 |
Twelve months ended December 31, | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Other information | ||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||||||
Operating cash flows from operating leases | $ | 351 | $ | 327 |
Twelve months ended December 31, | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Lease term and discount rate | ||||||||||||||||||||
Weighted-average remaining lease term operating leases | 3.0 years | 4.0 years | ||||||||||||||||||
Weighted-average discount rate operating leases | 11.8 | % | 11.8 | % |
|
The Company has estimated theright-of-use
|
Effective January 1, 2018, the Company adopted Topic 606. The Company elected to apply the standard using the modified retrospective method beginning January 1, 2018. The Company applied this guidance only to those contracts that were not completed at the date of adoption. As a result of adoption, the cumulative impact to the Company’s retained earnings at January 1, 2018 was $0.135 million. The comparative information has not been restated and continues to be reportedpayments under the accounting standards in effect for those periods.
There were no significant changes in the timing or amount of revenue recognized for the Company’s product sales and relatedgross-to-net adjustments under Topic 606. The Company’s net product sales continue to be recognized when delivery has occurred, and itsgross-to-net adjustments are estimated and recorded in the accounting period related to when sales occur in the manner fundamentally consistent with the Company’s prior accounting methodology.
Under the new standard, timing for recognition of certain contract revenue may be accelerated such that a portion of revenue will be estimated and recognized in revenue earlier than the previous accounting standards. During the year ended December 31, 2018, the Company recorded financing revenue for a milestone that is not due until 2020.
The main types of revenue contracts are:
|
|
|
The impact of adoption of Topic 606 on the Company’s consolidated balance sheetnon-cancellable leases as of December 31, 2018 follows (in thousands):
Consolidated Balance Sheet | ||||||||||||
December 31, 2018 | ||||||||||||
As reported | Balances without adoption of Topic 606 | Effect of Adoption | ||||||||||
Accounts receivable, net | $ | 13,627 | $ | 13,462 | $ | 165 | ||||||
Accumulated deficit | $ | (351,288 | ) | $ | (351,453 | ) | $ | 165 |
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
Maturity of lease liabilities | ||||||||||||||
2020 | $360 | |||||||||||||
2021 | $370 | |||||||||||||
2022 | $219 | |||||||||||||
Total lease payments | $949 | |||||||||||||
Less: Interest | $(128) | |||||||||||||
Present value of lease liabilities | $821 |
| |||||||||||
December 31, 2019 | |||||||||||
Assets | |||||||||||
Property and equipment, net operating lease-right of use asset | $ | 720 | |||||||||
Liabilities | |||||||||||
Current liabilities operating lease-current liability | $ | 281 | |||||||||
Other long-term liabilities operating lease-noncurrent liability | $ | 540 | |||||||||
Total lease liabilities | $ | 821 |
The impact of adoption of Topic 606 on the Company’s consolidated statement of operations for the year ended December 31, 2018 follows (in thousands):
Consolidated Statement of Operations Year ended December 31, 2018 | ||||||||||||
As reported | Balances without adoption of Topic 606 | Effect of Adoption | ||||||||||
Product sales | $ | 51,410 | $ | 51,410 | $ | — | ||||||
Product royalty revenues | 3,389 | 3,389 | — | |||||||||
Contract revenues | 841 | 811 | 30 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | $ | 55,640 | $ | 55,610 | $ | 30 | ||||||
|
|
|
|
|
| |||||||
Net loss | $ | (33,867 | ) | $ | (33,897 | ) | $ | 30 | ||||
|
|
|
|
|
|
The beginning and ending balances of the Company’s accounts receivables with customers from contracts during the periods presented is as follows (in thousands):
Balance at January 1, 2018 | Year ended December 31, 2018 | Balance at December 31, 2018 | ||||||||||
Accounts receivable with customers | $ | 8,987 | $ | 4,640 | $ | 13,627 |
On January 8, 2019, Purdue terminated their license agreement with the Company which was effective March 11, 2019 (See Note 10,Other license agreements and acquired product rights). Therefore, all previously presented contract revenue for future milestones related to the Purdue agreement as a result of the adoption of Topic 606 during the year ended December 31, 2018 has been reversed. The total amount reversed is $0.2 million and is recorded in the accompanying consolidated statement of operations for the year ended December 31, 2018.
|
|
all.
2018 | 2017 | |||||||
Accounts payable | $ | 3,166 | $ | 12,236 | ||||
Accrued rebates | 12,261 | 5,648 | ||||||
Accrued compensation and benefits | 3,814 | 3,472 | ||||||
Accrued acquisition costs | 318 | 2,311 | ||||||
Accrued returns | 715 | 915 | ||||||
Accrued royalties | 159 | 488 | ||||||
Accrued clinical trial costs | 464 | 234 | ||||||
Accrued legal | 70 | 216 | ||||||
Accrued other | 572 | 629 | ||||||
|
|
|
| |||||
Total accounts payable and accrued expenses | $ | 21,539 | $ | 26,149 | ||||
|
|
|
|
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
2019 2018 Accounts payable $ 11,704 $ 3,166 Accrued rebates 28,528 12,261 Accrued compensation and benefits 5,545 3,814 Accrued acquisition costs — 318 Accrued returns 4,438 715 Accrued royalties 535 159 Accrued clinical trial costs — 464 Accrued regulatory fees 331 — Accrued legal 1,484 70 Accrued other 1,428 572 Total accounts payable and accrued expenses $ 53,993 $ 21,539
|
2018 | 2017 | |||||||
Machinery & equipment | $ | 5,635 | $ | 5,428 | ||||
Computer equipment & software | 406 | 399 | ||||||
Office furniture & equipment | 155 | 169 | ||||||
Leasehold improvements | 43 | 44 | ||||||
Idle equipment | 679 | 766 | ||||||
|
|
|
| |||||
Total | 6,918 | 6,806 | ||||||
|
|
|
| |||||
Less accumulated depreciation | (3,846 | ) | (3,028 | ) | ||||
|
|
|
| |||||
Total property, plant & equipment, net | $ | 3,072 | $ | 3,778 | ||||
|
|
|
|
2019 | 2018 | ||||||||||
Machinery & equipment | $ | 5,635 | $ | 5,635 | |||||||
Right of use, building and lease | 720 | — | |||||||||
Computer equipment & software | 437 | 406 | |||||||||
Office furniture & equipment | 174 | 155 | |||||||||
Leasehold improvements | 43 | 43 | |||||||||
Idle equipment | 679 | 679 | |||||||||
Total | 7,688 | 6,918 | |||||||||
Less accumulated depreciation | (5,613) | (3,846) | |||||||||
Total property, plant & equipment, net | $ | 2,075 | $ | 3,072 |
|
associated with accelerated depreciation for BUNAVAIL specific equipment.
December 31, 2018 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, net | Weighted average Useful Life | ||||||||||||
Product rights | $ | 6,050 | $ | (5,442 | ) | $ | 608 | 1.08 | ||||||||
BELBUCA license and distribution rights | 45,000 | (9,000 | ) | 36,000 | 7.65 | |||||||||||
Licenses | 1,900 | (1,805 | ) | 95 | 0.50 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total intangible assets | $ | 52,950 | $ | (16,247 | ) | $ | 36,703 | 9.23 | ||||||||
|
|
|
|
|
|
|
| |||||||||
December 31, 2017 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, net | Weighted average Useful Life | ||||||||||||
Product rights | $ | 6,050 | $ | (4,881 | ) | $ | 1,169 | 1.21 | ||||||||
BELBUCA license and distribution rights | 45,000 | (4,500 | ) | 40,500 | 8.50 | |||||||||||
Licenses | 1,900 | (1,709 | ) | 191 | 0.54 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total intangible assets | $ | 52,950 | $ | (11,090 | ) | $ | 41,860 | 10.25 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2019 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, net | Weighted average Useful Life | ||||||||||||||||||||||
Product rights | $ | 6,050 | $ | (6,003) | $ | 47 | 0.61 | |||||||||||||||||||
BELBUCA license and distribution rights | 45,000 | (13,500) | 31,500 | 3.77 | ||||||||||||||||||||||
Symproic license and distribution rights | 30,636 | (1,827) | 28,809 | 4.40 | ||||||||||||||||||||||
Licenses | 1,900 | (1,900) | — | 0.30 | ||||||||||||||||||||||
Total intangible assets | $ | 83,586 | $ | (23,230) | $ | 60,356 |
December 31, 2018 | Gross Carrying Value | Accumulated Amortization | Intangible Assets, net | Weighted average Useful Life | ||||||||||||||||||||||
Product rights | $ | 6,050 | $ | (5,442) | $ | 608 | 1.08 | |||||||||||||||||||
BELBUCA license and distribution rights | 45,000 | (9,000) | 36,000 | 7.65 | ||||||||||||||||||||||
Licenses | 1,900 | (1,805) | 95 | 0.50 | ||||||||||||||||||||||
Total intangible assets | $ | 52,950 | $ | (16,247) | $ | 36,703 |
Years ending December 31, | ||||
2019 | $ | 5,157 | ||
2020 | 4,546 | |||
2021 | 4,500 | |||
2022 | 4,500 | |||
2023 | 4,500 | |||
Thereafter | 13,500 | |||
|
| |||
$ | 36,703 | |||
|
|
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
The Company periodically enters into licenseYears ending December 31, 2020 $ 6,981 2021 6,935 2022 6,935 2023 6,935 2024 6,935 Thereafter 25,635 $ 60,356
Endo license and development agreement
In January 2012, the Company entered into a License and Development Agreement with Endo Pharmaceuticals, Inc. (“Endo”) pursuant to which the Company granted Endo an exclusive commercial world-wide license to develop, manufacture, market and sell the Company’s BELBUCAacquired product and to complete U.S. development of such product candidate for purposes of seeking FDA approvalrights:
Pursuant to the Endo Agreement, Endo had obtained all rights necessary to complete the clinical and commercial development of BELBUCA and to sell the product worldwide.
Pursuant to the Endo Agreement, the Company has received the following payments:
$50 million upon regulatory approval, earned in October 2015 and received in November 2015. Of the $50 million received in November 2015, $20 million related to a patent extension and was recorded as deferred revenue because all or a portion of such $20 million was contingently refundable to Endo if a third party generic product was introduced in the U.S. during the patent extension period from 2020 to 2027. However, due to, the Company and Endo enteringShionogi Inc. (“Shionogi”) entered into a Termination Agreement on December 7, 2016 which terminatedan exclusive license agreement (the “License Agreement”) for the BELBUCA license to Endo effective January 6, 2017, the deferred $20 million was recognized as revenue in January 2017. (See note 8, Business Combinations and BELBUCA Acquisition).
Collegium license and development agreement
On May 11, 2016, the Company and Collegium executed a License Agreement under which the Company granted Collegium the exclusive rights to develop and commercialize ONSOLIScommercialization of Symproic in the U.S.
UnderUnited States including Puerto Rico (the “Territory”) for opioid-induced constipation in adult patients with chronic non-cancer pain (the “Field”).
On December 8, 2017, the Company received therequired 90-day notice from Collegium regarding terminationauthorized generic. Assets acquired as part of the License Agreement include: intellectual property, inventory, trademarks and the effective date of termination was March 8, 2018. tradenames.
Pursuant toobligations. Unless earlier terminated, the CollegiumLicense Agreement will continue in effect until the Company has receivedexpiration of the following payments:
a $2.5 million upfrontnon-refundable payment, payable to the Company within 30 days of executionCompany’s royalty obligations, as defined. Upon expiration of the License Agreement, (received June 2016);
reimbursementThe Company and Shionogi have also entered into a customary supply agreement under which Shionogi will supply Symproic to the Company at cost plus an agreed upon markup for an initial term of up to two years. In the event the Company elects to source Symproic from apre-determined amount third party supplier, Shionogi would continue to supply the Company with naldemedine tosylate for use in Symproic at cost plus such agreed upon markup for the duration of the remaining expenses associated withLicense Agreement. The Company and Shionogi also entered into a customary transition services and distribution agreement under which Shionogi will continue to perform certain sales, distribution and related activities and commercialization and administrative services on the ongoing transferCompany’s behalf until June 30, 2019 pursuant to the transition services and distribution agreement (the “Transition Date”) (during which time, in lieu of paying royalties and cost-plus supply, distribution and transitional services during this period, Shionogi will retain 35% of the manufacturingnet sales of ONSOLIS;
| ||||||||
Symproic license | $ | 30,000 | ||||||
Transaction expenses | $ | 636 | ||||||
Total value | $ | 30,636 |
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
agreement and (ii) Endo’s waiver of its right to sell product for twelve months following the closing of the termination agreement.
At the closing date, the Company accepted transfer of the net assets and assumed and agreed to discharge when due all applicable liabilities assumed by the Company, which consisted of post-closing obligations for liabilities and payments associated with the net assets, the assumed contracts related to the net assets and applicable taxes (with the obligation forpre-closing and other certain liabilities resulting from the acts or omissions of Endo being retained by Endo). The Purchase Price, together with all other payments (including anon-compete covenant payment) due to Endo under the Termination Agreement, was payable to Endo in cash in four quarterly installments on the last calendar day of each quarter in 2017.
The BELBUCA acquisition was accounted for as a business combination in accordance with ASC No. 805, Business Combinations which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, and estimates of terminal values. The Company believes the estimates used are reasonable and the significant effects of the BELBUCA acquisition are properly reflected.
Asset purchase price: | ||||
Deferred cash consideration to Endo | $ | 7,536 | ||
|
| |||
Total asset purchase price | $ | 7,536 | ||
|
| |||
Estimated fair value of assets acquired: | ||||
BELBUCA product inventory andwork-in process | $ | 5,412 | ||
BELBUCA-related manufacturing equipment | 432 | |||
License and distribution rights intangible assets | 45,000 | |||
Deferred tax liability | (15,972 | ) | ||
|
| |||
Amount attributable to assets acquired | $ | 34,872 | ||
|
| |||
Bargain purchase gain | $ | (27,336 | ) | |
|
|
Inventories
Asset purchase price: | |||||
Deferred cash consideration to Endo | $ | 7,536 | |||
Total asset purchase price | $ | 7,536 | |||
Estimated fair value of assets acquired: | |||||
BELBUCA product inventory and work-in process | $ | 5,412 | |||
BELBUCA-related manufacturing equipment | 432 | ||||
License and distribution rights intangible assets | 45,000 | ||||
Deferred tax liability | (15,972) | ||||
Amount attributable to assets acquired | $ | 34,872 | |||
Bargain purchase gain | $ | (27,336) |
The fair value of the equipment was determined by consideration of replacement cost and equipment condition and was assigned a useful life of seven years. The fair value of the license and distribution rights intangible assets as amortized in the accompanying consolidated balance sheets were estimated primarily using the “income method,” which starts with a forecast of all expected future cash flows. Some of the more significant assumptions inherent in the development of intangible asset values, from the perspective of a market participant, include: the amount and timing of projected future cash flows (including net revenue, cost of sales, commercial expenses, research and development costs and working capital requirements) as well as estimated contributory asset charges; the discount rate selected to measure the risks inherent in the future cash flows; and the assessment of the asset’s life cycle and the competitive trends impacting the asset, among other factors. The license and distribution rights intangible assets will be amortized over ten years, which approximates the current, remaining patent life of the BELBUCA -related intellectual property.
As a result of the business combination,agreement, the Company recognized a deferred tax liabilitygranted Mylan rights to the European development and commercialization of $16.0 million. This deferred tax liability was netted against its deferred tax assets as of December 31, 2017. Because a full valuation allowance has been provided againstBREAKYL. Mylan managed the Company’s deferred tax assets as it is considered more likely than notregulatory submission in Europe that they will not be utilized,led to approval in October 2010.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Pro forma impact of acquisition of BELBUCA
The following pro forma combined results of operations are provided for the yearyears ended December 31, 2016, as though the BELBUCA acquisition had been completed as of January 1, 2016. These supplemental pro forma results of operations are provided for illustrative purposes only2019, 2018 and do not purport to be indicative of the actual results that would have been achieved by the combined company for the period presented or that may be achieved by the combined company in the future. The pro forma results of operations do not include any cost savings or other synergies that resulted, or may result, from the BELBUCA acquisition or any estimated costs that will be incurred to integrate the BELBUCA product line, nor do they reflect the bargain purchase gain recognized. Future results may vary significantly from the results in this pro forma information because of future events and transactions, as well as other factors.
(in thousands, except per share data) | December 31, 2016 (unaudited) | |||
Revenue | $ | 25,010 | ||
Net loss | $ | (201,769 | ) | |
Pro forma net loss per common share | ||||
Basic | $ | (3.76 | ) | |
Diluted | $ | (3.76 | ) |
The Company’s historical financial information was adjusted to give effect to the pro forma events that were directly attributable to the BELBUCAacquisition and factually supportable. The unaudited pro forma consolidated results include historical revenues and expenses of assets acquired in the acquisition with the following adjustments:
Adjustment to recognize incremental amortization expense based on the fair value of intangibles acquired;
Adjustment to recognize incremental depreciation expense for equipment acquired in the acquisition.
|
Purdue license and supply agreement:
On July 12, 2017, the Company, along with Purdue, an Ontario limited partnership, announced that they had executed an exclusive agreement granting to Purdue the licensing, distribution, marketing and sale rights related to BELBUCA in Canada. Financial terms of the Purdue agreement include: (i) total upfront and other cash milestone payments (relating to marketing authorization transfer and certain other marketing- and sales-related milestones) of up to an aggregate of CAD 4.5 million, including approximately CAD 1.5 million (0.5 million CAD and 1.0 million CAD received August 2017 and October 2017, respectfully); (ii) a low double digit percent royalty payable quarterly by Purdue to the Company based on Canadian net sales of BELBUCA, which royalty rate is subject to adjustment in certain circumstances; (iii) an annual royalty fee commencing a period of time after the commercial launch of BELBUCA in Canada, which fee is creditable against royalties payable by Purdue and subject to reduction in certain circumstances; and (iv) payment by Purdue of certain costs incurred to obtain and transfer the marketing authorization for BELBUCA in Canada, a portion of which will be reimbursed by the Company as a reduction of royalties payable by Purdue.
On September 12, 2017, the Company announced Health Canada had granted market authorization to formally transfer the Drug Identification Number (DIN) ownership of BELBUCAin Canada to Purdue. This approval triggered a milestone payment to the Company in the amount of CAD 1 million, which was received October 2017.
On January 30, 2018, the Company and Purdue announced that BELBUCA was now commercially available in Canada. The first commercial sale of BELBUCA in Canada triggered a milestone payment to the Company from Purdue in the amount of CAD 1 million, which the Company received March 2018.
On January 8, 2019, the Company received therequired 60-day notice from Purdue regarding termination of the License Agreement and the effective date of termination was March 11, 2019. Given these developments, the Company is taking steps to discontinue the sale of BELBUCA in Canada.
respectively.
On October 7,
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
receivedBEMA Fentanyl in 2010. In addition,Taiwan, where the product is now marketed under the brand name PAINKYL. The Company will receivereceives an ongoing royalty based on net sales. TTY will be responsible for the regulatory filing of BEMA Fentanyl in Taiwan as well as future commercialization in that territory.
On July 29, 2013, the Company announced the regulatory approval of BEMA Fentanyl in Taiwan, where the product will be marketed under the brand name PAINKYL. The approval in Taiwan resulted in a milestone payment of $0.3 million to the Company, which was received in the third quarter 2013.
|
Pursuant to the Term Loan Agreement, the Company borrowed $45.0 million from the Lenders as of the Closing Date, and was eligible to borrow up to an additional $15.0 million contingent upon achievement of certain conditions, including: (i) in the case of the first tranche, representing the second potential draw under the Loan Agreement (the “Second Draw”), satisfying both (a) certain minimum net revenue thresholds on or before September 30, 2017 or December 31, 2017 and (b) a certain minimum market capitalization threshold for a period of time prior to the funding of the Second Draw (provided, that if the Company does not achieve the minimum net revenue thresholds necessary for the Second Draw but does achieve a certain minimum market capitalization threshold for a period of time prior to December 31, 2017, the Company would be eligible for a Second Draw funding in the amount of $5.0 million).Date. On December 26, 2017, the Company was eligible and elected to receive the Second Drawsecond draw for gross proceeds of $15.0 million.
After the payoff of the MidCap Credit Agreement, the Company utilized the initial proceeds under the Term Loan Agreement (after deducting loan origination costs and broker and other fees) of approximately $13.7 million, plus any additional amounts borrowed in the future, for general corporate purposes and working capital. The original Term Loan Agreement hada six-year term with three years of interest-only payments, (from 2017-2019).
The Company may prepayrepay all or a portion of the outstanding principal and accrued unpaid interestloan balance owed by the Company under the TermOriginal Loan Agreement. The Company also used existing cash on hand to pay a $5.6 million backend facility fee to CRG. Upon the repayment of all amounts owed by the Company under the CRG Original Loan Agreement, at any time upon prior noticeall commitments to CRG were terminated and all security interests granted by the Lenders subject to a certainCompany and its subsidiary guarantors under the CRG Original Loan Agreement were released.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
|
control and certain asset sales or licensing transactions, the Company is required to prepay all or a portion
As security for itsmandatory prepayment provisions that require prepayment upon change of control.
The Term Loan Agreement also contains customary affirmative and negative covenants for a credit facility of this size and type, including covenants that limit or restrict the Company’s ability to, among other things (but subject in each case to negotiated exceptions), incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions, license intellectual property rights on an exclusive basis or repurchase stock.
The Term Loan Agreement includes customary events of default that include, among otherthings, non-payment, inaccuracy of representations and warranties, covenant breaches, a material adverse change (as defined in the Term Loan Agreement), cross default to material indebtedness or material agreements, bankruptcy and insolvency, material judgments and a change of control. The occurrence and continuance of an event of default could result in the acceleration of the obligations under the Term Loan Agreement. Under certain circumstances, a default interest rate of an additional 4.00% per annum will apply on all outstanding obligations during the existence of an event of default under the Term Loan Agreement.
exceptions.
2019 | $ | — | ||
2020 | — | |||
2021 | 30,892 | |||
2022 | 30,892 | |||
|
| |||
Total maturities | $ | 61,784 | ||
Unamortized discount and loan costs | (10,132 | ) | ||
|
| |||
Total notes payable obligation | $ | 51,652 | ||
|
|
In connection with the initial borrowing made under the Term Loan Agreement, the Company issued to CRG and certain of its affiliates five separate warrants to purchase an aggregate of 1,701,583 shares of the Common Stock (the “CRG Warrants”). The CRG Warrants are exercisable any time prior to February 21, 2027 at a price of $2.38 per share, with typical provisions for cashless exercises. The exercise of the CRG Warrants could have a dilutive effect to the Common Stock to the extent that the market price per share of the Common Stock, as measured under the terms of the CRG Warrants, exceeds the exercise price of the CRG Warrants.
In connection with the Second Draw, the Company issued to CRG and certain of its affiliates warrants to purchase an aggregate of 349,452 shares of the Company’s common stock (the “CRG Second Draw Warrants”). The CRG Second Draw Warrants are exercisable any time prior to December 26, 2027, at a price of $3.42 per share, with typical provisions for cashless exercise and stock-based anti-dilution protection. The exercise of the CRG Second Draw Warrants could have a dilutive effect to the Company’s common stock to the extent that the market price per share of the Company’s common stock, as measured under the terms of the CRG Second Draw Warrants, exceeds the exercise price of the CRG Warrants.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
2020 $ — 2021 — 2022 13,846 2023 18,462 2024 18,462 2025 9,230 Total maturities $ 60,000 Unamortized discount and loan costs (1,432) Total notes payable obligation $ 58,568
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
BELBUCA | $ | 45,988 | $ | 26,980 | $ | — | ||||||
BUNAVAIL | 5,422 | 7,942 | 8,266 | |||||||||
|
|
|
|
|
| |||||||
Net product sales | $ | 51,410 | $ | 34,922 | $ | 8,266 | ||||||
|
|
|
|
|
|
|
Year ended December 31, | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
BELBUCA | $ | 97,538 | $ | 45,988 | $ | 26,980 | |||||||||||||||||||||||
% of net product sales | 90.4 | % | 89.5 | % | 77.3 | % | |||||||||||||||||||||||
Symproic | 8,061 | $ | — | $ | — | ||||||||||||||||||||||||
% of net product sales | 7.5 | % | — | % | — | % | |||||||||||||||||||||||
BUNAVAIL | 2,289 | 5,422 | 7,942 | ||||||||||||||||||||||||||
% of net product sales | 2.1 | % | 10.5 | % | 22.7 | % | |||||||||||||||||||||||
Net product sales | $ | 107,888 | $ | 51,410 | $ | 34,922 |
The Company recorded federal income tax benefit during 2018 due to the impact of the 2018 Tax Cuts and Jobs Act. For years beginning after December 31, 2017, the Act repeals corporate AMT. The credit becomes refundable in an amount equal to 50% of the excess of the credit for the tax year over the amount of the credit allowable for the year against regular tax liability. The Company recorded state income tax expense of $0.05 million due to state audit findings related to prior periods. The Company has recognized valuation allowances for all deferred tax assets for years ending 2018 and 2017.
2018 | 2017 | 2016 | ||||||||||
Federal statutory income (benefit) tax rate | 21.00 | % | (34.00 | %) | 34.00 | % | ||||||
2017 Tax Act, net deferred tax remeasurement | — | (626.73 | ) | — | ||||||||
State taxes, net of federal benefit | (0.11 | ) | (2.01 | ) | 2.88 | |||||||
Stock compensation | (4.74 | ) | (5.18 | ) | (0.61 | ) | ||||||
Permanent differences-other | (1.33 | ) | (13.39 | ) | (1.00 | ) | ||||||
North Carolina tax rate change | — | (32.75 | ) | — | ||||||||
Research and development (“R&D”) credit | — | 5.54 | 0.98 | |||||||||
Valuation release for bargain purchase gain | — | (302.23 | ) | — | ||||||||
Other | (2.07 | ) | (1.36 | ) | (0.47 | ) | ||||||
Decrease (increase) in valuation allowance | (12.65 | ) | 709.88 | (35.78 | ) | |||||||
|
|
|
|
|
| |||||||
0.10 | % | (302.23 | %) | 0.00 | % | |||||||
|
|
|
|
|
|
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
2019 2018 2017 Federal statutory income (benefit) tax rate 21.00 % 21.00 % (34.00) % 2017 Tax Act, net deferred tax remeasurement — — (626.73) State taxes, net of federal benefit (0.18) (0.11) (2.01) Stock compensation (5.39) (4.74) (5.18) Permanent differences-other (7.67) (1.33) (13.39) North Carolina tax rate change — — (32.75) Research and development (“R&D”) credit — — 5.54 Valuation release for bargain purchase gain — — (302.23) Other 1.71 (2.07) (1.36) Decrease (increase) in valuation allowance (9.44) (12.65) 709.88 0.03 % 0.10 % (302.23) %
December 31, | ||||||||
Deferred tax assets (liabilities) | 2018 | 2017 | ||||||
Deferred revenue | $ | — | $ | — | ||||
Basis difference in equipment | (459 | ) | (587 | ) | ||||
Basis difference in intangibles | (6,045 | ) | (8,288 | ) | ||||
Accrued liabilities and other | 2,246 | 654 | ||||||
R&D credit | 10,980 | 11,882 | ||||||
AMT credit | — | 79 | ||||||
Stock options | 4,360 | 6,115 | ||||||
Net operating loss carry-forward | 64,376 | 61,660 | ||||||
|
|
|
| |||||
75,458 | 71,515 | |||||||
|
|
|
| |||||
Less: valuation allowance | (75,458 | ) | (71,515 | ) | ||||
|
|
|
| |||||
$ | — | $ | — | |||||
|
|
|
|
December 31, | ||||||||||||||||||||
Deferred tax assets (liabilities) | 2019 | 2018 | ||||||||||||||||||
Basis difference in equipment | $(438) | $(459) | ||||||||||||||||||
Basis difference in intangibles | (5,356) | (6,045) | ||||||||||||||||||
Accrued liabilities and other | 3,942 | 2,246 | ||||||||||||||||||
R&D credit | 10,980 | 10,980 | ||||||||||||||||||
Stock options | 4,416 | 4,360 | ||||||||||||||||||
Net operating loss carry-forward | 62,535 | 64,376 | ||||||||||||||||||
76,079 | 75,458 | |||||||||||||||||||
Less: valuation allowance | (76,079) | (75,458) | ||||||||||||||||||
$ | — | $ | — |
assets for the years ended December 31, 2019 and 2018.
2019.
|
2015.
On August 23, 2017, the Company and Dr. Mark Sirgo entered into a retirement agreement (the “Sirgo Retirement Agreement”). Pursuant to the Sirgo Retirement Agreement, all unvested RSUs previously issued under the Company’s equity incentive plans and held by Dr. Sirgo as of the retirement date were cancelled and, in lieu thereof, Dr. Sirgo was awarded aone-time issuance of shares of Common Stock based upon a net present valuation of the cancelled RSUs in January 2018 of 795,730 shares of Common Stock.
On January 12, 2018, the Company and Dr. Niraj Vasisht entered into a retirement agreement (the “Vasisht Retirement Agreement”). Pursuant to the Vasisht Retirement Agreement, all unvested RSUs previously issued under the Company’s equity incentive plans and held by Dr. Vasisht as of the retirement date were cancelled and, in lieu thereof, Dr. Vasisht was awarded aone-time issuance of shares of Common Stock based upon a net present valuation of the cancelled RSUs in March and December 2018 of 309,162 and 65,000 shares of Common Stock, respectively.
The Compensation Committee of the Board of Directors approved in early 2018, equity awards for 2017 in the form of RSUs to its named executive officers (including Drs. Sirgo and Vasisht) and other senior executives. Dr. Sirgo, received 285,305 and Dr. Vasisht received 198,129, respectively, shares of Common Stock in fulfillment of the Company’s contractual obligations. Such shares were issued in 2018.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
On August 2, 2018, in connection with the Company’s 2018 Annual Meeting of Stockholders, the Company’s stockholders approved, among other matters, to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 75,000,000 to 125,000,000.
2017.
Restricted
at a public offering price of $5.00 per share. The gross proceeds from the Company’s portion of the offering (10,000,000 shares), before deducting the underwriter discounts and commission and other offering expenses, was $50.0 million. The net proceeds were $47.6 million. The gross proceeds to the selling stockholder were approximately $19.0 million, which includes shares sold pursuant to the underwriters’ exercise of their option to purchase an additional 1,800,000 shares of common stock at the public offering price.
Number of Shares | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value | |||||||||||||||
Outstanding at January 1, 2017 | 3,468,991 | $ | 4.14 | $ | 0 | ||||||||||||
Granted in 2017: | |||||||||||||||||
Officers and Directors | 83,658 | $ | 2.64 | ||||||||||||||
Others | 873,017 | 1.96 | |||||||||||||||
Exercised | (202,519) | 2.17 | |||||||||||||||
Forfeitures | (1,510,193) | 5.13 | |||||||||||||||
Outstanding at December 31, 2017 | 2,712,954 | $ | 2.98 | $ | 1,190 | ||||||||||||
Granted in 2018: | |||||||||||||||||
Officers and Directors | 1,249,817 | $ | 2.49 | ||||||||||||||
Others | 1,299,360 | 2.60 | |||||||||||||||
Exercised | (350,441) | 2.00 | |||||||||||||||
Forfeitures | (505,686) | 3.48 | |||||||||||||||
Outstanding at December 31, 2018 | 4,406,004 | $ | 3.19 | $ | 4,172 | ||||||||||||
Granted in 2019: | |||||||||||||||||
Officers and Directors | 1,228,109 | $ | 4.08 | ||||||||||||||
Others | 1,160,643 | 4.51 | |||||||||||||||
Exercised | (799,800) | 2.90 | |||||||||||||||
Forfeitures | (497,985) | 2.03 | |||||||||||||||
Outstanding at December 31, 2019 | 5,496,971 | $ | 3.64 | $ | 15,455 |
Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||||
$1.00 – 5.00 | 5,011,678 | 8.38 | $ | 3.28 | ||||||||||||||||||||||
$5.01 – 10.00 | 415,537 | 6.81 | $ | 6.16 | ||||||||||||||||||||||
$10.01 – 15.00 | 38,756 | 5.15 | $ | 13.09 | ||||||||||||||||||||||
$15.01 – 20.00 | 31,000 | 4.74 | $ | 16.20 | ||||||||||||||||||||||
5,496,971 | $ | 15,455 |
Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||||
$1.00 – 5.00 | 1,284,107 | 7.46 | $ | 2.63 | ||||||||||||||||||||||
$5.01 – 10.00 | 269,861 | 5.14 | $ | 6.36 | ||||||||||||||||||||||
$10.01 – 15.00 | 38,756 | 5.15 | $ | 13.09 | ||||||||||||||||||||||
$15.01 – 20.00 | 31,000 | 4.74 | $ | 16.20 | ||||||||||||||||||||||
1,623,724 | $ | 4,712 |
Nonvested Shares | Shares | Weighted Average Grant Date Fair Value | Intrinsic Value | |||||||||||||||||
Nonvested at January 1, 2019 | 2,763,833 | |||||||||||||||||||
Granted | 2,388,752 | |||||||||||||||||||
Vested | (995,589) | |||||||||||||||||||
Forfeited | (283,749) | |||||||||||||||||||
Nonvested at December 31, 2019 | 3,873,247 | $ | 3.55 | $ | 10,743 |
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
TheseOf the aforementioned RSU grants, 360,250 RSUs were issued under the Company’s 2011 Equity Incentive Plan, as amended, and vest as following: (i) For executive officers, half of the grant vestsdirectors and employees, in equal installments over three years and (ii) for a former officer, the grant vested immediately in full April 2019. The remaining half vests subject16,000 RSUs were issued to performance criteriaa director under the 2019 Plan and vest in equal installments over three years, (ii) for employees, the grants immediately vested in full October 2018, (iii) for the board of directors grants vest ratably from August 2018 to August 2022, and (iv) and for retiring officers, the grants vested immediately vested in full February and March 2018.
years.
Number of Restricted Shares | Weighted Average Fair Market Value Per RSU | |||||||
Outstanding at January 1, 2018 | 4,706,895 | $ | 5.20 | |||||
Granted: | ||||||||
Executive officers | 1,183,750 | 2.25 | ||||||
Directors | 469,261 | 2.59 | ||||||
Employees | 381,250 | 2.28 | ||||||
Vested | (1,863,731 | ) | 2.57 | |||||
Forfeitures | (591,398 | ) | 2.46 | |||||
Conversions | (2,119,925 | ) | 2.72 | |||||
|
|
|
| |||||
Outstanding at December 31, 2018 | 2,166,102 | $ | 2.59 | |||||
|
|
|
|
Number of Restricted Shares | Weighted Average Fair Market Value Per RSU | ||||||||||
Outstanding at January 1, 2018 | 2,166,102 | $ | 2.59 | ||||||||
Granted: | |||||||||||
Executive officers | 223,250 | $ | 4.44 | ||||||||
Directors | 106,000 | $ | 5.06 | ||||||||
Employees | 47,000 | $ | 4.77 | ||||||||
Vested | (806,661) | $ | 4.80 | ||||||||
Forfeitures | (87,132) | $ | 2.30 | ||||||||
Outstanding at December 31, 2019 | 1,648,559 | $ | 3.86 |
Stock options
The Company has a 2011 Equity Incentive Plan. During the 2017 Annual Meetingrespectively. A cumulative total of Stockholders (the “Annual Meeting”), stockholders approved an amendment818,363 unvested LTIP shares were returned back to the Company’s 2011 Equity Incentive2019 Plan to increase the number of shares of common stock authorized for issuance under the plan by 7,100,000 shares from 11,050,000 to 18,150,000.
An additional 523,854 shares of Common Stock underlying options previously granted under the Company’s Amended and Restated 2001 Incentive Plan remain outstanding and exercisable as of December 31, 2018. The Company’s Amended and
Restated 2001 Incentive Plan expired in July 2011 and no new securities may be issued thereunder. Options may be awarded during theten-year term of the 2011 Equity Incentive Plan to Company employees, directors, consultants and other affiliates.
During the years ended December 31, 2018, 2017 and 2016, Company employees, directors and affiliates exercised approximately 0.4 million, 0.2 million and 0.1 million stock options, respectively, with net proceeds to the Company of approximately $0.7 million, 0.4 million and $0.3 million, respectively.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Stock option activity for the years ended December 31, 2018, 2017 and 2016 is as follows:
Number of Shares | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value | ||||||||||
Outstanding at January 1, 2016 | 3,397,529 | $ | 5.42 | $ | 3,124 | |||||||
|
|
|
|
|
| |||||||
Granted in 2016: | ||||||||||||
Officers and Directors | 95,000 | $ | 2.34 | |||||||||
Others | 558,373 | 3.12 | ||||||||||
Exercised | (147,425 | ) | 2.01 | |||||||||
Forfeitures | (434,486 | ) | 13.17 | |||||||||
|
| |||||||||||
Outstanding at December 31, 2016 | 3,468,991 | $ | 4.14 | $ | 0 | |||||||
|
|
|
|
|
| |||||||
Granted in 2017: | ||||||||||||
Officers and Directors | 83,658 | $ | 2.64 | |||||||||
Others | 873,017 | 1.96 | ||||||||||
Exercised | (202,519 | ) | 2.17 | |||||||||
Forfeitures | (1,510,193 | ) | 5.13 | |||||||||
|
| |||||||||||
Outstanding at December 31, 2017 | 2,712,954 | $ | 2.98 | $ | 1,190 | |||||||
|
|
|
|
|
| |||||||
Granted in 2018: | ||||||||||||
Officers and Directors | 1,249,817 | $ | 2.49 | |||||||||
Others | 1,299,360 | 2.60 | ||||||||||
Exercised | (350,441 | ) | 2.00 | |||||||||
Forfeitures | (502,186 | ) | 3.48 | |||||||||
|
| |||||||||||
Outstanding at December 31, 2018 | 4,406,004 | $ | 3.19 | $ | 4,172 | |||||||
|
|
|
|
|
|
Options outstanding at December 31, 2018 are as follows:
Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||
$1.00 – 5.00 | 3,948,887 | 7.72 | $ | 2.70 | ||||||||||||
$5.01 – 10.00 | 387,361 | 4.78 | $ | 5.91 | ||||||||||||
$10.01 – 15.00 | 38,756 | 6.15 | $ | 13.09 | ||||||||||||
$15.01 – 20.00 | 31,000 | 6.00 | $ | 16.20 | ||||||||||||
|
|
|
| |||||||||||||
4,406,004 | $ | 4,172 | ||||||||||||||
|
|
|
|
Options exercisable at December 31, 2018 are as follows:
Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||
$1.00 – 5.00 | 1,196,693 | 4.07 | $ | 3.15 | ||||||||||||
$5.01 – 10.00 | 375,722 | 4.71 | $ | 6.10 | ||||||||||||
$10.01 – 15.00 | 38,756 | 6.15 | $ | 13.09 | ||||||||||||
$15.01 – 20.00 | 31,000 | 5.80 | $ | 16.20 | ||||||||||||
|
|
|
| |||||||||||||
1,642,171 | $ | 653 | ||||||||||||||
|
|
|
|
The weighted average grant date fair value of options granted during the years ended December 31, 2018, 2017 and 2016 was $1.57, $1.46 and $1.75, respectively. There were no options granted during the years ended December 31, 2018, 2017 or 2016 whose exercise price was lower than the estimated market price of the stock at the grant date.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Nonvested stock options as of December 31, 2018, and changes during the year then ended, are as follows:
Nonvested Shares | Shares | Weighted Average Grant Date Fair Value | Intrinsic Value | |||||||||
Nonvested at January 1, 2018 | 885,484 | |||||||||||
Granted | 2,549,177 | |||||||||||
Vested | (209,500 | ) | ||||||||||
Forfeited | (461,328 | ) | ||||||||||
|
|
|
|
|
| |||||||
Nonvested at December 31, 2018 | 2,763,833 | $ | 1.54 | $ | 5,979 | |||||||
|
|
|
|
|
|
As of December 31, 2018, there was approximately $6.9 million of unrecognized compensation cost related to unvested share-based compensation awards granted. These costs will be expensed over the next four years.
Stock-based compensation
During the year ended December 31, 2018, a total of 2,549,177 options to purchase Common Stock, with an aggregate fair market value of approximately $3.9 million, were granted to Company employees and directors. The options granted have a term of 10 years from the grant date and vest ratably between a one and three-year period. The fair value of each option is amortized as compensation expense evenly through the vesting period.
Warrants:
The Company has granted warrants to purchase shares of Common Stock. Warrants may be granted to affiliates in connection with certain agreements.
|
December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Basic: | ||||||||||||
Net (loss) income | $ | ( 33,867 | ) | $ | 5,285 | $ | (67,138 | ) | ||||
Less deemed dividend related to beneficial conversion feature on Series B Preferred Stock | (12,500 | ) | — | — | ||||||||
Net (loss) income attributable to common stockholders, basic | $ | (46,367 | ) | $ | 5,285 | $ | (67,138 | ) | ||||
|
|
|
|
|
| |||||||
Weighted average common shares outstanding | 63,165,063 | 55,355,802 | 53,679,134 | |||||||||
|
|
|
|
|
| |||||||
Basic (loss) income per common share | $ | (0.73 | ) | $ | 0.10 | $ | (1.25 | ) | ||||
|
|
|
|
|
|
December 31, 2019 2018 2017 Basic: Net (loss) income $ (15,305) $ (33,867) $ 5,285 Less deemed dividend related to beneficial conversion feature on Series B Preferred Stock — (12,500) — Net (loss) income attributable to common stockholders, basic $ (15,305) $ (46,367) $ 5,285 Weighted average common shares outstanding 83,213,704 63,165,063 55,355,802 Basic (loss) income per common share $ (0.18) $ (0.73) $ 0.10
December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Diluted: | ||||||||||||
Effect of dilutive securities: | ||||||||||||
Net (loss) income attributable to common stockholders, diluted | $ | (46,367 | ) | $ | 5,285 | $ | (67,138 | ) | ||||
|
|
|
|
|
| |||||||
Weighted average common shares outstanding | 63,165,063 | 55,355,802 | 53,679,134 | |||||||||
Effect of dilutive options and warrants | — | 1,046,677 | — | |||||||||
|
|
|
|
|
| |||||||
Diluted weighted average common shares outstanding | 63,165,063 | 56,402,479 | 53,679,134 | |||||||||
|
|
|
|
|
| |||||||
Diluted (loss) income per common share | $ | (0.73 | ) | $ | 0.09 | $ | (1.25 | ) | ||||
|
|
|
|
|
|
December 31, | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||||||
Net (loss) income attributable to common stockholders, diluted | $ | (15,305) | $ | (46,367) | $ | 5,285 | |||||||||||||||||||||||
Weighted average common shares outstanding | 83,213,704 | 63,165,063 | 55,355,802 | ||||||||||||||||||||||||||
Effect of dilutive options and warrants | — | — | 1,046,677 | ||||||||||||||||||||||||||
Diluted weighted average common shares outstanding | 83,213,704 | 63,165,063 | 56,402,479 | ||||||||||||||||||||||||||
Diluted (loss) income per common share | $ | (0.18) | $ | (0.73) | $ | 0.09 |
2018 | 2017 | 2016 | ||||||||||
Options, RSUs, warrants and convertible preferred stock to purchase Common Stock | 10,739,378 | 9,555,869 | 10,228,929 |
|
2019 | 2018 | 2017 | |||||||||||||||
Options, RSUs, warrants and convertible preferred stock to purchase Common Stock | 11,375,323 | 10,739,378 | 9,555,869 |
|
De Paolantonio separation agreement
On January 23, 2019, the Company entered into a Transitional Service2017.
The Separation Agreement provides for, among other things, Mr. De Paolantonio to (i) continue to receive his current base salary, (ii) remain eligible to participate in the Company’s group employee benefit plans as a regular full-time employee, and (iii) continue to vest in his outstanding equity awards until his Retirement Date. At the termination of his employment with the Company, provided that, among other things, Mr. De Paolantonio is not terminated by the Company for “cause,” Mr. De Paolantonio will be entitled to receive (a) aone-time cash payment of $0.36 million, subject to applicable deductions and withholdings, representing one full year of his current base salary, provided that Mr. De Paolantonio has not breached any of his continuing obligations, including that he signs and does not revoke a general release of claims against the Company, (b) his target annual incentive compensation for 2018 (subject to determination by the board of directors of the Company), and (c) a monthly cash payment for three months in an amount equal to the actual costs of continuation of Mr. De Paolantonio’s group health and dental insurance under the Consolidated Omnibus Reconciliation Act of 1985.
|
Operating leases
Since November 2007, the Company has leased space for their corporate office. Lease expense for the corporate office was $0.3 million for each of the years ended December 31, 2018, 2017 and 2016, respectively. The Company leased new space for their corporate offices, which began March 2015 for 89 months.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
The future minimum commitment on the new operating lease at December 31, 2018 is as follows:
Years ending December 31, | ||||
2019 | $ | 351 | ||
2020 | 360 | |||
2021 | 370 | |||
2022 | 219 | |||
|
| |||
$ | 1,300 | |||
|
|
Indemnifications
2023.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
patent infringement. On the Company’sfiled a motion this case was transferred to the Eastern District of North Carolina. A Joint Motion to Staytransfer the case was grantedfrom New Jersey to North Carolina and a motion to dismiss the case is now stayed until a final resolution of the ‘167 IPRs discussed directly below. The Company will continue to vigorously defend this case.
against its commercial partner.
On February 7, 2019, the PTAB issued three decisions on remand purporting to deny institution of the three previously instituted IPRs of the ‘167 patent. On March 11, 2019, the Company timely appealed the PTAB decisions on remand to U.S. Court of Appeal for the Federal Circuit. On March 20, 2019, Aquestive and Indivior moved to dismiss the appeal, and the Company opposed that motion. On August 29, 2019, a three-judge panel of the Court of Appeals for the Federal Circuit granted the motion and dismissed the Company’s appeal. On September 30, 2019, the Company filed a petition for an en banc rehearing of the order dismissing the Company’s appeal by the full Federal Circuit Court of Appeals.
The ‘019 Patent had already been the subject of an unrelated IPR before the USPTO under which the Company prevailed, and all claims of the ‘019 Patent survived. Aquestive’s request for rehearing of the final IPR decision regarding the ‘019 Patent was denied by the USPTO on December 19, 2016. Aquestive did not file a timely appeal at the Federal Circuit.
BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS)
|
Incorporated (collectively, “Alvogen”), asserting that Alvogen infringes the Company’s Orange Book listed patents for BELBUCA,BELBUCA®, including U.S. Patent Nos. 8,147,866 and 9,655,843, both expiring in July of 2027, and U.S. Patent No. 9,901,539, expiring in December of 2032. This complaint follows receipt by the Company on July 30, 2018 of a Paragraph IV Patent Certification from Alvogen stating that Alvogen had filed an ANDA with the FDA for a generic version of BELBUCABELBUCA® Buccal Film (75 mcg, 150 mcg, 300 mcg, 450 mcg, 600 mcg, 750 mcg and 900 mcg). Because the Company initiated a patent infringement suit to defend the patents identified in the Paragraph IV notice within 45 days after receipt of the Paragraph IV Certification, the FDA is prevented from approving the ANDA until the earlier of 30 months or a decision in the case that each of the patents is not infringed or invalid. Alvogen’s notice letter also does not provide any information on the timing or approval status of its ANDA.
the Company it licensed its branded fentanyl buccal soluble film ONSOLIS to Collegium, and Collegium is also named as a defendant in the lawsuit. ONSOLIS is not presently sold in the United States and the license agreement with Collegium was terminated prior to Collegium launching ONSOLIS in the United States. Therefore, on June 28, 2018, the Company moved to dismiss the case against it and most recently, on July 6, 2018, the plaintiffs filed a notice to voluntarily dismiss the Companyus from the Arkansas case, without prejudice.
On March 15, 2019, the Company filed a complaint against the Defendants in New Jersey asserting the same claims for patent infringement made in the Delaware lawsuit. On April 19, 2019, Defendants filed an answer to the Delaware complaint wherein they denied infringement of the ‘866, ‘843 and ‘539 patents and asserted counterclaims seeking declaratory relief concerning the alleged invalidity and non-infringement of such patents. On April 25, 2019, the Company voluntarily dismissed the New Jersey lawsuit given Defendants’ consent to jurisdiction in Delaware.
|
On August 2, 2018, the Company held the 2018 Annual Meeting, at which time the stockholders voted on the Amendments. Following the 2018 Annual Meeting, based on consultation with the Company’s advisors, the Company determined that the Amendments had been adopted by the requisite vote of stockholders and effected the Amendments by
Quarter Ended | ||||||||||||||||
March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | |||||||||||||
Revenue | $ | 11,281 | $ | 12,175 | $ | 14,156 | $ | 18,028 | ||||||||
Gross profit | 7,866 | 7,609 | 10,377 | 14,005 | ||||||||||||
Loss from operations | (8,123 | ) | (7,266 | ) | (3,811 | ) | (4,448 | ) | ||||||||
Net loss | (10,709 | ) | (9,770 | ) | (18,880 | ) | (7,008 | ) | ||||||||
Basic loss per share | (0.18 | ) | (0.16 | ) | (0.29 | ) | (0.13 | ) | ||||||||
Diluted loss per share | (0.18 | ) | (016 | ) | (0.29 | ) | (0.13 | ) |
Quarter Ended | ||||||||||||||||
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | |||||||||||||
Revenue | $ | 29,478 | $ | 8,744 | $ | 11,253 | $ | 12,510 | ||||||||
Gross profit | 23,833 | 4,573 | 6,808 | 7,275 | ||||||||||||
Income (loss) from operations | 7,903 | (12,987 | ) | (10,045 | ) | (14,291 | ) | |||||||||
Net income (loss) | 48,325 | (14,879 | ) | (11,951 | ) | (16,210 | ) | |||||||||
Basic income (loss) per share | 0.89 | (0.27 | ) | (0.21 | ) | (0.31 | ) | |||||||||
Diluted income (loss) per share | 0.87 | (0.27 | ) | (0.21 | ) | (0.30 | ) |
Quarter Ended | ||||||||||||||||
March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | |||||||||||||
Revenue | $ | 3,040 | $ | 5,004 | $ | 3,571 | $ | 3,931 | ||||||||
Gross profit | 490 | 910 | 1,257 | 1,631 | ||||||||||||
Loss from operations | (17,942 | ) | (15,594 | ) | (15,199 | ) | (15,200 | ) | ||||||||
Net loss | (18,733 | ) | (16,486 | ) | (15,977 | ) | (15,942 | ) | ||||||||
Basic loss per share | (0.35 | ) | (0.31 | ) | (0.30 | ) | (0.29 | ) | ||||||||
Diluted loss per share | (0.35 | ) | (0.31 | ) | (0.30 | ) | (0.29 | ) |
Quarter Ended March 31,
2019June 30,
2019September 30,
2019December 31, 2019 Revenue $ 19,769 $ 29,677 $ 30,306 $ 31,637 Gross profit 15,717 24,754 24,956 24,372 Income (loss) from operations (1,272) 2,799 1,596 613 Net income (loss) (3,833) (11,130) 354 (696) Basic loss per share (0.05) (0.13) — — Diluted loss per share (0.05) (0.13) — —
Quarter Ended | |||||||||||||||||||||||||||||||||||||||||
March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | ||||||||||||||||||||||||||||||||||||||
Revenue | $ | 11,281 | $ | 12,175 | $ | 14,156 | $ | 18,028 | |||||||||||||||||||||||||||||||||
Gross profit | 7,866 | 7,609 | 10,377 | 14,005 | |||||||||||||||||||||||||||||||||||||
Loss from operations | (8,123) | (7,266) | (3,811) | (4,448) | |||||||||||||||||||||||||||||||||||||
Net loss | (10,709) | (9,770) | (18,880) | (7,008) | |||||||||||||||||||||||||||||||||||||
Basic loss per share | (0.18) | (0.16) | (0.29) | (0.13) | |||||||||||||||||||||||||||||||||||||
Diluted loss per share | (0.18) | (0.16) | (0.29) | (0.13) |
Quarter Ended | |||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | ||||||||||||||||||||||||||||||||||||||
Revenue | $ | 29,478 | $ | 8,744 | $ | 11,253 | $ | 12,510 | |||||||||||||||||||||||||||||||||
Gross profit | 23,833 | 4,573 | 6,808 | 7,275 | |||||||||||||||||||||||||||||||||||||
Income (loss) from operations | 7,903 | (12,987) | (10,045) | (14,291) | |||||||||||||||||||||||||||||||||||||
Net income (loss) | 48,325 | (14,879) | (11,951) | (16,210) | |||||||||||||||||||||||||||||||||||||
Basic income (loss) per share | 0.89 | (0.27) | (0.21) | (0.31) | |||||||||||||||||||||||||||||||||||||
Diluted income (loss) per share | 0.87 | (0.27) | (0.21) | (0.30) |
Balance at beginning of the period | Charged to income | Charged to other accounts | Deductions | Balance at the end of the period | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Description | ||||||||||||||||||||
Valuation allowance for deferred tax assets | ||||||||||||||||||||
Year ended December 31, 2018: | $ | 71,515 | $ | 3,943 | $ | — | $ | — | $ | 75,458 | ||||||||||
Year ended December 31, 2017: | $ | 109,030 | $ | (37,515 | ) | $ | — | $ | — | $ | 71,515 | |||||||||
Year ended December 31, 2016: | $ | 84,960 | $ | 24,070 | $ | — | $ | — | $ | 109,030 | ||||||||||
Allowance for rebates | ||||||||||||||||||||
Year ended December 31, 2018: | $ | 5,648 | $ | 37,071 | $ | 813 | $ | (31,270 | ) | $ | 12,261 | |||||||||
Year ended December 31, 2017: | $ | 3,842 | $ | 17,236 | $ | (132 | ) | $ | (15,298 | ) | $ | 5,648 | ||||||||
Year ended December 31, 2016: | $ | 4,470 | $ | (1,204 | ) | $ | 11,501 | $ | (10,925 | ) | $ | 3,842 | ||||||||
Allowance for price adjustments and chargebacks | ||||||||||||||||||||
Year ended December 31, 2018: | $ | 3,925 | $ | 13,033 | $ | — | $ | (12,940 | ) | $ | 4,018 | |||||||||
Year ended December 31, 2017: | $ | 602 | $ | 6,738 | $ | (3 | ) | $ | (3,412 | ) | $ | 3,925 | ||||||||
Year ended December 31, 2016: | $ | 383 | $ | 36 | $ | 1,711 | $ | (1,528 | ) | $ | 602 | |||||||||
Allowance for inventory obsolescence | ||||||||||||||||||||
Year ended December 31, 2018: | $ | 243 | $ | (56 | ) | $ | — | $ | — | $ | 187 | |||||||||
Year ended December 31, 2017: | $ | — | $ | 243 | $ | — | $ | — | $ | 243 | ||||||||||
Year ended December 31, 2016: | $ | — | $ | — | $ | — | $ | — | $ | — |
Balance at
beginning of
the periodCharged
to incomeCharged to
other
accountsDeductions Balance at
the end of
the period(In thousands) Description Valuation allowance for deferred tax assets Year ended December 31, 2019: $ 75,458 $ 1,235 $ — $ — $ 76,693 Year ended December 31, 2018: $ 71,515 $ 3,943 $ — $ — $ 75,458 Year ended December 31, 2017: $ 109,030 $ (37,515) $ — $ — $ 71,515 Allowance for rebates Year ended December 31, 2019: $ 12,261 $ 81,217 $ 1,664 $ (65,801) $ 29,341 Year ended December 31, 2018: $ 5,648 $ 37,070 $ 813 $ (31,270) $ 12,261 Year ended December 31, 2017: $ 3,842 $ 17,236 $ (132) $ (15,298) $ 5,648 Allowance for price adjustments and chargebacks Year ended December 31, 2019: $ 4,018 $ 29,552 $ 1 $ (26,647) $ 6,924 Year ended December 31, 2018: $ 3,925 $ 13,033 $ — $ (12,940) $ 4,018 Year ended December 31, 2017: $ 602 $ 6,738 $ (3) $ (3,412) $ 3,925 Allowance for inventory obsolescence Year ended December 31, 2019: $ 187 $ 149 $ — $ (92) $ 244 Year ended December 31, 2018: $ 243 $ (56) $ — $ — $ 187 Year ended December 31, 2017: $ — $ 243 $ — $ — $ 243
BIODELIVERY SCIENCES INTERNATIONAL, INC. | ||||||||||||
Date: March | By: | / | ||||||||||
Name: | Herm Cukier | |||||||||||
Title: | Chief Executive Officer and Director
| |||||||||||
By: | / | |||||||||||
Name: | Mary Theresa Coelho | |||||||||||
Title: | Chief Financial Officer
|
Person | Capacity | Date | ||||||||||||
/S/ PETER S. GREENLEAF |
|
| ||||||||||||
Peter S. Greenleaf | ||||||||||||||
/S/
| Vice Chairman | March | ||||||||||||
Mark A. Sirgo | ||||||||||||||
/S/
|
| March | ||||||||||||
Herm Cukier | ||||||||||||||
/S/
|
| March | ||||||||||||
Francis E. O’Donnell, Jr. | ||||||||||||||
/S/
| Director | March | ||||||||||||
William M. Watson | ||||||||||||||
/S/
| Director | March | ||||||||||||
Todd C. Davis | ||||||||||||||
/S/
| Director | March | ||||||||||||
Kevin Kotler | ||||||||||||||
/
| Director | March | ||||||||||||
Vanila Singh |