Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Aquestive Therapeutics, Inc. | |
Entity Central Index Key | 0001398733 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 25,042,964 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Address, State or Province | NJ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 20,914 | $ 60,599 |
Trade and other receivables, net | 10,316 | 6,481 |
Inventories, net | 4,124 | 5,441 |
Prepaid expenses and other current assets | 2,706 | 1,680 |
Total current assets | 38,060 | 74,201 |
Property and equipment, net | 10,351 | 12,207 |
Intangible assets, net | 165 | 204 |
Other assets | 242 | 239 |
Total assets | 48,818 | 86,851 |
Current liabilities: | ||
Accounts payable and accrued expenses | 19,218 | 27,631 |
Deferred revenue, current | 835 | 721 |
Loans payable, current | 0 | 4,600 |
Total current liabilities | 20,053 | 32,952 |
Loans payable, net | 59,775 | 42,603 |
Deferred revenue, net of current portion | 2,127 | 0 |
Asset retirement obligations | 1,322 | 1,216 |
Total liabilities | 83,277 | 76,771 |
Commitments and contingencies (note 17) | ||
Stockholders' (deficit)/equity: | ||
Common stock, $.001 par value. Authorized 250,000,000 shares; 25,042,964 and 24,957,309 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 25 | 25 |
Additional paid-in capital | 83,354 | 71,431 |
Accumulated deficit | (117,838) | (61,376) |
Total stockholders' (deficit)/equity | (34,459) | 10,080 |
Total liabilities and stockholders' (deficit)/equity | $ 48,818 | $ 86,851 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 | Apr. 30, 2018 | Mar. 31, 2018 |
Stockholders' (deficit)/equity: | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 | 350,000,000 | 25,000 |
Common stock, shares issued (in shares) | 25,042,964 | 24,957,309 | ||
Common stock, shares outstanding (in shares) | 25,042,964 | 24,957,309 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) [Abstract] | ||||
Revenues | $ 12,418 | $ 13,267 | $ 36,190 | $ 50,606 |
Costs and expenses: | ||||
Manufacture and supply | 4,643 | 5,592 | 13,569 | 16,201 |
Research and development | 5,063 | 4,534 | 17,517 | 17,429 |
Selling, general and administrative | 13,714 | 12,346 | 47,868 | 53,559 |
Total costs and expenses | 23,420 | 22,472 | 78,954 | 87,189 |
Loss from operations | (11,002) | (9,205) | (42,764) | (36,583) |
Other income/(expenses): | ||||
Interest expense | (2,652) | (1,933) | (6,515) | (5,809) |
Interest income | 138 | 216 | 565 | 238 |
Loss on the extinguishment of debt | (4,896) | 0 | (4,896) | 0 |
Change in fair value of warrant | 0 | (4,116) | 0 | (5,278) |
Net loss before income taxes | (18,412) | (15,038) | (53,610) | (47,432) |
Income taxes | 0 | 0 | 0 | 0 |
Net loss | (18,412) | (15,038) | (53,610) | (47,432) |
Comprehensive loss | $ (18,412) | $ (15,038) | $ (53,610) | $ (47,432) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.74) | $ (0.64) | $ (2.15) | $ (2.45) |
Weighted-average number of common shares outstanding - basic and diluted (in shares) | 25,031,478 | 23,646,192 | 24,992,229 | 19,335,541 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Deficit (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total | |
Balance at Dec. 31, 2017 | [1] | $ 0 | $ (26,495) | $ 0 | $ (26,495) |
Balance (in shares) at Dec. 31, 2017 | [1] | 5,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Effect of stock split | $ 15 | (15) | 0 | 0 | |
Effect of stock split (in shares) | 15,072,647 | ||||
Net income (loss) | $ 0 | 0 | 4,099 | 4,099 | |
Balance at Mar. 31, 2018 | $ 15 | (26,510) | 4,099 | (22,396) | |
Balance (in shares) at Mar. 31, 2018 | 15,077,647 | ||||
Balance at Dec. 31, 2017 | [1] | $ 0 | (26,495) | 0 | (26,495) |
Balance (in shares) at Dec. 31, 2017 | [1] | 5,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (47,432) | ||||
Balance at Sep. 30, 2018 | $ 25 | 70,851 | (47,432) | 23,444 | |
Balance (in shares) at Sep. 30, 2018 | 24,942,185 | ||||
Balance at Mar. 31, 2018 | $ 15 | (26,510) | 4,099 | (22,396) | |
Balance (in shares) at Mar. 31, 2018 | 15,077,647 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common Stock issued to performance unit plan participants | $ 5 | 19,929 | 0 | 19,934 | |
Common Stock issued to performance unit plan participants (in shares) | 4,922,353 | ||||
Share-based compensation | $ 0 | 7 | 0 | 7 | |
Share-based compensation (in shares) | 0 | ||||
Net income (loss) | $ 0 | 0 | (36,493) | (36,493) | |
Balance at Jun. 30, 2018 | $ 20 | (6,574) | (32,394) | (38,948) | |
Balance (in shares) at Jun. 30, 2018 | 20,000,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common Stock issued related in initial public offering | $ 5 | 68,709 | 0 | 68,714 | |
Common Stock issued related in initial public offering (in shares) | 4,925,727 | ||||
Issuance costs related to initial public offering | $ 0 | (5,230) | 0 | (5,230) | |
Issuance costs related to initial public offering (in shares) | 0 | ||||
Reclassification of warrant liability to equity | $ 0 | 12,951 | 0 | 12,951 | |
Share-based compensation | $ 0 | 995 | 0 | 995 | |
Share-based compensation (in shares) | 16,458 | ||||
Net income (loss) | $ 0 | 0 | (15,038) | (15,038) | |
Balance at Sep. 30, 2018 | $ 25 | 70,851 | (47,432) | 23,444 | |
Balance (in shares) at Sep. 30, 2018 | 24,942,185 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of ASU 2014-09 and ASU 2018-07 (Note 3.C.) | ASU 2014-09 and ASU 2018-07 [Member] | $ 0 | 20 | (2,852) | (2,832) | |
Balance at Dec. 31, 2018 | $ 25 | 71,431 | (61,376) | 10,080 | |
Balance (in shares) at Dec. 31, 2018 | 24,957,309 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation | $ 0 | 1,422 | 0 | 1,422 | |
Share-based compensation (in shares) | 17,830 | ||||
Net income (loss) | $ 0 | 0 | (14,726) | (14,726) | |
Balance at Mar. 31, 2019 | $ 25 | 72,873 | (78,954) | (6,056) | |
Balance (in shares) at Mar. 31, 2019 | 24,975,139 | ||||
Balance at Dec. 31, 2018 | $ 25 | 71,431 | (61,376) | 10,080 | |
Balance (in shares) at Dec. 31, 2018 | 24,957,309 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (53,610) | ||||
Balance at Sep. 30, 2019 | $ 25 | 83,354 | (117,838) | (34,459) | |
Balance (in shares) at Sep. 30, 2019 | 25,042,964 | ||||
Balance at Mar. 31, 2019 | $ 25 | 72,873 | (78,954) | (6,056) | |
Balance (in shares) at Mar. 31, 2019 | 24,975,139 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation | $ 0 | 1,739 | 0 | 1,739 | |
Share-based compensation (in shares) | 16,128 | ||||
Shares issued under employee stock purchase plan | $ 0 | 132 | 0 | 132 | |
Shares issued under employee stock purchase plan (in shares) | 31,393 | ||||
Net income (loss) | $ 0 | 0 | (20,472) | (20,472) | |
Balance at Jun. 30, 2019 | $ 25 | 74,744 | (99,426) | (24,657) | |
Balance (in shares) at Jun. 30, 2019 | 25,022,660 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share-based compensation | $ 0 | 1,810 | 0 | 1,810 | |
Share-based compensation (in shares) | 20,304 | ||||
Fair value of warrants issued | $ 0 | 6,800 | 0 | 6,800 | |
Net income (loss) | 0 | 0 | (18,412) | (18,412) | |
Balance at Sep. 30, 2019 | $ 25 | $ 83,354 | $ (117,838) | $ (34,459) | |
Balance (in shares) at Sep. 30, 2019 | 25,042,964 | ||||
[1] | Represents balances as of December 31, 2017 as adjusted for the reorganization from LLC to C corporation business structure effective at the close of business on that date. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (53,610) | $ (47,432) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Depreciation and amortization | 2,143 | 2,438 |
Change in fair value of warrant | 0 | 5,278 |
Share-based compensation | 5,199 | 28,541 |
Asset retirement obligation accretion | 106 | 102 |
Amortization of intangible | 39 | 38 |
Amortization of debt issuance costs and discounts | 1,338 | 1,297 |
Loss on extinguishment of debt | 4,896 | 0 |
Non-cash interest expense | 24 | 0 |
Bad debt provision | 36 | 20 |
Other, net | 16 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (3,887) | (1,291) |
Inventories, net | 1,317 | (469) |
Prepaid expenses and other assets | (1,029) | (889) |
Accounts payable and accrued expenses | (5,632) | 2,754 |
Deferred revenue | (591) | (566) |
Net cash used for operating activities | (49,635) | (10,179) |
Cash flows from investing activities: | ||
Capital expenditures | (577) | (1,334) |
Net cash used for investing activities | (577) | (1,334) |
Cash flows used for financing activities: | ||
Proceeds from initial offering of common stock | 0 | 68,714 |
Proceeds from common stock issued via employee stock purchase plan | 112 | 0 |
Proceeds from issuance of long-term debt | 70,000 | 0 |
Debt repayment | (50,000) | 0 |
Payments for loan acquisition costs | (3,918) | 0 |
Payments for deferred offering costs | 0 | (4,695) |
Premium paid to retire debt | (2,944) | 0 |
Payments for taxes on share-based compensation | (2,723) | (5,903) |
Net cash provided by financing activities | 10,527 | 58,116 |
Net (decrease) increase in cash and cash equivalents | (39,685) | 46,603 |
Cash and cash equivalents: | ||
Beginning of period | 60,599 | 17,379 |
End of period | 20,914 | 63,982 |
Supplemental disclosures of cash flow information: | ||
Cash payments for interest | 5,153 | 4,511 |
Net (decrease) in capital expenditures included in accounts payable and accrued expenses | (290) | (145) |
Net increase/(decrease) in offering costs included in accounts payable and accrued expenses | 162 | (515) |
Accrued withholding tax for share based compensation | 0 | 1,701 |
Deferred financing costs charged to additional paid in capital | 0 | 5,230 |
Warrants issued in connection with long-term debt | 6,800 | 0 |
Noncash component of warrants exercised | $ 0 | $ 12,591 |
Corporate Organization and Comp
Corporate Organization and Company Overview | 9 Months Ended |
Sep. 30, 2019 | |
Corporate Organization and Company Overview [Abstract] | |
Corporate Organization and Company Overview | Note 1. Corporate Organization and Company Overview (A) Company Overview Aquestive Therapeutics, Inc. (“Aquestive” or the “Company”) is a specialty pharmaceutical company focused on identifying, developing and commercializing differentiated products to address unmet medical needs and solving critical healthcare challenges, having been formed effective on January 1, 2018 via the conversion of MonoSol Rx, LLC, a Delaware limited liability company, to a Delaware corporation and a simultaneous name change. The Company has a late-stage proprietary product pipeline focused on the treatment of diseases of the central nervous system, or CNS, and is developing orally administered complex molecules as alternatives to more invasive therapies. Aquestive is pursuing its business objectives through commercialization of self-developed proprietary products and through in-licensing and out-licensing arrangements. Production facilities are located in Portage, Indiana, and corporate headquarters, sales, commercialization operations and primary research laboratory facilities are based in Warren, New Jersey. The Company’s major customer and primary commercialization licensee has global operations headquartered in the United Kingdom with principal operations in the United States; other customers are principally located in the United States. (B) Corporate Conversion and Reorganization, Stock Splits and IPO Corporate Conversion and Reorganization Effective on January 1, 2018, the Company converted from a Delaware limited liability company (LLC) into a Delaware corporation pursuant to a statutory conversion and changed its name from MonoSol Rx, LLC (“MonoSol”) to Aquestive Therapeutics, Inc., having previously operated as an LLC since January 2004. At the time of the statutory conversion, the holders of membership units of MonoSol contributed all of their LLC interests to Aquestive Partners, LLC, or APL, in exchange for identical interests in APL. As a result of the exchange, APL was issued 5,000 shares of voting common stock in Aquestive Therapeutics, Inc. and became the parent and sole stockholder of the Company. Stock Splits During 2018, the Board of Directors approved the Amended and Restated Certificate of Incorporation of the Company to: (i) increase the authorized number of shares of capital stock from 25,000 to 350,000,000 shares, and subsequently reduced that authorized total to 250,000,000, (ii) authorize certain non-voting common stock for use in settlement of performance incentive obligations, and (iii) effect a stock split of the Company’s common stock, par value $0.001 per share, such that each share be subdivided and reclassified into 37,212 shares of voting common stock, par value $0.001 per share. Subsequent to this split, and in connection to pricing considerations related to the Company’s initial public offering (“IPO”), a reverse split was executed such that each 12.34 shares outstanding converted into one share of common stock, par value $0.001 per share. The net effect of these stock splits is reflected in these financial statements as if they had occurred on January 1, 2018. Initial Public Offering of Common Stock On July 27, 2018, the Company closed the IPO of 4,500,000 shares of common stock at an offering price of $15.00 per share. The Company received net proceeds of approximately $57,543 after deducting underwriting discounts, commissions, and offering-related transaction costs of approximately $9,957. The underwriter’s over-allotment option was exercised in August 2018 and the Company issued 425,727 additional shares of common stock at $15.00 per share and the Company received additional net proceeds of approximately $5,939, after deducting underwriting discounts of approximately $447. The IPO and overallotment option resulted in total net proceeds of $63,482. Immediately prior to the consummation of the IPO, all of the Company’s outstanding shares of non-voting common stock were automatically converted to 4,922,353 shares of voting common stock. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 2. Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X for interim financial reporting. In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on March 14, 2019 (the “2018 Annual Report on Form 10-K”). As included herein, the condensed consolidated balance sheet at December 31, 2018 is derived from the audited consolidated financial statements as of that date. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results of interim periods have been included. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed financial statements. Any reference in these notes to applicable guidance refers to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies (A) Principles of Consolidation The interim condensed consolidated financial statements presented herein include the accounts of Aquestive Therapeutics, Inc. and its wholly owned subsidiary, MonoSol Rx, Inc. Other than corporate formation activities, MonoSol Rx, Inc. has conducted no commercial, developmental or operational activities and has no customers or vendors. The results of operations and cash flows reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected in any other interim period or for the entire fiscal year. (B) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to estimates and assumptions include allowances for rebates from proprietary product sales, the allowance for sales returns, the useful lives of fixed assets, valuation of warrants issued in connection with the 12.5% Senior Secured Notes, valuation of share-based compensation, and contingencies. (C) Recent Accounting Pronouncements As an emerging growth company, the Company has elected to take advantage of the extended transition period afforded by the Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards no later than the relevant dates on which adoption of such standards is required for emerging growth companies. The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In May 2014, the FASB, issued ASU 2014-09, Revenue from Contracts with Customers The Company adopted this standard on January 1, 2019, using the modified retrospective method and recorded a cumulative effect adjustment of $2,832 to increase the opening balance of accumulated deficit. The impact was primarily related to deferral of a portion of the original upfront and milestone payments of its collaborative licensing arrangements resulting in a deferral of $3,100 of previously recognized revenue as of the adoption date. The cumulative adjustment also reflects $151 net acceleration of revenue related to feasibility and development arrangements with its customers and acceleration of $117 of revenue recognition of the Company’s manufacturing and supply product sales. Under the modified retrospective method of adoption, the comparative information in the consolidated financial statements has not been revised and continues to be reported under the previously applicable revenue accounting guidance, ASC 605. For additional information regarding the Company’s revenue, see Note 5, Revenues and Trade Receivables, Net. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-Employee Share-Based Payment Accounting, Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees In January 2016, the FASB issued revised guidance governing accounting and reporting of financial instruments (ASU 2016-01) and in 2018 issued technical corrections (ASU 2018-03). This guidance requires that equity investments with readily determinable fair values that are classified as available-for-sale be measured at fair value with changes in value reflected in current earnings. This guidance also simplifies the impairment testing of equity investments without readily determinable fair values and alters certain disclosure requirements. ASU No. 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Recent Accounting Pronouncements Not Adopted as of September 30, 2019: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), There are a number of practical expedients available to the Company at transition. The transition practical expedients are that the Company may elect to not re-assess: (i) whether its contracts contain a lease under the new definition, (ii) the classification of those leases and (iii) the accounting for any initial direct costs previously incurred. In addition, the Company may apply hindsight in determining the lease terms on its existing leases and any potential impairments that may exist on the ROU assets to be recognized on adoption, and the Company may elect to not recognize an ROU asset and lease liability for those leases with a remaining term of 12 months or less. Upon adoption, ROU assets and lease liabilities will be recognized on the Company’s consolidated balance sheets. The lease liability recognized upon adoption will be based upon the present value of the sum of the remaining minimum lease payments (as previously identified under ASC 840) and any amounts probable of being owed under the residual value guarantee (if applicable), to be determined using the discount rate then in effect. The interest rate will be based on the Company’s ability to borrow on a collateralized basis over a similar remaining term and in a similar economic environment. The ROU asset to be recorded will be based on the lease liability and adjusted for any prepaid or accrued lease payments, the remaining balance of any lease incentives, the unamortized initial direct costs and impairments (if applicable). The standard is effective for the Company beginning January 1, 2020. The Company has the option to adopt the new standard using one of two methods: retrospectively to each prior reporting period presented with a cumulative effect adjustment recognized at the beginning of the earliest comparative period presented, or the modified retrospective method, at the beginning of the period of adoption. The Company will adopt the standard using the modified retrospective method whereby the ROU assets and lease liabilities will be reflected in the Company’s financial statements only for periods beginning on or after January 1, 2020. The Company continues to evaluate the impact of ASU 2016-02 on its financial statements. The Company does not believe that recognition of lease liabilities and corresponding ROU assets will have a material impact on the Company’s balance sheet. Further, the Company does not believe the adoption of this standard will have a significant impact on its statements of operations, stockholders’ equity/(deficit) or cash flows. Refer to Note 17, Commitments and Contingencies, for further information on the Company’s existing leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework. Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the condensed consolidated financial statements of the Company. |
Risks and Uncertainties
Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | Note 4. Risks and Uncertainties The Company’s unaudited interim condensed financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company’s cash requirements for 2019 and beyond include expenses related to continuing development and clinical evaluation of its products, costs of regulatory filings, patent prosecution expenses and litigation expenses, expenses related to commercialization of its products, debt service requirements, and costs to comply with the requirements of being a public company. As of September 30, 2019, working capital, including cash and cash equivalents, totaled $18,007. As of the date of issuance of these unaudited interim condensed financial statements, the Company expects that its revenues from licensed and proprietary products, including expected milestone payments, other co-development payments and royalties, manufacturing and sale revenues at anticipated levels, anticipated sales of its proprietary products, cash on hand, and the net proceeds from the issuance on July 15, 2019 of its 12.5% Senior Secured Notes due 2025, including possible future issuances under the Indenture (see Note 12), potential monetization of its out-licensed Apomorphine product candidate subject to regulatory approval thereof and if needed and available to it, which cannot be assured, access to the capital markets under its shelf registration statement filed with the SEC and effective September 17, 2019, will be adequate to fund its expected cash requirements for at least the next twelve months. To the extent additional funds are necessary to meet liquidity or other cash needs as the Company continues to execute its business strategy, the Company will seek to satisfy such additional funding requirements through additional debt or equity financings, potential monetization of other royalty streams, the completion of a licensing transaction for one or more of the Company’s pipeline assets, continuing expense reduction initiatives, or a combination of these potential sources of funds. Although the Company has been successful in raising capital in the past, there is no assurance that these sources of funding will be sufficient or available or on reasonable terms, if at all, which could adversely affect its financial condition and business prospects. |
Revenues and Trade Receivables,
Revenues and Trade Receivables, Net | 9 Months Ended |
Sep. 30, 2019 | |
Revenues and Trade Receivables, Net [Abstract] | |
Revenues and Trade Receivables, Net | Note 5. Revenues and Trade Receivables, Net The Company’s revenues to date have been earned from licensed commercialized products, research and development services provided to customers, licensing of patent-protected intellectual property and commercialization of a proprietary product. These activities generate revenues in four primary categories: manufacturing and supply revenue, co-development and research fees, license and royalty revenue, and proprietary product sales, net. 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 the current revenue standard. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, we assess the goods promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a good that is distinct. When identifying our performance obligations, we consider all goods or services promised in the contract regardless of whether explicitly stated in the contract or implied by customary business practices. The Company’s performance obligations consist mainly of transferring control of goods and services identified in the contracts, purchase orders or invoices. The Company’s performance obligation with respect to its proprietary product sales is satisfied at a point in time which transfers control upon delivery of the product to its customers. The Company considers control to have transferred upon delivery because the customer has legal title to the asset, physical possession of the asset has been transferred, the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time. With respect to manufacturing and supply revenue stream, a quantity is ordered and manufactured according to the customer’s specifications and represents a single performance obligation. The products manufactured are exclusively for specific customers and have no alternative use. Under the customer arrangements, the Company is entitled to receive payments for progress made to date once the acceptance requirements surrounding quality control are satisfied. Thus, revenues related to this product stream are recognized at a point in time when the manufactured product passes quality control testing. Royalty revenues are estimated based on the provisions of contracts with customers and recognized in the same period that the royalty-based products are sold to the Company’s strategic licensees, as all royalties are directly attributable to the Company’s manufacturing activities, and are therefore recognizable at the same time the manufacturing revenue is recognizable. In addition to usage-based royalties, licensing contracts may contain provisions for one-time payments related to certain license fees and milestone achievements. Revenue recognition of these license fees and milestone payments depend on the nature of the specific contract, typically license and milestone payments are recognized at a point in time in the period they are achieved. However, there are limited instances where, upon review of the contract, it is determined that the license is non-distinct and limited in nature and does not provide benefit to the customer without purchasing the product, these upfront licensing fees are recognized over time (typically the length of the contract). Co-development and research fee revenue is recorded over time based upon the progress of services provided in order to complete the specific performance obligation identified in the related contract. Revenues from the sale of products and services and the subsequent related payments are evidenced by a contract with the customer, which includes all relevant terms of sale. For manufacturing and supply and proprietary product sales, invoices are generally issued upon the transfer of control and co-development and research revenue is typically invoiced based on the contractual payment schedule, or upon completion of the service. Invoices are typically payable 30 to 60 days after the invoice date, however some payment terms may reach 105 days depending on the customer. The Company performs a review of each specific customer’s credit worthiness and ability to pay prior to acceptance as a customer. Further, the Company performs periodic reviews of its customers’ creditworthiness, prospectively. Contract Assets In limited situations, certain customer contractual payment terms require billing to occur in arrears; accordingly, some portions, or all, of the Company’s performance obligations are completed before we are contractually entitled to bill the customer. In these situations, billing occurs subsequent to revenue recognition, which results in a contract asset. These contract assets are reflected as a component of Trade and other receivables, net on the Condensed Consolidated Balance Sheet. As of September 30, 2019 and January 1, 2019, such contract assets were $760, and $284, respectively. Contract Liabilities In other limited situations, certain customer contractual payment terms allow advanced billings; accordingly, customer cash payments may be received before satisfaction of some or all contractual performance obligations. In these situations, billing occurs in advance of revenue recognition, which results in contract liabilities. These contract liabilities are reflected as Deferred revenue in the Condensed Consolidated Balance Sheet. As remaining performance obligations are satisfied, a portion of the deferred revenue balance is recognized in the Company’s results of operations. As of September 30, 2019 and January 1, 2019, such contract liabilities were $2,962 and $3,762, respectively. Revenue recognized for the nine-month period ended September 30, 2019 that was reflected in the deferred revenue balance as of January 1, 2019 was $1,079. The Company’s revenues were comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Manufacture and supply revenue $ 9,155 $ 9,005 $ 24,739 $ 29,249 License and royalty revenue 1,356 3,355 6,402 17,387 Co-development and research fees 1,073 907 2,862 3,970 Proprietary product sales, net 834 - 2,187 - Total revenues $ 12,418 $ 13,267 $ 36,190 $ 50,606 Disaggregation of Revenue The following table provides disaggregated net revenue by geographic area: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 United States $ 11,022 $ 12,483 $ 33,683 $ 49,060 Ex-United States 1,396 784 2,507 1,546 Total revenues $ 12,418 $ 13,267 $ 36,190 $ 50,606 Non-United States revenues is derived primarily from products manufactured for the Australian and Malaysian markets. Trade and other receivables, net consist of the following: September 30, 2019 December 31, 2018 Trade receivables $ 9,687 $ 6,610 Contract and other receivables 843 33 Less: allowance for bad debts (94 ) (58 ) Less: sales-related allowances (120 ) (104 ) Trade and other receivables, net $ 10,316 $ 6,481 Contract and other receivables totaled $843 as of September 30, 2019, consisting primarily of contract assets related to the adoption of ASC 606 and certain reimbursable customer costs. Other receivables totaled $33 as of December 31, 2018, consisting primarily of reimbursable costs incurred on behalf of a customer. Sales-related allowances for both periods presented are estimated in relation to revenues recognized for sales of Sympazan® beginning with the launch of this product in December 2018. The following table presents the changes in the allowance for bad debt: September 30, 2019 December 31, 2018 Allowance for doubtful accounts at beginning of year $ 58 $ 55 Additions charged to bad debt expense 36 53 Write-downs charged against the allowance -- (50 ) Allowance for doubtful accounts at end of the period $ 94 $ 58 Sales Related Allowances and Accruals Revenues from proprietary product sales are recorded net of prompt payment discounts, wholesaler service fees, return allowances, rebates and co-pay card redemptions. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale. The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis. The following table provides a summary of activity with respect to our sales related allowances and accruals for the nine months ended September 30, 2019: Total Sales Related Allowances and Accruals Balance at December 31, 2018 $ 585 Provision 1,576 Payments / credits (984 ) Balance at September 30, 2019 $ 1,177 Total reductions of gross product sales from sales-related allowances and accruals were $1,576 for the nine months ended September 30, 2019. Accruals for return allowances and prompt pay discounts are reflected as a direct reduction to trade receivables, and totaled $120 and $104 at September 30, 2019 and December 31, 2018, respectively. Accruals for wholesaler fees, co-pay cards and rebates are reflected as current liabilities, and totaled $1,057 and $481 at September 30, 2019 and December 31, 2018, respectively. There were no sales related allowances and accruals at September 30, 2018, as Sympazan was launched in December 2018. Concentration of Major Customers Customers are considered major customers when sales exceed 10% of total net sales for the period or outstanding receivable balances exceed 10% of total receivables. For the year ended December 31, 2018, Indivior, PLC. (“Indivior”) provided 89% of the total revenues for the period, and as of that date, the Company’s outstanding receivable balance from Indivior represented approximately 78% of gross receivables. For the nine months ended September 30, 2019, revenues provided by Indivior represented approximately 83% of total revenues and outstanding accounts receivable due from Indivior represented approximately 77% of gross receivables. |
Material Agreements
Material Agreements | 9 Months Ended |
Sep. 30, 2019 | |
Material Agreements [Abstract] | |
Material Agreements | Note 6. Material Agreements Commercial Exploitation Agreement with Indivior In August 2008, the Company entered into a Commercial Exploitation Agreement with Reckitt Benckiser Pharmaceuticals, Inc. (with subsequent amendments, collectively, the “Indivior License Agreement”). Reckitt Benckiser Pharmaceuticals, Inc. was later succeeded to in interest by Indivior. Pursuant to the Indivior License Agreement, the Company agreed to manufacture and supply Indivior’s requirements for Suboxone, a sublingual film formulation, both inside and outside the United States on an exclusive basis. Under the terms of the Indivior License Agreement, the Company is required to manufacture Suboxone in accordance with current Good Manufacturing Practice standards and according to the specifications and processes set forth in the related quality agreements the Company entered into with Indivior. Additionally, the Company is required to obtain Active Pharmaceutical Ingredients (“API”) for the manufacture of Suboxone directly from Indivior. The Indivior License Agreement specifies a maximum annual threshold quantity of Suboxone that the Company is obligated to fill and requires Indivior to provide the Company with a forecast of its requirements at various specified times throughout the year. Additionally, in the event Indivior purchases certain large quantities of Suboxone during a specified period, Indivior will be entitled to scaled rebates on rest of the world sales only. In addition to the purchase price for the Suboxone supplied product, Indivior is required to make certain single digit percentage royalty payments tied to net sales value (as provided for in the Indivior License Agreement) in all countries other than the United States and subject to annual maximum amounts and limited to the life of the related United States or international patents. The Indivior License Agreement contains customary contractual termination provisions, including those for breach, a filing for bankruptcy or corporate dissolution, an invalidation of the intellectual property surrounding Suboxone, or commission of a material breach of the Indivior License Agreement by either party. Additionally, Indivior may terminate if the U.S. Food and Drug Administration (“FDA”) or other applicable regulatory authority declares the Company’s manufacturing site to no longer be suitable for the manufacture of Suboxone or Suboxone is no longer suitable to be manufactured due to health or safety reasons. The initial term of the Indivior License Agreement was seven years from the commencement date. Thereafter, the Indivior License Agreement automatically renews for successive one-year periods, unless either party provides the other with written notice of its intent not to renew at least one year prior to the expiration of the initial or renewal term. Supplemental Agreement with Indivior On September 24, 2017, the Company entered into a supplemental agreement with Indivior, or the Indivior Supplemental Agreement. Pursuant to the Indivior Supplemental Agreement, we conveyed to Indivior all of our existing and future rights in the settlement of various ongoing patent enforcement legal actions and disputes related to the Suboxone product. Under the Indivior Supplemental Agreement, we are entitled to receive certain payments from Indivior commencing on the date of the agreement through January 1, 2023. Once paid, all payments made under the Indivior Supplemental Agreement are non-refundable, and total payments under this agreement are capped at $75,000. Through February 20, 2019, the at-risk launch date of the competing generic products of Dr. Reddy’s Labs and Alvogen, we received an aggregate of $40,750 from Indivior under the Indivior Supplemental Agreement, of which $4,250 was collected during the three months ended March 31, 2019. Further payments under the Indivior Supplemental Agreement are suspended until adjudication of related patent infringement litigation is completed. If such litigation is successful, which cannot be assured, in addition to the amounts already received as described in the foregoing, we may receive up to an additional $34,250, consisting of (i) up to $33,000 in the aggregate from any combination of (a) performance or event-based milestone payments and (b) single digit percentage royalties on net revenue earned by Indivior on sales of Suboxone and (ii) an additional $1,250 that was earned through the issuance to the Company of additional process patent rights. All payments made by Indivior to the Company pursuant to the Indivior Supplemental Agreement are in addition to, and not in place of, any amounts owed by Indivior to the Company pursuant to the Indivior License Agreement. Indivior’s payment obligations under the Indivior Supplemental Agreement are subject to certain factors affecting the market for Suboxone and may terminate prior to January 1, 2023 in the event certain contingencies relating to such market occur. License Agreement with Sunovion Pharmaceuticals, Inc. In April 2016, we entered into a license agreement with Cynapsus Therapeutics Inc. which was later succeeded to in interest by Sunovion Pharmaceuticals, Inc. (“Sunovion”), referred to as the Sunovion License Agreement, pursuant to which we granted to Sunovion an exclusive, worldwide license (with the right to sub-license) to certain intellectual property, including existing and future patents and patent applications, covering all oral films containing APL-130277 (Apomorphine) for the treatment of episodes in Parkinson’s disease patients, as well as two other fields of disease conditions. Our licensee, Sunovion, as sponsor of APL-130277, submitted an NDA to the FDA on March 29, 2018. According to statements by Sunovion, following the January 2019 PDUFA date, Sunovion received a Complete Response Letter from the FDA which requires additional data, but does not require additional clinical studies. In consideration for the rights granted to Sunovion under the Sunovion License Agreement, we received aggregate payments totaling $18,000 to date. In addition to the upfront payment of $5,000, we have also earned an aggregate of $13,000 in connection with specified regulatory and development milestones in the United States and Europe (the “Initial Milestone Payments”), all of which have been received to date. No payments were received during the three and nine months ended September 30, 2019. We are also entitled to receive certain contingent one-time milestone payments related to product availability and regulatory approval in the United States and Europe, certain one-time milestone payments based on the achievement of specific annual net sales thresholds of APL-130277, and ongoing mid-single digit percentage royalty payments related to the net sales of APL-130277 (subject to reduction to low-single digit percentage royalty payments in certain circumstances), subject to certain minimum payments. The maximum aggregate milestone payments that may be paid to us pursuant to the Sunovion License Agreement are equal to $45,000. With the exception of the Initial Milestone Payments, there can be no guarantee that any such milestones will in fact be met or that additional milestone payments will be payable. The Sunovion License Agreement will continue until terminated by us or Sunovion in accordance with the termination provisions of the Sunovion License Agreement. Absent early termination, the Sunovion License Agreement continues (on a country-by-country basis) until the expiration of all applicable licensed patents. Upon termination, all rights to intellectual property granted to Sunovion to develop and commercialize products will revert to the Company and Sunovion must continue to pay royalties to the Company on each sale of Sunovion’s remaining inventory of products which include Apomorphine as their API. Agreement to Terminate CLA with KemPharm In March 2012, the Company entered into an agreement with KemPharm, Inc. (“KemPharm”) to terminate a Collaboration and License Agreement entered into in April 2011. Under this termination arrangement, we have the right to participate in any and all value that KemPharm may derive from the commercialization or any other monetization of KP-415 and KP-484 compounds or their derivatives. Among these monetization transactions are those related to any business combinations involving KemPharm and collaborations, royalty arrangements, or other transactions from which KemPharm may realize value from these compounds. Third quarter 2019 license and royalty revenue includes $1,000 from the Company’s 10% share of milestone payments paid to KemPharm during September 2019, under its licensing of KP-415 and KP-484. There can be no guarantee that any such payments will be made in the future. |
Financial Instruments - Fair Va
Financial Instruments - Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Financial Instruments - Fair Value Measurements [Abstract] | |
Financial Instruments - Fair Value Measurements | Note 7. Financial Instruments – Fair Value Measurements Certain assets and liabilities are reported on a recurring basis at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. To increase consistency and comparability in such measurements, the FASB established a three-level hierarchy which requires maximization of the use of observable inputs and minimization of the use of unobservable inputs when estimating fair value. The three levels of the fair value hierarchy include: • Level 1 — Observable quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable prices that are based on inputs not quoted on active markets but corroborated by market data. • Level 3 — Unobservable inputs that are supported by little or no market activity, such as pricing models, discounted cash flow methodologies and similar techniques. The Company’s Level 1 assets for the periods presented included cash and cash equivalents, including money market funds. The Company held no Level 2 or Level 3 assets or liabilities as of either balance sheet date presented herein. The fair value of warrants presented in the Company’s condensed consolidated statements of changes in shareholders’ deficit were Level 3 and were estimated using the Black-Scholes-Merton pricing model. Prior to exercise in connection with the July 2018 IPO, outstanding warrants held by Perceptive Credit Opportunities Fund were categorized as Level 3 liabilities. This warrant liability was estimated at fair value based primarily on independent third-party appraisals prepared and reported periodically, consistent with generally-accepted valuation methods of the Uniform Standards of Professional Appraisal Practice, the American Society of Appraisers and the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation. The carrying amounts reported in the balance sheets for Trade and other receivables, net, Prepaid and other current assets, Accounts payable and accrued expenses, and Deferred revenue approximate fair value based on the short-term maturity of these assets and liabilities. |
Inventories, Net
Inventories, Net | 9 Months Ended |
Sep. 30, 2019 | |
Inventories, Net [Abstract] | |
Inventories, Net | Note 8. Inventories, Net The components of Inventory, net is as follows: September 30, 2019 December 31, 2018 Raw material $ 1,142 $ 1,283 Packaging material 1,729 2,975 Finished goods 1,253 1,183 Total inventory, net $ 4,124 $ 5,441 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2019 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, Net | Note 9. Property and Equipment, Net Useful Lives September 30, 2019 December 31, 2018 Machinery 3-15 yrs $ 20,927 $ 20,681 Furniture and fixtures 3-15 yrs 1,150 1,150 Leasehold improvements (a) 21,333 21,333 Computer, network equipment and software 3-7 yrs 2,771 2,579 Construction in progress 1,503 1,655 47,684 47,398 Less: accumulated depreciation and amortization (37,333 ) (35,191 ) Total property and equipment, net $ 10,351 $ 12,207 (a) Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives. Total depreciation and amortization related to property and equipment was $695 and $733 for the three-month periods ended September 30, 2019 and 2018, respectively. For the respective nine-month periods, these expenses totaled $2,143 and $2,438. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Intangible Assets [Abstract] | |
Intangible Assets | Note 10. Intangible Assets The following table provides the components of identifiable intangible assets, all of which are finite lived: September 30, 2019 December 31, 2018 Purchased technology-based intangible $ 2,358 $ 2,358 Purchased patent 509 509 2,867 2,867 Less: accumulated amortization (2,702 ) (2,663 ) Total intangible assets, net $ 165 $ 204 Amortization expense was $13 for each of the three-month periods ended September 30, 2019 and 2018, respectively. For the corresponding nine-month periods, these expenses totaled $39 and $38, respectively. During the remaining life of the purchased patent, estimated annual amortization expense is $50 for each of the years from 2019 to 2022. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Accounts Payable and Accrued Expenses | Note 11. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following: September 30, 2019 December 31, 2018 Accounts payable $ 14,202 $ 20,436 Accrued compensation 3,480 3,604 Accrued distribution expenses 1,057 481 Real estate and personal property taxes 246 388 Accrued withholding tax for share-based compensation 49 2,515 Other 184 207 Total accounts payable and accrued expenses $ 19,218 $ 27,631 |
12.5 % Senior Secured Notes and
12.5 % Senior Secured Notes and Loans Payable | 9 Months Ended |
Sep. 30, 2019 | |
12.5 % Senior Secured Notes and Loans Payable [Abstract] | |
12.5 % Senior Secured Notes and Loans Payable | Note 12. 12.5 % Senior Secured Notes and Loans Payable 12.5% Senior Secured Notes On July 15, 2019, the Company completed the private placement of up to $100 million aggregate principal of its 12.5% Senior Secured Notes due 2025 (the “Notes”) and issued warrants for two million shares of common stock (the “Warrants”), $.001 per value, per share, through its structuring agent, Morgan Stanley & Co., LLC, and entered into a purchase agreement and related indenture (the “Purchase Agreement” or “Indenture”) governing these Notes. The Company simultaneously entered into related agreements including a Collateral Agreement with U.S. Bank National Association as trustee and collateral agent, and a Lien Subordination and Intercreditor Agreement for the benefit of Madryn Health Partners, other institutional noteholders and U.S. Bank National Association in dual roles providing terms governing an asset-based loan facility. Upon closing, the Company issued $70,000 of the principal of the Notes (the “Initial Notes”) along with the Warrants and rights of first offer (the “First Offer Rights”) to the lenders participating in this transaction for Notes and Warrants (the “Lenders”). Issuance of the Initial Notes and Warrants provided net proceeds of $66,082. In addition to the Initial Notes, the Indenture may provide access to further loans of up to $30,000 that may become available in two tranches of Additional Notes tied to the NDA filing for and FDA approval of Libervant, an important part of our drug candidate pipeline. Provided that no events of default exist, the Company may elect, subject to approval of the holder of a majority of the outstanding principal amount of the Notes to offer to the Lenders participation in a $10,000 additional offering of 12.5% senior secured notes (the “First Additional Offering”) under terms similar to the Initial Notes, on or before March 31, 2021, upon the filing of the Libervant NDA with the FDA. A second identical funding opportunity would allow, on or before March 31, 2021, the Company to obtain an additional $20,000 if the first option has been elected and funded, or, if not elected or funded, an additional $30,000 may be offered for issuance following FDA approval of Libervant. There can be no assurance that any such additional financing will be consummated. Proceeds from issuance of the Initial Notes and Warrants were used to fully repay the Company’s $52,092 outstanding indebtedness to Perceptive Credit Holdings, LP, related early repayment fees and legal and other fees incurred in executing this Indenture. Remaining proceeds of $13,990 are being used to support the advancement of Aquestive’s late-stage development pipeline, ongoing proprietary product commercialization and for general corporate operations. The Notes provide a stated fixed rate of 12.5%, payable quarterly in arrears, with the initial quarterly principal repayment of the Initial Notes due on September 30, 2021 and the final quarterly payment due at maturity on June 30, 2025. Principal payments are scheduled to increase annually from 10% of the face amount of the debt then outstanding during the first four quarters to 40% of the initial loan principal during the final four quarters. A debt maturity table is presented below: Remainder of 2019 $ - 2020 - 2021 3,500 2022 10,500 2023 17,500 2024 and thereafter 38,500 Total $ 70,000 The Company may elect, at its option, to prepay the Notes at any time at premiums that range from 101.56% of outstanding principal if prepayment occurs on or after the 5 th Collateral for the loan consists of a first priority lien on substantially all property and assets, including intellectual property, of the Company. This secured obligation provides payment rights that are senior to all existing and future subordinated indebtedness of the Company and provides Lenders with perfected security interests in substantially all of the Company’s assets. In the event that asset-based loans of up to $10,000 (“ABL Facility”) may be obtained, subject receivables and inventory assets will provide a second priority lien to senior secured note holders. The Company’s license of its IP to a third-party drug development enterprise (specifically, Sunovion Pharmaceutical’s APL-130277 product) is one of the various assets serving as collateral for this loan. The loan indenture permits the Company to monetize this asset while specifying that a portion of the proceeds, up to $40,000 if the First Additional Offering has not been elected or funded, or, $50,000 if it has been elected and funded, must be applied to prepay the Initial Notes, at 112.5% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest, if any, thereon to the date of repurchase, to the extent elected by the Note holders, assuming that such monetization, up to such $40,000 or $50,000 level, as applicable, equals or exceeds those levels and if such monetization does not equal or exceed such level, such prepayment would be pro-rated among the Note holders. To the extent that Lenders do not elect repayment of the debt at the date of monetization, the amount not elected up to $40,000 (or $50,000 if an additional tranche is issued) will be held in a collateral account until approval of Libervant by the FDA, at which time this cash collateral is to be released to the Company. Proceeds in excess of $40,000 (or $50,000 if an additional tranche is issued) can be used immediately for general corporate purposes. Affirmative and negative covenants specified in the Indenture are considered typical for loans of this nature, including, but not limited to, specifications relating to preservation of corporate existence, publicly traded status, intellectual property and business interests; limitations or prohibitions of dividend payments or other distributions, repurchases of shares, asset transfers or dispositions, creation or occurrence of additional liens, entering into licensing or monetization arrangements other than as permitted under the Indenture, and perfection of security interests. The Company was in compliance with its debt covenants under the Indenture as of September 30, 2019. Also, as of that date, the carrying value of the Company’s loan payable approximated its market value. The Indenture also restricts the incurrence of additional indebtedness except only such indebtedness as is expressly permitted under the terms of the Indenture (which includes the ABL Facility) on the terms and conditions set forth in the Indenture and such indebtedness as may be permitted under limitations set forth in the Indenture. The Indenture also restricts the issuance of any “Disqualified Stock”, including, generally, mandatorily redeemable securities or securities redeemable at the option of the holder or securities convertible or exchangeable at the option of the holder for indebtedness of the Company or for other Disqualified Stock Events of default include various commonly specified conditions, including but not limited to, bankruptcy, insolvency, material adverse changes, failure to meet Indenture payment or other obligations, compliance with regulatory requirements and preservation of corporate existence and business operations. The Company capitalizes legal and other third-party costs incurred in connection with obtaining debt as deferred debt issuance costs and applies the unamortized portion as a reduction of the outstanding face amount of the related loan in accordance with ASU 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs Unamortized deferred debt issuance costs and deferred debt discounts totaled $10,225 as of September 30, 2019. Perceptive Loan On August 16, 2016, the Company entered into a Loan Agreement and Guaranty (the “Loan Agreement”) with Perceptive Credit Opportunities Fund, LP (“Perceptive”). Upon closing, the Company borrowed $45,000 from Perceptive and was permitted to borrow up to an additional $5,000 within one year of the closing date based upon achievement of a defined milestone which was met in March 2017 and the balance of the facility was borrowed at that time. The initial loan proceeds were used to pay the existing debt obligation of $37,500 due to White Oak Global Advisors, LLC, with the balance available for general business purposes. On July 15, 2019, this loan from Perceptive was repaid in full as part of a refinancing transaction. On May 21, 2018, the Company and Perceptive agreed to make certain amendments to the loan agreement then in effect. In the event that a qualified IPO could be consummated on or before December 31, 2018, the Company and Perceptive agreed to postpone the initial loan principal payments, delay the loan maturity date to December 16, 2020 and retain interest rate terms, payable monthly, at one-month LIBOR or approximately 2% plus 9.75%, subject to a minimum rate of 11.75%. Accordingly, commencing on May 31, 2019, seven monthly loan principal payments were due in the amount of $550. Thereafter, monthly principal payments in the amount of $750 were due through the maturity date, December 16, 2020, at which time the full amount of the remaining outstanding loan balance was due. As noted above, on July 15, 2019, the Company fully repaid its outstanding indebtedness under the Loan Agreement, and there was no outstanding debt related to Perceptive as of September 30, 2019. At December 31, 2018, $4,600 was classified as current debt. The Company’s tangible and intangible assets were subject to first priority liens to the extent of the outstanding debt. Further, under the Loan Agreement, as amended, the Company was permitted, subject to Perceptive’s consent, to monetize the royalty and fees derived from sales of certain Apomorphine products and, in connection with such monetization, Perceptive had agreed to release liens related to these royalties and fees. Other significant terms of the Loan Agreement, as amended, included financial covenants, change of control triggers and limitations on additional indebtedness, asset sales, acquisitions and dividend payments. Financial covenant requirements included (1) minimum liquidity under which a $4,000 minimum cash balance must be maintained at all times and (2) a minimum revenue requirement for the trailing twelve consecutive months, measured at the end of each calendar quarter. As of July 15, 2019, the Company was in compliance with all financial covenants under the Loan Agreement, as amended. Also, as of that date, the carrying value of the Company’s loan payable approximated its market value. At closing of the Loan Agreement, as amended, Perceptive received a warrant to purchase senior common equity interests representing 4.5% of the fully diluted common units of the Company on an as converted basis, which was automatically exercised in full at the time of the IPO (see Note 13). The Company capitalizes legal and other third-party costs incurred in connection with obtaining debt as deferred debt issuance costs and applies the unamortized portion as a reduction of the outstanding face amount of the related loan in accordance with ASU 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs The Company recorded during the three-month period ended September 30, 2019 a $4,896 loss on the extinguishment of debt associated with the early retirement of the Perceptive Loan. The $4,896 loss on the extinguishment of debt is comprised of the following: $2,944 in prepayment premiums paid to Perceptive to settle the outstanding debt and $1,952 in unamortized deferred debt issuance costs and deferred debt discounts associated with the Perceptive Loan. There were no unamortized deferred debt issuance costs and deferred debt discounts related to the Perceptive Loan as of September 30, 2019, while unamortized deferred debt issuance costs and deferred debt discounts amounted to $2,797 as of December 31, 2018. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2019 | |
Warrants [Abstract] | |
Warrants | Note 13. Warrants 12.5% Senior Secured Notes The Warrants issued in conjunction with the 12.5% Senior Secured Notes expire on June 30, 2025 and entitle the Lenders to purchase two million shares of the Company’s common stock at $4.25 per share and include specified registration rights. Management estimated the fair value of the warrants to be approximately $6,800, assisted by an independent third-party appraiser. The fair value of these warrants is treated as a debt discount, amortizable over the term of the warrants, with the unamortized loan portion applied to reduce the face amount of the loan in the Company’s balance sheet. Additionally, since the Warrants issued do not provide warrant redemption or put rights within the control of the holders that could require the Company to make a payment of cash or other assets to satisfy the obligations under the Warrants, except in the case of a “cash change in control”, the fair value attributed to the Warrants is presented in additional-paid in capital in the accompanying Condensed Consolidated Balance Sheets. Perceptive Loan The warrants issued to Perceptive in connection with the Perceptive Loan Agreement was, by its terms, set to expire on August 16, 2023 and provided certain rights and preferences including anti-dilution adjustments so that, upon exercise, they would represent 4.5% of the Company’s fully diluted common stock on an as converted basis, subject to dilution for certain financing including the issuance of shares upon termination of our PUPs. The warrants also provided Perceptive with a put right which, if exercised under certain circumstances, would require the Company to purchase the warrants for $3,000 within the first year of the loan or $5,000 thereafter. Because these re-purchase terms could have required net-cash settlement, the appraised value of these warrants at the time of issuance of $5,800 was classified as a liability, rather than as a component of equity, and was treated as a debt discount, with the unamortized portion applied to reduce the face amount of the loan in the accompanying Condensed Consolidated Balance Sheet. Immediately prior to pricing of the Company’s IPO, Perceptive received 863,400 shares of the Company’s common stock $.001 par value per share issuable pursuant to the automatic exercise of warrants at a total price of $116 that was collected subsequently. As a result, the warrant liability of $12,951 was reclassified to Additional paid-in capital during the third quarter of 2018. A Level 1 market price of $15.00, the initial price at which the Company’s common stock was publicly offered, was used in determining fair value as of the warrants’ conversion date. A roll-forward of warrant liability is as follows: Warrant Liability Balance at December 31, 2017 $ 7,673 Changes in fair value recognized 5,278 Exercise of warrants (12,951 ) Balance at September 30, 2018 $ - |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Net Loss Per Share [Abstract] | |
Net Loss Per Share | Note 14. Net Loss Per Share Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares. As a result of the Company’s net losses incurred for the three and nine-month periods ended September 30, 2019 and September 30, 2018, respectively, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations for these periods. Therefore, basic and diluted net loss per share were the same, as reflected below. Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator: Net loss $ (18,412 ) $ (15,038 ) $ (53,610 ) $ (47,432 ) Denominator: Weighted-average number of common shares – basic 25,031,478 23,646,192 24,992,229 19,335,541 Loss per common share - basic $ (0.74 ) $ (0.64 ) $ (2.15 ) $ (2.45 ) As of September 30, 2019, the Company’s potentially dilutive instruments included 2,256,092 options to purchase common shares and 107,144 unvested restricted stock units (“RSUs”) that were excluded from the computation of diluted weighted average shares outstanding because these securities had an anti-dilutive impact due to the loss reported. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-Based Compensation [Abstract] | |
Share-Based Compensation | Note 15. Share-Based Compensation The Company recognized share-based compensation in its Condensed Consolidated Statements of Operations and Comprehensive Loss during 2019 and 2018 as follows: Three Months Ended September 30, Nine Months Ended September 30, Expense classification: 2019 2018 2019 2018 Manufacture and supply $ 60 $ 32 $ 176 $ 377 Research and development 188 192 536 2,378 Selling, general and administrative 1,622 1,102 4,480 25,786 Total share-based compensation expenses $ 1,870 $ 1,236 $ 5,200 $ 28,541 Share-based compensation from: Restricted stock units $ 473 $ 610 $ 1,403 $ 610 Stock options 1,397 626 3,777 633 Non-voting common shares -- — -- 27,298 Employee stock purchase plan -- — 20 — Total share-based compensation expenses $ 1,870 $ 1,236 $ 5,200 $ 28,541 The 2018 expense presented above also include those arising from the Company’s prior incentive compensation plan (“Performance Unit Plan”(PUP)) that was terminated and settled in April 2018 through the issuance of non-voting common shares, $.001 par value per share, of the company. Under that Plan, vested grants were not exercisable prior to a change in control or completion of an IPO and accordingly, compensation expenses for these awards were initially recognized in April 2018 upon plan participant and Board approval of the plan termination. Share-Based Compensation Equity Awards The following tables provide information about the Company’s restricted stock and stock option unit activity during the nine months ended September 30, 2019: Restricted stock units: Number of Units Weighted Average Grant Date Fair Value (in thousands) Unvested at December 31, 2018 205 $ 14.77 Granted -- -- Vested (95 ) 14.91 Forfeited (3 ) 13.00 Unvested at September 30, 2019 107 $ 14.70 Grant date fair value of shares vested during the period $ 1,421 Unrecognized compensation costs of RSU awards at September 30, 2019 $ 1,409 Unrecognized compensation costs related to awards of RSUs are expected to be recognized over a weighted-average period of less than three years. Stock options: Number of Options Weighted Average Exercise Price (in thousands) Outstanding at December 31, 2018 1,033 $ 14.72 Granted 1,253 6.67 Forfeited (30 ) 7.73 Exercised, expired -- -- Outstanding at September 30, 2019 2,256 $ 10.34 Vested or expected to vest at September 30, 2019 2,113 $ 10.28 Exercisable at September 30, 2019 345 $ 14.79 The fair values of stock options granted during 2019 were estimated using the Black-Scholes-Merton pricing model based on the following assumptions: Expected dividend yield 0 % Expected volatility 85 - 95 % Expected term (years) 5.5 - 6.1 Risk-free interest rate 1.5 - 2.6 % The weighted average grant date fair value of stock options granted during 2019 was $6.67. During the nine months ended September 30, 2019, stock options were granted with exercise prices ranging from $3.36 to $8.05, and accordingly, given the Company’s share price of $3.18 at the close of the Company’s third quarter 2019, these options provided no intrinsic value at that date. Similarly, stock options granted in 2018 provided no intrinsic value at September 30, 2019. As of September 30, 2019, $10,679 of total unrecognized compensation expenses related to non-vested stock options is expected to be recognized over a weighted average period of 2.1 years from the date of grant. Employee stock purchase plan The Company’s Board of Directors adopted the Aquestive Therapeutics, Inc. Employee Stock Purchase Plan, or ESPP, in June 2018, as amended and restated effective as of January 1, 2019. The ESPP was approved by stockholders on June 13, 2019. The ESPP features two six-month offering periods per year, running from January 1 to June 30 and July 1 to December 31. Under the ESPP, employees may elect to purchase the Company’s common stock at the lower of 85% of the fair value of shares on either the first or last day of the offering period. During the nine months ended September 30, 2019, 31,393 shares were purchased at a total discount of $20 and were issued under the ESPP, effective as of that date. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | Note 16. Income Taxes The Company has accounted for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as net operating loss carryforwards and research and development credits. Valuation allowances are provided if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. For the three months ended September 30, 2019 and 2018, the Company recorded no income tax benefit from its pretax losses of $18,412 and $15,038, respectively, and similarly for the nine months ended September 30, 2019 and 2018, the Company recorded no tax benefit from its pretax loss of $53,610 and $47,432, respectively, due to realization uncertainties. The Company’s U.S. Federal statutory rate is 21%. The primary factor impacting the effective tax rate for the three and nine months ended September 30, 2019 is the anticipated full year operating loss which will require full valuation allowances against any associated net deferred tax assets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 17. Commitments and Contingencies (A) Operating Leases The Company has entered into various lease agreements for production and research facilities and offices. Most leases contain renewal options. Certain leases contain purchase options and require the Company to pay for taxes, maintenance and operating expenses. All of the Company’s leases are classified as operating leases. Rent expense for all leased manufacturing facilities and sales, laboratory and office space totaled $399 and $375 for the three-month periods ended September 30, 2019 and 2018, respectively and $1,170 and $998 for the nine-month periods ended September 30, 2019 and 2018, respectively. (B) Litigation and Contingencies From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of business, including product liability, intellectual property, commercial litigation, or environmental or other regulatory matters. Patent-Related Litigation Beginning in August 2013, we were informed of ANDA filings in the United States by Watson Laboratories, Inc. (now Actavis Laboratories, Inc., or “Actavis”), Par Pharmaceutical, Inc. (“Par”), Alvogen Pine Brook, Inc. (“Alvogen”), Teva Pharmaceuticals USA, Inc. (“Teva”), Sandoz Inc. (“Sandoz”), and Mylan Technologies Inc. (“Mylan”), for the approval by the FDA of generic versions of Suboxone Sublingual Film in the United States. We filed patent infringement lawsuits against all six generic companies in the U.S. District Court for the District of Delaware. After the commencement of the ANDA patent litigation against Teva, Dr. Reddy’s Laboratories (“DRL”) acquired the ANDA filings for Teva’s buprenorphine and naloxone sublingual film that are at issue in these trials. Of these, cases against three of the six generic companies have been resolved. • Mylan Sandoz • All cases against Par • Actavis • DRL Alvogen Teva Subsequent to the above, all potential generic competitors without a settlement agreement were also sued for infringement of two additional new patents that contain new claims not adjudicated in the original case against DRL and Alvogen. On July 12, 2019, the Federal Circuit affirmed the decisions from the previously decided cases. The remaining case against Actavis was dismissed in light of the infringement ruling above, which prevents Actavis from entering the market until 2024. The case(s) against the remaining defendants, regarding the additional asserted patents have not been finally resolved. A Markman On March 22, 2019, we and Indivior brought suit against Aveva Drug Delivery Systems, Inc., Apotex Corp., and Apotex Inc. for infringement of the ’150, ’514, ’454, and ’305 patents, seeking an injunction and potential monetary damages. The case is pending in the Southern District of Florida, and the defendants filed their answers to the complaint, including counterclaims for non-infringement and invalidity of the asserted patents as well as two other patents that were not asserted in the original complaint. On July 29, 2019, we and Indivior filed a motion to dismiss Aveva and Apotex’s counterclaim for inequitable conduct relating to Indivior’s ‘454 patent, The hearing on that motion originally scheduled for October 30, 2019, was cancelled by the Court, subject to possible rescheduling. We are also seeking to enforce our patent rights in multiple cases against BioDelivery Sciences International, Inc. (“BDSI”). Two cases are currently pending but stayed in the U.S. District Court for the Eastern District of North Carolina: • The first, a declaratory judgment action brought by BDSI against Indivior and Aquestive, seeks declarations of invalidity and non-infringement of U.S. Patents Nos. 7,897,080, or the ’080 patent, 8,652,378, or the ’378 patent, and 8,475,832, or the ’832 patent. This case is stayed pending final resolution of the above-mentioned appeals on related patents. • The second was filed by us and Indivior related to BDSI’s infringing Bunavail product, and alleges infringement of our patent, U.S. Patent No. 8,765,167, or the ’167 patent, and seeks an injunction and potential monetary damages. Shortly after the case was filed, BDSI filed four IPRs challenging the asserted ’167 patent. On March 24, 2016, the Patent Trial and Appeal Board, or the PTAB, issued a final written decision finding that all claims of the ’167 patent were valid. The case was stayed in May 2016 pending the final determination of the appeals on those decisions. Following the PTAB’s February 7, 2019 decisions on remand denying institution, we and Indivior submitted a notice to the Court on February 15, 2019 notifying the Court that the stay should be lifted as a result of the PTAB’s decisions. We are awaiting further action from the Court. • On January 13, 2017, we also sued BDSI asserting infringement of the ’167 patent by BDSI’s Belbuca product and seeking an injunction and potential monetary damages. Following the PTAB’s February 7, 2019 decisions on remand denying institution, the Company submitted a notice to the Court on February 15, 2019 notifying the Court that BDSI’s motion to stay should be denied as moot. BDSI also sent a letter to the Court on February 13, 2019 indicating its intent to appeal the PTAB’s decisions. On August 7, 2019 the Court granted BDSI’s motion to dismiss the Complaint without prejudice and denied BDSI’s motion to stay as moot. BDSI appealed the PTAB’s remand decisions to the Federal Circuit, and on March 20, 2019, we moved to dismiss the appeal for lack of jurisdiction. On August 29, 2019 the Federal Circuit granted the motion to dismiss BDSI’s appeal. On September 30, 2019, BDSI filed a petition for rehearing en banc Antitrust Litigation On September 22, 2016, forty-one states and the District of Columbia, or the States, brought suit against Indivior and us in the U.S. District Court for the Eastern District of Pennsylvania, alleging violations of federal and state antitrust statutes and state unfair trade and consumer protection laws relating to Indivior’s launch of Suboxone Sublingual Film in 2010 and seeking an injunction, civil penalties, and disgorgement. After filing, the case was consolidated for pre-trial purposes with the In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation Daubert |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | The accompanying interim unaudited condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with Article 10 of Regulation S-X for interim financial reporting. In compliance with those rules, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on March 14, 2019 (the “2018 Annual Report on Form 10-K”). As included herein, the condensed consolidated balance sheet at December 31, 2018 is derived from the audited consolidated financial statements as of that date. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results of interim periods have been included. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited condensed financial statements. Any reference in these notes to applicable guidance refers to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | (A) Principles of Consolidation The interim condensed consolidated financial statements presented herein include the accounts of Aquestive Therapeutics, Inc. and its wholly owned subsidiary, MonoSol Rx, Inc. Other than corporate formation activities, MonoSol Rx, Inc. has conducted no commercial, developmental or operational activities and has no customers or vendors. The results of operations and cash flows reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected in any other interim period or for the entire fiscal year. |
Use of Estimates | (B) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to estimates and assumptions include allowances for rebates from proprietary product sales, the allowance for sales returns, the useful lives of fixed assets, valuation of warrants issued in connection with the 12.5% Senior Secured Notes, valuation of share-based compensation, and contingencies. |
Recent Accounting Pronouncements | (C) Recent Accounting Pronouncements As an emerging growth company, the Company has elected to take advantage of the extended transition period afforded by the Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards and, as a result, the Company will comply with new or revised accounting standards no later than the relevant dates on which adoption of such standards is required for emerging growth companies. The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. In May 2014, the FASB, issued ASU 2014-09, Revenue from Contracts with Customers The Company adopted this standard on January 1, 2019, using the modified retrospective method and recorded a cumulative effect adjustment of $2,832 to increase the opening balance of accumulated deficit. The impact was primarily related to deferral of a portion of the original upfront and milestone payments of its collaborative licensing arrangements resulting in a deferral of $3,100 of previously recognized revenue as of the adoption date. The cumulative adjustment also reflects $151 net acceleration of revenue related to feasibility and development arrangements with its customers and acceleration of $117 of revenue recognition of the Company’s manufacturing and supply product sales. Under the modified retrospective method of adoption, the comparative information in the consolidated financial statements has not been revised and continues to be reported under the previously applicable revenue accounting guidance, ASC 605. For additional information regarding the Company’s revenue, see Note 5, Revenues and Trade Receivables, Net. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-Employee Share-Based Payment Accounting, Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees In January 2016, the FASB issued revised guidance governing accounting and reporting of financial instruments (ASU 2016-01) and in 2018 issued technical corrections (ASU 2018-03). This guidance requires that equity investments with readily determinable fair values that are classified as available-for-sale be measured at fair value with changes in value reflected in current earnings. This guidance also simplifies the impairment testing of equity investments without readily determinable fair values and alters certain disclosure requirements. ASU No. 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Recent Accounting Pronouncements Not Adopted as of September 30, 2019: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), There are a number of practical expedients available to the Company at transition. The transition practical expedients are that the Company may elect to not re-assess: (i) whether its contracts contain a lease under the new definition, (ii) the classification of those leases and (iii) the accounting for any initial direct costs previously incurred. In addition, the Company may apply hindsight in determining the lease terms on its existing leases and any potential impairments that may exist on the ROU assets to be recognized on adoption, and the Company may elect to not recognize an ROU asset and lease liability for those leases with a remaining term of 12 months or less. Upon adoption, ROU assets and lease liabilities will be recognized on the Company’s consolidated balance sheets. The lease liability recognized upon adoption will be based upon the present value of the sum of the remaining minimum lease payments (as previously identified under ASC 840) and any amounts probable of being owed under the residual value guarantee (if applicable), to be determined using the discount rate then in effect. The interest rate will be based on the Company’s ability to borrow on a collateralized basis over a similar remaining term and in a similar economic environment. The ROU asset to be recorded will be based on the lease liability and adjusted for any prepaid or accrued lease payments, the remaining balance of any lease incentives, the unamortized initial direct costs and impairments (if applicable). The standard is effective for the Company beginning January 1, 2020. The Company has the option to adopt the new standard using one of two methods: retrospectively to each prior reporting period presented with a cumulative effect adjustment recognized at the beginning of the earliest comparative period presented, or the modified retrospective method, at the beginning of the period of adoption. The Company will adopt the standard using the modified retrospective method whereby the ROU assets and lease liabilities will be reflected in the Company’s financial statements only for periods beginning on or after January 1, 2020. The Company continues to evaluate the impact of ASU 2016-02 on its financial statements. The Company does not believe that recognition of lease liabilities and corresponding ROU assets will have a material impact on the Company’s balance sheet. Further, the Company does not believe the adoption of this standard will have a significant impact on its statements of operations, stockholders’ equity/(deficit) or cash flows. Refer to Note 17, Commitments and Contingencies, for further information on the Company’s existing leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework. Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the condensed consolidated financial statements of the Company. |
Revenues and Trade Receivable_2
Revenues and Trade Receivables, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenues and Trade Receivables, Net [Abstract] | |
Revenue | The Company’s revenues were comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Manufacture and supply revenue $ 9,155 $ 9,005 $ 24,739 $ 29,249 License and royalty revenue 1,356 3,355 6,402 17,387 Co-development and research fees 1,073 907 2,862 3,970 Proprietary product sales, net 834 - 2,187 - Total revenues $ 12,418 $ 13,267 $ 36,190 $ 50,606 |
Disaggregation of Revenue | The following table provides disaggregated net revenue by geographic area: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 United States $ 11,022 $ 12,483 $ 33,683 $ 49,060 Ex-United States 1,396 784 2,507 1,546 Total revenues $ 12,418 $ 13,267 $ 36,190 $ 50,606 |
Trade and Other Receivables, Net | Trade and other receivables, net consist of the following: September 30, 2019 December 31, 2018 Trade receivables $ 9,687 $ 6,610 Contract and other receivables 843 33 Less: allowance for bad debts (94 ) (58 ) Less: sales-related allowances (120 ) (104 ) Trade and other receivables, net $ 10,316 $ 6,481 |
Changes in Allowance for Bad Debt | The following table presents the changes in the allowance for bad debt: September 30, 2019 December 31, 2018 Allowance for doubtful accounts at beginning of year $ 58 $ 55 Additions charged to bad debt expense 36 53 Write-downs charged against the allowance -- (50 ) Allowance for doubtful accounts at end of the period $ 94 $ 58 |
Sales Related Allowances and Accruals | The following table provides a summary of activity with respect to our sales related allowances and accruals for the nine months ended September 30, 2019: Total Sales Related Allowances and Accruals Balance at December 31, 2018 $ 585 Provision 1,576 Payments / credits (984 ) Balance at September 30, 2019 $ 1,177 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventories, Net [Abstract] | |
Inventory, net | The components of Inventory, net is as follows: September 30, 2019 December 31, 2018 Raw material $ 1,142 $ 1,283 Packaging material 1,729 2,975 Finished goods 1,253 1,183 Total inventory, net $ 4,124 $ 5,441 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, Net | Useful Lives September 30, 2019 December 31, 2018 Machinery 3-15 yrs $ 20,927 $ 20,681 Furniture and fixtures 3-15 yrs 1,150 1,150 Leasehold improvements (a) 21,333 21,333 Computer, network equipment and software 3-7 yrs 2,771 2,579 Construction in progress 1,503 1,655 47,684 47,398 Less: accumulated depreciation and amortization (37,333 ) (35,191 ) Total property and equipment, net $ 10,351 $ 12,207 (a) Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives. |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Intangible Assets [Abstract] | |
Components of Identifiable Intangible Assets | The following table provides the components of identifiable intangible assets, all of which are finite lived: September 30, 2019 December 31, 2018 Purchased technology-based intangible $ 2,358 $ 2,358 Purchased patent 509 509 2,867 2,867 Less: accumulated amortization (2,702 ) (2,663 ) Total intangible assets, net $ 165 $ 204 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Payable and Accrued Expenses [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following: September 30, 2019 December 31, 2018 Accounts payable $ 14,202 $ 20,436 Accrued compensation 3,480 3,604 Accrued distribution expenses 1,057 481 Real estate and personal property taxes 246 388 Accrued withholding tax for share-based compensation 49 2,515 Other 184 207 Total accounts payable and accrued expenses $ 19,218 $ 27,631 |
12.5 % Senior Secured Notes a_2
12.5 % Senior Secured Notes and Loans Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
12.5 % Senior Secured Notes and Loans Payable [Abstract] | |
Debt Maturity | A debt maturity table is presented below: Remainder of 2019 $ - 2020 - 2021 3,500 2022 10,500 2023 17,500 2024 and thereafter 38,500 Total $ 70,000 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Warrants [Abstract] | |
Warrant Liability | A roll-forward of warrant liability is as follows: Warrant Liability Balance at December 31, 2017 $ 7,673 Changes in fair value recognized 5,278 Exercise of warrants (12,951 ) Balance at September 30, 2018 $ - |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Net Loss Per Share [Abstract] | |
Basic and Diluted Net Loss Per Share | As a result of the Company’s net losses incurred for the three and nine-month periods ended September 30, 2019 and September 30, 2018, respectively, all potentially dilutive instruments outstanding would have anti-dilutive effects on per-share calculations for these periods. Therefore, basic and diluted net loss per share were the same, as reflected below. Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Numerator: Net loss $ (18,412 ) $ (15,038 ) $ (53,610 ) $ (47,432 ) Denominator: Weighted-average number of common shares – basic 25,031,478 23,646,192 24,992,229 19,335,541 Loss per common share - basic $ (0.74 ) $ (0.64 ) $ (2.15 ) $ (2.45 ) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-Based Compensation [Abstract] | |
Share-based Compensation Expense | The Company recognized share-based compensation in its Condensed Consolidated Statements of Operations and Comprehensive Loss during 2019 and 2018 as follows: Three Months Ended September 30, Nine Months Ended September 30, Expense classification: 2019 2018 2019 2018 Manufacture and supply $ 60 $ 32 $ 176 $ 377 Research and development 188 192 536 2,378 Selling, general and administrative 1,622 1,102 4,480 25,786 Total share-based compensation expenses $ 1,870 $ 1,236 $ 5,200 $ 28,541 Share-based compensation from: Restricted stock units $ 473 $ 610 $ 1,403 $ 610 Stock options 1,397 626 3,777 633 Non-voting common shares -- — -- 27,298 Employee stock purchase plan -- — 20 — Total share-based compensation expenses $ 1,870 $ 1,236 $ 5,200 $ 28,541 |
Restricted Stock Units Awards | The following tables provide information about the Company’s restricted stock and stock option unit activity during the nine months ended September 30, 2019: Restricted stock units: Number of Units Weighted Average Grant Date Fair Value (in thousands) Unvested at December 31, 2018 205 $ 14.77 Granted -- -- Vested (95 ) 14.91 Forfeited (3 ) 13.00 Unvested at September 30, 2019 107 $ 14.70 Grant date fair value of shares vested during the period $ 1,421 Unrecognized compensation costs of RSU awards at September 30, 2019 $ 1,409 |
Stock Option Activity | Stock options: Number of Options Weighted Average Exercise Price (in thousands) Outstanding at December 31, 2018 1,033 $ 14.72 Granted 1,253 6.67 Forfeited (30 ) 7.73 Exercised, expired -- -- Outstanding at September 30, 2019 2,256 $ 10.34 Vested or expected to vest at September 30, 2019 2,113 $ 10.28 Exercisable at September 30, 2019 345 $ 14.79 |
Valuation Assumptions for Determination of Fair Value of Options | The fair values of stock options granted during 2019 were estimated using the Black-Scholes-Merton pricing model based on the following assumptions: Expected dividend yield 0 % Expected volatility 85 - 95 % Expected term (years) 5.5 - 6.1 Risk-free interest rate 1.5 - 2.6 % |
Corporate Organization and Co_2
Corporate Organization and Company Overview (Details) $ / shares in Units, $ in Thousands | Jul. 27, 2018USD ($)$ / sharesshares | Aug. 31, 2018USD ($)$ / sharesshares | Apr. 30, 2018$ / sharesshares | Sep. 30, 2018shares | Mar. 31, 2018shares | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Dec. 31, 2018$ / sharesshares | Jun. 30, 2018shares |
Corporate Conversion, Reorganization, Stock Splits and IPO [Abstract] | |||||||||
Common stock, shares issued (in shares) | 25,042,964 | 24,957,309 | |||||||
Conversion ratio, stock | 0.08 | ||||||||
Common stock, shares authorized (in shares) | 350,000,000 | 25,000 | 250,000,000 | 250,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||||
Initial Public Offering of Common Stock [Abstract] | |||||||||
Share price (in dollars per share) | $ / shares | $ 15 | ||||||||
Net proceeds from initial public offering | $ | $ 63,482 | $ 0 | $ 68,714 | ||||||
Common stock, shares outstanding (in shares) | 25,042,964 | 24,957,309 | |||||||
Initial Public Offering [Member] | |||||||||
Initial Public Offering of Common Stock [Abstract] | |||||||||
Number of common shares issued (in shares) | 4,500,000 | ||||||||
Share price (in dollars per share) | $ / shares | $ 15 | ||||||||
Net proceeds from initial public offering | $ | $ 57,543 | ||||||||
Stock issuance costs | $ | $ 9,957 | ||||||||
Over-Allotment Option [Member] | |||||||||
Initial Public Offering of Common Stock [Abstract] | |||||||||
Number of common shares issued (in shares) | 425,727 | ||||||||
Share price (in dollars per share) | $ / shares | $ 15 | ||||||||
Net proceeds from initial public offering | $ | $ 5,939 | ||||||||
Stock issuance costs | $ | $ 447 | ||||||||
Voting Common Stock [Member] | |||||||||
Corporate Conversion, Reorganization, Stock Splits and IPO [Abstract] | |||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||||||
Effect of stock split (in shares) | 37,212 | ||||||||
Nonvoting Common Stock [Member] | |||||||||
Initial Public Offering of Common Stock [Abstract] | |||||||||
Common stock, shares outstanding (in shares) | 4,922,353 | ||||||||
Aquestive Partners, LLC [Member] | Voting Common Stock [Member] | |||||||||
Corporate Conversion, Reorganization, Stock Splits and IPO [Abstract] | |||||||||
Common stock, shares issued (in shares) | 5,000 | ||||||||
Common Stock [Member] | |||||||||
Corporate Conversion, Reorganization, Stock Splits and IPO [Abstract] | |||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||||||
Effect of stock split (in shares) | 15,072,647 | ||||||||
Initial Public Offering of Common Stock [Abstract] | |||||||||
Number of common shares issued (in shares) | 4,925,727 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jul. 15, 2019 | Dec. 31, 2018 |
Recent Accounting Pronouncements [Abstract] | |||
Deferred revenue | $ 2,962 | $ 3,762 | |
ASU 2014-09 and ASU 2018-07 [Member] | |||
Recent Accounting Pronouncements [Abstract] | |||
Cumulative effect adjustment of accumulated deficit | (2,832) | ||
ASU 2014-09 [Member] | Adjustments Due to Adoption of ASU 2014-09 [Member] | |||
Recent Accounting Pronouncements [Abstract] | |||
Deferred revenue | 3,100 | ||
ASU 2014-09 [Member] | Adjustments Due to Adoption of ASU 2014-09 [Member] | Manufacture and Supply Revenue [Member] | |||
Recent Accounting Pronouncements [Abstract] | |||
Deferred revenue | (117) | ||
ASU 2014-09 [Member] | Adjustments Due to Adoption of ASU 2014-09 [Member] | Co-Development and Research Fees [Member] | |||
Recent Accounting Pronouncements [Abstract] | |||
Deferred revenue | (151) | ||
Additional Paid-in Capital [Member] | ASU 2014-09 and ASU 2018-07 [Member] | |||
Recent Accounting Pronouncements [Abstract] | |||
Cumulative effect adjustment of accumulated deficit | $ 20 | ||
Senior Secured Notes Due 2025 [Member] | |||
Use of Estimates [Abstract] | |||
Interest rate | 12.50% | 12.50% |
Risks and Uncertainties (Detail
Risks and Uncertainties (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jul. 15, 2019 |
Risks and Uncertainties [Abstract] | ||
Working capital | $ 18,007 | |
Senior Secured Notes Due 2025 [Member] | ||
Debt Instrument, Interest Rate [Abstract] | ||
Interest rate | 12.50% | 12.50% |
Revenues and Trade Receivable_3
Revenues and Trade Receivables, Net, Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Contract with Customer, Asset and Liability [Abstract] | |||||
Invoices payable term | 105 days | ||||
Contract assets | $ 760 | $ 760 | $ 284 | ||
Contract liabilities | 2,962 | 2,962 | $ 3,762 | ||
Deferred revenue, recognized | 1,079 | ||||
Revenue [Abstract] | |||||
Total revenues | 12,418 | $ 13,267 | $ 36,190 | $ 50,606 | |
Minimum [Member] | |||||
Contract with Customer, Asset and Liability [Abstract] | |||||
Invoices payable term | 30 days | ||||
Maximum [Member] | |||||
Contract with Customer, Asset and Liability [Abstract] | |||||
Invoices payable term | 60 days | ||||
Manufacture and Supply Revenue [Member] | |||||
Revenue [Abstract] | |||||
Total revenues | 9,155 | 9,005 | $ 24,739 | 29,249 | |
License and Royalty Revenue [Member] | |||||
Revenue [Abstract] | |||||
Total revenues | 1,356 | 3,355 | 6,402 | 17,387 | |
Co-Development and Research Fees [Member] | |||||
Revenue [Abstract] | |||||
Total revenues | 1,073 | 907 | 2,862 | 3,970 | |
Proprietary Product Sales, Net [Member] | |||||
Revenue [Abstract] | |||||
Total revenues | $ 834 | $ 0 | $ 2,187 | $ 0 |
Revenues and Trade Receivable_4
Revenues and Trade Receivables, Net, Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues by Geographic Market [Abstract] | ||||
Total revenues | $ 12,418 | $ 13,267 | $ 36,190 | $ 50,606 |
United States [Member] | ||||
Revenues by Geographic Market [Abstract] | ||||
Total revenues | 11,022 | 12,483 | 33,683 | 49,060 |
Ex-United States [Member] | ||||
Revenues by Geographic Market [Abstract] | ||||
Total revenues | $ 1,396 | $ 784 | $ 2,507 | $ 1,546 |
Revenues and Trade Receivable_5
Revenues and Trade Receivables, Net, Trade and other receivables, net (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Trade and other receivables, net [Abstract] | |||
Trade receivables | $ 9,687 | $ 6,610 | |
Contract and other receivables | 843 | 33 | |
Less: allowance for bad debts | (94) | (58) | $ (55) |
Less: sales-related allowances | (120) | (104) | |
Trade and other receivables, net | $ 10,316 | $ 6,481 |
Revenues and Trade Receivable_6
Revenues and Trade Receivables, Net, Changes in Allowance for Bad Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Allowance for doubtful accounts at beginning of year | $ 58 | $ 55 |
Additions charged to bad debt expense | 36 | 53 |
Write-downs charged against the allowance | 0 | (50) |
Allowance for doubtful accounts at end of the period | $ 94 | $ 58 |
Revenues and Trade Receivable_7
Revenues and Trade Receivables, Net, Summary of Activity with Sales Related Allowances and Accruals (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Revenues and Trade Receivables, Net [Abstract] | ||
Beginning balance | $ 585 | |
Provision | 1,576 | |
Payments / credits | (984) | |
Ending balance | 1,177 | |
Accruals for return allowances and prompt pay discounts | 120 | $ 104 |
Accruals for wholesaler fees, co-pay cards and rebates | $ 1,057 | $ 481 |
Revenues and Trade Receivable_8
Revenues and Trade Receivables, Net, Concentration of Major Customers (Details) - Indivior [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Revenue [Member] | ||
Customer Concentration [Abstract] | ||
Concentrations of risk | 83.00% | 89.00% |
Receivables [Member] | ||
Customer Concentration [Abstract] | ||
Concentrations of risk | 77.00% | 78.00% |
Material Agreements (Details)
Material Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 182 Months Ended | 189 Months Ended | |
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2019 | Feb. 20, 2019 | Sep. 30, 2019 | |
Commercial Exploitation Agreement with Indivior [Member] | |||||
Agreements [Abstract] | |||||
License agreement term | 7 years | ||||
Automatic renewal period of agreement | 1 year | ||||
Commercial Exploitation Agreement with Indivior [Member] | Minimum [Member] | |||||
Agreements [Abstract] | |||||
Notice period of intent not to renew agreement | 1 year | ||||
Supplemental Agreement with Indivior [Member] | |||||
Agreements [Abstract] | |||||
Contingent payments receivable in the future | $ 34,250 | $ 34,250 | $ 34,250 | ||
Revenues | $ 4,250 | $ 40,750 | |||
Supplemental Agreement with Indivior [Member] | Maximum [Member] | |||||
Agreements [Abstract] | |||||
Contingent payments receivable in the future | 75,000 | 75,000 | 75,000 | ||
Supplemental Agreement with Indivior Performance or Event-Based Milestones [Member] | |||||
Agreements [Abstract] | |||||
Contingent payments receivable in the future | 33,000 | 33,000 | 33,000 | ||
Supplemental Agreement with Indivior Additional Process Patent Rights to the Company [Member] | |||||
Agreements [Abstract] | |||||
Contingent payments receivable in the future | 1,250 | 1,250 | 1,250 | ||
License Agreement with Sunovion Pharmaceuticals, Inc. [Member] | |||||
Agreements [Abstract] | |||||
Revenues | 0 | 0 | 18,000 | ||
License Agreement with Sunovion Pharmaceuticals, Inc Milestones [Member] | |||||
Agreements [Abstract] | |||||
Revenues | 13,000 | ||||
License Agreement with Sunovion Pharmaceuticals, Inc Milestones [Member] | Maximum [Member] | |||||
Agreements [Abstract] | |||||
Contingent payments receivable in the future | $ 45,000 | $ 45,000 | 45,000 | ||
License Agreement with Sunovion Pharmaceuticals, Inc. Upfront [Member] | |||||
Agreements [Abstract] | |||||
Revenues | $ 5,000 | ||||
Agreement to Terminate CLA with KemPharm [Member] | |||||
Agreements [Abstract] | |||||
Percentage share of milestone payments paid | 10.00% | ||||
Agreement to Terminate CLA with KemPharm [Member] | License and Royalty Revenue [Member] | |||||
Agreements [Abstract] | |||||
Revenues | $ 1,000 |
Financial Instruments - Fair _2
Financial Instruments - Fair Value Measurements (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Level 2 [Member] | |
Fair Value of Financial Instruments [Abstract] | |
Assets, fair value | $ 0 |
Liabilities, fair value | 0 |
Level 3 [Member] | |
Fair Value of Financial Instruments [Abstract] | |
Assets, fair value | 0 |
Liabilities, fair value | $ 0 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Inventories, Net [Abstract] | ||
Raw material | $ 1,142 | $ 1,283 |
Packaging material | 1,729 | 2,975 |
Finished goods | 1,253 | 1,183 |
Total inventory, net | $ 4,124 | $ 5,441 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | ||
Property and Equipment, Net [Abstract] | ||||||
Property and equipment, gross | $ 47,684 | $ 47,684 | $ 47,398 | |||
Less: accumulated depreciation and amortization | (37,333) | (37,333) | (35,191) | |||
Total property and equipment, net | 10,351 | 10,351 | 12,207 | |||
Property Plant and Equipment Income Statement Disclosures [Abstract] | ||||||
Depreciation and amortization | 695 | $ 733 | 2,143 | $ 2,438 | ||
Machinery [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Property and equipment, gross | 20,927 | $ 20,927 | 20,681 | |||
Machinery [Member] | Minimum [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Useful lives | 3 years | |||||
Machinery [Member] | Maximum [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Useful lives | 15 years | |||||
Furniture and Fixtures [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Property and equipment, gross | 1,150 | $ 1,150 | 1,150 | |||
Furniture and Fixtures [Member] | Minimum [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Useful lives | 3 years | |||||
Furniture and Fixtures [Member] | Maximum [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Useful lives | 15 years | |||||
Leasehold Improvements [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Property and equipment, gross | [1] | 21,333 | $ 21,333 | 21,333 | ||
Computer, Network Equipment and Software [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Property and equipment, gross | 2,771 | $ 2,771 | 2,579 | |||
Computer, Network Equipment and Software [Member] | Minimum [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Useful lives | 3 years | |||||
Computer, Network Equipment and Software [Member] | Maximum [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Useful lives | 7 years | |||||
Construction in Progress [Member] | ||||||
Property and Equipment, Net [Abstract] | ||||||
Property and equipment, gross | $ 1,503 | $ 1,503 | $ 1,655 | |||
[1] | Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives. |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Identifiable Intangible Assets [Abstract] | |||||
Intangible assets, gross | $ 2,867 | $ 2,867 | $ 2,867 | ||
Less: accumulated amortization | (2,702) | (2,702) | (2,663) | ||
Total intangible assets, net | 165 | 165 | 204 | ||
Amortization expense | 13 | $ 13 | 39 | $ 38 | |
Estimated Annual Amortization Expense [Abstract] | |||||
2019 | 50 | 50 | |||
2020 | 50 | 50 | |||
2021 | 50 | 50 | |||
2022 | 50 | 50 | |||
Purchased Technology-based Intangible [Member] | |||||
Identifiable Intangible Assets [Abstract] | |||||
Intangible assets, gross | 2,358 | 2,358 | 2,358 | ||
Purchased Patent [Member] | |||||
Identifiable Intangible Assets [Abstract] | |||||
Intangible assets, gross | $ 509 | $ 509 | $ 509 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts Payable and Accrued Expenses [Abstract] | ||
Accounts payable | $ 14,202 | $ 20,436 |
Accrued compensation | 3,480 | 3,604 |
Accrued distribution expenses | 1,057 | 481 |
Real estate and personal property taxes | 246 | 388 |
Accrued withholding tax for share-based compensation | 49 | 2,515 |
Other | 184 | 207 |
Total accounts payable and accrued expenses | $ 19,218 | $ 27,631 |
12.5 % Senior Secured Notes a_3
12.5 % Senior Secured Notes and Loans Payable, 12.5% Senior Secured Notes (Details) $ / shares in Units, $ in Thousands | Jul. 15, 2019USD ($)Tranche | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
12.5% Senior Secured Notes [Abstract] | ||||||
Warrants issued (in shares) | shares | 2,000,000 | 2,000,000 | ||||
Warrant exercise price (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Net proceeds from issuance of initial notes, warrants and first offer rights | $ 66,082 | |||||
Remaining proceeds after repayment of debt | 13,990 | |||||
Debt Maturity [Abstract] | ||||||
Remainder of 2019 | $ 0 | $ 0 | ||||
2020 | 0 | 0 | ||||
2021 | 3,500 | 3,500 | ||||
2022 | 10,500 | 10,500 | ||||
2023 | 17,500 | 17,500 | ||||
2024 and thereafter | 38,500 | 38,500 | ||||
Total | 70,000 | 70,000 | ||||
Amortization expense, deferred debt issuance costs and debt discounts | 1,338 | $ 1,297 | ||||
Unamortized deferred debt issuance cost and deferred debt discounts | $ 0 | $ 0 | $ 2,797 | |||
Perceptive Credit Opportunities Fund, LP [Member] | ||||||
12.5% Senior Secured Notes [Abstract] | ||||||
Warrants issued (in shares) | shares | 863,400 | 863,400 | ||||
Debt Maturity [Abstract] | ||||||
Amortization expense, deferred debt issuance costs and debt discounts | $ 64 | $ 374 | $ 847 | $ 1,297 | ||
Unamortized deferred debt issuance cost and deferred debt discounts | $ 1,952 | $ 1,952 | ||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | ||||||
12.5% Senior Secured Notes [Abstract] | ||||||
Interest rate | 2.00% | 2.00% | ||||
Payment of existing debt obligation | $ (52,092) | |||||
Debt maturity date | Dec. 16, 2020 | |||||
Senior Secured Notes Due 2025 [Member] | ||||||
12.5% Senior Secured Notes [Abstract] | ||||||
Principal amount | $ 70,000 | $ 70,000 | ||||
Interest rate | 12.50% | 12.50% | 12.50% | |||
Warrants issued (in shares) | shares | 2,000,000 | 2,000,000 | ||||
Warrant exercise price (in dollars per share) | $ / shares | $ 4.25 | $ 4.25 | ||||
Number of tranches | Tranche | 2 | |||||
Frequency of periodic principal payment | quarterly | |||||
Debt maturity date | Jun. 30, 2025 | |||||
Annual percentage increase in principal payments during first four quarters | 10.00% | |||||
Annual percentage increase of initial loan principal payments during final four quarters | 40.00% | |||||
Debt Maturity [Abstract] | ||||||
Redemption percentage of debt under change of control provisions | 101.00% | |||||
Amortization expense, deferred debt issuance costs and debt discounts | $ 493 | $ 493 | ||||
Unamortized deferred debt issuance cost and deferred debt discounts | $ 10,225 | 10,225 | ||||
Senior Secured Notes Due 2025 [Member] | Minimum [Member] | ||||||
Debt Maturity [Abstract] | ||||||
Elective redemption percentage of debt | 101.56% | |||||
Senior Secured Notes Due 2025 [Member] | Maximum [Member] | ||||||
12.5% Senior Secured Notes [Abstract] | ||||||
Principal amount | $ 100,000 | 100,000 | ||||
Additional borrowing capacity | $ 30,000 | 30,000 | ||||
Debt Maturity [Abstract] | ||||||
Elective redemption percentage of debt | 112.50% | |||||
Asset based loans secured on second priority lien by receivables and inventory assets | $ 10,000 | 10,000 | ||||
Senior Secured Notes Due 2025 - First Additional Offering [Member] | ||||||
12.5% Senior Secured Notes [Abstract] | ||||||
Additional borrowing capacity | 10,000 | 10,000 | ||||
Senior Secured Notes Due 2025 - First Additional Offering [Member] | Maximum [Member] | ||||||
Debt Maturity [Abstract] | ||||||
Portion of proceeds used to monetize assets, if First Additional Offering has not been elected or funded | 40,000 | |||||
Senior Secured Notes Due 2025 - Second Additional Offering [Member] | ||||||
12.5% Senior Secured Notes [Abstract] | ||||||
Additional borrowing capacity | 20,000 | $ 20,000 | ||||
Senior Secured Notes Due 2025 - Second Additional Offering [Member] | Maximum [Member] | ||||||
Debt Maturity [Abstract] | ||||||
Portion of proceeds used to monetize assets, if First Additional Offering has been elected and funded | $ 50,000 |
12.5 % Senior Secured Notes a_4
12.5 % Senior Secured Notes and Loans Payable, Perceptive Loan (Details) $ in Thousands | Jul. 15, 2019USD ($) | Mar. 31, 2017USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Payment | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Line of Credit Facility [Abstract] | |||||||
Loans payable, current | $ 0 | $ 0 | $ 4,600 | ||||
Loss on extinguishment of debt | (4,896) | $ 0 | (4,896) | $ 0 | |||
Prepayment premiums paid | 2,944 | 0 | |||||
Amortization expense, deferred debt issuance costs and debt discounts | 1,338 | 1,297 | |||||
Unamortized deferred debt issuance cost and deferred debt discounts | 0 | 0 | 2,797 | ||||
Perceptive Credit Opportunities Fund, LP [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Prepayment premiums paid | 2,944 | ||||||
Amortization expense, deferred debt issuance costs and debt discounts | 64 | $ 374 | 847 | $ 1,297 | |||
Unamortized deferred debt issuance cost and deferred debt discounts | 1,952 | 1,952 | |||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Borrowing amount | $ 45,000 | $ 0 | $ 0 | ||||
Warrant to purchase senior common equity interest ratio to fully diluted common units | 4.50% | 4.50% | |||||
Credit facility, remaining borrowing capacity | 5,000 | ||||||
Payment of existing debt obligation | $ (52,092) | ||||||
Debt maturity date | Dec. 16, 2020 | ||||||
Debt instrument base rate | 2.00% | 2.00% | |||||
Debt instrument variable interest rate | 9.75% | ||||||
Loans payable, current | $ 4,600 | ||||||
Financial covenant requirement, Consecutive period for maintaining minimum revenues | 12 months | ||||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | Minimum [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Debt instrument effective interest rate | 11.75% | 11.75% | |||||
Financial covenant requirement, monthly cash balance | $ 4,000 | $ 4,000 | |||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | May 2019 [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Frequency of periodic principal payment | Monthly | ||||||
Number of loan principal payments | Payment | 7 | ||||||
Monthly principal payment amount | $ 550 | ||||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | December 2020 [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Frequency of periodic principal payment | Monthly | ||||||
Monthly principal payment amount | $ 750 | ||||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | LIBOR [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Term of variable rate | 1 month | ||||||
White Oaks Global Advisors, LLC [Member] | Line of Credit [Member] | |||||||
Line of Credit Facility [Abstract] | |||||||
Payment of existing debt obligation | $ (37,500) |
Warrants (Details)
Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jul. 15, 2019 | Dec. 31, 2018 | |
Warrants [Abstract] | ||||||
Warrant exercise price (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Change in fair value of warrant | $ 6,800 | |||||
Number of shares received upon automatic exercise of warrant (in shares) | 2,000,000 | 2,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||
Share price (in dollars per share) | $ 15 | $ 15 | ||||
Warrant Liability [Roll Forward] | ||||||
Balance as of beginning of period | $ 7,673 | |||||
Changes in fair value recognized | $ 0 | $ 4,116 | $ 0 | 5,278 | ||
Exercise of warrants | (12,951) | |||||
Balance as of end of period | 0 | $ 0 | ||||
Additional Paid-in Capital [Member] | ||||||
Warrants [Abstract] | ||||||
Change in fair value of warrant | $ 6,800 | |||||
Perceptive Credit Opportunities Fund, LP [Member] | ||||||
Warrants [Abstract] | ||||||
Number of shares received upon automatic exercise of warrant (in shares) | 863,400 | 863,400 | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Cash received for warrant exercise | $ 116 | |||||
Perceptive Credit Opportunities Fund, LP [Member] | Line of Credit [Member] | ||||||
Warrants [Abstract] | ||||||
Interest rate | 2.00% | 2.00% | ||||
Debt maturity date | Dec. 16, 2020 | |||||
Warrant to purchase senior common equity interest ratio to fully diluted common units | 4.50% | 4.50% | ||||
Purchase price of warrant within first year of the loan | $ 3,000 | $ 3,000 | ||||
Purchase price of warrant after first year | 5,000 | 5,000 | ||||
Warrant liability, fair value | $ 5,800 | $ 5,800 | ||||
Senior Secured Notes Due 2025 [Member] | ||||||
Warrants [Abstract] | ||||||
Interest rate | 12.50% | 12.50% | 12.50% | |||
Debt maturity date | Jun. 30, 2025 | |||||
Warrant exercise price (in dollars per share) | $ 4.25 | $ 4.25 | ||||
Change in fair value of warrant | $ 6,800 | |||||
Number of shares received upon automatic exercise of warrant (in shares) | 2,000,000 | 2,000,000 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator [Abstract] | ||||||||
Net loss | $ (18,412) | $ (20,472) | $ (14,726) | $ (15,038) | $ (36,493) | $ 4,099 | $ (53,610) | $ (47,432) |
Denominator [Abstract] | ||||||||
Weighted-average number of common shares - basic (in shares) | 25,031,478 | 23,646,192 | 24,992,229 | 19,335,541 | ||||
Loss per common share - basic (in dollars per share) | $ (0.74) | $ (0.64) | $ (2.15) | $ (2.45) | ||||
Stock Options [Member] | ||||||||
Dilutive Instruments [Abstract] | ||||||||
Anti-dilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 2,256,092 | |||||||
Unvested Restricted Stock Units [Member] | ||||||||
Dilutive Instruments [Abstract] | ||||||||
Anti-dilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 107,144 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | $ 1,870 | $ 1,236 | $ 5,200 | $ 28,541 |
Additional Disclosures [Abstract] | ||||
Share price (in dollars per share) | $ 15 | $ 15 | ||
Manufacture and supply [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | $ 60 | 32 | $ 176 | 377 |
Research and Development [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | 188 | 192 | 536 | 2,378 |
Selling, General and Administrative [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | 1,622 | 1,102 | 4,480 | 25,786 |
Non-voting Common Shares [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | 0 | 0 | 0 | 27,298 |
Restricted Stock Units [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | $ 473 | 610 | $ 1,403 | 610 |
Number of Units [Roll Forward] | ||||
Unvested, at beginning of period (in shares) | 205,000 | |||
Granted (in shares) | 0 | |||
Vested (in shares) | (95,000) | |||
Forfeited (in shares) | (3,000) | |||
Unvested, at end of period (in shares) | 107,000 | 107,000 | ||
Weighted Average Grant Date Fair Value Per Share [Abstract] | ||||
Unvested, at beginning of period (in dollars per share) | $ 14.77 | |||
Granted (in dollars per share) | 0 | |||
Vested (in dollars per share) | 14.91 | |||
Forfeited (in dollars per share) | 13 | |||
Unvested, at end of period (in dollars per share) | $ 14.70 | $ 14.70 | ||
Grant date fair value of shares vested during the period | $ 1,421 | $ 1,421 | ||
Unrecognized compensation costs of RSU awards | 1,409 | $ 1,409 | ||
Additional Disclosures [Abstract] | ||||
Vesting period | 3 years | |||
Stock Options [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | $ 1,397 | 626 | $ 3,777 | 633 |
Number of Options [Roll Forward] | ||||
Outstanding at beginning of period (in shares) | 1,033,000 | |||
Granted (in shares) | 1,253,000 | |||
Forfeited (in shares) | (30,000) | |||
Exercised, expired (in shares) | 0 | |||
Outstanding at end of period (in shares) | 2,256,000 | 2,256,000 | ||
Vested or expected to vest at end of period (in shares) | 2,113,000 | 2,113,000 | ||
Exercisable at end of period (in shares) | 345,000 | 345,000 | ||
Weighted Average Exercise Price [Abstract] | ||||
Outstanding at beginning of period (In dollars per share) | $ 14.72 | |||
Granted (in dollars per share) | 6.67 | |||
Forfeited (in dollars per share) | 7.73 | |||
Exercised, expired (in dollars per share) | 0 | |||
Outstanding at end of period (In dollars per share) | $ 10.34 | 10.34 | ||
Vested or expected to vest at end of period (in dollars per share) | 10.28 | 10.28 | ||
Exercisable at end of period (in dollars per share) | 14.79 | $ 14.79 | ||
Fair Value Assumptions [Abstract] | ||||
Expected dividend yield | 0.00% | |||
Additional Disclosures [Abstract] | ||||
Weighted average grant date fair value (in dollars per share) | $ 6.67 | |||
Share price (in dollars per share) | $ 3.18 | $ 3.18 | ||
Intrinsic value of options granted | $ 0 | |||
Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expenses related to non-vested stock options | $ 10,679 | $ 10,679 | ||
Unrecognized compensation cost, recognition period | 2 years 1 month 6 days | |||
Stock Options [Member] | Minimum [Member] | ||||
Weighted Average Exercise Price [Abstract] | ||||
Granted (in dollars per share) | $ 3.36 | |||
Fair Value Assumptions [Abstract] | ||||
Expected volatility | 85.00% | |||
Expected term (years) | 5 years 6 months | |||
Risk-free interest rate | 1.50% | |||
Stock Options [Member] | Maximum [Member] | ||||
Weighted Average Exercise Price [Abstract] | ||||
Granted (in dollars per share) | $ 8.05 | |||
Fair Value Assumptions [Abstract] | ||||
Expected volatility | 95.00% | |||
Expected term (years) | 6 years 1 month 6 days | |||
Risk-free interest rate | 2.60% | |||
Employee Stock Purchase Plan [Member] | ||||
Share-based Compensation expenses [Abstract] | ||||
Share-based compensation expenses | $ 0 | $ 0 | $ 20 | $ 0 |
Employee Stock Purchase Plan [Abstract] | ||||
Purchase price of common stock as percentage of fair market value | 85.00% | |||
Shares issued under employee stock purchase plan (in shares) | 31,393 | |||
Discount value on shares issued under employee stock purchase plan | $ 20 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Taxes [Abstract] | ||||
Income tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
Net (loss)/income before income taxes | $ (18,412) | $ (15,038) | $ (53,610) | $ (47,432) |
Federal statutory tax rate | 21.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2013Company | Sep. 30, 2019USD ($)CaseStates | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)CasePatentStates | Sep. 30, 2018USD ($) | |
Operating Leases [Abstract] | |||||
Rent expense | $ | $ 399 | $ 375 | $ 1,170 | $ 998 | |
Litigation and Contingencies [Abstract] | |||||
Number of companies patent infringement lawsuits filed | Company | 6 | ||||
Number of cases resolved | 3 | ||||
Number of additional infringement on patents | Patent | 2 | ||||
Number of cases pending | 2 | 2 | |||
Number of cases filed | 4 | ||||
Number of states in the antitrust litigation | States | 41 | 41 |