Strongbridge Biopharma 10Q 2020 Q2 Quarterly report

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____________ to _____________

Commission file number 001-37569

Strongbridge Biopharma plc

(Exact name of Registrant as specified in its charter)

Ireland

98-1275166

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

900 Northbrook Drive

Suite 200

Trevose, PA 19053

(Address of principal executive offices)

Registrant’s Telephone Number, Including Area Code: +1 610-254-9200

Securities Registered Pursuant to Section 12(b) of the Exchange Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Ordinary shares, par value $0.01 per share	SBBP	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and emerging growth company in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒

Non-Accelerated Filer	☐	Smaller Reporting Company	☒

		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 28, 2020, there were 54,355,957 ordinary shares of the registrant issued and outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
PART I.	Financial Information	1

Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	1
	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019	2
	Consolidated Statements of Stockholders’ Equity	3
	Consolidated Statements of Cash Flow for the Six Months Ended June 30, 2020 and 2019	4
	Notes to the Unaudited Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II.	Other Information	24

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

SIGNATURES		29

Solely for convenience, the trademarks and trade names in this Quarterly Report on Form 10-Q (this “Quarterly Report”) are referred to without the ^® and ^™ symbols, but absence of such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. The trademarks, trade names and service marks appearing in this Quarterly Report are the property of their respective owners.

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STRONGBRIDGE BIOPHARMA plc

Consolidated Balance Sheets

(In thousands, except share and per share data)

(unaudited)


	June 30,		December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	59,909	$	57,032
Marketable securities		—		21,072
Accounts receivable		2,885		2,289
Inventory		1,315		1,993
Prepaid expenses and other current assets		1,914		1,157
Total current assets		66,023		83,543
Property and equipment, net		248		291
Right of use asset, net		696		789
Intangible asset, net		22,599		25,110
Goodwill		7,256		7,256
Other assets		812		649
Total assets	$	97,634	$	117,638
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,957	$	3,331
Accrued and other current liabilities		17,363		20,962
Current portion of long-term debt, net		162		—
Total current liabilities		19,482		24,293
Long-term debt, net		6,841		—
Warrant liability		10,914		4,127
Supply agreement liability, noncurrent		11,556		15,947
Other long-term liabilities		972		1,080
Total liabilities		49,765		45,447
Commitments and contingencies (Note 8)
Stockholders’ equity:
Deferred shares, $1.098 par value, 40,000 shares authorized, issued and outstanding at June 30, 2020 and December 31, 2019		44		44
Ordinary shares, $0.01 par value, 600,000,000 shares authorized; 54,355,957 and 54,205,852 shares issued and outstanding at June 30, 2020 and December 31, 2019		544		542
Additional paid-in capital		337,734		332,085
Accumulated deficit		(290,453)		(260,483)
Accumulated other comprehensive income		—		3
Total stockholders’ equity		47,869		72,191
Total liabilities and stockholders’ equity	$	97,634	$	117,638

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

STRONGBRIDGE BIOPHARMA plc

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(unaudited)


	Three Months Ended					Six Months Ended
	June 30					June 30,
	2020			2019		2020		2019
Revenues:
Net product sales	$	7,752		$	6,073	$	14,415	$	10,406
Royalty revenue		8	��		6		19		16
Total revenues		7,760			6,079		14,434		10,422

Cost and expenses:
Cost of sales (excluding amortization of intangible asset)	$	393		$	1,022	$	1,362	$	1,835
Selling, general and administrative		9,638			12,182		20,041		24,282
Research and development		6,152			8,739		13,704		15,322
Amortization of intangible asset		1,255			1,255		2,511		2,511
Total cost and expenses		17,438			23,198		37,618		43,950
Operating loss		(9,678)			(17,119)		(23,184)		(33,528)
Other (expense) income, net:
Unrealized (loss) gain on fair value of warrants		(7,367)			8,697		(6,787)		6,877
Income from field services agreement		—			1,725		—		3,741
Expense from field services agreement		—			(1,758)		—		(3,987)
Interest expense		(253)			—		(253)		—
Other income, net		26			608		254		1,293
Total other (expense) income, net		(7,594)			9,272		(6,786)		7,924
Loss before income taxes		(17,272)			(7,847)		(29,970)		(25,604)
Income tax expense		—			(400)		—		(1,077)
Net loss	$	(17,272)		$	(8,247)		(29,970)		(26,681)
Other comprehensive income
Unrealized loss on marketable securities		(6)			—		(3)		—
Comprehensive loss	$	(17,278)		$	(8,247)	$	(29,973)	$	(26,681)

Net loss attributable to ordinary shareholders:
Basic	$	(17,272)		$	(8,247)	$	(29,970)	$	(26,681)
Diluted	$	(17,272)		$	(16,944)	$	(29,970)	$	(33,558)
Net loss per share attributable to ordinary shareholders:
Basic	$	(0.32)		$	(0.15)	$	(0.55)	$	(0.49)
Diluted	$	(0.32)		$	(0.30)	$	(0.55)	$	(0.60)
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders:
Basic		54,302,325			54,175,731		54,266,675		54,165,439
Diluted		54,302,325			55,781,078		54,266,675		56,262,936

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

STRONGBRIDGE BIOPHARMA plc

Consolidated Statement of Stockholders’ Equity

(In thousands, except share amounts)

(unaudited)



							Additional				Accumulated Other		Total
	Ordinary Shares			Deferred Shares			Paid-In		Accumulated		Comprehensive		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Gain		Equity
Balance—March 31, 2019	54,167,948	$	542	40,000	$	44	$	325,863	$	(229,466)		—	$	96,983
Net loss	—		—	—		—		—		(8,247)		—		(8,247)
Stock-based compensation	—		—	—		—		2,572		—		—		2,572
Exercise of stock options	4,113		*	—		—		12		—		—		12
Ordinary shares issued, net of shares withheld for employee taxes	14,207		*	—		—		(31)		—		—		(31)
Balance—June 30, 2019	54,186,268	$	542	40,000	$	44	$	328,416	$	(237,713)		—	$	91,289

Balance—December 31, 2018	54,122,074	$	541	40,000	$	44	$	323,402	$	(211,032)		—	$	112,955
Net loss	—		—	—		—		—		(26,681)		—		(26,681)
Stock-based compensation	—		—	—		—		4,895		—		—		4,895
Exercise of stock options	43,841		1	—		—		178		—		—		179
Ordinary shares issued, net of shares withheld for employee taxes	20,353		*	—		—		(59)		—		—		(59)
Balance—June 30, 2019	54,186,268	$	542	40,000	$	44	$	328,416	$	(237,713)		—	$	91,289

Balance—March 31, 2020	54,247,501	$	542	40,000	$	44	$	333,768	$	(273,181)		6	$	61,179
Net loss	—		—	—		—		—		(17,272)		—		(17,272)
Stock-based compensation	—		—	—		—		1,773		—		—		1,773
Issuance of warrants and beneficial conversion feature related to the Loan Agreement	—		—	—		—		2,457		—		—		2,457
Ordinary shares issued, net of shares withheld for employee taxes	108,456		2					(264)						(262)
Unrealized loss on marketable securities	—		—	—		—				—		(6)		(6)
Balance—June 30, 2020	54,355,957	$	544	40,000	$	44	$	337,734	$	(290,453)		—	$	47,869

Balance—December 31, 2019	54,205,852	$	542	40,000	$	44	$	332,085	$	(260,483)		3	$	72,191
Net loss	—		—	—		—		—		(29,970)		—		(29,970)
Stock-based compensation	—		—	—		—		3,524		—		—		3,524
Issuance of warrants and beneficial conversion feature related to the Loan Agreement	—		—	—		—		2,457		—		—		2,457
Ordinary shares issued, net of shares withheld for employee taxes	150,105		2	—		—		(332)		—		—		(330)
Unrealized loss on marketable securities			—	—		—		—		—		(3)		(3)
Balance—June 30, 2020	54,355,957	$	544	40,000	$	44	$	337,734	$	(290,453)		—	$	47,869

* Represents an amount less than $1.

Table of Contents

The accompanying notes are an integral part of these unaudited consolidated financial statements.

STRONGBRIDGE BIOPHARMA plc

Consolidated Statements of Cash Flow

(In thousands)

(unaudited)


	Six Months Ended
	June 30,
	2020		2019
Cash flows from operating activities:
Net loss	$	(29,970)	$	(26,681)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrant liability		6,787		(6,877)
Stock-based compensation		3,524		4,895
Amortization of intangible asset		2,511		2,511
Accretion of discounts on marketable securities		(53)		(71)
Depreciation		43		36
Changes in operating assets and liabilities:
Accounts receivable		(596)		(4,717)
Inventory		294		393
Prepaid expenses and other current assets		(757)		1,782
Other assets		314		(1,166)
Accounts payable		(1,374)		285
Accrued and other liabilities		(8,098)		(6,873)
Net cash used in operating activities		(27,375)		(36,483)
Cash flows from investing activities:
Purchases of property and equipment		—		(33)
Purchases of marketable securities		—		(27,939)
Maturities of marketable securities		21,122		—
Net cash provided by (used in) investing activities		21,122		(27,972)
Cash flows from financing activities:
Proceeds from long-term debt, net		9,460		—
Proceeds from exercise of stock options		—		180
Payments related to tax withholding for net-share settled equity awards		(330)		(59)
Net cash provided by financing activities		9,130		121
Net increase (decrease) in cash and cash equivalents		2,877		(64,334)
Cash and cash equivalents—beginning of period		57,032		122,490
Cash and cash equivalents—end of period	$	59,909	$	58,156
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	118	$	—
Income taxes other, net of refunds	$	531	$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

STRONGBRIDGE BIOPHARMA plc

Notes to Unaudited Consolidated Financial Statements

1. Organization

We are a global, commercial-stage biopharmaceutical company focused on the development and commercialization of therapies for rare diseases with significant unmet needs.

Our first commercial product is Keveyis (dichlorphenamide), the first and only treatment approved by the U.S. Food and Drug Administration (the “FDA”) for hyperkalemic, hypokalemic, and related variants of primary periodic paralysis (“PPP”), a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis.

We have 2 clinical-stage product candidates for rare endocrine diseases, Recorlev and veldoreotide. Recorlev (levoketoconazole) is a cortisol synthesis inhibitor currently being studied for the treatment of endogenous Cushing's syndrome. Veldoreotide is a next-generation somatostatin analog being investigated for potential applications in conditions amenable to somatostatin receptor activation, such as acromegaly. Both levoketoconazole and veldoreotide have received orphan designation from the FDA and the European Medicines Agency (“EMA”).

In January 2018, Strongbridge Ireland Limited, one of our wholly-owned subsidiaries, acquired the U.S. and Canadian rights to Macrilen (macimorelin), the first and only oral drug approved by the FDA for the diagnosis of patients with adult growth hormone deficiency. We launched Macrilen in the United States in July 2018. In December 2018, we sold Strongbridge Ireland Limited to Novo Nordisk Healthcare AG (“Novo”) for $145 million plus the right to receive tiered royalties on net sales of Macrilen through 2027. In addition, Strongbridge U.S. Inc., another of our wholly-owned subsidiaries, entered into an agreement with Novo Nordisk Inc. (“NNI”), a subsidiary of Novo, pursuant to which NNI funded the costs of 23 of our field-based employees to provide full-time ongoing services to NNI, including the promotion of Macrilen in the United States, for a period of three years. Novo also purchased 5.2 million of our ordinary shares at a purchase price of $7.00 per share. In December 2019, we reached an agreement with Novo to terminate the services agreement. We received a $6 million payment in connection with such termination and we no longer provide services to Novo.

Liquidity

We believe that our cash and cash equivalents of $59.9 million at June 30, 2020, will be sufficient to allow us to fund planned operations for at least 12 months beyond the issuance date of these unaudited consolidated financial statements.

We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. We plan to continue to fund our operations and capital funding needs through equity or debt financing along with revenues from Keveyis. There can be no assurances, however, that additional funding will be available on terms acceptable to us.

2. Summary of significant accounting policies and basis of presentation

Basis of presentation

These unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the operating results and financial position for the periods presented.

The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures in the consolidated

Table of Contents

financial statements. Actual results could differ from those estimates. Results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

These unaudited consolidated financial statements should be read in conjunction with the accounting policies and notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the U.S. Securities and Exchange Commission on February 28, 2020 (the “2019 Annual Report”). Our significant accounting policies are described in Note 2 of the notes to the audited consolidated financial statements included in our 2019 Annual Report. Since the date of those financial statements, there have been no changes to our significant accounting policies.

Reclassifications

The consolidated financial statements contain certain reclassifications within our consolidated statements of cash flow for the six months ended June 30, 2019 due to an immaterial incorrect classification of investments in marketable securities and the related impact on investing activities.

Leases

We account for leases in accordance with Accounting Standards Codification Topic 842, Leases (“ASC 842”). We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to us the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) we have the right to control the use of the identified asset.

Operating leases where we are the lessee are included in Right of use (“ROU”) assets and Accrued and other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how we determined (1) the discount rate we use to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Because our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for all of our leases includes the noncancellable period of the lease. Lease payments included in the measurement of the lease asset or liability are comprised of our fixed payments.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We monitor for events or changes in circumstances that require a reassessment of a lease. If a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

Table of Contents

We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all of our other leases.

Cash, cash equivalents and marketable securities

We consider all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively.

We occasionally invest our excess cash balances in marketable debt securities of highly rated financial institutions. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions, maturities and investment types. We classify marketable debt securities as available-for-sale and, accordingly, record such securities at fair value. We classify these securities as current assets as these investments are intended to be available to us for use in funding current operations. There were 0 marketable securities as of June 30, 2020.

Unrealized gains and losses on marketable debt securities are recorded as a separate component of Accumulated other comprehensive income (loss) included in stockholders’ equity.

Segment information

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in 1 operating segment.

Net loss per share

Basic net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted-average number of ordinary shares outstanding for the period, including any dilutive effect from outstanding stock options or other equity-based awards. Shares used in the diluted net loss per share calculations exclude anti-dilutive ordinary share equivalents, which currently consist of outstanding stock options, unvested restricted stock units (“RSUs”) and equity-classified warrants.

The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as of June 30, 2020 and 2019, as they would be anti-dilutive:


	June 30,
	2020		2019
Warrants		7,100,643		1,803,253
Stock options issued and outstanding		10,499,222		10,241,158
Unvested RSUs		1,090,300		964,850

Recent accounting pronouncements – not yet adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the

Table of Contents

current other-than-temporary impairment model. The standard is effective for smaller reporting companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. We do not expect the adoption of this standard to have a significant impact on our financial statements or internal controls.

3. Revenue recognition

Product sales, net

We sell Keveyis to 1 specialty pharmacy provider (the “Customer”), who is the exclusive distributor of Keveyis in the United States. The Customer subsequently resells Keveyis to patients, most of whom are covered by payors that may provide for government-mandated or privately negotiated rebates with respect to the purchase of Keveyis.

Revenues from sales of Keveyis are recognized when we satisfy a performance obligation by transferring control of the product to the Customer. Transfer of control occurs upon receipt of the product by the Customer. We expense incremental costs related to the set-up of contracts with the Customer when incurred, as these costs do not meet the criteria for capitalization.

Reserves for variable consideration

Revenues from sales of Keveyis are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that result from rebates, co-pay assistance and other allowances that are offered between us and the patients’ payors. There is 0 variable consideration reserve for returns as we do not accept returns of Keveyis. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than the Customer). Where appropriate, these estimates may take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. We reassess our estimates on an ongoing basis. If actual results in the future vary from our estimates, we will adjust our estimates. Any such adjustments would affect net product revenue and earnings in the period such variances become known.

Trade Discount: We provide the Customer with a discount that is explicitly stated in our contract and is recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, we receive sales order management, data and distribution services from the Customer. To the extent the services received are distinct from our sale of Keveyis to the Customer, these payments are classified in Selling, general and administrative expenses in our consolidated statement of operations and comprehensive loss.

Funded Co-pay Assistance Program: We contract with a third-party to manage the co-pay assistance program intended to provide financial assistance to qualified insured patients. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with Keveyis that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. These payments are consideration payable to the Customer and the related reserve is recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet.

Government Rebates: We are subject to discount obligations under state Medicaid programs and Medicare. We estimate our Medicaid and Medicare rebates for the estimated patient mix. These reserves are recorded in the same

Table of Contents

period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses on the consolidated balance sheet. For Medicaid, accruals are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Center for Medicaid and Medicare Services. Manufacturers of pharmaceutical products are responsible for 70% of the patient’s cost of branded prescription drugs related to the Medicare Part D Coverage Gap. In order to estimate the cost to us of this Medicare coverage gap responsibility, we estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for Keveyis that have been recognized as revenue, but remains in the Customer’s inventory at the end of each reporting period.

Temporary Supply and Patient Assistance Programs: We provide free Keveyis to uninsured patients who satisfy pre-established criteria for either the Temporary Supply Program or the Patient Assistance Program. Patients who meet the Temporary Supply Program eligibility criteria may receive a temporary supply of free Keveyis for no more than sixty days while there is a determination of the patient’s third-party insurance, prescription drug benefit or other third-party coverage for Keveyis. The Patient Assistance Program provides free Keveyis for up to twelve months to uninsured patients who satisfy pre-established criteria for financial need. We do not recognize any revenue related to these free products and the associated costs are classified in selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss.

4. Fair value measurement

We follow FASB accounting guidance on fair value measurements for financial assets and liabilities measured on a recurring basis. Because of their short-term nature, the amounts reported in the balance sheet for cash and accounts payable approximate fair value.

The guidance requires fair value measurements to maximize the use of “observable inputs.” The three-level hierarchy of inputs to measure fair value are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Because of their short-term nature, the amounts reported in the balance sheet for cash and accounts payable approximate fair value.

Level 2: Significant observable inputs other than Level 1 prices such as quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The fair values of the outstanding warrants were measured using the Black-Scholes option-pricing model. Inputs used to determine estimated fair value of the warrant liabilities include the estimated fair value of the underlying stock at the valuation date, the estimated term of the warrants, risk-free interest rates, and the expected volatility of the underlying stock. The significant unobservable inputs used in the fair value measurement of the warrant liabilities were the volatility rate and the estimated term of the warrants. Generally, increases and decreases in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.

We did not have any transfers between the different levels.

Table of Contents

The following table presents our assets and liabilities that are measured at fair value on a recurring basis for the periods presented (in thousands):


	As of June 30, 2020
	Level I		Level II		Level III		Total
Cash equivalents		58,966		—		—		58,966
Marketable securities		—		—		—		—
Total assets	$	58,966	$	—	$	—	$	58,966
Warrant liability		—		—		10,914		10,914
Total liabilities	$	—	$	—	$	10,914	$	10,914


	As of December 31, 2019
	Level I		Level II		Level III		Total
Cash equivalents		56,544		—		—		56,544
Marketable securities		—		21,072		—		21,072
Total assets	$	56,544	$	21,072	$	—	$	77,616
Warrant liability		—		—		4,127		4,127
Total liabilities	$	—	$	—	$	4,127	$	4,127

The following table presents a reconciliation of our level 3 warrant liability (in thousands):


		As of June 30, 2020
Balance as of December 31, 2019	$	4,127
Unrealized loss on fair value of warrants for six months ended June 30, 2020		6,787
Balance as of June 30, 2020	$	10,914

5. Intangible asset and goodwill

The following represents the balance of our intangible asset and goodwill as follows (in thousands):


	As of June 30, 2020
	Beginning of Period		Amortization		End of Period
Keveyis	$	25,110	$	(2,511)	$	22,599
Goodwill		7,256		—		7,256
Total	$	32,366	$	(2,511)	$	29,855

Our finite-lived intangible asset consists of acquired developed product rights obtained from our acquisition of Keveyis (dichlorphenamide) from a subsidiary of Taro Pharmaceutical Industries Ltd. (“Taro”).

Pursuant to the terms of the Asset Purchase Agreement and Supply Agreement that we entered into with Taro in December 2016, we paid Taro an upfront payment in 2 installments of $1 million in December 2016 and $7.5 million in March 2017, and will pay an aggregate of $7.5 million in potential milestones upon the achievement of certain product sales targets. Taro has agreed to continue to manufacture Keveyis for us under an exclusive supply agreement through the orphan exclusivity period. We are obligated to purchase certain annual minimum amounts of product totaling approximately $29 million over a six-year period. We have concluded that the supply price payable by us exceeds fair value and, therefore, have used a discounted cash flow method with a probability assumption to value the payments in excess of fair value at $29.3 million, for which we have recorded an intangible asset and corresponding liability. This liability is being reduced as we purchase inventory over the term of the Supply Agreement that we entered into with Taro. In addition, we incurred transaction costs of $2.4 million. The transaction resulted in the recording of an intangible asset of $40.2 million. This asset is being amortized over an eight-year period using the straight-line method.

We recorded amortization expense of $1.3 million and $2.5 million for the three and six months ended June 30, 2020 and 2019, respectively.

Table of Contents

6. Long-term debt

On May 19, 2020 (the “Closing Date”), Strongbridge Biopharma plc (“Strongbridge”), along with Strongbridge U.S. Inc., Cortendo AB (publ) and Strongbridge Dublin Limited, each a subsidiary of Strongbridge (the “Subsidiaries,” and together with Strongbridge, the “Company”), entered into a $30 million Term Loan Agreement (the “Loan Agreement”) with Avenue Venture Opportunities Fund L.P. (“Avenue”), as administrative agent and collateral agent, and the lenders named therein and from time to time a party thereto (the “Lenders”). Pursuant to the terms of the Loan Agreement, Strongbridge U.S. Inc. (the “Borrower”) borrowed $10 million (the “Initial Loan”) from the Lenders at closing.

The Borrower may borrow up to 2 additional tranches of $10 million under the Loan Agreement. The first $10 million tranche (the “Second Loan”) is available between October 1, 2020 and December 31, 2020 if Strongbridge achieves positive top-line data for RECORLEV in its Phase 3 LOGICS clinical trial. The second $10 million tranche (the “Third Loan” and, together with the Initial Loan and the Second Loan, the “Loans”) is available between October 1, 2021 and March 31, 2022 if Strongbridge achieves FDA approval of RECORLEV and subject to Avenue’s investment committee approval.

The Loan Agreement has a four-year term, 0 minimum revenue or cash balance financial covenants and an interest-only period of up to 36 months assuming the Company achieves positive top-line data for RECORLEV in its Phase 3 LOGICS clinical trial and the Company receives FDA approval of RECORLEV. The Borrower paid a commitment fee of $200,000 (1% of the amounts of the Initial Loan and the Second Loan).

Amounts borrowed under the Loan Agreement accrue interest at a floating rate per annum (based on a year of 365 days) equal to the sum of (a) the greater of (x) the Prime Rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, and (y) 3.25%, plus (b) 6.75%. Accrued interest is payable in advance on the first day of each month and on the maturity date; provided however that no principal payments are required for the first 12 months (which the period is extended for up to 36 months subject to the satisfaction of certain conditions under the Loan Agreement). The Borrower is also required to pay the Lenders a final payment fee upon repayment or prepayment of the Loans in accordance with the terms and conditions of the Loan Agreement. The interest rate as of June 30, 2020 was 10%.

The Borrower may prepay all or a portion of the outstanding principal amount of any Loans outstanding under the Loan Agreement at any time upon prior notice to the Lenders subject to a prepayment premium (which reduces after the first year) and the payment of the pro rata portion of the final payment fee (to the extent not already paid) based on the amount of Loans being prepaid. In certain circumstances, including a change of control and certain asset sales or licensing transactions, the Borrower may be required to prepay all or a portion of the Loans outstanding, and, to the extent required under the terms of the Loan Agreement, the applicable prepayment premium and final payment fee.

In connection with the execution of the Loan Agreement, Strongbridge issued warrants to the Lenders to purchase an aggregate of 267,390 ordinary shares at an exercise price (the “Exercise Price”) equal to the lower of (i) $1.87 (which is equal to the five-day volume weighted average price as of the trading day immediately prior to execution of the financing agreement) or (ii) the effective price of any bona fide equity financing prior to December 31, 2020 (subject to certain adjustments described in the Warrant). The Warrant will be exercisable, in full or in part, at any time prior to five years following the issue date and contains customary provisions for assumption or exchange upon a change of control or a sale of all or substantially all of the assets of the Company. We have accounted for these warrants as equity, and the fair value is recorded into Additional paid-in capital.

Avenue has the right to convert up to $3 million of the aggregate principal amount of any loans outstanding under the Loan Agreement into Strongbridge ordinary shares at a price per share of the lower of (a) $2.24, or (b) 20% above the effective price of any bona fide equity financing of Strongbridge prior to December 31, 2020, subject to the terms and conditions described in the Loan Agreement. We have accounted for this beneficial conversion feature, and the fair value is recorded into Additional paid-in capital.

Table of Contents

Future principal payments due under the Loan Agreement, if the interest payment only period is not extended are as follows (in thousands):


	Principal
	Payments

2020		—
2021		1,944
2022		3,333
2023		3,333
2024		1,390
Total future payments	$	10,000

7. Accrued and other current liabilities

Accrued and other current liabilities consist of the following (in thousands):


	June 30,		December 31,
	2020		2019
Consulting and professional fees	$	4,934	$	4,335
Supply agreement - current portion		4,391		2,773
Accrued sales allowances		2,350		2,990
Employee compensation		2,511		4,452
Accrued taxes		1,361		1,892
Severance		580		2,968
Lease liability - current portion		394		374
Accrued royalties		301		806
Other		541		372
Total accrued and other current liabilities	$	17,363	$	20,962

8. Commitments and contingencies

(a) Commitments to Taro Pharmaceuticals Industries Ltd.

In December 2016, we acquired the U.S. marketing rights to Keveyis (dichlorphenamide) from Taro. Under the terms of the Asset Purchase Agreement, we paid Taro an upfront payment in 2 installments of $1 million in December 2016 and $7.5 million in March 2017, and will pay an aggregate of $7.5 million in potential milestones upon the achievement of certain product sales targets. Taro has agreed to continue to manufacture Keveyis for us under an exclusive supply agreement through the orphan exclusivity period. We are obligated to purchase certain annual minimum amounts of product totaling approximately $29 million over a six-year period. As of June 30, 2020, our remaining obligation was $19.0 million. Our Supply Agreement with Taro may extend beyond the orphan exclusivity period unless terminated by either party pursuant to the terms of the agreement. If terminated by Taro at the conclusion of the orphan exclusivity period, we have the right to manufacture the product on our own or have the product manufactured by a third party on our behalf. We are also required to reimburse Taro for its royalty obligation resulting from its sale of Keveyis to us.

(b) Indemnifications

In the ordinary course of business and in connection with the sale of assets and businesses and other transactions, we often indemnify our counterparties against certain liabilities that may arise in connection with the transaction or that are related to events and activities prior to or following a transaction, such as breaches of contracts, unfavorable tax consequences and employee liabilities. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we may be required to reimburse the loss and such amount could be material to our consolidated financial statements. Where appropriate, the obligation for such indemnifications is recorded as a liability. Because the amount of these types of indemnifications generally is not specifically stated, the overall

Table of Contents

maximum amount of the obligation under such indemnifications cannot be reasonably estimated. However, we believe that the likelihood of a material liability being triggered under these indemnification obligations is not probable at this time.

9. Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts and tax bases of assets and liabilities and operating loss carryforwards and other attributes using enacted rates expected to be in effect when those differences reverse. Valuation allowances are provided against deferred tax assets that are not more likely than not to be realized.

We assess our ability to realize deferred tax assets. Changes in future earnings projections, among other factors, may cause us to adjust our valuation allowance on deferred tax assets. Any such adjustments would impact our income tax expense in the period in which it is determined that these factors have changed.

We did 0t incur income any tax expense for the three and six months ended June 30, 2020.

CARES Act

The CARES Act allows companies to defer payments of employer Social Security payroll taxes that are otherwise owed for wage payments made after March 27, 2020 through December 31, 2020. Fifty percent of the taxes deferred are required to be paid by December 31, 2021 with the remaining fifty percent required to be paid by December 31, 2022. As of June 30, 2020, we have accrued $100,000 of Social Security payroll taxes that will be deferred under the CARES Act. We expect to continue to defer payroll taxes through the end of the year and pay them as described above.

10. Warrants

Warrants

Our outstanding warrants as of June 30, 2020 are as follows:


								Warrants
								Outstanding
		Exercise			Expiration	Warrants	Warrants	June 30,
	Classification	Price			Date	Issued	Exercised	2020
Warrants in connection with private equity placement	Liability	$	2.50		6/28/2022	7,000,000	(1,970,000)	5,030,000
Warrants in connection with Horizon and Oxford loan agreement	Equity	$	2.45		12/28/2026	428,571	(267,857)	160,714
Warrants in connection with CRG loan agreement	Equity	$	7.37	��	7/14/2024	394,289	—	394,289
Warrants in connection with CRG loan amendment in January 2018	Equity	$	10.00		1/16/2025	1,248,250	—	1,248,250
Warrants in connection with Avenue Capital loan agreement	Equity	$	1.87	⁽¹⁾	5/19/2025	267,390	—	267,390
						9,338,500		7,100,643

(1)	Exercise price is lower of (i) $1.87 per share or (ii) the effective price of any bona fide equity financing prior to December 31, 2020.

11. Stock-based compensation

Our board of directors has adopted the 2017 Inducement Plan (the “Inducement Plan”). The Inducement Plan provides for the grant of equity-based awards to new employees. The purpose of the Inducement Plan is to attract valued

Table of Contents

employees by offering them a greater stake in our success and a closer identity with us, and to encourage ownership of our ordinary shares by such employees. The Inducement Plan became effective on February 23, 2017. As of June 30, 2020, 1,373,903 shares are available for issuance pursuant to the Inducement Plan.

Our board of directors has adopted, and our shareholders have approved, the 2015 Equity Compensation Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options to our employees and any parent or subsidiary corporation’s employees, and for the grant of nonstatutory stock options, stock awards, and RSUs to our employees, directors and consultants and our parent or subsidiary corporations’ employees and consultants. The 2015 Plan became effective on September 3, 2015. As of June 30, 2020, 332,429 shares are available for issuance pursuant to the 2015 Plan.

Our board of directors has adopted, and our shareholders have approved, the Non-Employee Director Equity Compensation Plan (the “Non-Employee Director Plan”). The Non-Employee Director Plan provides for the grant of nonstatutory stock options, stock awards, and RSUs to our non-employee directors. The Non-Employee Director Plan became effective on September 3, 2015. As of June 30, 2020, 71,029 shares are available for issuance pursuant to the Non-Employee Director Plan.

A summary of our outstanding stock options as of June 30, 2020 is as follows:


	Options Outstanding
				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
	Number of	Exercise		Term	Aggregate
	Shares	Price		(Years)	Intrinsic Value
					(in thousands)
Outstanding—January 1, 2020	9,192,684	$	6.58	5.96	$	164
Granted	2,480,500	$	2.93
Forfeited and cancelled	(1,173,962)	$	10.49
Exercised	—	$	—
Outstanding—June 30, 2020	10,499,222	$	5.28	6.88	$	4,650
Vested and exercisable—June 30, 2020	5,648,268	$	6.67	5.33	$	1,400

Stock-based compensation expense

We recognized stock-based compensation expense for employees and directors for stock options and RSUs as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Selling, general and administrative	$	1,280	$	1,981	$	2,550	$	3,792
Research and development		493		591		974		1,103
Total stock-based compensation	$	1,773	$	2,572	$	3,524	$	4,895

As of June 30, 2020, the total unrecognized compensation expense related to unvested stock options is $11.2 million, which we expect to recognize over an estimated weighted-average period of 2.70 years.

In determining the estimated fair value of our service-based awards, we use the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Table of Contents

The fair value of our service-based awards that were granted during the six months period ending June 30, 2020 and 2019 was estimated with the following assumptions:


	Six Months Ended
	June 30,
	2020	2019
Expected term (in years)	6.08	6.10
Risk-free interest rate	.45%-1.48%	1.98%-2.61%
Expected volatility	78.15%-80.74%	78.70%-85%
Dividend rate	—%	—%

Restricted stock units

We grant RSUs to employees and to members of our board of directors. RSUs that are granted to employees vest two years from the date of issuance, provided that the employee is employed by us on such vesting date. RSUs that are granted to directors, vest on the one-year anniversary of the grant date, provided that the director continues to serve as a member of the board of directors continuously from the grant date through such one-year anniversary. All RSUs will fully vest upon a change of control of our company. If and when the RSUs vest, we will issue 1 ordinary share for each whole RSU that has vested, subject to satisfaction of the employee’s or director’s tax withholding obligations. The RSUs will cease to be outstanding upon the issuance of ordinary shares upon vesting. We recorded expense related to RSUs, which is included in the stock-based compensation table above, of $498,000 and $533,000 for the three months ended June 30, 2020 and 2019, respectively, and $1 million and $771,000 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, the total unrecognized compensation expense related to unvested RSUs is $2.0 million, which we expect to recognize over an estimated weighted-average period of 1.29 years.

A summary of our unvested RSUs as of June 30, 2020 is as follows:


		Number of
		Shares
Outstanding—January 1, 2020		791,350
Granted		595,150
Forfeited		(35,200)
Vested		(261,000)
Unvested—June 30, 2020		1,090,300

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on 10-Q (this “Quarterly Report”) and the audited financial statements and related notes for the year ended December 31, 2019 and related Management’s Discussion and Analysis of Financial Condition and Results of Operations that are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 28, 2020. As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,” or “Strongbridge” refer to Strongbridge Biopharma plc.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, prospective products, size of market or patient population, plans, objectives of management, expected market growth and the anticipated effects of the coronavirus (COVID-19) pandemic on our business, operating results and financial condition are forward-looking

Table of Contents

statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and healthcare, regulatory and scientific developments and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2019 Annual Report on Form 10-K and Part II, Item 1A of this Quarterly Report, in each case under the heading “Risk Factors.” In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods.

Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report except as required by law. You should also read carefully the factors described in the “Risk Factors” section of our 2019 Annual Report and this Quarterly Report to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

Overview

We are a global, commercial-stage biopharmaceutical company focused on the development and commercialization of therapies for rare diseases with significant unmet needs.

We have two clinical-stage product candidates for rare endocrine diseases, Recorlev and veldoreotide. Recorlev (levoketoconazole) is a cortisol synthesis inhibitor currently being studied for the treatment of endogenous Cushing's syndrome. Veldoreotide is a next-generation somatostatin analog being investigated for potential applications in conditions amenable to somatostatin receptor activation. Both levoketoconazole and veldoreotide have received orphan designation from the FDA and the European Medicines Agency (“EMA”).

Table of Contents

Recent Developments

On July 2, 2020, our board of directors appointed John H. Johnson to the position of Chief Executive Officer, effective immediately.

In June 2020, we conducted a pre-NDA meeting with the Division of General Endocrinology (DGE) of the FDA to review plans relating to our proposed NDA submission for Recorlev, with an anticipated submission date approximately 6 months following disclosure of topline results from the LOGICS study. Based on feedback received from DGE during this meeting, we believe that the LOGICS and SONICS study results together will provide a sufficient clinical-studies basis for a substantive review of an NDA and that it will be a review issue as to whether the data will be sufficient to support approval of the NDA. There can be no assurance that DGE will determine that the totality of data included in the NDA, including the results from our SONICS and LOGICS studies, will be sufficient to warrant approval of the NDA for Recorlev.

COVID-19

COVID-19 emerged in Asia at the end of calendar year 2019. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption in the financial markets.

While the COVID-19 pandemic did not have a material impact on our business, financial condition or results of operations for the six months ended June 30, 2020, we have experienced business disruptions as a result of the outbreak. For example, most of our corporate employees are currently working remotely from home, we have suspended all commercial air and train travel for business, and any other employee travel is done in accordance with the state and local guidelines. In addition, our field teams have had limited access to visit physicians.

We continue to monitor the impacts of COVID-19 on the global economy and on our business operations. However, at this time, it is difficult to predict how long the potential operational impacts of COVID-19 will remain in effect or to what degree they will impact our operations and financial results. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition, as well as our ability to execute our business strategies and initiatives in their respective expected time frames.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Product Sales, net

Revenues from sales of our products are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and that result from rebates, co-pay assistance and other allowances that are offered by us and the patients’ payors. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a current liability (if the amount is payable to a party other than our customer). Where appropriate, these estimates may take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. For a complete discussion of accounting for net product revenue, see Note 3, "Revenue recognition" to our consolidated financial statements.

Table of Contents

Cost of Sales

Cost of sales includes third-party acquisition costs, third-party warehousing and product distribution charges.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include personnel costs, costs for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits, travel and stock-based compensation. Outside professional services consist of legal, accounting and audit services, commercial evaluation and strategy services, sales, market access, marketing, investor relations, public relations, recruiting and other consulting services.

Research and Development Expenses

We expense all research and development costs as incurred. Our research and development expenses consist primarily of costs incurred in connection with the development of our product candidates, including:

●

personnel-related costs, such as salaries, bonuses, benefits, travel and other related expenses, including stock-based compensation;

●

expenses incurred under our agreements with contract research organizations (CROs), clinical sites, contract laboratories, medical institutions and consultants that plan and conduct our preclinical studies and clinical trials. We recognize costs for each grant project, preclinical study or clinical trial that we conduct based on our evaluation of the progress to completion, including the use of information and data provided to us by our external research and development vendors and clinical sites;

●

costs associated with regulatory filings; and

●

costs of acquiring preclinical study and clinical trial materials, and costs associated with formulation, process development and statistical analysis.

We do not allocate personnel-related research and development costs, including stock-based compensation or other indirect costs, to specific programs, as they are deployed across multiple projects under development.

Amortization of Intangible Asset

Amortization of intangible asset relates to the amortization of our product rights to Keveyis. This intangible asset is being amortized over an eight-year period using the straight-line method.

Other Income (Expense), Net

Other income (expense), net, consists of unrealized loss or gain on the remeasurement of the fair value of the warrant liability, interest income generated from our cash, cash equivalents and marketable securities, foreign exchange gains and losses and gains and losses on investments. In 2019, we recorded income and expenses relating to our service agreement with NNI to fund the costs of 23 of our field-based employees who provided full-time ongoing services to NNI, including the promotion of Macrilen in the United States.

Critical Accounting Policies and Significant Judgments and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Table of Contents

We believe there have been no significant changes in our critical accounting policies and significant judgments and estimates as discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2019 Annual Report.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2020 and 2019.

The following table sets forth our results of operations for the three and six months ended June 30, 2020 and 2019.


	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2020		2019		$		2020		2019		$

	(in thousands)						(in thousands)
Revenues:
Net product sales	$	7,752	$	6,073	$	1,679	$	14,415	$	10,406	$	4,009
Royalty revenues		8		6		2		19		16		3
Total revenues		7,760		6,079		1,681		14,434		10,422		4,012

Cost and operating expenses:
Cost of sales (excluding amortization of intangible asset)	$	393	$	1,022	$	(629)	$	1,362	$	1,835	$	(473)
Selling, general and administrative		9,638		12,182		(2,544)		20,041		24,282		(4,241)
Research and development		6,152		8,739		(2,587)		13,704		15,322		(1,618)
Amortization of intangible asset		1,255		1,255		—		2,511		2,511		—
Total cost and expenses		17,438		23,198		(5,760)		37,618		43,950		(6,332)
Operating loss		(9,678)		(17,119)		7,441		(23,184)		(33,528)		10,344
Other (expense) income, net		(7,594)		9,272		(16,866)		(6,786)		7,924		(14,710)
Loss before income taxes		(17,272)		(7,847)		(9,425)		(29,970)		(25,604)		(4,366)
Income tax expense		—		(400)		400		—		(1,077)		1,077
Net loss	$	(17,272)	$	(8,247)	$	(9,025)	$	(29,970)	$	(26,681)	$	(3,289)

Revenues

Net product sales were $7.8 million for the three months ended June 30, 2020, an increase of $1.7 million compared to the three months ended June 30, 2019. Product sales from Keveyis increased primarily due to the an increase the number of patients on Keveyis and an increase in price. Cost of sales decreased due to changes in the assumptions underlying the allocation between the purchase price of our inventory and the supply agreement.

Net product sales were $14.4 million for the six months ended June 30, 2020, an increase of $4.0 million compared to the six months ended June 30, 2019. Product sales from Keveyis increased primarily due to an increase in the number of patients on Keveyis and an increase in price. Cost of sales decreased due to changes in the assumptions underlying the allocation between the purchase price of our inventory and the supply agreement..

Table of Contents

Selling, General and Administrative Expenses

The following table summarizes our selling, general and administrative expenses during the three and six months ended June 30, 2020 and 2019:


	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2020		2019		$		2020		2019		$

	(in thousands)						(in thousands)
Compensation and other personnel costs	$	3,669	$	6,133	$	(2,464)	$	7,448	$	11,996	$	(4,548)
Outside professional and consulting services		4,516		3,841		675		9,701		8,001		1,700
Stock-based compensation expense		1,280		1,981		(701)		2,550		3,792		(1,242)
Facility costs		173		227		(54)		342		493		(151)
Total selling, general and administrative expenses	$	9,638	$	12,182	$	(2,544)	$	20,041	$	24,282	$	(4,241)

Selling, general and administrative expenses were $9.6 million for the three months ended June 30, 2020, a decrease of $2.5 million compared to the three months ended June 30, 2019, mostly due to decreases in compensation and other personnel costs due to reduced headcount in 2020 and reduced spending due to COVID-19.

Selling, general and administrative expenses were $20.0 million for the six months ended June 30, 2020, a decrease of $4.2 million compared to the six months ended June 30, 2019, mostly due to decreases in compensation and other personnel costs due to reduced headcount in 2020 and reduced spending due to COVID-19.

Research and Development Expenses

The following table summarizes our research and development expenses during the three and six months ended June 30, 2020 and 2019:


	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2020		2019		$		2020		2019		$

	(in thousands)						(in thousands)
Product development and supporting activities	$	4,195	$	6,652	$	(2,457)	$	9,732	$	11,387	$	(1,655)
Compensation and other personnel costs		1,464		1,495		(31)		2,998		2,831		167
Stock-based compensation expense		493		592		(99)		974		1,104		(130)
Total research and development expenses	$	6,152	$	8,739	$	(2,587)	$	13,704	$	15,322	$	(1,618)

Research and development expenses were $6.2 million for the three months ended June 30, 2020, a decrease of $2.6 million compared to the three months ended June 30, 2019. The decrease was due to decreases in product development and supporting activities resulting from the completion of our SONICS trial in 2019 and higher costs related to our LOGICS trial in 2019, offset by an increase in costs from our OPTICS trial in 2020.

Research and development expenses were $13.7 million for the six months ended June 30, 2020, a decrease of $1.6 million compared to the six months ended June 30, 2019. The decrease was due to decreases in product development and supporting activities resulting from the completion of our SONICS trial in 2019 and higher costs related to our LOGICS trial in 2019, offset by an increase in costs from our OPTICS trial in 2020.

Table of Contents

Amortization of Intangible Asset

Amortization of intangible asset was $1.3 million and $2.5 million for the three and six months ended June 30, 2020 and 2019, respectively.

Other (Expense) Income, Net

The following table summarizes our other income, net, during the three months ended March 31, 2020 and 2019:


	Three Months Ended						Six Months Ended
	June 30,				Change		June 30,				Change
	2020		2019		$		2020		2019		$

	(in thousands)						(in thousands)
Unrealized (loss) gain on fair value of warrants	$	(7,367)	$	8,697	$	(16,064)	$	(6,787)	$	6,877	$	(13,664)
Income from field services agreement		—		1,725		(1,725)		—		3,741		(3,741)
Expense from field services agreement		—		(1,758)		1,758		—		(3,987)		3,987
Interest expense		(253)		—		(253)		(253)		—		(253)
Other income, net		26		608		(582)		254		1,293		(1,039)
Total other (expense) income, net	$	(7,594)	$	9,272	$	(16,866)	$	(6,786)	$	7,924	$	(14,710)

Total other (expense) income, net, decreased by $16.9 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. The decrease was largely due to a net $16.1 million change in the revaluation of the fair value of our warrant liability for the three months ended June 30, 2020. The change in the warrant liability is primarily due to increases in our stock price.

Total other (expense) income, net, decreased by $14.7 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The decrease was largely due to a net $13.7 million change in the revaluation of the fair value of our warrant liability for the six months ended June 30, 2020. The change in the warrant liability is primarily due to increases in our stock price.

Income Tax

We did not incur income any tax expense for the three and six months ended June 30, 2020.

Cash Flows

Comparison for the Six Months Ended June 30, 2020 and 2019:


	Six Months Ended
	June 30
	2020		2019

	(in thousands)
Net cash (used in) provided by:
Operating activities	$	(27,376)	$	(36,483)
Investing activities		21,122		(27,972)
Financing activities		9,131		121
Net increase (decrease) in cash and cash equivalents	$	2,877	$	(64,334)

Operating Activities

Net cash used in operating activities was $27.4 million for the six months ended June 30, 2020 compared to $36.5 million for the six months ended June 30, 2019. The decrease in net cash used in operating activities resulted from an increase in total revenues of $4.0 million and reduced expenditures in our commercial activities for Keveyis.

Table of Contents

Investing Activities

The increase in net cash provided by investing activities resulted from the maturities of our marketable securities.

Financing Activities

The increase in net cash provided by financing activities was due to the proceeds received under our Term Loan Agreement with Avenue Venture Opportunities Fund L.P.

Liquidity and Capital Resources

We are continuously and critically reviewing our liquidity and anticipated capital requirements in light of our clinical trial activities and the significant uncertainty created by the COVID-19 global pandemic.

On May 19, 2020, we and our subsidiaries, Strongbridge U.S. Inc., Cortendo AB (publ) and Strongbridge Dublin Limited, entered into a $30 million Term Loan Agreement (the “Loan Agreement”) with Avenue Venture Opportunities Fund L.P. (“Avenue”), as administrative agent and collateral agent, and the lenders named therein and from time to time a party thereto (the “Lenders”). Pursuant to the terms of the Loan Agreement, Strongbridge U.S. Inc. (the “Borrower”) borrowed $10.0 million (the “Initial Loan”) from the Lenders at closing.

The Borrower may borrow up to two additional tranches of $10.0 million under the Loan Agreement. The first $10 million tranche is available between October 1, 2020 and December 31, 2020 if we achieve positive top-line data for RECORLEV in our Phase 3 LOGICS clinical trial. The second $10 million tranche is available between October 1, 2021 and March 31, 2022 if we achieve FDA approval of RECORLEV and subject to Avenue’s investment committee approval. See Note 6, "Long-term debt" to our consolidated financial statements for additional information regarding the Loan Agreement.

We believe that our cash and cash equivalents of $59.9 million at June 30, 2020 will be sufficient to allow us to fund planned operations for at least 12 months beyond the issuance date of these unaudited consolidated financial statements.

Cash used to fund operating expenses is affected by the timing of when we make payments to our vendors, as reflected in the change in our outstanding accounts payable and accrued expenses set forth in the consolidated financial statements, included in this Quarterly Report.

Our future funding requirements will depend on many factors, including the following:

●

the amount of revenue that we receive from sales of Keveyis;

●

the cost and timing of establishing sales, marketing, distribution and administrative capabilities;

●

the scope, rate of progress, results and cost of our clinical trials testing and other related activities for Recorlev and veldoreotide and our ability to prepare and file our NDA submissions on a timely basis and receive approval;

●

the number and characteristics of product candidates that we pursue, including any additional product candidates we may in-license or acquire;

●

the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

Table of Contents

●

the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates;

●

the cost, timing and outcomes of regulatory approvals, including product labeling;

●

adequate reimbursement from payors for Recorlev and Keveyis on a timely basis;

●

the terms and timing of any collaborative, licensing and other arrangements that we may establish, including any required milestone and royalty payments thereunder;

●

the emergence of competing technologies and their achieving commercial success before we do or other adverse market developments; and

●

any extended impact of COVID-19.

Off-Balance Sheet Arrangements

We do not have variable interests in variable interest entities or any off-balance sheet arrangements.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Except for the broad effects of COVID-19 including its negative impact on the global economy and major financial markets, there have been no material changes to our market risk exposures since December 31, 2019. In addition, as described in “Item 1A. Risk Factors,” there may be implications for our business with regard to the COVID-19 pandemic.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2020, the end of the period covered by this Quarterly Report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of June 30, 2020 were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Table of Contents

Changes in Internal Control over Financial Reporting

In response to the COVID-19 pandemic, most of our corporate employees, including all those involved in the operation of our internal controls over financial report, have been working remotely since mid-March 2020. Despite this change, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are continuously monitoring and assessing the impact of COVID-19 on our internal controls to minimize any impact it may have on their design and operating effectiveness.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is not currently involved in any legal matters arising in the normal course of business. From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters.

ITEM 1A. Risk Factors

The risks described in Item 1A. Risk Factors of our 2019 Annual Report could materially and adversely affect our business, financial condition and results of operations. The risk factors discussed in our 2019 Annual Report do not identify all risks that we face because our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. The following is an update to our risk factors.

The current outbreak of the novel coronavirus, or COVID-19, or the future outbreak of any other highly infectious or contagious diseases, could materially and adversely affect our results of operations, financial condition and cash flows. Further, the spread of the COVID-19 outbreak has caused severe disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration.

In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread across the world, including every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19.

The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in the financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel, among other protective measures. While the COVID-19 pandemic has not had a material impact on our business operations to date, we have experienced business disruptions as a result of the outbreak and expect that the continued spread of COVID-19 could materially and adversely impact our operations due to, among other factors:

●

a general decline in business activity,

●

the destabilization of the markets and negative impacts on the healthcare system globally could negatively impact our ability to market and sell Keveyis, including through the disruption of health care activities in general, the inability of our sales team to contact and/or visit doctors in person, patients’ interest in starting or

Table of Contents

staying on drugs, patients’ ability to obtain or maintain insurance coverage for Keveyis and our ability to support patients that presently use Keveyis;

●

difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deteriorations in credit and financing conditions which could affect our access to capital necessary to fund business operations;

●

the potential negative impact on the health of our employees, especially if a significant number of them or any of their family members are impacted or if any of our senior leaders are impacted for an extended period of time;

●

the potential negative impact on our ability to monitor the investigative sites participating in our LOGICs study in person or even remotely, which could result in a deviation from pre-pandemic protocols and/or site monitoring and data management plans, and delays in our ability to perform data-related tasks dependent on communications with personnel at the investigative sites, such as resolution of open data queries, the cumulative effects of which could lead to delayed or missed identification of non-compliance with good clinical practice (GCP), and/or unrecognized data errors.

●

potential delays in the preparation and submission of applications for regulatory approval of our products, as well as potential delays in FDA’s ability to review applications in a timely manner consistent with past practices;

●

the potential negative impact on our ability to manufacture and distribute our products, including as a result of disruptions to the businesses of third parties that manufacture and distribute our products;

●

potential difficulty in adequately overseeing and/or evaluating the manufacturing process at the facilities that will manufacture future commercial supplies of Recorlev, if approved;

●

a deterioration in our ability to ensure business continuity during a disruption.

We continue to monitor the impacts of COVID-19 on the global economy and on our business operations. However, at this time, it is difficult to predict how long the potential operational impacts of COVID-19 will remain in effect or to what degree they will impact our operations and financial results in the future. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition, as well as our ability to execute our business strategies and initiatives in their respective expected time frames.

The regulatory approval process of the FDA, EMA or any comparable foreign regulatory agency may be lengthy,

time consuming and unpredictable.

We cannot be certain that any of our product candidates will be successful in clinical trials or receive regulatory approval. The FDA, EMA and other comparable foreign regulatory agencies have substantial discretion in the approval process and in determining when or whether regulatory approval will be obtained for any of our product candidates. Even if we believe the data collected from clinical trials of our product candidates are promising, such data may not be sufficient to support approval by the FDA, EMA or any comparable foreign regulatory agency. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval for the product candidates.

Furthermore, while certain of our employees have prior experience with submitting marketing applications to the FDA, EMA and comparable foreign regulatory agencies, we, as a company, have not submitted such applications for our product candidates. Applications for any of our product candidates could fail to receive regulatory approval for many reasons, including, but not limited to, the following:

●

the FDA, EMA or any comparable foreign regulatory agency may disagree with the design or implementation of our clinical trials or our interpretation of data from nonclinical trials or clinical trials;

Table of Contents

●

the population studied in the clinical program may not be sufficiently broad or representative to assure safety in the full population for which we seek approval, including reliance on foreign clinical data;

●

the data collected from clinical trials of our product candidates may not be sufficient to support a finding that has statistical significance or clinical meaningfulness or support the submission of an NDA or other submission, or to obtain regulatory approval in the United States or elsewhere;

●

we may be unable to demonstrate to the FDA, EMA or any comparable foreign regulatory agency that a product candidate’s risk-benefit ratio for its proposed indication is acceptable;

●

the FDA, EMA or any comparable foreign regulatory agency may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

●

the approval policies or regulations of the FDA, EMA or any comparable foreign regulatory agency may significantly change in a manner rendering our clinical data insufficient for approval.

In communications we had with the FDA, they recommended use of a concurrent control group in our SONICS Phase 3 clinical trial. However, SONICS utilizes an open-label, single-arm design because use of a placebo control in a parallel-arm monotherapy design was considered unethical or infeasible to enroll, depending on the specific country or clinical trial site under consideration. Studies lacking an active control group are more likely to be subject to unanticipated variability in study results that can potentially lead to flawed conclusions because they do not allow for discrimination of patient outcomes. In August 2018, we announced statistically significant positive top-line results from our SONICS Phase 3 clinical trial. However, even if we achieve the clinical trial’s endpoints for this clinical trial, the FDA or other regulatory authorities could view our study results as potentially biased due to our lack of an active control group.

Our LOGICS study, which is a second Phase 3 clinical trial of Recorlev for the treatment of endogenous Cushing’s syndrome, will supplement the long-term efficacy and safety data from the ongoing SONICS trial via a randomized, double-blind, placebo-controlled design that will randomize approximately 54 patients, in an attempt to address our lack of an active control group in our SONICS trial. There can be no assurances, however, that the FDA or other regulatory authorities will view the LOGICS study results as sufficient.

In March 2019, we conducted a Type C meeting with the Division of Metabolic and Endocrine Products (DMEP) of the FDA. DMEP stated in its meeting minutes that the FDA generally requests that a sponsor conduct two adequate and well-controlled clinical studies for the proposed indication of a drug candidate under 21 CFR 314.126(b)(2). DMEP also noted that the FDA recognizes situations when a single trial may be sufficient. DMEP reiterated that the characteristics of an “adequate and well-controlled” investigation under 21 CFR 314.126 include the use of a control group (e.g., placebo concurrent control, dose-comparison concurrent control), randomization and evaluation of primary endpoints that directly measure clinical benefits, or supported by evidence of clinical benefit. For this reason, while DMEP indicated that it would consider, as a review issue, the adequacy of an NDA submission with data from the SONICS trial as the sole Phase 3 evidence supporting the efficacy of RECORLEV, DMEP nonetheless recommended that we complete the LOGICS trial (which is double-blinded, randomized and placebo-controlled) and include the results from the LOGICS trial in addition to data from the SONICS trial in our NDA submission. We currently expect to receive LOGICS top-line data by the end of the first quarter of 2020 (compared to our prior projection of the end of 2019) and submit an NDA for Recorlev in the third quarter of 2020 that will include data from each of the SONICS and LOGICS trials. In addition, the DMEP stated in its meeting minutes that our clinical pharmacology program for Recorlev, as described to them, appears reasonable to support an NDA filing for Recorlev provided that the data generated are found to be suitable.

Table of Contents

sufficient to support approval of the NDA. There can be no assurance that DGE will determine that the totality of data included in the NDA, including the results from our SONICS and LOGICS studies, will be sufficient to warrant approval of the NDA for Recorlev.

In addition, following FDA consultation, we have determined that the 505(b)(2) approval pathway, which permits an NDA applicant to rely on data from studies that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference, is the appropriate pathway for a Recorlev NDA. We intend to rely on published literature and the FDA’s prior findings concerning the safety and/or effectiveness of ketoconazole in our NDA for Recorlev and on similar processes in other jurisdictions. There can be no assurances, however, that the 505(b)(2) approval pathway in the United States, or similar approval pathways outside of the United States, will be available for Recorlev or that the FDA or other regulatory authorities will approve Recorlev through an application based on such pathways.

We generally plan to seek regulatory approval to commercialize our product candidates in the United States, the European Union and other key global markets. To obtain regulatory approval in other countries, we must comply with regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical trials, commercial sales, pricing and distribution of our product candidates. Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions. Failure to obtain marketing authorization for our product candidates in any jurisdiction will result in our being unable to market and sell such products. Similarly, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.

Any of our current or future product candidates could take a significantly longer time to gain regulatory approval than we expect or may never gain regulatory approval. This could delay or eliminate any potential product revenue by delaying or terminating the potential commercialization of our product candidates.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

Table of Contents

ITEM 6. Exhibits

EXHIBIT INDEX


10.1		Employment Agreement, dated as of July 2, 2020, by and between Strongbridge U.S. Inc. and John Johnson
10.2		Term Loan Agreement, dated May 19, 2020, by Strongbridge Biopharma plc (“Strongbridge”), along with Strongbridge U.S. Inc., Cortendo AB (publ) and Strongbridge Dublin Limited, Avenue Venture Opportunities Fund L.P., as administrative agent and collateral agent, and the lenders named therein.
10.3		Warrant to Adventure Ventures Opportunities Fund, L.P., dated May 19, 2020
31.1		Certificate of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certificate of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definitions Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	STRONGBRIDGE BIOPHARMA PLC

	By:		/s/ Robert Lutz
	Name:		Robert Lutz
	Title:		Chief Financial Officer

Date: August 4, 2020

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	H.S. junior Avg

Strongbridge Biopharma (SBBP) 10-Q2020 Q2 Quarterly report

Content analysis