UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
(State of Incorporation) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) |
(Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered |
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.
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
☒ |
Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
Total shares of registrant’s common stock outstanding as of the close of business on July 31, 2024:
Class |
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Number of Shares Outstanding |
Common Stock, $0.0001 par value |
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ACADIA PHARMACEUTICALS INC.
FORM 10-Q
TABLE OF CONTENTS
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PAGE NO. |
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Item 1. |
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1 |
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1 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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27 |
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Item 4. |
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Item 1. |
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29 |
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Item 1A. |
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Item 5. |
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63 |
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Item 6. |
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64 |
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66 |
i
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACADIA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
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June 30, |
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December 31, |
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(unaudited) |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Investment securities, available-for-sale |
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Accounts receivable, net |
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Interest and other receivables |
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Inventory |
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Prepaid expenses |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Restricted cash |
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Long-term inventory |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Total current liabilities |
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Operating lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive (loss) income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
ACADIA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues |
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$ |
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$ |
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$ |
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$ |
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Total revenues |
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Operating expenses |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Income (loss) from operations |
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Interest income, net |
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Other income (loss) |
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Income (loss) before income taxes |
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Income tax expense |
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Net income (loss) |
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$ |
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$ |
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$ |
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Earnings (net loss) per share: |
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Basic |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
ACADIA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Unrealized (loss) gain on investment securities |
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Foreign currency translation adjustments |
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Comprehensive income (loss) |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
ACADIA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
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Six Months Ended June 30, |
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2024 |
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2023 |
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Cash flows from operating activities |
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Net income (loss) |
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$ |
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$ |
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Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
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Stock-based compensation |
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Amortization of premiums and accretion of discounts on investment securities |
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Amortization of intangible assets |
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Gain on strategic investment |
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Loss on sale of investment securities |
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Depreciation |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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( |
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Interest and other receivables |
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( |
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( |
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Inventory |
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( |
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( |
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Prepaid expenses |
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( |
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( |
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Other assets |
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( |
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Operating lease right-of-use assets |
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Accounts payable |
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Accrued liabilities |
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Operating lease liabilities |
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( |
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Long-term liabilities |
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Net cash provided by (used in) operating activities |
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Cash flows from investing activities |
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Purchases of investment securities |
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Sale and maturity of investment securities |
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Intangible assets |
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( |
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Net cash used in investing activities |
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( |
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Cash flows from financing activities |
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Proceeds from issuance of common stock, net of issuance costs |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash |
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( |
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Net decrease in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash |
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Beginning of period |
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End of period |
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$ |
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$ |
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Supplemental disclosure of noncash information: |
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Accrued inventory purchases |
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$ |
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$ |
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Accrued milestone and contingent payments in connection with asset acquisition |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ACADIA PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Total stockholders’ equity, beginning balances |
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$ |
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$ |
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$ |
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$ |
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Common stock: |
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Beginning balance |
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Ending balance |
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Additional paid-in capital: |
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Beginning balance |
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Issuance of common stock from exercise of stock options |
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Issuance of common stock pursuant to employee stock |
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Stock-based compensation |
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Ending balance |
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Accumulated deficit: |
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Beginning balance |
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( |
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( |
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( |
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Net income (loss) |
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( |
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Ending balance |
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( |
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( |
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( |
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( |
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Other comprehensive (loss) income: |
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Beginning balance |
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( |
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( |
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( |
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Other comprehensive (loss) income |
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( |
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( |
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( |
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Ending balance |
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( |
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( |
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Total stockholders’ equity, ending balances |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
ACADIA PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Business
Acadia Pharmaceuticals Inc. (the Company), based in San Diego, California, is a biopharmaceutical company focused on the development and commercialization of innovative medicines to address unmet medical needs in central nervous system (CNS) disorders and rare diseases.
In April 2016, the U.S. Food and Drug Administration (FDA) approved the Company’s first drug, NUPLAZID® (pimavanserin), for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis (PDP). NUPLAZID became available for prescription in the United States in May 2016.
In March 2023, the FDA approved the Company’s second drug, DAYBUE (trofinetide), for the treatment of Rett syndrome in adults and pediatric patients 2 years of age and older. DAYBUE became available for prescription in the United States in April 2023.
2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K (Annual Report) filed with the Securities and Exchange Commission (the SEC). The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair statement of the financial position, results of operations, cash flows, and stockholders’ equity for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from those estimates.
Risk and Uncertainties
Global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages, inflation and monetary supply shifts, recession risks, recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures and potential disruptions from geopolitical and military conflicts and related sanctions. The Company continues to actively monitor the impact of these macroeconomic factors on its financial condition, liquidity, operations and workforce. The extent of the impact of these factors on the Company’s operational and financial performance, including its ability to execute its business strategies and initiatives in the expected time frame, will depend on future developments, which are uncertain and cannot be predicted; however, any continued or renewed disruption resulting from these factors could negatively impact the Company’s business.
6
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated statements of cash flows that sum to the total of the same such amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands):
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Six Months Ended June 30, 2024 |
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Six Months Ended June 30, 2023 |
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Beginning of |
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End of |
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Beginning of |
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End of |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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$ |
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Restricted cash |
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Total cash, cash equivalents and restricted cash shown in |
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$ |
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$ |
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$ |
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$ |
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Accounts Receivable
Accounts receivable are recorded net of customer allowances for distribution fees, prompt payment discounts, chargebacks, and credit losses. Allowances for distribution fees, prompt payment discounts and chargebacks are based on contractual terms. The Company estimated the current expected credit losses of its accounts receivable by assessing the risk of loss and available relevant information about collectability, including historical credit losses, existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances, and reasonable and supportable forecast of economic conditions expected to exist throughout the contractual life of the receivable. The Company has not historically experienced significant credit losses. Based on its assessment, as of June 30, 2024 the Company determined that an allowance for credit loss was not required.
Revenues
The Company operates in one business segment. Results of its operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. Revenues consist of net product sales to customers, all of which are sales in the U.S. Revenues by product are as follows (in thousands):
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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NUPLAZID |
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$ |
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$ |
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$ |
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$ |
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DAYBUE |
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Product sales, net |
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$ |
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$ |
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$ |
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$ |
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License Fees and Royalties
The Company expenses amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid is uncertain and the technology has no alternative future use when acquired. Acquisitions of technology licenses are charged to expense or capitalized based upon management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use. The Company has determined that technological feasibility for its product candidates is reached when the requisite regulatory approvals are obtained to make the product available for sale.
The Company has capitalized a total of $
Royalties incurred in connection with the Company’s license agreement with Neuren, as disclosed in Note 9, are expensed to cost of product sales as revenue from product sales is recognized.
7
Intangible Assets
Finite-lived intangible assets are recorded at cost, net of accumulated amortization, and, if applicable, impairment charges. Amortization of finite-lived intangible assets is recorded over the assets’ estimated useful lives on a straight-line basis or based on the pattern in which economic benefits are consumed, if reliably determinable. We review our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such intangible assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of intangible the assets exceeds the estimated fair value of the intangible assets.
3. Earnings (Net Loss) Per Share
Basic earnings (net loss) per share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (net loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares and common stock equivalents outstanding for the period determined using the treasury stock method.
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(in thousands, except per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) - basic and diluted |
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$ |
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$ |
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$ |
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$ |
( |
) |
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Weighted average shares outstanding: |
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Basic |
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Effect of potentially dilutive common shares from: |
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Equity awards |
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Employee stock purchase plan rights |
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Diluted |
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Earnings (net loss) per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
( |
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Diluted |
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$ |
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$ |
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$ |
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$ |
( |
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Potentially dilutive shares excluded from per share amounts as their effect |
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4. Stock-Based Compensation
The following table summarizes the total stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of operations for the periods presented (in thousands):
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Cost of product sales |
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$ |
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$ |
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$ |
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$ |
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Research and development |
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Selling, general and administrative |
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$ |
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$ |
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$ |
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$ |
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8
The fair value of each employee stock option and each employee stock purchase plan right granted is estimated on the grant date under the fair value method using the Black-Scholes valuation model, which requires the Company to make a number of assumptions including the estimated expected life of the award and related volatility. The fair value of restricted stock units is estimated based on the market price of the Company’s common stock on the date of grant. The estimated fair values of stock options, purchase plan rights, and restricted stock units are then expensed over the requisite service period, which is generally the vesting period. For restricted stock units requiring satisfaction of both market and service conditions, the estimated fair values are generally expensed over the longest of the explicit, implicit and derived service periods. Performance-based stock awards vest upon the achievement of certain pre-defined company-specific performance-based criteria. Expense related to these performance-based stock awards is generally recognized ratably over the expected performance period once the pre-defined performance-based criteria for vesting becomes probable.
5. Balance Sheet Details
Inventory consisted of the following (in thousands):
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June 30, |
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December 31, |
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Finished goods |
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$ |
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$ |
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Work in process |
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Raw material |
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$ |
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$ |
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Reported as: |
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Inventory |
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$ |
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$ |
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Long-term inventory |
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Total |
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$ |
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$ |
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Amount reported as long-term inventory consisted of raw materials as of June 30, 2024 and December 31, 2023. The Company has raw materials beyond a one year production plan that help limit the exposures from potential supply interruption. Those raw materials beyond the one year production plan were classified as long-term inventory.
Accrued liabilities consisted of the following (in thousands):
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June 30, |
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December 31, |
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Accrued sales allowances |
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$ |
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$ |
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Accrued contingent payments |
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Accrued research and development services |
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Accrued compensation and benefits |
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Accrued consulting and professional fees |
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Current portion of lease liabilities |
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Accrued royalties |
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Current portion of accrued branded prescription drug fees |
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Other |
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$ |
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$ |
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6. Investments
The carrying value and amortized cost of the Company’s investments, summarized by major security type, consisted of the following (in thousands):
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June 30, 2024 |
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Amortized |
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Unrealized |
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Unrealized |
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Estimated |
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U.S. Treasury notes |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Government sponsored enterprise securities |
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( |
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$ |
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$ |
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$ |
( |
) |
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$ |
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9
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December 31, 2023 |
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Amortized |
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Unrealized |
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Unrealized |
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Estimated |
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U.S. Treasury notes |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Government sponsored enterprise securities |
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( |
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$ |
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$ |
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$ |
( |
) |
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$ |
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The Company has classified all of its available-for-sale investment securities as current assets on its unaudited condensed consolidated balance sheets based on the highly liquid nature of the investment securities and because these investment securities are considered available for use in current operations. The Company has classified all equity securities as other assets on its unaudited condensed consolidated balance sheets.
At June 30, 2024 and December 31, 2023, the Company had
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Less Than 12 Months |
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12 Months or Greater |
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Total |
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Estimated |
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Unrealized |
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Estimated |
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Unrealized |
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Estimated |
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Unrealized |
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June 30, 2024 |
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U.S. Treasury notes |
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$ |
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$ |
( |
) |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
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Government sponsored enterprise securities |
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( |
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— |
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— |
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( |
) |
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Total |
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$ |
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$ |
( |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
) |
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Less Than 12 Months |
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12 Months or Greater |
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Total |
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Estimated |
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Unrealized |
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Estimated |
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Unrealized |
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Estimated |
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Unrealized |
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December 31, 2023 |
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U.S. Treasury notes |
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$ |
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$ |
( |
) |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
) |
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Government sponsored enterprise securities |
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( |
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— |
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— |
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( |
) |
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Total |
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$ |
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$ |
( |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
) |
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At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic conditions.
As of June 30, 2024, the Company did not intend to sell the investments in unrealized loss position and it was unlikely that the Company will be required to sell the investments before the recovery of their amortized cost basis. The Company has not historically experienced significant losses on its investments. Based on its evaluation, the Company determined its year-to-date credit losses related to its available-for-sale securities were immaterial at June 30, 2024.
7. Fair Value Measurements
The Company’s investments include cash equivalents, available-for-sale investment securities consisting of money market funds, municipal bonds, and government sponsored enterprises in accordance with the Company’s investment policy, and equity securities. The Company’s investment policy defines allowable investment securities and establishes guidelines relating to credit quality, diversification, and maturities of its investments to preserve principal and maintain liquidity. All investment securities have a credit rating of at least Aa3/AA- or better, or P-1/A-1 or better, as determined by Moody’s Investors Service or Standard & Poor’s.
10
The Company’s cash equivalents, available-for-sale investment securities and equity securities are classified within the fair value hierarchy as defined by authoritative guidance. The Company’s investment securities and equity securities classified as Level 1 are valued using quoted market prices. The Company obtains the fair value of its Level 2 financial instruments from third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and matrices, and obtaining market values from other pricing sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of June 30, 2024 and December 31, 2023.
In November 2021, the Company established a plan whereby substantially all full-time employees excluding executive management are eligible to receive a series of cash bonuses based on achievement of certain conditions as described in more detail in Note 8 to the unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q (this Quarterly Report). The Company estimated the fair value of the cash awards using a Monte Carlo simulation, which utilizes level 3 inputs such as volatility, probabilities of success, and other inputs that are not observable in active markets. The cash awards are required to be measured at fair value on a recurring basis each reporting period, with changes in the fair value recognized as compensation cost over the derived service period of the awards.
The Company has not transferred any investment securities between the classification levels.
The recurring fair value measurements of the Company’s financial assets and liabilities measured at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):
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Fair Value Measurements at |
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June 30, |
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Quoted Prices |
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Significant |
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Significant |
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Assets |
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Money market fund |
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$ |
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$ |
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$ |
— |
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$ |
— |
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U.S. Treasury notes |
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— |
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— |
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Government sponsored enterprise securities |
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— |
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— |
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Total |
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$ |
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$ |
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$ |
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$ |
— |
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Liabilities |
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Cash awards |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Total |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Fair Value Measurements at |
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December 31, |
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Quoted Prices |
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Significant |
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Significant |
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Assets |
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