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SD

 

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, 2024

or

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

Commission File Number: 000-50768

 

ACADIA PHARMACEUTICALS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

06-1376651

(State of Incorporation)

(I.R.S. Employer Identification No.)

 

12830 El Camino Real, Suite 400

San Diego, California

92130

(Address of Principal Executive Offices)

(Zip Code)

 

(858) 558-2871

(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

Common Stock, par value $0.0001 per share

ACAD

The Nasdaq Stock Market LLC

 

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 (§ 232.405 of this chapter) 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, 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

Total shares of registrant’s common stock outstanding as of the close of business on July 31, 2024:

 

Class

 

Number of Shares Outstanding

Common Stock, $0.0001 par value

 

165,876,052

 

 


 

ACADIA PHARMACEUTICALS INC.

FORM 10-Q

TABLE OF CONTENTS

 

 

 

PAGE NO.

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

5

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

27

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

27

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

29

 

 

 

 

 

Item 1A.

 

Risk Factors

 

29

 

 

 

 

 

Item 5.

 

Other Information

 

63

 

 

 

 

 

Item 6.

 

Exhibits

 

64

 

 

 

SIGNATURES

 

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)

 

 

 

June 30,
2024

 

 

December 31,
2023

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

177,134

 

 

$

188,657

 

Investment securities, available-for-sale

 

 

323,808

 

 

 

250,208

 

Accounts receivable, net

 

 

103,698

 

 

 

98,267

 

Interest and other receivables

 

 

6,695

 

 

 

4,083

 

Inventory

 

 

71,525

 

 

 

35,819

 

Prepaid expenses

 

 

46,056

 

 

 

39,091

 

Total current assets

 

 

728,916

 

 

 

616,125

 

Property and equipment, net

 

 

4,144

 

 

 

4,612

 

Operating lease right-of-use assets

 

 

52,390

 

 

 

51,855

 

Intangible assets, net

 

 

107,859

 

 

 

65,490

 

Restricted cash

 

 

5,770

 

 

 

5,770

 

Long-term inventory

 

 

14,544

 

 

 

4,628

 

Other assets

 

 

476

 

 

 

476

 

Total assets

 

$

914,099

 

 

$

748,956

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Accounts payable

 

$

19,882

 

 

$

17,543

 

Accrued liabilities

 

 

317,969

 

 

 

236,711

 

Total current liabilities

 

 

337,851

 

 

 

254,254

 

Operating lease liabilities

 

 

47,186

 

 

 

47,800

 

Other long-term liabilities

 

 

12,362

 

 

 

15,147

 

Total liabilities

 

 

397,399

 

 

 

317,201

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 5,000,000 shares authorized at June 30, 2024
   and December 31, 2023;
no shares issued and outstanding at June 30, 2024 and
   December 31, 2023

 

 

 

 

 

 

Common stock, $0.0001 par value; 225,000,000 shares authorized at June 30, 2024
   and December 31, 2023;
165,853,301 shares and 164,650,219 shares issued and
   outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

16

 

 

 

16

 

Additional paid-in capital

 

 

2,897,916

 

 

 

2,862,552

 

Accumulated deficit

 

 

(2,380,893

)

 

 

(2,430,837

)

Accumulated other comprehensive (loss) income

 

 

(339

)

 

 

24

 

Total stockholders’ equity

 

 

516,700

 

 

 

431,755

 

Total liabilities and stockholders’ equity

 

$

914,099

 

 

$

748,956

 

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)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

241,963

 

 

$

165,235

 

 

$

447,794

 

 

$

283,697

 

Total revenues

 

 

241,963

 

 

 

165,235

 

 

 

447,794

 

 

 

283,697

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

18,230

 

 

 

7,459

 

 

 

41,181

 

 

 

9,126

 

Research and development

 

 

76,233

 

 

 

58,771

 

 

 

135,912

 

 

 

127,915

 

Selling, general and administrative

 

 

117,063

 

 

 

95,968

 

 

 

225,054

 

 

 

197,203

 

Total operating expenses

 

 

211,526

 

 

 

162,198

 

 

 

402,147

 

 

 

334,244

 

Income (loss) from operations

 

 

30,437

 

 

 

3,037

 

 

 

45,647

 

 

 

(50,547

)

Interest income, net

 

 

6,359

 

 

 

4,550

 

 

 

11,865

 

 

 

8,350

 

Other income (loss)

 

 

386

 

 

 

(1,244

)

 

 

672

 

 

 

3,601

 

Income (loss) before income taxes

 

 

37,182

 

 

 

6,343

 

 

 

58,184

 

 

 

(38,596

)

Income tax expense

 

 

3,793

 

 

 

5,229

 

 

 

8,240

 

 

 

3,311

 

Net income (loss)

 

$

33,389

 

 

$

1,114

 

 

$

49,944

 

 

$

(41,907

)

Earnings (net loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

 

$

0.01

 

 

$

0.30

 

 

$

(0.26

)

Diluted

 

$

0.20

 

 

$

0.01

 

 

$

0.30

 

 

$

(0.26

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

165,551

 

 

 

163,458

 

 

 

165,174

 

 

 

163,109

 

Diluted

 

 

166,174

 

 

 

165,046

 

 

 

166,391

 

 

 

163,109

 

 

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)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income (loss)

 

$

33,389

 

 

$

1,114

 

 

$

49,944

 

 

$

(41,907

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on investment securities

 

 

(113

)

 

 

(318

)

 

 

(371

)

 

 

439

 

Foreign currency translation adjustments

 

 

3

 

 

 

3

 

 

 

8

 

 

 

1

 

Comprehensive income (loss)

 

$

33,279

 

 

$

799

 

 

$

49,581

 

 

$

(41,467

)

 

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)

 

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

49,944

 

 

$

(41,907

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

30,435

 

 

 

29,859

 

Amortization of premiums and accretion of discounts on investment securities

 

 

(3,740

)

 

 

(3,758

)

Amortization of intangible assets

 

 

7,631

 

 

 

1,364

 

Gain on strategic investment

 

 

 

 

 

(3,601

)

Loss on sale of investment securities

 

 

 

 

 

505

 

Depreciation

 

 

468

 

 

 

828

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(5,431

)

 

 

(19,657

)

Interest and other receivables

 

 

(2,612

)

 

 

(1,419

)

Inventory

 

 

(43,795

)

 

 

(2,519

)

Prepaid expenses

 

 

(6,965

)

 

 

(2,497

)

Other assets

 

 

 

 

 

(115

)

Operating lease right-of-use assets

 

 

3,649

 

 

 

3,405

 

Accounts payable

 

 

2,339

 

 

 

6,065

 

Accrued liabilities

 

 

27,043

 

 

 

26,875

 

Operating lease liabilities

 

 

(2,089

)

 

 

(3,342

)

Long-term liabilities

 

 

(2,785

)

 

 

182

 

Net cash provided by (used in) operating activities

 

 

54,092

 

 

 

(9,732

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investment securities

 

 

(217,846

)

 

 

(228,675

)

Sale and maturity of investment securities

 

 

147,615

 

 

 

266,910

 

Intangible assets

 

 

 

 

 

(40,000

)

Net cash used in investing activities

 

 

(70,231

)

 

 

(1,765

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

4,608

 

 

 

6,944

 

Net cash provided by financing activities

 

 

4,608

 

 

 

6,944

 

Effect of exchange rate changes on cash

 

 

8

 

 

 

(2

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(11,523

)

 

 

(4,555

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

 

194,427

 

 

 

120,616

 

End of period

 

$

182,904

 

 

$

116,061

 

Supplemental disclosure of noncash information:

 

 

 

 

 

 

Accrued inventory purchases

 

$

1,506

 

 

$

 

Accrued milestone and contingent payments in connection with asset acquisition

 

$

50,000

 

 

$

29,583

 

 

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)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total stockholders’ equity, beginning balances

 

$

464,044

 

 

$

374,258

 

 

$

431,755

 

 

$

400,413

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

16

 

 

 

16

 

 

 

16

 

 

 

16

 

Ending balance

 

 

16

 

 

 

16

 

 

 

16

 

 

 

16

 

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

2,878,539

 

 

 

2,787,034

 

 

 

2,862,552

 

 

 

2,770,923

 

Issuance of common stock from exercise of stock options
   and units

 

 

73

 

 

 

2,815

 

 

 

1,116

 

 

 

4,281

 

Issuance of common stock pursuant to employee stock
   purchase plan

 

 

3,492

 

 

 

2,663

 

 

 

3,492

 

 

 

2,663

 

Stock-based compensation

 

 

15,812

 

 

 

15,258

 

 

 

30,756

 

 

 

29,903

 

Ending balance

 

 

2,897,916

 

 

 

2,807,770

 

 

 

2,897,916

 

 

 

2,807,770

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(2,414,282

)

 

 

(2,412,572

)

 

 

(2,430,837

)

 

 

(2,369,551

)

Net income (loss)

 

 

33,389

 

 

 

1,114

 

 

 

49,944

 

 

 

(41,907

)

Ending balance

 

 

(2,380,893

)

 

 

(2,411,458

)

 

 

(2,380,893

)

 

 

(2,411,458

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(229

)

 

 

(220

)

 

 

24

 

 

 

(975

)

Other comprehensive (loss) income

 

 

(110

)

 

 

(315

)

 

 

(363

)

 

 

440

 

Ending balance

 

 

(339

)

 

 

(535

)

 

 

(339

)

 

 

(535

)

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity, ending balances

 

$

516,700

 

 

$

395,793

 

 

$

516,700

 

 

$

395,793

 

 

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):

 

 

 

Six Months Ended June 30, 2024

 

 

Six Months Ended June 30, 2023

 

 

 

Beginning of
period

 

 

End of
period

 

 

Beginning of
period

 

 

End of
period

 

Cash and cash equivalents

 

$

188,657

 

 

$

177,134

 

 

$

114,846

 

 

$

107,941

 

Restricted cash

 

 

5,770

 

 

 

5,770

 

 

 

5,770

 

 

 

8,120

 

Total cash, cash equivalents and restricted cash shown in
   the unaudited condensed consolidated statements of cash flows

 

$

194,427

 

 

$

182,904

 

 

$

120,616

 

 

$

116,061

 

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):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

NUPLAZID

 

$

157,409

 

 

$

142,018

 

 

$

287,332

 

 

$

260,480

 

DAYBUE

 

 

84,554

 

 

 

23,217

 

 

 

160,462

 

 

 

23,217

 

   Product sales, net

 

$

241,963

 

 

$

165,235

 

 

$

447,794

 

 

$

283,697

 

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 $119.6 million as intangible assets following the FDA approval and sale of DAYBUE pursuant to its 2018 license agreement with Neuren Pharmaceuticals Limited (Neuren), as disclosed in Note 9. The intangible assets are amortized on a straight-line basis over the estimated useful life of the licensed patents through early 2036. The Company recorded total amortization expense related to these intangible assets of $2.3 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively. The Company recorded total amortization expense related to these intangible assets of $7.6 million and $1.4 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, estimated future amortization expense related to the Company’s intangible assets was $4.7 million for the remainder of 2024, and $9.4 million for each subsequent year.

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. No impairment loss was recorded on intangible assets during the three and six months ended June 30, 2024 and 2023.

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. For purposes of diluted earnings (net loss) per share calculation, equity awards and employee stock purchase plan rights are considered to be common stock equivalents.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands, except per share data)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income (loss) - basic and diluted

 

$

33,389

 

 

$

1,114

 

 

$

49,944

 

 

$

(41,907

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

165,551

 

 

 

163,458

 

 

 

165,174

 

 

 

163,109

 

Effect of potentially dilutive common shares from:

 

 

 

 

 

 

 

 

 

 

 

 

Equity awards

 

 

578

 

 

 

1,533

 

 

 

1,138

 

 

 

 

Employee stock purchase plan rights

 

 

45

 

 

 

55

 

 

 

79

 

 

 

 

Diluted

 

 

166,174

 

 

 

165,046

 

 

 

166,391

 

 

 

163,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (net loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

 

$

0.01

 

 

$

0.30

 

 

$

(0.26

)

Diluted

 

$

0.20

 

 

$

0.01

 

 

$

0.30

 

 

$

(0.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Potentially dilutive shares excluded from per share amounts as their effect
   would have been anti-dilutive

 

 

20,944

 

 

 

16,378

 

 

 

17,533

 

 

 

23,174

 

 

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):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Cost of product sales

 

$

362

 

 

$

200

 

 

$

515

 

 

$

368

 

Research and development

 

 

3,749

 

 

 

3,666

 

 

 

7,842

 

 

 

7,638

 

Selling, general and administrative

 

 

11,574

 

 

 

11,288

 

 

 

22,078

 

 

 

21,853

 

 

 

$

15,685

 

 

$

15,154

 

 

$

30,435

 

 

$

29,859

 

 

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):

 

 

 

June 30,
2024

 

 

December 31,
2023

 

Finished goods

 

$

17,205

 

 

$

5,001

 

Work in process

 

 

5,361

 

 

 

4,134

 

Raw material

 

 

63,503

 

 

 

31,312

 

 

 

$

86,069

 

 

$

40,447

 

Reported as:

 

 

 

 

 

 

    Inventory

 

$

71,525

 

 

$

35,819

 

    Long-term inventory

 

 

14,544

 

 

 

4,628

 

    Total

 

$

86,069

 

 

$

40,447

 

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):

 

 

 

June 30,
2024

 

 

December 31,
2023

 

Accrued sales allowances

 

$

126,493

 

 

$

90,718

 

Accrued contingent payments

 

 

79,583

 

 

 

29,583

 

Accrued research and development services

 

 

26,059

 

 

 

32,883

 

Accrued compensation and benefits

 

 

26,044

 

 

 

42,718

 

Accrued consulting and professional fees

 

 

24,152

 

 

 

18,804

 

Current portion of lease liabilities

 

 

10,470

 

 

 

9,405

 

Accrued royalties

 

 

8,456

 

 

 

8,710

 

Current portion of accrued branded prescription drug fees

 

 

7,836

 

 

 

718

 

Other

 

 

8,876

 

 

 

3,172

 

 

 

$

317,969

 

 

$

236,711

 

 

6. Investments

The carrying value and amortized cost of the Company’s investments, summarized by major security type, consisted of the following (in thousands):

 

 

 

June 30, 2024

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Estimated
Fair
Value

 

U.S. Treasury notes

 

$

157,687

 

 

$

 

 

$

(179

)

 

$

157,508

 

Government sponsored enterprise securities

 

 

166,465

 

 

 

1

 

 

 

(166

)

 

 

166,300

 

 

 

$

324,152

 

 

$

1

 

 

$

(345

)

 

$

323,808

 

 

9


 

 

 

 

December 31, 2023

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Estimated
Fair
Value

 

U.S. Treasury notes

 

$

75,315

 

 

$

47

 

 

$

(28

)

 

$

75,334

 

Government sponsored enterprise securities

 

 

174,867

 

 

 

119

 

 

 

(112

)

 

 

174,874

 

 

 

$

250,182

 

 

$

166

 

 

$

(140

)

 

$

250,208

 

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 36 and 21 available-for-sale investment securities, respectively, in an unrealized loss position. The following table presents gross unrealized losses and fair value for those available-for-sale investment securities that were in an unrealized loss position as of June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that the individual securities have been in a continuous loss position (in thousands):

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

$

157,508

 

 

$

(179

)

 

$

 

 

$

 

 

$

157,508

 

 

$

(179

)

 

Government sponsored enterprise securities

 

 

156,658

 

 

 

(166

)

 

 

 

 

 

 

 

 

156,658

 

 

 

(166

)

 

Total

 

$

314,166

 

 

$

(345

)

 

$

 

 

$

 

 

$

314,166

 

 

$

(345

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

 

Unrealized
Losses

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury notes

 

$

41,366

 

 

$

(28

)

 

$

 

 

$

 

 

$

41,366

 

 

$

(28

)

 

Government sponsored enterprise securities

 

 

108,587

 

 

 

(112

)

 

 

 

 

 

 

 

 

108,587

 

 

 

(112

)

 

Total

 

$

149,953

 

 

$

(140

)

 

$

 

 

$

 

 

$

149,953

 

 

$

(140

)

 

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):

 

 

 

 

 

 

Fair Value Measurements at
Reporting Date Using

 

 

 

June 30,
2024

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

54,604

 

 

$

54,604

 

 

$

 

 

$

 

U.S. Treasury notes

 

 

202,247

 

 

 

202,247

 

 

 

 

 

 

 

Government sponsored enterprise securities

 

 

191,174

 

 

 

 

 

 

191,174

 

 

 

 

    Total

 

$

448,025

 

 

$

256,851

 

 

$

191,174

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Cash awards

 

$

 

 

$

 

 

$

 

 

$

 

    Total

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

Fair Value Measurements at
Reporting Date Using

 

 

 

December 31,
2023

 

 

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets