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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

 

 

FORM 10-Q

(Mark One)

x

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

For the quarterly period ended September 30, 2020

 

 

 

or

o

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: 001-34703

 

 

 

Alimera Sciences, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

20-0028718

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

6120 Windward Parkway, Suite 290

Alpharetta, GA

 

30005

(Address of principal executive offices)

 

(Zip Code)

(678) 990-5740

(Registrant’s telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

ALIM

The Nasdaq Stock Market LLC

(Nasdaq Global 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  x    No  o

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  x    No  o

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

o

 

Accelerated filer

x

 

 

 

 

 

Non-accelerated filer

o

 

Smaller reporting company

x

 

 

 

 

 

 

 

 

Emerging growth company

o

 

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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. o

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

As of October 29, 2020, there were 5,131,744 shares of the registrant’s Common Stock issued and outstanding.

 

2


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ALIMERA SCIENCES, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

6

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

6

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019

7

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019

8

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

9

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

10

Notes to Condensed Consolidated Financial Statements

11

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

27

Item 3. Quantitative and Qualitative Disclosures about Market Risk

39

Item 4. Controls and Procedures

39

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

40

Item 1A. Risk Factors

40

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

43

Item 3. Defaults Upon Senior Securities

43

Item 4. Mine Safety Disclosures

43

Item 5. Other Information

43

Item 6. Exhibits

44

Signatures

45

 


 

3


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS

Various statements in this report of Alimera Sciences, Inc. (we, our, Alimera or the Company) are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are subject to risks and uncertainties and are based on information currently available to our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “contemplates,” “predict,” “project,” “target,” “likely,” “potential,” “continue,” “ongoing,” “will,” “would,” “should,” “could,” or the negative of these terms and similar expressions or words, identify forward-looking statements. The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from those projected in our forward-looking statements. Meaningful factors that could cause actual results to differ include:

Risks Related to the COVID-19 Pandemic

the adverse effects of the COVID-19 pandemic, and its unpredictable duration, in the regions where we have customers, employees and distributors;

the adverse effects of the COVID-19 pandemic on sales of ILUVIEN® resulting from (a) limitations on in-person access to physicians for treatment imposed by governments or healthcare facilities and (b) the unwillingness of patients, many of whom suffer from diabetic macular edema and, in Europe, non-infectious uveitis, to visit their physicians in person for fear of contracting the COVID-19 coronavirus;

financial uncertainty associated with the adverse effects of the COVID-19 pandemic and the duration of those effects, which had an adverse effect on our revenue beginning late in the first quarter and continuing through the third quarter of 2020 and may in the future have an adverse effect on our revenue and on our financial condition and cash flows as well as an impact in future periods on certain estimates used in the preparation of our quarterly financial results, including impairment of intangible assets, the income tax provision and recoverability of certain receivables;

the possibility that the economic impact of the COVID-19 pandemic will lead to changes in reimbursement policies and reduce market access for ILUVIEN in countries where we sell ILUVIEN;

the possibility that we may fail to maintain or modify as necessary our internal controls over financial reporting in the current environment in which (a) some of our employees may be required to work remotely from time to time and (b) we or our distributors are required to modify our standard business processes to take into account the current environment in light of the COVID-19 pandemic;

the possibility of reduced efficiency and potential distractions of our employees resulting from the impact of the COVID-19 pandemic, and the resulting loss of productivity;

Financial Risks

the possibility that we may fail to comply with minimum required revenue and liquidity covenants in our $45.0 million loan and security agreement with Solar Capital Ltd.;

the possibility that we may not be entitled to forgiveness of our PPP Loan;

our possible need to raise additional financing;

uncertainty regarding our ability to achieve profitability and positive cash flow through the commercialization of ILUVIEN in the U.S., the European Economic Area and other regions of the world where we sell ILUVIEN;

a slowdown or reduction in our sales due to, in addition to the other factors cited above, a reduction in end user demand, unexpected competition, regulatory issues, or other unexpected circumstances;

 

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Manufacturing Risks

uncertainty associated with our transition from the previous third-party manufacturer of certain component parts of the ILUVIEN applicator to the successor manufacturer;

dependence on third-party manufacturers to manufacture ILUVIEN or any future products or product candidates in sufficient quantities and quality, in a timely manner, and at an acceptable price;

the possibility that we may fail to plan appropriately to meet the demand of our customers for ILUVIEN, which could lead either to (a) ILUVIEN being out of stock or (b) our investment of a greater amount of cash in inventory than we need;

Regulatory Risks

uncertainty regarding the pricing and reimbursement guidelines for ILUVIEN or any future products or product candidates, including ILUVIEN in new markets;

uncertainty associated with our pursuit of reimbursement approval from local health authorities in certain countries for the recently obtained additional indication for ILUVIEN for prevention of relapse in recurrent non-infectious uveitis affecting the posterior segment of the eye (NIU-PS);

delay in or failure to obtain regulatory and reimbursement approval of ILUVIEN or any future products or product candidates in additional countries;

uncertainty associated with our ability to meet any post-market requirements for NIU-PS in the European Economic Area;

uncertainty associated with our ability to successfully commercialize ILUVIEN following regulatory approval in additional markets;

Other Risks

uncertainty associated with our ability to retain our current employees and to recruit and retain the new employees we need in the future, in particular a productive sales force;

the possibility that we may fail to comply with the Nasdaq listing standards in the future; and

the possibility that the NEW DAY Study may fail to demonstrate the efficacy of ILUVIEN as baseline therapy in patients with early diabetic macular edema (DME) or to generate data demonstrating the benefits of ILUVIEN when compared to the current leading therapy for DME.

All written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We caution investors not to rely too heavily on the forward-looking statements we make or that are made on our behalf. We undertake no obligation and specifically decline any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please see, however, any further disclosures we make on related subjects in any annual, quarterly or current reports that we may file with the Securities and Exchange Commission (SEC).

We encourage you to read the discussion and analysis of our financial condition and our condensed consolidated financial statements contained in this report. We also encourage you to read Item 1A of Part II of this Quarterly Report on Form 10-Q, entitled “Risk Factors,” and Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which contains a more detailed discussion of some of the risks and uncertainties associated with our business. In addition to the risks described above, other unknown or unpredictable factors also could affect our results. There can be no assurance that we will in fact achieve the actual results or developments we anticipate or, even if we do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore, we can give no assurances that we will achieve the outcomes stated in those forward-looking statements and estimates.

Unless the context otherwise requires, throughout this Quarterly Report on Form 10-Q, the words “Alimera” “we,” “us,” the “registrant” or the “Company” refer to Alimera Sciences, Inc. and its subsidiaries (as applicable).

 

 

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements (unaudited)

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

September 30,

December 31,

2020

2019

(In thousands, except share and per share data)

CURRENT ASSETS:

Cash and cash equivalents

$

11,254

$

9,426

Restricted cash

32

33

Accounts receivable, net

15,628

19,331

Prepaid expenses and other current assets

3,177

2,565

Inventory (Note 7)

2,522

1,390

Total current assets

32,613

32,745

NON-CURRENT ASSETS:

Property and equipment, net

1,582

940

Right of use assets, net

791

1,107

Intangible asset, net (Note 8)

13,327

14,783

Deferred tax asset

767

734

TOTAL ASSETS

$

49,080

$

50,309

CURRENT LIABILITIES:

Accounts payable

$

5,356

$

7,077

Accrued expenses

3,475

4,716

Notes payable

1,185

Finance lease obligations

219

255

Total current liabilities

10,235

12,048

NON-CURRENT LIABILITIES:

Notes payable, net of discount (Note 10)

42,459

38,658

Finance lease obligations — less current portion

452

94

Other non-current liabilities

3,567

3,954

COMMITMENTS AND CONTINGENCIES

 

 

STOCKHOLDERS’ DEFICIT:

Preferred stock, $.01 par value — 10,000,000 shares authorized at September 30, 2020 and December 31, 2019:

Series A Convertible Preferred Stock, 1,300,000 authorized and 600,000 issued and outstanding at September 30, 2020 and December 31, 2019; liquidation preference of $24,000 at September 30, 2020 and December 31, 2019

19,227

19,227

Series C Convertible Preferred Stock, 10,150 authorized and 8,650.033 issued and outstanding at September 30, 2020 and 10,150 authorized issued and outstanding at December 31, 2019; liquidation preference of $8,650 at September 30, 2020 and liquidation preference of $10,150 at December 31, 2019

9,474

11,117

Common stock, $.01 par value — 150,000,000 shares authorized, 5,131,744 shares issued and outstanding at September 30, 2020 and 4,965,949 shares issued and outstanding at December 31, 2019

51

50

Additional paid-in capital

352,728

350,117

Common stock warrants

3,707

3,707

Accumulated deficit

(391,932)

(387,570)

Accumulated other comprehensive loss

(888)

(1,093)

TOTAL STOCKHOLDERS’ DEFICIT

(7,633)

(4,445)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

$

49,080

$

50,309

See Notes to Condensed Consolidated Financial Statements.


 

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Table of Contents

 

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

(In thousands, except share and per share data)

NET REVENUE

$

12,473

$

12,850

$

37,046

$

36,595

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION

(1,537)

(1,579)

(4,949)

(4,353)

GROSS PROFIT

10,936

11,271

32,097

32,242

RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES

2,469

2,761

7,162

8,322

GENERAL AND ADMINISTRATIVE EXPENSES

2,619

3,121

8,775

10,189

SALES AND MARKETING EXPENSES

4,764

6,437

14,818

18,458

DEPRECIATION AND AMORTIZATION

677

668

2,016

1,974

OPERATING EXPENSES

10,529

12,987

32,771

38,943

NET INCOME (LOSS) FROM OPERATIONS

407

(1,716)

(674)

(6,701)

INTEREST EXPENSE AND OTHER

(1,285)

(1,232)

(3,928)

(3,696)

UNREALIZED FOREIGN CURRENCY GAIN (LOSS), NET

267

(115)

295

(135)

NET LOSS BEFORE TAXES

(611)

(3,063)

(4,307)

(10,532)

PROVISION FOR TAXES

(7)

(77)

(55)

(409)

NET LOSS

$

(618)

$

(3,140)

$

(4,362)

$

(10,941)

NET LOSS PER COMMON SHARE — Basic and diluted

$

(0.12)

$

(0.66)

$

(0.87)

$

(2.31)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — Basic and diluted

5,068,701

4,733,484

5,026,905

4,727,472

See Notes to Condensed Consolidated Financial Statements.

 

 

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Table of Contents

 

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

(In thousands)

NET LOSS

$

(618)

$

(3,140)

$

(4,362)

$

(10,941)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments

198

(165)

205

(193)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

198

(165)

205

(193)

COMPREHENSIVE LOSS

$

(420)

$

(3,305)

$

(4,157)

$

(11,134)

See Notes to Condensed Consolidated Financial Statements.


 

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Table of Contents

 

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

2020

2019

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(4,362)

$

(10,941)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

2,016

1,974

Unrealized foreign currency transaction (gain) loss

(295)

135

Amortization of debt discount

727

626

Stock-based compensation expense

1,074

1,903

Changes in assets and liabilities:

Accounts receivable

3,942

663

Prepaid expenses and other current assets

(301)

(451)

Inventory

(1,104)

726

Accounts payable

(1,906)

497

Accrued expenses and other current liabilities

(1,310)

(89)

Other long-term liabilities

(411)

383

Net cash used in operating activities

(1,930)

(4,574)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(535)

(150)

Net cash used in investing activities

(535)

(150)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

10

34

Issuance of debt

4,278

Payment of debt costs

(19)

Payment of finance lease obligations

(341)

(234)

Net cash provided by (used in) financing activities

3,928

(200)

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

364

(217)

NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

1,827

(5,141)

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period

9,459

13,075

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — End of period

$

11,286

$

7,934

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest

$

2,854

$

3,070

Cash paid for income taxes

$

20

$

10

Supplemental schedule of non-cash investing and financing activities:

Property and equipment acquired under finance leases

$

776

$

124

Property and equipment acquired under operating leases

$

$

676

Note payable end of term payment accrued but unpaid

$

2,125

$

1,800

See Notes to Condensed Consolidated Financial Statements.

 

 

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Table of Contents

 

ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

Series A

Series C

Convertible

Convertible

Accumulated

Common Stock

Preferred Stock

Preferred Stock

Additional

Common

Other

Paid-In

Stock

Accumulated

Comprehensive

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Warrants

Deficit

Loss

Total

2020

(In thousands, except share data)

Balance, December 31, 2019

4,965,949 

$

50 

600,000 

$

19,227 

10,150 

$

11,117 

$

350,117 

$

3,707 

$

(387,570)

$

(1,093)

$

(4,445)

Issuance of common stock, net of issuance costs

62,933