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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 June 30, 2021

 

 

 

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

o

 

 

 

 

 

Non-accelerated filer

x

 

Smaller reporting company

x

 

 

 

 

 

 

 

 

Emerging growth company

o

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

 

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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 August 11, 2021, there were 6,924,174 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)

7

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

7

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020

8

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2021 and 2020

9

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020

10

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

11

Notes to Condensed Consolidated Financial Statements

12

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

32

Item 3. Quantitative and Qualitative Disclosures about Market Risk

46

Item 4. Controls and Procedures

46

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

47

Item 1A. Risk Factors

47

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

49

Item 3. Defaults Upon Senior Securities

49

Item 4. Mine Safety Disclosures

49

Item 5. Other Information

49

Item 6. Exhibits

50

Signatures

51

 


 

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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.

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 the accompanying unaudited interim condensed consolidated financial statements and notes thereto (Interim Financial Statements) contained in this Quarterly Report on Form 10-Q. We also encourage you to read Item 1A of Part 1 of our Annual Report on Form 10-K for FY 2020, entitled “Risk Factors,” which contains a more detailed discussion of some of the risks and uncertainties associated with our business. In addition to the risks summarized below and in “Risk Factors” in our Annual Report on Form 10-K, 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. 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, including those imposed in the U.K. and Europe (notably in Germany), and (b) the unwillingness of patients, many of whom suffer from diabetes and diabetic macular edema and, in Europe and the U.K., non-infectious uveitis, to visit their physicians in person for fear of contracting the COVID-19 coronavirus;

the financial uncertainty associated with the adverse effects of the COVID-19 pandemic and the duration and severity of those effects, which had an adverse effect on our revenue beginning late in the first quarter of 2020 and continuing to the date of this report, and if these adverse effects continue in the future, they may (a) adversely affect our revenue, financial condition and cash flows, and (b) affect certain estimates we use to prepare our quarterly financial results, including impairment of intangible assets, the income tax provision and recoverability of certain receivables;

the possibility that the restrictions placed on regulatory and pricing bodies will delay or defer market access for ILUVIEN as we seek to secure reimbursement;

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 staffing shortages resulting from the COVID-19 pandemic will recur at the third-party manufacturer where the ILUVIEN implant is made and the ILUVIEN applicator is assembled and packaged that may lead to product shortages;

the possibility that distribution of the ILUVIEN insert or applicator may be disrupted by government action related to COVID-19 or by the effect of the pandemic on our manufacturers’ or distributors’ workforces;

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

 

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the possibility that the economic impact of the COVID-19 pandemic will cause our distributors to vary the way they manage inventory, which will cause our revenue to be inconsistent quarter to quarter;

Operational Risks

our dependence on the commercial success of our only product, ILUVIEN;

the competition we face, given that our competitors include larger, more established, fully integrated pharmaceutical companies and biotechnology companies that have substantially greater capital resources, existing competitive products, larger research and development staffs and facilities, greater marketing capabilities, and greater experience in drug development and in obtaining regulatory approvals than we do;

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 the NEW DAY Study may (a) 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, and (b) take longer to enroll or be more costly to complete than we currently anticipate;

our possible inability to expand our portfolio of ophthalmic products;

Manufacturing Risks

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

the possibility that the necessary regulatory approvals and qualification may not be obtained from the FDA in time to permit Cadence, Inc. to manufacture the components used in the ILUVIEN applicator to satisfy our inventory needs within the U.S. market;

our dependence on third-party manufacturers to manufacture ILUVIEN or any future products or product candidates in sufficient quantities and quality, in a timely manner (particularly during the COVID-19 pandemic), 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;

Financial Risks

the possibility that we may fail to comply with the financial covenants in our $45.0 million Loan and Security Agreement with SLR Investment Corp. (SLR, f/k/a Solar Capital Ltd.) as Collateral Agent (Agent), and certain other lenders, including SLR in its capacity as a lender, dated December 31, 2019, as amended;

our possible need to raise additional financing, the terms of which may restrict our operations and, if the capital we raise is equity or a debt security that is convertible into equity, could dilute our stockholders’ investment;

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

a slowdown or reduction in our sales due to, among other things, a reduction in end user demand, unexpected competition, regulatory issues or other unexpected circumstances;

Regulatory Risks

uncertainty associated with our pursuit of reimbursement from local health authorities in certain countries for the 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 approval and reimbursement of ILUVIEN or any future products or product candidates in additional markets where we do not currently sell ILUVIEN;

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

 

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Intellectual Property Risks

the possibility that we may be adversely affected by the expiration of patents that protect key aspects of ILUVIEN.

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

 

June 30,

December 31,

2021

2020

(In thousands, except share and per share data)

CURRENT ASSETS:

Cash and cash equivalents

$

24,780

$

11,208

Restricted cash

35

34

Accounts receivable, net

15,086

17,200

Prepaid expenses and other current assets

3,029

3,718

Inventory (Note 7)

2,307

2,746

Total current assets

45,237

34,906

NON-CURRENT ASSETS:

Property and equipment, net

1,516

1,638

Right of use assets, net

683

720

Intangible asset, net (Note 8)

11,875

12,838

Deferred tax asset

729

753

Warrant asset

2,062

TOTAL ASSETS

$

62,102

$

50,855

CURRENT LIABILITIES:

Accounts payable

$

7,083

$

7,461

Accrued expenses

2,924

3,197

Paycheck Protection Program (PPP) loan (Note 10)

1,481

Finance lease obligations

301

209

Total current liabilities

10,308

12,348

NON-CURRENT LIABILITIES:

Notes payable, net of discount (Note 10)

42,595

42,408

Other non-current liabilities

3,308

4,077

COMMITMENTS AND CONTINGENCIES

 

 

STOCKHOLDERS’ EQUITY (DEFICIT):

Preferred stock, $.01 par value — 10,000,000 shares authorized at June 30, 2021 and December 31, 2020:

Series A Convertible Preferred Stock, 1,300,000 authorized and 600,000 issued and outstanding at June 30, 2021 and December 31, 2020; liquidation preference of $24,000 at June 30, 2021 and December 31, 2020

19,227

19,227

Common stock, $.01 par value — 150,000,000 shares authorized, 6,924,174 shares issued and outstanding at June 30, 2021 and 5,719,367 shares issued and outstanding at December 31, 2020

69

57

Additional paid-in capital

376,334

365,830

Common stock warrants

370

370

Accumulated deficit

(388,992)

(392,909)

Accumulated other comprehensive loss

(1,117)

(553)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

5,891

(7,978)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$

62,102

$

50,855

See Notes to Unaudited Interim Condensed Consolidated Financial Statements (Interim Financial Statements).


 

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ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

(In thousands, except share and per share data)

REVENUE:

PRODUCT REVENUE, NET

$

10,655

$

10,038

$

21,869

$

24,573

LICENSE REVENUE

11,048

11,048

NET REVENUE

21,703

10,038

32,917

24,573

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION

(1,813)

(1,485)

(3,375)

(3,412)

GROSS PROFIT

19,890

8,553

29,542

21,161

RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES

3,567

1,810

6,780

4,693

GENERAL AND ADMINISTRATIVE EXPENSES

3,356

2,791

6,769

5,773

SALES AND MARKETING EXPENSES

5,331

4,566

10,149

10,437

DEPRECIATION AND AMORTIZATION

633

685

1,271

1,339

OPERATING EXPENSES

12,887

9,852

24,969

22,242

INCOME (LOSS) FROM OPERATIONS

7,003

(1,299)

4,573

(1,081)

INTEREST EXPENSE AND OTHER

(1,347)

(1,351)

(2,690)

(2,643)

UNREALIZED FOREIGN CURRENCY GAIN, NET

56

109

181

28

GAIN ON EXTINGUISHMENT OF DEBT

1,792

1,792

CHANGE IN FAIR VALUE OF WARRANT ASSET

701

701

NET INCOME (LOSS) BEFORE TAXES

8,205

(2,541)

4,557

(3,696)

PROVISION FOR TAXES

(640)

(5)

(640)

(48)

NET INCOME (LOSS)

$

7,565

$

(2,546)

$

3,917

$

(3,744)

NET INCOME (LOSS) PER SHARE — Basic

$

1.03

$

(0.51)

$

0.57

$

(0.75)

WEIGHTED AVERAGE SHARES OUTSTANDING — Basic

7,351,919

5,030,833

6,857,172

5,005,777

NET INCOME (LOSS) PER SHARE — Diluted

$

1.03

$

(0.51)

$

0.57

$

(0.75)

WEIGHTED AVERAGE SHARES OUTSTANDING — Diluted

7,363,150

5,030,833

6,857,172

5,005,777

See Notes to Interim Financial Statements.

 

 

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ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

(In thousands)

NET INCOME (LOSS)

$

7,565

$

(2,546)

$

3,917

$

(3,744)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments

33

93

(564)

7

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

33

93

(564)

7

COMPREHENSIVE INCOME (LOSS)

$

7,598

$

(2,453)

$

3,353

$

(3,737)

See Notes to Interim Financial Statements.


 

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ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30,

2021

2020

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

3,917

$

(3,744)

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

Depreciation and amortization

1,271

1,339

Non-cash consideration received as revenue

(973)

Unrealized foreign currency transaction gain, net

(181)

(28)

Amortization of debt discount

480

481

Stock-based compensation expense

514

757

Gain on extinguishment of debt

(1,792)

Change in fair value of warrant asset

(701)

Changes in assets and liabilities:

Accounts receivable

2,019

5,305

Prepaid expenses and other current assets

646

(238)

Inventory

408

(582)

Accounts payable

(252)

(1,211)

Accrued expenses and other current liabilities

(226)

(1,568)

Other long-term liabilities

(939)

(293)

Net cash provided by operating activities

4,191

218

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(190)

(217)

Net cash used in investing activities

(190)

(217)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

10,042

10

Common stock issuance costs

(81)

Proceeds from exercise of stock options

42

Issuance of debt

4,278

Payment of debt costs

(19)

Payment of finance lease obligations

(112)

(231)

Net cash provided by financing activities

9,891

4,038

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

(319)

29

NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

13,573

4,068

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period

11,242

9,459

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — End of period

$

24,815

$

13,527

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest

$

2,145

$

1,084

Cash paid for income taxes

$

23

$

30

Supplemental schedule of non-cash investing and financing activities:

Property and equipment acquired under finance leases

$

$

495

Note payable end of term payment accrued but unpaid

$

1,800

$

1,800

See Notes to Interim Financial Statements.

 

 

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ALIMERA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (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 

Stock-based compensation expense

440 

440 

Other