QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
|
||
(Address of principal executive offices) |
(Zip Code) |
Title of each class: |
Trading Symbol(s) |
Name of each exchange on which registered: | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page No. |
||||||
Item 1. |
Financial Statements | 4 | ||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 32 | ||||
Item 4. |
Controls and Procedures | 32 | ||||
Item 1. |
Legal Proceedings | 33 | ||||
Item 1A. |
Risk Factors | 33 | ||||
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 33 | ||||
Item 3. |
Defaults Upon Senior Securities | 33 | ||||
Item 4. |
Mine Safety Disclosures | 33 | ||||
Item 5. |
Other Information | 34 | ||||
Item 6. |
Exhibits | 34 | ||||
35 |
• | our ability to continue as a going concern and to obtain capital to fund our business, as well as the potential changes in our business if we are not able to obtain necessary funding. |
• | our announced workforce reduction, and its related costs and effect on our business; |
• | our ability to successfully commercialize and market JATENZO and any future product candidates, if approved, and the timing of any commercialization and marketing efforts; |
• | the potential market size, opportunity and growth potential for JATENZO and any future product candidates, if approved; |
• | the benefits of testosterone replacement therapy, or TRT, in certain populations, patients’ drug administration preferences and acceptance of JATENZO by physicians and patients; |
• | our ability to successfully complete a strategic alternative review process and the timing of such process regarding a potential transaction; |
• | the timing of our product development activities and the initiation, timing, progress and results of our exploratory trials and studies to guide the development of JATENZO for additional potential indications; |
• | the implementation of our business model, strategic plans for our business, product candidates and technology; |
• | expectations regarding sales of JATENZO and the costs of supplying, manufacturing and continuing to commercialize JATENZO; |
• | our ability to obtain marketing approval and acceptance for JATENZO in territories outside of the United States; |
• | our ability to maintain the listing of our common stock on the Nasdaq Global Market and the potential liquidity and trading of our securities; |
• | our future financial performance and expectations regarding future expenditures; |
• | the accuracy of our estimates regarding expenses, capital requirements and our future needs for additional financing; |
• | our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professional; |
• | developments relating to our competitors and our industry, and our ability to compete effectively in a competitive industry; |
• | our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately and to produce sufficient quantities of clinical and potentially future commercial supplies; |
• | our ability to enter into marketing or co-promotional arrangements and strategic partnerships; |
• | the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; |
• | regulatory, judicial, and legislative developments and their impact on our business; |
• | the impact from the outcome of any known and unknown litigation; and |
• | other risks and uncertainties, including those listed under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, or the 2021 Annual Report. |
• | We have incurred significant operating losses and there is substantial doubt about our ability to continue as a going concern, which is affecting our ability to obtain future financing and may require us to further curtail our operations. We will need to raise additional capital and restructure our indebtedness to support our operations. This additional funding may not be available on acceptable terms or at all. Failure to obtain this necessary capital or address our liquidity needs may force us to further delay, limit or terminate our operations, make further reductions in our workforce, discontinue our commercialization efforts for JATENZO as well as other development programs, liquidate all or a portion of our assets or pursue other strategic alternatives, and/or seek protection under the provisions of the U.S. Bankruptcy Code. |
• | We have significant indebtedness and servicing our debt requires a significant amount of cash. We may not have sufficient cash flow from our operations to satisfy the financial covenants in our debt agreements. We may not receive a waiver of default for outstanding indebtedness for which we may be in default in the future. |
• | Our planned workforce reduction may not result in anticipated savings, and could result in total costs and expenses that are greater than expected and could disrupt our business. |
• | We may not be successful in identifying and implementing any strategic business combination or other transaction and any strategic transactions that we may consummate in the future could have negative consequences. |
• | JATENZO is the only product we are commercializing. If we fail to successfully commercialize JATENZO, we may need to acquire additional product candidates and our business may be impaired. |
• | We have limited experience as a commercial company and the marketing and sale of JATENZO or any future approved drugs may be unsuccessful or less successful than anticipated. |
• | Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. |
• | Our reliance on third-party suppliers and distributors could harm our ability to commercialize JATENZO or any product candidates that may be approved in the future. |
• | The ongoing COVID-19 pandemic is having, and is expected to have, an adverse impact on our business. |
• | The U.S. Food and Drug Administration, or FDA, and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found to have improperly promoted off-label uses, we may become subject to significant liability. |
• | Even though we have received marketing approval for JATENZO in the United States, we may never receive marketing approval outside of the United States, or receive pricing and reimbursement outside the United States at acceptable levels. |
• | Recent federal legislation may increase pressure to reduce prices of certain pharmaceutical products paid for by Medicare, which could materially adversely affect our revenue and our results of operations. |
• | Testosterone, or T, is a Schedule III (non-narcotic) substance under the Controlled Substances Act and any failure to comply with this Act or its state equivalents would have a negative impact on our business. |
• | If coverage and reimbursement for JATENZO are limited, it may be difficult for us to profitably sell JATENZO. |
• | Our market is subject to intense competition and recently another oral TRT was approved. If we are unable to compete effectively, our opportunity to generate revenue from the sale of JATENZO will be impaired. |
• | If we are unable to obtain or protect intellectual property rights related to JATENZO, we may not be able to compete effectively in our market. |
• | We may be involved in lawsuits and proceedings to protect or enforce our patents, which could be expensive, time consuming and unsuccessful. |
• | We have identified material weaknesses in our internal control over financial reporting, and we may identify future material weaknesses in our internal control over financial reporting. |
• | We will need to grow our company, and we may encounter difficulties in managing this growth, which could disrupt our operations. |
• | Our future success depends on our ability to retain our key employees, and with our recent workforce reduction, we may not be able to attract, retain and motivate qualified personnel. |
• | Our debt agreements contain restrictions that limit our flexibility in operating our business. |
June 30, 2022 |
December 31, 2021 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
||||||||
Inventory, net |
||||||||
Prepaid expenses |
||||||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Total assets |
$ | $ | ||||||
Liabilities and stockholders’ deficit |
||||||||
Current liabilities: |
||||||||
Senior notes payable |
$ | $ | ||||||
Accounts payable |
||||||||
Accrued expenses |
||||||||
Deferred revenue |
||||||||
Total current liabilities |
||||||||
Derivative warrant liability |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (See Note 12) |
||||||||
Stockholders’ deficit: |
||||||||
Preferred stock, $ |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
Total liabilities and stockholders’ deficit |
$ | $ | ||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Net product revenue |
$ | $ | $ | $ | ||||||||||||
Cost of product sales |
||||||||||||||||
Gross profit |
||||||||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
||||||||||||||||
General and administrative |
||||||||||||||||
Research and development |
||||||||||||||||
Total operating expenses |
||||||||||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other (expense) income, net: |
||||||||||||||||
Change in fair value of warrant liability |
||||||||||||||||
Interest income |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Litigation settlement |
||||||||||||||||
Total other (expense) income, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Provision for income taxes |
||||||||||||||||
Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Accretion of preferred stock |
( |
) | ( |
) | ||||||||||||
Net loss attributable to common stockholders – basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Net loss per common share attributable to common stockholders, basic and diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Weighted-average common shares used in net loss per share attributable to common stockholders, basic and diluted |
||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Issuance of shares in connection with exercise of pre-funded warrants |
— | — | — | — | — | — | ||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||||
Net income (loss) |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
Balance at March 31, 2022 |
( |
) | ( |
) | ||||||||||||||||||||||||||
Issuance of shares in connection with the April 2022 Equity Offering, net of issuance costs |
— | — | — | |||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||||
Net income (loss) |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
Balance at June 30, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||
Balance at December 31, 2020 (as previously reported) |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
Retroactive application of the recapitalization due to the Business Combination (Note 3) |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||||
Adjusted balance at December 31, 2020 |
( |
) | ( |
) | ||||||||||||||||||||||||||
Conversion of convertible notes payable into Series D redeemable convertible preferred stock |
— | — | — | — | — | |||||||||||||||||||||||||
Conversion of Series D redeemable convertible preferred stock into common stock (1) |
( |
) | ( |
) | — | — | — | |||||||||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value (1) |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||||
Net income (loss) |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
Balance at March 31, 2021 |
( |
) | ( |
) | ||||||||||||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value (1) |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | |||||||||||||||||||||||||
Net income (loss) |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
Balance at June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||
(1) | Relates to activity associated with the Redeemable Convertible Preferred Stock prior to the reverse recapitalization on September 9, 2021. As all common shares have been retroactively restated to give effect to the Business Combination, there are no shares of common stock associated with the conversion of Series D redeemable convertible preferred stock. |
Six Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
Operating activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Non-cash interest expense related to debt financing and royalty obligation, net of payment |
( |
) | ||||||
Settlement of interest with payment-in-kind |
||||||||
Change in fair value of warrant liability |
( |
) | ||||||
Stock-based compensation expense |
||||||||
Depreciation |
||||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Inventory |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued expenses |
||||||||
Deferred revenue |
( |
) | ||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Investing activities |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Financing activities |
||||||||
Proceeds from issuance of convertible notes payable |
||||||||
Proceeds from issuance of senior notes payable |
||||||||
Proceeds from issuance of equity and pre-funded warrants, net of issuance costs |
||||||||
Payment of equity issuance costs |
|
|
( |
) | |
|
|
|
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
|
|
|
|
|||||
Net (decrease) increase in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents – beginning of period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents – end of period |
$ | $ | ||||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for interest |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock |
$ | $ | ||||||
|
|
|
|
|||||
Conversion of convertible notes payable into Series D redeemable convertible preferred stock |
$ | $ | ||||||
|
|
|
|
|||||
Conversion of Series D redeemable convertible preferred stock into common stock |
$ | $ | ||||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Beginning Balance |
$ | $ | $ | $ | ||||||||||||
Amounts deferred |
||||||||||||||||
Revenue recognized |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Ending Balance |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Cash – Blue Water Trust Account and cash (net of redemptions) |
$ | |||
Less: Equity issuance costs and other costs paid |
( |
) | ||
|
|
|||
Net Proceeds from the Business Combination |
$ | |||
|
|
Blue Water shares outstanding prior to the Business Combination |
||||
Conversion of Legacy Clarus Series D Preferred Stock |
||||
Conversion of Legacy Clarus convertible notes |
||||
Conversion of additional capital provided by Legacy Clarus convertible note and senior note holders |
||||
Conversion of Senior Secured Note principal and royalty rights |
||||
|
|
|||
Total shares of the Company’s common stock outstanding immediately following the Business Combination |
||||
|
|
June 30, 2022 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets |
||||||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Private placement warrant liability |
$ | $ | — | $ | — | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2021 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets |
||||||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Private placement warrant liability |
$ | $ | — | $ | — | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Fair value of underlying instrument |
$ | |||
Risk-free interest rate |
% | |||
Expected term (in years) |
||||
Expected volatility |
% | |||
Expected dividend yield |
% |
Balance at December 31, 2021 |
$ | |||
Change in fair value of warrant liability |
( |
) | ||
|
|
|||
Balance at March 31, 2022 |
||||
Change in fair value of warrant liability |
( |
) | ||
|
|
|||
Balance at June 30, 2022 |
$ | |||
|
|
June 30, 2022 |
December 31, 2021 |
|||||||
Raw material |
$ | $ | ||||||
Work-in-process |
||||||||
Finished goods |
||||||||
|
|
|
|
|||||
Total inventory |
||||||||
Inventory reserve |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total inventory, net of reserve |
$ | $ | ||||||
|
|
|
|
June 30, 2022 |
December 31, 2021 |
|||||||
Selling and marketing costs |
$ | $ | ||||||
Employee compensation and related benefits |
||||||||
Professional fees |
||||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
June 30, 2022 |
December 31, 2021 |
|||||||
Principal amount |
$ | $ | ||||||
Accrued interest |
||||||||
Unamortized debt discount |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
Years ended December 31, |
Amount |
|||
2022 (remaining 6 months) |
$ | |||
2023 |
||||
2024 |
||||
2025 |
||||
|
|
|||
Total |
$ | |||
|
|
Six Months Ended June 30, |
||||
2022 |
||||
Risk free interest rate |
% | |||
Expected term (in years) |
||||
Expected dividend yield |
% | |||
Expected volatility of underlying common stock |
% |
Number of options |
Weighted average exercise price |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value |
|||||||||||||
Outstanding as of December 31, 2021 |
$ | $ | ||||||||||||||
Granted |
— | |||||||||||||||
Exercised |
— | — | — | |||||||||||||
Cancelled or forfeited |
( |
) | — | |||||||||||||
Outstanding as of June 30, 2022 |
$ | $ | ||||||||||||||
Options vested and exercisable as of June 30, 2022 |
$ | — | $ | |||||||||||||
Options unvested as of June 30, 2022 |
$ | $ | — |
Number of Shares |
Weighted Average Grant Date Fair Value |
|||||||
Unvested restricted stock as of December 31, 2021 |
$ | |||||||
Granted |
||||||||
Forfeited |
( |
) | ||||||
Unvested restricted stock as of June 30, 2022 |
$ | |||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Selling and marketing |
$ | $ | $ | $ | ||||||||||||
Research and development |
||||||||||||||||
General and administrative |
||||||||||||||||
Total stock-based compensation expense |
$ | $ | $ | $ | ||||||||||||
June 30, |
||||||||
2022 |
2021 |
|||||||
Redeemable convertible preferred stock |
||||||||
Convertible notes |
— | |||||||
Legacy Clarus warrants |
||||||||
IPO warrants |
||||||||
Private Placement warrants |
||||||||
December 2022 PIPE warrants |
||||||||
April 2022 equity offering warrants |
||||||||
Stock options and unvested restricted stock awards |
• | reorganize our streamlined operations and implement our planned reduction in workforce; |
• | continue commercialization of JATENZO in the United States for the treatment of adult males with a deficiency or absence of endogenous T; |
• | incur sales and marketing costs to support the commercialization of JATENZO; |
• | incur contractual manufacturing costs for JATENZO; |
• | implement post-approval requirements related to JATENZO; |
• | pursue additional indications and line extensions for JATENZO for the treatment of adult males with a deficiency or absence of endogenous T; |
• | seek to attract and retain new and existing skilled personnel; |
• | seek to discover and develop additional product candidates; |
• | seek to in-license or acquire additional product candidates for other medical conditions; |
• | adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products; |
• | maintain, expand and protect our intellectual property portfolio; |
• | add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; |
• | create additional infrastructure to support operations as a public company and incur increased legal, accounting, investor relations and other expenses; and |
• | experience delays or encounter issues with additional outbreaks of the pandemic in addition to any of the above. |
• | salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions; |
• | post-marketing requirements of the FDA for JATENZO and pharmaceutical development expense related to our internally -in-licensed |
• | costs of outside consultants, including their fees and related travel expenses engaged in research and development functions. |
Three Months Ended June 30, |
||||||||||||||||
2022 |
2021 |
Change ($) |
Change (%) |
|||||||||||||
Net product revenue |
$ | 4,050 | $ | 2,779 | $ | 1,271 | 46 | % | ||||||||
Cost of product sales |
1,160 | 554 | 606 | 109 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Gross profit |
2,890 | 2,225 | 665 | 30 | % | |||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
6,688 | 9,530 | (2,842 | ) | (30 | )% | ||||||||||
General and administrative |
5,625 | 5,327 | 298 | 6 | % | |||||||||||
Research and development |
1,229 | 606 | 623 | 103 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Loss from operations |
(10,652 | ) | (13,238 | ) | 2,586 | (20 | )% | |||||||||
Other expense, net: |
||||||||||||||||
Change in fair value of warrant liability and derivative, net |
728 | — | 728 | 100 | % | |||||||||||
Litigation settlement |
1,250 | — | 1,250 | 100 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total other expense, net |
(42 | ) | (4,877 | ) | 4,835 | (99 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Net loss |
$ | (10,694 | ) | $ | (18,115 | ) | $ | 7,421 | (41 | )% | ||||||
|
|
|
|
|
|
• | a $2.8 million decrease in outsourced advertising and promotion costs due to timing of media buys and agency activities; |
• | a $0.6 million decrease in patient assistance costs due to fixed copay rates; and |
• | a $0.2 million decrease in commercial analytic and market research costs; offset by |
• | a $0.7 million increase in other sales and marketing related costs primarily related to trade shows; NDA submissions and FDA user fees; and |
• | a $0.1 million increase in distribution fees. |
• | a $0.7 million increase in personnel costs, including stock-based compensation expense, primarily due to an increase in headcount and external consultants; |
• | a $0.6 million increase in other general and administrative costs ; and |
• | a $0.4 million increase in insurance fees, related to directors’ and officers’ insurance; offset by |
• | a $1.4 million decrease in consulting and professional fees. |
• | a $0.4 million increase in clinical costs related to costs incurred as part of the Phase 4 trials related to the development of JATENZO, our lead commercial product, during the three months ended June 30, 2022; and |
• | a $0.2 million increase in personnel costs. |
Six Months Ended June 30, |
||||||||||||||||
2022 |
2021 |
Change ($) |
Change (%) |
|||||||||||||
Net product revenue |
$ | 8,061 | $ | 5,109 | $ | 2,952 | 58 | % | ||||||||
Cost of product sales |
1,823 | 921 | 902 | 98 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Gross profit |
6,238 | 4,188 | 2,050 | 49 | % | |||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
17,418 | 17,467 | (49 | ) | 0 | % | ||||||||||
General and administrative |
10,910 | 8,932 | 1,978 | 22 | % | |||||||||||
Research and development |
2,110 | 1,817 | 293 | 16 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Loss from operations |
(24,200 | ) | (24,028 | ) | (172 | ) | 1 | % | ||||||||
Other expense, net: |
||||||||||||||||
Change in fair value of warrant liability and derivative, net |
1,370 | — | 1,370 | 100 | % | |||||||||||
Interest income |
1 | — | 1 | 100 | % | |||||||||||
Interest expense |
(3,985 | ) | (9,517 | ) | 5,532 | (58 | )% | |||||||||
Litigation settlement |
1,250 | — | 1,250 | 100 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total other expense, net |
(1,364 | ) | (9,517 | ) | (8,153 | ) | (86 | )% | ||||||||
|
|
|
|
|
|
|||||||||||
Net loss |
$ | (25,564 | ) | $ | (33,545 | ) | $ | 7,981 | (24 | )% | ||||||
|
|
|
|
|
|
• | a $0.8 million decrease in outsourced advertising and promotion costs due to timing of media buys and agency activities; and |
• | a $0.7 million decrease in commercial analytic and market research costs, primarily related to prescription and payor data; offset by |
• | a $1.2 million increase in other sales and marketing related costs primarily related to trade shows, NDA submission and FDA user fees and |
• | a $0.2 million increase in distribution fees. |
• | a $2.3 million increase in personnel costs, including stock-based compensation expense, primarily due to an increase in headcount and external consultants; |
• | a $0.9 million increase in insurance fees, related to directors’ and officers’ insurance; and |
• | a $0.8 million increase in other general and administrative costs; offset by, |
• | a $2.0 million decrease in consulting and professional fees. |
• | a $0.6 million increase in personnel costs; offset by |
• | a $0.3 million decrease in clinical costs related to costs incurred as part of the Phase 4 trials related to the development of JATENZO, our lead commercial product, during the six months ended June 30, 2022. |
Six Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
Net cash used in operating activities |
$ | (34,769 | ) | $ | (21,935 | ) | ||
Net cash used in investing activities |
(10 | ) | (20 | ) | ||||
Net cash provided by financing activities |
27,537 | 25,000 | ||||||
|
|
|
|
|||||
Net (decrease) increase in cash and cash equivalents |
$ | (7,242 | ) | $ | 3,045 | |||
|
|
|
|
• | The costs, timing and ability to manufacture JATENZO; |
• | the costs of future activities, including product sales, marketing, manufacturing and distribution of JATENZO; |
• | the costs of manufacturing commercial-grade product and necessary inventory to support continued commercialization; |
• | the costs of potential milestones related to license agreements; |
• | the ability to receive additional non-dilutive funding, including grants from organizations and foundations; |
• | the revenue from commercial sale of our products; |
• | the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual property rights and defending intellectual property-related claims; and |
• | our ability to establish and maintain collaborations on favorable terms, if at all. |
* | The certifications furnished in Exhibit 32.1 hereto are deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent specifically incorporated by reference. |
Date: August 19, 2022 | By: | /s/ Robert E. Dudley | ||||
Name: | Robert E. Dudley | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) | ||||||
By: | /s/ Richard Peterson | |||||
Name: | Richard Peterson | |||||
Title: | Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |