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, 2018
OR
☐ |
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 1-10352
JUNIPER PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
Delaware |
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59-2758596 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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33 Arch Street Boston, Massachusetts |
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02110 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (617) 639-1500
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
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Non-accelerated filer |
☐ (Do not check if a smaller reporting company) |
Smaller reporting company |
☐ |
Emerging Growth Company ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the registrant’s common stock as of August 3, 2018: 11,319,757.
Unless the context indicates otherwise, references in this Quarterly Report to “Juniper Pharmaceuticals,” “Juniper,” “the Company,” “we” “our,” and “us” mean Juniper Pharmaceuticals, Inc. and its subsidiaries.
Table of Contents
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Page |
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Part I—Financial Information |
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Item 1. |
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Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 |
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1 |
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2 |
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3 |
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4 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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5 |
Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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20 |
Item 3. |
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30 |
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Item 4. |
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31 |
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Part II—Other Information |
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Item 1. |
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32 |
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Item 1A. |
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32 |
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Item 2. |
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33 |
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Item 3. |
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33 |
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Item 4. |
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33 |
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Item 5. |
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33 |
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Item 6. |
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34 |
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35 |
Juniper Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
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June 30, 2018 |
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December 31, 2017 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
20,826 |
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$ |
21,446 |
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Accounts receivable, net |
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10,772 |
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4,734 |
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Inventories |
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6,280 |
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6,326 |
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Prepaid expenses and other current assets |
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3,228 |
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3,467 |
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Total current assets |
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41,106 |
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35,973 |
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Property and equipment, net |
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17,074 |
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15,229 |
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Intangible assets, net |
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587 |
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744 |
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Goodwill |
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8,928 |
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9,123 |
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Other assets |
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73 |
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151 |
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Total assets |
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$ |
67,768 |
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$ |
61,220 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
7,173 |
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$ |
4,038 |
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Accrued expenses and other |
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7,398 |
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5,615 |
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Deferred revenue |
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887 |
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6,141 |
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Current portion of long-term debt |
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544 |
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546 |
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Total current liabilities |
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16,002 |
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16,340 |
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Long-term debt, net of current portion |
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2,909 |
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3,253 |
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Deferred tax liability |
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300 |
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— |
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Other non-current liabilities |
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64 |
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115 |
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Total liabilities |
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19,275 |
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19,708 |
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Stockholders’ equity: |
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Common stock $0.01 par value; 150,000 shares authorized; 12,525 issued and 11,105 outstanding at June 30, 2018 and 12,257 issued and 10,844 outstanding at December 31, 2017 |
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125 |
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123 |
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Additional paid-in capital |
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294,584 |
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292,108 |
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Treasury stock (at cost), 1,420 shares at June 30, 2018 and 1,413 shares at December 31, 2017 |
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(8,661 |
) |
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(8,601 |
) |
Accumulated deficit |
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(233,802 |
) |
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(238,961 |
) |
Accumulated other comprehensive loss |
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(3,753 |
) |
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(3,157 |
) |
Total stockholders’ equity |
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48,493 |
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41,512 |
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Total liabilities and stockholders’ equity |
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$ |
67,768 |
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$ |
61,220 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
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Three Months Ended June 30 |
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Six Months Ended June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
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Revenues |
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Product revenues |
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$ |
9,343 |
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$ |
9,569 |
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$ |
19,417 |
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$ |
17,295 |
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Service revenues |
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5,717 |
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4,387 |
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11,167 |
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7,908 |
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License revenues |
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250 |
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— |
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250 |
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— |
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Total revenues |
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15,310 |
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13,956 |
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30,834 |
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25,203 |
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Cost of product revenues |
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6,158 |
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5,303 |
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12,174 |
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9,617 |
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Cost of service revenues |
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2,959 |
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2,347 |
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5,969 |
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4,590 |
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Total cost of revenues |
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9,117 |
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7,650 |
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18,143 |
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14,207 |
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Gross profit |
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6,193 |
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6,306 |
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12,691 |
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10,996 |
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Operating expenses |
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Sales and marketing |
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563 |
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410 |
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982 |
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788 |
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Research and development |
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1,055 |
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1,648 |
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2,029 |
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2,994 |
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General and administrative |
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6,518 |
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4,604 |
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10,607 |
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9,025 |
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Total operating expenses |
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8,136 |
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6,662 |
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13,618 |
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12,807 |
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Loss from operations |
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(1,943 |
) |
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(356 |
) |
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(927 |
) |
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(1,811 |
) |
Interest expense, net |
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(29 |
) |
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(30 |
) |
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(74 |
) |
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(58 |
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Other income, net |
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758 |
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10 |
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559 |
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52 |
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Total non-operating income (expense) |
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729 |
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(20 |
) |
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485 |
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(6 |
) |
Loss before income taxes |
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(1,214 |
) |
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(376 |
) |
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(442 |
) |
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(1,817 |
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Income tax expense |
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300 |
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— |
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300 |
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— |
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Net loss |
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(1,514 |
) |
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(376 |
) |
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(742 |
) |
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(1,817 |
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Adjustments attributable to preferred stockholders |
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— |
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452 |
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— |
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|
445 |
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Net (loss) income available to common stockholders |
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$ |
(1,514 |
) |
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$ |
76 |
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$ |
(742 |
) |
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$ |
(1,372 |
) |
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Basic net (loss) income per common share |
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$ |
(0.14 |
) |
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$ |
0.01 |
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$ |
(0.07 |
) |
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$ |
(0.13 |
) |
Diluted net (loss) income per common share |
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$ |
(0.14 |
) |
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$ |
(0.03 |
) |
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$ |
(0.07 |
) |
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$ |
(0.13 |
) |
Basic weighted average common shares outstanding |
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11,103 |
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10,803 |
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11,023 |
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10,803 |
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Diluted weighted average common shares outstanding |
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11,103 |
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10,954 |
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11,023 |
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10,803 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Condensed Consolidated Statements of Comprehensive (Loss) Income
(in thousands)
(unaudited)
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Three Months Ended June 30 |
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Six Months Ended June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
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Net loss |
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$ |
(1,514 |
) |
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$ |
(376 |
) |
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$ |
(742 |
) |
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$ |
(1,817 |
) |
Other comprehensive (loss) income components: |
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Foreign currency translation |
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(1,536 |
) |
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|
823 |
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(596 |
) |
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|
1,051 |
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Total other comprehensive (loss) income |
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(1,536 |
) |
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|
823 |
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(596 |
) |
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1,051 |
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Comprehensive (loss) income |
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$ |
(3,050 |
) |
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$ |
447 |
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|
$ |
(1,338 |
) |
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$ |
(766 |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
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Six Months Ended June 30, |
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2018 |
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2017 |
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Operating activities: |
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Net loss |
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$ |
(742 |
) |
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$ |
(1,817 |
) |
Reconciliation of net loss to net cash used in operating activities: |
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Depreciation and amortization |
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1,211 |
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1,075 |
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Stock-based compensation expense |
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1,069 |
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|
845 |
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Deferred tax liability |
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|
300 |
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|
— |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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(6,188 |
) |
|
|
(145 |
) |
Inventories |
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46 |
|
|
|
409 |
|
Prepaid expenses and other current assets |
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487 |
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(240 |
) |
Accounts payable |
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2,915 |
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(805 |
) |
Accrued expenses and other |
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1,898 |
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(335 |
) |
Deferred rent |
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(23 |
) |
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(18 |
) |
Deferred revenue |
|
|
469 |
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|
1,522 |
|
Net cash provided by operating activities |
|
|
1,442 |
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|
|
491 |
|
Investing activities: |
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Purchases of property and equipment |
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(3,092 |
) |
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(1,404 |
) |
Net cash used in investing activities |
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(3,092 |
) |
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(1,404 |
) |
Financing activities: |
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|
|
|
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Proceeds from sale of common stock / exercise of options |
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1,407 |
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|
|
— |
|
Proceeds from loan facility |
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— |
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|
954 |
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Proceeds from equipment loans |
|
|
— |
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|
|
1,501 |
|
Principal payments on debt |
|
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(274 |
) |
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(1,143 |
) |
Payments to satisfy employee taxes due on vesting of restricted awards |
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(60 |
) |
|
|
— |
|
Dividends paid |
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— |
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|
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(7 |
) |
Net cash provided by financing activities |
|
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1,073 |
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|
1,305 |
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Effect of exchange rate changes on cash and cash equivalents |
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(43 |
) |
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|
78 |
|
Net (decrease) increase in cash and cash equivalents |
|
|
(620 |
) |
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|
470 |
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Cash and cash equivalents, beginning of period |
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|
21,446 |
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|
|
20,994 |
|
Cash and cash equivalents, end of period |
|
$ |
20,826 |
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$ |
21,464 |
|
Supplemental cash flow information |
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|
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Cash paid for interest |
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$ |
75 |
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$ |
50 |
|
Supplemental noncash information |
|
|
|
|
|
|
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Purchases of equipment through accounts payable and accrued expenses |
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$ |
470 |
|
|
$ |
327 |
|
Excess of carrying value of Series C Preferred Stock over redemption value |
|
$ |
— |
|
|
$ |
459 |
|
Redemption of Series C Preferred Stock and dividend included in accounts payable |
|
$ |
— |
|
|
$ |
98 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Interim Condensed Consolidated Financial Statements
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Annual Report on Form 10-K of Juniper Pharmaceuticals, Inc. (“Juniper” or the “Company”) for the year ended December 31, 2017 filed with the SEC on March 9, 2018 (the “2017 Annual Report”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2018, and its results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The condensed consolidated balance sheet at December 31, 2017 was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements. Results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018 or any period thereafter.
At June 30, 2018, cash and cash equivalents were $20.8 million. The Company’s future funding requirements depend on a number of factors, including the rate of market acceptance of its current and future products and services and the resources the Company devotes to developing and supporting the same. The Company believes that current cash and cash equivalents, as well as cash generated from operations, will be sufficient to meet anticipated cash needs for working capital and capital expenditures through the next twelve months from the date of the filing of this Form 10-Q. The Company may be dependent on its ability to raise additional capital to finance operations. If the Company is not able to raise additional capital on terms acceptable to it, or at all, as and when needed, it may be required to evaluate future anticipated capital or operational needs.
Management Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to, revenue recognition, allowance for doubtful accounts, inventory reserves, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, and fair value of stock options. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates.
(2) Inventories
Inventories are stated at the lower of cost or market, determined on a first-in, first-out method. The Company monitors standard costs on a monthly basis and updates them annually as necessary to reflect change in raw material costs and labor and overhead rates. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands):
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June 30, 2018 |
|
|
December 31, 2017 |
|
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Raw materials |
|
$ |
1,382 |
|
|
$ |
1,921 |
|
Work in process |
|
|
4,060 |
|
|
|
3,299 |
|
Finished goods |
|
|
838 |
|
|
|
1,106 |
|
Total |
|
$ |
6,280 |
|
|
$ |
6,326 |
|
5
The Company provides inventory allowances when conditions indicate that the selling price could be less than cost due to physical deterioration, usage, obsolescence, reductions in estimated future demand and reductions in selling prices. The Company balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact its gross margins. The inventory reserve balance at June 30, 2018 and December 31, 2017 was $0.2 million and 0.5 million, respectively. No charges for excess and obsolete inventory were incurred during the three months ended June 30, 2018 or 2017. During the six months ended June 30, 2018 and 2017, the Company recorded charges in the condensed consolidated statements of operations for excess and obsolete inventory of $11,000 and $0.2 million, respectively.
(3) Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that fair value of the asset may be less than the carrying value of the asset.
Changes to goodwill during the six months ended June 30, 2018 were as follows (in thousands):
|
|
Total |
|
|
Balance—December 31, 2017 |
|
$ |
9,123 |
|
Effects of foreign currency translation |
|
|
(195 |
) |
Balance—June 30, 2018 |
|
$ |
8,928 |
|
The Company capitalizes and includes in intangible assets the costs of trademark, developed technology and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 3 to 7 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, (“ASC 820”). If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life.
Intangible assets consist of the following at June 30, 2018 and December 31, 2017 (in thousands):
|
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Trademark |
|
|
Developed Technology |
|
|
Customer Relationships |
|
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Total |
|
||||
Gross carrying amount |
|
$ |
300 |
|
|
$ |
1,370 |
|
|
$ |
1,240 |
|
|
$ |
2,910 |
|
Foreign currency translation adjustment |
|
|
(53 |
) |
|
|
(223 |
) |
|
|
(201 |
) |
|
|
(477 |
) |
Accumulated amortization |
|
|
(247 |
) |
|
|
(888 |
) |
|
|
(711 |
) |
|
|
(1,846 |
) |
Balance—June 30, 2018 |
|
$ |
— |
|
|
$ |
259 |
|
|
$ |
328 |
|
|
$ |
587 |
|
|
Trademark |
|
|
Developed Technology |
|
|
Customer Relationships |
|
|
Total |
|
|||||
Gross carrying amount |
|
$ |
300 |
|
|
$ |
1,370 |
|
|
$ |
1,240 |
|
|
$ |
2,910 |
|
Foreign currency translation adjustment |
|
|
(53 |
) |
|
|
(198 |
) |
|
|
(179 |
) |
|
|
(430 |
) |
Accumulated amortization |
|
|
(247 |
) |
|
|
(839 |
) |
|
|
(650 |
) |
|
|
(1,736 |
) |
Balance—December 31, 2017 |
|
$ |
— |
|
|
$ |
333 |
|
|
$ |
411 |
|
|
$ |
744 |
|
Amortization expense for the three months ended June 30, 2018 and 2017 was $0.1 million. Amortization expense for the six months ended June 30, 2018 and 2017 was $0.2 million and $0.2 million, respectively. Amortization expense related to developed technology is classified as a component of cost of service revenues in the accompanying consolidated statements of operations. Amortization expense related to trademark and customer relationships is classified as a component of general and administrative expenses in the accompanying consolidated statements of operations.
6
As of June 30, 2018, amortization expense remaining on existing intangible assets is as follows (in thousands):
Year ending December 31, |
|
Total |
|
|
Remainder of 2018 |
|
$ |
142 |
|
2019 |
|
|
256 |
|
2020 |
|
|
189 |
|
Total |
|
$ |
587 |
|
(4) Debt and Other Contractual Obligations
In September 2013, Juniper assumed debt of $3.9 million in connection with its acquisition of Juniper Pharma Services (“JPS”). JPS had entered into a Business Loan Agreement (“Loan Agreement”) covering three loan facilities (collectively referred to as the “original agreements”) with Lloyds TSB Bank (“Lloyds”) as administrative agent. In May 2017, JPS repaid one of the existing loan facilities upon which JPS subsequently entered into a new loan facility with the same administrative agent for the same outstanding balance. The refinancing was accounted for as a modification with no resulting gain or loss. The remaining original agreements and the new agreement are collectively referred to as the “loan facilities”.
As of June 30, 2018, the Company owed $2.3 million on the loan facilities. All facilities are due for repayment over periods ranging from 7-15 years from the date of drawdown. Two of the facilities bear interest at the Bank of England’s base rate plus 1.95%, and 2.55%, respectively. The weighted average interest rates at June 30, 2018 for these two facilities were 2.45% and 3.05%, respectively. The third facility is a fixed rate agreement bearing interest at 2.99% per annum. The weighted average interest rate for the three loan facilities for the three months ended June 30, 2018 was 2.76%. The loan facilities are secured by the mortgaged property and an unlimited lien on other assets of JPS. The loan facilities contain financial covenants that limit the amount of indebtedness Juniper Pharma Services may incur, requires Juniper Pharma Services to maintain certain levels of net worth, and restricts Juniper Pharma Services’ ability to materially alter the character of its business. As of June 30, 2018, the Company is in compliance with all of the covenants under the loan facilities.
As of June 30, 2018, the Company owed $1.2 million on its equipment loans. During the quarter ending March 31, 2017, the Company entered into two loans totaling $1.5 million with payments through March 2022 for equipment in its Nottingham, U.K. facility at an interest rate of 2.09%. The transactions were considered failed sales-leaseback arrangements as the Company will obtain title to the equipment at the end of the term of the financing for little or no consideration. These failed sale-leaseback arrangements have been recorded as a component of long-term debt on the Company’s condensed consolidated balance sheets. The initial terms of the loans are 60 months.
In October 2015, the Company entered into an operating lease agreement for its corporate office in Boston, Massachusetts. The initial term of the lease agreement is approximately 39 months and ends in the January of 2019, which includes a three-month free rent period.
In December 2016, the Company entered into an API Supply Agreement for a manufacturer of progesterone under which the Company has agreed to annual minimum volume commitments until December 2019.
The Company’s significant outstanding contractual obligations relate to operating leases for the Company’s facilities, loan agreements and minimum volume commitments. The Company’s facility leases are non-cancellable and contain renewal options. The Company’s future contractual obligations as of June 30, 2018 include the following (in thousands):
|
|
Total |
|
|
Remainder of 2018 |
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
2022 |
|
|
Thereafter |
|
|||||||
Operating lease obligations |
|
$ |
296 |
|
|
$ |
222 |
|
|
$ |
74 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Loan principal repayments |
|
|
2,255 |
|
|
|
116 |
|
|
|
237 |
|
|
|
243 |
|
|
|
250 |
|
|
|
257 |
|
|
|
1,152 |
|
Capital lease obligations |
|
|
1,198 |
|
|
|
154 |
|
|
|
317 |
|
|
|
331 |
|
|
|
344 |
|
|
|
52 |
|
|
|
|
|
Minimum purchase obligation |
|
|
5,375 |
|
|
|
3,401 |
|
|
|
1,974 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
9,124 |
|
|
$ |
3,893 |
|
|
$ |
2,602 |
|
|
$ |
574 |
|
|
$ |
594 |
|
|
$ |
309 |
|
|
$ |
1,152 |
|
7
(5) Intravaginal Ring Technology License
In March 2015, the Company obtained an exclusive worldwide license (“License Agreement”) to the intellectual property rights for a novel segmented intravaginal ring (“IVR”) technology. Due to its novel polymer and segmentation composition, the Company believes the IVR has the potential to deliver one or more drugs, including hormones and larger molecules such as peptides, at different dosages and release rates within a single segmented ring. Drugs such as progesterone and leuprolide have already been tested using the technology and demonstrated sustained release for up to three weeks. This technology was developed by Dr. Robert Langer from the Massachusetts Institute of Technology (“MIT”) and Dr. William Crowley from Massachusetts General Hospital (“MGH”) and Harvard Medical School. Drs. Langer and Crowley each agreed to serve a three-year term, which ended in March 2018, as strategic advisors to the Company in exchange for an upfront one-time payment plus quarterly fees and equity compensation.
Unless earlier terminated by the parties, the License Agreement will remain in effect until the later of (i) the date on which all issued patents and filed patent applications within the licensed patent rights have expired or been abandoned and (ii) one year after the last sale for which a royalty is due under the License Agreement or 10 years after such expiration or abandonment date referred to in (i), whichever is earlier. Juniper has the right to terminate the License Agreement by giving 90 days advance written notice to MGH. MGH has the right to terminate the License Agreement based on the Company’s failure to make payments due under the License Agreement, subject to a 15 day cure period, or the Company’s failure to maintain the insurance required by the License Agreement. MGH may also terminate the License Agreement based on Juniper’s non-financial default under the License Agreement, subject to a 60 day cure period.
Pursuant to the terms of the License Agreement, Juniper has agreed to reimburse MGH for all costs associated with the preparation, filing, prosecution and maintenance of the licensed patent rights, and has agreed to pay MGH a $50,000 annual license fee on each of the first five year anniversaries of the effective date of the License Agreement, and a $100,000 annual license fee beginning on the sixth anniversary of the effective date of the License Agreement and on each subsequent anniversary thereafter. The annual license fee is creditable against any royalties or sublicense income payable in each calendar year.
Under the terms of the License Agreement, Juniper has agreed to use commercially reasonable efforts to develop and commercialize at least one product and/or process related to the IVR technology, which efforts will include the making of certain minimum annual expenditures in each of the first five years following the effective date of the License Agreement. Juniper has also agreed to pay MGH certain milestone payments totaling up to $1.2 million tied to the Company’s achievement of certain development and commercialization milestones, and certain annual royalty payments based on net sales of any such patented products or processes developed by Juniper.
Daré Bioscience, Inc.
On April 24, 2018, Juniper entered into an Exclusive License Agreement with Daré Bioscience, Inc. (Daré), the “Daré License Agreement”) pursuant to which the Company granted Daré (a) an exclusive worldwide license under certain patent rights (i) owned by the Company and (ii) exclusively licensed to the Company under the License Agreement, dated as of March 25, 2015, by and between Juniper and The General Hospital Corporation, as amended, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive worldwide license under certain technological information owned by the Company to make, have made, use, have used, sell, have sold, import and have imported products and processes. Daré is also entitled to sublicense the rights granted to it under the Daré License Agreement.
As consideration, the Company received in May 2018 a $250,000 license fee from Daré in connection with the execution of the Daré License Agreement. In addition, the Company is entitled to receive an annual license maintenance fee from Daré in the amount of $50,000 for the first two anniversaries of the effective date of the Daré License Agreement, increasing to $100,000 for each anniversary thereafter. The Company is also entitled to receive potential future development and sales milestone payments of up to $43.8 million (up to $13.5 million in development milestones and up to $30.3 million in sales milestones) for each product or process covered by the licenses granted under the Daré License Agreement. The Company is also eligible to receive mid-single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the Daré Licensee Agreement. The royalty term shall terminate on a product-by-product basis (or process-by-process) basis on the latest of (i) the expiration date of the last valid claim within the licensed patent rights in a country, (ii) ten (10) years following the first commercial sale of a product or process in a country, or (iii) the entry of generic competition for a product or process in a country, provided that if there is no generic competition for a product or process in a country by the ten (10) year anniversary of the first commercial sale of a product or process in a country, the royalty term shall terminate on the ten (10) year anniversary of the first commercial sale of such product or process in the country. In addition, if Daré sublicenses any of its rights under the Daré License Agreement, the Company is eligible to a low double-digit percentage of all sublicense income received by Daré for the sublicense of such rights to a third party, in lieu of the royalties on net sales noted above.
8
(6) Segments and Geographic Information
The Company and its subsidiaries currently operate in two segments, product and service. The product segment oversees the supply chain and manufacturing of Crinone, the Company’s sole commercialized product. The service segment includes product development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers as well as characterizing and developing pharmaceutical product candidates for the Company’s internal programs. The Company conducts its advanced formulation, analytical and consulting services through its subsidiary, Juniper Pharma Services, the Company’s U.K.-based provider of pharmaceutical development, clinical trial manufacturing and advanced analytical and consulting services to the pharmaceuticals industry. The Company has integrated its supply chain management for Crinone into those operations and has therefore sought to capture synergies by transferring all operational activities related to its historic business. The Company owns certain plant and equipment physically located at third-party contractor facilities in the United Kingdom (the “U.K.”) and Switzerland.
The Company’s largest customer, Merck KGaA, utilizes a Switzerland-based subsidiary to acquire product from the Company, which it then sells throughout the world, excluding the United States (the “U.S.”).
The following tables show selected information by geographic area (in thousands):
Revenues:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
United States |
|
$ |
3,917 |
|
|
$ |
2,387 |
|
|
$ |
7,459 |
|
|
$ |
4,015 |
|
Switzerland |
|
|
9,518 |
|
|
|
9,759 |
|
|
|
19,796 |
|
|
|
17,516 |
|
United Kingdom |
|
|
1,182 |
|
|
|
1,088 |
|
|
|
1,975 |
|
|
|
2,037 |
|
Other countries |
|
|
693 |
|
|
|
722 |
|
|
|
1,604 |
|
|
|
1,635 |
|
Total |
|
$ |
15,310 |
|
|
$ |
13,956 |
|
|
$ |
30,834 |
|
|
$ |
25,203 |
|
Total assets:
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
United States |
|
$ |
20,886 |
|
|
$ |
21,683 |
|
Switzerland |
|
|
7,362 |
|
|
|
1,366 |
|
United Kingdom |
|
|
39,491 |
|
|
|
38,129 |
|
Other countries |
|
|
29 |
|
|
|
42 |
|
Total |
|
$ |
67,768 |
|
|
$ |
61,220 |
|
Long-lived assets:
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
United States |
|
$ |
345 |
|
|
$ |
523 |
|
Switzerland |
|
|
1,257 |
|
|
|
535 |
|
United Kingdom |
|
|
16,129 |
|
|
|
15,064 |
|
Other countries |
|
|
3 |
|
|
|
2 |
|
Total |
|
$ |
17,734 |
|
|
$ |
16,124 |
|
Long-lived assets include fixed assets, intangibles and other assets.
No other individual country represented greater than 10% of total revenues, total assets or total long-lived assets for any period presented.
For the three and six months ended June 30, 2018 and 2017, Merck KGaA accounted for 100% of the product segment revenue. At June 30, 2018 and December 31, 2017, Merck KGaA made up 100% of the product segment accounts receivable.
9
For the three and six months ended June 30, 2018 and 2017, the same customer accounted for 41% and 28% and 37% and 23% of the service segment total revenue, respectively. No additional customers accounted for 10% or more of the service segment total revenue for the three or six months ended June 30, 2018 and 2017. At June 30, 2018 and December 31, 2017, one customer accounted for 47% and 53% of total service segment accounts receivable, respectively.
The following summarizes other information by segment for the three months ended June 30, 2018 (in thousands):
|
|
Product |
|
|
Service |
|
|
Total |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
9,343 |
|
|
$ |
— |
|
|
$ |
9,343 |
|
Service revenues |
|
|
— |
|
|
|
5,717 |
|
|
|
5,717 |
|
License revenues |
|
|
250 |
|
|
|
— |
|
|
|
250 |
|
Total revenues |
|
$ |
9,593 |
|
|
$ |
5,717 |
|
|
$ |
15,310 |
|
Cost of product revenues |
|
|
6,158 |
|
|
|
— |
|
|
|
6,158 |
|
Cost of service revenues |
|
|
— |
|
|
|
2,959 |
|
|
|
2,959 |
|
Total cost of revenues |
|
$ |
6,158 |
|
|
$ |
2,959 |
|
|
$ |
9,117 |
|
Gross profit |
|
$ |
3,435 |
|
|
$ |
2,758 |
|
|
$ |
6,193 |
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
8,136 |
|
Total non-operating income |
|
|
|
|
|
|
|
|
|
|
729 |
|
Loss before income taxes |
|
|
|
|
|
|
|
|
|
$ |
(1,214 |
) |
The following summarizes other information by segment for the three months ended June 30, 2017 (in thousands):
|
|
Product |
|
|
Service |
|
|
Total |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
9,569 |
|
|
$ |
— |
|
|
$ |
9,569 |
|
Service revenues |
|
|
— |
|
|
|
4,387 |
|
|
|
4,387 |
|
Total revenues |
|
$ |
9,569 |
|
|
$ |
4,387 |
|
|
$ |
13,956 |
|
Cost of product revenues |
|
|
5,303 |
|
|
|
— |
|
|
|
5,303 |
|
Cost of service revenues |
|
|
— |
|
|
|
2,347 |
|
|
|
2,347 |
|
Total cost of revenues |
|
$ |
5,303 |
|
|
$ |
2,347 |
|
|
$ |
7,650 |
|
Gross profit |
|
$ |
4,266 |
|
|
$ |
2,040 |
|
|
$ |
6,306 |
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
6,662 |
|
Total non-operating expense |
|
|
|
|
|
|
|
|
|
|
(20 |
) |
Loss before income taxes |
|
|
|
|
|
|
|
|
|
$ |
(376 |
) |
The following summarizes other information by segment for the six months ended June 30, 2018 (in thousands):
|
|
Product |
|
|
Service |
|
|
Total |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
19,417 |
|
|
$ |
— |
|
|
$ |
19,417 |
|
Service revenues |
|
|
— |
|
|
|
11,167 |
|
|
|
11,167 |
|
License revenues |
|
|
250 |
|
|
|
— |
|
|
|
250 |
|
Total revenues |
|
$ |
19,667 |
|
|
$ |
11,167 |
|
|
$ |
30,834 |
|
Cost of product revenues |
|
|
12,174 |
|
|
|
— |
|
|
$ |
12,174 |
|
Cost of service revenues |
|
|
— |
|
|
|
5,969 |
|
|
$ |
5,969 |
|
Total cost of revenues |
|
$ |
12,174 |
|
|
$ |
5,969 |
|
|
|
18,143 |
|
Gross profit |
|
$ |
7,493 |
|
|
$ |
5,198 |
|
|
$ |
12,691 |
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
13,618 |
|
Total non-operating income |
|
|
|
|
|
|
|
|
|
|
485 |
|
Loss before income taxes |
|
|
|
|
|
|
|
|
|
$ |
(442 |
) |
10
The following summarizes other information by segment for the six months ended June 30, 2017 (in thousands):
|
|
Product |
|
|
Service |
|
|
Total |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
17,295 |
|
|
$ |
— |
|
|
$ |
17,295 |
|
Service revenues |
|
|
— |
|
|
|
7,908 |
|
|
|
7,908 |
|
Total revenues |
|
$ |
17,295 |
|
|
$ |
7,908 |
|
|
$ |
25,203 |
|
Cost of product revenues |
|
$ |
9,617 |
|
|
$ |
— |
|
|
$ |
9,617 |
|
Cost of service revenues |
|
|
— |
|
|
|
4,590 |
|
|
|
4,590 |
|
Total cost of revenues |
|
$ |
9,617 |
|
|
$ |
4,590 |
|
|
$ |
14,207 |
|
Gross profit |
|
$ |
7,678 |
|
|
$ |
3,318 |
|
|
$ |
10,996 |
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
12,807 |
|
Total non-operating expense |
|
|
|
|
|
|
|
|
|
|
(6 |
) |
Loss before income taxes |
|
|
|
|
|
|
|
|
|
$ |
(1,817 |
) |
(7) Property and Equipment
Property and equipment consists of the following (in thousands):
|
|
Estimated Useful Life (Years) |
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Machinery and equipment |
|
3-10 |
|
$ |
15,061 |
|
|
$ |
12,358 |
|
Furniture and fixtures |
|
3-5 |
|
|
1,083 |
|
|
|
1,083 |
|
Computer equipment and software |
|
3-5 |
|
|
635 |
|
|
|
628 |
|
Buildings |
|
Up to 39 |
|
|
7,824 |
|
|
|
7,995 |
|
Land |
|
Indefinite |
|
|
502 |
|
|
|
513 |
|
Construction in-process |
|
|
|
|
1,387 |
|
|
|
1,133 |
|
|
|
|
|
|
26,492 |
|
|
|
23,710 |
|
Less: Accumulated depreciation |
|
|
|
|
(9,418 |
) |
|
|
(8,481 |
) |
Total |
|
|
|
$ |
17,074 |
|
|
$ |
15,229 |
|
Depreciation expense for the three and six months ended June 30, 2018 and 2017 was $0.5 million and $0.5 million and $1.1 million and $0.9 million, respectively.
Machinery and equipment includes $1.5 million of equipment purchased under equipment loans at June 30, 2018 and December 31, 2017.
(8) Shareholders’ Equity
Preferred Stock
During the quarter ending June 30, 2017, the Company issued a Notice of Conversion to the holders of its Series B and a Notice of Redemption to the holders of its Series C giving notice that on June 30, 2017 (the “Redemption and Conversion Date”) all outstanding shares of the respective Preferred Stock issuance would be converted, as in the case of the Series B, or redeemed, as in the case of the Series C. The Series B, by its terms, automatically converted into shares of common stock, upon the occurrence of the event. On the Redemption and Conversion Date, each share of the 130 shares of Series B outstanding converted into 2.78 shares of common stock resulting in an issuance of 361 shares.
The holders of each share of the 550 shares of Series C outstanding had the right to require the Company to redeem their shares in cash plus all accrued and unpaid dividends thereon the date such redemption is demanded. On the Redemption and Conversion Date, the Company paid to the holders of the Series C approximately $0.01 million and as a result of the transaction recorded the excess of the carrying value of Series C over redemption value of approximately $0.5 million to accumulated deficit for the year ended December 31, 2017. There are no outstanding shares of either the Series B or the Series C at June 30, 2018 or December 31, 2017.
11
(9) Net (Loss) Income Per Common Share
The calculation of basic and diluted income (loss) per common share and common share equivalents is as follows (in thousands except for per share data):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
Basic net (loss) income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,514 |
) |
|
$ |
(376 |
) |
|
$ |
(742 |
) |
|
$ |
(1,817 |
) |
Add: Excess of carrying value of Series C Preferred Stock over redemption value |
|
|
— |
|
|
|
459 |
|
|
|
|
|
|
|
459 |
|
Less: Preferred stock dividends |
|
|
— |
|
|
|
(7 |
) |
|
|
— |
|
|
|
(14 |
) |
Net (loss)income applicable to common stock |
|
$ |
(1,514 |
) |
|
$ |
76 |
|
|
$ |
(742 |
) |
|
$ |
(1,372 |
) |
Basic weighted average number of common shares outstanding |
|
|
11,103 |
|
|
|
10,803 |
|
|
|
11,023 |
|
|
|
10,803 |
|
Basic net (loss) income per common share |
|
$ |
(0.14 |
) |
|
$ |
0.01 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.13 |
) |
Diluted income (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income applicable to common stock |
|
$ |
(1,514 |
) |
|
$ |
76 |
|
|
$ |
(742 |
) |
|
$ |
(1,372 |
) |
Less: Excess of carrying value of Series C Preferred Stock over redemption value |
|
|
— |
|
|
|
(459 |
) |
|
|
— |
|
|
|
— |
|
Add: Preferred stock dividends |
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
Net loss applicable to dilutive common stock |
|
$ |
(1,514 |
) |
|
$ |
(376 |
) |
|
$ |
(742 |
) |
|
$ |
(1,372 |
) |
Basic weighted average number of common shares outstanding |
|
|
11,103 |
|
|
|
10,803 |
|
|
|
11,023 |
|
|
|
10,803 |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive stock awards |
|
|
— |
|
|
|
40 |
|
|
|
— |
|
|
|
— |
|
Dilutive preferred share conversion |
|
|
|
|
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
151 |
|
|
|
— |
|
|
|
— |
|
Diluted weighted average number of common shares outstanding |
|
|
11,103 |
|
|
|
10,954 |
|
|
|
11,023 |
|
|
|
10,803 |
|
Diluted net (loss) income per common share |
|
$ |
(0.14 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.13 |
) |
Basic net (loss) income per common share is computed by dividing the net (loss) income, less preferred dividends and adding the excess of carrying value of Series C Preferred Stock over redemption value recognized on the conversion of the Series C Preferred Shares by the weighted-average number of shares of common stock outstanding during a period. The diluted income (loss) per common share calculation gives effect to dilutive options, convertible preferred stock, and other potential dilutive common stock including restricted shares of common stock outstanding during the period. Diluted net (loss) income per share is based on the treasury stock method and includes the effect from potential issuance of common stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive.
Shares to be issued upon the exercise of the outstanding options, performance-based restricted stock units, convertible preferred stock, and selected restricted shares of common stock excluded from the income per share calculation amounted to 2.0 million and 2.4 million and 2.0 million and 1.5 million in each of the three and six months ended June 30, 2018 and 2017, respectively, because the awards were anti-dilutive.
12
(10) Accumulated Other Comprehensive Loss
Changes to accumulated other comprehensive loss during the six months ended June 30, 2018 were as follows (in thousands):
|
|
Translation Adjustment |
|
|
Balance—December 31, 2017 |
|
$ |
(3,157 |
) |
Current period other comprehensive income |
|
|
(596 |
) |
Balance—June 30, 2018 |
|
$ |
(3,753 |
) |
(11) Stock-Based Compensation
Stock Incentive Plan – Stock Options
Juniper granted options to purchase 293,500 and 680,400 shares of common stock to employees during the six months ended June 30, 2018 and 2017, respectively. There were no options granted to non-employees during the six months ended June 30, 2018 and 2017. Stock options granted to employees typically vest over a four-year term and options granted to non-employee directors typically vest over a three-year term.
The Company uses the Black-Scholes option pricing model to determine the estimated grant date fair values for stock-based awards. The Black-Scholes option pricing model requires the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The Company’s assumptions do not include an estimated forfeiture rate.
The weighted-average grant date fair values of options granted to employees during the six months ended June 30, 2018 and 2017 were $3.40 and $2.43, respectively, using the following assumptions:
|
|
Six Months Ended June 30, |
|
|||
|
|
2018 |
|
|
2017 |
|
Risk free interest rate |
|
2.15% |
|
|
1.45% - 1.59% |
|
Expected term |
|
4.75 years |
|
|
4.5 - 4.75 years |
|
Dividend yield |
|
— |
|
|
— |
|
Expected volatility |
|
47.79% - 47.86% |
|
|
53.15% - 55.20% |
|
The Company records stock-based compensation expense for stock options granted to non-employees based on the fair value of the stock options, which is re-measured over the graded vesting term resulting in periodic adjustments to stock-based compensation expense. The stock-based compensation expense recorded for non-employees has historically been reflected in the research and development line of the statement of operations and is remeasured on a quarterly basis from the date of grant. The Company did not record any stock-based expense for non-employee awards during the three or six months ended June 30, 2018 as all options were fully vested. During the three and six months ended June 30, 2017, the Company recorded a reduction of stock-based compensation expense of $0.1 million for non-employee options as a result of changes in the fair value of the options during the period.
Stock Option Plan – Restricted Stock
Juniper granted 122,300 and 5,625 time-based restricted stock units to employees and non-employee directors, respectively, during the six months ended June 30, 2018. The Company granted 52,700 time-based restricted stock units to employees and 51,234 to non-employee directors during the six months ended June 30, 2017. The weighted-average grant date fair value of the time-based restricted stock units was $8.18 and $5.11 per share during the six months ended June 30, 2018 and 2017, respectively. The Company recognizes stock-based compensation expense for time-based restricted stock units over the vesting period. There were 9,300 time-based restricted stock units that vested during the six months ended June 30, 2018. No time-based restricted stock units vested during the six months ended June 30, 2017.
The Company granted 186,000 performance-based restricted stock units to employees during the six months ended June 30, 2017. No additional performance-based restricted stock units were granted during the six months ended June 30, 2018. These performance-based restricted stock units vest based upon the occurrence of certain operational and strategic events that were determined by the Company’s Board of Directors and approved by the Company’s Compensation Committee. The Company considers the performance criteria at each balance sheet date and recognizes stock-based compensation expense for those criteria considered probable. During the year ended and at December 31, 2017, 109,550 performance-based restricted stock units expired. At December 31, 2017, performance-based restricted stock units outstanding totaled 76,450. On January 8, 2018, the Company announced the 4.5-year extension of its supply agreement for Crinone with an affiliate of Merck KGaA, Darmstandt, Germany. On
13
February 7, 2018, the Company’s Compensation Committee of the Board of Director approved the vesting of 27,800 awards affiliated with this performance condition and as a result the Company recorded a charge to stock compensation expense during the first quarter of 2018 totaling $0.1 million. At June 30, 2018, performance-based restricted stock units outstanding totaled 48,650. The expense recognition for these awards commences when achievement of the operational or strategic events becomes probable over the remaining service period. In the second quarter, the Company determined the achievement of one remaining performance criteria associated with a targeted organic revenue growth of Juniper Pharma Services, totaling 20,850 restricted stock units, was probable and as a result recognized $36,000 in stock-based compensation expense during the three months ended June 30, 2018.
Stock-based compensation relates to options granted to employees, non-employee directors and non-employees, time-based restricted stock units granted to employees and non-employee directors and performance-based restricted stock units granted to employees. Stock-based compensation expense for the three months ended June 30, 2018 and 2017 was $0.5 million and $0.5 million, respectively. Stock-based compensation expense for the six months ended June 30, 2018 and 2017 was $1.1 million and $0.8 million, respectively. Total stock-based compensation expense was recorded to cost of revenues and operating expenses based upon the functional responsibilities of the individuals holding the respective awards as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
Cost of revenues |
|
$ |
39 |
|
|
$ |
31 |
|
|
$ |
77 |
|
|
$ |
59 |
|
Sales and marketing |
|
|
12 |
|
|
|
12 |
|
|
|
25 |
|
|
|
23 |
|
Research and development |
|
|
40 |
|
|
|
71 |
|
|
|
58 |
|
|
|
28 |
|
General and administrative |
|
|
412 |
|
|
|
390 |
|
|
|
909 |
|
|
|
735 |
|
Total |
|
$ |
503 |
|
|
$ |
504 |
|
|
$ |
1,069 |
|
|
$ |
845 |
|
There were 230,626 of stock option exercised during the six months ended June 30, 2018 for which the Company received $1.4 million. There were no option exercises during the six months ended June 30, 2017.
As of June 30, 2018, the total unrecognized compensation cost related to outstanding stock options and time-based restricted stock units expected to vest was $3.6 million, which the Company expects to recognize over a weighted-average period of 2.58 years.
(12) Fair Value of Financial Instruments
The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported values. ASC 820 establishes a framework for measuring fair value U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:
Level 1: Quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The fair value of cash and cash equivalents are classified as Level 1 at June 30, 2018 and December 31, 2017.
Some of the estimates and assumptions in the Company's goodwill impairment assessment include: the amount and timing of the projected net cash flows, the discount rate, and the tax rate.
The fair values of accounts receivable and accounts payable approximate their respective carrying amounts. The Company’s long-term debt is carried at amortized face value, which approximates fair value based on current market pricing of similar debt instruments and is categorized as a Level 2 measurement.
14
The Company did not have transfers of financial assets between Level 1 and Level 2.
Provision for income taxes for the three and six months ended June 30, 2018 was $0.3 million. Income tax expense primarily relates to increased current year profits in the U.K. and adjustments resulting from the filing of the U.K. tax returns, offset by a benefit for releasing the valuation allowance on net deferred tax assets in the U.K.. During the three and six months ended June 30, 2017, Juniper recorded no income tax expense due to expected losses forecasted for the year due to the full valuation allowance in all jurisdictions. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. The Company continues to maintain valuation allowances in the U.S. and France.
On December 22, 2017 President Donald Trump signed into U.S. law the Tax Cuts and Jobs Act of 2017 (“Tax Reform”). ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions of the law, January 1, 2018.
One of the Tax Reform provisions effective January 1, 2018 includes a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (i.e., global intangible low-taxed income or “GILTI”). Under the U.S. generally accepted accounting principles, companies are allowed to make an accounting policy election of either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). The Company is currently accounting for GILTI using the period cost method as it continues to evaluate the two policies available. Under the period cost method, the Company has included approximately $2.4 million GILTI in U.S. taxable income, fully off-set by net operating loss carryforwards.
Given the significance of the legislation, the FASB issued ASU No. 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended prior to the one-year term when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. As of June 30, 2018, the Company has not recorded any incremental accounting adjustments related to the impact of Tax Reform that were recorded in its December 31, 2017 financial statements and it continues to assess its provisional estimate and technical interpretations of its application.
Tax Reform included a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to invest all of these earnings, as well as the capital in these subsidiaries, indefinitely outside of the U.S. The amount of any unrecognized deferred tax liability on these undistributed earnings would be immaterial.
The Company files tax returns in the United States, United Kingdom, France and various state jurisdictions. All of the Company’s tax years remain open to examination by major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state and foreign tax authorities if they have or will be used in future periods. The Internal Revenue Service has concluded their audit of the 2011 and 2012 tax years. There were no material findings resulting from their audit. Additionally, with few exceptions, Juniper is no longer subject to U.S. state tax examinations for years prior to 2012.
(14) Recent Accounting Pronouncements
Adopted
In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, (“ASU 2016-15”), which amends the guidance of ASC No. 230 on the classification of certain items in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice by making amendments that add or clarify the guidance on eight specific cash flow issues. ASU 2016-15 is effective for all fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ASU 2016-15 should be applied retrospectively to all periods presented, but may be applied prospectively from the earliest practicable if retrospective application would be impracticable. The adoption of this standard was applied retrospectively but did not have an impact on the Company’s consolidated financial statements and related disclosures.
15
In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard was effective beginning in the first quarter of 2018 and early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e. the original effective date). As such, ASU 2014- 09 will be effective for annual and interim reporting periods beginning after December 15, 2017. In March and April 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, respectively, which clarify the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. In addition, in May 2016 and December 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, both of which amend certain narrow aspects of Topic 606. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. See the Company’s discussion of the impact of this adoption in Note 16 – Revenue Recognition.
To be adopted
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the method and impact that the adoption will have on its consolidated financial statements and related disclosures.
(15) Restructuring Charges
In September 2017, the Company announced a corporate reprioritization which aimed to re-focus its resources on the core businesses of Crinone progesterone gel and JPS and reduce expenditures on research and development activities associated with the Company’s IVR program with the goal of potentially identifying a partner for one or more of its IVR product candidates. As a result, during the fiscal year ended December 31, 2017, the Company incurred approximately $0.8 million in restructuring charges. The Company accounted for these actions in accordance with ASC 420, Exit or Disposal Cost Obligations.
The following table summarizes the components of the Company’s restructuring activity recorded in the accompanying balance sheets (in thousands):
|
|
Amounts accrued at December 31, 2017 |
|
|
Expense incurred |
|
|
Amounts paid |
|
|
Amounts accrued at June 30, 2018 |
|
||||
Employee severance, benefits and related costs |
|
$ |
72 |
|
|
$ |
— |
|
|
$ |
(72 |
) |
|
$ |
— |
|
Obligations under manufacturing and development contracts |
|
|
283 |
|
|
|
— |
|
|
|
(134 |
) |
|
|
149 |
|
|
|
$ |
355 |
|
|
$ |
— |
|
|
$ |
(206 |
) |
|
$ |
149 |
|
16
No significant additional charges are anticipated relating to this restructuring plan. The Company expects to pay approximately $43,000 and $0.1 million during the remainder of 2018 and beyond, respectively.
(16) Revenue from Contracts with Customers
The new accounting standard for recognition of revenue, Topic 606, was adopted by the Company for its fiscal year beginning on January 1, 2018. In accordance with Topic 606, the Company recognizes revenue following the five-step model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The five-step model prescribed under Topic 606 include: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation. The Company adopted Topic 606 using the modified retrospective transition method. In adopting Topic 606, the Company applied the new guidance only to contracts that were not completed on January 1, 2018. The Company does not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less and does not adjust for the effect of the financing components when the period between customer payment and revenue recognition is one year or less, which are practical expedients provided within Topic 606.
Product Revenue
The adoption of Topic 606 resulted in a change in the pattern of revenue recognition for product revenue. Revenue and the related cost of sales are primarily the result of firm purchase commitments, generally only for a short period of time. Revenue is recognized when the performance obligation has been met, upon shipment to the customer. Selling prices to Merck KGaA for Crinone are determined on an annual and country-by-country basis. Juniper records revenue at a transaction price that most closely approximate what it will be sold for by Merck KGaA. The transaction price is determined by evaluating the Merck KGaA selling price. The Company records as deferred revenue amounts invoiced above the transaction price. Accordingly, product revenue in each period includes both an amount for product shipped to Merck KGaA in the current period recognized at the transaction price and an amount for product shipped by Merck KGaA to its customers in the current period equal to the difference between the invoice price and the transaction price.
Product revenue is recorded net of variable consideration which include volume discounts and price adjustments. Merck KGaA is entitled to a volume discount based on annual purchases. The Company records reserves against revenue on a quarterly basis to reflect the volume discount expected to be earned by Merck KGaA during the year. In addition, any difference between selling price to Merck KGaA and Merck KGaA’s actual net selling price are billed or credited to Merck KGaA in the quarter the product is sold through by Merck KGaA. Product sales are recorded net of value-added tax and similar taxes. Shipping and handling costs are recorded in cost of revenue.
Upon adoption, the Company recorded approximately $5.7 million as an adjustment to both deferred revenue and accumulated deficit. In accordance with Topic 605, the Company would have recognized approximately $10.3 million and $19.0 million in product revenue for the three and six months ended June 30, 2018 and product deferred revenue as of that date would have been $6.4 million.
Service Revenue
The adoption of Topic 606 did not have an impact on how the Company recognizes service revenue.
17
Juniper recognizes substantially all of the Company’s professional services revenues under written contracts as the services are provided, and only in those situations where collection from the client is reasonably assured. Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenues to each performance obligation based on its relative standalone selling price. When entering into multiple element arrangements, the Company identifies whether its performance obligations under the arrangement represent a distinct good or service or a series of distinct goods or services. A series of distinct goods or services is required to be accounted for as a single performance obligation provided that (i) each distinct good or service in the series promised would meet the criteria to be a performance obligation satisfied over-time; and (ii) the same method would be used to measure the Company’s progress toward complete satisfaction of the performance obligation to transfer each distinct good or service in the series to the customer. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The fair value of deliverables under the arrangement may be derived using a “best estimate of selling price” if vendor-specific objective evidence and third-party evidence is not available.
Significant management judgment is required in determining the consideration to be earned under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. Service revenues from a majority of Juniper’s fixed-price engagements are recognized on a proportional performance method based on the ratio of costs incurred, substantially all of which are labor-related, to the total estimated project costs. The proportional performance method is used for fixed-price contracts because reasonably dependable estimates of the revenues and costs applicable to various stages of a contract can be made, based on historical experience and the terms set forth in the contract, and are indicative of the level of benefit provided to Juniper’s clients. Project costs are classified in costs of services and are based on the direct salary of the employees on the engagement plus all direct expenses incurred to complete the engagement, including any amounts billed to Juniper by its vendors. In the event of a termination, fixed-price contracts generally provide for payment for services rendered up to the termination date. Service revenues also include reimbursements, which include reimbursement for travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses. Amounts invoiced not yet earned on service revenue are deferred until such time as performance is rendered or the obligation to perform the service is completed for service revenues.
The professional service contracts that Juniper enters into and operates under specify whether the engagement will be billed on a time-and-materials or a fixed-price basis. These engagements generally last three to six months, although some of Juniper’s engagements can be longer in duration. Payments terms vary by the type and services offered. The term between invoicing and when payment is due is not significant. In certain cases, Juniper bills clients prior to work being performed, which requires Juniper to defer revenue in accordance with U.S. GAAP. Revenues from time-and-materials service contracts are recognized as the services are performed based upon hours worked and contractually agreed-upon hourly rates, as well as indirect fees based upon hours worked. Juniper collects value-added tax from its customers for revenue generated out of the U.K. for which the customer is not tax exempt and remits such taxes to the appropriate governmental authority. Juniper presents its value added tax on a net basis; therefore, these taxes are excluded form revenues.
The Company generally expenses commission when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. Juniper does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognized revenue at the amount to which it has the right to invoice for services performed. Upon adoption, for contracts that exceed one year in duration, the Company has recorded contract costs totaling $0.2 million. For the three and six months ended June 30, 2018, in accordance with Topic 605, the Company would have recognized a reduction in sales and marketing expense of approximately $39 thousand and $11 thousand, respectively. As of June 30, 2018, the ending balance of contract costs included in prepaid expenses and other current assets was $0.2 million.
The Company evaluated the Daré License Agreement under ASC 606. Based on this evaluation, the Company identified a single performance obligation requiring the transfer of the intellectual property under the license under which Daré is responsible for conducting all research, development and commercial activities for the IVR program using its available resources. Because the Company satisfied the single performance obligation at the inception of the contract and had no remaining performance obligation, the upfront consideration received of $0.3 million was recognized upon receipt. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales occur.
18
A summary of changes in deferred revenue balances for product and service revenue is as follows:
|
|
Product Revenue |
|
|
Service Revenue |
|
|
Total |
|
|||
Opening Balance - December 31, 2017 |
|
$ |
5,888 |
|
|
$ |
253 |
|
|
$ |
6,141 |
|
Additions |
|
|
300 |
|
|
|
917 |
|
|
|
1,217 |
|
Recognized into Revenue |
|
|
(230 |
) |
|
|
(538 |
) |
|
|
(768 |
) |
Recognized into Accumulated Deficit |
|
|
(5,703 |
) |
|
|
— |
|
|
|
(5,703 |
) |
Ending Balance - June 30, 2018 |
|
$ |
255 |
|
|
$ |
632 |
|
|
$ |
887 |
|
(17) Subsequent Event
On July 2, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Catalent Pharma Solutions, Inc., a Delaware corporation (“Catalent”) and Catalent Boston, Inc., a Delaware corporation and wholly owned subsidiary of Catalent (“Merger Sub”) providing for the acquisition of the Company by Catalent in an all cash transaction, pursuant to a tender offer, followed by a subsequent merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Catalent. Pursuant to the Merger Agreement, and subject to its terms and conditions, on July 17, 2018, Merger Sub commenced a cash tender offer (the “Offer”) to acquire all of our issued and outstanding shares of common stock at a price per share equal to $11.50, net to the seller in cash, without interest, subject to any withholding of taxes required by applicable law and, further, the Offer will initially remain open until the end of the day on August 13, 2018, which is the 20th business day from the date of the commencement of the Offer. On July 17, 2018, in connection with the offer, the Company filed a Solicitation/Recommendation Statement on Schedule 14D-9 recommending that its stockholders accept the Offer and tender their shares to Merger Sub.
The obligation of Merger Sub to consummate the Offer is subject to customary conditions, including, among others, that a certain minimum number of shares of common stock be validly tendered and not validly withdrawn (“Minimum Condition”). Specifically, the Minimum Condition requires that there be validly tendered and not validly withdrawn shares of common stock that, when considered together with all other shares of common stock (if any) beneficially owned by Catalent and its affiliates (excluding any shares of common stock tendered pursuant to guaranteed delivery procedures that have not yet been received), represent more than 50% of the sum of (x) the total number of shares of the Company’s common stock outstanding at the time of the expiration of the Offer, plus (y) the aggregate number of shares of common stock then issuable to optionholders from which the Company has received notices of exercise prior to the expiration of the Offer (and as to which such shares have not yet been issued to such exercising optionholders) .
If, at the scheduled expiration time of the Offer any of the conditions to the Offer have not been satisfied or waived, then the Offer may be extended on one or more occasions to permit the satisfaction of all Offer conditions. At the proposed effective time of the Merger, each share of the Company’s common stock issued and outstanding immediately prior to the proposed effective time of the Merger, will be canceled and converted into the right to receive $11.50 in cash, without interest and subject to any required tax withholding, other than: (i) the Company’s shares of common stock held in treasury, (ii) shares of common stock held by Catalent, Merger Sub or any other direct or indirect wholly owned subsidiary of Catalent or Merger Sub, (iii) shares of Common Stock irrevocably accepted for payment in the Offer, (iv) shares of common stock held by stockholders who have properly exercised their demands for appraisal of such shares in accordance with the Delaware law and have neither withdrawn nor lost such rights prior to the effective time of the Merger. At the contemplated effective time of the Merger, all outstanding and unexercised Company stock options (whether vested or unvested) and unvested restricted stock units that are outstanding immediately prior to the effective time will be cancelled and extinguished in exchange for the right to receive the merger consideration (without interest) with respect to the number of shares of common stock underlying the applicable award, less applicable withholding taxes, and less the applicable exercise price for Company stock options. The Merger is expected to close in the third quarter of 2018.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains information that may constitute forward-looking statements. Generally, forward-looking statements can be identified by words such as “may,” “will,” “plan,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “should,” “estimate,” “predict,” “project,” “would,” and similar expressions, which are generally not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future—including statements relating to our future operating or financial performance or events, our strategy, goals, plans and projections regarding our financial position, our liquidity and capital resources, and our product development—are forward-looking statements. All statements regarding the risks and uncertainties related to the pending acquisition of the Company by Catalent, including the timing of the completion of the Offer (as defined below) and the Merger (as defined below), how many of our stockholders will tender their shares in the Offer, the possibility that the various closing conditions for the Offer or the Merger may not be satisfied or waived, possible litigation related to the Offer and the Merger, and the impact of the Offer and the Merger on our operations and business and on our relationships with our employees, clients and suppliers are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain known and unknown risks, uncertainties and factors that may cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and our Annual Report on Form 10-K for the year ended December 31, 2017, and those described from time to time in our future reports filed with the Securities and Exchange Commission (the “SEC”).
You should read this Quarterly Report and the documents that we have filed as exhibits to this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. While we may elect to update forward-looking statements at some point in the future, we do not undertake any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except as required by law.
Pending Sale of the Company to Catalent
In January 2018, we announced that we would be exploring strategic alternatives in order to enhance shareholder value. We engaged Rothschild Global Advisory Group as our independent financial advisor to assist us and our Board of Directors in evaluating potential strategic alternatives.
On July 2, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Catalent Pharma Solutions, Inc., a Delaware corporation (“Catalent”) and Catalent Boston, Inc., a Delaware corporation and wholly owned subsidiary of Catalent (“Merger Sub”). Pursuant to the Merger Agreement, and subject to its terms and conditions, we expect to be acquired by Catalent in an all cash tender offer, followed by a subsequent merger between us and Merger Sub (the “Merger”), whereby we would survive as a wholly owned subsidiary of Catalent. Pursuant to the Merger Agreement, and subject to its terms and conditions, on July 17, 2018 Merger Sub commenced a cash tender offer (the “Offer”) to acquire all of our issued and outstanding shares of common stock at a price per share equal to $11.50, net to the seller in cash, without interest, subject to any withholding of taxes required by applicable law. Further, the Offer will initially remain open until the end of the day on August 13, 2018, which is the 20th business day from the date of the commencement of the Offer. On July 17, 2018, in connection with the Offer, we filed a Solicitation/Recommendation Statement on Schedule 14D-9 recommending that our stockholders accept the Offer and tender their shares to Merger Sub.
The Offer is not subject to any financing conditions. However, the obligation of Merger Sub to consummate the Offer is subject to customary conditions, including, among others, that a certain minimum number of shares of common stock be validly tendered and not validly withdrawn (“Minimum Condition”). Specifically, the Minimum Condition requires that there be validly tendered and not validly withdrawn shares of common stock that, when considered together with all other shares of common stock (if any) beneficially owned by Catalent and its affiliates (excluding any shares of common stock tendered pursuant to guaranteed delivery procedures that have not yet been received), represent more than 50% of the sum of (x) the total number of shares of the Company’s common stock outstanding at the time of the expiration of the Offer, plus (y) the aggregate number of shares of common stock then issuable to optionholders from which the Company has received notices of exercise prior to the expiration of the Offer (and as to which such shares have not yet been issued to such exercising optionholders).
20
If, at the scheduled expiration time of the Offer any of the conditions to the Offer have not been satisfied or waived, then the Offer may be extended on one or more occasions to permit the satisfaction of all Offer conditions.
At the contemplated effective time of the Merger, each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger, will be canceled and converted into the right to receive $11.50 in cash, without interest and subject to any required tax withholding, other than: (i) the Company’s shares of common stock held in treasury, (ii) shares of common stock held by Catalent, Merger Sub or any other direct or indirect wholly owned subsidiary of Catalent or Merger Sub, (iii) shares of Common Stock irrevocably accepted for payment in the Offer, (iv) shares of common stock held by stockholders who have properly exercised their demands for appraisal of such shares in accordance with the Delaware law and have neither withdrawn nor lost such rights prior to the effective time of the Merger. Further, at the contemplated effective time of the Merger, all outstanding and unexercised Company stock options (whether vested or unvested) and unvested restricted stock units that are outstanding immediately prior to the effective time shall, at the effective time, be cancelled and extinguished in exchange for the right to receive the merger consideration (without interest) with respect to the number of shares of common stock underlying the applicable award, less applicable withholding taxes, and less the applicable exercise price for Company stock options. The Merger is expected to close in the third quarter of 2018.
The Merger Agreement prohibits us from soliciting or initiating discussions with third parties regarding other proposals to acquire us, and we have agreed to certain restrictions on our ability to respond to such proposals, subject to the fulfillment of certain fiduciary requirements of our board of directors under Delaware law. Subject to the terms and conditions of the Merger Agreement, our board of directors is permitted to change its recommendation in response to a “Change in Circumstances” or if it determines that a competing transaction proposal constitutes a “Superior Proposal” (each as defined in the Merger Agreement).
The Merger Agreement may be terminated under certain circumstances, including in specified circumstances in connection with an Acquisition Proposal (as defined in the Merger Agreement) that our board of directors determines constitutes a Superior Proposal. Upon the termination of the Merger Agreement, under specified circumstances, we will be required to pay Catalent a termination fee of approximately $5.6 million.
Company Overview
We are a diversified healthcare company with core businesses consisting of our Crinone (progesterone gel) franchise and our fee-for-service pharmaceutical development and manufacturing business called Juniper Pharma Services (“JPS”). Our commercial product and product development programs utilize our proprietary drug delivery technologies, which we believe are suited to applications in women’s health. These technologies consist of our bioadhesive delivery system (“BDS”), a polymer designed to adhere to epithelial surfaces or mucosa and achieve sustained and controlled delivery of active drug product, and our novel IVR technology. In April 2018, we licensed the development our differentiated intravaginal ring (“IVR”) technology to Daré Bioscience, Inc. (“Daré”) to advance a pipeline of product candidates intended to address the unmet needs in women’s health. In addition, under the agreement, Daré licensed from us worldwide rights to our IVR technology and will be responsible for conducting all research, development and commercial activities for the IVR program.
In September 2017, we announced a reduction of approximately 8% of our workforce, primarily in the areas of new product research and development, in order to focus our resources on our core businesses. In addition, as part of our more focused research and development strategy, we completed our in vivo preclinical animal studies and finalized the results for our IVR programs, which consist of JNP-0101, JNP-0201 and JNP-0301 (the “IVR program”) in the second quarter of 2018 and effective in April 2018, we licensed the development of our IVR platform to Daré.
We currently operate in two segments: product and service. Our product segment oversees the supply chain and manufacturing of Crinone, our sole commercialized product, to our international commercial partner, Merck KGaA. Our service segment includes advanced analytical and consulting services, product development and clinical trial manufacturing as well as characterizing and developing pharmaceutical product candidates for our internal programs and managing certain preclinical activities.
CRINONE:
Crinone is a progesterone gel designed for progesterone supplementation or replacement as part of an assisted reproductive technology treatment for infertile women with progesterone deficiency. Crinone is approved for marketing in the United States, Europe, Asia, Japan and certain other markets, and the primary source of our commercial revenue. We have licensed Crinone to our commercial partner, Merck KGaA, for the markets outside the United States and we receive product revenues from the manufacture and sale of Crinone internationally. In 2010, we sold the U.S. intellectual property rights of Crinone to Allergan, and received royalty revenues from Allergan based on their U.S. sales through October 2016.
21
Crinone continues to be introduced in new countries by Merck KGaA. In April 2013, our license and supply agreement with Merck KGaA for the sale of Crinone outside the United States was renewed for an additional five-year term, extending the expiration date to May 19, 2020. In January 2018, we announced the extension of this supply agreement for an additional 4.5-years through at least December 31, 2024. Under the terms of our current license and supply agreement with Merck KGaA, we sell Crinone to Merck KGaA on a country-by-country basis at the greater of (i) direct manufacturing cost plus 20% or (ii) a percentage of Merck KGaA’s net selling price based on a tiered structure. In addition, the 2018 extension allows for a volume tiered, fixed price per unit with minimum annual volume guarantees, beginning on July 1, 2020.
If, at the end of the supply term, the parties cannot agree upon mutually acceptable terms for renewal of the supply arrangement, Merck KGaA will have the option to negotiate the purchase of all of the Company’s assets related to the Crinone supply chain and to transfer the manufacturing to a third party or take over the management of the supply of the product.
Pharmaceutical Service Business:
JPS, our pharmaceutical service business, offers a range of sophisticated technical services to the pharmaceutical and biotechnology industry. Our customers range from start-up biotechnology firms to global pharmaceutical companies.
Within our services offering, we provide expertise to our customers on the characterization, development, and manufacturing of pharmaceutical compounds for clinical trials. We believe we have particular expertise in problem solving for challenging compounds that are considered “difficult to progress.” Our service model allows us to take our customers’ product candidates from early development through clinical trial manufacturing. We also support our customers with advanced analytical and consulting services for intellectual property issues. We deploy these same capabilities for our in-house proprietary product development activities.
Through JPS, we also manage the global supply chain and contract manufacturing of Crinone, for our partner Merck KGaA.
Our Strategy:
Subject to the pending sale of the Company, our strategy is to grow Crinone in key markets and expand both the JPS technical and geographic reach. Key elements of our strategy include:
|
• |
Supplying Crinone to our commercial partner, Merck KGaA, for sale in over 90 countries around the world; and |
|
• |
Growing revenue from our formulation, analytical, product development and clinical trial manufacturing capabilities at JPS, and deploying those same capabilities for the advancement of our in-house product candidates; |
Our Product Candidates:
In April 2018, we licensed the development of our entire IVR platform, which consists of JNP-0101, JNP-0201 and JNP-0301 (the “IVR program”), to Daré. In addition, under the agreement, Daré will be responsible for conducting all research, development and commercial activities for the IVR program.
We have licensed our pipeline of proprietary product candidates to treat unmet medical needs in women’s health. The three preclinical product development programs utilizing our IVR technology, target overactive bladder, hormone replacement therapy in women, and prevention of preterm birth in women with short cervical length, each as outlined below.
JNP-0101 - Oxybutynin IVR for the treatment of OAB
JNP-0101 is an IVR product candidate designed to deliver oxybutynin for the treatment of overactive bladder (“OAB”) in women. Oxybutynin is currently approved for the treatment of OAB, however, oral oxybutynin therapy is frequently discontinued by patients due to undesirable side effects including dry mouth, blurred vision, and constipation. We expect that the delivery of oxybutynin using our IVR technology will provide an improved side effect profile as the drug will bypass first pass hepatic metabolism issues. Oxybutynin is metabolized by the liver to an active metabolite resulting an increased in central nervous system (“CNS”) side effects. In addition, we believe that delivery using our IVR technology will improve patient compliance and convenience versus other routes of administration, including oral therapies, patches, and gels. We completed our in vivo preclinical animal studies and finalized the results of these studies for our IVR programs, which consist of JNP-0101, JNP-0201 and JNP-0301 (the “IVR program”) in the first half of 2018.
22
JNP-0201 - Progesterone and Estradiol IVR for Hormone Replacement Therapy
JNP-0201 is a segmented IVR product candidate containing both natural progesterone and natural estradiol to be used for hormone replacement therapy (“HRT”) in menopausal women. JNP-0201 has been designed to deliver natural hormones locally to vaginal tissue. This is another example where avoiding first pass, hepatic metabolism of estradiol may result in an improved side-effect profile. We also believe our delivery approach will provide an improvement in the beneficial effects of estradiol when compared to the currently approved combination HRT therapies; these include orally administered formulations utilizing synthetic progestogens, which have been associated in published clinical trials with higher risk of side effects including cardiovascular events. In addition, we believe that delivery using our IVR technology will improve patient compliance and convenience versus other routes of administration, including oral therapies and patches. We completed our in vivo preclinical animal studies and finalized the results of these studies for our IVR program in the first half of 2018.
JNP-0301 - Progesterone IVR for the prevention of PTB
JNP-0301 is a natural progesterone IVR product candidate for the prevention of preterm birth (“PTB”) in women with a short cervical length. Short cervical length at mid-pregnancy is a critical predictor of preterm birth in women. Medical guidelines issued by the American College of Obstetricians and Gynecologists and the Society of Maternal Fetal Medicine, among others, support use of vaginal progesterone in women with a short cervical length at mid-pregnancy to reduce the risk of PTB. There is no Food and Drug Administration (“FDA”) approved therapy to prevent PTB in women at risk due to short cervix. We believe JNP-0301 can enable the consistent local delivery of progesterone while facilitating patient compliance. We completed our in vivo preclinical animal studies and finalized the results of these studies for our IVR program in the first half of 2018.
Business Development Collaborations:
Our IVR technology can be applied to life-cycle management strategies for existing commercial products that may benefit from intravaginal delivery of drugs. Existing commercial products that are injectable, experience poor compliance, or have systemic toxicity limitations may particularly benefit from our delivery technologies.
Sources of Revenue
We generate revenues primarily from the sale of our products and services. During the three months ended June 30, 2018, we recognized a one-time licensing fee totaling $0.3 million in connection with the execution of the Daré License Agreement.
We recognize revenue from the sale of our products to Merck KGaA when the customer obtains control of the product, which is when the product has been received by the customer. We record revenue at a transaction price that most closely approximates what it will be sold for by Merck KGaA. We record deferred revenue related to amounts invoiced above the transaction price. Revenues from services are recognized as the work is performed. During the three months ended June 30, 2018, we derived approximately 61% of our revenues from the sale of our products and 37% from the sale of our services. During the six months ended June 30, 2018, we derived approximately 63% of our revenues from the sale of our products and 36% from the sale of our services. During both the three and six months ended June 30, 2017, we derived approximately 69% and 31% of our revenues from the sale of our products and services, respectively. During the three and six months ended June 30, 2018, we recognized license revenue which represented 2% and 1% of revenue for each period, respectively.
We expect that future recurring revenues will be derived from product sales to Merck KGaA, and from offering pharmaceutical development, clinical trial manufacturing, and analytical and consulting services. Quarterly sales results can vary widely and affect comparisons with prior periods because (i) products shipped to Merck KGaA occur only in full batches and (ii) service revenues are driven by contracting and maintaining an active backlog of customer projects, which may vary widely from quarter to quarter.
23
Results of Operations – Three and Six Months Ended June 30, 2018 Compared to Three and Six Months Ended June 30, 2017
The following tables contain selected consolidated statements of operations information, which serves as the basis of the discussion surrounding the results of our operations for the three and six months ended June 30, 2018 and 2017:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
Product revenues |
|
$ |
9,343 |
|
|
$ |
9,569 |
|
|
$ |
(226 |
) |
|
|
-2 |
% |
|
$ |
19,417 |
|
|
$ |
17,295 |
|
|
$ |
2,122 |
|
|
|
12 |
% |
Service revenues |
|
|
5,717 |
|
|
|
4,387 |
|
|
|
1,330 |
|
|
|
30 |
% |
|
|
11,167 |
|
|
|
7,908 |
|
|
|
3,259 |
|
|
|
41 |
% |
License revenues |
|
|
250 |
|
|
|
— |
|
|
|
250 |
|
|
|
100 |
% |
|
|
250 |
|
|
|
— |
|
|
|
250 |
|
|
|
100 |
% |
Total revenues |
|
|
15,310 |
|
|
|
13,956 |
|
|
|
1,354 |
|
|
|
10 |
% |
|
|
30,834 |
|
|
|
25,203 |
|
|
|
5,631 |
|
|
|
22 |
% |
Cost of product revenues |
|
|
6,158 |
|
|
|
5,303 |
|
|
|
855 |
|
|
|
16 |
% |
|
|
12,174 |
|
|
|
9,617 |
|
|
|
2,557 |
|
|
|
27 |
% |
Cost of service revenues |
|
|
2,959 |
|
|
|
2,347 |
|
|
|
612 |
|
|
|
26 |
% |
|
|
5,969 |
|
|
|
4,590 |
|
|
|
1,379 |
|
|
|
30 |
% |
Total cost of revenues |
|
|
9,117 |
|
|
|
7,650 |
|
|
|
1,467 |
|
|
|
19 |
% |
|
|
18,143 |
|
|
|
14,207 |
|
|
|
3,936 |
|
|
|
28 |
% |
Gross profit |
|
|
6,193 |
|
|
|
6,306 |
|
|
|
(113 |
) |
|
|
-2 |
% |
|
|
12,691 |
|
|
|
10,996 |
|
|
|
1,695 |
|
|
|
15 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
563 |
|
|
|
410 |
|
|
|
153 |
|
|
|
37 |
% |
|
|
982 |
|
|
|
788 |
|
|
|
194 |
|
|
|
25 |
% |
Research and development |
|
|
1,055 |
|
|
|
1,648 |
|
|
|
(593 |
) |
|
|
-36 |
% |
|
|
2,029 |
|
|
|
2,994 |
|
|
|
(965 |
) |
|
|
-32 |
% |
General and administrative |
|
|
6,518 |
|
|
|
4,604 |
|
|
|
1,914 |
|
|
|
42 |
% |
|
|
10,607 |
|
|
|
9,025 |
|
|
|
1,582 |
|
|
|
18 |
% |
Total operating expenses |
|
|
8,136 |
|
|
|
6,662 |
|
|
|
1,474 |
|
|
|
22 |
% |
|
|
13,618 |
|
|
|
12,807 |
|
|
|
811 |
|
|
|
6 |
% |
Loss from operations |
|
|
(1,943 |
) |
|
|
(356 |
) |
|
|
(1,587 |
) |
|
|
446 |
% |
|
|
(927 |
) |
|
|
(1,811 |
) |
|
|
884 |
|
|
|
-49 |
% |
Interest expense, net |
|
|
(29 |
) |
|
|
(30 |
) |
|
|
1 |
|
|
|
-3 |
% |
|
|
(74 |
) |
|
|
(58 |
) |
|
|
(16 |
) |
|
|
28 |
% |
Other income, net |
|
|
758 |
|
|
|
10 |
|
|
|
748 |
|
|
|
7480 |
% |
|
|
559 |
|
|
|
52 |
|
|
|
507 |
|
|
|
975 |
% |
Loss before income taxes |
|
|
(1,214 |
) |
|
|
(376 |
) |
|
|
(838 |
) |
|
|
223 |
% |
|
|
(442 |
) |
|
|
(1,817 |
) |
|
|
1,375 |
|
|
|
-76 |
% |
Income tax (benefit) expense |
|
|
300 |
|
|
|
— |
|
|
|
300 |
|
|
|
100 |
% |
|
|
300 |
|
|
|
— |
|
|
|
300 |
|
|
|
100 |
% |
Net loss |
|
$ |
(1,514 |
) |
|
$ |
(376 |
) |
|
$ |
(1,138 |
) |
|
|
303 |
% |
|
$ |
(742 |
) |
|
$ |
(1,817 |
) |
|
$ |
1,075 |
|
|
|
(59 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables presents the results of our operations for the three and six months ended June 30, 2018 and 2017 as a percentage of revenue:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
Amount |
|
|
Amount |
|
||||
Product revenues |
|
|
61 |
% |
|
|
69 |
% |
|
|
63 |
% |
|
|
69 |
% |
Service revenues |
|
|
37 |
% |
|
|
31 |
% |
|
|
36 |
% |
|
|
31 |
% |
License revenues |
|
|
2 |
% |
|
|
0 |
% |
|
|
1 |
% |
|
|
0 |
% |
Total revenues |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Total cost of revenues |
|
|
60 |
% |
|
|
55 |
% |
|
|
59 |
% |
|
|
56 |
% |
Gross profit |
|
|
40 |
% |
|
|
45 |
% |
|
|
41 |
% |
|
|
44 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
4 |
% |
|
|
3 |
% |
|
|
3 |
% |
|
|
3 |
% |
Research and development |
|
|
7 |
% |
|
|
12 |
% |
|
|
7 |
% |
|
|
12 |
% |
General and administrative |
|
|
43 |
% |
|
|
33 |
% |
|
|
34 |
% |
|
|
36 |
% |
Total operating expenses |
|
|
53 |
% |
|
|
48 |
% |
|
|
44 |
% |
|
|
51 |
% |
Loss from operations |
|
|
-13 |
% |
|
|
-3 |
% |
|
|
-3 |
% |
|
|
-7 |
% |
Interest expense, net |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
Other income, net |
|
|
5 |
% |
|
|
0 |
% |
|
|
2 |
% |
|
|
0 |
% |
Loss before income taxes |
|
|
-8 |
% |
|
|
-3 |
% |
|
|
-1 |
% |
|
|
-7 |
% |
Income tax (benefit) expense |
|
|
2 |
% |
|
|
0 |
% |
|
|
1 |
% |
|
|
0 |
% |
Net loss |
|
|
-10 |
% |
|
|
-3 |
% |
|
|
-2 |
% |
|
|
-7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
Product revenues |
|
$ |
9,343 |
|
|
$ |
9,569 |
|
|
$ |
(226 |
) |
|
|
-2 |
% |
|
$ |
19,417 |
|
|
$ |
17,295 |
|
|
$ |
2,122 |
|
|
|
12 |
% |
Service revenues |
|
|
5,717 |
|
|
|
4,387 |
|
|
|
1,330 |
|
|
|
30 |
% |
|
|
11,167 |
|
|
|
7,908 |
|
|
|
3,259 |
|
|
|
41 |
% |
License revenues |
|
|
250 |
|
|
|
— |
|
|
|
250 |
|
|
|
100 |
% |
|
|
250 |
|
|
|
— |
|
|
|
250 |
|
|
|
100 |
% |
Total revenues |
|
$ |
15,310 |
|
|
$ |
13,956 |
|
|
$ |
1,354 |
|
|
|
10 |
% |
|
$ |
30,834 |
|
|
$ |
25,203 |
|
|
$ |
5,631 |
|
|
|
22 |
% |
Revenues in the three months ended June 30, 2018 increased by $1.4 million, or 10%, compared to the three months ended June 30, 2017. Revenues in the six months ended June 30, 2018 increased by $5.6 million, or 22%, compared to the six months ended June 30, 2017. These increases were primarily attributable to the following factors:
Product Revenues:
|
• |
For the three months ended June 30, 2018, revenues from the sale of Crinone was $9.3 million, a decrease of approximately $0.2 million, or 2%, from the same period in 2017, primarily due timing of shipments. For the three months ended June 30, 2017, revenue was $9.6 million which included $7.1 million related to product shipped to Merck KGaA and $2.5 million related to product sold through by Merck KGaA to its customers. In comparison, for the three months ended June 30, 2018, revenue, as reported under ASC 605, would have been $10.3 million and included $7.1 million related to product shipped to Merck KGaA and $3.2 million related to product sold through by Merck KGaA to its customers. |
|
• |
For the six months ended June 30, 2018, revenues from the sale of Crinone was $19.4 million, an increase of approximately $2.1 million, or 12%, from the same period in 2017, primarily due to in-market growth by Merck KGaA offset by the timing of shipments. For the six months ended June 30, 2017, revenue was $17.3 million which included $13.0 million related to product shipped to Merck KGaA and $4.3 million related to product sold through by Merck KGaA to its customers. In comparison, for the six months ended June 30, 2018, revenue, as reported under ASC 605, would have been $19.0 million and included $14.9 million related to product shipped to Merck KGaA and $4.1 million related to product sold through by Merck KGaA to its customers. |
Service Revenues:
|
• |
For the three months ended June 30, 2018, service revenues increased approximately $1.3 million, or 30%, from the second quarter of 2017. For the six months ended June 30, 2018, service revenues increased approximately $3.3 million, or 41%, from the six months ended June 30, 2017. The increases in each of these periods was primarily due to increases in customer volume across our service offerings and a sales focus on larger customer contracts partially offset by the weakening of the Euro and British pound against the U.S. dollar. |
License Revenues:
|
• |
For the three and six months ended June 30, 2018, we recorded license revenues totaling $0.3 million associated with a license fee received from Daré in connection with the execution of the Daré License Agreement. |
25
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
Cost of product revenues |
|
$ |
6,158 |
|
|
$ |
5,303 |
|
|
$ |
855 |
|
|
|
16 |
% |
|
$ |
12,174 |
|
|
$ |
9,617 |
|
|
$ |
2,557 |
|
|
|
27 |
% |
Cost of service revenues |
|
|
2,959 |
|
|
|
2,347 |
|
|
|
612 |
|
|
|
26 |
% |
|
|
5,969 |
|
|
|
4,590 |
|
|
|
1,379 |
|
|
|
30 |
% |
Total cost of revenues |
|
$ |
9,117 |
|
|
$ |
7,650 |
|
|
$ |
1,467 |
|
|
|
19 |
% |
|
$ |
18,143 |
|
|
$ |
14,207 |
|
|
|
3,936 |
|
|
|
28 |
% |
Cost of product revenues (as a percentage of total product revenues) |
|
|
66 |
% |
|
|
55 |
% |
|
|
|
|
|
|
|
|
|
|
63 |
% |
|
|
56 |
% |
|
|
|
|
|
|
|
|
Cost of service revenues (as a percentage of total service revenues) |
|
|
52 |
% |
|
|
53 |
% |
|
|
|
|
|
|
|
|
|
|
53 |
% |
|
|
58 |
% |
|
|
|
|
|
|
|
|
Total cost of revenues (as a percentage of total revenues) |
|
|
60 |
% |
|
|
55 |
% |
|
|
|
|
|
|
|
|
|
|
59 |
% |
|
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product gross margin |
|
$ |
3,185 |
|
|
$ |
4,266 |
|
|
$ |
(1,081 |
) |
|
|
-25 |
% |
|
$ |
7,243 |
|
|
$ |
7,678 |
|
|
$ |
(435 |
) |
|
|
-6 |
% |
Product gross margin (as a percentage of total product revenues) |
|
|
34 |
% |
|
|
45 |
% |
|
|
|
|
|
|
|
|
|
|
37 |
% |
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service gross margin |
|
$ |
2,758 |
|
|
$ |
2,040 |
|
|
$ |
718 |
|
|
|
35 |
% |
|
$ |
5,198 |
|
|
$ |
3,318 |
|
|
$ |
1,880 |
|
|
|
57 |
% |
Service gross margin (as a percentage of total service revenues) |
|
|
48 |
% |
|
|
47 |
% |
|
|
|
|
|
|
|
|
|
|
47 |
% |
|
|
42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin |
|
$ |
6,193 |
|
|
$ |
6,306 |
|
|
$ |
(113 |
) |
|
|
-2 |
% |
|
$ |
12,691 |
|
|
$ |
10,996 |
|
|
$ |
1,695 |
|
|
|
15 |
% |
Total gross margin (as a percentage of total revenues) |
|
|
40 |
% |
|
|
45 |
% |
|
|
|
|
|
|
|
|
|
|
41 |
% |
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues was $9.1 million and $7.7 million for the three months ended June 30, 2018 and 2017, respectively and $18.1 million and $14.2 million for the six months ended June 30, 2018 and 2017, respectively.
The increase in total cost of product revenues in both the second quarter of 2018 and the six months ended June 30, 2018 was driven primarily by an increase in total cost of product revenue resulting from higher professional and other consulting costs associated with finalizing and executing third-party supply agreements and higher manufacturing costs, primarily progesterone costs.
Cost of service revenues are largely fixed and consist mainly of facility costs, external consultant fees, depreciation and materials used in connection with generating our service revenues. The increase in total cost of service revenue in both the second quarter of 2018 and the six months ended June 30, 2018 was driven primarily by an increase in personnel related costs offset by lower professional and consulting services. Personnel costs are scaled to support customer volume.
Product gross margin decreased for both the three and six months ended June 30, 2018 as compared to the same periods in 2017 primarily due to higher progesterone costs and higher costs associated with finalizing and executing third-party supply agreements. Service gross margin increased in 2018 as compared to 2017 due to mix of revenue type within the service segment and higher labor utilization due to fixed labor costs.
Sales and marketing expenses
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
Sales and marketing |
|
$ |
563 |
|
|
$ |
410 |
|
|
$ |
153 |
|
|
|
37 |
% |
|
$ |
982 |
|
|
$ |
788 |
|
|
$ |
194 |
|
|
|
25 |
% |
Sales and marketing (as a percentage of total revenues) |
|
|
4 |
% |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
3 |
% |
|
|
3 |
% |
|
|
|
|
|
|
|
|
26
Sales and marketing expenses incurred during the three and six months ended June 30, 2018 and 2017 were attributable to our service business and consisted of personnel costs for our sales force as well as marketing costs for certain tradeshows and conference fees. The increase in both periods in 2018 was largely attributable to higher personnel costs and professional fees to support the expanded growth of our service business.
Research and development
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
Research and development |
|
$ |
1,055 |
|
|
$ |
1,648 |
|
|
$ |
(593 |
) |
|
|
-36 |
% |
|
$ |
2,029 |
|
|
$ |
2,994 |
|
|
$ |
(965 |
) |
|
|
-32 |
% |
Research and development (as a percentage of total revenues) |
|
|
7 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
7 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
Research and development expenses primarily include clinical trial costs to conclude our sheep studies, personnel-related expenses and professional and consulting services costs. The decrease in research and development costs incurred during the three and six months ended June 30, 2018 as compared to the same periods of 2017 was largely associated with lower salary and employee related costs resulting from the Strategic Reprioritization action taken in September 2017 and reduced expenditures incurred on our IVR clinical programs as the in vivo clinical trial programs were concluded in second quarter of 2018. As part of our more focused research and development strategy, we licensed the development of our IVR platform to Daré in April 2018. In addition, in both the three and six months ended June 30, 2017, we recorded a credit associated with the final adjustments on the COL-1077 clinical trial. The trial did not achieve its primary and secondary endpoints, and further development was discontinued.
General and administrative expenses
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
General and administrative |
|
$ |
6,518 |
|
|
$ |
4,604 |
|
|
$ |
1,914 |
|
|
|
42 |
% |
|
$ |
10,607 |
|
|
$ |
9,025 |
|
|
$ |
1,582 |
|
|
|
18 |
% |
General and administrative (as a percentage of total revenues) |
|
|
43 |
% |
|
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
34 |
% |
|
|
36 |
% |
|
|
|
|
|
|
|
|
General and administrative expenses increased by $1.9 million to $6.5 million for the three months ended June 30, 2018 compared with $4.6 million for the three months ended June 30, 2017. For the three months ended June 30, 2018, general and administrative expenses were driven primarily by one-time costs of $3.5 million, or 54%, incurred as part of our strategic alternatives process. For the three months ended June 30, 2017, we incurred $0 in expenses as part of our strategic alternatives process which started in January 2018.
General and administrative expenses increased by $1.6 million to $10.6 million for the six months ended June 30, 2018 compared with $9.0 million for the six months ended June 30, 2017. For the six months ended June 30, 2018, general and administrative expenses were driven primarily by one-time costs of $4.0 million, or 37%, incurred as part of our strategic alternatives process. For the six months ended June 30, 2017, we incurred $0 in expenses as part of our strategic alternatives process which started in January 2018.
Excluding these one-time costs, our general and administrative expenses for each of the periods discussed would have reflected our continued efforts to closely manage our general and administrative expense.
In 2017, we incurred charges principally related to legal, accounting and other professional fees associated with a growing public company, including matters related to the restatement of our financial results for the fiscal years ended December 31, 2013 through December 2015 and the remediation of material weaknesses in our internal control over financial reporting resulting from the restatement, costs associated with our evaluation of potential strategic opportunities and other business development matters and costs associated with shareholder and investor relations, including matters related to our 2017 annual meeting.
27
Non-operating income and expense
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
||||
(in thousands, except for percentages) |
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
|
|
% Change |
|
||||||||
Interest expense, net |
|
$ |
(29 |
) |
|
$ |
(30 |
) |
|
$ |
1 |
|
|
|
-3 |
% |
|
$ |
(74 |
) |
|
$ |
(58 |
) |
|
$ |
(16 |
) |
|
|
28 |
% |
Other income, net |
|
|
758 |
|
|
|
10 |
|
|
|
748 |
|
|
|
7480 |
% |
|
|
559 |
|
|
|
52 |
|
|
|
507 |
|
|
|
975 |
% |
|
|
$ |
729 |
|
|
$ |
(20 |
) |
|
|
|
|
|
|
|
|
|
$ |
485 |
|
|
$ |
(6 |
) |
|
|
|
|
|
|
|
|
Interest expense, net (as a percentage of total revenues) |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
Other income, net (as a percentage of total revenues) |
|
|
5 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
2 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
Interest expense, net, primarily relates to interest payments, denominated in British pounds, associated with our loan facilities and equipment loans.
For the three months ended June 30, 2018, other income, net, primarily relates to an insurance settlement received of $0.3 million, credits related to the reimbursement of research and development spending of $0.3 million and net foreign currency transaction gains related to the weakening of the Euro and British pound against the U.S. dollar. For the six months ended June 30, 2018, other income, net, primarily relates to the insurance proceeds settlement received of $0.3 million and credits related to the reimbursement of research and development spending of $0.3 million. For the three months and six months ended June 30, 2017, other income, net, primarily relates to foreign currency transaction losses related to the strengthening of the Euro and British pound against the U.S. dollar losses offset by income associated with the Regional Growth Fund which concluded in October 2017.
Provision for income taxes
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
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2018 |
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2017 |
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2018 |
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2017 |
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(in thousands, except for percentages) |
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Amount |
|
|
Amount |
|
|
$ Change |
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% Change |
|
|
Amount |
|
|
Amount |
|
|
$ Change |
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|
% Change |
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||||||||
Income tax (benefit) expense |
|
$ |
300 |
|
|
|
— |
|
|
$ |
300 |
|
|
|
100 |
% |
|
$ |
300 |
|
|
|
— |
|
|
$ |
300 |
|
|
|
100 |
% |
Income tax (benefit) expense (as a percentage of total revenues) |
|
|
2 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
1 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
During the three and six months ended June 30, 2018, we recorded tax expense primarily due to the increased current year profits in the U.K. and adjustments resulting from the filing of the U.K. tax returns, offset by a benefit for releasing the valuation allowance on net deferred tax assets in the U.K. Currently, we maintain valuation allowances offsetting net deferred tax assets in the U.S. and France.
Liquidity and Capital Resources
We require cash to fund operating expenses, working capital needs and capital expenditures.
At June 30, 2018, cash and cash equivalents were $20.8 million. Cash and cash equivalents are highly liquid investments with original maturities of 90 days or less at date of purchase and consist of cash in operating accounts.
In September 2013, Juniper assumed debt of $3.9 million in connection with its acquisition of JPS. JPS had entered into a Business Loan Agreement (“Loan Agreement”) covering three loan facilities (collectively referred to as the “original agreements”) with Lloyds TSB Bank (“Lloyds”) as administrative agent. In May 2017, JPS repaid on one of the existing loan facilities upon which JPS subsequently entered into a new loan facility with the same administrative agent for the same outstanding balance. The refinancing was accounted for as a modification with no resulting gain or loss. The remaining original agreements and the new agreement are collectively referred to as the “loan facilities.”
28
As of June 30, 2018, we owed $2.3 million on the loan facilities. The loan facilities are each repayable over periods ranging from 7-15 years from the date of drawdown. Two of the facilities bear interest at the Bank of England’s base rate plus 1.95%, and 2.55%, respectively. The interest rates at June 30, 2018 for these facilities were 2.45% and 3.05%, respectively. The third facility is a fixed rate agreement bearing interest at 2.99% per annum. The weighted average interest rate for the three loan facilities for the three months ended June 30, 2018 was 2.76%. The loan facilities are secured by the mortgaged property and an unlimited lien on other assets of JPS. The loan facilities contain financial covenants that limit the amount of indebtedness JPS may incur, requires JPS to maintain certain levels of net worth, and restricts JPS’s ability to materially alter the character of its business. As of June 30, 2018, we are in compliance with all of the covenants under the loan facilities.
As of June 30, 2018, we owed $1.2 million on its equipment loans. During the quarter ending March 31, 2017, we entered into two loans totaling $1.5 million with payments through March 2022 for equipment in our Nottingham, U.K. facility at an interest rate of 2.09%. The transactions were considered failed sales-leaseback arrangements as the Company will obtain title to the equipment at the end of the term of the financing for little or no consideration. These failed sale-leaseback arrangements have been recorded as a component of long-term debt on our condensed consolidated balance sheets. The initial terms of the loans are 60 months.
In October 2015, we entered into an operating lease agreement for our corporate office in Boston, Massachusetts. The initial term of the lease agreement is approximately 39 months and ends in the first quarter of 2019, which includes a three-month free rent period.
In December 2016, we entered into an API Supply Agreement for a manufacturer of progesterone under which we agreed to annual minimum volume commitments until December 2019.
Commitments under our lease arrangements are as follows as of June 30, 2018 (in thousands).
|
|
Total |
|
|
Remainder of 2018 |
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
2022 |
|
|
Thereafter |
|
|||||||
Operating lease obligations |
|
$ |
296 |
|
|
$ |
222 |
|
|
$ |
74 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Loan principal repayments |
|
|
2,255 |
|
|
|
116 |
|
|
|
237 |
|
|
|
243 |
|
|
|
250 |
|
|
|
257 |
|
|
|
1,152 |
|
Capital lease obligations |
|
|
1,198 |
|
|
|
154 |
|
|
|
317 |
|
|
|
331 |
|
|
|
344 |
|
|
|
52 |
|
|
|
|
|
Minimum purchase obligation |
|
|
5,375 |
|
|
|
3,401 |
|
|
|
1,974 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
9,124 |
|
|
$ |
3,893 |
|
|
$ |
2,602 |
|
|
$ |
574 |
|
|
$ |
594 |
|
|
$ |
309 |
|
|
$ |
1,152 |
|
Our future capital requirements depend on a number of factors, including the rate of market acceptance of our current and future products and services and the resources we devote to developing and supporting the same. Our capital expenditures were $3.1 million and $1.4 million for the six months ended June 30, 2018 and June 30, 2017, respectively. Our capital expenditures primarily relate to investments in capital equipment made at our Nottingham, U.K. site and our contract manufacturer sites.
Research and development expenses include costs for product and clinical development, which were a combination of internal and third-party costs, and regulatory fees. For the remainder of 2018, we do not expect to incur any research and development expenses as we have concluded our in vivo preclinical studies and have transitioned all responsibilities for conducting all research, development and commercial activities for the IVR program to Daré.
We believe that our current cash and cash equivalents, as well as cash generated from operations, will be sufficient to meet our anticipated cash needs for working capital, including advancing our product candidates, and capital expenditures at least through the next twelve months from the date of issuance of this report. We may be dependent on our ability to raise additional capital to finance operations beyond that period. If we are not able to raise additional capital on terms acceptable to us, or at all, as and when needed, we may be required to evaluate future anticipated capital or operational needs.
29
Net cash provided by operating activities for the six months ended June 30, 2018 was $1.4 million, which resulted primarily from approximately $1.2 million in net depreciation and amortization, $1.1 million in stock-based compensation and $0.3 million of deferred tax liability offset by a $0.7 million net loss and changes in net working capital items which decreased cash by approximately $0.4 million. Net cash used in investing activities was $3.1 million for the six months ended June 30, 2018, which resulted from the purchase of property plant and equipment. Net cash provided by financing activities was approximately $1.1 million for the six months ended June 30, 2018, primarily relating to proceeds from the exercises of stock options, partially offset by the principal payments on debt.
Net cash provided by operating activities for the six months ended June 30, 2017 was $0.5 million, which resulted primarily from approximately $1.1 million in depreciation and amortization, $0.8 million in stock-based compensation expense, and net changes in working capital items which increased cash by approximately $0.4 million offset by a $1.8 million net loss. Net cash used in investing activities was $1.4 million for the six months ended June 30, 2017, which resulted primarily from the purchase of property, plant and equipment. Net cash provided by financing activities was approximately $1.3 million for the six months ended June 30, 2017, primarily relating to proceeds from the equipment loans and financing agreement offset by the principal payments on debt.
Off-Balance Sheet Arrangements
As of June 30, 2018, we did not have any off-balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(ii).
Contractual Obligations
There have been no other material changes to our contractual obligations and commitments outside the ordinary course of business or described above from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations set forth above are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates and judgments, including those described in our Annual Report on Form 10-K for the year ended December 31, 2017. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities, and the reported amounts of revenues and expenses, that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Except for the adoption of the new accounting standard for the recognition of revenue, ASC 606 - Revenue from Contracts with Customers, adopted for the fiscal year beginning on January 1, 2018, described above, there have been no material changes to our critical accounting policies since December 31, 2017.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Rate Risk
We do not believe that we have material exposure to market rate risk. We may, however, seek additional financing to fund future obligations and no assurance can be given that the terms of future sources of financing will not expose us to material market rate risk.
There has been no material change to our market rate risk exposure since December 31, 2017.
Foreign Currency Exchange
Overall, we are a net recipient of currencies other that the U.S. dollar and, as such, benefit from a weaker dollar and are adversely affected by a strong dollar relative to major currencies worldwide. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect our consolidated revenues or operating costs and expenses as expressed in U.S. dollars. Our significant foreign currency exposures include the British pound and the Euro. Our exposure is reduced given assets and liabilities, revenues and expenses are designated in U.S. dollars, or U.S. dollar linked. We have not historically engaged in hedging activities relating to our non-U.S. dollar operations. We may be exposed to exchange rate fluctuations that occur from certain intercompany transactions with our subsidiaries, which we recognize as unrealized gains and losses in our statements of operations.
30
Revenues from our international operations that were recorded in U.S. dollars represented approximately 78% of our total international revenues for the six months ended June 30, 2018. The remaining 22% were sales in British pounds. Since we conduct our business in U.S. dollars, our main exposure, if any, results from changes in the exchange rate between the British pound and the U.S. dollar.
There has been no material change to our foreign currency exchange risk exposure since December 31, 2017.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined by Rules 13a-15e and 15d-15e with the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of June 30, 2018. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2018 at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
During our most recent fiscal quarter, there has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affect, our internal control over financial reporting.
31
Litigation Relating to the Pending Sale of the Company to Catalent
On July 26, 2018, a putative securities class action complaint, Seedman v. Juniper Pharmaceuticals, Inc., et al., No. 1:18-cv-11584, was filed in the United States District Court for the District of Massachusetts by purported Company stockholder Joseph Seedman against the Company and Company directors in connection with the Offer by Merger Sub, a wholly owned subsidiary of Catalent, to acquire all of the issued and outstanding shares of the Company’s common stock, par value $0.01 per share, at a price per Share equal to $11.50, net to the seller in cash, without interest, subject to any withholding of taxes required by applicable law (the “Seedman Complaint”). The Seedman Complaint alleges that the Schedule 14D-9 filed with the SEC on July 17, 2018 in connection with the Offer omitted or materially misrepresented certain supposedly material information concerning: (i) Company management’s financial projections, utilized by the Company’s financial advisor, Rothschild Inc. (“Rothschild”), in its financial analyses; (ii) the data and inputs underlying the financial valuation analyses that support the fairness opinion provided by Rothschild; and (iii) the sale process that resulted in the Offer, including certain information concerning the Company’s standstill and confidentiality agreements with potential buyers. The Seedman Complaint asserts claims against all defendants for violation of Sections 14(d) and 14(e) of the Exchange Act, and against the Company’s directors for violation of Section 20(a) of the Exchange Act. The Seedman Complaint seeks declaratory and injunctive relief, as well as damages and attorneys’ fees and costs. Neither Catalent nor Merger Sub is named as a defendant in the Seedman Compliant.
On July 27, 2018, a putative securities class action complaint, Rosenblatt v. Juniper Pharmaceuticals, Inc., et al., No. 1:18-cv-01108, was filed in the United States District Court for the District of Delaware by purported Company stockholder Jordan Rosenblatt against the Company, the Company directors, Catalent and Merger Sub in connection with the Offer (the “Rosenblatt Complaint”). The Rosenblatt Complaint alleges that the Schedule 14D-9 filed with the SEC on July 17, 2018 in connection with the Offer omitted or materially misrepresented certain supposedly material information concerning: (i) the financial projections and valuation analyses performed by Rothschild in connection with the Offer; and (ii) the background leading to the Offer and potential conflicts of interest of the Company’s management. The Rosenblatt Complaint asserts claims against all defendants for violation of Sections 14(d) and 14(e) of the Exchange Act, and against the Company’s directors, Merger Sub and Catalent for violation of Section 20(a) of the Exchange Act. The Rosenblatt Complaint seeks declaratory and injunctive relief, as well as damages and attorneys’ fees and costs.
Additional similar cases may also be filed in connection with the Offer and the Merger.
Other Litigation, Claims and Proceedings
Claims and lawsuits are filed against our Company from time to time. Although the results of pending claims are always uncertain, we believe that we have adequate reserves or adequate insurance coverage in respect of these claims, but no assurance can be given as to the sufficiency of such reserves or insurance coverage in the event of any unfavorable outcome resulting from these actions.
An investment in shares of our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2017 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, in addition to other information included in this Quarterly Report on Form 10-Q, including the information below and our financial statements and related notes thereto, before deciding to invest in our common stock. The occurrence of any of these risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.
We have entered into a Merger Agreement with Catalent to be acquired and the pending sale of our company poses certain risks to our business, including disrupting our business operations and subjecting us to litigation, as well as diverting management’s efforts from focusing on our business and affecting our ability to retain, recruit and motivate key personnel.
On July 2, 2018, we entered into a Merger Agreement with Catalent and Merger Sub. Pursuant to the Merger Agreement, and subject to its terms and conditions, we expect to be acquired by Catalent in a cash tender offer, followed by a subsequent merger between us and Merger Sub, whereby we would survive as a wholly owned subsidiary of Catalent. This transaction represents a total equity value of approximately $139.6 million on a fully-diluted basis.
32
The proposed Merger, whether or not consummated, may result in a diversion of management’s attention from day-to-day operations and a loss of key personnel, and may affect our ability to recruit prospective employees, retain and motivate existing employees or cause a disruption in our operations. The proposed Merger may also affect our relationships with third parties, including customers, suppliers and partners. For example, customers and others that deal with us could defer decisions concerning a continued relationship with us, or seek to alter and terminate existing business relationships with us.
The Merger Agreement imposes customary restrictions on the conduct of our business outside of the ordinary course consistent with past practice prior to the closing of the transactions contemplated by the Merger Agreement or the termination of the Merger Agreement, which may also adversely affect our ability to manage our operations effectively in light of changes in economic or market conditions, or to execute or adjust our business strategy. In addition, litigation is common in connection with sales of publicly traded companies similar to us. As a result, we and our directors and officers may become parties to lawsuits relating to the Merger, which, even if these lawsuits are without merit, could be time consuming, expensive and divert the attention of our management from operating our business. If we experience the potential consequences of any of the foregoing risks, our results of operations, financial condition and prospects could be materially and adversely affected.
The Merger Agreement contains certain termination rights of Catalent and the Company and provides that, upon the termination of the Merger Agreement under specified circumstances, the Company will be required to pay Catalent a termination fee of $5.58 million. If we are required to pay a termination fee pursuant to the Merger Agreement, our results of operations and financial position could be materially and adversely affected.
The tender offer, proposed Merger and pending sale of our Company may not be completed within the expected timeframe, or at all, and the failure to complete these transactions could adversely affect our business and the price of our common stock.
We cannot predict with certainty whether or when the tender offer, proposed Merger and pending sale of our Company will be completed. Delays in these transactions could worsen the overall risks associated with these transactions. If the pending sale of our Company is not completed, the price of our common stock may drop to the extent that the current price of our common stock reflects an assumption that the sale may be completed. We have incurred, and continue to incur, significant transaction costs in connection with the pending sale of our Company, for which we will have received little or no benefit if these transactions are not completed. Many of these costs will be payable even if the pending sale of our Company is not completed and may relate to activities that we would not have undertaken other than to complete the sale. Further, a failed transaction may result in negative publicity and may cause a negative impression about us in the investment community. Finally, any disruption to our business resulting from the announcement and pendency of the tender offer, Merger and pending sale of our Company, including any adverse impact in our relationships with employees, customers, suppliers or partners, could continue or accelerate in the event of a failed transaction. There can be no assurance that our business, these relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the tender offer, if the sale of our Company is not completed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
None.
33
(a) Exhibits
3.1.1*** |
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3.1.2*** |
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3.1.3*** |
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3.1.4*** |
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3.2.1*** |
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3.2.2*** |
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10.1* † |
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10.2* † |
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10.3* † |
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31.1* |
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Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Company. |
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31.2* |
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Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Company. |
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32.1** |
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32.2** |
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101* |
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The following materials from the Juniper Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017, (ii) Condensed Consolidated Balance Sheets at June 30, 2018 and December 31, 2017, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2018 and 2017, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017, and (v) Notes to Condensed Consolidated Financial Statements. |
* |
Filed herewith. |
** |
Furnished herewith. |
*** |
Incorporated by reference. |
† |
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been submitted separately to the SEC. |
34
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Juniper Pharmaceuticals, Inc. |
|
/s/ Jeffrey E. Young |
Jeffrey E. Young |
Senior Vice President, Finance, Chief Financial Officer and Treasurer |
(Principal Financial and Accounting Officer) |
DATE: August 9, 2018 |
35
Exhibit 10.1
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
AMENDMENT NO. 2
TO MANUFACTURING AND SUPPLY AGREEMENT
THIS AMENDMENT NO. 2 (this “Amendment”) to the Manufacturing and Supply Agreement dated as of December 8, 2009 (as amended by an amendment agreement dated 31 December 2013) (the “Existing Agreement”), by and between Columbia Laboratories, (Bermuda) Ltd., a limited company existing and organised under the laws of Bermuda, having a place of business at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda (“Columbia”), and Fleet Laboratories Limited, a limited private company existing and organised under the laws of England, having a place of business at 94 Rickmansworth Road, Watford Herts, WD18 7JJ, United Kingdom (“Fleet”) is entered into on 2018 (the “Effective Date”).
WHEREAS, Columbia and Fleet entered into the Existing Agreement pursuant to which Fleet has agreed to manufacture and supply to Columbia, and Columbia has agreed to purchase, certain Products; and
WHEREAS, Columbia and Fleet wish to amend the Existing Agreement in accordance with the terms of this Amendment.
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Columbia and Fleet agree as follows:
General
Capitalised terms used but not defined in this Amendment shall have the same meanings ascribed to such terms in the Existing Agreement. The following amendments to the Existing Agreement shall have effect on and from the Effective Date.
1. |
The following definitions shall be added to Section 1 of the Existing Agreement: |
““Ares Agreement” means the supply agreement entered into between Columbia and Ares Trading S.A. (a subsidiary of Merck Serono S.A.) dated 7 January 2018.”
“GDP” means the EU guidelines for current Good Distribution Practice guidelines 2013/C 343/01 as amended.”
2. |
The definition of “batch” in Section 1 of the Existing Agreement shall be deleted in its entirety and replaced with the following: |
““Batch” means a quantity of [***] kilograms of material (or such other quantity as the Parties may agree in writing from time to time) produced in a process or series of processes that is expected to be homogeneous within specified limits.”
3. |
The following shall be added to Section 2.1 of the Existing Agreement (Regulatory Requirements) as a new Section 2.1 (d): |
“2.1 (d)Subject to the prior written consent of Columbia (such consent not to be unreasonably withheld, delayed or conditioned), Fleet may subcontract all or part of the activities to be performed by it under this Agreement to any subcontractor provided that the subcontracting of any activities shall not relieve Fleet of, and Fleet shall remain solely liable for, its obligations under this Agreement. Columbia may subcontract all or any part of the activities performed by it under this Agreement to any subcontractor without the consent of Fleet.”
1
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
4. |
The following new Sections 2.2 (b), 2.2 (c) and 2.2 (d) shall be added to Section 2.2 of the Existing Agreement (Regulatory Requirements): |
“2.2 (b) Compliance with Brazilian Regulatory Authorities Regulations. Fleet hereby warrants that the facilities where the Product is manufactured complies in full with the relevant standards stipulated by the Brazil National Health Surveillance Agency (“ANVISA”) and undertakes to ensure the facilities will continue to do so throughout the Term.
2.2 (c)Compliance with Regulatory Approvals. To the extent required for regulatory purposes, Fleet grants to Columbia the right to refer to, and to grant any purchasers of Columbia’s products containing the Product the right to refer to Fleet’s batch manufacturing records relating to the Product. Fleet undertakes to notify Columbia and to provide Columbia with specific details of any changes to be made to the batch manufacturing records and any other filings made by Fleet with the Regulatory Authorities to the extent that they relate to the Product.
2.2 (d)Material Change in Manufacturing Process. Fleet shall provide reasonable notice to Columbia and shall consult with Columbia before Fleet makes any material change in any manufacturing process for the Product.”
5. |
Section 2.3 (c) of the Existing Agreement (Raw Materials) shall be deleted and replaced by the following: |
2.3 (c)Raw Materials. Fleet shall be responsible for ordering [***] Raw Materials other than [***] and the [***] (which shall be provided by Columbia), as required to support Fleet’s obligations under this Agreement. All right, title and interest in and to the Raw Materials provided by Columbia (including but not limited to the [***] and the [***]) shall remain with Columbia at all times. Fleet shall ensure that all Raw Materials are released for use at least [***] prior to their use in manufacturing the Product. Fleet shall maintain sufficient stocks of Raw Materials to meet its manufacturing and supply obligations to, and as set out in any Production Schedule by, Columbia; provided however that Fleet shall have a retest date in accordance with the relevant supplier’s written instructions (or where none, Fleet’s SOPs, which Fleet shall provide to Columbia upon request) for Raw Materials. Raw Materials shall not be used beyond their expiration date as provided by the Raw Materials supplier.
|
(i) |
[***] costs of Raw Materials shall be included in the Purchase Price. Fleet shall be responsible for [***] of Raw Materials hereunder which Fleet supplies. For the avoidance of doubt, Columbia shall be responsible for all such costs only in respect of [***] and [***] provided by Columbia to Fleet. Fleet shall not use any Raw Materials purchased directly by Columbia except for the manufacture of Product hereunder. Columbia will be responsible for all retesting costs associated with the Raw Materials supplied by Columbia. |
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|
(ii) |
Fleet shall notify Columbia of any Raw Materials that do not meet the specifications of the Raw Materials, and shall provide Columbia with full details within twenty-four (24) hours of completion of the investigation, but not more than twenty (20) business days from identification of the non-conformity with the specifications. |
|
2
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
“2.3 (n)KPIs. As soon as practicable following the Effective Date the Parties shall agree in good faith key performance indicators the Supplier will agree to achieve when supplying the Products and such key performance indicators will be set out in an amendment agreed by the Parties to this Agreement.”
7. |
A new Section 3A shall be inserted into the Existing Agreement as follows: |
“3A Machinery and Equipment
3A.1Columbia has provided Fleet with the machinery, equipment and materials listed in Exhibit B, which Fleet uses to manufacture Products (“Columbia Equipment”). Any additional machinery, equipment and materials provided by Columbia to Fleet during the Term shall be Columbia Equipment unless otherwise agreed in writing by both Parties. During the Term, Columbia shall review and update Exhibit B in December of each year to include any additional machinery, equipment and materials provided to Fleet.
3A.2The Parties confirm that Columbia owns title to all Columbia Equipment and that Columbia shall be regarded as the owner of the Columbia Equipment notwithstanding that the Columbia Equipment shall be retained at Fleet’s premises. Fleet shall not do or permit or cause anything to be done whereby Columbia’s rights in and title to the Columbia Equipment are or may become prejudiced including, without limitation, by ensuring that Columbia Equipment are clearly marked as the property of Columbia. No item of Columbia Equipment may be moved from Fleet’s premises without the prior written consent of Columbia.
3A.3Fleet shall not use the Columbia Equipment for any purpose other than supplying Columbia with the Product in accordance with the terms of this Agreement without Columbia’s prior written consent.
3A.4Fleet will at all times ensure that the Columbia Equipment meets and is operated and maintained in accordance with Applicable Laws and cGMP and GDP.
3A.5 Fleet shall maintain the Columbia Equipment, the reasonable costs of which shall be agreed by the Parties (acting reasonably) and paid by Columbia, and:
|
(a) |
maintenance shall be carried out to at least the standards adopted in respect of Fleet’s other machinery and equipment used by it at its premises and Fleet shall not prioritize the maintenance of its own equipment above that of the Columbia Equipment; |
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(b) |
Fleet shall at all times ensure that it has sufficient trained and competent maintenance personnel available for such maintenance; |
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(c) |
during the Term, on or before 1 January of each year, Fleet shall prepare and deliver to Columbia: |
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|
(i) |
a maintenance plan setting out the maintenance activities to be performed by Fleet in respect of the Columbia Equipment for the following year; and |
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3
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
(ii) |
a maintenance report confirming that each of the maintenance activities set out in the previous year’s maintenance plan have been carried out; |
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(d) |
Columbia shall have the right to request a maintenance report in respect of any of the Columbia Equipment at any time during the Term which Fleet shall provide to Columbia within twenty-eight (28) days; |
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(e) |
Fleet shall inform Columbia of the need for any overhauls, replacements and repairs and shall perform all such overhauls, replacements and repairs as reasonably instructed by Columbia (the reasonable agreed costs of which shall be borne by Columbia); and |
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(f) |
if an overhaul of the Columbia Equipment is required, Fleet shall provide reasonable notice to Columbia and shall manufacture adequate stocks of Product in advance to ensure continuity of supply in accordance with orders placed by Columbia pursuant to the terms of this Agreement. |
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3A.6 Fleet shall keep the Columbia Equipment safe and in good working order and shall take all reasonable steps to ensure that the Columbia Equipment does not become contaminated or corroded.
3A.7 Fleet shall mark each individual unit of the Columbia Equipment in a conspicuous manner to indicate that such machinery and equipment is owned by Columbia.
3A.8Fleet shall keep the Columbia Equipment free and clear of any lien, charge or encumbrance and Fleet shall obtain and deliver to Columbia a waiver of any of the foregoing in a form reasonably acceptable to Columbia.
3A.9Columbia shall not be liable for any loss or damage due to the negligence or wilful misconduct of Fleet, its Affiliates, employees, contractors or representatives. In the event of any loss or damage of any item of the Columbia Equipment due to the negligence or wilful misconduct (including negligence or intentional misconduct in relation to the operation, inspection or maintenance of the Columbia Equipment) of Fleet, its Affiliates, employees, contractors or representatives, Fleet shall repair or replace such items of Columbia Equipment, at Fleet’s sole cost and expense, promptly taking into account the quantities of stock held by Fleet at the time of such loss or damage.”
8. |
Section 3.1 of the Existing Agreement (Production Schedules) shall be deleted and replaced by the following: |
“3.1 Production Forecasts
(a)Production Schedule. Each [***], before the [***], during the Term Columbia shall prepare and provide Fleet with a written Production Schedule of its requirements for Product (each, a "Production Schedule") for the following [***]. The amounts set forth for the [***] in each Production Schedule shall constitute a firm purchase order and shall be binding upon Columbia (each a "Purchase Order") unless otherwise agreed in writing by both parties. The amounts set forth for the following [***] shall constitute Columbia's non-binding, good faith estimate of the Product requirements of Columbia for such periods. Fleet shall manufacture, supply and deliver to
4
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Columbia all quantities of Product as Columbia orders in accordance with this Section 3.1. All right, title and interest in and to the Product shall remain with Columbia at all times. Fleet shall ensure that it has sufficient experienced production staff available to meet the requirements set out in each Production Schedule and at a minimum, to meet the expected non-binding forecast set out below:
|
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
Number of batches |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
(b) Non-Active Product Orders. From time to time during the Term, Columbia may provide Fleet with a purchase order for a batch of Product that does not contain any active pharmaceutical ingredient provided that such purchase order is received at least ninety (90) days prior to the required delivery date. The batch size for any Product ordered pursuant to this Section 3.1 (b) shall be set out in the relevant purchase order. All provisions of this Agreement that relate to Products shall apply equally to any Products that do not contain any active pharmaceutical ingredient.”
9. |
Section 3.3 (a) of the Existing Agreement (Delivery) shall be deleted and replaced by the following: |
“3.3 (a)Delivery. All Product supplied under this Agreement shall be delivered EXW Fleet’s Watford, UK facility. All risk of loss in the Product shall pass to Columbia upon receipt of the Product at Fleet’s facility by the carrier designated by Columbia. The weights, tariffs and tests affixed by Fleet’s invoice shall govern unless established to be incorrect. Claims relating to quantity, weight and loss or damage to any Product sold under this Agreement shall be waived by Columbia unless made within [***] of receipt of Product by Columbia.”
10. |
Section 4.1 of the Existing Agreement (Audits) shall be deleted and replaced by the following: |
“4.1 Audits. Columbia QA, any other person appointed by Columbia, Columbia’s customer, and/or any Regulatory Authority may conduct inspections and audits of Fleet’s manufacturing facility, Columbia Equipment, quality control laboratories, and other quality systems relating to the manufacture and storage of the Product according to Columbia's reasonable procedures upon reasonable prior written notice, during normal business hours, provided, however, that Columbia QA, any other person appointed by Columbia and/or any Regulatory Authority may conduct a “For Cause” audit during normal business hours upon three (3) business days prior written notice to Fleet. Any such audit undertaken by Columbia QA or any other person appointed by Columbia shall be at Columbia’s sole cost and expense. Columbia or any other person appointed by Columbia shall have the right, in connection with any such audit, to inspect and obtain copies of any records or other documents and materials associated with or related to the manufacture of the Product. Fleet shall promptly notify Columbia of any proposed inspections by any governmental authority of the facilities at which Product is manufactured in sufficient time for Columbia to attend such inspection.”
11. |
Sections 5.1 (Price) and 5.2 (Invoicing) of the Existing Agreement shall be deleted and replaced by the following: |
5
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
“5.1 Price. During the Term, the purchase price for each Batch purchased by Columbia from Fleet in any [***] shall be determined in accordance with Part 1 of Exhibit A and the pricing model set out in Part 2 of Exhibit A attached hereto, as may be amended from time to time in accordance with the provisions of this Section 5.1. The Parties shall agree the applicable purchase price for each [***] in accordance with Part 1 of Exhibit A (as may be amended from time to time in accordance with this Section 5.1) and the production forecasts received by Fleet pursuant to Section 3.1. [***]. Any adjustments as set out in paragraphs (a), (b) and (c) below and any consequent adjustments to the volume discount model set out in Part 1 of Exhibit A and/or the pricing model set out in Part 2 of Exhibit A shall be agreed in writing by both Parties and shall take effect from 1 January the following calendar year. Exhibit A may be amended by the mutual written agreement of both parties as follows:
|
(a) |
the [***] of Exhibit A shall only be amended to reflect the change in rate of the Consumer Price Index as published by the UK Office of National Statistics all item data series D7BT (the “CPI”). By way of example, if on 1 November in a calendar year during the Term, the CPI shows that there has been an increase in prices compared with the same index on 1 November the previous year [***], then [***] in the model as of 1 January in the following year [***] of the CPI increase as recorded on 1 November, [***]. |
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|
(b) |
the [***] of Exhibit A shall only be amended to reflect [***] of the change in rate of the CPI. By way of example, if on 1 November in a calendar year during the Term, the CPI shows that there has been an increase in prices compared with the same index on 1 November the previous year [***], then [***] in the model as of 1 January in the following year [***] of the CPI increase as recorded on 1 November, i.e. by [***]. |
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|
(c) |
the [***] of Exhibit A shall only be amended to reflect any [***] changes to the cost of any of the [***] set out in Part 4 of Exhibit A. If at any other time during a calendar year the [***] when compared with [***], Fleet shall have the right to amend the [***] for any future invoices by providing Columbia with at least three (3) months’ prior written notice. |
|
Except as otherwise set out in Section 5.1 (c), the first period during which any adjustment set out in Section 5.1 (a), (b) or (c) above will be calculated shall be [***], with the adjusted costs to be applied to the pricing model in Exhibit A for the calendar year commencing [***]. Fleet shall provide Columbia with access to all books and records necessary to verify any changes to the purchase price.
5.2Invoicing. Upon delivery of Product to Columbia, Fleet shall submit invoices therefor to Columbia. Columbia shall pay each invoice in full within [***] after the date of receipt by Columbia of such invoice, which shall be issued no earlier than the date on which the Product is delivered to the carrier by Fleet. All payments shall be made in pounds sterling. In the event that any actual volume of Product purchased by Juniper in any calendar year means that a different purchase price should have applied to such volume of Product purchased in that calendar year (as calculated in accordance with the pricing model set out in Exhibit A), Fleet shall notify Juniper in writing of such pricing differential and shall apply a proportionate credit or debit (as applicable) to any invoices raised for the subsequent calendar year. Upon the expiration or earlier termination of this Agreement,
6
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Fleet shall determine the applicable purchase price for that calendar year and shall notify Juniper in writing of any underpayment or overpayment within [***] of expiration or termination (as applicable). In the event of any underpayment by Juniper, Juniper shall pay to Fleet an amount equal to the amount of any such underpayment within [***] of receipt by Juniper of such written notice. In the event of any overpayment by Juniper, Fleet shall pay to Juniper an amount equal to the amount of any overpayment within [***] of receipt by Juniper of such written notice. Fleet shall provide Columbia with access to all books and records necessary to verify any changes to the purchase price and any underpayment or overpayment.”
12. |
Section 8 of the Existing Agreement (Insurance) shall be deleted and replaced by the following: |
“Fleet and Columbia shall maintain comprehensive general liability insurance, including product liability insurance against claims regarding the manufacture of Product under this Agreement and sufficient cover to meet its liabilities under this Agreement in respect of the Columbia Equipment, with insurers having an AM Best rating within the top 2 categories at the time (at the date of this Agreement known as “superior” or “excellent”) or reasonably comparable coverage, in such amounts as it customarily maintains for similar products and activities, but in no event less than [***] per individual claim and [***] in the aggregate. Each party shall maintain such insurance during the Term and thereafter for so long as it customarily maintains insurance for itself for similar products and activities (but in no event less than [***] following termination or expiration).”
13. |
Section 10.1 (a) of the Existing Agreement (Fleet’s Indemnity Obligations) shall be deleted and replaced by the following: |
“10.1(a)Fleet’s Indemnity Obligations. Fleet shall defend, indemnify and hold harmless Columbia, its Affiliates and their respective successors and permitted assigns (and the respective officers, directors, stockholders, partners and employees of each) from and against any and all losses liabilities, claims, actions, proceedings, damages and expenses (including, without limitation, reasonable attorneys' and professional fees and disbursements and expenses of litigation, arbitration or investigation) ("Damages") relating to or arising from (i) any breach by Fleet or its Affiliates of its representations, warranties, covenants, agreements or obligations under this Agreement, including without limitation, the failure of Fleet to timely deliver all Product ordered or the failure of the Product to meet the Fleet Warranty and/or Product Specifications or the failure of Fleet to manufacture or warehouse the Product in accordance with the Product Specifications and Applicable Law (including those relating to cGMP); and (ii) any claims of infringement or misappropriation with respect to the manufacture of the Product, except to the extent such claim of infringement relates to the use of the Intellectual Property; and (iii) any personal injury or property damage to the extent that the injury or damage is the direct result of a failure by Fleet or its Affiliates or subcontractors to manufacture, package, or label the Product in accordance with the Specifications, GMP or Applicable Law.”
14. |
Section 10.1 (b) of the Existing Agreement (Columbia’s Indemnity Obligations) shall be deleted and replaced by the following: |
“10.1 (b)Columbia’s Indemnity Obligations. Columbia shall defend, indemnify and hold harmless Fleet and its Affiliates, and their respective successors and permitted assigns (and the respective officers, directors,
7
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
stockholders, partners and employees of each) from and against any and all Damages arising out of (i) the handling, possession, use, marketing, distribution or sale of any Product and finished pharmaceutical product containing a Product by Columbia or any of its distributors or agents after Fleet's delivery of the Product to Columbia (except to the extent such claims arise out of the circumstances described in Section 10.1(a) or Fleet’s negligence or wilful misconduct); (ii) product liability claims, including, wrongful death, resulting from the use of a finished pharmaceutical product containing a Product (except to the extent such claims arise out of the circumstances described in Section 10.1(a) or Fleet’s negligence or wilful misconduct); (iii) any breach by Columbia of its representations, warranties, covenants, agreements or obligations under this Agreement (except to the extent any such breach is due to the negligence, breach or wilful misconduct of Fleet); and (iv) any claims of infringement or misappropriation relating to the Intellectual Property.”
15. |
Sections 11.1 to 11.3 of the Existing Agreement (Confidentiality and Public Disclosure) shall be deleted and replaced by the following: |
“11.1Confidentiality. Each party will treat as confidential the Confidential Information of the other party and will take all necessary precautions to assure the confidentiality of such Confidential Information. Each party agrees to return to the other party upon the expiration or termination of this Agreement all Confidential Information acquired from such other party, except as to such information it may be required to retain under Applicable Law, and except for one copy of such information to be retained by such party's legal counsel. Neither party shall, during the period of this Agreement nor for five (5) years thereafter, without the other party's express prior written consent, other than as provided under this Agreement, use or disclose any such Confidential Information for any purpose other than to carry out its obligations hereunder. Each Party shall guard such Confidential Information using the same degree of care as it normally uses to guard its own confidential, proprietary information of like importance, but in any event no less than reasonable care.
11.2 Permitted Disclosures. Notwithstanding the obligations of confidentiality and non-use set out in Section 11.1, a Receiving Party may:
|
(a) |
disclose Confidential Information to a regulatory authority as reasonably necessary to obtain registration in a particular jurisdiction; |
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8
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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review and provide comments, unless a shorter review time is agreed; and (iv) exercise its commercially reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed; |
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(c) |
disclose Confidential Information on a strict need to know basis to such Receiving Party’s licensee’s, employees, Affiliates, contractors (including clinical researchers), distributors, agents and consultants as such Receiving Party reasonably determines is necessary to receive the benefit of the licenses and rights granted or available to it under this Agreement or to fulfil its obligations pursuant to this Agreement; provided, however, any such person is bound in writing to observe confidentiality provisions at least as strict as those of this Agreement; |
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(d) |
disclose Confidential Information: (i) to its actual or potential investment bankers; (ii) to existing and potential investors in connection with an offering or placement of securities for purposes of obtaining financing for its business and to actual and prospective lenders for the purpose of obtaining financing for its business; and (iii) to a bona fide potential acquirer or merger partner for the purposes of evaluating entering into a merger or acquisition, provided, however, any such persons must be obligated to substantially the same extent as set forth in Section 11.1 to hold in confidence and not make use of such Confidential Information for any purpose other than those permitted by this Agreement; and |
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(e) |
disclose Confidential Information to its legal advisers for the purpose of seeking advice. |
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11.3 Public Announcements. Except for such disclosure as is permitted under Section 11.2 or as required by Applicable Law or the requirements of a national securities exchange or another similar regulatory body, no announcement, news release, public statement, publication, or presentation relating to this Agreement, the subject matter hereof or either party’s performance hereunder will be made without the other party’s prior written approval.
16. |
Section 12.1 of the Existing Agreement (Term) shall be deleted and replaced by the following: |
“12.1 Term. Unless terminated earlier pursuant to Section 12.2 below, the initial term of this Agreement shall expire on 31 December 2024 (the “Initial Term”) unless the Parties mutually agree in writing any extension to the Initial Term. Upon termination of this Agreement, Fleet agrees to perform its obligations under this Agreement until the earlier of [***].”
17. |
Section 12.2 (b) of the Existing Agreement, regarding termination of the Existing Agreement by Columbia, shall be deleted and replaced by the following: |
“12.2 (b)Columbia shall have the right to terminate this Agreement upon [***] notice to Fleet in the event:
|
(i) |
Fleet fails to maintain its authorizations under Applicable law to manufacture the product, including without limitation those from MHRA; |
|
9
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
(iii) |
Fleet cannot supply product at a Competitive Price; or |
|
|
(iv) |
the Ares Agreement is terminated.” |
|
18. |
Section 12.3 (b) of the Existing Agreement (Effect of Expiration and Termination) shall be deleted and replaced by the following: |
“12.3 (b)Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. The provisions of Sections 1 (Definitions), 3A.2, 3A.3 and 3A.8 (Machinery and Equipment), 4.1 (Audits), 5.2 (Invoicing), 7 (Representations and Warranties), 8 (Insurance), 9 (Adverse Events; Recalls), 10 (Indemnification; Limitation of Liability), 11.1 (Confidentiality and Public Disclosure), 12 (Term and Termination) and 13 (General Provisions) shall survive any expiration or termination of this Agreement.”
19. |
Section 12.3 (c) of the Existing Agreement (Effect of Expiration and Termination) shall be deleted and replaced by the following: |
“12.3 (c)If Columbia terminates this Agreement under Section 12.2 (b)(ii) or (iii), Columbia shall reimburse Fleet for [***] purchased by Fleet under this Agreement in the period of [***] prior to the date of termination that are only used by Fleet in the manufacture of the Products.”
20. |
The following new Sections 12.3 (d) and 12.3 (e) shall be added to Section 12.3 of the Existing Agreement (Effect of Expiration and Termination): |
“12.3 (d) If Columbia terminates this Agreement under Section 12.2 (a)(i) in the case of Fleet’s breach of this Agreement, under Section 12.2 (a)(ii) in the case of Fleet’s insolvency or other financial difficulty under that section, or under Section 12.2 (b) or 12.2 (c), subject to the reimbursement of Fleet’s reasonable costs and expenses, Fleet shall provide such assistance as Columbia may reasonably request to Columbia and, if relevant, any third party supplier, to ensure that Columbia (or any of its Affiliates) and, if relevant, any third party supplier has sufficient access to Fleet’s facilities and equipment, and to the Columbia Equipment, in order to continue to manufacture the Product. Fleet shall continue to supply the Product under the then current terms and conditions of this Agreement for as long as is necessary to enable the transfer of the manufacture of the Product to Columbia or a third party supplier in accordance with Section 12.3 (e).
12.3 (e) Fleet shall provide such assistance as Columbia may reasonably request to ensure the orderly transfer of the manufacture of the Product to any alternative manufacturer. If requested by Columbia, Fleet shall transfer to Columbia or the alternative manufacturer all technology and know-how necessary or useful to give Columbia or the alternative manufacturer the capability of manufacturing the Product. Fleet shall communicate such technology to Columbia or the alternative manufacturer promptly, effectively and economically, so that Columbia or the alternative manufacturer can undertake the manufacture of the Product and continue the sale of the Product without interruption. Columbia undertakes to reimburse Fleet for its reasonable costs of providing such assistance and to pay to Fleet an amount for all inventory of Raw Materials and work in progress of Products and part completed Products used to provide such assistance.”
10
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
“Juniper Pharmaceuticals UK Limited
8 Orchard Place
Nottingham Business Park
Nottingham, England
NG8 6PX
Attention: Chief Operating Officer”
22. |
Section 13.2 of the Existing Agreement (Assignment) shall be deleted and replaced by the following: |
“13.2Assignment. Neither party shall, without the prior written consent (not to be unreasonably withheld or delayed) of the other party having been obtained, assign or transfer this Agreement to any person or entity, in whole or in part (and any attempt to do so shall be void), provided that, each party may assign or transfer this Agreement without such consent to any Affiliate or to any successor by merger of such party, or upon a sale or other transfer of all or substantially all of such party's assets or business to which the subject matter of this Agreement pertains, provided that the acquirer of the business confirms to the Supplier in writing its agreement to be bound by all of the terms and conditions of this Agreement and that the assignor shall remain liable for the obligations hereunder. Notwithstanding the foregoing, it shall not be deemed unreasonable for Columbia to withhold consent, to any proposed or attempted assignment (including by merger or sale) by Fleet to a party which is not an Affiliate, if Columbia is not reasonably satisfied that the assignee possesses the management, finances, personnel, capabilities and facilities to perform fully the obligations of Fleet hereunder. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.”
23. |
Section 13.12 of the Existing Agreement (Technical Agreement) shall be deleted and replaced by the following: |
|
“13.12 |
Technical Agreement. Columbia and Fleet are parties to a certain technical agreement dated 18 March 2015 (as such agreement may be amended in accordance with its terms from time to time) (the “Technical Agreement”), the terms of which outline the responsibilities of Columbia and Fleet with respect to assuring the quality of the Product. Columbia and Fleet acknowledge and agree that in the event the terms of this Agreement and the Technical Agreement conflict or are inconsistent, the terms of this Agreement shall prevail over the terms of the Technical Agreement; provided however, that to the extent possible, the terms of both the Technical Agreement and this Agreement shall be read and considered to effect the intent of the parties.” |
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24. |
The following new Section 13.13 shall be added to Section 13 of the Existing Agreement (General Provisions): |
“13.13Anti-Bribery.
|
(a) |
The parties agree: |
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11
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
(ii) |
to have and maintain in place throughout the term of this Agreement their own policies and procedures to ensure compliance with the Relevant Laws and will appropriately enforce those policies and procedures; and |
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|
(iii) |
that no employee, contractor, supplier, agent, broker, or entity will offer or pay anything of value to a public or private official intending to influence or induce an official act or decision or to obtain an improper advantage. |
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|
(b) |
A material breach of this Section 13.13 shall be deemed a material breach of this Agreement. In the event of a material breach of this Section 13.13, the party not in breach shall have the right to terminate this Agreement, without any liability to the party in breach, with immediate effect. |
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(c) |
This Agreement is made subject to any restrictions concerning the export of products or technical information from the United Kingdom or other countries which may be imposed upon or related to Fleet or Columbia from time to time. Each party agrees that it shall not export, directly or indirectly, any technical information acquired from the other party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export licence or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity.” |
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25. |
All other terms and conditions of the Existing Agreement remain in full force and effect. Except as expressly provided in this Amendment, the Existing Agreement shall remain unmodified and is hereby ratified and affirmed. The execution, delivery, and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy of Columbia or Fleet under the Existing Agreement. |
26. |
This Amendment, together with the Existing Agreement, sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and thereof and merges all prior discussions and negotiations between them, and neither of the parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein and therein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby. |
12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
delivered by facsimile or a portable document format (PDF) copy (including copy(ies) sent by e-mail) and all such shall be deemed as if actual signature pages had been delivered. |
28. |
This Amendment and and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of England. Each Party irrevocably agrees that the English courts shall have sole and exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Amendment or its subject matter or formation. |
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the Effective Date.
COLUMBIA LABORATORIES (BERMUDA), LTD.
By: /s/ Alicia Secor ____________________________
Name: Alicia Secor_______________________________
Title:Chief Executive Officer_______________________
FLEET LABORATORIES LIMITED
By: /s/ Tom Horner______________________________________
Name: Tom Horner_________________________________________
Title:Managing Director____________________________________
13
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Part 1 – Volume adjusted purchase price
[***]
14
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
[***]
15
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit B
Columbia Equipment
[***]
16
Exhibit 10.2
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
SUPPLY AGREEMENT
This Agreement (the “Agreement”) is made and entered into as of this 10th day of May 2018,
Between:
(1) |
Columbia Laboratories (Bermuda) Limited, a Bermuda corporation having its principal place of business at Canon‘s Court, 22 Victoria Street, PO Box HM 1179, Hamilton HM 12, Bermuda (the “Purchaser”); and |
(2) |
Maropack ag, a Swiss corporation having its principal place of business at Industriestrasse Briseck 4, CH-6144 Zell, Switzerland (the “Supplier”), |
each a “Party” and together, the “Parties”.
The Parties acknowledge that this Agreement is entered into between the Supplier and the Purchaser but that the Purchaser’s Affiliate, Juniper Pharmaceuticals UK Limited (registration number 02425939) with registered address at 8 Orchard Place, Nottingham Business Park, Nottingham, NG8 6PX, UK (“Juniper”), provides services to the Purchaser which include managing this Agreement for the Purchaser.
BACKGROUND:
(A) |
The Purchaser is engaged in the manufacture of drug products and distributes products itself or through its officially appointed distributors and the Purchaser wishes to appoint the Supplier to undertake certain steps in the manufacturing process; |
(B) |
The Purchaser wishes to appoint the Supplier to fill single doses of the Bulk Gel (as defined below) into Applicators as further described in this Agreement; |
(C) |
The Supplier is a contract manufacturer of sterile liquid and semi-solid medicinal products by use of the bottelpack® system, based on Suppliers proprietary Blow-Fill-Seal Technology, and has previously performed certain filling and packaging services for the benefit of the Purchaser pursuant to the Existing Supply Agreement including the Amendment Agreement (each as defined below); |
(D) |
This Agreement terminates the Existing Supply Agreement with effect from the Effective Date and sets out the terms on which the Supplier will fill, manufacture, package and supply the Finished Product with effect from the Effective Date; |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1. |
Definitions |
As used in this Agreement, the following terms (except as otherwise expressly provided or unless the context otherwise requires) shall have the respective meanings set forth below (it being understood that the terms defined in this Agreement shall include the singular number in the plural, and the plural number in the singular):
1.1 |
“Affiliate” shall mean any corporation or other business entity that either directly or indirectly owns or controls a Party, is owned or controlled by such Party, or is under common ownership or control of a Third Party with one of the Parties hereto. As used herein, the term “control” means possession of the power to direct or cause the direction of the management and policies of a corporation or other entity whether through the ownership of voting securities, by contract or otherwise. A corporation or other entity shall be deemed to “own” another entity, if it holds at least 50 % of shares of that entity. |
1.2 |
“Adjusted Purchase Price” shall mean the increased or decreased price per Finished Product that is payable by the Purchaser in respect of each Finished Product in accordance with Section 5.1. |
1.3 |
“Applicable Laws” shall mean all applicable statutes, laws, rules, ordinances, regulations, directives, orders and guidelines (including any amendments, extensions or replacements thereto) inside the Territory or the European Union that apply to the performance of either Party’s obligations under this Agreement. |
1.4 |
“Applicators” or the “Primary Packaging Material” shall mean receptacles made of synthetic material, the particulars of which are set out in the Specifications, into which the Supplier shall fill single doses of the Bulk Gel using the Blow-Fill-Seal Technology in accordance with the Specifications and the provisions of this Agreement. |
1.5 |
“Blow-Fill-Seal Technology” shall mean the process by which the Applicators are blow-molded, filled with liquid product and sealed in one continuous operation under aseptic processing conditions. |
1.6 |
“[***]” shall mean the new [***] in accordance with Section 2.10. |
1.7 |
“Bulk Gel” shall mean progesterone vaginal gel containing progesterone in a concentration of eight percent (8%) w/w (mass/mass). |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.10 |
“Confidential Information” shall mean any written, oral, electronic, visual (e.g. information acquired by observation or otherwise during any site visit at the other Party’s site) tangible or non-tangible notices, disclosures, documents, materials or other information which is disclosed by one Party to the other Party pursuant to this Agreement including the existence and the terms and provisions of this Agreement and all information of a confidential or proprietary nature arising from the performance of this Agreement. Information shall not be deemed Confidential Information to the extent that Recipient Party can prove by demonstration of competent written records that such information: |
(i) was already known to the Recipient Party or its Affiliates at the time of disclosure or became known thereafter by way of disclosure by a Third Party, except directly or indirectly by breach of this Agreement or by breach of a Third Party’s confidentiality obligation towards the Disclosing Party;
(ii) at the time of the disclosure was generally known or freely accessible to the public;
(iii) after the time of disclosure became generally known or freely accessible to the public, except directly or indirectly by breach of this Agreement or by breach of a Third Party’s confidentiality obligation towards the Disclosing Party;
(iv) was created or developed by the Recipient Party, or one of its Affiliates, without the aid, application or use of the Confidential Information of the Disclosing Party; or
(v) was expressly marked or described by the Disclosing Party as non-confidential.
Irrespective of the applicability of any such exceptions, Recipient Party shall not be entitled to inform Third Parties of the fact, that it received such information from the Disclosing Party and that the Disclosing Party uses such information.
1.11 |
“Defect” shall mean a Finished Product which at the time of delivery of the Finished Product by the Supplier to the Purchaser when title to and risk for the Finished Product passes from the Supplier to the Purchaser does not meet the Specifications and does not have the quality agreed by the Parties; and “Defective” shall mean a Finished Product bearing a Defect; |
1.12 |
“Disclosing Party” means the Party or its Affiliate which discloses Confidential Information to the other Party or its respective Affiliate. |
1.13 |
“Effective Date” means 1 January 2018. |
1.14 |
“Existing Purchase Price” shall mean the price per Finished Product as agreed between the Parties in writing from time to time. |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.15 |
“Existing Supply Agreement” shall mean the agreement entered into between the Parties dated as of 28 October, 1993, which agreement was amended as of 8 December 2016 (the “Amendment Agreement”). |
1.17 |
“Filling Batch Certificate” shall mean a certificate in the form appended as Exhibit A to the Technical and Quality Agreement signed on behalf of the Supplier delivered to the Purchaser with each batch of Finished Products certifying the number of Finished Products (including any samples of such Finished Products) delivered in such batch and that such Finished Products have been filled and quality controlled and conform with the Specifications and all Applicable Laws. |
1.18 |
“Finished Product” shall mean each individual product comprising the Bulk Gel delivered by the Purchaser to the Supplier which the Supplier shall fill into Applicators and package using the Secondary Packaging Materials as set out in the Specifications. |
1.19 |
“Flow-Wrapping Batch Certificate” shall mean a certificate in the form appended as Exhibit B to the Technical and Quality Agreement signed on behalf of the Supplier delivered to the Purchaser with each batch of Finished Products certifying the number of Finished Products (including any samples of such Finished Products) delivered in such batch and that such Finished Products have been flow wrapped and quality controlled and conform to the Specifications and all Applicable Laws. |
1.20 |
“Good Manufacturing Practice” or “GMP” shall mean current good manufacturing practices and general biological products standards promulgated under and in accordance with the EEC Guide to Good Manufacturing Practices for Medicinal Products promulgated under the European Commission Directive 2003/94/EC of 8 October 2003 (laying down the principles and guidelines of good manufacturing practice in respect of medicinal products for human use and investigational medicinal products for human use). For the avoidance of doubt, Good Manufacturing Practice shall not include the United States Federal Food Drug and Cosmetic Act Title 21 of the U.S. Code of Federal Regulations, Parts 210, 211, 600, 601 and 610 or any other regulation applicable in the United States and the Finished Products shall not be manufactured in accordance with such regulations. |
1.21 |
“Improvement” shall mean any information, Intellectual Property Rights or Know-How invented, created or derived by any of the Parties and/or their respective Affiliates, alone or jointly with the other Party, under this Agreement or by use of Confidential Information of the other Party. |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
extent applicable); and including the right to use (whether by license, sublicense, assignment, permission, or otherwise) such rights in any applicable jurisdiction. |
1.25 |
“Manufacturing Records” shall mean the detailed written instructions describing the manufacturing of the Finished Product, including the records setting out the compounding (weighing-compounding instructions), processing (manufacturing instructions), secondary packaging (packaging instructions), quality control testing (quality control instructions), storage (part of the manufacturing instructions) and shipping (if applicable) (part of the manufacturing instructions) of the Finished Product, which are created by Supplier through implementation of the Specifications or any other instructions given by the Purchaser, and have been approved and countersigned by Purchaser; |
1.27 |
“New Equipment” shall mean the new equipment [***] to be purchased by the Purchaser in accordance with Section 2.10, the particulars of which are set out in Part A of Schedule 3. |
1.28 |
“New Facility” shall mean the new building to be constructed [***] as set out in Section 2.10, the particulars of which are set out in Part B of Schedule 3. |
1.29 |
“Pharmaceutical Company” shall mean the Company being in possession and holder of the marketing authorization for the Finished Product and the company responsible for the release of the Finished Product to the market. |
1.30 |
“PQR” shall mean an annual review of the quality of the Finished Product undertaken in accordance with chapter 1.5 of the EU-GMP-Guide. |
1.31 |
“Production Forecast” shall mean the forecast of its requirements for Finished Product provided by the Purchaser to the Supplier in accordance with Section 3.1. |
1.33 |
“Purchase Price” shall mean the purchase price for each Finished Product determined in accordance with Schedule 2. |
1.34 |
“Purchaser Equipment” means all [***] or other equipment required for the manufacture of the Finished Products which are owned by the Purchaser and set out in Schedule 1 and which shall (i) include the New Equipment; and [***]. |
1.35 |
“Purchaser Improvement” shall mean Improvements which are solely related to the materials provided by Purchaser (or its subcontractors) to the Supplier for the filling |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
of products (including but not limited to the Bulk Gel), except to the extent such Improvements are invented, created or derived by Purchaser in breach of this Agreement. |
1.36 |
“Purchaser Materials” shall mean any of Purchaser’s samples and tangible materials including but not limited to those assets set out in Schedule 1 and Bulk Gel and Secondary Packaging Materials provided by the Purchaser to the Supplier for the purpose of filling the Bulk Gel into the Applicators pursuant to this Agreement. |
1.37 |
“Recipient Party” means the Party or their respective Affiliate which receives Confidential Information from the other Party or their respective Affiliate. |
1.38 |
“Regulatory Authority” shall mean any national, supranational, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in any country having jurisdiction over any of the activities contemplated by this Agreement or over the Parties including but not limited to the granting of registrations, approvals and licenses for the manufacture and supply of the Finished Product. |
1.39 |
“Representative” shall mean, with respect to each Party, any employee, officer, agent, director, attorney, consultant or subcontractor of that Party. |
1.40 |
“Secondary Packaging Materials” shall mean any packaging materials (including but not limited to folding cardboard boxes, wrappings and instructions to accompany the boxes) supplied by the Purchaser or a Third Party into which the Finished Product is to be packaged in accordance with the Specifications. |
1.41 |
“Specifications” shall mean the Finished Product specifications set out in the Technical and Quality Agreement, as may be amended by the Purchaser from time to time in accordance with this Agreement. |
1.42 |
“Subcontractor” shall mean any subcontractor appointed by the Supplier to manufacture and/or supply the Finished Product. |
1.43 |
“Supplier Equipment” means the equipment used by the Supplier for the manufacture of the Finished Products which for the avoidance of doubt shall (i) include [***] and (ii) exclude the Purchaser Equipment and the New Equipment. |
1.44 |
“Supplier Improvements” shall mean Improvements which are not solely related to the materials provided by Purchaser (or its subcontractors) to the Supplier for the filling of products (including but not limited to the Bulk Gel) and shall include in particular any Improvements related to the manufacturing or packaging process, the design of the Applicator, or the BlowFill-Seal Technology, except to the extent such Improvements are invented, created or derived by Supplier in breach of this Agreement. |
1.45 |
“Supplier’s Premises” means Industriestrasse Briseck 4, CH-6144 Zell, Switzerland. |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.47 |
“Technology” shall mean all technical or other information, data and analysis and Know-How relating to the registration, manufacture, packaging, use, marketing and sale of the Finished Product (including, without limitation, all works copyrighted by the Supplier) and all proprietary rights relating thereto owned by the Supplier or its Affiliates or to which the Supplier or its Affiliates has assignable rights, whether prior to or after the Effective Date, and relating or pertaining to the Finished Product but shall exclude the equipment owned by the Supplier or its Subcontractors which is used by the Supplier or its Subcontractors for the production of the Finished Product and which is located at the premises of the Supplier or such Subcontractors. |
1.48 |
“Term” shall mean the Initial Term and any extension of the Initial Term agreed by the Parties in accordance with Section 12.2. |
1.49 |
“Territory” shall mean Switzerland. |
1.50 |
“Third Party” shall mean any person other than the Supplier or the Purchaser or an Affiliate of either of them. |
1.51 |
“United States” shall mean the several United States of America and its territories and possessions. |
1.52 |
In this Agreement: |
|
1.52.1 |
unless the context otherwise requires all references to a particular Section, paragraph or Schedule shall be a reference to that Section, paragraph or Schedule, in or to this Agreement as it may be amended from time to time pursuant to this Agreement; |
|
1.52.2 |
the table of contents and headings are inserted for convenience only and shall not affect the interpretation of any provision of this Agreement; |
|
1.52.3 |
unless the contrary intention appears, words importing the masculine gender shall include the feminine and vice versa and words in the singular include the plural and vice versa; |
|
1.52.4 |
unless the contrary intention appears, words denoting persons shall include any individual, partnership, company, corporation, joint venture, trust, association, organisation or other entity, in each case whether or not having separate legal personality; |
|
1.52.5 |
reference to the words “include” or “including” are to be construed without the limitation to the generality of the preceding words; |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
1.52.7 |
reference to any statute or regulation includes any modification or re-enactment of that statute or regulation. |
2. |
Supply |
|
2.1.1 |
the manufacture of the Applicators; |
|
2.1.2 |
the filling of the Bulk Gel supplied by the Purchaser under this Agreement into the Applicators; and |
|
2.1.3 |
the packaging of the Applicators using the Secondary Packaging Materials, |
each in accordance with this Agreement and, in particular, the Specifications and all Finished Products shall comply with the Specifications. The Purchaser acknowledges that it is the Purchaser’s responsibility to ensure that the Specifications are in accordance with Applicable Laws, GMP and recognized pharmaceutical standards and the Supplier shall rely on such Specifications in the course of the manufacture of Finished Product. Supplier shall, in accordance with the QA and using a format in accordance with Supplier’s quality management system, transcribe the Specifications into Manufacturing Records, which then shall be (to the extent set forth in the QA) approved and countersigned by the Purchaser in writing. The Purchaser shall at any time during normal business hours, but upon reasonable prior notice in writing, have access to the current version of the Manufacturing Records, and shall promptly notify the Supplier of any inconsistencies or gaps between the Manufacturing Records on the one hand, and the Specifications, GMP and all Applicable Laws and regulations on the other hand, independent of whether such parts of the Manufacturing Records have been approved by the Purchaser or not. The manufacturing processes used by Supplier will be validated as set out in the QA.
2.2 |
Application of this Agreement. The terms of this Agreement shall apply with effect from the Effective Date. |
2.3 |
Key Performance Indicators (KPIs). As soon as practicable following the Effective Date the Parties shall agree in good faith key performance indicators the Supplier will agree to achieve when supplying the Finished Products. Such key performance indicators will be incorporated in Schedule 4 of this Agreement by mutual written agreement of both Parties. The Supplier shall use its commercially reasonable efforts to meet the minimum acceptance levels of the KPIs during the Term. |
2.4 |
Samples. The Supplier shall take samples of each batch of Finished Product in accordance with the provisions of the Technical and Quality Agreement. Such |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
samples shall be sealed and stored until the expiry date of the relevant batch of Finished Product from which the relevant sample was taken (but in any event, for no more than six (6) years). The Supplier shall also provide to the Purchaser any samples required in any Purchase Order, including any stability samples. |
2.5 |
Quantity of Supply. The Supplier shall supply to the Purchaser, its Affiliates and sub-licensees such quantities of the Finished Product as the Purchaser may order from time to time in accordance with the terms of this Agreement. |
2.6 |
Supply of Bulk Gel and Secondary Packaging Materials. The Purchaser will bear all risks and costs of the transport for the Bulk Gel, the Secondary Packaging Materials and the completely filled Applicators. The Purchaser shall supply to the Supplier such quantities of the Bulk Gel and the Secondary Packaging Materials as is required in order for the Supplier to produce the quantity of Finished Products set out in each Purchase Order. The Bulk Gel shall be delivered to the Supplier by the date agreed with the Purchaser and in sealed containers in accordance with the Specifications and the QA. In the event that the seals of any container containing the Bulk Gel are damaged or missing, the Supplier shall as soon as possible inform the Purchaser of this fact and shall not use the Bulk Gel to perform its obligations under this Agreement. The following information shall also be provided by Purchaser with each supply of Bulk Gel: |
|
2.6.1 |
name and trade name of the Bulk Gel; |
|
2.6.2 |
batch number; |
|
2.6.3 |
description of the Bulk Gel; |
|
2.6.4 |
weight of the Bulk Gel being supplied; and |
|
2.6.5 |
expiry date of the Bulk Gel of the relevant batch. |
2.7 |
Supply of further information. The Purchaser shall also disclose to the Supplier all relevant information for the handling of the Bulk Gel and the Secondary Packaging Materials including but not limited to: |
|
2.7.1 |
precautionary measures to be taken in the handling, filling and packaging of the Bulk Gel; |
|
2.7.2 |
storage conditions; |
|
2.7.3 |
waste treatment; |
|
2.7.4 |
safety measures; |
|
2.7.5 |
confirmation that the Bulk Gel is compatible with the synthetic material of the Applicators; and |
|
2.7.6 |
qualitative formulation of the Bulk Gel. |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
2.10.1 |
on or promptly following the Effective Date, the Supplier shall purchase the [***]; |
|
2.10.2 |
on or promptly following the Effective Date, the Purchaser shall purchase the New Equipment and procure that such New Equipment is delivered to the Supplier’s Premises; |
|
2.10.3 |
the Parties acknowledge that prior to the Effective Date, the Purchaser has paid to the Supplier the total sum of [***]; |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
2.10.7 |
the Supplier shall ensure that the Purchaser Equipment and the [***] meet and are operated and maintained in accordance with Applicable Laws and GMP; |
|
2.10.9 |
the Supplier shall keep the Purchaser Equipment and the [***] safe and in good working order and shall take all reasonable steps to ensure that the Purchaser Equipment and the [***] does not become contaminated or corroded; |
|
2.10.10 |
the Supplier shall keep the Purchaser Equipment and the [***] free and clear of any lien, charge or encumbrance; |
|
2.10.11 |
the Purchaser shall not be liable for any loss or damage to the Purchaser Equipment or the [***] due to the negligence or willful misconduct of the Supplier, its Affiliates, employees, contractors or Representatives. In the event of any loss or damage of any of the Purchaser Equipment or the [***] due to the negligence or willful misconduct (including negligence or intentional misconduct in relation to the operation, inspection or maintenance of the Purchaser Equipment or the [***]) of the Supplier, its Affiliates, employees, contractors or Representatives, the Supplier shall repair or replace such items of the Purchaser Equipment or the [***] at the Supplier’s sole cost and expense promptly taking into account the quantities of stock held by the Supplier at the time of such loss or damage; |
|
2.10.12 |
the Supplier further undertakes to construct the New Facility in which a part of the Finished Products are planned to be manufactured. The Supplier shall use its best endeavours to complete the construction of the New Facility by [***]. [***]; |
|
2.10.13 |
the Supplier may use the [***], the New Equipment and the New Facility for the manufacture, filling and supply of products to Third Parties provided that the Supplier gives priority at all times to the manufacture, filling and supply of the Finished Products and that such use does not prejudice or compromise the manufacture, filling or supply of the Finished Products for the Purchaser. |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.12 |
Subcontractors. Subject to the prior written consent of the Purchaser (such consent not to be unreasonably withheld, delayed or conditioned), the Supplier may subcontract all or part of the activities to be performed by it under this Agreement to any Subcontractor provided that the subcontracting of any activities shall not relieve the Supplier of, and the Supplier shall remain solely liable for, its obligations under this Agreement. |
2.13 |
Technical and Quality Agreement. The Supplier shall manufacture the Finished Product according to the Manufacturing Records and to the quality standard specified in, and in accordance with, the QA. Unless otherwise explicitly agreed to by the Parties in a written document which acknowledges an exception or amendment to this Agreement: |
2.14 |
Audits. The Supplier shall permit the Purchaser, its Representatives and any Regulatory Authority by appointment to: |
|
2.14.1 |
inspect the Supplier’s work under this Agreement and its facilities for performance of the services under this Agreement (including the New Facility); |
|
2.14.2 |
inspect all relevant records of the Supplier relating to the production of the Finished Products; and |
|
2.14.3 |
access relevant representatives of the Supplier. |
However, notwithstanding anything to the contrary in this Agreement, the Purchaser shall in no possible event be entitled to demand any disclosure of, or any part of, the Supplier’s financial books, financial records or other financial information.
Such inspections by the Purchaser or its Representatives will take place during normal business hours and not within a company holiday (two times a year, each for two weeks) of Supplier and may take place on a periodic or annual basis as required by the Purchaser or any Regulatory Authority in accordance with the QA. The Purchaser shall notify the Supplier of the performance of such an audit giving at least seven (7) calendar days prior notice.
2.15 |
Packaging and Labelling. The Finished Products shall be provided by the Supplier in accordance with the Manufacturing Records. |
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3366395 v12
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
3.3.1 |
The Supplier shall use its commercially reasonable efforts to ensure that at all times during the Term it and its Subcontractors have sufficient capacity to produce a minimum of Finished Products per annum as required to satisfy the Production Forecasts provided by the Purchaser to the Supplier. |
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3366395 v12
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3.3.3 |
If completion of the Capacity Increase Project is materially delayed, thus delayed by three (3) months or more, the Supplier shall notify the Purchaser in writing of such delay and provide an expected completion date for completion of the Capacity Increase Project. The Supplier shall use its reasonable efforts (including arranging for extra shifts and overtime to be worked by relevant employees and for such other reasonable and feasible steps as may be agreed by the Parties to be taken at the Supplier’s cost) to provide the Purchaser with additional services and Finished Product to ensure that the Supplier is able to supply quantities of Finished Product to the Purchaser in accordance with the Production Forecasts provided by the Purchaser in accordance with Section 3.1. In the event that the Purchaser submits Purchase Orders for more than [***] Finished Products per annum before completion of the Capacity Increase Project, Supplier shall use reasonable efforts (including arranging for extra shifts and overtime to be worked by relevant employees and for such other reasonable and feasible steps as may be agreed by the Parties) to provide the Purchaser with additional services and Finished Product but at Purchaser’s cost provided that any additional costs are agreed in advance in writing by the Purchaser. |
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3.3.4 |
If completion of the Capacity Increase Project has not occurred by [***], the Parties acknowledge and agree that the Purchase Price should be reduced. In this event, the Parties shall enter into good faith negotiations to agree an appropriate reduction to the Purchase Price and ways in which the Supplier can increase the quantities of Finished Products that it supplies until the Capacity Increase Project is completed. |
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3.3.5 |
[***]. On completion of the Capacity Increase Project the Supplier shall notify the Purchaser if the total costs of implementing the Capacity Increase Project are greater or less than the amount budgeted as at the Effective Date (being between Swiss Francs [***] and Swiss Francs [***]). If: |
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(a) |
the actual cost is less than Swiss Francs [***], the Parties shall discuss in good faith [***]; or |
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(b) |
the actual cost is greater than Swiss Francs [***], the Parties shall discuss in good faith [***]; or |
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
X LESS Y x [***]
X |
Where: |
X means: |
the total aggregate number of Annual Minimum Finished Product Volume for that Calendar Year and each previous Calendar Year |
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Y means: |
the total number of Finished Products actually purchased by the Purchaser in that Calendar Year and each previous Calendar Year |
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[***] means: |
the lower of (a) [***]; or (b) [***] |
By way of example:
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4.1 |
Defective Finished Products. |
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4.1.3 |
For the purposes of section 4 of this Agreement, “inspection” shall mean that the Purchaser or its nominee has undertaken at least the following: |
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(a) |
comparing the applicable Purchase Order against the documentation accompanying the Finished Products collected to verify that the delivery date, identity, quantity and exterior shipment labelling comply with the order; |
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(c) |
visually inspecting the exterior of the Finished Products collected to verify that the Finished Products collected appear to be in good condition; for the avoidance of doubt to comply with this paragraph 4.1.3(c), the Purchaser or its nominee at the time of delivery shall only be obliged to inspect the shrink wrapped pallets containing the Finished Products and shall not be obliged to open the pallets or boxes to inspect their contents. Any Defects that would not be visible following such an inspection will be considered to be hidden or latent Defects at that time. As soon as any hidden or latent Defects are discovered by the Purchaser as a result of the further processing of the Finished Products, Supplier must be promptly notified as set out in Section 4.1.2. |
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4.1.5 |
In the event that the Supplier disagrees with any rejection notice received from the Purchaser pursuant to Section 4.1.1, the Supplier shall analyse a |
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retained sample of any batch of the Finished Product rejected by the Purchaser for non-conformity with the Specifications within thirty (30) calendar days of receipt of such notice, and present its findings with respect to such quantity of the Finished Product to the Purchaser. If the Parties cannot agree on whether the batch of Finished Product in question conforms to the Specifications, an independent qualified laboratory reasonably acceptable to both Parties, and at a cost to be borne by the Party found to be in error, shall analyse both the Purchaser’s (or any Third Party to which Purchaser has supplied the Finished Product) and the Supplier’s samples of the Finished Product from the batch in question, and the definitive results of such laboratory shall be final and binding on the Parties. If the batch of the Finished Product in question is determined to be conforming and provided that the Certificate of Analysis did not indicate it to be non-conforming, the Purchaser will reimburse the Supplier for the cost of the Purchaser Materials and shall pay to the Supplier the Purchase Price for the quantity of Finished Products delivered by the Supplier and the Purchaser shall bear the costs of the commissioned laboratory. |
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4.1.6 |
If any delay, Defect, or shortage in quantity is due mainly to an action or omission of the Purchaser, including late delivery of, or delivery of Defective Purchaser Materials, the right of the Purchaser to claim rework or replacement or reimbursement of the Purchase Price does not apply, and the Supplier shall not be liable for any damages resulting from such delay, Defect or shortage in quantity. If a delay, Defect or shortage in quantity is not caused mainly by one Party but is caused partly by the Supplier and partly by the Purchaser and/or a Third Party, any damages resulting from such delay, Defect or shortage in quantity shall be divided between the parties contributing to such damages in proportion to the contribution made by each party to such delay, Defect or shortage in quantity. Such contribution shall be determined by the Parties in good faith or, failing agreement the provisions of Section 28 shall apply. |
5. |
Price, Payment terms AND SHIPPING |
5.1 |
Purchase Price. From 1 January 2018, the Purchaser shall pay the Supplier the Purchase Price for the Finished Products provided that: |
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Products to be purchased by the Purchaser will be less than [***], the Supplier shall raise invoices for the Adjusted Purchase Price set out in column B of Schedule 2 that corresponds to the expected volume of Finished Products to be purchased by the Purchaser based on the Production Forecasts, as set out in column A of Schedule 2. |
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5.1.2 |
if in any Calendar Year the actual volume of Finished Products supplied by the Supplier, as set out in column A of Schedule 2 is less than [***], and the Supplier has not raised invoices for the corresponding Adjusted Purchase Price during that Calendar Year, the Purchaser shall pay the increased Adjusted Purchase Price set out in column B of Schedule 2 that corresponds to the actual volume of Finished Products for each Finished Product supplied by the Supplier in that Calendar Year. |
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5.1.4 |
in the event that, during any Calendar Year, the Production Forecasts provided by the Purchaser and/or the high volumes of Finished Products ordered by the Purchaser indicate that the the actual volume of Finished Products to be purchased by the Purchaser will be greater than or equal to [***], the Supplier shall raise invoices for the Adjusted Purchase Price set out in column B of Schedule 2 that corresponds to the expected volume of Finished Products to be purchased by Purchaser based on the Production Forecasts, as set out in column A of Schedule 2. |
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5.1.5 |
if in any Calendar Year the actual volume of Finished Products supplied by the Supplier, as set out in column A of Schedule 2 is greater than or equal to [***], and the Supplier has not raised invoices for the corresponding Adjusted Purchase Price during that Calendar Year, the Purchaser shall pay the decreased Adjusted Purchase Price set out in column B of Schedule 2 that corresponds to the actual volume of Finished Products for each Finished Product supplied by the Supplier in that Calendar Year. |
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5.1.6 |
the difference between the amount actually paid by the Purchaser for the actual volume of Finished Products supplied by the Supplier in that Calendar Year and the total reduced Purchase Price applicable to the Finished Products supplied in that Calendar Year shall be calculated by the Supplier and notified to the Purchaser following the end of each Calendar Year. Any such amount shall be payable to the Purchaser by way of issue by the Supplier to the Purchaser of a credit note for such amount. |
5.3 |
Payment of Invoices. Any invoice issued by the Supplier in accordance with this Agreement shall be payable in Swiss Francs within thirty (30) days after the date of |
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receipt by the Purchaser of such an invoice. In the event that the Purchaser fails to pay any such invoice by the due date, the Supplier may charge interest on the amount overdue at the rate of [***] above the Bank of England base rate on the date that payment is due, calculated on a daily basis until payment is made. |
5.5 |
Storage and Insurance. The storage of the Finished Products and the Purchaser Materials shall be carried out in accordance with the terms and provisions set forth in the QA. The Purchaser shall be responsible for insuring the Finished Products and Purchaser Materials delivered by Purchaser, against loss, damage or other deterioration, including by fire, water, burglary and/or theft, at Supplier’s site, and in such amounts as appropriate given the value of the goods. Neither the Finished Products nor any of the Purchaser Materials delivered by the Purchaser need to be insured by Supplier against the aforementioned risks during storage, manufacture or transport except that the Supplier shall insure the Finished Products and Purchaser Materials against any loss, damage or other deterioration caused by the Supplier’s negligence or wilful acts in accordance with the provisions of Section 10.7. |
5.6 |
Ownership. All right, title and interest in and to the Purchaser Materials, the filled Applicators and the Finished Products shall remain with the Purchaser at all times. |
5.7 |
Withholding Taxes. If the Purchaser is legally required to withhold any taxes from payments due hereunder, the Parties shall discuss is good faith the arrangements which should apply to the withholding of such taxes. |
5.8 |
VAT. All payments to the Supplier under the terms of the Agreement are expressed to be exclusive of value added tax and any other goods and services tax howsoever arising and the Purchaser shall pay to the Supplier in addition to those payments all value added tax and any other goods and services tax for which the Supplier is liable to account to a Regulatory Authority in relation to any supply made or deemed to be made for value added tax purposes to this Agreement on receipt of a tax invoice or invoices from the Supplier. |
5.9 |
Bank Account. The Purchaser shall make all payments to the Supplier under this Agreement by wire transfer to the account of the Supplier notified by the Supplier to the Purchaser in writing from time to time. |
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6.1 |
Notwithstanding anything to the contrary in this Agreement or the Quality Agreement, the Purchaser, its subcontractor or any Third Party to which the Purchaser sells the Finished Product, shall be responsible for the release of the Finished Product to the market or for sale for clinical trials (as applicable). The Purchaser shall ensure compliance with the Quality Agreement, GMP and all Applicable Laws. |
6.2 |
The Finished Product will not be sold under the Supplier’s name (Maropack) or the name of any of the Supplier’s Affiliates. The Purchaser, or the Third Party to which the Purchaser sells the Finished Product, shall sell the Finished Product in its own name and in its own responsibility. The Parties agree that Supplier is not acting as a Pharmaceutical Company under this Agreement and in no case will be responsible for releasing the Finished Product to the market. |
6.3 |
The Purchaser, or the Third Party to which the Purchaser sells the Finished Product, shall be responsible for preparing an annual PQR. The Supplier shall provide available data to the Purchaser as required to complete the PQR as set out in the QA. |
6.4 |
The Purchaser or the Third Party to which the Purchaser sells the Finished Product shall be responsible for pharmacovigilance in accordance with Applicable Laws provided that the Supplier shall report any safety issues relating to the Finished Product of which it becomes aware in accordance with GMP. |
7. |
INTELLECTUAL PROPERTY |
7.1 |
Subject to the provisions in this Section 7, all rights and title to the Confidential Information shall remain with the Disclosing Party provided that that any newly created Confidential Information which pertains to Improvements shall be deemed to be Confidential Information of the Party who owns such Improvements in accordance to the provisions below. |
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permit and assist the Purchaser (at its own expense) to obtain, by registration or otherwise, and enforce all Intellectual Property Rights in the Purchaser Improvements, including (without limitation) the execution of any confirmatory assignments and assistance in any legal proceedings. To the extent any Purchaser Improvements are wholly or partially created or derived by the Supplier's Affiliates, its or their respective Representatives, the Supplier shall procure that (i) any such Purchaser Improvements are exclusively owned by the Purchaser; (ii) such Affiliate or Representative assigns to the Purchaser all rights, title and interest such Affiliate or Representative may have or acquire in such Purchaser Improvements to the Purchaser; (iii) such Affiliate or Representative performs all acts deemed necessary or helpful by the Purchaser to permit and assist the Purchaser (at its own expense) to obtain, by registration or otherwise, and enforce all Intellectual Property Rights in the Purchaser Improvements, including (without limitation) the execution of any confirmatory assignments and assistance in any legal proceedings; and (iv) such Affiliate or Representative takes all other actions required to be taken under Applicable Law so that all rights in such Purchaser Improvements are exclusively owned by the Purchaser. |
7.4 |
All Supplier Improvements and Supplier’s Confidential Information and Know-How shall be exclusively owned by the Supplier. The Purchaser hereby assigns to the Supplier, without prejudice to Section 7.2 above, any rights Purchaser may have or acquire in such Supplier Improvements and agrees to perform, during and after the Term of this Agreement, all acts deemed necessary or helpful by the Supplier to permit and assist the Supplier (at its own expense) to obtain, by registration or otherwise, and enforce all Intellectual Property Rights in the Supplier Improvements, including (without limitation) the execution of any confirmatory assignments and assistance in any legal proceedings. To the extent any Supplier Improvements are wholly or partially created or derived by the Purchaser's Affiliates, its or their respective Representatives, the Purchaser shall procure that (i) any such Supplier Improvements are exclusively owned by the Supplier; (ii) such Affiliate or Representative assigns to the Supplier all rights, title and interest the such Affiliate or Representative may have or acquire in such Supplier Improvements to the Supplier; (iii) such Affiliate or Representative performs all acts deemed necessary or helpful by the Supplier to permit and assist the Supplier (at its own expense) to obtain, by registration or otherwise, and enforce all Intellectual Property Rights in the Supplier Improvements, including (without limitation) the execution of any confirmatory assignments and assistance in any legal proceedings; and (iv) such Affiliate or Representative takes all other actions required to be taken under Applicable Law so that all rights in such Supplier Improvements are exclusively owned by the Supplier. |
7.5 |
Subject to Section 7.2, the Supplier grants to the Purchaser a fully paid up right to use the Supplier Improvements (excluding Supplier’s Background IP) for, and strictly limited to, the manufacture of the Purchaser’s products. This right shall be non-exclusive, non-transferable and non-sublicensable and shall continue following termination of this Agreement and shall be, without any warranty or guarantee of any absence of Third Party rights and subject to the scope of actual protection at a particular time of the Supplier’s Improvements. The protection of the Supplier’s Improvements shall in any case remain within Supplier’s sole discretion. |
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8.1 |
Each of the Parties shall keep strictly secret and shall not use or disclose, other than as provided in this Agreement, any and all Confidential Information disclosed by or on behalf of one Party and/or its Affiliates to the other Party, or obtained through observation or examination of such Confidential Information. The Disclosing Party may however continue to use its Confidential Information without any obligation towards the other Party. |
8.3 |
In case of Confidential Information directly disclosed to an Affiliate of the Recipient Party, and to the extent such disclosure is made for the purpose of the fulfillment of the contract and in good faith, Recipient Party shall ensure that its Affiliate has agreed to abide by the terms of this Agreement or an at least equally restrictive confidentiality obligation prior to receiving any Confidential Information or, if the disclosure has already occurred without the knowledge of the other Party, immediately upon knowledge thereof and with retroactive effect for the past. The Recipient Party shall be liable towards the Disclosing Party for the compliance of its Affiliates with such confidentiality obligation. |
8.4 |
Notwithstanding the above obligations of confidentiality and non-use a Recipient Party may disclose Confidential Information which it is obliged to disclose pursuant to any order of a competent court or administrative or governmental agency, provided that (i) the Recipient Party shall promptly inform the Disclosing Party of any such order; (ii) the Recipient Party shall only disclose such portion of the Confidential Information that it is legally compelled to disclose; and (iii) the Recipient Party shall appropriately cooperate with the Disclosing Party to prevent or limit the scope of the disclosure, or to obtain an appropriate protective order or other reliable assurance of confidential treatment to the Confidential Information. |
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8.6 |
The undertakings and obligations set out in this Section 8 will continue throughout the Term and will survive expiration or termination of this Agreement and will remain in force for a period of five (5) years following expiration or termination of this Agreement. Each Party agrees to keep the existence and nature of this Agreement confidential and not to use the same or the name of the other Party (or group names) in any publicity, advertisement or other disclosure provided that the Purchaser shall be permitted to disclosure the existence and nature of this Agreement to its subcontractors and to any Third Party to which it sells the Finished Products. |
9.1 |
Supplier hereby represents, warrants and covenants the following: |
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9.1.1 |
Supplier is a corporation duly organized, existing and in good standing under the laws of Switzerland, with full right, power and authority to enter into and perform this Agreement and to grant all of the rights, powers and authorities herein granted. |
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9.1.2 |
The execution, delivery and performance of this Agreement do not conflict with, violate or breach any agreement to which Supplier is a Party, or Supplier’s articles of incorporation or bylaws. |
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9.1.3 |
This Agreement has been duly executed and delivered by Supplier and is a legal, valid and binding obligation enforceable against Supplier in accordance with its terms. |
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9.1.4 |
Supplier shall comply with all Swiss Regulations, EC Directives and GMP in performing this Agreement. |
9.2 |
Purchaser hereby represents, warrants and covenants the following: |
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9.2.1 |
Purchaser is a corporation duly organized, existing and in good standing under the laws of Bermuda, with full right, power and authority to enter into and perform this Agreement and to grant all of the rights, powers and authorities herein granted. |
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9.2.2 |
The execution, delivery and performance of this Agreement do not conflict with, violate or breach any agreement to which Purchaser is a Party, or Purchaser’s articles of organization or bylaws. |
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9.2.3 |
This Agreement has been duly executed and delivered by Purchaser and is a legal, valid and binding obligation enforceable against Purchaser in accordance with its terms. |
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9.2.4 |
Purchaser shall comply with all Swiss Regulations, EC Directives and GMP in performing this Agreement. |
Unless provided otherwise in this Agreement, the Supplier shall be liable to Purchaser only to the extent damages are attributable to negligence or a wilful breach of this Agreement or any of the Supplier’s other legal obligations (including but not limited to statutory obligations) owed to the Purchaser (if any).
10.2 |
Liability Cap for Personal Injury and Property Damages |
The extent of the Supplier’s liability (if any, and resulting from any legal cause, including any kind of statutory liability such as liability in tort) owed to the Purchaser for injury to life, body or health and/or property damages shall be limited to € [***], per single incident and in the aggregate per Calendar Year.
10.3 |
Liability Cap for Personal Injury of Third Parties caused by Defective Products |
The extent of the Supplier’s liability (if any, resulting from any legal cause, including any kind of statutory liability such as liability in tort) owed to the Purchaser for injury to life, body or health of Third Parties caused by Defective Products shall be limited to € [***], per single incident and in the aggregate per Calendar Year.
10.4 |
Liability Cap for Other Kinds of Damages |
The extent of the Supplier’s liability (if any, and resulting from any legal cause, including any kind of statutory liability such as liability in tort) owed to the Purchaser for any and all other kinds of damage, including delay, financial loss, loss of profit, loss of production, additional costs, Third Party claims other than set forth in Section 10.3, loss of reputation and other similar claims, shall per single incident and in the aggregate per Calendar Year, be limited to [***] percent ([***] %) of the yearly amount paid by the Purchaser to the Supplier under this Agreement, calculated on the basis of the period of twelve (12) months immediately preceding the date on which the damage first occurred. In the event a damage occurs during the first twelve (12) months following the Effective Date, the maximum amount payable shall be calculated on the basis of the firm Purchase Orders placed by the Parties since the Effective Date.
10.5 |
Non-Limited Claims |
The limitation of liability according to Sections 10.2 to 10.4 shall not apply if and to the extent damages are attributable to i) the willful breach of its obligations by Supplier or ii) fraudulent misrepresentation of Supplier.
10.6 |
Claims unknown to Swiss Law |
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For greater clarity: notwithstanding Sections 10.2 to 10.5, and notwithstanding anything to the contrary in this Agreement, neither Party shall be liable to the other Party for any punitive or exemplary damages or any other damages that may be awarded by a court outside Switzerland which are not recognized under the laws of Switzerland.
(i)in the case of liability of, and indemnification by, the Supplier only, any damage to the other Party, and any claims for damages raised by any Third Parties against the other Party, to the extent that such damage or Third Party claims are due to the Finished Products being Defective; For the exclusion of doubt, Supplier shall only indemnify Purchaser to the extent Supplier, any Subcontractor of Supplier or any supplier of any materials for the manufacture of the Finished Products other than the Purchaser Materials is responsible for such Defect under this Agreement. If Purchaser and/or a Third Party (other than any Subcontractor of Supplier or any supplier of any materials for the manufacture of the Finished Products other than the Purchaser Materials) are at least partially responsible for the Defect, Supplier shall only be liable to the extent that Supplier (or its Subcontractors or suppliers of any materials for the manufacture of the Finished Products other than the Purchaser Materials) is accountable for and the damage is attributable to the Defect of the Finished Product; and
(ii)in the case of both Parties, any damage to the other Party, and any claims for damages raised by any Third Parties against the other Party, caused and attributable to a culpable breach of contract by the indemnifying Party,
and in each case of (i) and (ii), not caused and attributable to an action or omission of the other Party.
10.9 |
Product Liability Insurance. Purchaser shall obtain at its sole expense product liability insurance with adequate coverage and shall maintain this insurance for the Term. |
10.10 |
Limitation Period. The limitation period for any and all claims of the Purchaser which are not claims arising from Defects of the Product or concurrent statutory claims (e.g. tort), shall be determined in accordance with the laws of Switzerland. |
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11.1 |
The Purchaser shall be responsible, to the extent this is required by Applicable Laws, for instituting a recall of Finished Products from the market. |
11.2 |
The Supplier shall be liable for commercially reasonably incurred costs related to a recall of the Finished Products to the extent that the recall was caused by a Defect of the Finished Products attributable to the negligence or willful breach of the Supplier of its obligations under this Agreement and provided that the Purchaser (or its subcontractor or the Third Party to which the Purchaser sells the Finished Product) is required by Applicable Laws to institute the recall. If the cause for the recall is mainly attributable to the Purchaser or a Third Party, Supplier shall not be liable for the costs of such a recall. If the cause for the recall is only partly attributable to the Purchaser or a Third Party, the Parties will discuss and agree in good faith about the allocation of liability on a case by case basis. In any case, notwithstanding anything to the contrary in this Section 11 (including subsections), the Supplier’s liability shall be limited according to the provisions set forth in Section 10 (including subsections).The Purchaser shall promptly notify the Supplier of any (actual or intended) recall, which is or might be related to the manufacture of Finished Products, single components, the testing/quality control or any other work performed by the Supplier under this Agreement. |
12. |
TERM |
12.1 |
Initial Term. This Agreement shall commence on the Effective Date and continue in full force and effect until 31 December 2024 (the “Initial Term”). |
13.1 |
Termination by Notice. This Agreement may be terminated at any time upon the mutual written agreement of both Parties. |
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Agreement unless such failure is cured or the Parties have reached agreement on a plan to achieve a cure of such failure by the end of such thirty (30) day period. |
13.3 |
Termination for Financial Difficulties. This Agreement may also be terminated by written notice of one Party, if the other Party shall be involved in financial difficulties as evidenced by its: |
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13.3.1 |
commencement of a voluntary case under any applicable bankruptcy code or statute, or by its authorizing, by appropriate proceedings, the commencement of such voluntary case; or |
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13.3.2 |
failing to receive dismissal of any involuntary case under any applicable bankruptcy code or statute within sixty (60) days after initiation of such action or petition; or |
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13.3.3 |
by the entry of an order by a court of competent jurisdiction finding it to be bankrupt or insolvent, or ordering or approving its liquidation, reorganization or any modification or alteration of the rights of its creditors or assuming custody of, or appointing a receiver or other custodian for, all or a substantial part of its property or assets; or |
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13.3.4 |
by its making an assignment for the benefit of, or entering into a composition with its creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property. |
13.5 |
Legal Situation Upon Termination. |
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13.5.2 |
Both Parties shall upon termination or expiration of this Agreement promptly return or destroy, at the discretion of the Disclosing Party, any and all |
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Confidential Information received and stored in written, electronic or any other form, including all copies thereof, and confirm to the Disclosing Party in writing the complete return or destruction of the Confidential Information. Notwithstanding the foregoing, the Recipient Party may retain one piece (e.g. copy, sample, model, etc.) of each Confidential Information solely for the purpose of, and for the duration of the confidentiality obligation, the documentation of, or the defense against, possible later claims under this Agreement. All other rights and obligations under this Agreement shall remain unaffected by such return or destruction of Confidential Information. Both Parties shall ensure that its Affiliates, directors, employees, agents, advisors or subcontractors agree to abide by the aforementioned terms and shall be liable towards the respective other Party for the compliance of its Affiliates, directors, employees, agents, advisors or subcontractors with such obligations. |
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13.5.3 |
All Purchase Orders agreed on prior to the termination or expiration of this Agreement shall be fulfilled by the Parties in accordance with the terms and provisions of this Agreement (including the obligation of the Purchaser to pay the Purchase Price). |
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13.5.4 |
On termination of this Agreement for any reason, the Supplier shall allow the Purchaser access to the Supplier’s facilities and provide such assistance to the Purchaser as the Purchaser may reasonably request in order for the Purchaser to arrange for the delivery of any Purchaser Materials and Purchaser Equipment to any location designated by the Purchaser. |
13.6 |
No Waiver. The failure by a Party to exercise its rights to terminate this Agreement pursuant to this Section 13 in the event of any occurrence giving rise thereto shall not constitute a waiver of such rights in the event of any subsequent occurrence. |
13.7 |
Survival. Termination of this Agreement shall not release either Party from its obligations accrued prior to the Effective Date of termination nor deprive either Party from any rights that this Agreement provides shall survive termination. The provisions of Sections 1 (Definitions), 4 (Defective Products), 6 (Release to the Market, Sale, PQR, Pharmacovigilance), 7 (Intellectual Property), 8 (Confidentiality), 10 (Limitation of Liability and Indemnification), 11 (Recall), 13.5 (Legal Situation upon Termination), 14 (Publicity), 15 (Notices), 16 (Ownership Change, Assignment, Successors), 17 (Anti-bribery), 20 (Force Majeure), 21.4 (Severability), 22 (Amendments), 23 (English Language), 24 (No Benefit to Third Parties), 25 (Expenses) and 28 (Choice of Law and Jurisdiction) and any other provision that by its spirit and purpose is understood to survive the termination or expiration of this Agreement, shall remain in full force and effect and shall survive the termination of this Agreement to the extent necessary to effect the express purposes of such paragraphs and Sections. |
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3366395 v12
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The Supplier acknowledges that the Purchaser will be required to comply with and to make announcements as required by the Securities and Exchange Commission in the United States of America. Any such announcement shall not constitute a breach of Section 8.
15. |
NOTICES |
Unless otherwise set forth in this Agreement or mutually agreed between the Parties in writing, any notices under this Agreement shall only be effective, if made in writing (e.g. delivered in person, by courier, sent by mail or registered mail) or in text form (e.g. sent by email or facsimile), and which is sent to the address set forth on page 1 of this Agreement, or at such other latest address as either Party may designate in writing to the other Party.
16. |
OWNERSHIP CHANGE: ASSIGNMENT; SUCCESSORS. |
16.1 |
Binding on Successors. This Agreement shall be binding on and inure to the benefit of the successors and assigns of each of the Parties, including any Affiliate, subsidiary, division or any entity controlled by either Party. |
16.2 |
Assignment. Neither Party may sublicense or assign this Agreement, in whole or in part, without the prior consent in writing of the other Party, and any purported assignment without such consent (which may be withheld without reason) shall be void; provided, that the either Party may without consent but with notice to the other Party assign all or any portion of this Agreement (i) to any of its Affiliates; or (ii) if such assignment occurs in connection with the sale or transfer (by merger or otherwise) of all or substantially all of the business and/or assets of the transferring Party to which the subject matter of this Agreement pertains, provided that the acquirer of the business confirms to the other Party in writing its agreement to be bound by all of the terms and conditions of this Agreement. |
17.1 |
The Parties agree: |
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17.1.1 |
to comply with all Applicable Laws, statutes and regulations relating to anti-bribery and anti-corruption in the European Union, the United States of America and Switzerland including but not limited to the U.S. Foreign Corrupt Practices Act, US government health care compliance (HCC) policies, regulations and laws, US Export Administration Act of 1979 (50 App. U.S.C. §2401 et. seq.) and the UK Bribery Act, in each case as at the Effective Date (collectively, the “Relevant Laws”); |
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accountable for a breach of Relevant Laws it was not made aware of by Purchaser; |
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17.1.3 |
to have and maintain in place throughout the Term of this Agreement their own policies and procedures to ensure compliance with the Relevant Laws and will appropriately enforce those policies and procedures. |
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17.1.4 |
that no employee, contractor, supplier, agent, broker, or entity will offer or pay anything of value to a public or private official intending to influence or induce an official act or decision or to obtain an improper advantage. |
18. |
NO WAIVER |
No delay or omission or failure to exercise any right or remedy provided for herein shall be deemed to be a waiver thereof or acquiescence in the event giving rise to such right or remedy.
19. |
FURTHER ASSURANCES |
Supplier and Purchaser each agree to produce or execute such other documents or agreements as may be necessary or desirable for the execution and implementation of this Agreement and the consummation of the transactions contemplated hereby.
20. |
FORCE MAJEURE |
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21.1 |
With effect from the Effective Date, this Agreement will supersede all prior agreements (including the Existing Supply Agreement), whether written or oral, with respect to the subject matter of this Agreement except for the Technical and Quality Agreement, which is considered part of this Agreement. |
21.2 |
Each Party confirms that it is not relying on any representations, warranties or covenants of the other Party except as specifically set out in this Agreement. |
21.3 |
All Schedules or Exhibits referred to in this Agreement are intended to be and are hereby specifically incorporated into and made a part of this Agreement. In the event of any inconsistency between any such Schedules or Exhibits and this Agreement, the terms of this Agreement shall govern. In the event of a conflict between the terms and provisions of this Agreement and the terms and provisions of the QA, the terms and provisions of this Agreement shall prevail, except insofar as only technical aspects of the Technical and Quality Agreement are concerned, for which the QA shall prevail. In case of a conflict between the terms and provisions of this Agreement including its Schedules or Exhibits and the terms and provisions of a particular Order, order confirmation, or invoice, the terms and provisions of this Agreement shall prevail. |
21.4 |
If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then, to the fullest extent permitted by Applicable Law and if the rights or obligations of any Party will not be materially and adversely affected: (i) such provision will be given no effect by the Parties and shall not form part of this Agreement, (ii) all other provisions of this Agreement shall remain in full force and effect unless the invalid or unenforceable provision is of such importance that the Parties would not have entered into this Agreement without the invalid or unenforceable provision, and (iii) the Parties shall use their commercially reasonable efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with Applicable Law and achieves, as nearly as possible, the original intention of the Parties. |
No variation, amendments or extension of this Agreement shall be binding on either Party unless such variation, amendment or extension is agreed to in writing by both Parties.
23. |
ENGLISH LANGUAGE |
This Agreement is written and executed in the English language. Any translation into any other language shall not be an official version of this Agreement and in the event
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
of any conflict in interpretation between the English version and such translation, the English version shall prevail.
The provisions of this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they shall not be construed as conferring any rights in any other persons. No person who is not a Party to this Agreement (including any Representative of either Party) shall have the right to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in writing of the Parties, which agreement must refer to this Section 24.
Except as otherwise expressly provided in this Agreement, each Party shall pay the fees and expenses of its respective lawyers and other experts and all other expenses and costs incurred by such Party incidental to the negotiation, preparation, execution and delivery of this Agreement.
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same instrument. An executed signature page of this Agreement delivered by facsimile transmission by electronic mail in “portable document format” (.pdf) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall be as effective as an original executed signature page.
27. |
PERFORMANCE BY AFFILIATES |
The Parties agree that certain of the rights and obligations of the Parties under this Agreement may be carried out by one or more of their Affiliates; provided, however, that the Parties shall remain responsible for the acts and omissions of their Affiliates. The Parties further understand and agree that no such Affiliate is a Party to this Agreement, and, except as contemplated by this Agreement, is not the agent of a Party for purposes hereof, is not authorized to bind a Party and cannot enter into amendments to this Agreement, which can only be made by agreement in writing by the duly appointed representatives of both of the Parties.
28. |
CHOICE OF LAW AND JURISDICTION |
This Agreement and performance hereof shall be construed and governed by the laws of Switzerland without giving effect to its conflict of law principles (to the extent legally possible). The Parties agree that the United Nations Convention On Contracts For The International Sale Of Goods (CISG) shall not apply. Any dispute, controversy, claim or difference arising between the Parties out of, relating to, or in connection with this Agreement shall be settled amicably between the Parties. In the
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event that no amicable settlement can be reached within sixty (60) calendar days, all disputes shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three (3) arbitrators, one appointed by each Party and one appointed by the arbitrators appointed by the Parties. The place, or legal seat, of arbitration shall be London, England. The language of the arbitration shall be English. The Emergency Arbitrator Provisions shall not apply. The decision regarding any award of costs of the arbitration (including the costs of any party participating in that arbitration) shall be with the arbitrators. The decision of the arbitrators acting under the above rules shall be final and conclusive and shall be binding upon the Parties, without prejudice to the Parties’ right to seek interim or conservatory measures with a competent court. The Parties expressly agree to abide by the arbitration award.
[Signature page to follow]
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IN WITNESS WHEREOF, the Parties have set their hands as of the day and year first above written,
Columbia Laboratories (Bermuda) Ltd.
By:/s/ Alicia Secor
Title: Chief Executive Officer
Date: May 15, 2018
Maropack AG
By:/s/ Stephan Gschwind
Title: Managing Director
Date: May 10, 2018
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3366395 v12
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PURCHASER EQUIPMENT AND MATERIALS
[***]
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PURCHASE PRICE
The Purchase Price for the Finished Products shall be determined in accordance with Section 5.1 of the Agreement by way of reference to the total number of Finished Products purchased by the Purchaser in each Calendar Year. The applicable Purchase Price per Finished Product for the actual volume of Finished Products purchased in each Calendar Year by the Purchaser is as set out below:
[***]
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EQUIPMENT AND INFRASTRUCTURE
[***]
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KEY PERFORMANCE INDICATORS
[***]
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3366395 v12
Exhibit 10.3
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
EXCLUSIVE LICENSE AGREEMENT
This Exclusive License Agreement (this “Agreement”) is made as April 24, 2018 (“Effective Date”), by and between Juniper Pharmaceuticals, Inc., a Delaware corporation, (“Juniper’’) and Daré Bioscience, Inc., a Delaware corporation (“Licensee”), each referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
WHEREAS, Juniper owns or has the exclusive rights to certain patent rights and owns or has non-exclusive rights to certain technical information and desires to grant licenses of those patent rights and technical information to Licensee;
WHEREAS, Licensee desires to license such patent rights and technical information and has the capability to commercially develop, manufacture, distribute and use Products (as defined below) and Processes (as defined below).
NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:
1.CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings, unless the context requires otherwise.
1.1“Affiliate” with respect to either Party shall mean any corporation or other legal entity other than that Party in whatever country organized, controlling, controlled by or under common control with that Party. The term “control” shall mean (i) the direct or indirect ownership of fifty percent (50%) or more of the voting securities having the right to elect directors, or (ii) the power, direct or indirect, to elect or appoint fifty percent (50%) or more of the directors, or to cause direction of management and policies, whether through the ownership of voting securities, by contract or otherwise.
1.2“Commercially Reasonable Efforts” shall mean with respect to the efforts to be expended by Licensee with respect to the objective that is the subject of such efforts, reasonable, good faith efforts and resources to accomplish such objective that a US-based pharmaceutical company of similar size and market capitalization would normally use to accomplish a similar objective under similar circumstances when developing a women’s health product, it being understood and agreed that with respect to the development or commercialization of a Product or Process, such efforts shall be similar to those efforts and resources consistent with the usual practice of such US-based pharmaceutical company in pursuing the development or commercialization of a potential women’s health medical product owned by it or to which it has exclusive rights, with similar product characteristics as the relevant Product or Process. Without limiting the foregoing, but for
1
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
the sake of clarity, the determination as to whether or not Licensee has met the foregoing requirement shall take into account all relevant factors with respect to a Product or Process, including without limitation market potential, profit potential, strategic value, stage of development, mechanism of action, efficacy and safety relative to competitive products in the marketplace, actual or anticipated approved labeling, expected and actual competitiveness of alternative products (including generic products) in the market, the nature and extent of market exclusivity (including patent coverage and regulatory exclusivity), cost and likelihood of obtaining regulatory approval, and availability of manufacture and supply for commercial sale
1.3“Distributor” shall mean any third party entity to whom Licensee, an Affiliate of Licensee or a Sublicensee has granted, express or implied, the right to distribute any Product or Process pursuant to Section 2.1(b)(ii).
1.4“First Commercial Sale” shall mean the initial Sale by Licensee or an Affiliate of Licensee or a Sublicensee in an arms-length transaction to a third party anywhere in the applicable License Territory after obtaining necessary marketing and pricing approval, to the extent both are required, from regulatory authorities of a specific Product or Process, but excluding any Sale of a reasonable quantity of Products for clinical trial purposes or marketing samples.
1.5“Generic Competition” shall mean, with respect to a Product or Process in a given country, one or more Generic Products are commercially available in such country.
1.6“Generic Product” shall mean, as to a Product or Process, any product (including a “generic product” approved by way of an Abbreviated New Drug Application or approved under a section 505(b)(2) application, by the FDA (or equivalent regulatory mechanism for another regulatory authority)) that is sold by a third party and (a) in the United States, is “therapeutically equivalent,” “comparable,” “biosimilar,” or “interchangeable,” as evaluated by the FDA, applying the definition of “therapeutically equivalent” set forth in the preface to the then-current edition of the FDA publication “Approved Drug Products With Therapeutic Equivalence Evaluations” or any other definitions set forth in the U.S. Code, FDA regulations, or other source of U.S. Law or (b) outside the United States, meets such equivalent determination by the applicable regulatory authorities (including a determination that the product is “comparable,” “interchangeable,” “bioequivalent,” or “biosimilar” with respect to the Product or Process).
1.7“License Field” shall mean all human and animal pharmaceutical, therapeutic, preventative, diagnostic and palliative uses, including, without limitation vaginal delivery of pharmaceuticals and shall not include any other field not specifically set forth herein.
1.8“License Territory’’ shall mean worldwide.
1.9“Net Sales” shall be calculated as set forth in this Section 1.9, all in accordance with U.S. Generally Accepted Accounting Principles, applied on a consistent basis (“GAAP”). Subject to the conditions set forth below, “Net Sales” shall mean the gross amount invoiced, or if no invoice is issued, the amount received by Licensee and its Affiliates for or on account of Sales of Products
2
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
and Processes on a country-by-country basis following First Commercial Sale in such country, less the following amounts to the extent separately stated on the invoice or actually paid or credited by Licensee and its Affiliates in effecting such Sale:
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(1) |
amounts repaid or credited by reason of charge-backs, retroactive price reductions, billing errors, rejection or return of applicable Products or Processes, and cash, credit or free goods allowances; |
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(2) |
reasonable and customary trade, quantity or cash rebates (including without limitation, government mandated and managed care rebates) or discounts to the extent allowed and taken; |
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(3) |
amounts for outbound transportation, insurance, packaging, handling and shipping, but only to the extent separately invoiced; and |
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(4) |
import, export, excise and sales taxes, customs duties, value added taxes, and other governmental charges levied on or measured by Sales of Products or Processes, whether paid by or on behalf of Licensee, but not franchise or income taxes of any kind whatsoever. |
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(a) |
Specifically excluded from the definition of “Net Sales” are amounts attributable to any Sale of any Product or Process between or among Licensee and any Licensee Affiliate and/or Sublicensee, unless the transferee is the end purchaser, user or consumer of such Product or Process. |
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(b) |
No deductions shall be made for any commissions paid to any individuals or for any costs or expenses of collections. |
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(c) |
Net Sales shall be deemed to have occurred and the applicable Product or Process Sold on the earliest of the date of billing, invoicing, delivery or payment or the due date for payment. |
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(d) |
If any Product or Process is Sold at a discounted price that is substantially lower than the customary non-discounted and discounted price charged, or for non-cash consideration (whether or not at a discount), Net Sales for such Product or Process shall be calculated based on the non-discounted cash amount charged to an independent third party for the Product or Process during the same Reporting Period or, in the absence of such transaction, on the fair market value of the Product or Process. Non-cash consideration received for a Product or Process that could materially reduce any royalty payment due to Licensee hereunder shall not be accepted without the prior written consent of Licensee. |
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(e) |
In the event Licensee or a Licensee Affiliate or Sublicensee (as used in this Section 1.9(e) each a “Combination Product Seller”) uses a functionally active component |
3
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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or ingredient (for clarity, functionally active components and ingredients shall exclude routine components including without limitation common buffers and standard cell culture media) not licensed by Juniper to Licensee hereunder (“Other Components”) to form a product that is a combination of a Product and/or Process and Other Component(s) (a “Combination Product”), Net Sales for the purposes of calculating the royalty owed to Juniper on Sales of such Product and/or Process shall be calculated as described in the subsections below: |
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(i) |
If all Products and/or Processes and Other Components contained in the Combination Product(s) are Sold separately, Net Sales for Sales of Products and/or Processes for the purposes of calculating royalty payments shall be determined by multiplying [***], or if no [***] (for the purposes of this Section 1.9(e), the “Gross Sales Price”) by [***], in which [***] is [***], and [***] is [***]. For clarity, a Product or Process that delivers a drug either sold separately by Licensee or acquired from a third party shall not be considered a Combination Product with respect to such drug being included in such Product or Process. |
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(ii) |
If the Combination Product contains Products and/or Processes or Other Components not sold separately in any given country (and thus the Gross Sales Price is not available for such Products and/or Processes or Other Components), then Net Sales for purposes of determining royalty payments will be calculated as above, but the [***] in the above equation for such country shall be determined by mutual agreement reached in good faith by the Parties prior to the end of the accounting period in question based on [***]. If the Parties are unable to reach such an agreement prior to the end of the applicable accounting period, then the Parties will refer such matter for dispute resolution pursuant to Section 12.13. |
1.10“Patent Rights” shall mean all patents and patent applications that are listed on Exhibit A, including all provisionals, substitutions, continuations, continuations-in-part, divisionals, supplementary protection certificates, renewals, all letters patent granted thereon, and all reissues, reexaminations, extensions, confirmations, revalidations, registrations, patents of addition thereof, PCTs, and foreign equivalents to all of the foregoing.
1.11 “Phase 1 Clinical Trial” shall mean, as to a specific Product or Process, in connection with obtaining regulatory approval in the United States, the first clinical study conducted in humans to obtain preliminary information on a Product’s safety, tolerability, pharmacodynamic activity, pharmacokinetics, drug metabolism and mechanism of action, as well as early evidence of effectiveness if possible, as described more fully in 21 C.F.R. § 312.21(a); or an equivalent clinical study in a country other than the United States in connection with obtaining regulatory approval therein.
4
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.12“Phase 2 Clinical Trial” shall mean, as to a specific Product or Process, in connection with obtaining regulatory approval in the United States, a clinical study in humans designed with the principal purpose of determining initial efficacy and dosing of such Licensed Product in patients for the indication(s) being studied, as described more fully in 21 C.F.R. § 312.21(b); or an equivalent clinical study in a country other than the United States in connection with obtaining regulatory approval therein.
1.13“Phase 3 Clinical Trial” shall mean, as to a specific Product or Process, in connection with obtaining regulatory approval in the United States, a clinical study in humans with a defined dose or set of defined doses of such Product or Process, after successful completion of one or more Phase 2 Clinical Studies, of the efficacy and safety of such Product or Process which is prospectively designed to demonstrate statistically whether such Product is effective and safe for use in a particular indication in a manner sufficient to file an application to obtain marketing approval to market and sell that Product or Process in the United States, as described more fully in 21 C.F.R. § 312.21(c); or an equivalent clinical study in a country other than the United States in connection with obtaining regulatory approval therein.
1.14“Process” shall mean any process, method or service, the performance of which, in whole or in part:
|
(a) |
absent the license granted hereunder would infringe, or is covered by, one or more Valid Claims of Patent Rights (“Patented Process”); or |
|
(b) |
does not meet the requirements of the foregoing clause “ (a) ” but incorporates or is based upon Technological Information (“Unpatented Process”). |
1.15“Product” shall mean any article, device or composition, the manufacture, use, or sale of which, in whole or in part:
|
(a) |
absent the license granted hereunder would infringe, or is covered by, one or more Valid Claims of Patent Rights; (“Patented Product”); or |
|
(b) |
does not meet the requirements of the foregoing clause “ (a) ” but incorporates or is based upon Technological Information (“Unpatented Product”). |
1.16“Reporting Period” shall mean each three month period ending March 31, June 30, September 30 and December 31.
1.17“Royalty Term” shall mean, on a country-by-country basis in the License Territory, the period of time beginning with the First Commercial Sale in such country, and ending upon the latest to occur of (a) expiration of the last-to-expire Valid Claim in such country, (b) ten (10) years from the date of First Commercial Sale in such country, and (c) a Product or Process becoming subject to Generic Competition in such country, provided, however, if there is no Generic Competition in a country for a Product or a Process by the tenth year following the date of First
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Commercial Sale in such country, the Royalty Term shall terminate on the tenth year following the date of the First Commercial Sale in such country.
1.18“Sell” (and “Sale” and “Sold” as the case may be) shall mean to sell or have sold, to lease or have leased, to import or have imported, in each case for valuable consideration (in the form of cash or otherwise) a Product or Process, or otherwise to transfer or have transferred a Product or Process for valuable consideration (in the form of cash or otherwise), and further in the case of a Process, to use or perform such Process for the benefit of a third party.
1.19“Sublicense Income” shall mean consideration in any form received by Licensee and/or Licensee’s Affiliate(s) in consideration for and directly attributable to a grant of a sublicense under the license grant in Section 2.1 to the Patent Rights and/or Technological Information (regardless of whether such grantee is a “Sublicensee” as defined in this Agreement) to make, have made, use, have used, Sell or have Sold Products or Processes. Sublicense Income shall include without limitation any license signing fee, license maintenance fee, milestone payment (other than for a milestone event for which Licensee or its Affiliate receives a milestone payment from such Sublicensee and where such milestone event corresponds to a milestone event under Section 4.3), unearned portion of any minimum royalty payment, distribution or joint marketing fee if they include sublicense rights , research and development funding in excess of the cost of performing such research and development (such costs to include reasonable overhead charges), and any consideration received for an equity interest in, extension of credit to or other investment in Licensee or Licensee’s Affiliates to the extent such consideration exceeds the fair market value of the equity or other interest received as determined by agreement of the Parties or by an independent appraiser mutually agreeable to the Parties.
Sublicense Income shall not include payments made to reimburse direct costs such as (i) payments or reimbursement for documented sponsored research and/or development activities, valued at the actual cost of such activities plus reasonable overhead charges; or (ii) payment or reimbursement of reasonable patent expenses actually incurred or paid by Licensee and not otherwise reimbursed, or payment of patent expenses required to be paid by Licensee hereunder. Sublicense Income shall also not include (iii) payments received with respect to a change of control of the Licensee; and (iv) equity in Sublicensee purchased at the fair market value of such equity , and if Licensee or any of its Affiliates makes an equity investment in the Sublicensee at a price that is less than fair market value (as determined in the manner specified above), then the difference between the purchase price and the fair market value on the date that such payment is to be made multiplied by the total number of shares or securities purchased shall be deemed Sublicense Income.
1.20“Sublicensee” shall mean any sublicensee of rights granted under Section 2.1(a)(iii). For purposes of this Agreement, neither a Distributor of a Product or Process nor a contract manufacturer shall be included in the definition of Sublicensee unless such Distributor or contractor manufacturer (i) is granted any right to make, have made, use or have used Products or Processes in accordance with Section 2.1 (a)(iii), or (ii) has agreed to pay to Licensee or its Affiliate(s) royalties on such Distributor’s or contractor manufacturer’s sales of Products or
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Processes, in which case such Distributor or contract manufacturer shall be a Sublicensee for all purposes of this Agreement. For clarity, a clinic that is granted the right to use or have used Products or Processes to treat patients shall not be considered a Sublicensee if Licensee or its Affiliate(s) do not receive royalties or other payments (other than the price paid for the Product or Process) related to such clinic’s use of Products or Processes.
1.21“Technological Information” shall mean proprietary discoveries, know-how and technical information known, licensed, owned, controlled or developed by Juniper or its Affiliates related to intravaginal ring for all indications as of the Effective Date, including for the sake of clarity, Technological Information licensed to Juniper pursuant to the Underlying Agreement and any subsequent improvements thereto, as set forth on Exhibit B attached hereto.
1.22“Underlying Agreement” shall mean that certain License Agreement, dated as of March 25, 2015, by and between Juniper and The General Hospital Corporation (“MGH”), as amended, and as may be amended or restated from time to time.
1.23“Valid Claim” shall mean a claim in an issued, unexpired patent or in a pending patent application within Patent Rights that (a) has not been finally cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction, (b) has not been revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, (c) has not been rendered unenforceable through disclaimer or otherwise, and (d) is not lost through an interference proceeding. Notwithstanding the foregoing, if a claim of a pending patent application within Patent Rights in the United States has not issued as a claim of a patent within the seven (7) years after the PCT filing date (or the first national filing date if no PCT was filed), such claim shall not be a Valid Claim for the purposes of this Agreement, unless and until such claim issues as a claim of an issued patent (from and after which time the same shall be deemed a Valid Claim subject to paragraphs (a) and (b) above). For territories outside of the United States the Parties will negotiate in good faith, on a country-by-country basis, the period during which a claim of a pending patent must issue in order for it to be considered a Valid Claim for the purpose of the Agreement.
2.LICENSE
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(a) |
Subject to the terms of this Agreement and any retained rights of MGH or the Massachusetts Institute of Technology (“MIT”) under the Underlying Agreement, Juniper hereby grants to Licensee in the License Field in the License Territory: |
|
(i) |
an exclusive, royalty-bearing license under the Patent Rights to make, have made, use, have used, sell, have sold, import and have imported Products and Processes; |
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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(ii) |
a non-exclusive, royalty-bearing license to use the Technological Information to make, have made, use, have used, sell, have sold, import and have imported Products and Processes; and |
|
(iii) |
the right to grant sublicenses under the rights granted in Sections 2.1(a)(i) and 2(a)(ii) to Sublicensees (including the right for Sublicensees to grant further sublicenses consistent with these terms), provided that in each case Licensee shall be responsible for the performance of any obligations of Sublicensees relevant to this Agreement as if such performance were carried out by Licensee itself, including, without limitation, the payment of any royalties or other payments provided for hereunder, regardless of whether the terms of any sublicense provide for such amounts to be paid by the Sublicensee directly to Licensee. |
|
(b) |
The license granted in Section 2.1(a) includes: |
|
(i) |
The right to grant to the final purchaser, user or consumer of Products the right to use such purchased Products within the License Field and License Territory; and |
|
(ii) |
the right to grant a Distributor the right to sell, have sold, use, have used, import and have imported (but not to make and have made) such Products and/or Processes for its own benefit in a manner consistent with this Agreement. |
Licensee acknowledges that this Agreement does not confer by implication, estoppel, or otherwise, any license or rights to any intellectual property rights, whether belonging to Juniper or any third party, other than those rights expressly stated herein.
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(c) |
Licensee may permit its Affiliates to exercise all rights granted to Licensee hereunder such that such Affiliates shall have the same license rights granted to Licensee hereunder. Licensee shall secure all appropriate covenants, obligations and rights from any such Affiliate so that such Affiliate is subject to, and Licensee can comply with, all of Licensee’s covenants and obligations to Juniper under this Agreement. Licensee shall be responsible for any failure of any of its Affiliates to comply with this Agreement. |
2.2Sublicenses. Each sublicense granted hereunder shall be consistent with and comply with all relevant terms of this Agreement and the Underlying Agreement, shall incorporate terms and conditions sufficient to enable Licensee to comply with this Agreement, shall provide that Licensee shall be responsible for performance of all such obligations and for compliance with all such terms and conditions by Sublicensees. Licensee shall provide to Juniper a fully signed
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
redacted (to remove content unrelated to obligations due Juniper) copy of all sublicense agreements and amendments thereto, including all exhibits, attachments and related documents, within thirty (30) days of executing the same. Upon termination of this Agreement or any license granted hereunder for any reason, any Sublicenses shall be addressed in accordance with Section 10.7.
2.3Retained Rights; Requirements. Any and all licenses granted hereunder are subject to the retained rights and requirements specified in Section 2.3 of the Underlying Agreement.
2.4Technology Transfer. Juniper shall, within thirty (30) days of the Effective Date, deliver to Licensee all Technological Information in Juniper’s possession or control, in a form and format as reasonably agreed by the Parties.
3.DUE DILIGENCE OBLIGATIONS
3.1Diligence Requirements. Licensee shall use, and shall cause its Affiliates and Sublicensees, as applicable, to use, Commercially Reasonable Efforts to develop and make available to the public at least one Product or Processes in the License Territory in the License Field Such efforts shall include achieving the requirements set forth in the table below by the dates specified in the table below.
Diligence Requirements |
Time for Completion |
(i) Apply for an NDA (as defined below) or PMA on a Product or Process |
[***] |
(ii) Make a First Commercial Sale or file a second IND on a Product or Process |
Within [***] of satisfying Diligence Requirement (i) |
Licensee may elect to extend the time period for a particular diligence requirement set forth in the table above by [***] upon written notice to Juniper and payment of a non-refundable extension payment of [***] U.S. dollars ($[***]). The extension of time, once elected and paid for, shall have the effect of extending all subsequent diligence requirements set forth in the table above. Licensee may exercise the extension of time no more than [***] times over the life of this Agreement (not per diligence requirement).
3.2Diligence Failures. In the event Licensee has materially failed to fulfill any of its obligations under Section 3.1, and subject to resolution under the dispute resolution provisions of Section 12.13 and failure to cure as permitted in Section 10.4, then Juniper may treat such material failure as a default and may terminate this Agreement and/or any license granted to Licensee hereunder in accordance with Section 10.4.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
3.3Diligence Reports. Licensee shall provide all reports with respect to its obligations under Section 3.1 as set forth in Section 5.
4.1Upfront License Fee. On the Effective Date, Licensee will make a non-creditable upfront license payment of $250,000 to Juniper.
4.2Annual License Fee. On the first and second anniversary of the Effective Date, Licensee will make annual an license maintenance fee payment of fifty thousand dollars $50,000 to Juniper. On the third anniversary of the Effective Date and each anniversary date thereafter, Licensee will make an annual license maintenance fee payment of $100,000 to Juniper. The annual license maintenance fees shall be creditable against royalties and other payments due to Juniper in the same calendar year (including milestone payments and Sublicense Income), but may not be carried forward to any other year.
4.3Milestone Payments. In addition to the payments set forth in Sections 4.1 and 4.2, Licensee shall make milestone payments to Juniper within [***] of the achievement of the milestone events set forth in the table below by Licensee, its Affiliates, or its Sublicensees. Milestone payments are due only once on a Product-by-Product or Process-by-Process basis.
Milestone Event |
Milestone Payment |
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|
Completion of a successful Phase 1 Clinical Trial of a Product or Process, completion which shall be deemed to have occurred when the data base for such clinical trial has been locked
|
$[***] |
Completion of a successful Phase 2 Clinical Trial of a Product or Process, completion which shall be deemed to have occurred when the data base for such clinical trial has been locked
|
$[***] |
Completion of first Phase 3 Clinical Trial of a Product or Process that meets criteria required for submission of a New Drug Application (“NDA”), to the United States Food and Drug Administration (“FDA”) |
$[***] |
NDA filing acceptance by the FDA for a Product or Process |
$[***] |
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
$[***] |
|
Regulatory approval for a Product or Process in the European Union |
$[***] |
First regulatory approval for a Product or Process outside of United States or European Union |
$[***] |
First Commercial Sale |
$[***] |
Achievement of aggregate Net Sales of $[***] |
$[***] |
Achievement of aggregate Net Sales of $[***] |
$[***] |
For the avoidance of doubt, each of the milestones payments shall be paid only once on a Product-by-Product or Process-by-Process basis, regardless of the number of disease indications for a Product or Process developed under this Agreement.
4.4Royalties and Sublicense Income.
|
(a) |
During the Royalty Term, Licensee shall pay Juniper royalties based on worldwide Net Sales in each calendar year in accordance with the table below: |
Royalty Rate |
Annual Worldwide Net Sales |
[***]% |
<$[***] |
[***]% |
Portion of Annual Worldwide Net Sales from $[***] but less than $[***] |
[***]% |
Portion of Annual Worldwide Net Sales from $[***] but less than $[***] |
[***]% |
Portion of Annual Worldwide Net Sales from $[***] but less than $[***] |
[***]% |
Portion of Annual Worldwide Net Sales that is $[***] or greater |
For an Unpatented Process or Unpatented Product, the applicable royalty rate set forth in the table above will be reduced by [***]%.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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Products or Patented Processes be reduced by more than [***] percent ([***]%) and (ii) in respect of the manufacture, use, sale or import of Unpatented Products or Unpatented Processes, Licensee may reduce royalties payable hereunder by royalties owed by to such third parties, but in no event shall royalties payable to Juniper under this Agreement for Unpatented Products or Unpatented Processes be reduced by more than [***] percent ([***]%), and provided further that in no event shall the royalty payable to Juniper with respect to Net Sales of Unpatented Patents and Unpatented Processes be less than [***]%. |
|
(c) |
With respect to Sublicensees, Licensee shall pay to Juniper [***] percent ([***]%) of all Sublicense Income received, in lieu of receipt of royalty payments specified above. |
|
(d) |
All payments due to Juniper under this Section 4.4 shall be due and payable by Licensee within [***] after the end of each Reporting Period, and shall be accompanied by a report as set forth in Sections 5.3 and 5.4. |
|
(e) |
Upon the expiration of a Royalty Term for a Patented Product or Patented Process in a country, the licenses granted to Licensee under Section 2 with respect to such Patented Product and Patented Process in such country shall be converted into fully paid-up, royalty-free, irrevocable licenses. |
4.5Form of Payment. All payments due under this Agreement shall be drawn on a United States bank and shall be payable in United States dollars. Each payment shall reference this Agreement and identify the obligation under this Agreement that the payment satisfies. In respect of Net Sales, conversion by Licensee of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States, as reported in The Wall Street Journal, on the last working day of the applicable Reporting Period, consistent with GAAP. Such payments shall be without deduction of exchange, collection or other charges. Payments shall be made by wire transfer to a bank account designated by Juniper.
4.6Withholding. If any applicable law requires Licensee to withhold taxes with respect to any payment to be made by Licensee to Juniper pursuant to this Agreement, Licensee will notify Juniper of such withholding requirement prior to making the payment to Juniper and provide such assistance to Juniper, including the provision of such standard documentation as may be required by a tax authority, as may be reasonably necessary in Juniper’s efforts to claim an exemption from or reduction of such taxes. Licensee will, in accordance with such law, withhold taxes from the amount due, remit such taxes to the appropriate tax authority, and furnish Juniper with proof of payment of such taxes within thirty (30) days following the payment. If taxes are paid to a tax authority, Licensee shall provide reasonable assistance to Juniper to obtain a refund of taxes withheld, or obtain a credit with respect to taxes paid.
4.7Overdue Payments. The payments due under this Agreement shall, if overdue, bear interest beginning on the first day following the due date to which such payment was incurred and
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
until payment thereof at a per annum rate equal to [***] above the prime rate in effect on the due date as reported by The Wall Street Journal, such interest rate being compounded on the last day of each Reporting Period, not to exceed the maximum permitted by law. Any such overdue payments when made shall be accompanied by all interest so accrued. Said interest and the payment and acceptance thereof shall not preclude Juniper from exercising any other rights it may have as a consequence of the lateness of any payment.
5.1Diligence Reports. Within thirty (30) days after the end of each calendar year, Licensee shall report in writing to Juniper on progress made toward achieving the objectives set forth in the Research Plan.
5.2Milestone Achievement Notification. Licensee shall report to Juniper the dates on which it achieves the milestone events set forth in Section 4.3 within thirty (30) days of each such occurrence.
5.3Sales Reports. Licensee shall report to Juniper the date of the First Commercial Sale in each country of the License Territory within thirty (30) days after such occurrence in a country. For each country, following the First Commercial Sale in any country, Licensee shall deliver a sales report to Juniper within thirty (30) days after the end of each Reporting Period with respect to Sales made during such Reporting Period. Each report under this Section 5.3 shall be certified as correct by an officer of Licensee and shall contain at least the following information as may be pertinent to a royalty accounting hereunder for such Reporting Period:
|
(a) |
the number of Products and Processes Sold by Licensee, its Affiliates and Sublicensees in each country, including breakdown between Patented Products and Unpatented Products and Patented Processes and Unpatented Processes; |
|
(b) |
the amounts billed, invoiced and received by Licensee, its Affiliates and Sublicensees for each Product and Process, in each country, and total billings or payments due or made for all Products and Processes; |
|
(c) |
calculation of Net Sales for the applicable Reporting Period in each country, including an itemized listing of permitted offsets and deductions; and |
|
(d) |
total royalties payable on Net Sales in U.S. dollars, together with the exchange rates used for conversion. |
If no amounts are due to Licensee for any Reporting Period, the report shall so state.
5.4Sublicense Income Reports. Licensee shall, along with delivering payment as set forth in Section 4.4(c), report to Juniper within thirty (30) days of receipt, the amount of all Sublicense Income received by Licensee, and Licensee’s calculation of the amount due and paid to Juniper
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
from such income, including an itemized listing of the source of income comprising such consideration, and the name and address of each entity making such payments.
5.5Audit Rights. Licensee shall maintain, and shall cause each of its Affiliates and Sublicensees to maintain, complete and accurate records relating to Sales of Products and Processes and Sublicense Income, and the rights and obligations under Section 4 of this Agreement and any amounts payable to Juniper in relation to this Agreement, which records shall contain sufficient information to permit Juniper to confirm the accuracy of any payments and reports delivered to Juniper. Licensee shall retain and make available, and shall cause each of its Affiliates and Sublicensees to retain and make available as set forth below, such records for at least [***] ([***]) years following the end of the calendar year to which they pertain, to Juniper upon at least thirty (30) days’ advance written notice, for examination during normal business hours, by independent certified public accountants hired by Juniper and reasonably acceptable to Licensee, its Affiliates and Sublicensees, as the case may be, to verify any reports and payments made and/or compliance in other respects under Section 4 of this Agreement. Licensee may require such accountants to enter into a reasonably acceptable confidentiality agreement, and in no event shall such accountants disclose to Juniper any information, other than such as relates to the accuracy of the corresponding reports pursuant to Section 5. Such confidentiality agreement shall permit such accountants to perform all activities typically associated with an audit of a license agreement. The foregoing right of examination may be exercised only once in relation to each twelve (12)-month period during the Term, and no period may be audited more than once, except in the event Juniper has cause for such audit, in which case, the for cause audit shall not count as an audit under this Section 5.5. If any examination conducted by such independent certified public accountants pursuant to the provisions of this Section certifies an underreporting or underpayment of [***] percent ([***]%) or more in any payment due to Juniper hereunder, Licensee shall reimburse Juniper for the reasonable cost of such audit and shall remit any amounts due to Juniper (including interest due in accordance with Section 4.5) within thirty (30) days of receiving a copy of the auditor’s report. This Section shall survive for [***] ([***]) years from expiration or termination of this Agreement.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
6.PATENT PROSECUTION AND MAINTENANCE
6.1Prosecution. MGH shall be responsible for the preparation, filing, prosecution and maintenance of all patent applications and patents included in Patent Rights that are subject to the Underlying Agreement (the “Underlying Patent Rights”) and Licensee shall be responsible for the preparation, filing, prosecution and maintenance of all patent applications and patents included in Patent Rights that are not Underlying Patent Rights. Licensee shall reimburse Juniper (or if requested by Juniper, MGH directly) for [***] costs incurred in the preparation, filing, maintenance of the patent applications and patents included in the Underlying Patent Rights within thirty (30) days of receipt of an invoice for such costs. Licensee shall [***] any costs associated with the preparation, filing, maintenance of the patent applications and patents included in the Patent Rights that are not Underlying Patent Rights. If requested by Licensee, Juniper shall communicate to MGH (or request that MGH allow Licensee to communicate directly with MGH) Licensee’s requests to seek patent protection of any Underlying Patent Rights in any country within the License Territory in which MGH is not prosecuting such Patent Rights (including seeking patent term adjustments, patent term extensions, supplemental patent protection or related extension of rights), and shall use commercially reasonable efforts to advocate on Licensee’s behalf with respect to such requests, if applicable.
6.2Copies of Documents. With respect to any Underlying Patent Right licensed hereunder, Juniper shall notify MGH in writing of its request that MGH instruct the patent counsel prosecuting such Underlying Patent Right to (i) promptly copy Licensee on all patent prosecution documents that are received from or filed with the United States Patent and Trademark Office and foreign equivalent, as applicable; (ii) promptly provide Licensee with copies of all draft submissions to the patent office prior to filing with reasonably sufficient time for Licensee and its patent counsel to review and provide comments for incorporation into such submission; and (iii) keep Licensee reasonably informed with respect to the preparation, prosecution and maintenance of the Underlying Patent Rights and consult with Licensee, and take any of Licensee’s or its patent counsel’s comments and requests into good faith consideration, with respect to the preparation, prosecution and maintenance of the Underlying Patent Rights. If requested by Licensee, Juniper shall use commercially reasonable efforts to facilitate communications between Licensee and MGH with respect to the Underlying Patent Rights, or shall request that MGH communicate directly with Licensee with respect to the Underlying Patent Rights.
6.3Licensee’s Election Not to Proceed. Licensee may elect to surrender any patent or patent application in Patent Rights in any country upon sixty (60) days advance written notice to Juniper (“Waived Patent Rights”). Such notice shall relieve Licensee from the obligation to pay for future patent costs related to such Waived Patent Rights but shall not relieve Licensee from responsibility to pay patent costs incurred prior to the expiration of the sixty (60) day notice period:
|
(a) |
If the Waived Patent Rights are in the [***], such patent application or patent in such country shall thereupon cease to be a Patent Right hereunder and Juniper shall be free to license its rights to that particular U.S. or foreign patent application or patent to any other party on any terms. |
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
7.THIRD PARTY INFRINGEMENT AND LEGAL ACTIONS
7.1Licensee Right to Prosecute. Each Party agrees to immediately notify the other Party in writing upon becoming aware of any infringement of the Patent Rights in the License Field and provide to the other Party all reasonably-available evidence of such infringement. Licensee shall have the first right, but not the obligation, to protect Patent Rights from infringement and prosecute infringers in the License Field in the License Territory, at its own expense. Subject to any consent and other requirements set forth in the Underlying Agreement, before commencing such action, Licensee and, as applicable, any Affiliate, shall reasonably consult with Juniper, concerning, among other things, Licensee’s standing to bring suit, the advisability of bringing suit, the selection of counsel and the jurisdiction for such action, and shall use commercially reasonable efforts to accommodate the views of Juniper regarding the proposed action. If Licensee commences any such action, but is not recognized by the applicable court or other relevant body as having the requisite standing to pursue such action, then at Licensee’s request, Juniper shall join, and if necessary, shall use commercially reasonable efforts to cause MGH to join, in as party-plaintiff or commence such action in its own name and, in either event, cooperate with Licensee, at Licensee’s expense; provided, however, that Licensee shall indemnify and hold Juniper, MGH and MIT harmless from and against any costs and expenses they incur in connection with the defense of any counterclaims filed against them, except for the expense of any independent counsel retained by Juniper, MGH, or MIT in accordance with Section 7.3.
7.2MGH Right to Prosecute. In the event Licensee notifies Juniper that Licensee does not intend to prosecute infringement identified under Section 7.1, or in the event that Licensee is unsuccessful in persuading the alleged infringer to desist, MGH shall have the right, but not the obligation to prosecute such infringement, as specified in the Underlying Agreement.
7.3 Juniper, MGH and MIT Joined as Party-Plaintiff. If Licensee elects to commence an action as described in Section 7.1, Juniper, MGH and MIT shall each have, in its sole discretion, the option to join such action as party-plaintiffs. If Juniper, MGH and MIT are required by law to join such action as party-plaintiffs, Juniper, MGH, or MIT may either (i) in their joint discretion, permit themselves to be joined as party-plaintiffs at the sole expense of Licensee, or (ii) assign to Licensee all of Juniper’s, MGH’s, or MIT’s right, title and interest in and to the Patent Right which is the subject of such action (subject to any government rights under law and any other rights that
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others may have in such Patent Right). If Juniper, MGH and MIT make such an assignment, such action by Licensee shall thereafter be brought or continued without Juniper, MGH, or MIT as a party; provided, however, that Juniper, MGH and MIT shall continue to have all rights of prosecution and maintenance with respect to the Patent Rights and Licensee shall continue to meet all of its obligations under this Agreement as if the assigned Patent Right were still licensed to Licensee hereunder. For the sake of clarity, MGH’s and MIT’s rights specified in this Section only relate to the Underlying Patent Rights.
7.4Notice of Actions; Settlement; Cooperation. The provisions of Sections 7.4 and 7.5 of the Underlying Agreement regarding notice of actions, settlements and cooperation shall apply this Agreement and are herein incorporated by reference.
7.5Recovery. Any award paid by third parties as the result of proceedings brought by Licensee under Section 7.1 (whether by way of settlement or otherwise) shall first be applied to reimbursement of any reasonable legal fees and out of pocket costs and expenses incurred by Licensee, then to reimbursement of any reasonable legal fees and out of pocket costs and expenses incurred by Juniper, MGH, or MIT; and any remainder [***].
8.INDEMNIFICATION AND INSURANCE
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(a) |
Licensee shall indemnify, defend and hold harmless Juniper and its Affiliates and their directors, officers, employees, agents and their respective successors, heirs and assigns (the “Indemnitees”) from and against any third party claims, actions, demands and proceedings brought or alleged against any of the Indemnitees (each a “Claim”), and shall pay all damages, losses and expenses (including reasonable attorney’s fees and expenses of litigation) (collectively, “Losses”) incurred by or imposed upon an Indemnitee, to the extent such Claim is arising out of or related to the exercise of any rights granted to Licensee under this Agreement, including without limitation any theory of product liability (including, but not limited to, actions in the form of contract, tort, warranty, or strict liability) concerning any product, process or service made, used, or sold or performed pursuant to any right or license granted under this Agreement, except to the extent such Losses arise from the breach of this Agreement or gross negligence or willful misconduct of an Indemnitee. |
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Indemnitee shall have the right to retain its own counsel and participate in the defense thereof at its own cost and expense, and further provided, that any Indemnitee shall have the right to retain its own counsel, at the expense of Licensee, if representation of such Indemnitee by counsel retained by Licensee would be inappropriate because of a direct adverse conflict of interests of such Indemnitee and any other party represented by such counsel in such action or a related action. |
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No Indemnitee may consent to any settlement or judgment of a Claim without the consent of Licensee. The Indemnitees under this Section 8.1 shall cooperate fully with Licensee and its legal representatives in the investigation and defense of any matter covered by this indemnification. Licensee agrees to keep Juniper informed of the progress in the defense and disposition of such claim and to reasonably consult with Juniper prior to any proposed settlement. |
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This Section 8.1 shall survive expiration or termination of this Agreement. |
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Licensee shall, at its sole cost and expense, procure and maintain commercial general liability and products-completed operations liability insurance policy(ies) in amounts set forth below which shall be issued by an insurer licensed to practice in the Commonwealth of Massachusetts, and Juniper shall qualify as a “loss payee” thereunder. Such insurance shall provide (i) product liability coverage (ii) errors and omissions liability coverage and (iii) contractual liability coverage. The limits of such insurance shall not be less than [***] Dollars ($[***]) per occurrence with an annual aggregate of [***] Dollars ($[***]) for bodily injury including death; and [***] Dollars ($[***]) per occurrence with an annual aggregate of [***] Dollars ($[***]) for property damage. If Licensee desires to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $[***] annual aggregate) such self-insurance program must be acceptable to Juniper. The minimum amounts of insurance coverage required under this Section 8.2 shall not be construed to create a limit of Licensee’s liability with respect to its indemnification under Section 8.1 of this Agreement. |
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Licensee shall provide Juniper with written evidence of such insurance upon written request of Juniper. Licensee shall provide Juniper with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if Licensee does not obtain replacement insurance providing comparable coverage prior to the expiration of such fifteen (15) day period, Juniper shall have the right to terminate this Agreement effective at the end of such fifteen (15) day period without notice or any additional waiting periods. |
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This Section 8.2 shall survive expiration or termination of this Agreement. |
9.WARRANTIES; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY
9.1Juniper Warranties. To the best actual knowledge of Juniper on the Effective Date, Juniper represents and warrants that Juniper is the exclusive licensee of the Underlying Patent Rights. Juniper represents and warrants that, as of the Effective Date, (i) it owns all right, title and interest in and to the patents and patent applications in the Patent Rights that are not Underlying Patent Rights, and that it has not granted any rights to any third party to such Patent Rights; (ii) Juniper has not received any written notice of any current claims, liens or encumbrances with respect to the Patent Rights, (iii) Juniper has received no current written claims of a third party to rights in the Patent Rights, (iv) to its best actual knowledge the Patent Rights are subsisting; (v) Juniper has not received any written claim or notice that the Patent Rights are invalid or unenforceable, and (vi) Juniper has not received any notice of any current claims, liens or encumbrances with respect to the rights and licenses to the Patent Rights granted to Licensee hereunder. Additionally, Juniper represents and warrants to Licensee that (a) Juniper has made available to Licensee all Technological Information in Juniper’s possession and control pursuant to Section 2.4, (b) Juniper has not intentionally withheld any information in its control that is material to the Patent Rights and Technological Information, and (c) to Juniper’s best actual knowledge, all information disclosed to Licensee prior to the Effective Date by Juniper relating to the Patent Rights and Technological Information is true and accurate as of the date of disclosure.
9.2Mutual Warranties. Each Party represents and warrants to the other Party that:
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this Agreement has been duly executed and delivered by and on behalf of such Party and constitutes a legal, valid, and binding obligation of such Party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity; |
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such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement; and |
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9.3No Warranties. EXCEPT WITH RESPECT TO THE EXPRESS WARRANTIES MADE IN SECTION 9.1 AND SECTION 9.2, JUNIPER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, CONCERNING THE PATENT RIGHTS AND THE RIGHTS GRANTED HEREUNDER, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AND HEREBY DISCLAIMS THE SAME. SPECIFICALLY, AND NOT TO LIMIT THE FOREGOING, JUNIPER MAKES NO WARRANTY OR REPRESENTATION (i) REGARDING THE VALIDITY OR SCOPE OF ANY OF THE CLAIM(S), WHETHER ISSUED OR PENDING, OF ANY OF THE PATENT RIGHTS, AND (ii) THAT THE EXPLOITATION OF THE PATENT RIGHTS OR ANY PRODUCT OR PROCESS WILL NOT INFRINGE ANY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.
9.4
10.TERM AND TERMINATION
10.1Term. The term of the Agreement will commence upon the Effective Date and continue on a country-by-country basis until the later of (a) expiration of the last-to-expire Valid Claim in such country, or (b) ten (10) years from the date of first commercial sale of a Product or Process in such country, unless this Agreement is terminated earlier in accordance with any of the other provisions of Section 10. Upon expiration per this Section 10.1, the licenses granted herein shall convert
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automatically to fully-paid irrevocable licenses. For clarity, the grant conversion of this Section 10.1 shall not apply if the Agreement is terminated pursuant to Sections 10.2, 10.3 or 10.4.
10.2Termination for Failure to Pay. If Licensee fails to make any payment due hereunder, Juniper shall have the right to terminate this Agreement upon thirty (30) days written notice, unless, subject to Licensee’s right to dispute such payment under the provisions of Section 12.13, Licensee makes such payments plus any interest due, as set forth in Section 4.7, within said thirty (30) day notice period. If undisputed payments are not made, Juniper may immediately terminate this Agreement at the end of said thirty (30) day period. Licensee shall be entitled to two (2) such cure periods in a calendar year; for a third failure to make an undisputed payment on time in such calendar year, Juniper shall have the right to terminate this Agreement immediately upon written notice.
10.3Termination for Insurance and Insolvency.
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Insurance. Juniper shall have the right to terminate this Agreement in accordance with Section 8.2(b) if Licensee fails to maintain the insurance required by Section 8.2(b). |
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Insolvency and other Bankruptcy Related Events. Juniper shall have the right to terminate this Agreement immediately upon written notice to Licensee with no further notice obligation or opportunity to cure if Licensee: (i) shall become insolvent; (ii) shall make an assignment for the benefit of creditors; or (iii) or shall have a petition in bankruptcy filed for or against it, which petition is not dismissed within ninety (90) days. |
10.4Termination for Non-Financial Default. If Licensee or any of its Affiliates materially breaches any of its obligations under this Agreement not otherwise covered by the provisions of Section 10.2 and 10.3, and if such material breach has not been cured within sixty (60) days after notice by Juniper in writing of such breach, or if Licensee has not undertaken a plan to cure such breach that is reasonably acceptable to Juniper, then Juniper may immediately terminate this Agreement and/or any license granted hereunder at the end of said sixty (60) day cure period. If Juniper notifies Licensee of a material breach as described herein, the Parties shall promptly meet in an effort to resolve any good faith dispute with respect to such breach in accordance with Section 12.13.
10.5Challenging Validity. During the term of this Agreement, Licensee shall not Challenge, and shall restrict its Affiliates and Sublicensees from Challenging, the Patent Rights and in the event of any breach of this provision, Juniper shall have the right to terminate this Agreement and any license (and sublicense in the case of a challenge from a Sublicensee) granted hereunder immediately. In addition, if the Patent Rights are upheld as a result of the Challenge Licensee shall reimburse Juniper for its reasonable legal costs and expenses incurred in defending any such challenge. Licensee or its Affiliate or a Sublicensee will be deemed to have made a “Challenge” of the Patent Rights if such entity: (a) institutes or voluntarily joins as a party to, or causes its counsel
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to institute on Licensee’s or its Affiliate’s or Sublicensee’s behalf, any interference, opposition, re-examination, post-grant review or similar proceeding with respect to any Patent Right with the U.S. Patent and Trademark Office or any foreign patent office; or (b) makes any filing or institutes or voluntarily joins as a party to any legal proceeding, or causes its counsel to make any filing or institute or voluntarily join as a party to any legal proceeding on Licensee’s or its Affiliate’s or Sublicensee’s behalf, with a court or other governmental body having authority to determine the validity, enforceability or scope of the Patent Rights, in which one or more claims or allegations challenges the validity or enforceability of any Patent Rights. Notwithstanding the foregoing, any response by Licensee, its Affiliates or Sublicensee in response to any suit, proceeding, or other action brought directly or indirectly by Juniper or any of its Affiliates or MGH against Licensee, its Affiliates or Sublicensee shall not be deemed a Challenge.
10.6Termination by Licensee. Licensee shall have the right to terminate this Agreement on a country-by-country basis by giving one hundred eighty (180) days advance written notice to Juniper (but if such termination occurs prior to receipt of marketing approval in the United States, then such notice period shall be ninety (90) days’), and upon such termination shall immediately cease all use and Sales of Products and Processes in such country, subject to Section 10.9.
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In the event the Agreement is terminated by Licensee in accordance with Section 10.6, and in the event of termination of this Agreement by Juniper in the event of material uncured breach by Licensee pursuant to Section 10.4, Juniper will have a full access, including the right to use and reference all Product data generated during the term of the Agreement that is owned by Licensee. Upon the termination of this Agreement, any and all sublicenses granted pursuant to Section 2.1 to a Sublicensee that has operations directed to the research and development of pharmaceutical drug products or is a distributor of such products shall remain in effect and be assigned on substantially the same terms with Juniper deemed for all purposes to be the licensor thereunder provided that (i) Sublicensee is in good standing under its sublicense agreement at the time of termination; (ii) the sublicense is consistent with the terms of this Agreement; (iii) Juniper shall have no obligations under such sublicenses other than to preserve the effectiveness, scope, and validity of the licenses granted therein under the Patent Rights and Technological Information; (iv) the relevant sublicense(s), when taken together, provide Juniper with similar benefits as this Agreement, (v) Juniper shall not assume any obligation of Licensee to such Sublicensee pursuant to any representation, warranty or indemnification provision; and (vi) further provided that such Sublicensee enters into an agreement directly with Juniper to effectuate such assignment. Juniper shall be entitled to all payments due to Licensee (but excluding any duplicate payments) from each Sublicensee under any such sublicense in accordance with the terms of such sublicense; and such sublicense shall be deemed assigned to Juniper if necessary to ensure continued payments. |
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10.8Effects of Termination of Agreement. Upon termination of this Agreement or any of the licenses hereunder for any reason, final reports in accordance with Section 5 shall be submitted to Juniper and all royalties and other payments, accrued or due to Juniper as of the termination date shall become immediately payable. Licensee shall cease, and shall cause its Affiliates and Sublicensees to cease under any sublicense granted by Licensee, all Sales and uses of Products and Processes upon such termination, subject to Sections 10.7 and 10.9. The termination or expiration of this Agreement or any license granted hereunder shall not relieve Licensee, its Affiliates or Sublicensees of obligations arising before such termination or expiration.
10.9Inventory. Upon early termination of this Agreement other than pursuant to Section 10.4, Licensee and its Affiliates and Sublicensees, subject to Section 10.7, may complete and sell any work-in-progress and inventory of Products that exist as of the effective date of termination provided that (i) Licensee pays Juniper the applicable running royalty or other amounts due on such Net Sales in accordance with the terms and conditions of this Agreement, and (ii) Licensee and its Affiliates and Sublicensees, subject to Section 10.7, shall complete and sell all work-in-progress and inventory of Products within [***] after the effective date of termination. Upon expiration of this Agreement, Licensee shall pay to Juniper the royalties set forth in Section 4.4 for Sales of any Product that was in inventory or was a work-in progress on the date of expiration of the Agreement.
10.10Section 365(n) of the Bankruptcy Code. All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(35A) of the U.S. Bankruptcy Code to the extent permitted thereunder, and as a licensee of such rights under this Agreement, Licensee shall retain and may fully exercise all of its rights and elections under the United States Bankruptcy Code or any applicable foreign equivalent
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thereof. The parties shall retain and may fully exercise all of their respective rights and elections under the U.S. Bankruptcy Code. Upon the bankruptcy of any party, the non-bankrupt party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt party, unless the bankrupt party elects to continue, and continues, to perform all of its obligations under this Agreement.
11.COMPLIANCE WITH LAW
11.1Compliance. Licensee shall have the sole obligation for compliance with, and shall ensure that any Affiliates and Sublicensees comply with, all government statutes and regulations that govern Products and Processes, including, but not limited to, those of the Food and Drug Administration and the Export Administration, as amended, and any applicable laws and regulations of any other country in the License Territory. Licensee agrees that it shall be solely responsible for obtaining any necessary licenses to export, re-export, or import Products or Processes covered by Patent Rights and/or Confidential Information. Licensee shall indemnify and hold harmless Juniper (in accordance with Section 8) for any breach of Licensee’s obligations under this Section 11.1.
11.2Patent Numbers. To the extent required by applicable law , Licensee shall use commercially reasonable efforts to properly mark all Products or their packaging in accordance with the applicable patent marking laws.
12.1Confidentiality. Each Party shall treat all information received from the other Party in connection with this Agreement in accordance with the provisions of Exhibit C. Licensee agrees to treat all information related to prosecution and maintenance of Patent Rights as Confidential Information in accordance with the provisions of Exhibit C. Juniper agrees to treat all information received by in reports delivered under Section 5 as Licensee’s Confidential Information in accordance with the provisions of Exhibit C.
12.2Entire Agreement. This Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereof.
12.3Notices. Any notices, waivers, or other legal or formal communications required under or pertaining to this Agreement shall be in writing and shall be delivered by hand, or sent by a reputable overnight mail service (e.g., Federal Express), or by first class mail (certified or registered), or by facsimile confirmed by one of the foregoing methods, to the other party. Notices will be deemed effective (a) three (3) working days after deposit, postage prepaid, if mailed, (b) the next day if sent by overnight mail, or (c) the same day if sent by facsimile and confirmed as set forth above or delivered by hand. Unless changed in writing in accordance with this Section, the notice address for Licensee shall be as follows:
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Daré Bioscience, Inc.
11119 North Torrey Pines Road
La Jolla, California 92037
Attention: Chief Executive Officer
If to Juniper:
Juniper Pharmaceuticals, Inc.
33 Arch Street
Boston, MA 02110
Attn: Chief Financial Officer
12.4Amendment; Waiver. This Agreement may be amended and any of its terms or conditions may be waived only by a written instrument executed by an authorized signatory of the Parties or, in the case of a waiver, by the Party waiving compliance. The failure of either Party at any time or times to require performance of any provision hereof shall in no matter affect its rights at a later time to enforce the same. No waiver by either Patty of any condition or term shall be deemed as a further or continuing waiver of such condition or term or of any other condition or term.
12.5Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.
12.6Assignment. This Agreement may not be assigned by either Party without the other Party’s written consent, provided that no such consent of the other Party will be required for assignment of the Agreement (a) in connection with the transfer or sale of all or substantially all of the assets or business of such Party to which this Agreement relates to a third party, whether by merger, sale of stock, sale of assets or otherwise, or (b) to any Affiliate.
12.7Force Majeure. Neither Party shall be responsible for delays resulting from causes beyond the reasonable control of such Party (which shall not relate to delays in payment), including without limitation fire, explosion, flood, war, sabotage, terrorism, strike or riot, provided that the nonperforming Party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed.
12.8Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts, excluding with respect to conflict of laws, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.
12.9U.S. Manufacturing. Licensee agrees that any Products or Processes used or sold in the United States will be manufactured substantially in the United States to the extent required by law and to the extent not subject to a waiver granted under applicable law.
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12.10Severability. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the term hereof, it is the intention of the parties that the remainder of this Agreement shall not be effected thereby. It is further the intention of the parties that in lieu of each such provision which is invalid, illegal or unenforceable, there be substituted or added as part of this Agreement a provision which shall be as similar as possible in economic and business objectives as intended by the parties to such invalid, illegal or enforceable provision, but shall be valid, legal and enforceable.
12.11Survival. In addition to any specific survival references in this Agreement, Sections 2.3, 5.5, 8, 9.4, 10.7, 10.8, 10.9, 10.10 and 12 shall survive termination or expiration of this Agreement. Any other rights, responsibilities, obligations, covenants and warranties which by their nature should survive this Agreement shall similarly survive and remain in effect.
12.12Interpretation. The parties hereto are sophisticated, have had the opportunity to consult legal counsel with respect to this transaction and hereby waive any presumptions of any statutory or common law rule relating to the interpretation of contracts against the drafter.
12.13 Headings. All headings are for convenience only and shall not affect the meaning of any provision of this Agreement.
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Any dispute or issue relating to or in connection with this Agreement (a “Dispute”) shall initially be referred to Licensee’s CEO and Juniper’s CEO to resolve the Dispute. However, notwithstanding any of the terms of this Section 12.13 and without limiting any other remedies that may be available, each Party shall have the light to seek immediate injunctive relief and other equitable relief from any court of competent jurisdiction to enjoin any breach or violation of this Agreement concerning confidential information or any other intellectual property licensed under this Agreement, without any obligation to undertake extra-judicial dispute resolution of any such Dispute or claim or otherwise to comply with this Section 12.13. It is understood and agreed that during the pendency of a Dispute pursuant to this Section 12.13, the terms and conditions of this Agreement shall remain in effect and the Parties shall continue to perform all of their respective obligations hereunder. |
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If Licensee’s CEO and Juniper’s CEO are unable to resolve the Dispute within forty-five (45) days after such referral, then each Party shall have the right to seek other relief, including equitable relief, from any court of competent jurisdiction. |
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Each Party shall bear its own costs in obtaining the dispute resolution, as outlined above. |
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date..
Juniper Pharmaceuticals, Inc.Daré Bioscience, Inc.
By: /s/ Alicia Secor By: /s/ Sabrina Martucci Johnson
Name: Alicia SecorName: Sabrina Martucci Johnson
Title: Chief Executive OfficerTitle: President and CEO
Date: April 24, 2018Date: April 24, 2018
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PATENT RIGHTS
[***]
Technological Information
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1. |
Documents provided by Juniper Pharmaceuticals to Dare Bioscience including: reports, data summaries, Certificate of Analysis, test methods, protocols, data, product and test specifications, manufacturing records and data, equipment specifications, know-how, and other information or intellectual property for which no patent has been filed whether or not patentable, pertaining to the vaginal ring technology platform that is required to manufacture said product to the required standards and specifications required by global regulatory authorities |
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2. |
Use of alternative EVA sources which have demonstrated comparable performance within the IVR configurations developed to date. |
CONFIDENTIALITY TERMS AND CONDITIONS
1. Definition of Confidential Information. “Confidential Information” shall mean any information, whether written or oral, including but not limited to data, techniques, protocols or results, or business, financial, commercial or technical information, disclosed or made available by one Party (each a “Discloser” as applicable) to the other Party (each a “Recipient” as applicable) in connection with the terms of that certain Exclusive License Agreement dated April ___, 2018, as the same may be amended or restated from time to time (the “License Agreement”). Juniper’s Confidential Information shall also include all information disclosed by Juniper to Licensee in connection with the Patent Rights. Capitalized terms used in this Exhibit that are not otherwise defined herein have the meanings ascribed in the License Agreement to which this Exhibit is attached and made a part thereof.
2. Exclusions. Confidential Information under this Agreement shall not include any information that (i) is or becomes publicly available through no wrongful act of Recipient; (ii) was known by Recipient prior to disclosure by Discloser, as evidenced by records kept in the ordinary course of Recipient’s business; (iii) becomes known to Recipient after disclosure from a third party having an apparent bona fide right to disclose it without duty of obligation to the Discloser; or (iv) is independently developed or discovered by Recipient without use of Discloser’s Confidential Information, as evidenced by records kept in the ordinary course of Recipient’s business.
Specific Confidential Information disclosed to the Recipient shall not be deemed to be within any of the foregoing exceptions merely because it is (a) embraced by more general information in the public domain or in the Recipient’s possession; (b) a combination of features or data that can be pieced together by combining individual features or data from multiple sources in the public domain or in the Recipient’s possession to reconstruct the Confidential Information, but none of which shows the entire combination; and/or (c) a selection or part of a document or embodiment where other information in the same document or embodiment becomes part of the public domain or in the Recipient’s possession.
3. Permitted Purpose. Recipient shall have the right to, and agrees that it will, use Discloser’s Confidential Information, solely to perform its obligations and exercise its rights under the License Agreement.
4. Restrictions. For the term of the License Agreement and a period of ten (10) years thereafter (and indefinitely with respect to any individually identifiable health information), each Recipient agrees that: (i) it will not use such Confidential Information for any purpose other than as specified herein, including without limitation for its own benefit or the benefit of any other person or entity; and (ii) it
will use reasonable efforts (but no less than the efforts used to protect its own confidential and/or proprietary information of a similar nature) not to disclose such Confidential Information to any other person or entity except as expressly permitted hereunder. Recipient may disclose Discloser’s Confidential Information only on a need-to-know basis to its and its Affiliates’ employees and agents (“Receiving Individuals”) who are informed of the confidential nature of such information, provided Recipient shall be responsible for compliance by Receiving Individuals with the terms of this Agreement and any breach thereof. Notwithstanding the foregoing, either Party may disclose Confidential Information regarding the existence and content of the License Agreement, to the extent applicable, to investors, potential institutional investors, Sublicensees, potential Sublicensees, partners, potential partners, bankers, financial institutions, and acquirers and potential acquirers of the Licensee, or as required under applicable law.
Each Party further agrees not to use the name of the other party or any of its Affiliates or any of their respective directors, officers, employees, consultants or agents in any advertising, promotional or sales literature, publicity or in any document employed to obtain funds or financing without the prior written approval of the party or individual whose name is to be used . Notwithstanding the foregoing, each Party may use the name of the other Party and its Affiliates in a non-misleading and factual manner, including in accordance with security laws and regulations, and Licensee may disclose the existence of this Agreement in furtherance of its business purposes. |
Notwithstanding anything contained in this Agreement to the contrary, this Agreement shall not prohibit the Recipient from disclosing Confidential Information to the extent required in order for the Recipient to comply with applicable laws and regulations (including, without limitation, stock exchange rules or the rules of any regulatory or self-regulatory authority), provided that the Recipient provides prior written notice of such required disclosure to the Discloser and takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure.
5. Right to Disclose. Discloser represents that to the best of its knowledge it has the right to disclose to the Recipient all of Discloser’s Confidential Information that is disclosed hereunder.
6. Ownership. All Confidential Information disclosed pursuant to this Agreement, including without limitation all written and tangible forms thereof, shall be and remain the property of the Discloser. Upon termination of this Agreement, if requested by Discloser in writing, Recipient shall return or destroy at Discloser’s discretion all of Discloser’s Confidential Information, provided that Recipient shall
be entitled to keep one copy of such Confidential Information in a secure location solely for the purpose of determining Recipient’s legal obligations hereunder.
Exhibit 31.1
Certification Pursuant to Rule 13a-14(a)/15d-14(a)
of the Securities Exchange Act of 1934
I, Alicia Secor, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Juniper Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Alicia Secor |
Alicia Secor |
President and Chief Executive Officer (Principal Executive Officer) |
DATE: August 9, 2018 |
Exhibit 31.2
Certification Pursuant to Rule 13a-14(a)/15d-14(a)
of the Securities Exchange Act of 1934
I, Jeffrey E. Young, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Juniper Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Jeffrey E. Young |
Jeffrey E. Young |
Senior Vice President, Finance, Chief Financial Officer and Treasurer |
(Principal Financial and Accounting Officer) |
DATE: August 9, 2018 |
Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Juniper Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alicia Secor, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ Alicia Secor |
Alicia Secor |
President and Chief Executive Officer (Principal Executive Officer) |
Date: August 9, 2018 |
Exhibit 32.2
Certification Pursuant to
18 U.S.C. Section 1350
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Juniper Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey E. Young, Senior Vice President, Finance, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ Jeffrey E. Young |
Jeffrey E. Young |
Senior Vice President, Finance, Chief Financial Officer and Treasurer |
(Principal Financial and Accounting Officer) |
DATE: August 9, 2018 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
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Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | JNP | |
Entity Registrant Name | JUNIPER PHARMACEUTICALS INC | |
Entity Central Index Key | 0000821995 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,319,757 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 12,525,000 | 12,257,000 |
Common stock, shares outstanding | 11,105,000 | 10,844,000 |
Purchase of treasury shares | 1,420,000 | 1,413,000 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues | ||||
Product revenues | $ 9,343,000 | $ 9,569,000 | $ 19,417,000 | $ 17,295,000 |
Service revenues | 5,717,000 | 4,387,000 | 11,167,000 | 7,908,000 |
License revenues | 250,000 | 250,000 | ||
Total revenues | 15,310,000 | 13,956,000 | 30,834,000 | 25,203,000 |
Cost of product revenues | 6,158,000 | 5,303,000 | 12,174,000 | 9,617,000 |
Cost of service revenues | 2,959,000 | 2,347,000 | 5,969,000 | 4,590,000 |
Total cost of revenues | 9,117,000 | 7,650,000 | 18,143,000 | 14,207,000 |
Gross profit | 6,193,000 | 6,306,000 | 12,691,000 | 10,996,000 |
Operating expenses | ||||
Sales and marketing | 563,000 | 410,000 | 982,000 | 788,000 |
Research and development | 1,055,000 | 1,648,000 | 2,029,000 | 2,994,000 |
General and administrative | 6,518,000 | 4,604,000 | 10,607,000 | 9,025,000 |
Total operating expenses | 8,136,000 | 6,662,000 | 13,618,000 | 12,807,000 |
Loss from operations | (1,943,000) | (356,000) | (927,000) | (1,811,000) |
Interest expense, net | (29,000) | (30,000) | (74,000) | (58,000) |
Other income, net | 758,000 | 10,000 | 559,000 | 52,000 |
Total non-operating income (expense) | 729,000 | (20,000) | 485,000 | (6,000) |
Loss before income taxes | (1,214,000) | (376,000) | (442,000) | (1,817,000) |
Income tax expense | 300,000 | 0 | 300,000 | 0 |
Net loss | (1,514,000) | (376,000) | (742,000) | (1,817,000) |
Adjustments attributable to preferred stockholders | 452,000 | 445,000 | ||
Net (loss) income available to common stockholders | $ (1,514,000) | $ 76,000 | $ (742,000) | $ (1,372,000) |
Basic net (loss) income per common share | $ (0.14) | $ 0.01 | $ (0.07) | $ (0.13) |
Diluted net (loss) income per common share | $ (0.14) | $ (0.03) | $ (0.07) | $ (0.13) |
Basic weighted average common shares outstanding | 11,103 | 10,803 | 11,023 | 10,803 |
Diluted weighted average common shares outstanding | 11,103 | 10,954 | 11,023 | 10,803 |
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (1,514) | $ (376) | $ (742) | $ (1,817) |
Other comprehensive (loss) income components: | ||||
Foreign currency translation | (1,536) | 823 | (596) | 1,051 |
Total other comprehensive (loss) income | (1,536) | 823 | (596) | 1,051 |
Comprehensive (loss) income | $ (3,050) | $ 447 | $ (1,338) | $ (766) |
Interim Condensed Consolidated Financial Statements |
6 Months Ended |
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Jun. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Interim Condensed Consolidated Financial Statements | (1) Interim Condensed Consolidated Financial Statements The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Annual Report on Form 10-K of Juniper Pharmaceuticals, Inc. (“Juniper” or the “Company”) for the year ended December 31, 2017 filed with the SEC on March 9, 2018 (the “2017 Annual Report”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2018, and its results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The condensed consolidated balance sheet at December 31, 2017 was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements. Results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018 or any period thereafter. At June 30, 2018, cash and cash equivalents were $20.8 million. The Company’s future funding requirements depend on a number of factors, including the rate of market acceptance of its current and future products and services and the resources the Company devotes to developing and supporting the same. The Company believes that current cash and cash equivalents, as well as cash generated from operations, will be sufficient to meet anticipated cash needs for working capital and capital expenditures through the next twelve months from the date of the filing of this Form 10-Q. The Company may be dependent on its ability to raise additional capital to finance operations. If the Company is not able to raise additional capital on terms acceptable to it, or at all, as and when needed, it may be required to evaluate future anticipated capital or operational needs. Management Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to, revenue recognition, allowance for doubtful accounts, inventory reserves, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, and fair value of stock options. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates.
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Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Inventories | (2) Inventories Inventories are stated at the lower of cost or market, determined on a first-in, first-out method. The Company monitors standard costs on a monthly basis and updates them annually as necessary to reflect change in raw material costs and labor and overhead rates. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands):
The Company provides inventory allowances when conditions indicate that the selling price could be less than cost due to physical deterioration, usage, obsolescence, reductions in estimated future demand and reductions in selling prices. The Company balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact its gross margins. The inventory reserve balance at June 30, 2018 and December 31, 2017 was $0.2 million and 0.5 million, respectively. No charges for excess and obsolete inventory were incurred during the three months ended June 30, 2018 or 2017. During the six months ended June 30, 2018 and 2017, the Company recorded charges in the condensed consolidated statements of operations for excess and obsolete inventory of $11,000 and $0.2 million, respectively. |
Goodwill and Intangible Assets |
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Goodwill And Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | (3) Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that fair value of the asset may be less than the carrying value of the asset. Changes to goodwill during the six months ended June 30, 2018 were as follows (in thousands):
The Company capitalizes and includes in intangible assets the costs of trademark, developed technology and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 3 to 7 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, (“ASC 820”). If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life.
Intangible assets consist of the following at June 30, 2018 and December 31, 2017 (in thousands):
Amortization expense for the three months ended June 30, 2018 and 2017 was $0.1 million. Amortization expense for the six months ended June 30, 2018 and 2017 was $0.2 million and $0.2 million, respectively. Amortization expense related to developed technology is classified as a component of cost of service revenues in the accompanying consolidated statements of operations. Amortization expense related to trademark and customer relationships is classified as a component of general and administrative expenses in the accompanying consolidated statements of operations. As of June 30, 2018, amortization expense remaining on existing intangible assets is as follows (in thousands):
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Debt and Other Contractual Obligations |
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Debt and Other Contractual Obligations | (4) Debt and Other Contractual Obligations In September 2013, Juniper assumed debt of $3.9 million in connection with its acquisition of Juniper Pharma Services (“JPS”). JPS had entered into a Business Loan Agreement (“Loan Agreement”) covering three loan facilities (collectively referred to as the “original agreements”) with Lloyds TSB Bank (“Lloyds”) as administrative agent. In May 2017, JPS repaid one of the existing loan facilities upon which JPS subsequently entered into a new loan facility with the same administrative agent for the same outstanding balance. The refinancing was accounted for as a modification with no resulting gain or loss. The remaining original agreements and the new agreement are collectively referred to as the “loan facilities”. As of June 30, 2018, the Company owed $2.3 million on the loan facilities. All facilities are due for repayment over periods ranging from 7-15 years from the date of drawdown. Two of the facilities bear interest at the Bank of England’s base rate plus 1.95%, and 2.55%, respectively. The weighted average interest rates at June 30, 2018 for these two facilities were 2.45% and 3.05%, respectively. The third facility is a fixed rate agreement bearing interest at 2.99% per annum. The weighted average interest rate for the three loan facilities for the three months ended June 30, 2018 was 2.76%. The loan facilities are secured by the mortgaged property and an unlimited lien on other assets of JPS. The loan facilities contain financial covenants that limit the amount of indebtedness Juniper Pharma Services may incur, requires Juniper Pharma Services to maintain certain levels of net worth, and restricts Juniper Pharma Services’ ability to materially alter the character of its business. As of June 30, 2018, the Company is in compliance with all of the covenants under the loan facilities.
As of June 30, 2018, the Company owed $1.2 million on its equipment loans. During the quarter ending March 31, 2017, the Company entered into two loans totaling $1.5 million with payments through March 2022 for equipment in its Nottingham, U.K. facility at an interest rate of 2.09%. The transactions were considered failed sales-leaseback arrangements as the Company will obtain title to the equipment at the end of the term of the financing for little or no consideration. These failed sale-leaseback arrangements have been recorded as a component of long-term debt on the Company’s condensed consolidated balance sheets. The initial terms of the loans are 60 months.
In October 2015, the Company entered into an operating lease agreement for its corporate office in Boston, Massachusetts. The initial term of the lease agreement is approximately 39 months and ends in the January of 2019, which includes a three-month free rent period.
In December 2016, the Company entered into an API Supply Agreement for a manufacturer of progesterone under which the Company has agreed to annual minimum volume commitments until December 2019.
The Company’s significant outstanding contractual obligations relate to operating leases for the Company’s facilities, loan agreements and minimum volume commitments. The Company’s facility leases are non-cancellable and contain renewal options. The Company’s future contractual obligations as of June 30, 2018 include the following (in thousands):
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Intravaginal Ring Technology License |
6 Months Ended |
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Jun. 30, 2018 | |
Licensing Activities [Abstract] | |
Intravaginal Ring Technology License | (5) Intravaginal Ring Technology License In March 2015, the Company obtained an exclusive worldwide license (“License Agreement”) to the intellectual property rights for a novel segmented intravaginal ring (“IVR”) technology. Due to its novel polymer and segmentation composition, the Company believes the IVR has the potential to deliver one or more drugs, including hormones and larger molecules such as peptides, at different dosages and release rates within a single segmented ring. Drugs such as progesterone and leuprolide have already been tested using the technology and demonstrated sustained release for up to three weeks. This technology was developed by Dr. Robert Langer from the Massachusetts Institute of Technology (“MIT”) and Dr. William Crowley from Massachusetts General Hospital (“MGH”) and Harvard Medical School. Drs. Langer and Crowley each agreed to serve a three-year term, which ended in March 2018, as strategic advisors to the Company in exchange for an upfront one-time payment plus quarterly fees and equity compensation. Unless earlier terminated by the parties, the License Agreement will remain in effect until the later of (i) the date on which all issued patents and filed patent applications within the licensed patent rights have expired or been abandoned and (ii) one year after the last sale for which a royalty is due under the License Agreement or 10 years after such expiration or abandonment date referred to in (i), whichever is earlier. Juniper has the right to terminate the License Agreement by giving 90 days advance written notice to MGH. MGH has the right to terminate the License Agreement based on the Company’s failure to make payments due under the License Agreement, subject to a 15 day cure period, or the Company’s failure to maintain the insurance required by the License Agreement. MGH may also terminate the License Agreement based on Juniper’s non-financial default under the License Agreement, subject to a 60 day cure period. Pursuant to the terms of the License Agreement, Juniper has agreed to reimburse MGH for all costs associated with the preparation, filing, prosecution and maintenance of the licensed patent rights, and has agreed to pay MGH a $50,000 annual license fee on each of the first five year anniversaries of the effective date of the License Agreement, and a $100,000 annual license fee beginning on the sixth anniversary of the effective date of the License Agreement and on each subsequent anniversary thereafter. The annual license fee is creditable against any royalties or sublicense income payable in each calendar year. Under the terms of the License Agreement, Juniper has agreed to use commercially reasonable efforts to develop and commercialize at least one product and/or process related to the IVR technology, which efforts will include the making of certain minimum annual expenditures in each of the first five years following the effective date of the License Agreement. Juniper has also agreed to pay MGH certain milestone payments totaling up to $1.2 million tied to the Company’s achievement of certain development and commercialization milestones, and certain annual royalty payments based on net sales of any such patented products or processes developed by Juniper. Daré Bioscience, Inc. On April 24, 2018, Juniper entered into an Exclusive License Agreement with Daré Bioscience, Inc. (Daré), the “Daré License Agreement”) pursuant to which the Company granted Daré (a) an exclusive worldwide license under certain patent rights (i) owned by the Company and (ii) exclusively licensed to the Company under the License Agreement, dated as of March 25, 2015, by and between Juniper and The General Hospital Corporation, as amended, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive worldwide license under certain technological information owned by the Company to make, have made, use, have used, sell, have sold, import and have imported products and processes. Daré is also entitled to sublicense the rights granted to it under the Daré License Agreement. As consideration, the Company received in May 2018 a $250,000 license fee from Daré in connection with the execution of the Daré License Agreement. In addition, the Company is entitled to receive an annual license maintenance fee from Daré in the amount of $50,000 for the first two anniversaries of the effective date of the Daré License Agreement, increasing to $100,000 for each anniversary thereafter. The Company is also entitled to receive potential future development and sales milestone payments of up to $43.8 million (up to $13.5 million in development milestones and up to $30.3 million in sales milestones) for each product or process covered by the licenses granted under the Daré License Agreement. The Company is also eligible to receive mid-single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the Daré Licensee Agreement. The royalty term shall terminate on a product-by-product basis (or process-by-process) basis on the latest of (i) the expiration date of the last valid claim within the licensed patent rights in a country, (ii) ten (10) years following the first commercial sale of a product or process in a country, or (iii) the entry of generic competition for a product or process in a country, provided that if there is no generic competition for a product or process in a country by the ten (10) year anniversary of the first commercial sale of a product or process in a country, the royalty term shall terminate on the ten (10) year anniversary of the first commercial sale of such product or process in the country. In addition, if Daré sublicenses any of its rights under the Daré License Agreement, the Company is eligible to a low double-digit percentage of all sublicense income received by Daré for the sublicense of such rights to a third party, in lieu of the royalties on net sales noted above.
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Segments and Geographic Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments and Geographic Information | (6) Segments and Geographic Information The Company and its subsidiaries currently operate in two segments, product and service. The product segment oversees the supply chain and manufacturing of Crinone, the Company’s sole commercialized product. The service segment includes product development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers as well as characterizing and developing pharmaceutical product candidates for the Company’s internal programs. The Company conducts its advanced formulation, analytical and consulting services through its subsidiary, Juniper Pharma Services, the Company’s U.K.-based provider of pharmaceutical development, clinical trial manufacturing and advanced analytical and consulting services to the pharmaceuticals industry. The Company has integrated its supply chain management for Crinone into those operations and has therefore sought to capture synergies by transferring all operational activities related to its historic business. The Company owns certain plant and equipment physically located at third-party contractor facilities in the United Kingdom (the “U.K.”) and Switzerland. The Company’s largest customer, Merck KGaA, utilizes a Switzerland-based subsidiary to acquire product from the Company, which it then sells throughout the world, excluding the United States (the “U.S.”). The following tables show selected information by geographic area (in thousands): Revenues:
Total assets:
Long-lived assets:
Long-lived assets include fixed assets, intangibles and other assets. No other individual country represented greater than 10% of total revenues, total assets or total long-lived assets for any period presented. For the three and six months ended June 30, 2018 and 2017, Merck KGaA accounted for 100% of the product segment revenue. At June 30, 2018 and December 31, 2017, Merck KGaA made up 100% of the product segment accounts receivable. For the three and six months ended June 30, 2018 and 2017, the same customer accounted for 41% and 28% and 37% and 23% of the service segment total revenue, respectively. No additional customers accounted for 10% or more of the service segment total revenue for the three or six months ended June 30, 2018 and 2017. At June 30, 2018 and December 31, 2017, one customer accounted for 47% and 53% of total service segment accounts receivable, respectively. The following summarizes other information by segment for the three months ended June 30, 2018 (in thousands):
The following summarizes other information by segment for the three months ended June 30, 2017 (in thousands):
The following summarizes other information by segment for the six months ended June 30, 2018 (in thousands):
The following summarizes other information by segment for the six months ended June 30, 2017 (in thousands):
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Property and Equipment |
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Property and Equipment | (7) Property and Equipment Property and equipment consists of the following (in thousands):
Depreciation expense for the three and six months ended June 30, 2018 and 2017 was $0.5 million and $0.5 million and $1.1 million and $0.9 million, respectively.
Machinery and equipment includes $1.5 million of equipment purchased under equipment loans at June 30, 2018 and December 31, 2017.
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Shareholders' Equity |
6 Months Ended |
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Jun. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | (8) Shareholders’ Equity Preferred Stock During the quarter ending June 30, 2017, the Company issued a Notice of Conversion to the holders of its Series B and a Notice of Redemption to the holders of its Series C giving notice that on June 30, 2017 (the “Redemption and Conversion Date”) all outstanding shares of the respective Preferred Stock issuance would be converted, as in the case of the Series B, or redeemed, as in the case of the Series C. The Series B, by its terms, automatically converted into shares of common stock, upon the occurrence of the event. On the Redemption and Conversion Date, each share of the 130 shares of Series B outstanding converted into 2.78 shares of common stock resulting in an issuance of 361 shares. The holders of each share of the 550 shares of Series C outstanding had the right to require the Company to redeem their shares in cash plus all accrued and unpaid dividends thereon the date such redemption is demanded. On the Redemption and Conversion Date, the Company paid to the holders of the Series C approximately $0.01 million and as a result of the transaction recorded the excess of the carrying value of Series C over redemption value of approximately $0.5 million to accumulated deficit for the year ended December 31, 2017. There are no outstanding shares of either the Series B or the Series C at June 30, 2018 or December 31, 2017.
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Net (Loss) Income Per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (Loss) Income Per Common Share | (9) Net (Loss) Income Per Common Share The calculation of basic and diluted income (loss) per common share and common share equivalents is as follows (in thousands except for per share data):
Basic net (loss) income per common share is computed by dividing the net (loss) income, less preferred dividends and adding the excess of carrying value of Series C Preferred Stock over redemption value recognized on the conversion of the Series C Preferred Shares by the weighted-average number of shares of common stock outstanding during a period. The diluted income (loss) per common share calculation gives effect to dilutive options, convertible preferred stock, and other potential dilutive common stock including restricted shares of common stock outstanding during the period. Diluted net (loss) income per share is based on the treasury stock method and includes the effect from potential issuance of common stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive. Shares to be issued upon the exercise of the outstanding options, performance-based restricted stock units, convertible preferred stock, and selected restricted shares of common stock excluded from the income per share calculation amounted to 2.0 million and 2.4 million and 2.0 million and 1.5 million in each of the three and six months ended June 30, 2018 and 2017, respectively, because the awards were anti-dilutive. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||
Accumulated Other Comprehensive Loss | (10) Accumulated Other Comprehensive Loss Changes to accumulated other comprehensive loss during the six months ended June 30, 2018 were as follows (in thousands):
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Stock-Based Compensation |
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Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | (11) Stock-Based Compensation Stock Incentive Plan – Stock Options Juniper granted options to purchase 293,500 and 680,400 shares of common stock to employees during the six months ended June 30, 2018 and 2017, respectively. There were no options granted to non-employees during the six months ended June 30, 2018 and 2017. Stock options granted to employees typically vest over a four-year term and options granted to non-employee directors typically vest over a three-year term. The Company uses the Black-Scholes option pricing model to determine the estimated grant date fair values for stock-based awards. The Black-Scholes option pricing model requires the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The Company’s assumptions do not include an estimated forfeiture rate. The weighted-average grant date fair values of options granted to employees during the six months ended June 30, 2018 and 2017 were $3.40 and $2.43, respectively, using the following assumptions:
The Company records stock-based compensation expense for stock options granted to non-employees based on the fair value of the stock options, which is re-measured over the graded vesting term resulting in periodic adjustments to stock-based compensation expense. The stock-based compensation expense recorded for non-employees has historically been reflected in the research and development line of the statement of operations and is remeasured on a quarterly basis from the date of grant. The Company did not record any stock-based expense for non-employee awards during the three or six months ended June 30, 2018 as all options were fully vested. During the three and six months ended June 30, 2017, the Company recorded a reduction of stock-based compensation expense of $0.1 million for non-employee options as a result of changes in the fair value of the options during the period. Stock Option Plan – Restricted Stock Juniper granted 122,300 and 5,625 time-based restricted stock units to employees and non-employee directors, respectively, during the six months ended June 30, 2018. The Company granted 52,700 time-based restricted stock units to employees and 51,234 to non-employee directors during the six months ended June 30, 2017. The weighted-average grant date fair value of the time-based restricted stock units was $8.18 and $5.11 per share during the six months ended June 30, 2018 and 2017, respectively. The Company recognizes stock-based compensation expense for time-based restricted stock units over the vesting period. There were 9,300 time-based restricted stock units that vested during the six months ended June 30, 2018. No time-based restricted stock units vested during the six months ended June 30, 2017. The Company granted 186,000 performance-based restricted stock units to employees during the six months ended June 30, 2017. No additional performance-based restricted stock units were granted during the six months ended June 30, 2018. These performance-based restricted stock units vest based upon the occurrence of certain operational and strategic events that were determined by the Company’s Board of Directors and approved by the Company’s Compensation Committee. The Company considers the performance criteria at each balance sheet date and recognizes stock-based compensation expense for those criteria considered probable. During the year ended and at December 31, 2017, 109,550 performance-based restricted stock units expired. At December 31, 2017, performance-based restricted stock units outstanding totaled 76,450. On January 8, 2018, the Company announced the 4.5-year extension of its supply agreement for Crinone with an affiliate of Merck KGaA, Darmstandt, Germany. On February 7, 2018, the Company’s Compensation Committee of the Board of Director approved the vesting of 27,800 awards affiliated with this performance condition and as a result the Company recorded a charge to stock compensation expense during the first quarter of 2018 totaling $0.1 million. At June 30, 2018, performance-based restricted stock units outstanding totaled 48,650. The expense recognition for these awards commences when achievement of the operational or strategic events becomes probable over the remaining service period. In the second quarter, the Company determined the achievement of one remaining performance criteria associated with a targeted organic revenue growth of Juniper Pharma Services, totaling 20,850 restricted stock units, was probable and as a result recognized $36,000 in stock-based compensation expense during the three months ended June 30, 2018. Stock-based compensation relates to options granted to employees, non-employee directors and non-employees, time-based restricted stock units granted to employees and non-employee directors and performance-based restricted stock units granted to employees. Stock-based compensation expense for the three months ended June 30, 2018 and 2017 was $0.5 million and $0.5 million, respectively. Stock-based compensation expense for the six months ended June 30, 2018 and 2017 was $1.1 million and $0.8 million, respectively. Total stock-based compensation expense was recorded to cost of revenues and operating expenses based upon the functional responsibilities of the individuals holding the respective awards as follows (in thousands):
There were 230,626 of stock option exercised during the six months ended June 30, 2018 for which the Company received $1.4 million. There were no option exercises during the six months ended June 30, 2017. As of June 30, 2018, the total unrecognized compensation cost related to outstanding stock options and time-based restricted stock units expected to vest was $3.6 million, which the Company expects to recognize over a weighted-average period of 2.58 years.
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Fair Value of Financial Instruments |
6 Months Ended |
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Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | (12) Fair Value of Financial Instruments The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported values. ASC 820 establishes a framework for measuring fair value U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value: Level 1: Quoted prices in active markets for identical assets and liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of cash and cash equivalents are classified as Level 1 at June 30, 2018 and December 31, 2017. Some of the estimates and assumptions in the Company's goodwill impairment assessment include: the amount and timing of the projected net cash flows, the discount rate, and the tax rate. The fair values of accounts receivable and accounts payable approximate their respective carrying amounts. The Company’s long-term debt is carried at amortized face value, which approximates fair value based on current market pricing of similar debt instruments and is categorized as a Level 2 measurement. The Company did not have transfers of financial assets between Level 1 and Level 2. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (13) Income Taxes Provision for income taxes for the three and six months ended June 30, 2018 was $0.3 million. Income tax expense primarily relates to increased current year profits in the U.K. and adjustments resulting from the filing of the U.K. tax returns, offset by a benefit for releasing the valuation allowance on net deferred tax assets in the U.K.. During the three and six months ended June 30, 2017, Juniper recorded no income tax expense due to expected losses forecasted for the year due to the full valuation allowance in all jurisdictions. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. The Company continues to maintain valuation allowances in the U.S. and France. On December 22, 2017 President Donald Trump signed into U.S. law the Tax Cuts and Jobs Act of 2017 (“Tax Reform”). ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions of the law, January 1, 2018. One of the Tax Reform provisions effective January 1, 2018 includes a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (i.e., global intangible low-taxed income or “GILTI”). Under the U.S. generally accepted accounting principles, companies are allowed to make an accounting policy election of either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). The Company is currently accounting for GILTI using the period cost method as it continues to evaluate the two policies available. Under the period cost method, the Company has included approximately $2.4 million GILTI in U.S. taxable income, fully off-set by net operating loss carryforwards.
Given the significance of the legislation, the FASB issued ASU No. 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended prior to the one-year term when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. As of June 30, 2018, the Company has not recorded any incremental accounting adjustments related to the impact of Tax Reform that were recorded in its December 31, 2017 financial statements and it continues to assess its provisional estimate and technical interpretations of its application. Tax Reform included a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to invest all of these earnings, as well as the capital in these subsidiaries, indefinitely outside of the U.S. The amount of any unrecognized deferred tax liability on these undistributed earnings would be immaterial. The Company files tax returns in the United States, United Kingdom, France and various state jurisdictions. All of the Company’s tax years remain open to examination by major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state and foreign tax authorities if they have or will be used in future periods. The Internal Revenue Service has concluded their audit of the 2011 and 2012 tax years. There were no material findings resulting from their audit. Additionally, with few exceptions, Juniper is no longer subject to U.S. state tax examinations for years prior to 2012. |
Recent Accounting Pronouncements |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Pronouncements | (14) Recent Accounting Pronouncements
Adopted In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, (“ASU 2016-15”), which amends the guidance of ASC No. 230 on the classification of certain items in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice by making amendments that add or clarify the guidance on eight specific cash flow issues. ASU 2016-15 is effective for all fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ASU 2016-15 should be applied retrospectively to all periods presented, but may be applied prospectively from the earliest practicable if retrospective application would be impracticable. The adoption of this standard was applied retrospectively but did not have an impact on the Company’s consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard was effective beginning in the first quarter of 2018 and early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e. the original effective date). As such, ASU 2014- 09 will be effective for annual and interim reporting periods beginning after December 15, 2017. In March and April 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, respectively, which clarify the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. In addition, in May 2016 and December 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, both of which amend certain narrow aspects of Topic 606. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. See the Company’s discussion of the impact of this adoption in Note 16 – Revenue Recognition.
To be adopted In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the method and impact that the adoption will have on its consolidated financial statements and related disclosures.
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Restructuring Charges |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring And Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | (15) Restructuring Charges In September 2017, the Company announced a corporate reprioritization which aimed to re-focus its resources on the core businesses of Crinone progesterone gel and JPS and reduce expenditures on research and development activities associated with the Company’s IVR program with the goal of potentially identifying a partner for one or more of its IVR product candidates. As a result, during the fiscal year ended December 31, 2017, the Company incurred approximately $0.8 million in restructuring charges. The Company accounted for these actions in accordance with ASC 420, Exit or Disposal Cost Obligations.
The following table summarizes the components of the Company’s restructuring activity recorded in the accompanying balance sheets (in thousands):
No significant additional charges are anticipated relating to this restructuring plan. The Company expects to pay approximately $43,000 and $0.1 million during the remainder of 2018 and beyond, respectively. |
Revenue from Contracts with Customers |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | (16) Revenue from Contracts with Customers
The new accounting standard for recognition of revenue, Topic 606, was adopted by the Company for its fiscal year beginning on January 1, 2018. In accordance with Topic 606, the Company recognizes revenue following the five-step model based on the principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The five-step model prescribed under Topic 606 include: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation. The Company adopted Topic 606 using the modified retrospective transition method. In adopting Topic 606, the Company applied the new guidance only to contracts that were not completed on January 1, 2018. The Company does not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less and does not adjust for the effect of the financing components when the period between customer payment and revenue recognition is one year or less, which are practical expedients provided within Topic 606. Product Revenue The adoption of Topic 606 resulted in a change in the pattern of revenue recognition for product revenue. Revenue and the related cost of sales are primarily the result of firm purchase commitments, generally only for a short period of time. Revenue is recognized when the performance obligation has been met, upon shipment to the customer. Selling prices to Merck KGaA for Crinone are determined on an annual and country-by-country basis. Juniper records revenue at a transaction price that most closely approximate what it will be sold for by Merck KGaA. The transaction price is determined by evaluating the Merck KGaA selling price. The Company records as deferred revenue amounts invoiced above the transaction price. Accordingly, product revenue in each period includes both an amount for product shipped to Merck KGaA in the current period recognized at the transaction price and an amount for product shipped by Merck KGaA to its customers in the current period equal to the difference between the invoice price and the transaction price. Product revenue is recorded net of variable consideration which include volume discounts and price adjustments. Merck KGaA is entitled to a volume discount based on annual purchases. The Company records reserves against revenue on a quarterly basis to reflect the volume discount expected to be earned by Merck KGaA during the year. In addition, any difference between selling price to Merck KGaA and Merck KGaA’s actual net selling price are billed or credited to Merck KGaA in the quarter the product is sold through by Merck KGaA. Product sales are recorded net of value-added tax and similar taxes. Shipping and handling costs are recorded in cost of revenue. Upon adoption, the Company recorded approximately $5.7 million as an adjustment to both deferred revenue and accumulated deficit. In accordance with Topic 605, the Company would have recognized approximately $10.3 million and $19.0 million in product revenue for the three and six months ended June 30, 2018 and product deferred revenue as of that date would have been $6.4 million.
Service Revenue The adoption of Topic 606 did not have an impact on how the Company recognizes service revenue. Juniper recognizes substantially all of the Company’s professional services revenues under written contracts as the services are provided, and only in those situations where collection from the client is reasonably assured. Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenues to each performance obligation based on its relative standalone selling price. When entering into multiple element arrangements, the Company identifies whether its performance obligations under the arrangement represent a distinct good or service or a series of distinct goods or services. A series of distinct goods or services is required to be accounted for as a single performance obligation provided that (i) each distinct good or service in the series promised would meet the criteria to be a performance obligation satisfied over-time; and (ii) the same method would be used to measure the Company’s progress toward complete satisfaction of the performance obligation to transfer each distinct good or service in the series to the customer. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The fair value of deliverables under the arrangement may be derived using a “best estimate of selling price” if vendor-specific objective evidence and third-party evidence is not available. Significant management judgment is required in determining the consideration to be earned under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. Service revenues from a majority of Juniper’s fixed-price engagements are recognized on a proportional performance method based on the ratio of costs incurred, substantially all of which are labor-related, to the total estimated project costs. The proportional performance method is used for fixed-price contracts because reasonably dependable estimates of the revenues and costs applicable to various stages of a contract can be made, based on historical experience and the terms set forth in the contract, and are indicative of the level of benefit provided to Juniper’s clients. Project costs are classified in costs of services and are based on the direct salary of the employees on the engagement plus all direct expenses incurred to complete the engagement, including any amounts billed to Juniper by its vendors. In the event of a termination, fixed-price contracts generally provide for payment for services rendered up to the termination date. Service revenues also include reimbursements, which include reimbursement for travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses. Amounts invoiced not yet earned on service revenue are deferred until such time as performance is rendered or the obligation to perform the service is completed for service revenues. The professional service contracts that Juniper enters into and operates under specify whether the engagement will be billed on a time-and-materials or a fixed-price basis. These engagements generally last three to six months, although some of Juniper’s engagements can be longer in duration. Payments terms vary by the type and services offered. The term between invoicing and when payment is due is not significant. In certain cases, Juniper bills clients prior to work being performed, which requires Juniper to defer revenue in accordance with U.S. GAAP. Revenues from time-and-materials service contracts are recognized as the services are performed based upon hours worked and contractually agreed-upon hourly rates, as well as indirect fees based upon hours worked. Juniper collects value-added tax from its customers for revenue generated out of the U.K. for which the customer is not tax exempt and remits such taxes to the appropriate governmental authority. Juniper presents its value added tax on a net basis; therefore, these taxes are excluded form revenues. The Company generally expenses commission when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. Juniper does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognized revenue at the amount to which it has the right to invoice for services performed. Upon adoption, for contracts that exceed one year in duration, the Company has recorded contract costs totaling $0.2 million. For the three and six months ended June 30, 2018, in accordance with Topic 605, the Company would have recognized a reduction in sales and marketing expense of approximately $39 thousand and $11 thousand, respectively. As of June 30, 2018, the ending balance of contract costs included in prepaid expenses and other current assets was $0.2 million.
License Revenue The Company evaluated the Daré License Agreement under ASC 606. Based on this evaluation, the Company identified a single performance obligation requiring the transfer of the intellectual property under the license under which Daré is responsible for conducting all research, development and commercial activities for the IVR program using its available resources. Because the Company satisfied the single performance obligation at the inception of the contract and had no remaining performance obligation, the upfront consideration received of $0.3 million was recognized upon receipt. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales occur.
A summary of changes in deferred revenue balances for product and service revenue is as follows:
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Subsequent Event |
6 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | (17) Subsequent Event On July 2, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Catalent Pharma Solutions, Inc., a Delaware corporation (“Catalent”) and Catalent Boston, Inc., a Delaware corporation and wholly owned subsidiary of Catalent (“Merger Sub”) providing for the acquisition of the Company by Catalent in an all cash transaction, pursuant to a tender offer, followed by a subsequent merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Catalent. Pursuant to the Merger Agreement, and subject to its terms and conditions, on July 17, 2018, Merger Sub commenced a cash tender offer (the “Offer”) to acquire all of our issued and outstanding shares of common stock at a price per share equal to $11.50, net to the seller in cash, without interest, subject to any withholding of taxes required by applicable law and, further, the Offer will initially remain open until the end of the day on August 13, 2018, which is the 20th business day from the date of the commencement of the Offer. On July 17, 2018, in connection with the offer, the Company filed a Solicitation/Recommendation Statement on Schedule 14D-9 recommending that its stockholders accept the Offer and tender their shares to Merger Sub. The obligation of Merger Sub to consummate the Offer is subject to customary conditions, including, among others, that a certain minimum number of shares of common stock be validly tendered and not validly withdrawn (“Minimum Condition”). Specifically, the Minimum Condition requires that there be validly tendered and not validly withdrawn shares of common stock that, when considered together with all other shares of common stock (if any) beneficially owned by Catalent and its affiliates (excluding any shares of common stock tendered pursuant to guaranteed delivery procedures that have not yet been received), represent more than 50% of the sum of (x) the total number of shares of the Company’s common stock outstanding at the time of the expiration of the Offer, plus (y) the aggregate number of shares of common stock then issuable to optionholders from which the Company has received notices of exercise prior to the expiration of the Offer (and as to which such shares have not yet been issued to such exercising optionholders) . If, at the scheduled expiration time of the Offer any of the conditions to the Offer have not been satisfied or waived, then the Offer may be extended on one or more occasions to permit the satisfaction of all Offer conditions. At the proposed effective time of the Merger, each share of the Company’s common stock issued and outstanding immediately prior to the proposed effective time of the Merger, will be canceled and converted into the right to receive $11.50 in cash, without interest and subject to any required tax withholding, other than: (i) the Company’s shares of common stock held in treasury, (ii) shares of common stock held by Catalent, Merger Sub or any other direct or indirect wholly owned subsidiary of Catalent or Merger Sub, (iii) shares of Common Stock irrevocably accepted for payment in the Offer, (iv) shares of common stock held by stockholders who have properly exercised their demands for appraisal of such shares in accordance with the Delaware law and have neither withdrawn nor lost such rights prior to the effective time of the Merger. At the contemplated effective time of the Merger, all outstanding and unexercised Company stock options (whether vested or unvested) and unvested restricted stock units that are outstanding immediately prior to the effective time will be cancelled and extinguished in exchange for the right to receive the merger consideration (without interest) with respect to the number of shares of common stock underlying the applicable award, less applicable withholding taxes, and less the applicable exercise price for Company stock options. The Merger is expected to close in the third quarter of 2018.
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Interim Condensed Consolidated Financial Statements (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Management Estimates | Management Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to, revenue recognition, allowance for doubtful accounts, inventory reserves, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, and fair value of stock options. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates. |
Goodwill and Intangible Assets | Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that fair value of the asset may be less than the carrying value of the asset. The Company capitalizes and includes in intangible assets the costs of trademark, developed technology and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 3 to 7 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, (“ASC 820”). If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life. |
Recent Accounting Pronouncements |
Adopted In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, (“ASU 2016-15”), which amends the guidance of ASC No. 230 on the classification of certain items in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice by making amendments that add or clarify the guidance on eight specific cash flow issues. ASU 2016-15 is effective for all fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ASU 2016-15 should be applied retrospectively to all periods presented, but may be applied prospectively from the earliest practicable if retrospective application would be impracticable. The adoption of this standard was applied retrospectively but did not have an impact on the Company’s consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard was effective beginning in the first quarter of 2018 and early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e. the original effective date). As such, ASU 2014- 09 will be effective for annual and interim reporting periods beginning after December 15, 2017. In March and April 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, respectively, which clarify the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. In addition, in May 2016 and December 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, both of which amend certain narrow aspects of Topic 606. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. See the Company’s discussion of the impact of this adoption in Note 16 – Revenue Recognition.
To be adopted In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the method and impact that the adoption will have on its consolidated financial statements and related disclosures.
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories consist of the following (in thousands):
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Goodwill and Intangible Assets (Tables) |
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Goodwill And Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes to Goodwill | Changes to goodwill during the six months ended June 30, 2018 were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes to Intangible Assets | Intangible assets consist of the following at June 30, 2018 and December 31, 2017 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization Expense Remaining on Existing Intangible Assets | As of June 30, 2018, amortization expense remaining on existing intangible assets is as follows (in thousands):
|
Debt and Other Contractual Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Future Contractual Obligations | The Company’s future contractual obligations as of June 30, 2018 include the following (in thousands):
|
Segments and Geographic Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Information by Geographic Area | The following tables show selected information by geographic area (in thousands): Revenues:
Total assets:
Long-lived assets:
|
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Schedule of Other Information by Segment | The following summarizes other information by segment for the three months ended June 30, 2018 (in thousands):
The following summarizes other information by segment for the three months ended June 30, 2017 (in thousands):
The following summarizes other information by segment for the six months ended June 30, 2018 (in thousands):
The following summarizes other information by segment for the six months ended June 30, 2017 (in thousands):
|
Property and Equipment (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Plant And Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consists of the following (in thousands):
|
Net (Loss) Income Per Common Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Income (Loss) Per Common Share and Common Share Equivalents | The calculation of basic and diluted income (loss) per common share and common share equivalents is as follows (in thousands except for per share data):
|
Accumulated Other Comprehensive Loss (Tables) |
6 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | Changes to accumulated other comprehensive loss during the six months ended June 30, 2018 were as follows (in thousands):
|
Stock-Based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense Allocation | Stock-based compensation expense for the three months ended June 30, 2018 and 2017 was $0.5 million and $0.5 million, respectively. Stock-based compensation expense for the six months ended June 30, 2018 and 2017 was $1.1 million and $0.8 million, respectively. Total stock-based compensation expense was recorded to cost of revenues and operating expenses based upon the functional responsibilities of the individuals holding the respective awards as follows (in thousands):
|
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Employees [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions Used to Value Options Granted | The weighted-average grant date fair values of options granted to employees during the six months ended June 30, 2018 and 2017 were $3.40 and $2.43, respectively, using the following assumptions
|
Restructuring Charges (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring And Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Components of Restructuring Activity | The following table summarizes the components of the Company’s restructuring activity recorded in the accompanying balance sheets (in thousands):
|
Revenue from Contracts with Customers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Deferred Revenue Balance for Product and Service Revenue | A summary of changes in deferred revenue balances for product and service revenue is as follows:
|
Interim Condensed Consolidated Financial Statements - Additional Information (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Cash and cash equivalents | $ 20,826 | $ 21,446 |
Inventories - Schedule of Inventory (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Net Items Net Of Reserve Alternative [Abstract] | ||
Raw materials | $ 1,382 | $ 1,921 |
Work in process | 4,060 | 3,299 |
Finished goods | 838 | 1,106 |
Total | $ 6,280 | $ 6,326 |
Inventories - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Inventory Net Items Net Of Reserve Alternative [Abstract] | |||||
Inventory reserve balance | $ 200,000 | $ 200,000 | $ 500,000 | ||
Charges for excess and obsolete inventory | $ 0 | $ 0 | $ 11,000 | $ 200,000 |
Goodwill and Intangible Assets - Schedule of Changes to Goodwill (Detail) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Beginning balance | $ 9,123 |
Effects of foreign currency translation | (195) |
Ending balance | $ 8,928 |
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Acquired Finite Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Minimum [Member] | ||||
Acquired Finite Lived Intangible Assets [Line Items] | ||||
Estimated useful live of definite lived intangible assets | 3 years | |||
Maximum [Member] | ||||
Acquired Finite Lived Intangible Assets [Line Items] | ||||
Estimated useful live of definite lived intangible assets | 7 years |
Goodwill and Intangible Assets - Changes to Intangible Assets (Detail) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 2,910 | $ 2,910 |
Foreign currency translation adjustment | (477) | (430) |
Accumulated amortization | (1,846) | (1,736) |
Balance | 587 | 744 |
Trademark [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 300 | 300 |
Foreign currency translation adjustment | (53) | (53) |
Accumulated amortization | (247) | (247) |
Developed Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 1,370 | 1,370 |
Foreign currency translation adjustment | (223) | (198) |
Accumulated amortization | (888) | (839) |
Balance | 259 | 333 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 1,240 | 1,240 |
Foreign currency translation adjustment | (201) | (179) |
Accumulated amortization | (711) | (650) |
Balance | $ 328 | $ 411 |
Goodwill and Intangible Assets - Amortization Expense Remaining on Existing Intangible Assets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | ||
Remainder of 2018 | $ 142 | |
2019 | 256 | |
2020 | 189 | |
Total | $ 587 | $ 744 |
Segments and Geographic Information - Schedule of Other Information by Segment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues | ||||
Product revenues | $ 9,343 | $ 9,569 | $ 19,417 | $ 17,295 |
Service revenues | 5,717 | 4,387 | 11,167 | 7,908 |
License revenues | 250 | 250 | ||
Total revenues | 15,310 | 13,956 | 30,834 | 25,203 |
Cost of product revenues | 6,158 | 5,303 | 12,174 | 9,617 |
Cost of service revenues | 2,959 | 2,347 | 5,969 | 4,590 |
Total cost of revenues | 9,117 | 7,650 | 18,143 | 14,207 |
Gross profit | 6,193 | 6,306 | 12,691 | 10,996 |
Total operating expenses | 8,136 | 6,662 | 13,618 | 12,807 |
Total non-operating income | 729 | (20) | 485 | (6) |
Loss before income taxes | (1,214) | (376) | (442) | (1,817) |
Product [Member] | ||||
Revenues | ||||
Product revenues | 9,343 | 9,569 | 19,417 | 17,295 |
License revenues | 250 | 250 | ||
Total revenues | 9,593 | 9,569 | 19,667 | 17,295 |
Cost of product revenues | 6,158 | 5,303 | 12,174 | 9,617 |
Total cost of revenues | 6,158 | 5,303 | 12,174 | 9,617 |
Gross profit | 3,435 | 4,266 | 7,493 | 7,678 |
Service [Member] | ||||
Revenues | ||||
Service revenues | 5,717 | 4,387 | 11,167 | 7,908 |
Total revenues | 5,717 | 4,387 | 11,167 | 7,908 |
Cost of service revenues | 2,959 | 2,347 | 5,969 | 4,590 |
Total cost of revenues | 2,959 | 2,347 | 5,969 | 4,590 |
Gross profit | $ 2,758 | $ 2,040 | $ 5,198 | $ 3,318 |
Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense | $ 0.5 | $ 0.5 | $ 1.1 | $ 0.9 | |
Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Equipment purchased under equipment loans | $ 1.5 | $ 1.5 | $ 1.5 |
Shareholders' Equity - Additional Information (Detail) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
shares
|
Jun. 30, 2017
USD ($)
shares
|
Jun. 30, 2018
shares
|
Jun. 30, 2017
USD ($)
shares
|
Dec. 31, 2017
USD ($)
shares
|
Dec. 31, 2016
shares
|
|
Class of Stock [Line Items] | ||||||
Preferred stock, redemption date | Jun. 30, 2017 | |||||
Series B Convertible Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock shares outstanding converted into common stock | 130 | |||||
Each share of preferred stock converted into common stock | 2.78 | |||||
Preferred shares converted into common stock, shares | 361 | 361 | 361 | |||
Preferred stock, shares outstanding | 0 | 0 | ||||
Series C Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares outstanding | 0 | 0 | 550 | |||
Payment for redemption of preferred stock | $ | $ 10 | $ 10 | $ 10 | |||
Amount recorded in excess of carrying value over redemption value | $ | $ 459 | $ 459 | $ 500 |
Net (Loss) Income Per Common Share - Additional Information (Detail) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share | 2.0 | 2.4 | 2.0 | 1.5 |
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance—December 31, 2017 | $ 41,512 | |||
Current period other comprehensive income | $ (1,536) | $ 823 | (596) | $ 1,051 |
Balance—June 30, 2018 | 48,493 | 48,493 | ||
Translation Adjustment [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance—December 31, 2017 | (3,157) | |||
Current period other comprehensive income | (596) | |||
Balance—June 30, 2018 | $ (3,753) | $ (3,753) |
Stock-Based Compensation - Assumptions Used to Value Options Granted (Detail) - Employees [Member] |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate | 2.15% | |
Expected term | 4 years 9 months | |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate | 1.45% | |
Expected term | 4 years 6 months | |
Expected volatility | 47.79% | 53.15% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate | 1.59% | |
Expected term | 4 years 9 months | |
Expected volatility | 47.86% | 55.20% |
Stock-Based Compensation - Schedule of Stock-Based Compensation Expense Allocation (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | $ 503 | $ 504 | $ 1,069 | $ 845 |
Cost of Revenues [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | 39 | 31 | 77 | 59 |
Sales and Marketing [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | 12 | 12 | 25 | 23 |
Research and Development [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | 40 | 71 | 58 | 28 |
General and Administrative [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | $ 412 | $ 390 | $ 909 | $ 735 |
Fair Value of Financial Instruments - Additional Information (Detail) |
Jun. 30, 2018
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Financial assets level 1 to level 2 transfers amount | $ 0 |
Financial assets level 2 to level 1 transfers amount | $ 0 |
Income Taxes - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Taxes And Tax Related [Line Items] | ||||
Income tax expense | $ 300,000 | $ 0 | $ 300,000 | $ 0 |
Global intangible low tax income included in taxable income | $ 2,400,000 | |||
Measurement period for record provisional amount | 1 year | |||
Minimum [Member] | ||||
Income Taxes And Tax Related [Line Items] | ||||
Global intangible low taxed income tax rate | 10.00% |
Restructuring Charges - Additional Information (Detail) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Restructuring And Related Activities [Abstract] | ||
Restructuring charges | $ 800,000 | |
Additional restructuring charges | $ 0 | |
Restructuring payments expected to be paid in remainder of 2018 | 43,000 | |
Restructuring payments expected to be paid in 2018 or beyond | $ 100,000 |
Restructuring Charges - Summary of Components of Restructuring Activity (Detail) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Restructuring Cost And Reserve [Line Items] | |
Amounts accrued at December 31, 2017 | $ 355 |
Amounts paid | (206) |
Amounts accrued at June 30, 2018 | 149 |
Employee Severance, Benefits and Related Costs [Member] | |
Restructuring Cost And Reserve [Line Items] | |
Amounts accrued at December 31, 2017 | 72 |
Amounts paid | (72) |
Obligations under Manufacturing and Development Contracts [Member] | |
Restructuring Cost And Reserve [Line Items] | |
Amounts accrued at December 31, 2017 | 283 |
Amounts paid | (134) |
Amounts accrued at June 30, 2018 | $ 149 |
Revenue from Contracts with Customers - Summary of Changes in Deferred Revenue Balances for Product and Service Revenue (Detail) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Deferred Revenue Arrangement [Line Items] | |
Opening Balance - December 31, 2017 | $ 6,141 |
Additions | 1,217 |
Recognized into Revenue | (768) |
Recognized into Accumulated Deficit | (5,703) |
Ending Balance - June 30, 2018 | 887 |
Product [Member] | |
Deferred Revenue Arrangement [Line Items] | |
Opening Balance - December 31, 2017 | 5,888 |
Additions | 300 |
Recognized into Revenue | (230) |
Recognized into Accumulated Deficit | (5,703) |
Ending Balance - June 30, 2018 | 255 |
Service [Member] | |
Deferred Revenue Arrangement [Line Items] | |
Opening Balance - December 31, 2017 | 253 |
Additions | 917 |
Recognized into Revenue | (538) |
Ending Balance - June 30, 2018 | $ 632 |
Subsequent Event - Additional Information (Detail) - Subsequent Event [Member] - $ / shares |
Jul. 17, 2018 |
Jul. 02, 2018 |
Jul. 01, 2018 |
---|---|---|---|
Subsequent Event [Line Items] | |||
Common stock issued and outstanding canceled and converted into right to receive in cash | $ 11.50 | ||
Merger Agreement [Member] | |||
Subsequent Event [Line Items] | |||
Date of merger | Jul. 02, 2018 | ||
Cash tender offer commencement date | Jul. 17, 2018 | ||
Common stock price per share | $ 11.50 | ||
Number of business days that cash tender offer remain open from commencement date | 20 days | ||
Cash tender offer end date | Aug. 13, 2018 | ||
Meger agreement description | The obligation of Merger Sub to consummate the Offer is subject to customary conditions, including, among others, that a certain minimum number of shares of common stock be validly tendered and not validly withdrawn (“Minimum Condition”). Specifically, the Minimum Condition requires that there be validly tendered and not validly withdrawn shares of common stock that, when considered together with all other shares of common stock (if any) beneficially owned by Catalent and its affiliates (excluding any shares of common stock tendered pursuant to guaranteed delivery procedures that have not yet been received), represent more than 50% of the sum of (x) the total number of shares of the Company’s common stock outstanding at the time of the expiration of the Offer, plus (y) the aggregate number of shares of common stock then issuable to optionholders from which the Company has received notices of exercise prior to the expiration of the Offer (and as to which such shares have not yet been issued to such exercising optionholders) . | ||
Minimum percentage that represents common stock outstanding at cash tender offer and common stock issuable to optionholders from expiration of Offer | 50.00% |
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