UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2016
OR
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission File Number 1-10352
JUNIPER
PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
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Delaware
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59-2758596
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(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
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(Address of principal executive offices)
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(Zip Code)
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Registrants 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.
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated filer
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☐ (Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
The number of shares
outstanding of the registrants common stock as of November 1, 2016: 10,843,752
EXPLANATORY NOTE
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.
Description of
Restatement
As described in additional detail in the Explanatory Note to our Annual Report on Form 10-K/A for the year ended
December 31, 2015 filed on November 14, 2016 misstatements were identified in connection with our previous product revenue recognition as well as to the recognition of research and development expenses under a clinical research
agreement. The Company determined that the Companys audited consolidated financial statements for the fiscal years ended December 31, 2013 through December 31, 2015, including the unaudited consolidated financial information for
each quarterly period within the fiscal years ended December 31, 2014 and 2015, as reported in the Companys Annual Report on Form 10-K filed on March 10, 2016 and amended on April 22, 2016, and its unaudited condensed
consolidated financial statements for the quarters ended March 31, 2016 and June 30, 2016, and the related quarters in 2015, as reported in the Companys Quarterly Reports on Form 10-Q filed on May 4, 2016 and August 4,
2016, respectively, should no longer be relied upon due to the errors identified therein, and that a restatement of these financial statements was required.
As of December 31, 2015, management determined that the Company did not maintain effective internal control over financial reporting due to
the existence of material weaknesses that resulted in the errors identified. As of September 30, 2016, due to the existence of these material weaknesses, management has concluded that the Companys disclosure controls and procedures were not
effective. See Item 4 of this Form 10-Q and Item 9A of the 2015 Form 10-K/A for further information.
Juniper Pharmaceuticals, Inc.
Table of Contents
Juniper Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
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September 30,
2016
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December 31,
2015
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(As Restated)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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14,971
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$
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13,901
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Accounts receivable, net
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5,255
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7,538
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Inventories
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4,838
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3,623
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Prepaid expenses and other current assets
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1,346
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872
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Total current assets
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26,410
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25,934
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Property and equipment, net
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12,562
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12,850
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Intangible assets, net
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1,099
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1,598
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Goodwill
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8,770
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10,010
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Other assets
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168
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185
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Total assets
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$
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49,009
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$
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50,577
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Liabilities and Stockholders Equity
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Current liabilities:
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Accounts payable
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$
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4,778
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$
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2,004
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Accrued expenses and other
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4,451
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3,430
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Deferred revenue
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5,810
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4,167
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Notes payable
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214
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238
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Total current liabilities
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15,253
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9,839
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Deferred revenue, net of current portion
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710
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Notes payable, net of current portion
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2,370
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2,897
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Other noncurrent liabilities
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66
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69
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Total liabilities
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17,689
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13,515
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Commitments and contingencies
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Contingently redeemable series C preferred stock, 0.55 shares issued and outstanding (liquidation
preference of $550)
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550
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550
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Stockholders equity:
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Preferred stock, $0.01 par value; 1,000 shares authorized Series B convertible preferred stock,
0.13 shares issued and outstanding (liquidation preference of $13)
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Common stock $0.01 par value; 150,000 shares authorized; 12,257 issued and 10,844 outstanding at
September 30, 2016 and 12,215 issued and 10,802 outstanding at December 31, 2015, respectively
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123
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122
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Additional paid-in capital
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290,247
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289,464
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Treasury stock, at cost (1,413 shares)
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(8,601
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)
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(8,601
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)
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Accumulated deficit
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(246,974
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)
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(243,311
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)
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Accumulated other comprehensive loss
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(4,025
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)
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(1,162
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)
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Total stockholders equity
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30,770
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36,512
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Total liabilities and stockholders equity
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$
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49,009
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$
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50,577
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Juniper Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2016
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2015
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2016
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2015
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(As Restated)
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(As Restated)
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Revenues
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Product revenues
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$
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7,057
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$
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6,735
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$
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20,716
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$
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18,375
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Service revenues
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3,337
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3,218
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9,964
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8,392
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Royalties
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1,162
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1,040
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2,963
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2,895
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Total revenues
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11,556
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10,993
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33,643
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29,662
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Cost of product revenues
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3,683
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4,192
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11,892
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10,825
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Cost of service revenues
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2,022
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2,361
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6,630
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6,176
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Total cost of revenues
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5,705
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6,553
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18,522
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17,001
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Gross profit
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5,851
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4,440
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15,121
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12,661
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Operating expenses
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Sales and marketing
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259
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338
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910
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941
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Research and development
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2,304
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1,598
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8,234
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|
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|
5,114
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General and administrative
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3,111
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2,220
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9,815
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|
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7,356
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|
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|
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Total operating expenses
|
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|
5,674
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|
|
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4,156
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|
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18,959
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|
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13,411
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|
Income (loss) from operations
|
|
|
177
|
|
|
|
284
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|
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|
(3,838
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)
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|
(750
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)
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|
|
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Interest expense, net
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|
(24
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)
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(27
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)
|
|
|
(74
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)
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(81
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)
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Other income, net
|
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|
90
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|
|
|
114
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|
|
|
296
|
|
|
|
322
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
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Total non-operating income
|
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66
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|
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|
87
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|
|
|
222
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|
241
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|
Income (loss) before income taxes
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243
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|
371
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|
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|
(3,616
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)
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|
(509
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)
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(Benefit from) provision for income taxes
|
|
|
(5
|
)
|
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|
3
|
|
|
|
47
|
|
|
|
11
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net income (loss)
|
|
$
|
248
|
|
|
$
|
368
|
|
|
$
|
(3,663
|
)
|
|
$
|
(520
|
)
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|
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Basic net income (loss) per common share
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$
|
0.02
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|
|
$
|
0.03
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|
|
$
|
(0.34
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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Diluted net income (loss) per common share
|
|
$
|
0.02
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|
|
$
|
0.03
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|
|
$
|
(0.34
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
10,799
|
|
|
|
10,771
|
|
|
|
10,791
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|
|
|
10,758
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Diluted weighted average common shares outstanding
|
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|
11,060
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|
|
|
11,009
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|
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10,791
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|
|
|
10,758
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Juniper Pharmaceuticals, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
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|
|
|
|
|
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|
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|
|
|
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|
Three Months Ended
September 30,
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Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
(As Restated)
|
|
Net income (loss)
|
|
$
|
248
|
|
|
$
|
368
|
|
|
$
|
(3,663
|
)
|
|
$
|
(520
|
)
|
Other comprehensive income components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
(658
|
)
|
|
|
(806
|
)
|
|
|
(2,863
|
)
|
|
|
(564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive loss
|
|
|
(658
|
)
|
|
|
(806
|
)
|
|
|
(2,863
|
)
|
|
|
(564
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(410
|
)
|
|
$
|
(438
|
)
|
|
$
|
(6,526
|
)
|
|
$
|
(1,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Juniper Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
(As Restated)
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,663
|
)
|
|
$
|
(520
|
)
|
Reconciliation of net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,435
|
|
|
|
1,502
|
|
Stock-based compensation expense
|
|
|
804
|
|
|
|
1,394
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
1,680
|
|
|
|
(2,697
|
)
|
Inventories
|
|
|
(1,215
|
)
|
|
|
217
|
|
Prepaid expenses and other current assets
|
|
|
282
|
|
|
|
(1,180
|
)
|
Other non-current assets
|
|
|
18
|
|
|
|
(17
|
)
|
Accounts payable
|
|
|
2,836
|
|
|
|
532
|
|
Accrued expenses and other
|
|
|
354
|
|
|
|
2,639
|
|
Deferred revenue
|
|
|
1,149
|
|
|
|
203
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
3,680
|
|
|
|
2,073
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(2,256
|
)
|
|
|
(1,215
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(2,256
|
)
|
|
|
(1,215
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from exercise of common stock options
|
|
|
|
|
|
|
83
|
|
Principal payments on notes payable
|
|
|
(175
|
)
|
|
|
(179
|
)
|
Dividends paid
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(196
|
)
|
|
|
(117
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(158
|
)
|
|
|
(56
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
1,070
|
|
|
|
685
|
|
Cash and cash equivalents, beginning of period
|
|
|
13,901
|
|
|
|
16,762
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
14,971
|
|
|
$
|
17,447
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
67
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
Supplemental noncash financing activities
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
$
|
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Juniper Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1)
Restatement of the
Consolidated Financial Statements
Background
On October 18, 2016, during the course of responding to a comment letter from the staff of the U.S. Securities and Exchange Commission, the
Company determined that the Companys audited consolidated financial statements for the fiscal years ended December 31, 2013 through December 31, 2015, including the unaudited consolidated financial information for each quarterly
period within the fiscal years ended December 31, 2014 and 2015, as reported in the Companys Annual Report on Form 10-K filed on March 10, 2016 and amended on April 22, 2016, and its unaudited condensed consolidated financial
statements for the quarters ended March 31, 2016 and June 30, 2016, and the related quarters in 2015, as reported in the Companys Quarterly Reports on Form 10-Q filed on May 4, 2016 and August 4, 2016, respectively, should
no longer be relied upon due to errors identified therein, and that a restatement of these financial statements is required.
The revenue
related errors relate to the determination that a portion of the invoice price of product sold under the Companys supply agreement with Ares Trading S.A. (an affiliate of Merck KGaA, Darmstadt, Germany (Merck KGaA)) is considered
contingent, and therefore not fixed or determinable at the time of shipment. The Companys previous practice was to record revenue at the time of shipment based on the invoice price, with an adjustment to increase or decrease revenue upon
completion of the quarterly reconciliation process. Accordingly, correction of the revenue errors will result in a timing difference for the contingent portion of revenue from the Companys original methodology. Under the corrected
methodology, revenue will be recognized in the period product is shipped to Merck KGaA for the fixed portion only (direct manufacturing cost plus 20%) with the contingent portion of the invoice price initially recorded as deferred revenue and
subsequently recognized upon completion of a quarterly reconciliation process that occurs after receiving sell-through information from Merck KGaA on a country-by-country basis.
Additionally, the Company has a contract related to a COL-1077 clinical trial which has been in place since May 2015. During the course of
compiling its results for the quarter ended September 30, 2016, the Company identified certain research and development expenses which had been incurred during the year ended December 31, 2015, and research and development expenses incurred during
the three months ended March 31, 2016 and June 30, 2016 which had not been properly recorded in the periods to which the expenses related. The restatement reflects the recognition of addition research and development expense in the affected
periods, with corresponding adjustments to prepaid expenses and other current assets, and accrued expenses related to those amounts. The additional research and development expenses incurred during the year ended December 31, 2015 were incurred
during the three month period ended December 31, 2015, and therefore did not have an impact on the consolidated statements of operations or consolidated statement of comprehensive income (loss) for the three and nine month period ended September 30,
2015 or the consolidated statement of cash flows for the nine months ended September 30, 2015. The balances of prepaid expenses and other current assets and accrued expenses in the consolidated balance sheet as of December 31, 2015 have been
restated to reflect these corrections.
In connection with the restatement, the Company also recorded an adjustment related to cost of
product revenues which was previously concluded to be immaterial. The adjustment was to increase cost of product revenues for the three month and nine month period ended September 30, 2015. A corresponding adjustment to reduce cost of product
revenues in the same amount was recorded in the three month period ended December 31, 2015 and accordingly did not have an impact on the twelve months ended December 31, 2015.
The effects of the restatement on the Companys consolidated balance sheet as of December 31, 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
Consolidated Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
$
|
1,674
|
|
|
$
|
(802
|
)
|
|
$
|
872
|
|
Total current assets
|
|
|
26,736
|
|
|
|
(802
|
)
|
|
|
25,934
|
|
Total assets
|
|
|
51,379
|
|
|
|
(802
|
)
|
|
|
50,577
|
|
Accrued expenses and other
|
|
|
4,158
|
|
|
|
(728
|
)
|
|
|
3,430
|
|
Deferred revenue
|
|
|
1,336
|
|
|
|
2,831
|
|
|
|
4,167
|
|
Total current liabilities
|
|
|
7,736
|
|
|
|
2,103
|
|
|
|
9,839
|
|
Total liabilities
|
|
|
11,412
|
|
|
|
2,103
|
|
|
|
13,515
|
|
Accumulated deficit
|
|
|
(240,406
|
)
|
|
|
(2,905
|
)
|
|
|
(243,311
|
)
|
Total stockholders equity
|
|
|
39,417
|
|
|
|
(2,905
|
)
|
|
|
36,512
|
|
Total liabilities and stockholders equity
|
|
|
51,379
|
|
|
|
(802
|
)
|
|
|
50,577
|
|
5
The tables below show the effects of the restatement on the Companys consolidated
statements of operations, consolidated statement of comprehensive loss (income) and consolidated statement of cash flows for the three and nine months ended September 30, 2015. In each case, the tax effect of the adjustment was considered
insignificant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2015
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
7,197
|
|
|
$
|
(462
|
)
|
|
$
|
6,735
|
|
Total revenues
|
|
|
11,455
|
|
|
|
(462
|
)
|
|
|
10,993
|
|
Cost of product revenues
|
|
|
4,069
|
|
|
|
123
|
|
|
|
4,192
|
|
Total cost of revenues
|
|
|
6,430
|
|
|
|
123
|
|
|
|
6,553
|
|
Gross profit
|
|
|
5,025
|
|
|
|
(585
|
)
|
|
|
4,440
|
|
Income from operations
|
|
|
869
|
|
|
|
(585
|
)
|
|
|
284
|
|
Income before taxes
|
|
|
956
|
|
|
|
(585
|
)
|
|
|
371
|
|
Net income
|
|
|
953
|
|
|
|
(585
|
)
|
|
|
368
|
|
Basis net income per share
|
|
$
|
0.09
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.03
|
|
Diluted net per share
|
|
$
|
0.09
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.03
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
953
|
|
|
$
|
(585
|
)
|
|
$
|
368
|
|
Comprehensive income (loss)
|
|
|
147
|
|
|
|
(585
|
)
|
|
|
(438
|
)
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
18,707
|
|
|
$
|
(332
|
)
|
|
$
|
18,375
|
|
Total revenues
|
|
|
29,994
|
|
|
|
(332
|
)
|
|
|
29,662
|
|
Cost of Product Revenues
|
|
|
10,702
|
|
|
|
123
|
|
|
|
10,825
|
|
Total Cost of Revenues
|
|
|
16,878
|
|
|
|
123
|
|
|
|
17,001
|
|
Gross profit
|
|
|
13,116
|
|
|
|
(455
|
)
|
|
|
12,661
|
|
Loss from operations
|
|
|
(295
|
)
|
|
|
(455
|
)
|
|
|
(750
|
)
|
Loss before taxes
|
|
|
(54
|
)
|
|
|
(455
|
)
|
|
|
(509
|
)
|
Net loss
|
|
|
(65
|
)
|
|
|
(455
|
)
|
|
|
(520
|
)
|
Basis net loss per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
Diluted net loss per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
Consolidated Statement of Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(65
|
)
|
|
$
|
(455
|
)
|
|
$
|
(520
|
)
|
Comprehensive loss
|
|
|
(629
|
)
|
|
|
(455
|
)
|
|
|
(1,084
|
)
|
|
|
|
|
Consolidated Statement of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(65
|
)
|
|
$
|
(455
|
)
|
|
$
|
(520
|
)
|
Inventories
|
|
|
94
|
|
|
|
123
|
|
|
|
217
|
|
Deferred revenue
|
|
|
(129
|
)
|
|
|
332
|
|
|
|
203
|
|
(2)
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/A of Juniper Pharmaceuticals, Inc. (Juniper or the Company) for the year ended December 31, 2015 filed with the SEC on November 14, 2016 (the 2015 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 September 30, 2016, and its results of operations for the three months and nine months ended September 30, 2016, and 2015, and cash flows for the nine months ended September 30, 2016, and 2015. The condensed consolidated
balance sheet at December 31, 2015 (as restated), 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 nine
months ended September 30, 2016 are not necessarily indicative of the results for the year ending December 31, 2016 or any period thereafter.
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 reserve, 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.
7
Summary of Significant Accounting Policies
Revenue Recognition and Sales Returns Reserves (As Restated)
Revenues include product revenues, which primarily consist of sales of CRINONE to Merck KGaA, royalty revenues, which primarily
consist of royalty revenues from Allergan on sales of CRINONE, service revenues, which primarily consist of analytical and consulting services, pharmaceutical development and clinical trial manufacturing services and other revenues.
Product Revenue
Revenues from the sale of products are recognized when all of the following criteria are met: persuasive evidence of a sales
arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectibility is reasonably assured. Selling prices to Merck KGaA for CRINONE (progesterone gel) are determined on an annual and
country-by-country basis and are the greater of (i) a percentage of Merck KGaAs estimated net selling price, or (ii) Junipers direct manufacturing cost plus 20% and are invoiced to Merck KGaA upon shipment. Juniper records
revenue at the minimum selling price, which is Junipers direct manufacturing cost plus 20%, at the time of shipment to Merck KGaA as that amount is considered fixed or determinable. The Company records deferred revenue related to amounts
invoiced above the minimum selling price. Upon receiving sell through information from Merck KGaA on a quarterly and country-by-country basis, the Company records an adjustment to increase revenue to reflect the difference between Merck KGaAs
actual net selling price and the minimum price recorded at the time of shipment. Any difference between the amounts invoiced at Merck KGaAs estimated net selling price and Merck KGaAs actual net selling price are billed or credited
to Merck KGaA in the quarter the product is sold through by Merck KGaA. Accordingly, product revenue in each period includes both an amount for product shipped to Merck KGaA in the current period recognized at the minimum purchase price as well
as an amount for product shipped by Merck KGaA to its customers in the current period equal to the difference between Merck KGaAs actual net selling price and the minimum purchase price. Merck KGaA is also 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 April 2013, Junipers 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.
Service Revenue
The professional service contracts that Juniper enters into and operates under specifies 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 Junipers engagements can be much longer in duration.
Juniper recognizes substantially all of the Companys professional services revenues under written contracts when the fee
is fixed or determinable, as the services are provided, and only in those situations where collection from the client is reasonably assured. In certain cases Juniper bills clients prior to work being performed, which requires Juniper to defer
revenue in accordance with U.S. GAAP. In these cases, these amounts are deferred until all criteria for recognizing revenue are met.
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.
Service revenues from a majority
of Junipers 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. In general, 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. The proportional performance
method is used for fixed-price contracts because 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 Junipers clients. 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.
8
Royalty revenues, based on sales by licensees, are recorded as revenues when
those sales are made by the licensees.
The Company maintains accounts receivable allowances for estimated losses resulting
from disputed amounts or the inability of Junipers customers to make required payments. Juniper identifies specific collection issues and establishes an accounts receivable allowance based on its historical collection experience, review of
client accounts, current trends, and credit policy. If the financial condition of Junipers customers were to deteriorate or disputes were to arise regarding the services provided, resulting in an impairment of their ability or intent to make
payment, additional allowances may be required. A failure to estimate accurately the accounts receivable allowances and ensure that payments are received on a timely basis could have a material adverse effect on Junipers business, financial
condition, and results of operations.
Juniper collects value added tax from its customers for revenues generated out of
the United Kingdom for which the customer is not tax exempt and remits such taxes to the appropriate governmental authorities. Juniper presents its value added tax on a net basis; therefore, these taxes are excluded from revenues.
Deferred Revenue
The Companys deferred revenue balance consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
(As Restated)
|
|
Product revenues
|
|
$
|
4,285
|
|
|
$
|
2,831
|
|
Service revenues
|
|
|
695
|
|
|
|
566
|
|
Regional Growth Fund
|
|
|
830
|
|
|
|
1,480
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,810
|
|
|
$
|
4,877
|
|
|
|
|
|
|
|
|
|
|
Amounts paid but not yet earned on product revenues are recorded as deferred revenue until the
Company receives sell through information from Merck KGaA indicating the product has been sold through or otherwise disposed of. Amounts invoiced but 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. Amounts deferred for product revenue are not settled until sell through information is received from Merck KGaA.
As part of the acquisition of Juniper Pharma Services, Juniper assumed a $2.5 million obligation under a grant arrangement with
the Regional Growth Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. Juniper Pharma Services used this grant to fund the building of its second facility, which includes analytical labs, office
space, and a manufacturing facility. As a part of the arrangement, Juniper Pharma Services is required to create and maintain certain full-time equivalent personnel levels through October 2017. As of September 30, 2016, the Company is in compliance
with the covenants of the arrangement. The income from the Regional Growth Fund will be recognized in the other income line of the consolidated statement of operations, on a decelerated basis through September 30, 2017.
(3) Inventories
Inventories are stated at the
lower of cost (first-in, first-out) or market. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Raw materials
|
|
$
|
734
|
|
|
$
|
1,410
|
|
Work in process
|
|
|
3,492
|
|
|
|
1,840
|
|
Finished goods
|
|
|
612
|
|
|
|
373
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,838
|
|
|
$
|
3,623
|
|
|
|
|
|
|
|
|
|
|
9
(4)
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 each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its
carrying value of the asset. In August, the Company announced that its Phase 2b clinical trial evaluating its lead product candidate, COL-1077 did not achieve its primary and secondary endpoints and that further development on COL-1077 would be
discontinued. The Company considered the determination that further development on COL-1077 would not continue, which resulted in a triggering event requiring a test for impairment under ASC 350.
In accordance with Accounting Standards Codification, or ASC 350, Goodwill and Other Intangibles (ASC 350), the Company uses
the two step approach for each reporting unit. The first step compares the carrying amount of the reporting unit to its estimated fair value (Step 1) utilizing a discounted cash flow analysis based on the present value of estimated future cash flows
to be generated using a risk-adjusted discount rate. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed, wherein the reporting units carrying value is compared to the
implied fair value (Step 2). To the extent that the carrying value of goodwill exceeds the implied fair value of goodwill, impairment exists and must be recognized.
Juniper concluded that the Company consists of two reporting units, which are product and service. All of the Companys goodwill is
assigned to the Companys service reporting unit. Juniper performed an impairment test as of the date of the triggering event and determined that the Companys goodwill is not impaired as of that date.
Changes to goodwill during the nine months ended September 30, 2016 were as follows (in thousands):
|
|
|
|
|
|
|
Total
|
|
BalanceDecember 31, 2015
|
|
$
|
10,010
|
|
Effects of foreign currency translation
|
|
|
(1,240
|
)
|
|
|
|
|
|
BalanceSeptember 30, 2016
|
|
$
|
8,770
|
|
|
|
|
|
|
Intangible assets consist of the following at September 30, 2016 and December 31, 2015 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademark
|
|
|
Developed
Technology
|
|
|
Customer
Relationships
|
|
|
Total
|
|
Gross carrying amountSeptember 30, 2016
|
|
$
|
300
|
|
|
$
|
1,370
|
|
|
$
|
1,240
|
|
|
$
|
2,910
|
|
Foreign currency translation adjustment
|
|
|
(53
|
)
|
|
|
(243
|
)
|
|
|
(220
|
)
|
|
|
(516
|
)
|
Accumulated amortization
|
|
|
(247
|
)
|
|
|
(605
|
)
|
|
|
(443
|
)
|
|
|
(1,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BalanceSeptember 30, 2016
|
|
$
|
|
|
|
$
|
522
|
|
|
$
|
577
|
|
|
$
|
1,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademark
|
|
|
Developed
Technology
|
|
|
Customer
Relationships
|
|
|
Total
|
|
Gross carrying amountDecember 31, 2015
|
|
$
|
300
|
|
|
$
|
1,370
|
|
|
$
|
1,240
|
|
|
$
|
2,910
|
|
Foreign currency translation adjustment
|
|
|
(19
|
)
|
|
|
(83
|
)
|
|
|
(76
|
)
|
|
|
(178
|
)
|
Accumulated amortization
|
|
|
(215
|
)
|
|
|
(538
|
)
|
|
|
(381
|
)
|
|
|
(1,134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BalanceDecember 31, 2015
|
|
$
|
66
|
|
|
$
|
749
|
|
|
$
|
783
|
|
|
$
|
1,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to completing the triggering event based assessment of goodwill under ASC 350, the Company assessed its
long-lived assets under ASC 360-10-05, Impairment or Disposal of Long-Lived Assets (ASC 360), and concluded that there was no impairment indicated for its long-lived assets. 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.
10
Amortization expense for the three months ended September 30, 2016 and 2015 was $0.1 million.
Amortization expense for the nine months ended September 30, 2016 was $0.3 million. Amortization expense for the nine months ended September 30, 2015 was $0.4 million. As of September 30, 2016, amortization expense on existing intangible
assets for the next five years is as follows (in thousands):
|
|
|
|
|
Year ending December 31,
|
|
Total
|
|
Remainder of 2016
|
|
$
|
81
|
|
2017
|
|
|
303
|
|
2018
|
|
|
278
|
|
2019
|
|
|
252
|
|
2020
|
|
|
185
|
|
|
|
|
|
|
Total
|
|
$
|
1,099
|
|
|
|
|
|
|
(5)
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 with Lloyds TSB Bank (Lloyds) as administrative agent. JPS had drawn down $3.9 million and as of September 30, 2016 owed $2.6 million.
The three loan facilities are each repayable by monthly installments. Repayment began on one facility in February 2013 and the remaining two commenced in October 2013. All facilities are due for repayment over 15 years from the date of drawdown. Two
of the facilities bear interest at the Bank of Englands base rate plus 1.95% and 2.55%, respectively. The interest rate at September 30, 2016 for these two facilities was 2.45% and 3.05%, respectively. The third facility is a fixed rate
agreement bearing interest at 3.52% per annum. The weighted average interest rate for the three loan facilities for the three months ended September 30, 2016 was 3.00%. The Loan Agreement is secured by the mortgaged property and an unlimited lien on
other assets of JPS. The Loan Agreement contains financial covenants that limit the amount of indebtedness JPS may incur, requires JPS to maintain certain levels of net worth, and restricts JPSs ability to materially alter the character of its
business. As of September 30, 2016, the Company is in compliance with all of the covenants under the Loan Agreement.
In September 2013,
as part of the acquisition of JPS, Juniper assumed a $2.5 million obligation under a grant arrangement with the Regional Growth Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. JPS used this grant
to fund the building of its second facility, which includes analytical labs, office space, and a manufacturing facility. As part of the arrangement, JPS is required to create and maintain certain full-time equivalent personnel levels through October
2017. As of September 30, 2016, the Company is in compliance with the covenants of the arrangement.
11
The Regional Growth Fund obligation is recognized in the other income line item in the
consolidated statement of operations on a decelerated basis over the obligation period through October 2017. As of September 30, 2016, the obligations carrying amount is $0.8 million and it is recorded in deferred revenue on the
consolidated balance sheets. Other income associated with the Regional Growth Fund obligation for the three months ended September 30, 2016 and 2015 was $0.2 million and $0.1 million, respectively. Other income associated with the Regional Growth
Fund obligation for the nine months ended September 30, 2016 and 2015 was $0.5 million and $0.4 million, respectively. The amount of other income on the obligation that will be recognized provided the Company remains in compliance with the
covenants will be the following (in thousands):
|
|
|
|
|
Year
|
|
Total
|
|
Remainder of 2016
|
|
$
|
208
|
|
2017
|
|
|
622
|
|
|
|
|
|
|
Total
|
|
$
|
830
|
|
|
|
|
|
|
(6)
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
1
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 have each agreed to serve a three-year term 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 day advance written notice to MGH. MGH has the right to terminate the License Agreement based on the Companys failure to make
payments due under the License Agreement, subject to a 15 day cure period, or the Companys failure to maintain the insurance required by the License Agreement. MGH may also terminate the License Agreement based on Junipers 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 $1,200,000 tied to the Companys 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.
1
|
Kimball AB
et al
. A novel approach to administration of peptides in women: Systemic absorption of a GnRH agonist via transvaginal ring delivery system.
J
Control Release
. 2016 Apr 26. pii: S0168-3659(16)30249-8. doi: 10.1016/j.jconrel.2016.04.035. [Epub ahead of print]
|
(7)
Segments and Geographic Information
The Company and its subsidiaries currently operate in two segments: product and service. The
product segment includes supply chain management for Crinone, the Companys sole commercialized product. The product segment also includes the royalty stream the Company receives from Allergan for Crinone sales in the United States, and the
development of new product candidates. The service segment includes pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services for the Companys customers as well as characterizing and developing
pharmaceutical product candidates for the Companys internal
12
programs and managing the Companys IVR technology. In September 2013, the Company acquired JPS, a U.K.-based provider of pharmaceutical development, clinical trial manufacturing, and
advanced analytical and consulting services to the pharmaceutical industry. The Company has integrated its supply chain management for its sole commercialized product, Crinone, into those operations and has sought to capture synergies by
transferring operational activities related to its historic business to JPS.
The Companys largest customer, Merck KGaA, Darmstadt,
Germany (Merck KGaA) obtains Crinone from the Company through its Switzerland-based subsidiary; Merck KGaA then sells Crinone throughout the world, excluding the United States. The Companys primary domestic customer, Allergan, Plc
(Allergan), is responsible for the commercialization and sale of Crinone in the United States. JPS provides services to customers in many jurisdictions; including the European Union, the United States, Australia and Canada. The following
tables show selected information by geographic area (in thousands):
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
(As Restated)
|
|
United States
|
|
$
|
2,851
|
|
|
$
|
2,327
|
|
|
$
|
7,066
|
|
|
$
|
5,951
|
|
Switzerland
|
|
|
7,081
|
|
|
|
6,812
|
|
|
|
20,772
|
|
|
|
18,571
|
|
Other countries
|
|
|
1,624
|
|
|
|
1,854
|
|
|
|
5,805
|
|
|
|
5,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,556
|
|
|
$
|
10,993
|
|
|
$
|
33,643
|
|
|
$
|
29,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
|
|
|
|
|
(As Restated)
|
|
United States
|
|
$
|
14,346
|
|
|
$
|
15,454
|
|
United Kingdom
|
|
|
31,197
|
|
|
|
33,335
|
|
Other countries
|
|
|
3,466
|
|
|
|
1,788
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
49,009
|
|
|
$
|
50,577
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
United Kingdom
|
|
$
|
12,516
|
|
|
$
|
13,817
|
|
Other countries
|
|
|
1,313
|
|
|
|
816
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,829
|
|
|
$
|
14,633
|
|
|
|
|
|
|
|
|
|
|
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 months ended September 30, 2016 and 2015, Merck KGaA and Allergan accounted for 86% and
14%, and 87% and 13% of the product segment revenue, respectively. For the nine months ended September 30, 2016 and 2015, Merck KGaA and Allergan accounted for 87% and 13%, and 86% and 14% of the product segment revenue, respectively. No other
customers accounted for 10% or more of service segment or total revenues for the three or nine months ended September 30, 2016 and 2015.
At September 30, 2016 Merck KGaA and Allergan made up 81% and 19% of the product segment accounts receivable, respectively. At
December 31, 2015 Merck KGaA and Allergan accounted for 58% and 42% of the product segment accounts receivable, respectively. At September 30, 2016 no customers accounted for greater than 10% of the service segment accounts receivable. At
December 31, 2015 one customer accounted for 18% of total service segment accounts receivable.
13
The following summarizes other information by segment for the three months ended September 30,
2016 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
Service
|
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
7,057
|
|
|
$
|
|
|
|
$
|
7,057
|
|
Service revenues
|
|
|
|
|
|
|
3,337
|
|
|
|
3,337
|
|
Royalties
|
|
|
1,162
|
|
|
|
|
|
|
|
1,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
8,219
|
|
|
$
|
3,337
|
|
|
$
|
11,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
Service
|
|
|
Total
|
|
Cost of product revenues
|
|
$
|
3,683
|
|
|
$
|
|
|
|
$
|
3,683
|
|
Cost of service revenues
|
|
|
|
|
|
|
2,022
|
|
|
|
2,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
3,683
|
|
|
|
2,022
|
|
|
|
5,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
4,536
|
|
|
$
|
1,315
|
|
|
$
|
5,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
5,674
|
|
Total non-operating income
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following summarizes other information by segment for the three months ended September 30, 2015 as
restated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
Service
|
|
|
Total
|
|
Revenues
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
(As Restated)
|
|
Product revenues
|
|
$
|
6,735
|
|
|
$
|
|
|
|
$
|
6,735
|
|
Service revenues
|
|
|
|
|
|
|
3,218
|
|
|
|
3,218
|
|
Royalties
|
|
|
1,040
|
|
|
|
|
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
7,775
|
|
|
$
|
3,218
|
|
|
$
|
10,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenues
|
|
$
|
4,192
|
|
|
$
|
|
|
|
$
|
4,192
|
|
Cost of service revenues
|
|
|
|
|
|
|
2,361
|
|
|
|
2,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
4,192
|
|
|
|
2,361
|
|
|
|
6,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
3,583
|
|
|
$
|
857
|
|
|
$
|
4,440
|
|
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
4,156
|
|
Total non-operating income
|
|
|
|
|
|
|
|
|
|
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following summarizes other information by segment for the nine months ended September 30, 2016 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
Service
|
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
20,716
|
|
|
$
|
|
|
|
$
|
20,716
|
|
Service revenues
|
|
|
|
|
|
|
9,964
|
|
|
|
9,964
|
|
Royalties
|
|
|
2,963
|
|
|
|
|
|
|
|
2,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
23,679
|
|
|
$
|
9,964
|
|
|
$
|
33,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
Service
|
|
|
Total
|
|
Cost of product revenues
|
|
$
|
11,892
|
|
|
$
|
|
|
|
$
|
11,892
|
|
Cost of service revenues
|
|
|
|
|
|
|
6,630
|
|
|
|
6,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
11,892
|
|
|
|
6,630
|
|
|
|
18,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
11,787
|
|
|
$
|
3,334
|
|
|
$
|
15,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
18,959
|
|
Total non-operating income
|
|
|
|
|
|
|
|
|
|
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
(3,616
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
The following summarizes other information by segment for the nine months ended September 30,
2015 as restated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
Service
|
|
|
Total
|
|
Revenues
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
(As Restated)
|
|
Product revenues
|
|
$
|
18,375
|
|
|
$
|
|
|
|
$
|
18,375
|
|
Service revenues
|
|
|
|
|
|
|
8,392
|
|
|
|
8,392
|
|
Royalties
|
|
|
2,895
|
|
|
|
|
|
|
|
2,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
21,270
|
|
|
|
8,392
|
|
|
|
29,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenues
|
|
$
|
10,825
|
|
|
$
|
|
|
|
$
|
10,825
|
|
Cost of service revenues
|
|
|
|
|
|
|
6,176
|
|
|
|
6,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
10,825
|
|
|
|
6,176
|
|
|
|
17,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
10,445
|
|
|
$
|
2,216
|
|
|
$
|
12,661
|
|
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
13,411
|
|
Total non-operating income
|
|
|
|
|
|
|
|
|
|
|
241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
(509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)
Property and Equipment
Property and equipment consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Useful Life
(Years)
|
|
|
September 30,
2016
|
|
|
December 31,
2015
|
|
Machinery and equipment
|
|
|
3-10
|
|
|
$
|
7,564
|
|
|
$
|
7,175
|
|
Furniture and fixtures
|
|
|
3-5
|
|
|
|
1,190
|
|
|
|
1,030
|
|
Computer equipment and software
|
|
|
3-5
|
|
|
|
530
|
|
|
|
625
|
|
Buildings
|
|
|
Up to 39
|
|
|
|
7,685
|
|
|
|
8,771
|
|
Land
|
|
|
Indefinite
|
|
|
|
493
|
|
|
|
562
|
|
Construction in-process
|
|
|
|
|
|
|
1,189
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,651
|
|
|
|
18,172
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
|
(6,089
|
)
|
|
|
(5,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
12,562
|
|
|
$
|
12,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense was $0.4 million for the three month periods ended September 30, 2016 and
2015. Depreciation expense was $1.1 million for the nine month periods ended September 30, 2016 and 2015.
15
(9)
Net Income (Loss) 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
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
(As Restated)
|
|
Basic income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
248
|
|
|
$
|
368
|
|
|
$
|
(3,663
|
)
|
|
$
|
(520
|
)
|
Less: Preferred stock dividends
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common stock
|
|
$
|
241
|
|
|
$
|
361
|
|
|
$
|
(3,684
|
)
|
|
$
|
(541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
|
|
|
10,799
|
|
|
|
10,771
|
|
|
|
10,791
|
|
|
|
10,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per common share
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common stock
|
|
$
|
241
|
|
|
$
|
361
|
|
|
$
|
(3,684
|
)
|
|
$
|
(541
|
)
|
Add: Preferred stock dividends
|
|
|
7
|
|
|
|
7
|
|
|
|
21
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to dilutive common stock
|
|
$
|
248
|
|
|
$
|
368
|
|
|
$
|
(3,663
|
)
|
|
$
|
(520
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
|
|
|
10,799
|
|
|
|
10,771
|
|
|
|
10,791
|
|
|
|
10,758
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive stock awards
|
|
|
178
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
Dilutive preferred share conversions
|
|
|
83
|
|
|
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
261
|
|
|
|
238
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding
|
|
|
11,060
|
|
|
|
11,009
|
|
|
|
10,791
|
|
|
|
10,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per common share
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share is computed by dividing the net income (loss), less preferred dividends,
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 income (loss) 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 and warrants, convertible preferred stock, and selected restricted shares of
common stock excluded from the income per share calculation amounted to 1.7 million and 1.0 million in each of the three and nine month periods ended September 30, 2016 and 2015, respectively, because the awards were anti-dilutive.
(10)
Accumulated Other Comprehensive Loss
Changes to accumulated other comprehensive loss during the nine months ended September 30, 2016 were as follows (in thousands):
|
|
|
|
|
|
|
Translation
Adjustment
|
|
BalanceDecember 31, 2015
|
|
$
|
(1,162
|
)
|
Current period other comprehensive loss
|
|
|
(2,863
|
)
|
|
|
|
|
|
BalanceSeptember 30, 2016
|
|
$
|
(4,025
|
)
|
|
|
|
|
|
16
(11)
Stock-Based Compensation
Stock-based compensation expense was $0.3 million and $0.5 million for the three months ended September 30, 2016 and 2015, respectively.
Stock-based compensation expense for the nine months ended September 30, 2016 and 2015 was $0.8 million and $1.4 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 options as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Cost of revenues
|
|
$
|
94
|
|
|
$
|
17
|
|
|
$
|
152
|
|
|
$
|
58
|
|
Sales and marketing
|
|
|
17
|
|
|
|
10
|
|
|
|
48
|
|
|
|
28
|
|
Research and development
|
|
|
23
|
|
|
|
353
|
|
|
|
(14
|
)
|
|
|
961
|
|
General and administrative
|
|
|
195
|
|
|
|
110
|
|
|
|
618
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
329
|
|
|
$
|
490
|
|
|
$
|
804
|
|
|
$
|
1,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received for option exercises was $0.1 million for the nine months ended September 30, 2015. There were
no option exercises in the nine months ended September 30, 2016.
Juniper granted 642,500 and 247,000 stock options to employees during
the nine months ended September 30, 2016 and 2015, respectively.
Juniper granted 42,203 and 461 restricted shares to non-employee
directors during the nine months ended September 30, 2016 and 2015, respectively.
Juniper granted 243,000 stock options to non-employees
during the nine months ended September 30, 2015. No stock options were granted to non-employees during the nine months ended September 30, 2016.
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. During the three months ended September 30, 2016 the Company recorded a reduction of stock-based compensation expense of $29,000
for non-employee options as a result of impacts of changes in the fair value of the options during the period. During the three months ended September 30, 2015 the Company recorded stock-based compensation expense of $0.3 million for
non-employee options. During the nine months ended September 30, 2016 the Company recorded a reduction of stock-based compensation expense of $0.2 million for non-employee options, as a result of impacts of changes in the fair value of the
options during the period. During the nine months ended September 30, 2015 the Company recorded stock-based compensation expense of $0.9 million for non-employee options. The stock-based compensation expense recorded for non-employees is
reflected in the research and development line of the statement of operations. The remaining options will be re-measured over a 6 month period.
The Company uses the Black-Scholes option pricing model to determine the estimated grant date fair values for stock-based awards.
The weighted-average grant date fair values of options granted to employees during the nine months ended September 30, 2016 and 2015 were
$4.71 and $3.89, respectively, using the following assumptions:
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
Risk free interest rate
|
|
0.85% - 1.14%
|
|
0.87% - 1.06%
|
Expected term
|
|
4.75 years
|
|
4.56 4.75 years
|
Dividend yield
|
|
|
|
|
Expected volatility
|
|
78.08% - 79.29%
|
|
76.76% - 78.04%
|
17
There were no options granted to non-employees during the nine months ended September 30,
2016. The weighted-average grant date fair values of the options granted to non-employees during the nine months ended September 30, 2015 were $4.52, respectively, using the following assumptions:
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
|
2015
|
Risk free interest rate
|
|
|
|
|
|
1.47%-1.54%
|
Expected term
|
|
|
|
|
|
7 years
|
Dividend yield
|
|
|
|
|
|
|
Expected volatility
|
|
|
|
|
|
82.88%-83.09%
|
Option-pricing models require the input of various subjective assumptions, including the options
expected life and the price volatility of the underlying stock. Junipers estimated expected stock price volatility is based on its own historical volatility. Junipers expected term of options granted during the nine months ended
September 30, 2016 and 2015 was derived using the simplified method for employees and the contractual term of the option for non-employees. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at
the time of grant.
As of September 30, 2016, the total unrecognized compensation cost related to outstanding stock options and restricted
stock awards expected to vest was $4.3 million, which the Company expects to recognize over a weighted-average period of 2.88 years.
(12)
Fair Value
of Financial Instruments
U.S. GAAP establishes a framework for measuring fair value under generally accepted accounting principles 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 September 30, 2016 and December 31, 2015.
The fair values of accounts receivable and accounts payable approximate their respective carrying amounts. The Companys 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.
(13)
Income Taxes
During the three
months ended September 30, 2016 Juniper recorded an income tax benefit of $5,000 representing an effective tax rate of (2.1)%. During the three months ended September 30, 2015, Juniper recorded income tax expense of $3,000, representing an effective
tax rate of 0.8%. During the nine months ended September 30, 2016 and 2015, Juniper recorded income tax expense of $47,000 and $11,000, respectively, representing an effective tax rate of (1.3)% and (2.2)%, respectively. The income tax provision for
the three and nine months ended September 30, 2016, is primarily attributable to alternative minimum taxes and state minimum taxes owed. The income tax provision for the three and nine months ended September 30, 2015, is primarily attributable to
state minimum taxes owed.
Juniper files income tax returns in the U.S. federal jurisdiction, and in various state and foreign
jurisdictions. Juniper is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to 2012. Additionally, with few exceptions, Juniper is no longer subject to U.S. state tax examinations for years prior to 2012.
18
(14)
Recent Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09,
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The standard is intended to simplify several areas of accounting for share-based compensation arrangements,
including the income tax impact, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December
15, 2016, and early adoption is permitted. The Company is currently evaluating the method and impact that the adoption will have on its 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.
In January 2016, the FASB issued ASU No.
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 becomes effective for Juniper beginning in the first quarter of 2018 and early adoption is permitted. The Company is currently evaluating the method and impact that the adoption will have on its consolidated financial
statements and related disclosures.
In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17). The standard requires that deferred tax assets and liabilities be classified as
noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the
standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company is currently evaluating the method and impact that the adoption will have on its consolidated financial statements and
related disclosures.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU
simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods
therein. The Company is currently evaluating the method and impact that the adoption will have on the Companys consolidated financial statements and related disclosures.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements Going Concern (ASU
2014-15). The provisions of ASU 2014-15 require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically,
the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require
certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a
period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods
thereafter. The Company does not believe this ASU will have an impact on its financial statements except for disclosure requirements.
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. The standards 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. In doing so, companies will need to use more judgment and make more estimates than under
todays guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance
obligation. In July 2015, the FASB approved a one year delay for the effective date of the revenue standard. The
19
guidance is effective for the Company beginning January 1, 2018 and, at that time the Company may adopt the new standard under the full retrospective approach or the modified retrospective
approach. Early adoption is not permitted. The Company is currently evaluating the method and impact that the adoption of ASU 2014-09 will have on its consolidated financial statements and related disclosures.
(15)
Subsequent Event
In November 2016,
the company entered into an agreement with Allergan, Inc., its U.S partner for Crinone, to monetize future royalty payments due to Juniper. Under the agreement, Juniper will receive a one-time payment of $11 million representing future royalty
amounts payable.
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
This Quarterly Report on Form 10-Q 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 futureincluding 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 developmentare 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 Companys historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in our Annual Report on Form 10-K/A for the year ended December 31,
2015, those described in this Quarterly Report on Form 10-Q, 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.
Restatement of the Consolidated Financial Statements
Background
On October 18, 2016,
during the course of responding to a comment letter from the staff of the U.S. Securities and Exchange Commission, we determined that our audited consolidated financial statements for the fiscal years ended December 31, 2013 through
December 31, 2015, including the unaudited consolidated financial information for each quarterly period within the fiscal years ended December 31, 2014 and 2015, as reported in our Annual Report on Form 10-K filed on March 10, 2016
and amended on April 22, 2016, and our unaudited condensed consolidated financial statements for the quarters ended March 31, 2016 and June 30, 2016, and the related quarters in 2015, as reported in our Quarterly Reports on Form 10-Q
filed on May 4, 2016 and August 4, 2016, respectively, should no longer be relied upon due to an error identified therein, and that a restatement of these financial statements is required.
The revenue related errors relate to the determination that a portion of the invoice price of product sold under our supply agreement with
Ares Trading S.A. (an affiliate of Merck KGaA, Darmstadt, Germany (Merck KGaA)) is considered contingent, and therefore not fixed or determinable at the time of shipment. Our previous practice was to record revenue at the time of
shipment based on the invoice price, with an adjustment to increase or decrease revenue upon completion of the quarterly reconciliation process. Accordingly, correction of the revenue errors will result in a timing difference for the contingent
portion of revenue from our original methodology. We currently expect that, under the corrected methodology, revenue will be recognized in the period product is shipped to Merck KGaA for the fixed portion only (direct manufacturing cost plus 20%)
with the contingent portion of the invoice price initially recorded as deferred revenue and subsequently recognized upon completion of a quarterly reconciliation process that occurs after receiving sell-through information from Merck KGaA on a
country-by-country basis.
Additionally, we have a contract related to a COL-1077 clinical trial which has been in place since May 2015.
During the course of compiling our results for the quarter ended September 30, 2016, we identified certain research and development expenses which had been incurred during the year ended December 31, 2015, and research and development expenses
incurred during the three months ended March 31, 2016 and June 30, 2016 which had not been properly recorded in the periods to which the expenses related. The restatement reflects the recognition of addition research and development expense in
the affected periods, with corresponding adjustments to prepaid expenses and other current assets, and accrued expenses related to those amounts. The additional research and
20
development expenses incurred during the year ended December 31, 2015 were incurred during the three month period ended December 31, 2015, and therefore did not have an impact on the consolidated
statements of operations or consolidated statement of comprehensive income (loss) for the three and nine month period ended September 30, 2015 or the consolidated statement of cash flows for the nine months ended September 30, 2015. The
balances of prepaid expenses and other current assets and accrued expenses in the consolidated balance sheet as of December 31, 2015 have been restated to reflect these corrections.
In connection with the restatement, the Company also recorded an adjustment related to cost of product revenues which was previously concluded
to be immaterial. The adjustment was to increase cost of product revenues for the three month and nine month period ended September 30, 2015. A corresponding adjustment to reduce cost of product revenues in the same amount was recorded in the
three month period ended December 31, 2015 and accordingly did not have an impact on the twelve months ended December 31, 2015.
The effects of the restatement on our consolidated balance sheet as of December 31, 2015 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
Consolidated Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
$
|
1,674
|
|
|
$
|
(802
|
)
|
|
$
|
872
|
|
Total current assets
|
|
|
26,736
|
|
|
|
(802
|
)
|
|
|
25,934
|
|
Total assets
|
|
|
51,379
|
|
|
|
(802
|
)
|
|
|
50,577
|
|
Accrued expenses and other
|
|
|
4,158
|
|
|
|
(728
|
)
|
|
|
3,430
|
|
Deferred revenue
|
|
|
1,336
|
|
|
|
2,831
|
|
|
|
4,167
|
|
Total current liabilities
|
|
|
7,736
|
|
|
|
2,103
|
|
|
|
9,839
|
|
Total liabilities
|
|
|
11,412
|
|
|
|
2,103
|
|
|
|
13,515
|
|
Accumulated deficit
|
|
|
(240,406
|
)
|
|
|
(2,905
|
)
|
|
|
(243,311
|
)
|
Total stockholdersequity
|
|
|
39,417
|
|
|
|
(2,905
|
)
|
|
|
36,512
|
|
Total liabilities and stockholders equity
|
|
|
51,379
|
|
|
|
(802
|
)
|
|
|
50,577
|
|
The tables below show the effects of the restatement on our consolidated statements of operations,
consolidated statements of comprehensive (loss) income and consolidated statement of cash flows for the three and nine months ended September 30, 2015 (in thousands except per share data). In each case, the tax effect of the adjustments was
considered insignificant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2015
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
7,197
|
|
|
$
|
(462
|
)
|
|
$
|
6,735
|
|
Total revenues
|
|
|
11,455
|
|
|
|
(462
|
)
|
|
|
10,993
|
|
Cost of product revenues
|
|
|
4,069
|
|
|
|
123
|
|
|
|
4,192
|
|
Total cost of revenues
|
|
|
6,430
|
|
|
|
123
|
|
|
|
6,553
|
|
Gross profit
|
|
|
5,025
|
|
|
|
(585
|
)
|
|
|
4,440
|
|
Income from operations
|
|
|
869
|
|
|
|
(585
|
)
|
|
|
284
|
|
Income before taxes
|
|
|
956
|
|
|
|
(585
|
)
|
|
|
371
|
|
Net income
|
|
|
953
|
|
|
|
(585
|
)
|
|
|
368
|
|
Basis net income per share
|
|
$
|
0.09
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.03
|
|
Diluted net per share
|
|
$
|
0.09
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.03
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
953
|
|
|
$
|
(585
|
)
|
|
$
|
368
|
|
Comprehensive income (loss)
|
|
|
147
|
|
|
|
(585
|
)
|
|
|
(438
|
)
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015
|
|
|
|
As Previously
Reported
|
|
|
Restatement
Adjustments
|
|
|
As Restated
|
|
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
18,707
|
|
|
$
|
(332
|
)
|
|
$
|
18,375
|
|
Total revenues
|
|
|
29,994
|
|
|
|
(332
|
)
|
|
|
29,662
|
|
Cost of product revenues
|
|
|
10,702
|
|
|
|
123
|
|
|
|
10,825
|
|
Total cost of revenues
|
|
|
16,878
|
|
|
|
123
|
|
|
|
17,001
|
|
Gross profit
|
|
|
13,116
|
|
|
|
(455
|
)
|
|
|
12,661
|
|
Loss from operations
|
|
|
(295
|
)
|
|
|
(455
|
)
|
|
|
(750
|
)
|
Loss before taxes
|
|
|
(54
|
)
|
|
|
(455
|
)
|
|
|
(509
|
)
|
Net loss
|
|
|
(65
|
)
|
|
|
(455
|
)
|
|
|
(520
|
)
|
Basis net loss per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
Diluted net loss per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
Consolidated Statement of Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(65
|
)
|
|
$
|
(455
|
)
|
|
$
|
(520
|
)
|
Comprehensive loss
|
|
|
(629
|
)
|
|
|
(455
|
)
|
|
|
(1,084
|
)
|
|
|
|
|
Consolidated Statement of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(65
|
)
|
|
$
|
(455
|
)
|
|
$
|
(520
|
)
|
Inventories
|
|
|
94
|
|
|
|
123
|
|
|
|
217
|
|
Deferred revenue
|
|
|
(129
|
)
|
|
|
332
|
|
|
|
203
|
|
Company Overview
We are a womens health therapeutics company focused on developing therapeutics that address unmet medical needs in womens health.
Our pipeline of product development programs utilizes a proprietary multi-segment intravaginal ring (IVR) drug delivery technology. The IVR technology allows for the delivery of one or more drugs in a single segmented ring to potentially
address both acute and chronic conditions.
Our objective is to be a leader in the discovery, development, and commercialization of
therapeutics designed to treat unmet medical needs in womens health. Key elements of our strategy include:
|
|
|
Advancing preclinical product candidates targeting overactive bladder, hormone replacement therapy, and the prevention of preterm birth into clinical development;
|
|
|
|
Supplying Crinone to our commercial partner, Merck KGaA, Darmstadt, Germany (Merck KGaA), for sale in over 90 countries around the world;
|
|
|
|
Growing revenue from our formulation, analytical and product development capabilities at our pharmaceutical service business, Juniper Pharma Services (JPS), and deploying that same capability for the
advancement of our in-house product candidates; and
|
|
|
|
Identifying and pursuing business development collaborations, including co-development opportunities that leverage our IVR technology and the pharmaceutical development capabilities of JPS for life-cycle management of
existing commercial pharmaceutical products.
|
We are applying the cash flow generated from our core business operations,
Crinone and JPS, to support the advancement of our product development programs. We believe this strategy positions us well for effective and capital-efficient growth.
22
Product Development:
We are developing a pipeline of proprietary products to treat unmet medical needs in womens health. The following table includes the
programs that we currently believe are significant to our business:
|
|
|
|
|
Product Candidate
|
|
Indication/Field
|
|
Status
|
|
|
|
PRECLINICAL
|
|
|
|
|
JNP-0101 - Oxybutynin IVR
|
|
Overactive bladder in women
|
|
Preclinical
|
JNP-0201 - Progesterone + Estradiol IVR
|
|
Hormone replacement therapy
|
|
Preclinical
|
JNP-0301 - Progesterone IVR
|
|
Prevention of preterm birth
|
|
Preclinical
|
The expenditures that will be necessary to execute our business plan are subject to numerous uncertainties.
Completion of clinical trials may take several years or more, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate. It is not unusual for the clinical development of
these types of product candidates to each take three years or more, and for total development costs to exceed $25 million for each product candidate. We estimate that clinical trials of the type we generally conduct are typically completed over the
following timelines:
|
|
|
Clinical Phase
|
|
Estimated
Completion
Period
|
Phase 1
|
|
1 - 2 Years
|
Phase 2
|
|
1 - 3 Years
|
Phase 3
|
|
1 - 3 Years
|
The duration and the cost of clinical trials may vary significantly over the life of a project as a result of
differences arising during the clinical trial protocol, including, among others, the following:
|
|
|
the number of patients that ultimately participate in the trial;
|
|
|
|
the duration of patient follow-up that seems appropriate in view of results;
|
|
|
|
the number of clinical sites included in the trials;
|
|
|
|
the length of time required to enroll suitable patient subjects; and
|
|
|
|
the efficacy and safety profile of the product candidate.
|
We generally will test potential
product candidates in preclinical studies for safety, toxicology and immunogenicity in addition to utilizing already published data for the underlying active pharmaceutical ingredient. We may then conduct multiple clinical trials for each product
candidate. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain product candidates in order to focus our resources on more promising product candidates.
An element of our business strategy is to pursue the research and development of a broad portfolio of product candidates. This is intended to
allow us to diversify the risks associated with our research and development expenditures. To the extent we are unable to maintain a broad range of product candidates, our dependence on the success of one or a few product candidates increases.
Regulatory approval is required before we can market our product candidates as therapeutic products. In order to proceed to subsequent
clinical trial stages and to ultimately achieve regulatory approval, the regulatory agency must conclude that our clinical data is safe and effective. Results from preclinical testing and early clinical trials (through Phase 2) may often not be
predictive of results obtained in later clinical trials. In various pharmaceutical companies like ours, a number of new drugs have shown promising results in early clinical trials, but subsequently failed to establish sufficient safety and efficacy
data to obtain necessary regulatory approvals.
Our business strategy includes the option of entering into collaborative arrangements with
third parties to complete the development and commercialization of our product candidates. In the event that third parties take over the clinical trial process for one of our product candidates, the estimated completion date would largely be under
control of that third party rather than us. We cannot forecast with any degree of certainty which proprietary products, if any, will be subject to future collaborative arrangements, in whole or in part, and how such arrangements would affect our
development plan or capital requirements.
As a result of the uncertainties discussed above, among others, it is difficult to accurately
estimate the duration and completion costs of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the
23
commercialization and sale of a product. Our inability to complete our research and development projects in a timely manner or our failure to enter into collaborative agreements, when
appropriate, could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek additional, external sources of financing from time to time in order to continue with our
business strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.
In August 2016, we announced that the Phase 2b clinical trial evaluating COL-1077, 10% lidocaine bioadhesive vaginal gel, for the reduction of
pain intensity in women undergoing an endometrial biopsy with tenaculum placement did not achieve its primary and secondary endpoints. The safety and pharmacokinetic (PK) profiles of COL-1077 were consistent with what has been observed in prior
clinical trials of the lidocaine bioadhesive vaginal gel. Based on this study outcome we concluded that further development of COL-1077 would be discontinued with resources to be deployed on our other preclinical programs.
Preclinical Programs
JNP-0101 - Oxybutynin
IVR for the treatment of OAB
We are developing 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, and oral oxybutynin is first line therapy for most women, however, oral oxybutynin therapy is frequently discontinued 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 be delivered to local tissues in higher concentrations,
and bypass first pass hepatic metabolism issues (where a drug is metabolized in the liver resulting in reduced drug availability and/or metabolites that can cause side effects).
JNP-0201 - Progesterone and Estradiol IVR for HRT
Our segmented IVR product candidate for hormone replacement therapy (HRT) in menopausal women will contain separate natural progesterone and
estradiol segments. We believe our delivery approach will provide an improved side effect profile when compared to the currently approved combination HRT therapies; these include orally administered formulations utilizing synthetic hormones, 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. This product candidate is currently in preclinical development.
24
JNP-0301 - Progesterone IVR for the prevention of PTB
JNP-0301 is a natural progesterone IVR product candidate for the prevention of preterm birth in women with a short cervical length. Short
cervical length at mid-pregnancy is a critical predictor of preterm birth (PTB) in women, and 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 FDA approved product 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. This product candidate is currently in preclinical development, and we expect to continue our work on determining the clinical and regulatory pathway for a vaginal progesterone
therapy for this indication.
Crinone:
Crinone is a vaginal progesterone gel designed to be used for progesterone supplementation or replacement as part of assisted reproductive
technology (ART) for infertile women with progesterone deficiency. Crinone is approved for marketing in the United States, Europe, and certain other markets. We licensed Crinone to our commercial partner, Merck KGaA, for markets outside
the United States, and we sold the U.S. intellectual property rights to Crinone to Allergan Plc (Allergan) in 2010.
Crinone
continues to be introduced in new countries by Merck KGaA. Under the terms of our current license and supply agreement with Merck KGaA, we manufacture and sell Crinone to Merck KGaA on a country-by-country basis at the greater of (i) cost plus 20%
or (ii) a percentage of Merck KGaAs net selling price. Additionally, we are jointly cooperating with Merck KGaA to evaluate and implement manufacturing cost reductions, with both parties sharing any benefits realized from these initiatives.
The license and supply agreement with Merck KGaA was renewed in April 2013, extending the expiration date to May 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 of converting the agreement into a license agreement and will be free to manufacture, or have manufactured, Crinone pursuant to the terms set forth in the current license and supply agreement.
Product revenues include sales of Crinone to Merck KGaA and royalty revenues from Allergan based on its U.S. sales of Crinone.
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.
JPS provides expertise 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. The JPS model allows us to
take product candidates from early development through clinical trials manufacturing. These same capabilities are also deployed for our in-house proprietary product development activities. We also support our customers with advanced analytical
and consulting services for intellectual property defense.
Through JPS, we also manage the global supply chain and contract manufacturing
of Crinone, for our partner Merck KGaA.
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. In particular, existing commercial products that are injectable, experience poor compliance, or have systemic toxicity limitations may benefit from our delivery technologies.
We are actively exploring business development collaborations that will leverage the IVR technology and in-house expertise at JPS. We expect
to be an active participant in these collaborations, including participating as a co-development partner, depending on the product and market opportunity.
25
Sources of Revenue
We generate revenues primarily from the sale of our products and services and from our royalty stream. During the three months ended September
30, 2016, we derived approximately 61% of our revenues from the sale of our products, 29% from the sale of our services, and 10% from our royalty stream. During the three months ended September 30, 2015, we derived approximately 61% of our revenues
from the sale of our products, 29% from the sale of our services, and 10% from our royalty stream. During the nine months ended September 30, 2016, we derived approximately 61% of our revenues from the sale of our products, 30% from the sale of our
services, and 9% from our royalty stream. During the nine months ended September 30, 2015, we derived approximately 62% of our revenues from the sale of our products, 28% from the sale of our services, and 10% from our royalty stream.
We expect that revenues will continue to be derived from product sales to Merck KGaA, a royalty stream from Allergan, and from our service
business. 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 a portion of revenue recognized each period relates to Merck KGaAs in-market
sales and (ii) service revenues are driven by contracting and maintaining an active backlog of customer projects, which may vary widely from quarter to quarter.
We recognize revenue from the sale of our products to Merck KGaA when all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred; the price is fixed or determinable; and collectability is reasonably assured. Revenues from services are recognized as the work is performed, and revenues from royalties are recognized as sales are
made by Allergan.
Results of Operations Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015
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 months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
(in thousands, except for percentages)
|
|
Amount
|
|
|
As a % of
Total
Revenues
|
|
|
Amount
|
|
|
As a % of
Total
Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Product revenues
|
|
$
|
7,057
|
|
|
|
61
|
%
|
|
$
|
6,735
|
|
|
|
61
|
%
|
|
$
|
322
|
|
|
|
5
|
%
|
Service revenues
|
|
|
3,337
|
|
|
|
29
|
|
|
|
3,218
|
|
|
|
29
|
|
|
|
119
|
|
|
|
4
|
|
Royalties
|
|
|
1,162
|
|
|
|
10
|
|
|
|
1,040
|
|
|
|
10
|
|
|
|
122
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
11,556
|
|
|
|
100
|
|
|
|
10,993
|
|
|
|
100
|
|
|
|
563
|
|
|
|
5
|
|
Cost of product revenues
|
|
|
3,683
|
|
|
|
32
|
|
|
|
4,192
|
|
|
|
38
|
|
|
|
(509
|
)
|
|
|
(12
|
)
|
Cost of service revenues
|
|
|
2,022
|
|
|
|
17
|
|
|
|
2,361
|
|
|
|
21
|
|
|
|
(339
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
5,705
|
|
|
|
49
|
|
|
|
6,553
|
|
|
|
60
|
|
|
|
(848
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
5,851
|
|
|
|
51
|
|
|
|
4,440
|
|
|
|
40
|
|
|
|
1,411
|
|
|
|
32
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
259
|
|
|
|
2
|
|
|
|
338
|
|
|
|
3
|
|
|
|
(79
|
)
|
|
|
(23
|
)
|
Research and development
|
|
|
2,304
|
|
|
|
20
|
|
|
|
1,598
|
|
|
|
15
|
|
|
|
706
|
|
|
|
44
|
|
General and administrative
|
|
|
3,111
|
|
|
|
27
|
|
|
|
2,220
|
|
|
|
20
|
|
|
|
891
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
5,674
|
|
|
|
49
|
|
|
|
4,156
|
|
|
|
38
|
|
|
|
1,518
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
177
|
|
|
|
2
|
|
|
|
284
|
|
|
|
3
|
|
|
|
(107
|
)
|
|
|
(38
|
)
|
Interest expense, net
|
|
|
(24
|
)
|
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
3
|
|
|
|
(11
|
)
|
Other income, net
|
|
|
90
|
|
|
|
1
|
|
|
|
114
|
|
|
|
1
|
|
|
|
(24
|
)
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
243
|
|
|
|
2
|
|
|
|
371
|
|
|
|
3
|
|
|
|
(128
|
)
|
|
|
(35
|
)
|
(Benefit from) provision for income taxes
|
|
|
(5
|
)
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
(267
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
248
|
|
|
|
2
|
%
|
|
$
|
368
|
|
|
|
3
|
%
|
|
$
|
(120
|
)
|
|
|
(33
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
7,057
|
|
|
$
|
6,735
|
|
|
$
|
322
|
|
|
|
5
|
%
|
Service revenues
|
|
|
3,337
|
|
|
|
3,218
|
|
|
|
119
|
|
|
|
4
|
|
Royalties
|
|
|
1,162
|
|
|
|
1,040
|
|
|
|
122
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
11,556
|
|
|
$
|
10,993
|
|
|
$
|
563
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues in the three months ended September 30, 2016 increased by $0.6 million, or 5%, compared to the three
months ended September 30, 2015. The increase was primarily attributable to the following factors by segment:
Product
(As Restated)
|
|
|
Revenues from the sale of Crinone, increased by approximately $0.3 million, or 5%, from the 2015 period primarily due to both in-market and new market growth by Merck KGaA. Revenues included $4.9 million related to
product shipped to Merck KGaA and $2.2 million related to product sold through by Merck KGaA to its customers in the three months ended September 30, 2016. Revenues included $5.8 million related to product shipped to Merck KGaA and $0.9 million
related to product sold through by Merck KGaA to its customers in the three months ended September 30, 2015.
|
|
|
|
Royalty revenues increased $0.1 million, or 12% in the three months ended September 30, 2016 as compared to the three months ended September 30, 2015.
|
Service
|
|
|
Service revenues increased approximately $0.1 million, or 4%, from the 2015 period primarily due to increases in customer volume across our service offerings and a sales focus on larger customer contracts.
|
Cost of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Cost of product revenues
|
|
$
|
3,683
|
|
|
$
|
4,192
|
|
|
$
|
(509
|
)
|
|
|
(12
|
)%
|
Cost of service revenues
|
|
|
2,022
|
|
|
|
2,361
|
|
|
|
(339
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
$
|
5,705
|
|
|
$
|
6,553
|
|
|
$
|
(848
|
)
|
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues (as a percentage of total revenues)
|
|
|
49
|
%
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
Product gross margin
|
|
|
55
|
%
|
|
|
46
|
%
|
|
|
|
|
|
|
|
|
Service gross margin
|
|
|
39
|
%
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
Total cost of revenues was $5.7 million and $6.6 million for the three month periods ended September 30,
2016 and 2015, respectively. The decrease in total cost of revenues in 2016 was largely driven by the decreased volume of Crinone product sold to Merck KGaA in addition to a reduction in the per unit cost year over year. There was a 5% decrease
in Crinone units shipped in the 2016 period as compared to the 2015 period.
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. Personnel costs are scaled to support customer volume.
Product gross margin, including royalty income, increased in 2016 as compared to 2015 largely due to the increase in product sold through by
Merck KGaA to its customers in more profitable markets where we benefit from a higher selling price from Merck KGaA. Service gross margin increased in 2016 as compared to 2015 due to mix of revenue type within the service segment and increased
capacity utilization.
27
Sales and marketing expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Sales and marketing
|
|
$
|
259
|
|
|
$
|
338
|
|
|
$
|
(79
|
)
|
|
|
(23
|
)%
|
Sales and marketing (as a percentage of total revenues)
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
Sales and marketing expenses incurred during the three months ended September 30, 2016 and 2015 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 decrease in sales and marketing expense in the 2016 period as compared to the
2015 period primarily relates to a reduction in travel expenses offset by investment in the U.S. market in 2016.
28
Research and development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
2,304
|
|
|
$
|
1,598
|
|
|
$
|
706
|
|
|
|
44
|
%
|
Research and development (as a percentage of total revenues)
|
|
|
20
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
The increase in research and development costs incurred during the three months ended September 30, 2016
and 2015 were largely associated with the phase 2b clinical trial of COL-1077 which was completed in August 2016. The 2016 expense primarily includes clinical trial costs, personnel-related expenses, and professional service consultants. In March
2015, Drs. Robert Langer and William Crowley joined as strategic advisors to our Company and we recorded $0.3 million of stock-based compensation expense for the three months ended September 30, 2015 in connection with their
agreements. For the three months ended September 30, 2016, as a result of changes in underlying fair value of options we recorded a reduction of stock-based compensation expense of $29,000. As we continue to advance our pipeline product
candidates, we expect corresponding increases in research and development costs.
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
3,111
|
|
|
$
|
2,220
|
|
|
$
|
891
|
|
|
|
40
|
%
|
General and administrative (as a percentage of total revenues)
|
|
|
27
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
General and administrative expenses increased by $0.9 million to $3.1 million for the three months ended
September 30, 2016, compared with $2.2 million for the three months ended September 30, 2015. This increase was attributable principally to costs associated with the creation of an internal business development function that was not in place in
2015, in addition to other administrative personnel costs, professional service costs, facility costs, and other costs associated with Company growth.
Non-operating income and expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
Interest expense, net
|
|
$
|
(24
|
)
|
|
$
|
(27
|
)
|
|
$
|
3
|
|
|
|
(11
|
)%
|
Other income, net
|
|
$
|
90
|
|
|
$
|
114
|
|
|
$
|
(24
|
)
|
|
|
(21
|
)%
|
Interest expense, net, primarily relates to interest payments denominated in British pounds, associated with
loan facilities assumed in the acquisition of JPS.
Other income, primarily relates to the income associated with the Regional Growth Fund
offset by net foreign currency transaction losses related to the weakening of the Euro and British pound against the U.S dollar.
29
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
(5
|
)
|
|
$
|
3
|
|
|
$
|
(8
|
)
|
|
|
(267
|
)%
|
Provision for income taxes (as a percentage of income (loss) before income taxes)
|
|
|
(2.1
|
)%
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
The 2016 tax expense represents alternative minimum taxes and state minimum taxes owed. The 2015 tax
expense represents state minimum taxes owed. We have a full valuation allowance offsetting our net domestic deferred tax asset.
Results of
Operations Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015
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 nine months ended September 30, 2016 and 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
(in thousands, except for percentages)
|
|
Amount
|
|
|
As a % of
Total
Revenues
|
|
|
Amount
|
|
|
As a % of
Total
Revenues
|
|
|
$
Change
|
|
|
%
Change
|
|
Product revenues
|
|
$
|
20,716
|
|
|
|
61
|
%
|
|
$
|
18,375
|
|
|
|
62
|
%
|
|
$
|
2,341
|
|
|
|
13
|
%
|
Service revenues
|
|
|
9,964
|
|
|
|
30
|
|
|
|
8,392
|
|
|
|
28
|
|
|
|
1,572
|
|
|
|
19
|
|
Royalties
|
|
|
2,963
|
|
|
|
9
|
|
|
|
2,895
|
|
|
|
10
|
|
|
|
68
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
33,643
|
|
|
|
100
|
|
|
|
29,662
|
|
|
|
100
|
|
|
|
3,981
|
|
|
|
13
|
|
Cost of product revenues
|
|
|
11,892
|
|
|
|
35
|
|
|
|
10,825
|
|
|
|
36
|
|
|
|
1,067
|
|
|
|
10
|
|
Cost of service revenues
|
|
|
6,630
|
|
|
|
20
|
|
|
|
6,176
|
|
|
|
21
|
|
|
|
454
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
18,522
|
|
|
|
55
|
|
|
|
17,001
|
|
|
|
57
|
|
|
|
1,521
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
15,121
|
|
|
|
45
|
|
|
|
12,661
|
|
|
|
43
|
|
|
|
2,460
|
|
|
|
19
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
910
|
|
|
|
3
|
|
|
|
941
|
|
|
|
3
|
|
|
|
(31
|
)
|
|
|
(3
|
)
|
Research and development
|
|
|
8,234
|
|
|
|
24
|
|
|
|
5,114
|
|
|
|
17
|
|
|
|
3,120
|
|
|
|
61
|
|
General and administrative
|
|
|
9,815
|
|
|
|
29
|
|
|
|
7,356
|
|
|
|
25
|
|
|
|
2,459
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
18,959
|
|
|
|
56
|
|
|
|
13,411
|
|
|
|
45
|
|
|
|
5,548
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(3,838
|
)
|
|
|
(11
|
)
|
|
|
(750
|
)
|
|
|
(3
|
)
|
|
|
(3,088
|
)
|
|
|
412
|
|
Interest expense, net
|
|
|
(74
|
)
|
|
|
|
|
|
|
(81
|
)
|
|
|
|
|
|
|
7
|
|
|
|
(9
|
)
|
Other income, net
|
|
|
296
|
|
|
|
1
|
|
|
|
322
|
|
|
|
1
|
|
|
|
(26
|
)
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(3,616
|
)
|
|
|
(11
|
)
|
|
|
(509
|
)
|
|
|
(2
|
)
|
|
|
(3,107
|
)
|
|
|
610
|
|
Provision for income taxes
|
|
|
47
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
36
|
|
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,663
|
)
|
|
|
(11
|
)%
|
|
$
|
(520
|
)
|
|
|
(2
|
)
|
|
$
|
(3,143
|
)
|
|
|
604
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
20,716
|
|
|
$
|
18,375
|
|
|
$
|
2,341
|
|
|
|
13
|
%
|
Service revenues
|
|
|
9,964
|
|
|
|
8,392
|
|
|
|
1,572
|
|
|
|
19
|
|
Royalties
|
|
|
2,963
|
|
|
|
2,895
|
|
|
|
68
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
33,643
|
|
|
$
|
29,662
|
|
|
$
|
3,981
|
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
Revenues in the nine months ended September 30, 2016 increased by $4.0 million, or 13%, compared
to the nine months ended September 30, 2015. The increase was primarily attributable to the following factors by segment:
Product (As Restated)
|
|
|
Revenues from the sale of Crinone, increased by approximately $2.3 million, or 13%, from the 2015 period primarily due to both in-market and new market growth by Merck KGaA. Revenues included $15.2 million related
to product shipped to Merck KGaA and $5.5 million related to product sold through by Merck KGaA to its customers in the nine months ended September 30, 2016. Revenues included $14.6 million related to product shipped to Merck KGaA and $3.8
million related to product sold through by Merck KGaA to its customers in the nine months ended September 30, 2015.
|
|
|
|
Royalty revenues increased $68,000, or 2%, for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015.
|
Service
|
|
|
Service revenues increased approximately $1.6 million, or 19%, from the 2015 period primarily due to increases in customer volume across our service offerings.
|
Cost of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Cost of product revenues
|
|
$
|
11,892
|
|
|
$
|
10,825
|
|
|
$
|
1,067
|
|
|
|
10
|
%
|
Cost of service revenues
|
|
|
6,630
|
|
|
|
6,176
|
|
|
|
454
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
$
|
18,522
|
|
|
$
|
17,001
|
|
|
$
|
1,521
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues (as a percentage of total revenues)
|
|
|
55
|
%
|
|
|
57
|
%
|
|
|
|
|
|
|
|
|
Product gross margin
|
|
|
50
|
%
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
Service gross margin
|
|
|
33
|
%
|
|
|
26
|
%
|
|
|
|
|
|
|
|
|
Total cost of revenues was $18.5 million and $17.0 million for the nine month periods ended September 30, 2016
and 2015, respectively. The increase in total cost of revenues in 2016 was largely driven by the increased volume of Crinone product sold to Merck KGaA offset by a reduction in our per unit costs year over year. There was a 17% increase in
Crinone units shipped in the 2016 period as compared to the 2015 period.
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. Personnel costs are scaled to support customer volume.
Product gross margin, including royalty income, remained consistent in 2016 as compared to 2015 due to the increase in product sold through by
Merck KGaA to its customers in more profitable markets where we benefit from a higher selling price from Merck KGaA. Service gross margin increased in 2016 as compared to 2015 due to mix of revenue type within the service segment and increased
capacity utilization.
Sales and marketing expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Sales and marketing
|
|
$
|
910
|
|
|
$
|
941
|
|
|
$
|
(31
|
)
|
|
|
(3
|
)%
|
Sales and marketing (as a percentage of total revenues)
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
Sales and marketing expenses incurred during the nine months ended September 30, 2016 and 2015 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 decrease in sales and marketing expense in the 2016 period as compared to the
2015 period primarily relates to a reduction in travel expenses and a non-recurring corporate recruitment expense in 2015 offset by investment in the U.S. market in 2016.
31
Research and development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
8,234
|
|
|
$
|
5,114
|
|
|
$
|
3,120
|
|
|
|
61
|
%
|
Research and development (as a percentage of total revenues)
|
|
|
24
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
The 2016 expense primarily includes clinical trial costs, personnel-related expenses and professional service
consultants. The increase in research and development costs incurred during the nine months ended September 30, 2016 and 2015 were largely associated with the phase 2b clinical trial of COL-1077 which was completed in August 2016. In March
2015, Drs. Robert Langer and William Crowley joined as strategic advisors to our Company and we recorded $0.9 million of stock-based compensation expense for the nine months ended September 30, 2015 in connection with their agreements. For
the nine months ended September 30, 2016, as a result of changes in underlying fair value of options we recorded a $0.2 million reduction in stock-based compensation expense. As we continue to advance our pipeline product candidates, we
expect corresponding increases in research and development costs.
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
9,815
|
|
|
$
|
7,356
|
|
|
$
|
2,459
|
|
|
|
33
|
%
|
General and administrative (as a percentage of total revenues)
|
|
|
29
|
%
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
General and administrative expenses increased by $2.5 million to $9.8 million for the nine months ended
September 30, 2016, compared with $7.4 million for the nine months ended September 30, 2015. This increase was attributable principally to costs associated with the creation of an internal business development function that was not in place in 2015,
in addition to non-recurring legal, personnel costs, accounting related costs, professional service costs, facility costs, and other costs associated with Company growth.
Non-operating income and expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
Interest expense, net
|
|
$
|
(74
|
)
|
|
$
|
(81
|
)
|
|
$
|
7
|
|
|
|
(9
|
)%
|
Other income, net
|
|
$
|
296
|
|
|
$
|
322
|
|
|
$
|
(26
|
)
|
|
|
(8
|
)%
|
Interest expense, net, primarily relates to interest payments denominated in British pounds, associated with
loan facilities assumed in the acquisition of JPS.
Other income, net primarily relates to the income associated with the Regional Growth
Fund offset by net foreign currency transaction losses related to the weakening of the Euro and British pound against the U.S dollar.
32
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
$
Change
|
|
|
%
Change
|
|
(in thousands, except for percentages)
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
47
|
|
|
$
|
11
|
|
|
$
|
36
|
|
|
|
327
|
%
|
Provision for income taxes (as a percentage of income (loss) before income taxes)
|
|
|
(1.3
|
)%
|
|
|
(2.2
|
)%
|
|
|
|
|
|
|
|
|
The 2016 tax expense represents alternative minimum taxes and state minimum taxes owed. The 2015 tax
benefit represents state minimum taxes owed. Currently, we have a full valuation allowance offsetting our net domestic deferred tax asset.
Liquidity and Capital Resources
We
require cash to pay our operating expenses, including research and development activities, fund working capital needs, make capital expenditures and fund acquisitions.
At September 30, 2016, our cash and cash equivalents were $15.0 million. Our 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, we assumed debt
of $3.9 million in connection with our acquisition of JPS. JPS had entered into a Business Loan Agreement (Loan Agreement) covering three loan facilities with Lloyds TSB Bank (Lloyds) as administrative agent. JPS had drawn
down $3.9 million under the Loan Agreement and as of September 30, 2016 owed a principal balance of $2.6 million. The three loan facilities are each repayable in monthly installments. Repayment began on one facility in February 2013, and the
remaining two commenced in October 2013. All facilities are due for repayment over 15 years from the date of drawdown. Two of the facilities bear interest at the Bank of Englands base rate plus 1.95% and 2.55%, respectively. The interest rate
at September 30, 2016 for these two facilities was 2.45% and 3.05%, respectively. The third facility is a fixed rate agreement bearing interest at 3.52% per annum. The weighted average interest rate for the three loan facilities for the nine months
ended September 30, 2016 was 3.00%. The Loan Agreement is secured by the mortgaged property and other assets of JPS. The Loan Agreement contains financial covenants that limit the amount of indebtedness we may incur, requires us to maintain certain
levels of net worth, and restricts our ability to materially alter the character of JPSs business. As of September 30, 2016, the Company remained in compliance with all of the covenants under the Loan Agreement.
In September 2013, as part of the acquisition of JPS, we assumed a $2.5 million obligation under a grant arrangement with the Regional Growth
Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. JPS used this grant to fund the building of their second facility, which includes analytical labs, office space, and a clinical manufacturing
facility. As a part of the arrangement, JPS is required to create and maintain certain full-time equivalent personnel levels through October 2017. As of September 30, 2016, we remained in compliance with the covenants of the arrangement.
The income from the Regional Growth Fund will be recognized on a decelerated basis over the next two years. As of September 30, 2016, the
obligation is valued at $0.8 million and is recorded as deferred revenue on the consolidated balance sheets. The amount of other income on the obligation that will be recognized provided we remain in compliance with the covenants will be the
following:
(in thousands):
|
|
|
|
|
Year
|
|
Total
|
|
Remainder of 2016
|
|
$
|
208
|
|
2017
|
|
|
622
|
|
|
|
|
|
|
Total
|
|
$
|
830
|
|
|
|
|
|
|
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 for the three months ended September 30, 2016 were $1.1 million compared to $0.7 million for the three months ended
September 30, 2015. Our capital expenditures for the nine months ended September 30, 2016 were $2.3 million compared to $1.2 million for the nine months ended September 30, 2015. Our capital expenditures primarily relate to investments in capital
equipment made at our Nottingham, U.K. site, our contract manufacturer sites and for research and development. We expect our capital expenditures to increase for the remainder of the year ending December 31, 2016, as compared to the year ended
December 31, 2015, primarily due to the expansion of our services business.
33
Research and development expenses include costs for product and clinical development, which were
a combination of internal and third-party costs, and regulatory fees. Our research and development activities continued for COL-1077. For the remainder of 2016, we expect our costs related to COL-1077 to decrease however we expect to continue to
incur costs related to our pre-clinical product candidates JNP-0101, JNP-0201, and JNP-0301.
As of September 30, 2016, we had 521,327
exercisable options outstanding which, if exercised, would result in approximately $3.9 million of additional capital and would cause the number of shares outstanding to increase. The intrinsic value of exercisable options was $25,000 for the nine
months ended September 30, 2016. The intrinsic value of exercisable options was $1.3 million for the nine months ended September 30, 2015.
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 for the foreseeable future.
Cash Flows (As
Restated)
Net cash provided by operating activities for the nine months ended September 30, 2016 was $3.7 million, which resulted
primarily from approximately $2.2 million in depreciation and amortization and stock-based compensation expense and net changes in working capital items, which increased cash by approximately $5.1 million, offset by a $3.7 million net loss. Net cash
used in investing activities was $2.3 million for the nine months ended September 30, 2016, which resulted primarily from the purchase of property plant and equipment. Net cash used in financing activities was approximately $0.2 million for the nine
months ended September 30, 2016, primarily relating to the principal payments on the note (Loan Agreement).
Net cash provided by
operating activities for the nine months ended September 30, 2015 was $2.1 million, which resulted primarily from $2.9 million in depreciation and amortization, $2.6 million in accrued expenses, and $0.5 million in accounts payable, offset by $3.9
million in accounts receivable and prepaid and other current assets. Net cash used in investing activities was $1.2 million for the nine months ended September 30, 2015, which resulted from the purchase of property plant and equipment. Net cash used
in financing activities was approximately $0.1 million for the nine months ended September 30, 2015, primarily relating to the principal payments on the note (Loan Agreement) offset by proceeds from the exercise of common stock options.
Off-Balance Sheet Arrangements
As of
September 30, 2016, we did not have any off-balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(ii).
Contractual Obligations
On October 15, 2015, we entered into a lease agreement for our corporate office in Boston. The initial term of the lease agreement is
approximately 39 months, which includes a three-month free rent period, after which monthly rental payments totaling $430,050 for the first twelve months, $437,100 for the next twelve months and $444,150 for the final twelve months. There have been
no other material changes to our contractual obligations and commitments outside the ordinary course of business from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.
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/A for the year ended December 31, 2015. 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. There have been no material changes to our critical accounting policies as of September 30, 2016.
Revenue Recognition and Sales Returns Reserves (As Restated)
Revenues include product revenues, which primarily consist of sales of CRINONE to Merck KGaA, royalty revenues, which primarily
consist of royalty revenues from Allergan on sales of CRINONE, service revenues, which primarily consist of analytical and consulting services, pharmaceutical development and clinical trial manufacturing services and other revenues.
34
Product Revenue
Revenues from the sale of products are recognized when all of the following criteria are met: persuasive evidence of a sales
arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectibility is reasonably assured. Selling prices to Merck KGaA for CRINONE (progesterone gel) are determined on an annual and
country-by-country basis and are the greater of (i) a percentage of Merck KGaAs estimated net selling price, or (ii) our direct manufacturing cost plus 20% and are invoiced to Merck KGaA upon shipment. We record revenue at the
minimum selling price, which is our direct manufacturing cost plus 20%, at the time of shipment to Merck KGaA as that amount is considered fixed or determinable. We record deferred revenue related to amounts invoiced above the minimum selling
price. Upon receiving sell through information from Merck KGaA on a quarterly and country-by-country basis, we record an adjustment to increase revenue to reflect the difference between Merck KGaAs actual net selling price and the minimum
purchase price recorded at the time of shipment. Any difference between the amounts invoiced at Merck KGaAs estimated net selling price and Merck KGaAs actual net selling price are billed or credited to Merck KGaA in the quarter the
product is sold through by Merck KGaA. Accordingly, product revenue in each period includes both an amount for product shipped to Merck KGaA in the current period recognized at the minimum purchase price as well as an amount for product shipped
by Merck KGaA to its customers in the current period equal to recognized as the difference between Merck KGaAs actual net selling price and the minimum purchase price. Merck KGaA is also entitled to a volume discount based on annual
purchases. We record reserves against revenue on a quarterly basis to reflect the volume discount expected to be earned by Merck KGaA during the year.
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.
Service Revenue
The professional service contracts that we enter into and operate under specifies 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 our engagements can be much longer in duration.
We recognizes substantially all of our professional services revenues under written contracts when the fee is fixed or
determinable, as the services are provided, and only in those situations where collection from the client is reasonably assured. In certain cases we bill clients prior to work being performed, which requires us to defer revenue in accordance with
U.S. GAAP. In these cases, these amounts are deferred until all criteria for recognizing revenue are met.
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.
Service revenues from a majority of our 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. In general, 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 us by our vendors. The proportional performance method is used for fixed-price contracts because 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 our clients. 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.
Royalty
revenues, based on sales by licensees, are recorded as revenues when those sales are made by the licensees.
We maintain
accounts receivable allowances for estimated losses resulting from disputed amounts or the inability of Junipers customers to make required payments. We identify specific collection issues and establish an accounts receivable allowance based
on our historical collection experience, review of client accounts, current trends, and credit policy. If the financial condition of our customers were to deteriorate or disputes were to arise regarding the services provided, resulting in an
impairment of their ability or intent to make payment, additional allowances may be required. A failure to estimate accurately the accounts receivable allowances and ensure that payments are received on a timely basis could have a material adverse
effect on our business, financial condition, and results of operations.
35
We collect value added tax from its customers for revenues generated out of the
United Kingdom for which the customer is not tax exempt and remits such taxes to the appropriate governmental authorities. We present our value added tax on a net basis; therefore, these taxes are excluded from revenues.
Deferred Revenue
Our deferred revenue balance consists of the following (in thousands):
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|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
As Restated
|
|
Product revenues
|
|
$
|
4,285
|
|
|
$
|
2,831
|
|
Service revenues
|
|
|
695
|
|
|
|
566
|
|
Regional Growth Fund
|
|
|
830
|
|
|
|
1,480
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,810
|
|
|
$
|
4,877
|
|
|
|
|
|
|
|
|
|
|
Amounts paid but not yet earned on product revenues are recorded as deferred revenue until we
receive sell through information from Merck KGaA indicating the product has been sold through or otherwise disposed of. Amounts invoiced but not yet earned on service revenue are deferred until or such time as performance is rendered or the
obligation to perform the service is completed for service revenues. Amounts deferred for product revenue are not settled until sell through information is received from Merck KGaA.
As part of the acquisition of Juniper Pharma Services, we assumed a $2.5 million obligation under a grant arrangement with the
Regional Growth Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. Juniper Pharma Services used this grant to fund the building of its second facility, which includes analytical labs, office space,
and a manufacturing facility. As a part of the arrangement, Juniper Pharma Services is required to create and maintain certain full-time equivalent personnel levels through October 2017. As of December 31, 2015, we are in compliance with the
covenants of the arrangement.
The income from the Regional Growth Fund will be recognized in the other income line of the
consolidated statement of operations on a decelerated basis through September 30, 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, 2015.
Foreign Currency Exchange
A significant portion of our operations are conducted through operations in countries other than the United States. Revenues from our
international operations that were recorded in U.S. dollars represented approximately 68% of our total international revenues for the three months ended September 30, 2016. The remaining 32% were sales in British pounds. Our raw materials for cost
of product revenues are primarily purchased in Euros. 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 and the Euro and the U.S. dollar.
Our policy is to reduce exposure to exchange rate fluctuations by designating most of our assets and liabilities, as well as most of our revenues and expenditures, in U.S. dollars, or having them linked to the U.S. dollar. We have not historically
engaged in hedging activities relating to our non-U.S. dollar operations.
There has been no material change to our foreign currency
exchange risk exposure since December 31, 2015.
36
Item 4. 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 of the end of September 30, 2016. The evaluation of our disclosure controls and procedures by our Chief Executive Officer and
Chief Financial Officer included a review of the restatement described in the filing of the restatement and this Form 10-Q, and the Forms 10-Q/A for the quarters ended June 30, 2016 and March 31, 2016, where the Company restated its consolidated
balance sheet, consolidated statement of operations, consolidated statements of comprehensive income (loss), and consolidated statements of cash flows. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were not effective as of September 30, 2016 at the reasonable assurance level, to enable us to record, process, summarize and report information required to be disclosed by us in reports that we file or
submit within the time periods specified in the SEC rules or forms due to the material weaknesses described below.
Material Weaknesses in Internal
Control over Financial Reporting (Revised)
A material weakness is defined as a deficiency or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim consolidated financial statements will not be prevented or detected on a timely basis. In connection with the restatement
of our consolidated financial statements and revised managements assessment of our internal controls over financial reporting at December 31, 2015, and evaluation of our disclosure controls and procedures as of March 31, 2016 and June 30,
2016, we identified material weaknesses in our internal control over financial reporting associated with technical accounting review of significant contractual agreements as well as our monitoring of expenses incurred under our clinical
research agreements.
Specifically, the Company did not design and maintain effective internal control over the assessment of the
accounting for significant arrangements, including timely assessment of revenue recognition, and the Company did not design and maintain effective internal control over the accounting for the completeness, accuracy and presentation and disclosure
over research and development expenses and related prepaid and accrual accounts. These material weaknesses resulted in the restatement described in Note 1 of our prior period financial statements including the years ended December 31, 2013, 2014 and
2015 and the interim periods therein as well as the quarter ended September 30, 2015, which is included in this Quarterly Report on Form 10-Q and the quarters ended June 30, 2016 and March 31, 2016, which are included in the Quarterly Reports on
Forms 10-Q/A filed on November 14, 2016. Additionally, these material weaknesses could result in a misstatement in the financial statements that would result in a material misstatement in the annual or interim consolidated financial
statements that would not be prevented or detected.
Changes in Internal Control over Financial Reporting
Except for the material weaknesses noted above and the remediation activities described under the caption Managements Remediation
Initiatives, there have been no changes in our internal control over financial reporting during the three months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Managements Remediation Initiatives (Revised)
Our management is committed to the planning and implementation of remediation to address all material weaknesses as well as other identified
areas of risk. These remediation efforts, summarized below, which are implemented, in the process of being implemented or are planned for implementation, are intended to address the identified material weaknesses and to enhance our overall
financial control environment.
With the oversight of senior management and our Audit Committee, we plan to take steps intended to address
the underlying causes of the material weaknesses in the immediate future, primarily through the following:
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Process improvements: We have commenced the redesign of specific processes and controls associated with review of contractual agreements, including a quarterly identification and review of significant agreements with
the senior management team to ensure that the relevant accounting implications are identified and considered. Additionally, we are in the process of redesigning our controls over research and development expenses, including the related balance
sheet accounts.
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37
We have not yet been able to remediate these material weaknesses. These actions are subject to
ongoing review by our senior management, as well as oversight by the audit committee of our board of directors. Although we plan to complete this remediation process as quickly as possible, we cannot, at this time, estimate when such remediation may
occur, and our initiatives may not prove successful in remediating the material weaknesses. Management may determine to enhance other existing controls and/or implement additional controls as the implementation progresses. It will take time to
determine whether the additional controls we are implementing will be sufficient to accomplish their intended purpose; accordingly, the material weaknesses may continue for a period of time. While the audit committee of our board of directors and
senior management are closely monitoring this implementation, until the remediation efforts discussed in this section, including any additional remediation efforts that our senior management identifies as necessary, are complete, tested and
determined effective, we will not be able to conclude that the material weaknesses have been remediated. In addition, we may need to incur incremental costs associated with this remediation, primarily due to the hiring and training of finance and
accounting personnel, and the implementation and validation of improved accounting and financial reporting procedures.
We are committed
to improving our internal control and processes and intend to continue to review and improve our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may
take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.
Part IIOther Information
Item 1. Legal 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.
Item 1a. Risk Factors
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, 2015 in addition to other information included in this Quarterly Report on Form 10-Q, including our financial statements and related notes hereto, 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.
Our management has identified material weaknesses in the Companys internal
control over financial reporting which could, if not remediated, result in additional material misstatements in our consolidated financial statements. We may be unable to develop, implement and maintain appropriate controls in future
periods. If we fail to maintain an effective system of internal control over finance reporting, we may not be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial
reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, and the
Sarbanes-Oxley Act of 2002 and SEC rules require that our management report annually on the effectiveness of the Companys internal control over financial reporting and our disclosure controls and procedures. Among other things, our management
must conduct an assessment of the Companys internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to audit, the effectiveness of the Companys internal control
over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. As disclosed in Part II, Item 9A, Controls and Procedures of our Annual Report on Form 10-K/A for the year ended December 31, 2015 and any amendments thereto
on Form 10-K/A, our management, with the participation of our current President and Chief Executive Officer and our Chief Financial Officer, has determined that we have material weaknesses in the Companys internal control over financial
reporting as of December 31, 2015 related to technical accounting review of significant contractual agreements and our monitoring of expenses incurred under our clinical research agreements. These material weaknesses resulted in material
misstatements in our previously filed annual audited and interim unaudited consolidated financial statements.
38
Additionally, this control deficiency could result in a misstatement in the financial statements
that would result in a material misstatement in the annual or interim consolidated financial statements that would not be prevented or detected.
We have identified material weaknesses in our internal control over financial reporting before. For the year ended December 31, 2014, our
management identified a material weakness in our internal control over financial reporting, relating to our evaluation of revenue recognition for services transactions and contractual arrangements. We developed a remediation plan designed to
address the material weakness in our internal control over financial reporting. Our plan included additional staffing, enhancing policies and procedures relating to revenue recognition and other areas reflected in the material weakness, and
implementing a series of incremental software solutions.
A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. We
are actively engaged in developing and implementing a remediation plan designed to address such material weaknesses. However, additional material weaknesses in the Companys internal control over financial reporting may be identified in the
future. Any failure to implement or maintain required new or improved controls, or any difficulties we encounter in their implementation, could result in additional material weaknesses, or could result in material misstatements in our consolidated
financial statements. These misstatements could result in a further restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations, reduce our ability to obtain financing or cause investors to lose
confidence in our reported financial information, leading to a decline in our stock price.
Although we are working to remedy the
ineffectiveness of the Companys internal control over financial reporting, there can be no assurance as to when the remediation plan will be fully developed, when it will be fully implemented or the aggregate cost of implementation. Until our
remediation plan is fully implemented, our management will continue to devote significant time and attention to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate, there will
continue to be an increased risk that we will be unable to timely file future periodic reports with the SEC and that our future consolidated financial statements could contain errors that will be undetected. Further and continued determinations that
there are material weaknesses in the effectiveness of the Companys internal control over financial reporting could also reduce our ability to obtain financing or could increase the cost of any financing we obtain and require additional
expenditures of both money and our managements time to comply with applicable requirements. For more information relating to the Companys internal control over financial reporting (and disclosure controls and procedures) and the
remediation plan undertaken by us, see Part II, Item 9A, Controls and Procedures included in the Annual Report on Form 10-K/A filed on November 14, 2016.
We cannot assure you that additional material weaknesses in our internal control over financial reporting will not be identified in the
future. Any failure to implement and document new and more precise monitoring controls or to implement organizational changes including skillset enhancements through resource changes or education to improve detection and communication of financial
misstatements across all levels of the organization could result in additional material weaknesses, result in material misstatement in our financial statements and cause us to fail to meet our reporting obligations, which in turn could cause the
trading price of our common stock to decline.
Item 6. Exhibits
(a) Exhibits
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|
|
10.1
|
|
Employment agreement, dated July 19, 2016 (and effective August 1, 016), by and between Juniper Pharmaceuticals, Inc. and Alicia Secor (incorporated by reference to Exhibit 10.1 to the Form 8-K (File No. 001-10352) filed on
July 20, 2016).
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10.2
|
|
Form of Inducement Option Award Agreement (incorporated by reference to Exhibit 10.2 to the Form 8-K
(File No. 001-10352) filed on July 20, 2016).
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|
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10.3
|
|
Transition and Consulting Agreement dated July 19, 2016, by and between Juniper Pharmaceuticals, Inc. and Frank C. Condella, Jr. (incorporated by reference to Exhibit 10.3 to the Form 8-K (File No. 001-10352), filed on July 20,
2016).
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10.4
|
|
Juniper Pharmaceuticals, Inc. Amended and Restated 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K (File No. 001-10352), filed on July 28, 2016).
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31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Company.
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|
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31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Company.
|
|
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32.1**
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
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32.2**
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
39
|
|
|
|
|
101*
|
|
The following materials from the Juniper Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated
Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (ii) Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (iii) Condensed Consolidated Statements of Comprehensive Income
(Loss) for the three and nine months ended September 30, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (v) Notes to Condensed Consolidated Financial
Statements.
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40
Signatures
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/ George O. Elston
|
George O. Elston
|
Chief Financial Officer and Treasurer
|
(Principal Financial and Accounting Officer)
|
DATE: November 14, 2016
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41
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