ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and result of operations should be read in conjunction with our unaudited financial statement and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended
December 31, 2016
, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 8, 2017. Unless the context otherwise requires, we use the terms “Trevena,” “company,” “we,” “us” and “our” to refer to Trevena, Inc.
Overview
Using our proprietary product platform, we have identified and are developing the following product candidates:
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•
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OLINVO
TM
(oliceridine injection):
We are developing OLINVO, a G protein based ligand of the μ opioid receptor, for the management of moderate-to-severe acute pain where intravenous, or IV, administration is preferred. On February 21, 2017, we announced positive top-line results from our Phase 3 APOLLO-1 and APOLLO-2 pivotal l efficacy studies of OLINVO in moderate-to-severe acute pain following bunionectomy and abdominoplasty, respectively. In both studies, all dose regimens achieved their primary endpoint of statistically greater analgesic efficacy than placebo, as measured by responder rate. On July 20, 2017, we announced that we have completed enrollment in the Phase 3 open-label ATHENA safety study to support the planned new drug application, or NDA, for OLINVO. In the study, 768 patients were administered OLINVO to manage pain associated with a wide range of procedures and diagnoses. We have retained all worldwide development and commercialization rights to OLINVO. If OLINVO receives regulatory approval, we plan to commercialize it in the United States either on our own or with a commercial partner for use in acute care settings such as hospitals and ambulatory surgery centers; outside the United States, we plan to commercialize OLINVO with a commercial partner. In the second quarter of 2017, we held a successful Type B meeting with the United States Food and Drug Administration, or FDA, regarding the Chemistry, Manufacturing and Controls data package of our new drug application, or NDA, submission for OLINVO. We also held a successful pre-NDA meeting with FDA regarding the clinical and non-clinical data package of the planned NDA in the second quarter of 2017. On November 2, 2017, we announced that the NDA for OLINVO has been submitted.
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|
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•
|
TRV250:
We are developing TRV250, a G protein biased ligand targeting the δ-receptor, as a compound with a potential first-in-class, non-narcotic
mechanism for the treatment of migraine. TRV250 also may have utility in a range of other central nervous system, or CNS, indications. Because TRV250 selectively targets the δ-receptor, we believe it will not have the addiction liability of conventional opioids or other μ-opioid related adverse effects like those seen with morphine or oxycodone. In the second quarter of
2017
, we began a Phase I study of TRV250 in the United Kingdom in healthy volunteers; we expect to complete dosing by the end of the first quarter of 2018.
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We have also identified and have completed the initial Phase 1 studies for TRV734, an orally administered new chemical entity expected to be used for first-line treatment of moderate-to-severe acute and chronic pain. We intend to continue to focus our efforts for TRV734 on securing a development and commercialization partner for this asset.
Since our incorporation in late 2007, our operations have included organizing and staffing our company, business planning, raising capital, and discovering and developing our product candidates. We have financed our operations primarily through private placements and public offerings of our equity securities and debt borrowings. As of
September 30, 2017
, we had an accumulated deficit of $
342.8
million. Our net loss was $
57.1
million and $
66.9
million for the
nine months ended September 30, 2017
and
2016
, respectively. Our ability to become and remain profitable depends on our ability to generate revenue or sales. We do not expect to generate significant revenue or sales unless and until we or a collaborator obtain marketing approval for and commercialize OLINVO, TRV250 or TRV734.
In September 2014, we announced we had entered into a senior secured tranched term loan credit facility with Oxford Finance LLC and Pacific Western Bank (formerly Square 1 Bank), of which we have drawn $28.5 million as of
September 30, 2017
.
We expect to incur significant expenses and operating losses for the foreseeable future as we continue the development and clinical trials of, seek regulatory approval for, and prepare for commercialization of our product candidates. If we obtain regulatory approval for OLINVO, we expect to incur significant expenses associated with the launch of this product. We will
need to obtain substantial additional funding in connection with our continuing operations. We will seek to fund our operations through the sale of equity, debt financings or other sources, including potential collaborations. However, we may be unable to raise additional funds or enter into such other agreements when needed on favorable terms, or at all. If we fail to raise capital or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue our operations, development programs, and/or any future commercialization efforts.
Recent Developments
On October 11, 2017, upon the approval of our board of directors, we announced a restructuring and reduction in force of approximately 30% of our workforce, or 21 employees, as well as other cost saving initiatives intended to lower our annualized net operating cash burn. The restructuring was completed as of October 13, 2017. In connection with the restructuring, Michael W. Lark, Ph.D., our Senior Vice President, Research and Chief Scientific Officer, will resign from his position effective as of December 15, 2017.
Senior Secured Tranched Term Loan Credit Facility
In September 2014, we entered into a loan and security agreement with Oxford Finance LLC and Pacific Western Bank, or the lenders, pursuant to which they agreed to lend us up to $35.0 million in a three-tranche series of term loans (Term Loans A, B, and C). Upon initially entering into the agreement, we borrowed $2.0 million under Term Loan A. On April 13, 2015, we amended the agreement with the lenders to change the draw period for Term Loan B. On December 23, 2015, we further amended the agreement with the lenders to, among other things, change the draw period for Term Loan C, modify the interest only period, and modify the maturity date of the loan. In December 2015, we borrowed the Term Loan B tranche of $16.5 million. Our ability to draw an additional $16.5 million under Term Loan C was subject to the satisfaction of one or more specified triggers related to the results of our Phase 2b clinical trial of TRV027. Although those triggers were not attained, in December 2016, we and the lenders modified the terms and conditions under which we could exercise an option to draw $10.0 million of Term Loan C. In March 2017, we borrowed the Term Loan C tranche of $10.0 million.
Borrowings under Term Loans A and B accrue interest at a fixed rate of
6.50%
per annum. Borrowings under Term Loan C accrue interest at a fixed rate of 6.98% per annum. We are required to make payments of interest only on borrowings under the loan agreement on a monthly basis through and including January 1, 2018, after which payments of principal in equal monthly installments and accrued interest will be due until the loan matures on March 1, 2020. Upon the last payment date of the amounts borrowed under the agreement, we will be required to pay a final payment fee equal to 6.6% of the aggregate amounts borrowed. In addition, if we repay Term Loan A, Term Loan B, or Term Loan C prior to the applicable maturity date, we will pay the lenders a prepayment fee
2.0%
of the total amount prepaid if the prepayment occurs between December 23, 2016 and December 23, 2017, and
1.0%
of the total amount prepaid if the prepayment occurs on or after December 24, 2017.
Our obligations are secured by a first priority security interest in substantially all of our assets, including our cash and cash equivalents and marketable securities, but excluding our intellectual property (together, the collateral). In addition, we have agreed not to pledge or otherwise encumber our intellectual property, with specified exceptions. Upon an event of default, the lenders have the right to foreclose upon the available collateral, including our existing cash and cash equivalents and marketable securities.
In connection with entering into the original agreement, we issued to the lenders and placement agent warrants to purchase an aggregate of 7,678 shares of our common stock, of which 5,728 shares remain outstanding as of
September 30, 2017
. These warrants are exercisable immediately and have an exercise price of $5.8610 per share. The warrants may be exercised on a cashless basis and will terminate on the earlier of September 19, 2024 or the closing of a merger or consolidation transaction in which we are not the surviving entity. In connection with the draw of Term Loan B, we issued to the lenders and placement agent additional warrants to purchase an aggregate of 34,961 shares of our common stock. These warrants have substantially the same terms as those noted above, and have an exercise price of $10.6190 per share and an expiration date of December 23, 2025. In connection with the draw of Term Loan C, we issued to the lenders and placement agent additional warrants to purchase an aggregate of 62,241 shares of our common stock. These warrants have substantially the same terms as those noted above, and have an exercise price of $3.6150 per share and an expiration date of March 31, 2027. These detachable warrant instruments have qualified for equity classification and have been allocated upon the relative fair value of the base instrument and the warrants, according to the guidance of ASC 470-20-25-2.
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial
statements, as well as the reported revenues and expenses during the reported periods. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
A summary of our significant accounting policies appears in the notes to our audited consolidated financial statements for the year ended
December 31, 2016
included in our annual report on Form 10-K. However, we believe that the following accounting policies are important to understanding and evaluating our reported financial results, and we have accordingly included them in this discussion.
Research and Development
Research and development costs are charged to expense as incurred. These costs include, but are not limited to, employee‑related expenses, including salaries, benefits and travel and stock based compensation of our research and development personnel; expenses incurred under agreements with contract research organizations and investigative sites that conduct clinical trials and preclinical studies; the cost of acquiring, developing and manufacturing clinical trial materials; other laboratory supplies; allocated facilities, depreciation and other expenses, which include rent and utilities; insurance; and costs associated with preclinical activities and regulatory operations.
Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or information provided to us by our vendors with respect to their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be.
As part of the process of preparing our financial statements, we are required to estimate our expenses resulting from our obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. Our objective is to reflect the appropriate trial expenses in our financial statements by matching those expenses with the period in which services are performed and efforts are expended. We may account for these expenses according to the progress of the trial as measured by subject progression and the timing of various aspects of the trial. We determine accrual estimates through financial models taking into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in it reporting amounts that are too high or too low for any particular period. For the
three and nine months ended September 30, 2017
and
2016
, there were no material adjustments to our prior period estimates of accrued expenses for clinical trials.
Stock-Based Compensation
We have applied the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation - Stock Compensation
to account for stock-based compensation for employees. We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant.
Determining the amount of stock-based compensation to be recorded requires us to develop estimates of the fair value of stock-based awards as of their measurement date. We recognize stock-based compensation expense over the requisite service period, which is the vesting period of the award. Calculating the fair value of stock-based awards requires that we make highly subjective assumptions. We use the Black-Scholes option pricing model to value our stock option awards. Use of this valuation methodology requires that we make assumptions as to the volatility of our common stock, the fair value of our common stock on the measurement date, the expected term of our stock options, the risk free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. Because of our limited operating history as a publicly traded entity, we utilize data from a representative group of publicly traded companies to estimate expected stock price volatility. We selected representative companies from the biopharmaceutical industry with characteristics similar to us. We use
the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107,
Share-Based Payment,
as we do not have sufficient historical stock option activity data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention of paying cash dividends. The risk-free interest rate used for each grant is based on the U.S. Treasury yield curve in effect at the time of grant for instruments with a similar expected life.
Under ASC 718, we are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from our estimates. In March 2016, the FASB issued ASU 2016-09,
Compensation - Stock Compensation
(Topic 718) which provides for improvements to employee share-based payment accounting. In connection with the early adoption of ASU 2016-09 in the quarter ended
December 31, 2016
, the Company elected an accounting policy to record forfeitures as they occur.
Recent Accounting Pronouncements
See Note 2,
Summary of Significant Accounting Policies
, in the notes to our unaudited financial statements for the
three and nine months ended September 30, 2017
, included in Part 1, Item 1 of this quarterly report on Form 10-Q for information on recent accounting pronouncements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, contains provisions that, among other things, reduce reporting requirements for an “emerging growth company.” As an emerging growth company, we have elected to not take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.
Results of Operations
Comparison of the
Three and Nine September 30, 2017
and
2016
(in thousands)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Collaboration revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,750
|
|
|
$
|
(3,750
|
)
|
Total revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,750
|
|
|
(3,750
|
)
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
5,232
|
|
|
4,078
|
|
|
1,154
|
|
|
14,496
|
|
|
11,693
|
|
|
2,803
|
|
Research and development
|
10,181
|
|
|
25,549
|
|
|
(15,368
|
)
|
|
41,776
|
|
|
58,505
|
|
|
(16,729
|
)
|
Total operating expenses
|
15,413
|
|
|
29,627
|
|
|
(14,214
|
)
|
|
56,272
|
|
|
70,198
|
|
|
(13,926
|
)
|
Loss from operations
|
(15,413
|
)
|
|
(29,627
|
)
|
|
14,214
|
|
|
(56,272
|
)
|
|
(66,448
|
)
|
|
10,176
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liability
|
(2
|
)
|
|
(7
|
)
|
|
5
|
|
|
53
|
|
|
63
|
|
|
(10
|
)
|
Net (loss) gain on asset disposals
|
—
|
|
|
(9
|
)
|
|
9
|
|
|
1
|
|
|
(9
|
)
|
|
10
|
|
Miscellaneous income
|
—
|
|
|
—
|
|
|
—
|
|
|
628
|
|
|
222
|
|
|
406
|
|
Interest income
|
167
|
|
|
178
|
|
|
(11
|
)
|
|
505
|
|
|
585
|
|
|
(80
|
)
|
Interest expense
|
(732
|
)
|
|
(434
|
)
|
|
(298
|
)
|
|
(2,041
|
)
|
|
(1,307
|
)
|
|
(734
|
)
|
Loss on foreign currency exhange
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
Total other expense
|
(586
|
)
|
|
(272
|
)
|
|
(314
|
)
|
|
(873
|
)
|
|
(446
|
)
|
|
(427
|
)
|
Net loss attributable to common stockholders
|
$
|
(15,999
|
)
|
|
$
|
(29,899
|
)
|
|
$
|
13,900
|
|
|
$
|
(57,145
|
)
|
|
$
|
(66,894
|
)
|
|
$
|
9,749
|
|
Revenue
To date, we have derived revenue principally from research grants and collaboration arrangements. In March 2015, we signed a letter agreement with Allergan plc pursuant to which it paid us $10.0 million to fund the expansion of our Phase 2b
trial of TRV027 from 500 patients to 620 patients. The collaboration revenue was recorded on a straight-line basis over the remaining period of the trial and was fully recognized as of June 30, 2016.
General and administrative expense
General and administrative expenses consist principally of salaries and related costs for administrative personnel, including stock‑based compensation and travel expenses. Other general and administrative expenses include professional fees for legal, consulting and accounting services.
General and administrative expenses increased by $1.2 million, or 28%, and $2.8 million, or 24%, respectively, for the three and
nine months ended September 30, 2017
, as compared to the same periods in
2016
, primarily as a result of increased headcount and associated salary and stock-based compensation expense, and increased expenditures associated with the relocation of our corporate headquarters to Chesterbrook, Pennsylvania in July 2017.
Research and development expense
Research and development expenses consist primarily of costs incurred for research and the development of our product candidates. In addition, research and development expenses include salaries and related costs for our research and development personnel and stock-based compensation expense and travel expenses for such individuals.
Research and development costs are expensed as incurred and are tracked by discovery program and subsequently by product candidate once a product candidate has been selected for development. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.
Research and development expenses decreased by $15.4 million, or 60%, for the
three months ended September 30, 2017
, as compared to the same period in
2016
and decreased by $16.7 million or 29% for the nine months ended September 30, 2017, as compared to the same period in 2016. The following table summarizes our research and development expenses (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Personnel-related costs
|
$
|
3,273
|
|
|
$
|
3,136
|
|
|
$
|
10,448
|
|
|
$
|
9,294
|
|
OLINVO
|
4,733
|
|
|
20,014
|
|
|
25,159
|
|
|
37,145
|
|
TRV027
|
26
|
|
|
775
|
|
|
138
|
|
|
6,122
|
|
TRV250
|
750
|
|
|
364
|
|
|
2,091
|
|
|
2,622
|
|
Other research and development
|
1,399
|
|
|
1,260
|
|
|
3,940
|
|
|
3,322
|
|
|
$
|
10,181
|
|
|
$
|
25,549
|
|
|
$
|
41,776
|
|
|
$
|
58,505
|
|
The decrease in research and development expenses during the
three months ended September 30, 2017
was due to a decrease in expenditures primarily attributable to the completion of the OLINVO Phase 3 clinical program. The decrease in expenditures for the
nine months ended September 30, 2017
was primarily due to a decrease in expenditures related to the second quarter 2016 completion of the TRV027 Phase 2b clinical trial in AHF and decreased expenditures on OLINVO attributable to the completion of the Phase 3 clinical program.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through private placements and public offerings of our equity securities, debt borrowings and payments received under collaboration agreements. At
September 30, 2017
, we had an accumulated deficit of
$342.8
million, working capital of
$62.7
million, cash and cash equivalents of
$18.1
million, restricted cash of
$1.4
million, and marketable securities of
$58.5
million.
Cash Flows
The following table summarizes our cash flows for the
nine months ended September 30, 2017
and
2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
Net cash (used in) provided by:
|
|
|
|
Operating activities
|
$
|
(59,448
|
)
|
|
$
|
(63,866
|
)
|
Investing activities
|
24,002
|
|
|
30,392
|
|
Financing activities
|
29,468
|
|
|
11,929
|
|
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(5,978
|
)
|
|
$
|
(21,545
|
)
|
Net cash used in operating activities
Net cash used in operating activities was $59.4 million for the
nine months ended September 30, 2017
and consisted primarily of a net loss of
$57.1
million and a decrease in accounts payable and accrued expenses of $8.8 million, primarily associated with the completion of the OLINVO Phase 3 clinical program. Changes in accounts payable and accrued expenses result from timing differences between the receipt and payment of cash and when the transactions are recognized in our results of operations.
Net cash used in operating activities was $63.9 million for the
nine months ended September 30, 2016
, consisting primarily of a net loss of $66.9 million partially offset by noncash adjustments of $5.9 million and changes in operating assets and liabilities of $2.9 million. Changes in operating assets and liabilities were primarily driven by a decrease of deferred revenue of $3.8 million associated with the payment received from Allergan in March 2015, partially offset by decreases in prepaid expenses and other assets and accounts payable and accrued expenses. These changes in accounts payable and accrued expenses result from timing differences between the receipt and payment of cash and when the transactions are recognized in our results of operations.
Net cash used in investing activities
Net cash used in investing activities was $24.0 million for the
nine months ended September 30, 2017
and $30.4 million for the
nine months ended September 30, 2016
. Investing activities in both years consisted primarily of purchases and maturities of marketable securities, as well as expenditures related to leasehold improvements and the purchase of capital equipment.
Net cash provided by financing activities
Net cash provided by financing activities was $29.5 million for the
nine months ended September 30, 2017
, which was primarily due to net proceeds of $9.9 million from the March 31, 2017 draw of Term Loan C and net proceeds of $19.2 million from the sale of common stock through our at-the-market, or ATM, sales facility with Cowen and Company, LLC, or Cowen.
Net cash provided by financing activities was $11.9 million for the
nine months ended September 30, 2016
, which was due to net proceeds of $11.8 million from the sale of common stock through Cowen, pursuant to our ATM sales facility, and proceeds from exercises of common stock options.
Operating and Capital Expenditure Requirements
We have not achieved profitability since our inception and we expect to continue to incur net losses and negative cash flows from operations for the foreseeable future. We expect our cash expenditures to continue to be significant in the near term as we prepare for future regulatory activities, and continue clinical development of TRV250. Additionally, over the next twelve months, we anticipate that our payroll and other general and administrative expenses will increase as we prepare for commercial operations, particularly with respect to expenses associated with the selling and marketing of OLINVO, if approved by the FDA.
We believe that our cash and cash equivalents and marketable securities as of
September 30, 2017
, together with interest thereon, will be sufficient to fund our operating expenses and capital expenditure requirements for at least twelve
months following the date of this filing. We anticipate that we will need to raise substantial additional financing in the future to fund our operations. To meet these requirements, we may seek to sell equity or convertible securities in public or private transactions that may result in dilution to our stockholders. In December 2015, we filed a $250 million shelf registration statement that includes a $75 million ATM sales facility with Cowen acting as our sales agent. Approximately $22.2 million remained available under the ATM sales facility as of
September 30, 2017
. We may offer and sell shares of our common stock under the existing registration statement (including under our ATM facility) or any registration statement we may file in the future. If we raise additional funds through the issuance of convertible securities, these securities could have rights senior to those of our common stock and could contain covenants that restrict our operations.
Ultimately, there can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all. Our future capital requirements will depend on many factors, including:
|
|
•
|
the timing and results of the FDA's review of the NDA submission for OLINVO and related regulatory activities;
|
|
|
•
|
our ability to enter into collaborative agreements for the development and/or commercialization of our product candidates, including for OLINVO;
|
|
|
•
|
the number and development requirements of any other product candidates that we may pursue;
|
|
|
•
|
the scope, progress, results and costs of researching and developing our product candidates or any future product candidates, both in the United States and in territories outside the United States;
|
|
|
•
|
the costs, timing and outcome of regulatory review of our product candidates or any future product candidates, both in the United States and in territories outside the United States;
|
|
|
•
|
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;
|
|
|
•
|
any product liability or other lawsuits related to our products;
|
|
|
•
|
the expenses needed to attract and retain skilled personnel;
|
|
|
•
|
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; and
|
|
|
•
|
the costs involved in preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending our intellectual property-related claims, both in the United States and in territories outside the United States.
|
Please see “Risk Factors” section of this Quarterly Report and our most recent Annual Report on Form 10-K as filed with the SEC and which is incorporated herein by reference, for additional risks associated with our substantial capital requirements.
Contractual Obligations and Commitments
The following is a summary of our long-term contractual cash obligations as of
September 30, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due By Period
|
|
Total
|
|
Less than
1 Year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than
5 years
|
|
|
|
|
|
Operating lease obligations(1)
|
$
|
12,809
|
|
|
$
|
947
|
|
|
$
|
2,704
|
|
|
$
|
2,302
|
|
|
$
|
6,856
|
|
Loans payable
|
$
|
28,500
|
|
|
$
|
10,556
|
|
|
$
|
17,944
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
41,309
|
|
|
$
|
11,503
|
|
|
$
|
20,648
|
|
|
$
|
2,302
|
|
|
$
|
6,856
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating lease obligations reflect our obligation to make payments in connection with the lease for our office spaces, including our current locations in King of Prussia, Pennsylvania and Chesterbrook, Pennsylvania.
Other Commitments
In addition, in the course of normal business operations, we have agreements with contract service providers to assist in the performance of our research and development and manufacturing activities. We can elect to discontinue the work under these agreements at any time. We also could enter into additional collaborative research, contract research, manufacturing and supplier agreements in the future, which may require upfront payments and even long-term commitments of cash.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Please see the “Critical Accounting Policies and Significant Judgments and Estimates” section of our most recent Annual Report on Form 10-K as filed with the SEC which is incorporated herein by reference, for full detail. We did not make any significant changes to our critical accounting policies during the
nine months ended September 30, 2017
.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined by applicable SEC regulations.