BIODELIVERY SCIENCES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
10. Stockholders equity (continued):
Preferred Stock
During the three months ended March 31, 2019, 700 shares of Series B Preferred Stock (Series B) were converted into 3,888,888 shares of Common
Stock. As of March 31, 2019, 2,400 shares of Series B are outstanding. As of March 31, 2019, 2,093,155 shares of Series A Preferred Stock (Series A) are outstanding. There were no conversions of Series A during the three months
ended March 31, 2019.
Earnings Per Share
During the three months ended March 31, 2019 and 2018, outstanding stock options, RSUs, warrants and preferred shares of 24,743,605 and 10,243,260 ,
respectively, were not included in the computation of diluted earnings per common share, because to do so would have had an antidilutive effect.
11.
Commitments and contingencies:
The Company is involved from time to time in routine legal matters incidental to our business. Based upon
available information, the Company believes that the resolution of such matters will not have a material adverse effect on its condensed consolidated financial position or results of operations. Except as discussed below, the Company is not the
subject of any pending legal proceedings and, to the knowledge of management, no proceedings are presently contemplated against the Company by any federal, state or local governmental agency.
Indivior (formerly RB Pharmaceuticals Ltd.) and Aquestive Therapeutics (formerly MonoSol Rx)
The following disclosure regarding the Companys ongoing litigations with Aquestive Therapeutics, Inc. (formerly MonoSol Rx, Aquestive) and
Indivior PLC (formerly RB Pharmaceuticals Limited, Indivior) is intended to provide some background and an update on the matter as required by the rules of the SEC. Additional details regarding the past procedural history of the matter
can be found in the Companys previously filed periodic filings with the SEC.
Litigation related to BUNAVAIL
On October 29, 2013, Reckitt Benckiser, Inc., Indivior, and Aquestive (collectively, the RB Plaintiffs) filed an action against the Company
relating to its BUNAVAIL product in the United States District Court for the Eastern District of North Carolina (EDNC) for alleged patent infringement. BUNAVAIL is a drug approved for the maintenance treatment of opioid dependence. The
RB Plaintiffs claim that the formulation for BUNAVAIL, which has never been disclosed publicly, infringes its US Patent No. 8,475,832 (the 832 Patent). On May 21, 2014, the Court granted the Companys motion to
dismiss.
On January 22, 2014, Aquestive initiated an inter partes review (IPR) on U.S. Patent No. 7,579,019, the (019
Patent). The PTAB upheld all claims of the Companys 019 Patent in 2015 and this decision was not appealed by Aquestive.
On
September 20, 2014, the Company proactively filed a declaratory judgment action in the United States District Court for the EDNC requesting the Court to make a determination that the Companys BUNAVAIL product does not infringe the
832 Patent, US Patent No. 7,897,080 (the 080 Patent) and US Patent No. 8,652,378 (the 378 Patent). The Company invalidated the 080 Patent in its entirety in an inter partes
reexamination proceeding. The Company invalidated all relevant claims of the 832 Patent in an IPR proceeding. And, in an IPR proceeding for the 378 Patent, in its decision not to institute the IPR proceeding, the PTAB construed the
claims of the 378 Patent narrowly. Shortly thereafter, by joint motion of the parties, the 378 Patent was subsequently removed from the action.
On June 6, 2016, in an unrelated case in which Indivior and Aquestive asserted the 832 Patent against other parties, the Delaware District Court
entered an order invalidating other claims in the 832 Patent. Indivior and Aquestive cross-appealed all adverse findings in that decision to the Court of Appeals for the Federal Circuit in Case
No. 17-2587.
The Companys declaratory judgment action remains stayed pending the outcome of that cross-appeal by Indivior and Aquestive.
On September 22, 2014, the RB Plaintiffs filed an action against the Company (and the Companys commercial partner) relating to the Companys
BUNAVAIL
product in the United States District Court for the District of New Jersey for alleged patent infringement. The RB Plaintiffs claim that BUNAVAIL, whose formulation and manufacturing
processes have never been disclosed publicly, infringes its patent U.S. Patent No. 8,765,167 (the 167 Patent). The Company believes this is an anticompetitive attempt by the RB Plaintiffs
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