We plan to raise additional funds that we may require in the future through public or
private equity offerings, debt financings, corporate collaborations or other means. We also may seek governmental grants for a portion of the required funding for our clinical trials and preclinical trials. We may further seek to raise capital to
fund additional product development efforts or product acquisitions, even if we have sufficient funds for our planned operations. Any sale by us of additional equity or convertible debt securities could result in dilution to our stockholders. There
can be no assurance that any such required additional funding will be available to us at all or available on terms acceptable to us. Further, to the extent that we raise additional funds through collaborative arrangements, it may be necessary to
relinquish some rights to our technologies or grant sublicenses on terms that are not favorable to us. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and
development programs, which could have an adverse effect on our business.
On July 12, 2017, we filed a shelf registration statement
with the SEC to sell up to $150 million of common stock, preferred stock, warrants to purchase common stock, debt securities and units consisting of one or more of such securities (the 2017 Shelf Registration Statement). The 2017
Shelf Registration Statement (file no.
333-219259)
was declared effective by the SEC on July 26, 2017. We have completed one offering under the 2017 Shelf Registration Statement, raising net proceeds of
approximately $53.8 million from the sale of 16,428,572 shares of our common stock on November 28, 2017.
On December 23,
2016, we filed a shelf registration statement with the SEC to sell up to $33.8 million of common stock (the 2016 Shelf Registration Statement). This shelf registration statement was declared effective by the SEC on January 9,
2017. We have made no sales under the 2016 Shelf Registration Statement.
As of the date of this Form
10-Q,
the full amount of our 2016 Shelf Registration Statement and $92.5 million of our 2017 Shelf Registration Statement remains available for future sales.
Cash Flows.
Net cash used in operating
activities was $7,962,755 and $6,081,450, respectively, for the three-month periods ended March 31, 2019 and 2018. During the three months ended March 31, 2019, net cash used in operating activities was primarily attributable to our net loss of
$644,503, increases of $7,251,381 in accounts receivable, and of $231,485 in prepaid expenses and other current assets and deposits, and decreases of $1,337,155 in accrued expenses and other liabilities, and $67,155 in operating lease liability.
This was partially offset by increases of $602,719 in accounts payable, and $1,006,780 of non-cash expenses. During the three months ended March 31, 2018, net cash used in operating activities was primarily attributable to our net loss of
$5,699,892, and decreases of $1,140,552 in accounts payable, and $401,277 in accrued expenses and other liabilities. This was partially offset by a $180,916 decrease in prepaid expenses and other current assets and deposits, and $979,355 of non-cash
expenses. Such additional non-cash expenses consist of depreciation, change in right-of-use asset, and stock-based compensation expense.
Net cash provided by investing activities was $10,395,719 for the three-month period ended March 31, 2019, consisting primarily of
purchases of investments of $9,944,974 and sales/maturities of investments of $20,346,326. Net cash used in investing activities was $31,847,693, for the three-month periods ended March 31, 2018, consisting primarily of purchases of short-term
investments.
Net cash provided by financing activities during the three-month periods ended March 31, 2019 and 2018 was $89,350 and
$33,032, respectively, consisting of proceeds from the exercise of options to purchase common stock.
Contractual Obligations.
We have entered into the following contractual arrangements:
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Payments to BioMarin and others under our license agreement with BioMarin.
Under our license agreement
with BioMarin we have agreed to pay (i) royalties to BioMarin for seven years from the first commercial sale of Firdapse® equal to 7% of net sales (as defined in the license agreement) in North America for any calendar year for sales up to
$100 million, and 10% of net sales in North America in any calendar year in excess of $100 million; and (ii) royalties to the third-party licensor of the rights sublicensed to us for seven years from the first commercial sale of
Firdapse® equal to 7% of net sales (as defined in the license agreement between BioMarin and the third-party licensor) in any calendar year. For the three months ended March 31, 2019, we recognized approximately $1.6 million of
royalties, which is included in cost of sales in the accompanying statement of operations.
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