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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 10-Q
_________________________________
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021
or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File Number 001-32302
_______________________________
ANTARES PHARMA, INC.
(Exact name of Registrant as specified in its charter)
_______________________________
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Delaware |
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41-1350192 |
(State or other jurisdiction of incorporation or
organization) |
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(I.R.S. Employer Identification No.) |
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100 Princeton South, Suite 300, Ewing, NJ
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08628 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (609)
359-3020
_______________________________
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading
Symbol(s)
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Name of each exchange on which registered |
Common Stock, par value $0.01 per share |
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ATRS |
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NASDAQ |
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 every Interactive Data File required to be submitted
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 such files). Yes
☒
No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
☐ |
Accelerated filer |
☒ |
Emerging growth company |
☐ |
Non–accelerated filer |
☐ |
Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
As of November 1, 2021, the registrant had 170,042,479 shares
of common stock outstanding at $0.01 par value per
share.
ANTARES PHARMA, INC.
Quarterly Report on Form 10-Q
For the Three Months Ended September 30, 2021
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ANTARES PHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(UNAUDITED)
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September 30,
2021 |
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December 31,
2020 |
Assets |
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Current assets |
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Cash and cash equivalents |
$ |
57,365 |
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$ |
53,137 |
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Accounts receivable, net |
54,471 |
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42,221 |
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Inventories, net |
16,493 |
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18,216 |
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Contract assets |
2,942 |
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8,140 |
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Prepaid expenses and other current assets |
2,162 |
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4,877 |
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Total current assets |
133,433 |
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126,591 |
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Deferred tax assets, net |
43,987 |
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46,982 |
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Property and equipment, net |
25,832 |
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24,020 |
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Operating lease right-of-use assets |
3,892 |
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4,621 |
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Intangibles, net |
7,072 |
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7,693 |
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Other long-term assets |
2,523 |
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2,624 |
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Total Assets |
$ |
216,739 |
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$ |
212,531 |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
$ |
12,885 |
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$ |
16,194 |
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Accrued expenses and other liabilities |
32,010 |
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25,635 |
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Current maturities of long-term debt, net |
2,918 |
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16,230 |
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Operating lease liabilities, current |
917 |
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1,203 |
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Deferred revenue |
3,804 |
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3,943 |
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Total current liabilities |
52,534 |
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63,205 |
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Long-term debt, less current maturities |
18,401 |
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24,669 |
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Operating lease liabilities, long-term |
4,613 |
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4,816 |
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Other long-term liabilities |
363 |
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726 |
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Total liabilities |
75,911 |
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93,416 |
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Stockholders’ Equity |
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Preferred Stock: $0.01 par; 3,000 shares authorized, none
outstanding
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— |
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— |
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Common Stock: $0.01 par; 300,000 shares authorized; 170,042 and
166,836 issued and outstanding at September 30, 2021 and December
31, 2020, respectively
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1,700 |
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1,668 |
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Additional paid-in capital |
348,834 |
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340,756 |
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Accumulated deficit |
(209,020) |
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(222,626) |
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Accumulated other comprehensive loss |
(686) |
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(683) |
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Total stockholders' equity |
140,828 |
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119,115 |
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Total liabilities and stockholders’ equity |
$ |
216,739 |
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$ |
212,531 |
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The accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited) are an integral part of these condensed
consolidated financial statements. |
ANTARES PHARMA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(UNAUDITED)
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2021 |
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2020 |
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2021 |
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2020 |
Revenue |
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Product sales, net |
$ |
33,068 |
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$ |
28,947 |
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$ |
90,107 |
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$ |
80,709 |
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Licensing and development revenue |
3,682 |
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4,321 |
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15,833 |
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8,763 |
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Royalties |
11,441 |
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6,735 |
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29,312 |
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15,994 |
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Total revenue, net |
48,191 |
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40,003 |
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135,252 |
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105,466 |
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Operating expenses |
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Cost of product sales |
14,039 |
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13,615 |
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38,167 |
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38,556 |
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Cost of development revenue |
2,390 |
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2,902 |
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11,147 |
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5,485 |
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Research and development |
3,923 |
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2,405 |
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10,610 |
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7,803 |
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Selling, general and administrative |
19,874 |
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15,231 |
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55,185 |
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46,101 |
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Total operating expenses |
40,226 |
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34,153 |
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115,109 |
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97,945 |
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Operating income |
7,965 |
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5,850 |
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20,143 |
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7,521 |
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Other income (expense) |
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Interest expense |
(750) |
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(782) |
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(2,847) |
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(2,810) |
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Other income (expense), net |
6 |
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(72) |
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(129) |
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104 |
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Total other expense, net |
(744) |
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(854) |
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(2,976) |
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(2,706) |
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Income before income taxes |
7,221 |
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4,996 |
|
|
17,167 |
|
|
4,815 |
|
Income tax expense |
(1,828) |
|
|
— |
|
|
(3,561) |
|
|
— |
|
Net income |
$ |
5,393 |
|
|
$ |
4,996 |
|
|
$ |
13,606 |
|
|
$ |
4,815 |
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
Basic |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
0.03 |
|
Diluted |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
Basic |
169,953 |
|
|
166,375 |
|
|
168,947 |
|
|
165,838 |
|
Diluted |
175,128 |
|
|
169,655 |
|
|
174,937 |
|
|
169,759 |
|
The accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited) are an integral part of these condensed
consolidated financial statements.
ANTARES PHARMA, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
$ |
5,393 |
|
|
$ |
4,996 |
|
|
$ |
13,606 |
|
|
$ |
4,815 |
|
Foreign currency translation adjustment |
— |
|
|
5 |
|
|
(3) |
|
|
11 |
|
Comprehensive income |
$ |
5,393 |
|
|
$ |
5,001 |
|
|
$ |
13,603 |
|
|
$ |
4,826 |
|
The accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited) are an integral part of these condensed
consolidated financial statements.
ANTARES PHARMA, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY
(in thousands)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders’
Equity |
|
Shares |
|
Amount |
|
|
|
|
Balance, June 30, 2021 |
169,584 |
|
|
$ |
1,696 |
|
|
345,431 |
|
|
$ |
(214,413) |
|
|
$ |
(686) |
|
|
$ |
132,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of options |
458 |
|
|
4 |
|
|
1,221 |
|
|
— |
|
|
— |
|
|
1,225 |
|
Stock-based compensation |
— |
|
|
— |
|
|
2,182 |
|
|
— |
|
|
— |
|
|
2,182 |
|
Net income |
— |
|
|
— |
|
|
— |
|
|
5,393 |
|
|
— |
|
|
5,393 |
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Balance, September 30, 2021 |
170,042 |
|
|
$ |
1,700 |
|
|
$ |
348,834 |
|
|
$ |
(209,020) |
|
|
$ |
(686) |
|
|
$ |
140,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional
Paid-In
Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders’
Equity
|
|
Shares |
|
Amount |
|
|
|
|
Balance, December 31, 2020 |
166,836 |
|
|
$ |
1,668 |
|
|
$ |
340,756 |
|
|
$ |
(222,626) |
|
|
$ |
(683) |
|
|
$ |
119,115 |
|
Common stock issued under equity compensation plan, net of shares
withheld for taxes
|
942 |
|
|
10 |
|
|
(2,851) |
|
|
— |
|
|
— |
|
|
(2,841) |
|
Exercise of options |
2,264 |
|
|
22 |
|
|
5,081 |
|
|
— |
|
|
— |
|
|
5,103 |
|
Stock-based compensation |
— |
|
|
— |
|
|
5,848 |
|
|
— |
|
|
— |
|
|
5,848 |
|
Net income |
— |
|
|
— |
|
|
— |
|
|
13,606 |
|
|
— |
|
|
13,606 |
|
Other comprehensive income (loss) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3) |
|
|
(3) |
|
Balance, September 30, 2021 |
170,042 |
|
|
$ |
1,700 |
|
|
$ |
348,834 |
|
|
$ |
(209,020) |
|
|
$ |
(686) |
|
|
$ |
140,828 |
|
The accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited) are an integral part of these condensed
consolidated financial statements.
ANTARES PHARMA, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY
(in thousands)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders’
Equity
|
|
Shares |
|
Amount |
|
|
|
|
Balance, June 30, 2020 |
166,085 |
|
|
$ |
1,661 |
|
|
$ |
335,372 |
|
|
$ |
(279,008) |
|
|
$ |
(696) |
|
|
$ |
57,329 |
|
Common stock issued under equity compensation plan, net of shares
withheld for taxes
|
7 |
|
|
— |
|
|
(16) |
|
|
— |
|
|
— |
|
|
(16) |
|
Exercise of options |
580 |
|
|
6 |
|
|
1,117 |
|
|
— |
|
|
— |
|
|
1,123 |
|
Stock-based compensation |
— |
|
|
— |
|
|
1,804 |
|
|
— |
|
|
— |
|
|
1,804 |
|
Net income |
— |
|
|
— |
|
|
— |
|
|
4,996 |
|
|
— |
|
|
4,996 |
|
Other comprehensive loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5 |
|
|
5 |
|
Balance, September 30, 2020 |
166,672 |
|
|
$ |
1,667 |
|
|
$ |
338,277 |
|
|
$ |
(274,012) |
|
|
$ |
(691) |
|
|
$ |
65,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders’
Equity
|
|
Shares |
|
Amount |
|
|
|
|
Balance, December 31, 2019 |
165,221 |
|
|
$ |
1,652 |
|
|
$ |
332,377 |
|
|
$ |
(278,827) |
|
|
$ |
(702) |
|
|
$ |
54,500 |
|
Common stock issued under equity compensation plan, net of shares
withheld for taxes
|
676 |
|
|
7 |
|
|
(1,373) |
|
|
— |
|
|
— |
|
|
(1,366) |
|
Exercise of options |
775 |
|
|
8 |
|
|
1,504 |
|
|
— |
|
|
— |
|
|
1,512 |
|
Stock-based compensation |
— |
|
|
— |
|
|
5,769 |
|
|
— |
|
|
— |
|
|
5,769 |
|
Net income |
— |
|
|
— |
|
|
— |
|
|
4,815 |
|
|
— |
|
|
4,815 |
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11 |
|
|
11 |
|
Balance, September 30, 2020 |
166,672 |
|
|
$ |
1,667 |
|
|
$ |
338,277 |
|
|
$ |
(274,012) |
|
|
$ |
(691) |
|
|
$ |
65,241 |
|
The accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited) are an integral part of these condensed
consolidated financial statements.
ANTARES PHARMA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
|
2021 |
|
2020 |
Cash Flows from Operating Activities |
|
|
|
Net income |
$ |
13,606 |
|
|
$ |
4,815 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Stock-based compensation |
5,848 |
|
|
5,769 |
|
Depreciation and amortization |
2,761 |
|
|
1,730 |
|
Other |
719 |
|
|
662 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
(12,250) |
|
|
(7,422) |
|
Inventories, net |
1,723 |
|
|
(3,809) |
|
Contract assets |
5,198 |
|
|
(549) |
|
Prepaid expenses and other assets |
2,715 |
|
|
1,345 |
|
Deferred taxes |
2,995 |
|
|
— |
|
Accounts payable |
(2,251) |
|
|
5,171 |
|
Accrued expenses and other liabilities |
6,202 |
|
|
4,967 |
|
Deferred revenue |
(139) |
|
|
1,538 |
|
Net cash provided by operating activities |
27,127 |
|
|
14,217 |
|
Cash Flows from Investing Activities |
|
|
|
Purchases of property and equipment |
(4,960) |
|
|
(7,893) |
|
Proceeds from maturities of investment securities |
— |
|
|
20,500 |
|
Net cash provided by (used in) investing activities |
(4,960) |
|
|
12,607 |
|
Cash Flows from Financing Activities |
|
|
|
Principal payments on long-term debt |
(20,000) |
|
|
— |
|
Prepayment fees on long-term debt |
(200) |
|
|
— |
|
Proceeds from exercise of stock options |
5,103 |
|
|
1,512 |
|
Taxes paid related to net share settlement of equity
awards |
(2,841) |
|
|
(1,366) |
|
Net cash provided by (used in) financing activities |
(17,938) |
|
|
146 |
|
Effect of exchange rate changes on cash and cash
equivalents |
(1) |
|
|
1 |
|
Increase in cash and cash equivalents |
4,228 |
|
|
26,971 |
|
Cash and cash equivalents |
|
|
|
Beginning of period |
53,137 |
|
|
23,201 |
|
End of period |
$ |
57,365 |
|
|
$ |
50,172 |
|
Supplemental disclosure of cash flow information |
|
|
|
Cash paid for interest |
$ |
2,365 |
|
|
$ |
2,679 |
|
Cash paid for income taxes |
$ |
1,224 |
|
|
$ |
— |
|
Supplemental disclosure of non-cash investing
activities |
|
|
|
Purchases of property and equipment recorded in accounts payable
and accrued expenses
|
$ |
1,009 |
|
|
$ |
1,577 |
|
The accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited) are an integral part of these condensed
consolidated financial statements.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Note 1. Description of
Business
Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the
“Company”) is a specialty pharmaceutical company focused primarily
on the development and commercialization of pharmaceutical products
and technologies in targeted therapeutic areas. We develop,
manufacture and commercialize, for ourselves or with partners,
novel therapeutic products using our advanced drug delivery systems
that are designed to provide commercial or functional advantages,
such as improved safety and efficacy, convenience, improved
tolerability, and enhanced patient comfort and adherence. We also
seek product opportunities that complement and leverage our
commercial platform. We have a portfolio of proprietary and
partnered commercial products and ongoing product development
programs in various stages of development. We have formed
significant strategic alliances and partnership arrangements with
industry leading pharmaceutical companies including Teva
Pharmaceutical Industries, Ltd. (“Teva”), AMAG Pharmaceuticals,
Inc. (“AMAG”), Pfizer Inc. (“Pfizer”) and Idorsia Pharmaceuticals
Ltd (“Idorsia”).
Our marketed proprietary products include:
•XYOSTED®
(testosterone enanthate) injection, indicated for testosterone
replacement therapy in adult males for conditions associated with a
deficiency or absence of endogenous testosterone, and is the first
and only subcutaneous testosterone enanthate product for
once-weekly, at-home self-administration to be approved by the U.S.
Food and Drug Administration (“FDA”);
•OTREXUP®
(methotrexate) injection, indicated for adults with severe active
rheumatoid arthritis, children with active polyarticular juvenile
idiopathic arthritis and adults with severe recalcitrant psoriasis;
and
•NOCDURNA®
(desmopressin acetate), marketed in the U.S. for the treatment of
nocturia due to nocturnal polyuria (“NP”) in adults who awaken at
least two times per night to urinate.
We are also party to various partnered product development and
supply arrangements:
•We
developed and are the exclusive supplier of devices for Teva’s
Epinephrine Injection USP products, the generic equivalent of
EpiPen®
and EpiPen®
Jr., indicated for emergency treatment of severe allergic reactions
including those that are life threatening (anaphylaxis) in adults
and certain pediatric patients;
•Through
our commercialization partner Teva, we sell Sumatriptan Injection
USP, a generic equivalent to the Imitrex®
STATdose Pen®,
in the U.S. indicated for the acute treatment of migraine headaches
and cluster headache in adults;
•In
collaboration with AMAG, we developed a subcutaneous auto injector
and are the exclusive supplier of devices and the final assembled
and packaged commercial product of AMAG’s Makena®
(hydroxyprogesterone caproate injection) subcutaneous auto
injector, which is a ready-to-administer treatment indicated to
reduce the risk of preterm birth in women pregnant with one baby
and who spontaneously delivered at least one preterm baby in the
past; and
•We
developed and are the exclusive supplier of devices for Teva’s
generic equivalent of Forsteo®
(Teriparatide Injection) which is approved and currently sold by
Teva in various countries outside the United States.
We are also developing two multi-dose pen injector products in
collaboration with Teva, a combination drug device rescue pen in
collaboration with Pfizer, a combination drug device product with
Idorsia, and advancing other internal and external research and
development programs.
Note 2. Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”) in the U.S. for interim financial
information and with the instructions to Form 10-Q and Article 10
of the Securities and Exchange Commission's Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in
the U.S. for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. The accompanying condensed consolidated financial
statements and condensed footnote disclosures thereto should be
read in conjunction with our Annual Report on Form 10-K for the
year ended December 31, 2020. Operating results for the three
and nine months ended September 30, 2021 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2021.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Reclassifications
Certain reclassifications have been made to prior year amounts to
conform with the current year presentation. Beginning as of and for
the year ended December 31, 2020, the cost of product sales
and the cost of development revenue are being classified under the
heading operating expenses in the accompanying Consolidated
Statements of Operations, and the corresponding prior period
amounts have been reclassified to conform to this presentation. The
reclassifications have no impact on our operating income or net
income as previously reported.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits at commercial
banks and highly liquid investments with an original maturity of
three months or less. Cash equivalents, consisting of investments
in money market funds, are remeasured and reported at fair value
each reporting period, in accordance with ASC Topic 820,
Fair Value Measurements
based on quoted market prices, which is a Level 1 input within the
three-level valuation hierarchy for disclosure of fair value
measurements, and totaled $36,141 and $36,133 as of
September 30, 2021 and December 31, 2020,
respectively.
Inventories
Inventories are stated at the lower of cost or net realizable value
with cost determined on a first-in, first-out basis. Certain
components of our products are provided by a limited number of
vendors, and our production, assembly, warehousing and distribution
operations are outsourced to third-parties where substantially all
of our inventory is located. Disruption of supply from key vendors
or third-party suppliers may have a material adverse impact on our
operations and financial results.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line
method over an asset's estimated useful life as
follows:
|
|
|
|
|
|
|
Useful Life |
Computer equipment and software |
3-5 years
|
Furniture, fixtures and office equipment |
5-7 years
|
Production molds, tooling and equipment |
3-10 years
|
Leasehold improvements |
Lesser of useful life or lease term |
Expenditures, including interest costs, for assets under
construction that are not yet ready for their intended use are
capitalized and will be depreciated based on the above guidelines
when placed in service.
Revenue Recognition
We generate revenue from proprietary and partnered product sales,
license and development activities and royalty arrangements.
Revenue is recognized when or as we transfer control of the
promised goods or services to the customer at the transaction
price, which is the amount that reflects the consideration to which
we expect to be entitled to in exchange for those goods or
services.
At inception of each contract, we identify the goods and services
that have been promised to the customer and each of those that
represent a distinct performance obligation, determine the
transaction price including any variable consideration, allocate
the transaction price to the distinct performance obligations and
determine whether control transfers to the customer at a point in
time or over time. Variable consideration is included in the
transaction price to the extent that it is probable that a
significant reversal in the amount of cumulative revenue recognized
will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. We reassess our reserves
for variable consideration at each reporting date and make
adjustments if necessary, which may affect revenue and earnings in
periods in which any such changes become known.
We have elected to recognize the cost for freight and shipping
activities as a fulfillment cost. Amounts billed to customers for
shipping and handling are included as part of the transaction price
and recognized as revenue when control of underlying goods are
transferred to the customer. The related shipping and freight
charges incurred are included in cost of product sales in the
Consolidated Statements of Operations.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Proprietary Product Sales
We sell our proprietary commercial products primarily to wholesale
and specialty distributors. Revenue is recognized when control has
transferred to the customer, which is typically upon delivery, at
the net selling price, which reflects the variable consideration
for which reserves and sales allowances are established for
estimated returns, wholesale distribution fees, prompt payment
discounts, government rebates and chargebacks, plan rebate
arrangements and patient discount and support
programs.
The determination of certain reserves and sales allowances requires
us to make a number of judgements and estimates to reflect our best
estimate of the transaction price and the amount of consideration
to which we believe we will be ultimately entitled to receive. The
expected value is determined based on unit sales data, contractual
terms with customers and third-party payers, historical and
expected utilization rates, any new or anticipated changes in
programs or regulations that would impact the amount of the actual
rebates, customer purchasing patterns, product expiration dates and
levels of inventory in the distribution channel. Reserves for
prompt payment discounts are recorded as a reduction in accounts
receivable in the Consolidated Statements of Operations. Reserves
for returns, rebates and chargebacks, distributor fees and customer
co-pay support programs are included within current liabilities in
the Condensed Consolidated Balance Sheets.
Partnered Product Sales
We are party to several license, development, supply and
distribution arrangements with pharmaceutical partners, under which
we produce and are the exclusive supplier of certain products,
devices and/or components. Revenue is recognized when or as control
of the goods transfers to the customer as discussed
below.
We are the exclusive supplier of the Makena®
subcutaneous auto injector product to AMAG. Because the product is
custom manufactured for AMAG with no alternative use and we have a
contractual right to payment for performance completed to date,
control is continuously transferred to the customer as product is
produced pursuant to firm purchase orders. Revenue is recognized
over time using the output method based on the contractual selling
price and number of units produced. The amount of revenue
recognized in excess of the amount shipped/billed to the customer,
if any, is recorded as contract assets in the Condensed
Consolidated Balance Sheets due to the short-term nature in which
the amount is ultimately expected to be billed and collected from
the customer.
All other partnered product sales are recognized at the point in
time in which control is transferred to the customer, which is
typically upon shipment. Sales terms and pricing are governed by
the respective supply and distribution agreements, and there is
generally no right of return. Revenue is recognized at the
transaction price, which includes the contractual per unit selling
price and estimated variable consideration, such as volume-based
pricing arrangements or profit sharing arrangements, if any. We
recognize revenue, including the estimated variable consideration
we expect to receive for contract margin on future commercial
sales, upon shipment of the goods to our partner. The estimated
variable consideration is recognized at an amount we believe is not
subject to significant reversal based on historical experience and
is adjusted at each reporting period if the most likely amount of
expected consideration changes or becomes fixed.
Licensing and Development Revenue
We have entered into several license, development and supply
arrangements with pharmaceutical partners under which we grant a
license to our device technology and know-how and provide research
and development services that often involve multiple performance
obligations and highly customized deliverables. For such
arrangements, we identify each of the promised goods and services
within the contract and the distinct performance obligations at
inception, and allocate consideration to each performance
obligation based on relative standalone selling price, which is
generally determined based on the expected cost plus
margin.
If the contract includes an enforceable right to payment for
performance completed to date and performance obligations are
satisfied over time, we recognize revenue over the development
period using either the input or output method depending on which
is most appropriate given the nature of the distinct deliverable.
For other contracts that do not contain an enforceable right to
payment for performance completed to date, revenue is recognized
when control is transferred to the customer. Factors that may
indicate that the transfer of control has occurred include the
transfer of legal title, transfer of physical possession, the
customer has obtained the significant risks and rewards of
ownership of the assets and we have a present right to
payment.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Our typical payment terms for development contracts may include an
upfront payment equal to a percentage of the total contract value
with the remaining portion to be billed upon completion and
transfer of the individual deliverables or satisfaction of the
individual performance obligations. We record a contract liability
for cash received in advance of performance, which is presented
within deferred revenue in the Condensed Consolidated Balance
Sheets and recognized as revenue in the Consolidated Statements of
Operations when the associated performance obligations have been
satisfied. We recognized $3,760 in licensing and development
revenue in connection with contract liabilities that were
outstanding as of December 31, 2020 and satisfied during the
nine months ended September 30, 2021.
License fees and milestones received in exchange for the grant of a
license to our functional intellectual property such as patented
technology and know-how in connection with a partnered development
arrangement are generally recognized at inception of the
arrangement, or over the development period depending on the facts
and circumstances, as the license is generally not distinct from
the non-licensed goods or services to be provided under the
contract. Milestone payments that are contingent upon the
occurrence of future events are evaluated and recorded at the most
likely amount, and to the extent that it is probable that a
significant reversal will not occur when the associated uncertainty
is resolved.
Royalties
We earn royalties in connection with licenses granted under license
and development arrangements with partners. Royalties are based
upon a percentage of commercial sales of partnered products with
rates ranging from mid-single digits to low double digits and are
tiered based on levels of net sales. These sales-based royalties,
for which the license was deemed the predominant element to which
the royalties relate, are estimated and recognized in the period in
which the partners’ commercial sales occur. The royalties are
generally reported and payable to us within 45 to 60 days of the
end of the period in which the commercial sales are made. We base
our estimates of royalties earned on actual sales information from
our partners when available or estimated prescription sales from
external sources and estimated net selling price. If actual
royalties received are different than amounts estimated, we would
adjust the royalty revenue in the period in which the adjustment
becomes known.
Remaining Performance Obligations
Remaining performance obligations represent the allocation of
transaction price of firm orders and development contract
deliverables for which work has not been completed or orders
fulfilled and excludes potential purchase orders under
ordering-type supply contracts with indefinite delivery or
quantity. As of September 30, 2021, the aggregate value of
remaining performance obligations, excluding contracts with an
original expected length of one year or less, was $16,034. We
expect to recognize revenue on the remaining performance
obligations over the next three years.
Note 3. Inventories
Inventories consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2021 |
|
December 31,
2020 |
Raw material |
$ |
422 |
|
|
$ |
325 |
|
Work in process |
8,186 |
|
|
7,120 |
|
Finished goods |
7,885 |
|
|
10,771 |
|
Total inventories, net |
$ |
16,493 |
|
|
$ |
18,216 |
|
A reserve is recorded for potentially excess, dated or obsolete
inventories based on an analysis of inventory on hand compared to
forecasted future sales, which was $1,094 and $619 as of
September 30, 2021 and December 31, 2020,
respectively.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Note 4. Property and Equipment
Property and equipment, net consisted of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2021 |
|
December 31,
2020 |
Production molds, tooling and equipment |
$ |
21,069 |
|
|
$ |
20,260 |
|
Leasehold improvements |
7,457 |
|
|
6,298 |
|
Furniture, fixtures and office equipment |
907 |
|
|
865 |
|
Computer equipment and software |
1,348 |
|
|
756 |
|
Construction and tooling in process |
7,506 |
|
|
6,214 |
|
Total property and equipment |
38,287 |
|
|
34,393 |
|
Less: Accumulated depreciation |
(12,455) |
|
|
(10,373) |
|
Total property and equipment, net |
$ |
25,832 |
|
|
$ |
24,020 |
|
Depreciation expense was $738 and $575 for the three months ended
September 30, 2021 and 2020, respectively, and $2,140 and $1,654
for the nine months ended September 30, 2021 and 2020,
respectively.
Note 5. Long-term Debt
In June 2017, we entered into a loan and security agreement (the
“Loan Agreement”) with Hercules Capital, Inc. (the “Lender”), for a
term loan of up to $35,000 (the “Term Loan”), under which we
initially borrowed $25,000 (“Tranche I”.) The amortizing Term Loan
is secured by substantially all of our assets, excluding
intellectual property, accrues interest at a prime-based variable
rate with a maximum of 9.5%, and initially provided for payments of
interest-only until August 1, 2019 with a maturity date of
July 1, 2022.
In June 2019, we entered into a First Amendment (the “Amendment”)
to the Loan Agreement, which increased the aggregate principal
amount available under the Term Loan from $35,000 to $50,000 and
extended the interest-only payment period of the Term Loan to
August 1, 2021. Under the Amendment, the interest only period could
be further extended to August 1, 2022 if we achieved a certain loan
extension milestone, requested such extension by July 31, 2021, and
paid an extension fee equal to one half of one percent of the
principal amount outstanding. Upon signing of the Amendment, an
additional $15,000 (“Tranche II”) was funded to us. The Term Loan
maturity date remained July 1, 2022, which could be extended to
July 1, 2024.
We are required to pay an end of term fee (“End of Term Charge”)
equal to 4.25% of Tranche I and 3.95% of the borrowings under
Tranche II, payable upon the earlier of July 1, 2022 or full
repayment of the loan. The Loan Agreement also imposes a prepayment
fee of 1.0% to 3.0% if any or all of the balance is prepaid prior
to the maturity date.
In June and September 2021, we made principal prepayments of
$15,000 and $5,000, respectively, and paid 1.0% prepayment fees.
The carrying value of the Term Loan was $21,319 and $40,899 as of
September 30, 2021 and December 31, 2020, respectively,
which consisted of the principal amounts outstanding and the End of
Term Charge accrual, less unamortized debt issuance costs that are
being amortized/accrued to interest expense over the term of the
Term Loan using the effective interest method.
In July 2021, having previously met the loan extension milestone,
we requested that the interest-only period be extended to August 1,
2022 and the maturity date be extended to July 1, 2024 in
accordance with the terms of the Amendment. The Lender granted the
extension of the interest-only period and maturity date and waived
the extension fee. As of September 30, 2021, the future
principal payments under the Term Loan consisted of nothing due in
2021, $3,878 due in 2022, $9,906 due in 2023 and $6,216 due in
2024, excluding the contractual End of Term Charges.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
On November 1, 2021, we entered into a Credit Agreement (the
“Credit Agreement”) with Wells Fargo Bank, National Association, as
administrative agent for the lenders, for credit facilities in an
aggregate principal amount of up to $40,000 with a maturity date of
November 1, 2024. The Credit Agreement consists of a $20,000 term
loan facility (the “Term Loan Facility”) and a $20,000 revolving
credit facility, $5,000 of which is available for the issuance of
letters of credit and $1,000 of which is available for swingline
loans (the “Revolving Credit Facility”), (collectively the “Credit
Facilities”), which are secured by substantially all of our assets.
The Term Loan Facility was funded upon execution of the Credit
Agreement with the proceeds used to repay our $20,000 Term Loan
with Hercules Capital and to pay fees and expenses incurred in
connection with the early repayment. The Revolving Credit Facility
remains available for future use and is expected to be used for
ongoing working capital requirements and other general corporate
purposes as needed. Payments under the Term Loan Facility are due
in consecutive quarterly installments on the last business day of
each of March, June, September and December, commencing on March
31, 2022. Interest accrues at either the base rate or LIBOR plus
the applicable margin, which varies based on our consolidated total
leverage ratio and will initially be 1.50% for base rate loans and
2.50% for LIBOR loans.
Note 6. Share-based
Compensation
We have an Equity Compensation Plan (the “Plan”), which allows for
grants in the form of incentive stock options, non-qualified stock
options, stock units, stock awards, stock appreciation rights, and
other stock-based awards. The Plan was amended and restated in June
2021 to increase the total number of shares available for grant
under the Plan by 10,000 shares. We also have a long-term incentive
program (“LTIP”), pursuant to which our senior executives have been
awarded stock options, restricted stock units (“RSUs”) and
performance stock units (“PSUs”).
The following is a summary of stock option activity under the Plan
as of and for the nine months ended September 30,
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares |
|
Weighted
Average
Exercise
Price |
|
Weighted
Average
Remaining
Contractual
Term (Years) |
|
Aggregate
Intrinsic
Value |
Outstanding at December 31, 2020
|
15,521 |
|
$ |
2.49 |
|
|
|
|
|
Granted |
2,591 |
|
4.39 |
|
|
|
|
|
Exercised |
(2,278) |
|
2.26 |
|
|
|
|
|
Cancelled / Forfeited |
(229) |
|
2.85 |
|
|
|
|
|
Outstanding at September 30, 2021
|
15,605 |
|
2.83 |
|
|
6.79 |
|
$ |
14,768 |
|
Exercisable at September 30, 2021
|
10,633 |
|
$ |
2.45 |
|
|
5.71 |
|
$ |
12,773 |
|
The following is a summary of PSU and RSU award activity under the
Plan as of and for the nine months ended September 30,
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Stock Units |
|
Restricted Stock Units |
|
Number of
Shares
|
|
Weighted
Average Grant
Date Fair
Value
|
|
Number of
Shares
|
|
Weighted
Average Grant
Date Fair
Value
|
Outstanding at December 31, 2020
|
1,641 |
|
$ |
2.61 |
|
|
1,567 |
|
$ |
2.77 |
|
Granted |
243 |
|
5.55 |
|
|
769 |
|
4.42 |
|
Incremental shares earned |
209 |
|
3.18 |
|
|
— |
|
— |
|
Vested / Settled |
(766) |
|
2.86 |
|
|
(832) |
|
2.76 |
|
Outstanding at September 30, 2021
|
1,327 |
|
$ |
3.04 |
|
|
1,504 |
|
$ |
3.62 |
|
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
The LTIP awards that vested during the nine months ended September
30, 2021 and 2020 were net-share settled such that we withheld
shares with a value equivalent to the employees’ tax obligations
for applicable income and other employment taxes, and remitted cash
to the appropriate taxing authorities. We withheld 626 and 425
shares during the nine months ended September 30, 2021 and 2020,
respectively, to satisfy tax obligations, which was determined
based on the fair value of the shares on their vesting date equal
to our closing stock price on such date. We paid $2,841 and $1,366
during the nine months ended September 30, 2021 and 2020,
respectively, to taxing authorities for the employees’ tax
obligations, which is reflected as a cash outflow from financing
activities within the Consolidated Statements of Cash Flows.
Net-share settlements have the effect of share repurchases as they
reduce the number of shares that would have otherwise been issued
as a result of the vesting.
Members of our Board of Directors also receive grants of RSUs that
vest in full one year from the date of grant. Directors may elect
to defer receipt of vested shares until retirement or separation
from the Board. During the nine months ended September 30,
2021,
30
shares were vested and deferred under this election.
In connection with Plan awards, we recognized share-based
compensation expense for the three and nine months ended
September 30, 2021 and 2020 as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Stock options |
$ |
1,170 |
|
|
$ |
1,045 |
|
|
$ |
2,947 |
|
|
$ |
2,801 |
|
Restricted stock units |
724 |
|
|
579 |
|
|
1,896 |
|
|
1,661 |
|
Performance stock units |
288 |
|
|
180 |
|
|
1,005 |
|
|
1,307 |
|
Total share-based compensation expense |
$ |
2,182 |
|
|
$ |
1,804 |
|
|
$ |
5,848 |
|
|
$ |
5,769 |
|
Note 7. Revenue, Significant Customers and
Concentration of Risk
We disaggregate our revenue by type of goods and services and
customer location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Types of goods and services |
|
|
|
|
|
|
|
Proprietary product sales, net |
$ |
20,827 |
|
|
$ |
15,765 |
|
|
$ |
58,512 |
|
|
$ |
43,177 |
|
Partnered product sales |
12,241 |
|
|
13,182 |
|
|
31,595 |
|
|
37,532 |
|
Total product revenue, net |
33,068 |
|
|
28,947 |
|
|
90,107 |
|
|
80,709 |
|
Licensing and development revenue |
3,682 |
|
|
4,321 |
|
|
15,833 |
|
|
8,763 |
|
Royalties |
11,441 |
|
|
6,735 |
|
|
29,312 |
|
|
15,994 |
|
Total revenue, net |
$ |
48,191 |
|
|
$ |
40,003 |
|
|
$ |
135,252 |
|
|
$ |
105,466 |
|
|
|
|
|
|
|
|
|
Customer location |
|
|
|
|
|
|
|
United States of America |
$ |
47,881 |
|
|
$ |
39,370 |
|
|
$ |
132,520 |
|
|
$ |
103,638 |
|
Europe |
310 |
|
|
633 |
|
|
2,732 |
|
|
1,828 |
|
Total revenue, net |
$ |
48,191 |
|
|
$ |
40,003 |
|
|
$ |
135,252 |
|
|
$ |
105,466 |
|
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Customers from which we derived 10% or more of our total net
revenue are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Teva |
47% |
|
45% |
|
45% |
|
42% |
McKesson Corporation |
13% |
|
12% |
|
13% |
|
12% |
AmerisourceBergen Corporation |
11% |
|
11% |
|
12% |
|
12% |
Cardinal Health |
10% |
|
11% |
|
11% |
|
11% |
AMAG |
<10% |
|
<10% |
|
<10% |
|
10% |
Note 8. Income Taxes
Our gross unrecognized tax benefits as of September 30, 2021
was $2,127 with no material changes during the three and nine
months then ended.
There
are no interest
or penalties accrued in relation to unrecognized tax benefits. We
will classify any future interest and penalties as a component of
income tax expense. We are subject to federal and state
examinations for the years 2017 and thereafter.
Note 9. Earnings per Share
Basic earnings per common share is computed by dividing net income
applicable to common stockholders by the daily weighted-average
number of common shares outstanding for the applicable period.
Diluted earnings per common share is computed in a similar manner,
except that the weighted average number of shares outstanding is
increased to reflect the potential dilution from the exercise or
conversion of securities into common stock. Diluted earnings per
share contemplates a complete conversion to common shares of all
convertible instruments only if such instruments are dilutive in
nature with respect to earnings per common share. The following
table sets forth the computation for basic and diluted earnings per
common share for the three and nine months ended September 30,
2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
$ |
5,393 |
|
|
$ |
4,996 |
|
|
$ |
13,606 |
|
|
$ |
4,815 |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
169,953 |
|
|
166,375 |
|
|
168,947 |
|
|
165,838 |
|
Dilutive effects of stock options and share-based
awards
issuable under equity compensation plans
|
5,175 |
|
|
3,280 |
|
|
5,990 |
|
|
3,921 |
|
Weighted average dilutive common shares outstanding |
175,128 |
|
|
169,655 |
|
|
174,937 |
|
|
169,759 |
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
Basic |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
0.03 |
|
Diluted |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
Anti-dilutive common stock equivalents
(1)
|
3,696 |
|
|
8,596 |
|
|
1,639 |
|
|
6,719 |
|
(1)
These common stock equivalents were outstanding for the period but
were not included in the computation of diluted earnings per share
for those periods as their inclusion would have had an
anti-dilutive effect.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
Note 10. Commitments and
Contingencies
Pending Litigation
From time to time, we may be involved in various legal matters
generally incidental to our business. Although the results of
litigation and claims cannot be predicted with certainty, after
discussion with legal counsel, we are not aware of any matters for
which the likelihood of a loss is probable and reasonably estimable
and which could have a material impact on our consolidated
financial condition, liquidity, or results of
operations.
On October 23, 2017, Randy Smith filed a complaint in the District
of New Jersey, captioned
Randy Smith, Individually and on Behalf of All Others Similarly
Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M.
Powell
(“Smith”),
Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of
persons who purchased or otherwise acquired Antares securities
between December 21, 2016 and October 12, 2017, inclusive,
asserting claims for purported violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, as amended, against
Antares, Robert F. Apple and Fred M. Powell. The Smith complaint
contends that defendants made false and/or misleading statements
and/or failed to disclose that: (i) Antares had provided
insufficient data to the FDA in connection with the NDA for
XYOSTED®;
and (ii) accordingly, Antares had overstated the approval prospects
for XYOSTED®.
On July 27, 2018, the court entered an order appointing Serghei
Lungu as lead plaintiff, Pomerantz LLP as lead counsel, and Lite
DePalma Greenberg, LLC as liaison counsel for plaintiff. On August
3, 2018, the parties submitted a stipulation and proposed order,
setting forth an agreed-upon schedule for responding to the
complaint, which the court granted. Pursuant to that order,
plaintiff filed a Consolidated Amended Class Action Complaint on
October 9, 2018. On November 26, 2018, defendants filed a motion to
dismiss. Plaintiff filed an opposition to the motion on January 10,
2019 and defendants filed a reply in support of their motion on
February 25, 2019. On July 2, 2019, the court dismissed the
complaint in its entirety without prejudice. On July 29, 2019,
plaintiff filed a Consolidated Second Amended Class Action
Complaint against the same parties alleging substantially similar
claims. On September 12, 2019, defendants filed a motion to dismiss
the Consolidated Second Amended Class Action Complaint. Plaintiffs’
opposition was filed on October 28, 2019 and defendants’ reply in
support of their motion was filed on November 27, 2019. On April
28, 2020, the court dismissed the Consolidated Second Amended Class
Action Complaint in its entirety. The court further ordered that
plaintiff may file an amended complaint by May 29, 2020 and provide
the court with a form of the amended complaint that indicates in
what respect(s) it differs from the complaint which it proposes to
amend. On May 29, 2020, plaintiff filed a Consolidated Third
Amended Class Action Complaint and defendants filed a motion to
dismiss on July 10, 2020. Briefing on defendants’ motion was
complete on August 25, 2020. On February 26, 2021, the court
granted defendants’ motion to dismiss with prejudice, and on March
29, 2021 the plaintiff filed a notice of appeal. On June 21, 2021,
plaintiff-appellant filed his opening brief. Defendants-appellees’
response brief was filed on August 4, 2021 and
plaintiff-appellant’s reply was filed on September 8, 2021. We
believe the claims in the
Smith
action lack merit and intends to continue to defend them
vigorously.
On January 12, 2018, a stockholder of the Company filed a
derivative civil action, captioned
Chiru Mackert, derivatively on behalf of Antares Pharma, Inc., v.
Robert F. Apple, et al.,
in the Superior Court of New Jersey Chancery Division, Mercer
County (Case No. C-000011-18). On January 17, 2018, another
stockholder filed a derivative action in the same court,
captioned
Vikram Rao, Derivatively on Behalf of Antares Pharma, Inc. v.
Robert F. Apple, et al.
(Case No. C-000004-18). Both complaints name Robert F. Apple, Fred
M. Powell, Thomas J. Garrity, Jacques Gonella, Anton Gueth, Leonard
S. Jacob, Marvin Samson and Robert P. Roche, Jr. as defendants, and
the Company as nominal defendant, and they assert claims for breach
of fiduciary duties, unjust enrichment, abuse of control, gross
mismanagement, and waste of corporate assets arising from the same
facts underlying the
Smith
securities class action. The plaintiffs seek damages, corporate
governance and internal procedure reforms and improvements,
restitution, reasonable attorneys’ fees, experts’ fees, costs, and
expenses. The parties have filed a stipulation and order
consolidating the two actions and staying the proceedings pending
the court’s decision on defendants’ motion to dismiss the
Smith
action; the motion to dismiss in
Smith
was granted on February 26, 2021 and a notice of appeal was filed
on March 29, 2021. Plaintiff’s-appellant’s appeal in
Smith
is still pending.
ANTARES PHARMA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except per share amounts)
On January 17, 2018, a stockholder of the Company filed a
derivative civil action, captioned
Robert Clark, Derivatively on Behalf of Antares Pharma, Inc. v.
Robert F. Apple, et al.
(“Clark”)
(Case No. 3:18-cv-00703-MAS-DEA), against Robert F. Apple, Thomas
J. Garrity, Jacques Gonella, Leonard S. Jacob, Marvin Samson, Anton
G. Gueth and Robert P. Roche, Jr. as defendants, and the Company as
a nominal defendant. The action was filed in the U.S. District
Court for the District of New Jersey and asserts claims for breach
of fiduciary duties, unjust enrichment, abuse of control, waste of
corporate assets, and a violation of Section 14(a) of the
Securities Exchange Act of 1934. This complaint relates to the same
facts underlying the
Smith
securities class action and the other derivative actions. The
plaintiff in
Clark
seeks damages, corporate governance and internal procedure reforms
and improvements, reasonable attorneys’ fees, accountants’ and
experts’ fees, costs, and expenses. The parties have filed a
stipulation and order staying the action pending the court’s
decision on defendants’ motion to dismiss the
Smith
action; the motion to dismiss in
Smith
was granted on February 26, 2021 and a notice of appeal was filed
on March 29, 2021. After the expiration of all appeals related to
the
Smith
dismissal, the parties shall submit a proposed order regarding the
derivative action. Plaintiff’s-appellant’s appeal in
Smith
is still pending.
Note 11. Subsequent Events
TLANDO®
Exclusive License Agreement
In October 2021, we entered into an exclusive license agreement
(the “Agreement”) with Lipocine Inc. (“Lipocine”) for the product
TLANDO®
(testosterone undecanoate) in the U.S., a twice-daily oral
formulation of testosterone for testosterone replacement therapy
indicated for conditions associated with a deficiency or absence of
endogenous testosterone, or hypogonadism in adult males.
TLANDO®
was granted tentative approval from the FDA based upon an FDA
conclusion at the time that TLANDO®
met all required efficacy, quality and safety standards.
TLANDO®
may be eligible for final approval and marketing in the U.S. upon
expiration of the exclusivity period previously granted to Clarus
Therapeutics, Inc. for JATENZO®
on March 27, 2022; however, there is no assurance FDA approval will
be received. Under the terms of the Agreement, we paid Lipocine an
upfront payment of $11,000. Lipocine is eligible for additional
milestone payments up to $10,000 and tiered royalty and commercial
milestones based on net sales of TLANDO® in the U.S. We will be
responsible for the manufacturing and commercialization of
TLANDO®.
The Agreement also grants us the option to license and develop LPCN
1111 (TLANDO XR) in the U.S., a potential once daily oral
testosterone product containing testosterone tridecanoate in
development for the treatment of hypogonadism in adult males.
Results of the Phase 2b study for TLANDO XR met its primary
endpoints, including identifying the dose expected to be tested in
a Phase 3 study. TLANDO XR was well tolerated with no drug-related
severe or serious adverse events reported and the target Phase 3
dose also met its primary and secondary endpoints in the Phase 2b
study. TLANDO XR is an investigational drug containing tridecanoate
and has not been approved by the FDA, nor has the name been
approved. Upon exercise of the option, we will pay an additional
$4,000 in license fees in two installments and will be responsible
for additional development and commercial milestone payments as
well as tiered royalties on net sales of TLANDO XR in the U.S. In
addition, we will be responsible for completing the development
program including the conduct of a phase 3 clinical trial and
applying for regulatory approval in the U.S.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (“MD&A”) is designed to provide a reader
of our financial statements with a narrative from the perspective
of management on our financial condition, results of operations,
liquidity and certain other factors that may affect our future
results. Our MD&A is presented in six sections.
•Forward-Looking
Statements
•Company
Overview
•Results
of Operations
•Liquidity
and Capital Resources
•Critical
Accounting Policies and Use of Estimates
•Off-Balance
Sheet Arrangements
Our MD&A should be read in conjunction with the condensed
consolidated financial statements and related condensed footnotes
included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
The terms “Antares,” “we,” “our,” “us” or the “Company” in this
Quarterly Report on Form 10-Q, unless the context otherwise
requires, refer to Antares Pharma, Inc. and its wholly owned
subsidiaries.
Forward-Looking Statements
Certain statements in this report, including statements in the
management’s discussion and analysis section set forth below, may
be considered “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. Forward-looking statements can be
identified by the words “expect,” “estimate,” “plan,” “project,”
“anticipate,” “should,” “intend,” “may,” “will,” “believe,”
“continue” or other words and terms of similar meaning in
connection with any discussion of, among other things, future
operating or financial performance, strategic initiatives and
business strategies, regulatory or competitive environments, our
intellectual property and product development. In particular, these
forward-looking statements include, among others, statements
about:
•our
expectations about the ongoing COVID-19 pandemic (the “Pandemic”)
and any potential disruption or impact to our operations, financial
position or cash flows;
•our
expectations regarding the continued successful commercialization
of XYOSTED®
(testosterone enanthate) injection and the continued growth in
prescriptions and revenues related thereto;
•our
expectations regarding continued sales of
OTREXUP®
(methotrexate) injection;
•our
expectations regarding the commercialization of
NOCDURNA®
(desmopressin acetate) in the U.S. under a licensing agreement with
Ferring International Center S.A. and its affiliates, (“Ferring”)
and future sales and revenue from the same;
•our
expectations regarding future FDA approval of
TLANDO®
in the U.S. under a licensing agreement with Lipocine Inc.
(“Lipocine”), the manufacturing and commercialization of
TLANDO®
and future sales and revenue from the same;
•our
expectations regarding whether we will exercise the option for
TLANDO XR and if exercised, the future timing and success of the
clinical development program for TLANDO XR and future FDA approval,
market acceptance and revenue from the same;
•our
expectations regarding the ability of our partner, Teva
Pharmaceutical Industries, Ltd. (“Teva”), to continue to
successfully commercialize Epinephrine Injection USP, the generic
equivalent version of EpiPen®
(“generic epinephrine injection”), and any future revenue related
thereto;
•our
expectations regarding the ability of AMAG Pharmaceuticals, Inc.
(“AMAG”) to continue to commercialize Makena®
(hydroxyprogesterone caproate injection), and our continued future
sales to AMAG and royalty revenue from the same, in light of the
FDA proposal to withdraw approval of Makena®
(hydroxyprogesterone caproate injection), AMAG’s request for a
hearing to maintain its approval of Makena®
(hydroxyprogesterone caproate injection), and the timing and
outcome of any hearings and future regulatory actions by the
FDA;
•our
expectations regarding continued sales of Sumatriptan Injection USP
to our partner, Teva, and Teva’s ability to successfully distribute
and sell Sumatriptan Injection USP;
•our
expectations regarding continued product development with Teva of
the teriparatide and exenatide disposable pen injectors, Teva’s
ability to obtain FDA approval and AB-rating for each of those
products, and if approved, Teva’s ability to successfully
commercialize the teriparatide disposable pen injector product
outside the U.S.;
•our
expectations about the development of a rescue pen for an
undisclosed drug with our partner Pfizer Inc. (“Pfizer”) and
potential future regulatory approval and future revenue from the
same;
•our
expectations about our development activities with Idorsia
Pharmaceuticals Ltd (“Idorsia”) and the timing and results of the
Phase 3 clinical trial of the drug device combination product for
selatogrel, a new chemical entity being developed for the treatment
of a suspected acute myocardial infarction (“AMI”) in adult
patients with a history of AMI, and the potential future FDA and
global regulatory approval of the same;
•our
expectations about the development of ATRS-1902 for adrenal crisis
rescue, including the timing and results of clinical trials and our
anticipated 505(b)(2) NDA filing with the FDA;
•our
expectations about our other internal and external research and
development projects, including but not limited to ATRS-1901, the
timing and results of clinical trials, and our anticipated
continued reliance on third parties in conducting studies, trials
and other research and development activities;
•our
expectations about the timing and outcome of pending or potential
claims and litigation, including without limitation, the pending
securities class action and derivative actions;
•our
anticipated continued reliance on contract manufacturers to
manufacture, assemble and package our products;
•our
anticipated continued reliance on third parties to provide certain
services for our products including logistics, warehousing,
distribution, invoicing, contract administration and chargeback
processing;
•our
sales and marketing plans;
•our
expectations about our future revenues, including the 2021 revenue
guidance, our cash flows and our ability to support our operations
and maintain profitability;
•our
estimates and expectations regarding the sufficiency of our cash
resources, anticipated capital requirements and our ability to
obtain additional financing, if needed;
•our
expectations and estimates made in connection with current
accounting practices, including but not limited to, the carrying
value of our deferred tax assets and our ability to utilize net
operating loss and other credit carryforwards to offset future U.S.
federal taxable income;
•the
potential impact of new accounting pronouncements and tax
legislation; and
•other
statements regarding matters that are not historical facts or
statements of current condition.
These forward-looking statements are based on assumptions that we
have made in light of our industry experience as well as our
perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate
under the circumstances. As you read and consider this report, you
should understand that these statements are not guarantees of
performance results. Forward-looking statements involve known and
unknown risks, uncertainties and assumptions, and other factors
that may cause our or our industry’s actual results, levels of
activity, performance or achievements to be materially different
from the information expressed or implied by these forward-looking
statements. While we believe that we have a reasonable basis for
each forward-looking statement contained in this report, we caution
you that these statements are based on a combination of facts and
factors currently known by us and projections of the future about
which we cannot be certain. Many factors may affect our ability to
achieve our objectives, including:
•potential
business interruptions and/or any financial or operational impact
as a result of the Pandemic;
•delays
in product introduction or unsuccessful marketing and
commercialization efforts by us or our partners;
•interruptions
in supply or an inability to adequately manage third party contract
manufacturers to meet customer supply requirements;
•our
inability to obtain or maintain adequate third-party payer coverage
of marketed products;
•the
timing and results of our or our partners’ research projects or
clinical trials of product candidates in development including
projects with Teva, Pfizer and Idorsia;
•actions
by the FDA or other regulatory agencies with respect to our
products or product candidates of our partners;
•our
inability to generate or sustain continued growth in product sales
and royalties;
•the
lack of market acceptance of our and our partners’ products and
future revenues from these products;
•a
decrease in business from our major customers and
partners;
•our
inability to compete successfully against new and existing
competitors or to leverage our research and development
capabilities or our marketing capabilities;
•our
inability to establish and maintain our sales and marketing
capability, our inability to effectively market our services or
obtain and maintain arrangements with our customers, partners and
manufacturers;
•changes
or delays in the regulatory review and approval
process;
•our
inability to effectively protect our intellectual
property;
•costs
associated with future litigation and the outcome of such
litigation;
•our
inability to attract and retain key personnel; and
•adverse
economic and political conditions.
In addition, you should refer to Item 1A of Part I of our Annual
Report on Form 10-K for the year ended December 30, 2020 and Item
1A of Part II of this Quarterly Report on Form 10-Q for a
discussion of other risk factors that may cause our actual results
to differ materially from those described by our forward-looking
statements. As a result of these factors, we cannot assure you that
the forward-looking statements contained in this report will prove
to be accurate and, if our forward-looking statements prove to be
inaccurate, the inaccuracy may be material.
Readers of this report are encouraged to understand forward-looking
statements to be strategic objectives rather than absolute targets
of future performance. Forward-looking statements speak only as of
the date they are made. We do not intend to update publicly any
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements are made or to
reflect the occurrence of unanticipated events except as required
by law. In light of the significant uncertainties in these
forward-looking statements, you should not regard these statements
as a representation or warranty by us or any other person that we
will achieve our objectives and plans in any specified time frame,
if at all.
The following discussion and analysis, the purpose of which is to
provide investors and others with information that we believe to be
necessary for an understanding of our financial condition, changes
in financial condition and results of operations, should be read in
conjunction with the financial statements, notes thereto and other
information contained in this report.
Company Overview
Antares Pharma, Inc. is a specialty pharmaceutical company focused
primarily on the development and commercialization of
pharmaceutical products and technologies that address unmet needs
in targeted therapeutic areas. We develop, manufacture and
commercialize, for ourselves or with partners, novel therapeutic
products using our advanced drug delivery systems that are designed
to provide commercial or functional advantages, such as improved
safety and efficacy, convenience, improved tolerability, and
enhanced patient comfort and adherence. We also seek product
opportunities that complement and leverage our commercial platform.
We have a portfolio of proprietary and partnered commercial
products and ongoing product development programs in various stages
of development. We have formed significant strategic alliances and
partnership arrangements with industry leading pharmaceutical
companies including Pfizer, Idorsia, Teva and AMAG.
We market and sell in the U.S., our proprietary product
XYOSTED®
(testosterone enanthate) injection, indicated for testosterone
replacement therapy in adult males for conditions associated with a
deficiency or absence of endogenous testosterone.
XYOSTED®
is the only FDA approved subcutaneous testosterone enanthate
product for once-weekly, at-home self-administration.
XYOSTED®
was approved by the FDA and launched for commercial sale in late
2018. In August 2020, we entered into an exclusive distribution
agreement with Lunatus to distribute and promote the sale of
XYOSTED®
in Saudi Arabia and the United Arab Emirates. Lunatus is
responsible for obtaining regulatory approval and, assuming
approval, for the promotion and commercialization of the product in
the territories.
We also market and sell in the U.S., our proprietary product
OTREXUP®
(methotrexate) injection, which is a subcutaneous methotrexate
injection for once weekly self-administration with an easy-to-use,
single dose, disposable auto injector, indicated for adults with
severe active rheumatoid arthritis, children with active
polyarticular juvenile idiopathic arthritis and adults with severe
recalcitrant psoriasis.
In October 2020, we entered into an exclusive license agreement
(the “License Agreement”) with Ferring for the marketed product
NOCDURNA®
(desmopressin acetate) in the United States, which is indicated for
the treatment of nocturia due to nocturnal polyuria (“NP”) in
adults who awaken at least two times per night to urinate. Under
the terms of the License Agreement, we paid Ferring an upfront
payment of $5.0 million upon execution and paid an additional $2.5
million on October 1, 2021. Ferring is eligible for tiered
royalties and additional commercial milestone payments potentially
totaling up to $17.5 million based on our net sales of
NOCDURNA®
in the United States. We began detailing
NOCDURNA®
with a soft launch in the fourth quarter of 2020 and are currently
executing a reintroduction of the product through a comprehensive
re-launch strategy to increase awareness and demand.
In October 2021, we entered into an exclusive license agreement
(the “Agreement”) with Lipocine for the product
TLANDO®
(testosterone undecanoate) in the U.S., a twice-daily oral
formulation of testosterone for testosterone replacement therapy
indicated for conditions associated with a deficiency or absence of
endogenous testosterone, or hypogonadism in adult males.
TLANDO®
was granted tentative approval from the FDA based upon an FDA
conclusion at the time that TLANDO®
met all required efficacy, quality and safety standards.
TLANDO®
may be eligible for final approval and marketing in the U.S. upon
expiration of the exclusivity period previously granted to Clarus
Therapeutics, Inc. for JATENZO®
on March 27, 2022; however, there is no assurance FDA approval will
be received. Under the terms of the Agreement, we paid Lipocine an
upfront payment of $11.0 million. Lipocine is eligible for
additional milestone payments up to $10.0 million and tiered
royalty and commercial milestones based on net sales of TLANDO® in
the U.S. We will be responsible for the manufacturing and
commercialization of TLANDO®.
The Agreement also grants us the option to license and develop LPCN
1111 (TLANDO XR) in the U.S., a potential once daily oral
testosterone product containing testosterone tridecanoate in
development for the treatment of hypogonadism in adult males.
Results of the Phase 2b study for TLANDO XR met its primary
endpoints, including identifying the dose expected to be tested in
a Phase 3 study. TLANDO XR was well tolerated with no drug-related
severe or serious adverse events reported and the target Phase 3
dose also met its primary and secondary endpoints in the Phase 2b
study. TLANDO XR is an investigational drug containing tridecanoate
and has not been approved by the FDA, nor has the name been
approved. Upon exercise of the option, we will be required to pay
an additional $4.0 million in license fees in two installments and
will be responsible for additional development and commercial
milestone payments as well as tiered royalties on net sales of
TLANDO XR in the U.S. In addition, we will be responsible for
completing the development program including the conduct of a phase
3 clinical trial and applying for regulatory approval in the
U.S.
In collaboration with Teva, we developed a version of our
VIBEX®
auto injector for use in a generic epinephrine auto injector
product that was approved by the FDA in August 2018 and launched in
late fourth quarter of 2018. Teva’s Epinephrine Injection USP is
indicated for emergency treatment of severe allergic reactions
including those that are life threatening (anaphylaxis) in adults
and certain pediatric patients and was approved as a generic drug
product with an AB rating, meaning that it is therapeutically
equivalent to the branded products EpiPen®
and EpiPen Jr®
and therefore, subject to state law, substitutable at the pharmacy.
We are the exclusive supplier of the device and Teva is responsible
for commercialization and distribution of the finished product, for
which we also receive royalties on Teva’s net sales.
Through our commercialization partner Teva, we sell Sumatriptan
Injection USP indicated in the U.S. for the acute treatment of
migraine and cluster headache in adults.
Under an exclusive license and development agreement with AMAG, we
developed, manufacture and supply a variation of our
VIBEX®
QuickShot®
subcutaneous auto injector for use with AMAG’s progestin hormone
drug Makena®
(hydroxyprogesterone caproate injection), indicated to help reduce
the risk of preterm birth in women pregnant with one baby and who
spontaneously delivered one preterm baby in the past. The
Makena®
(hydroxyprogesterone caproate injection) subcutaneous auto injector
was approved by the FDA and commercialized in February 2018. We are
the exclusive supplier of the devices and the final assembled and
packaged commercial product and receive royalties on AMAG’s net
sales of the product. In October 2019, AMAG announced that the
FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met
to better understand and interpret the PROLONG (Progestin’s Role in
Optimizing Neonatal Gestation) confirmatory clinical trial for
Makena®
(hydroxyprogesterone caproate) injection. Nine advisory committee
members voted to recommend that the FDA pursue withdrawal of
approval for Makena®
and seven committee members voted to leave the product on the
market under accelerated approval and require a new confirmatory
trial. In October 2020, AMAG received notice that the FDA is
proposing to withdraw approval of Makena®
(hydroxyprogesterone caproate injection). AMAG has formally
requested a public hearing in response to the FDA’s proposal to
withdraw its approval and has stated that it remains committed to
working with the FDA to maintain patient access to
Makena®
as a treatment option to reduce pre-term birth.
We are also collaborating with Teva on a multi-dose pen for a
generic form of Forteo®
(teriparatide rDNA origin injection) for the treatment of
osteoporosis, and another multi-dose pen for a generic form of
BYETTA®
(exenatide injection) for the treatment of type 2 diabetes. Teva
continues to work through the U.S. regulatory process with the FDA
for exenatide and teriparatide using the ANDA pathway. Teva
recently launched Teriparatide Injection (“teriparatide”), the
generic version of Eli Lilly’s branded product
Forsteo®
featuring the Antares multi-dose pen platform in several countries
outside the United States. Antares is responsible for the
manufacturing and supply of the multi-dose pen utilized in Teva’s
generic teriparatide product under an exclusive development,
license and supply agreement with Teva, the scope of which is
worldwide.
In August 2018, we entered into a development agreement with Pfizer
to develop a combination drug device rescue pen. This rescue pen
will utilize the Antares QuickShot®
auto injector and an undisclosed Pfizer drug. We are developing the
product and Pfizer will be responsible for obtaining FDA approval
of the combination product. We entered into a separate commercial
supply agreement with Pfizer pursuant to which we will provide
fully packaged commercial ready finished product to Pfizer and
Pfizer will then be responsible for commercializing the product in
the U.S., pending FDA approval, for which we will receive royalties
on net sales.
In November 2019, we entered into a global agreement with Idorsia
to develop a novel, drug-device product containing selatogrel. The
new chemical entity selatogrel is being developed for the treatment
of a suspected acute myocardial infarction (“AMI”) in adult
patients with a history of AMI. Idorsia will pay for the
development of the combination product and will be responsible for
applying for and obtaining global regulatory approvals for the
product. The parties intend to enter into a separate commercial
license and supply agreement pursuant to which we will provide
fully assembled and labelled product to Idorsia at cost plus
margin. Idorsia will then be responsible for global
commercialization of the product, pending FDA or foreign approval.
We will be entitled to receive royalties on net sales of the
commercial product.
In June 2021, Idorsia announced it was initiating its Phase 3
registration study to evaluate the efficacy and safety of
self-administered subcutaneous selatogrel, Idorsia’s
P2Y12
receptor antagonist, in suspected AMI utilizing Antares’
QuickShot®
auto-injector. The study is an international, multi-center,
double-blind, randomized, placebo-controlled, parallel-group, Phase
3 study to assess the clinical efficacy and safety of 16 mg
selatogrel when self-administered (on top of standard-of-care) upon
occurrence of symptoms suggestive of an acute myocardial
infarction. The primary efficacy endpoint is the occurrence of
death from any cause, or non-fatal AMI after any study treatment
self-administration. The study will enroll approximately 14,000
patients who are at high risk of recurrent AMI, at approximately
250 sites in approximately 30 countries. A Special Protocol
Assessment has been agreed with the FDA for Idorsia’s selatogrel,
which indicates the FDA is in agreement with the adequacy and
acceptability of specific critical elements of overall protocol
design (e.g., entry criteria, dose selection, endpoints and planned
analyses) for a study intended to support a future marketing
application. In December 2020, the FDA designated Idorsia’s
investigation of selatogrel for the treatment of a suspected AMI in
adult patients with a history of AMI as a “fast-track” development
program. This designation is intended to promote communication and
collaboration between the FDA and pharmaceutical companies for
drugs that treat serious conditions and fill an unmet medical
need.
We are also committed to advancing our internal research and
development programs and continue to invest in the development of
our proprietary product pipeline. Our research and development
efforts are focused primarily on leveraging our existing product
and technology platforms by broadening their applications for use
in other drug device combination products, as well as exploring new
pharmaceutical products, technologies and drug delivery
methods.
In 2019, we initiated development of a proprietary drug device
combination product for the urology oncology market, identified as
ATRS-1901. We have conducted formulation development work and
non-clinical studies to help advance this program. In 2020, we
received a response from the FDA regarding our pre-IND
(Investigational New Drug) submission and believe we have
determined our clinical and regulatory pathway
forward.
In 2019, we identified a program to develop a proprietary drug
device combination product for the endocrinology market, identified
as ATRS-1902. The development program supports a proposed
indication for the treatment of acute adrenal insufficiency, known
as adrenal crisis, in adults and adolescents, using a novel
proprietary auto-injector platform to deliver a liquid stable
formulation of hydrocortisone. We conducted initial formulation
work and developed a working prototype of a new device to support
this program. We received a response from the FDA regarding our
pre-IND submission and believe we have determined the regulatory
and clinical path forward.
In June 2021, we submitted an IND application with the FDA for the
initiation of a Phase 1 clinical study of ATRS-1902 for adrenal
crisis rescue. The IND application for ATRS-1902, and its
corresponding development program, supports a proposed indication
for the treatment of acute adrenal insufficiency, known as adrenal
crisis, in adults and adolescents, using a novel proprietary
auto-injector platform to deliver liquid stable formulation of
hydrocortisone. The IND application includes the protocol for an
initial clinical study to compare the pharmacokinetic profile of
our novel formulation of hydrocortisone versus
Solu-Cortef®,
which is an anti-inflammatory glucocorticoid and is the current
standard of care for the management of acute adrenal
crises.
In July 2021, the FDA accepted our IND for ATRS-1902 enabling us to
initiate our Phase 1 clinical study. The Phase 1 clinical study
designed to evaluate the safety, tolerability and pharmacokinetics
(“PK”) of a liquid stable formulation of hydrocortisone was
initiated in September 2021. The study is a cross-over design to
establish the PK profile of ATRS-1902 (100 mg) compared to
Solu-Cortef®
(100 mg), the reference-listed drug, in 32 healthy adults. After
this study is completed, we expect to conduct a bioequivalence
study and second human factor study utilizing our proprietary
auto-injector technology which has been developed for high
reliability and ease-of-use in emergency situations by the patient
or caregiver. We believe these studies will be the basis of our
anticipated 505(b)(2) NDA filing with the FDA towards the end of
2022.
COVID-19
In December 2019, a novel strain of coronavirus (“COVID-19”)
emerged in China, and has since spread worldwide, including every
state in the United States. On March 11, 2020, the World Health
Organization declared the outbreak a Pandemic and on March 13,
2020, the United States declared a national emergency with respect
to the outbreak. The Pandemic has impacted global economic activity
and lead to disruptions in supply chain, labor shortages, business
closures, travel restrictions and other health, safety and social
distancing requirements.
We have taken several measures to help minimize the impact of the
Pandemic on our business and have implemented safety measures and
protocols to protect the health and safety of our employees and
comply with governmental and public health regulations while
working to ensure the sustainability of our business operations and
continuity of product supply. We continue to monitor the situation
and potential effects on our business, suppliers, partners and
workforce.
Most of our employees, including our corporate and administrative
functions, have returned to work onsite at our facilities. Our
sales force has resumed in-person office visits in most areas and
continue to reach healthcare providers virtually in other
territories based on the varying restrictions, protocols and phased
re-openings. The restrictions and closures during the Pandemic
have, to some extent, limited or reduced patient access to
physicians for non-essential services. These limitations have had,
and may continue to have, an impact on the rate of new
prescriptions for our proprietary products. Our partners may also
experience a decrease or fluctuation in demand for our partnered
products due to the Pandemic or the related restrictions. Although
we have not experienced any significant delays or disruption in our
development programs due to the Pandemic, a worsening or sustained
outbreak could also impact our or our partners’ clinical trials or
lead to delays or disruptions in activities with the
FDA.
While we have taken measures to help minimize the potential impact
of the Pandemic and various government orders, and believe any
potential or significant disruption, when and if experienced, could
be temporary, there is continued uncertainty around the timing and
duration of the potential disruption, and the magnitude of any
potential impact. As a result, we are unable to estimate the
potential impact on our operations or cash flows as of the date of
this filing. For more information on these risks see Item 1A of
Part I of our Annual Report on Form 10-K for the year ended
December 31, 2020 as filed with the Securities and Exchange
Commission.
Results of Operations
The following is an analysis and discussion of our operations for
the three and nine months ended September 30, 2021 as compared
to the same periods in 2020. Operating results for the three and
nine months ended September 30, 2021 are not necessarily
indicative of the results that may be expected for the full year
ending December 31, 2021.
Revenue, Net
We generate revenue from proprietary and partnered product sales,
license and development activities and royalty arrangements. The
following table provides details about the components and drivers
of our overall revenue growth:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Increased / (Decreased) |
|
Nine Months Ended
September 30, |
|
Increased / (Decreased) |
2021 |
|
2020 |
|
$ |
|
% |
|
2021 |
|
2020 |
|
$ |
|
% |
Proprietary product sales, net |
$ |
20,827 |
|
|
$ |
15,765 |
|
|
$ |
5,062 |
|
|
32.1 |
% |
|
$ |
58,512 |
|
|
$ |
43,177 |
|
|
$ |
15,335 |
|
|
35.5 |
% |
Partnered product sales |
12,241 |
|
|
13,182 |
|
|
(941) |
|
|
(7.1) |
% |
|
31,595 |
|
|
37,532 |
|
|
(5,937) |
|
|
(15.8) |
% |
Total product revenue, net |
33,068 |
|
|
28,947 |
|
|
4,121 |
|
|
14.2 |
% |
|
90,107 |
|
|
80,709 |
|
|
9,398 |
|
|
11.6 |
% |
Licensing and development revenue |
3,682 |
|
|
4,321 |
|
|
(639) |
|
|
(14.8) |
% |
|
15,833 |
|
|
8,763 |
|
|
7,070 |
|
|
80.7 |
% |
Royalties |
11,441 |
|
|
6,735 |
|
|
4,706 |
|
|
69.9 |
% |
|
29,312 |
|
|
15,994 |
|
|
13,318 |
|
|
83.3 |
% |
Total revenue, net |
$ |
48,191 |
|
|
$ |
40,003 |
|
|
$ |
8,188 |
|
|
20.5 |
% |
|
$ |
135,252 |
|
|
$ |
105,466 |
|
|
$ |
29,786 |
|
|
28.2 |
% |
Product Revenue, Net
Net revenue from product sales for the three months ended September
30, 2021 increased 14.2% primarily due to increased sales of our
proprietary product XYOSTED®.
For the nine months ended September 30, 2021, net revenue from
product sales increased 11.6% primarily driven by increased sales
of our proprietary products, XYOSTED®
and NOCDURNA®,
partially offset by a reduction in sumatriptan sales to Teva and
sales of Makena®
subcutaneous auto-injectors to AMAG.
Sales of our proprietary products XYOSTED®,
OTREXUP®
and NOCDURNA®
are presented net of estimated product returns and sales
allowances. The increases in proprietary product sales of 32.1% and
35.5% for the three and nine months ended September 30, 2021,
respectively, were primarily attributable to continued growth in
prescriptions and sales of XYOSTED®
and new sales of NOCDURNA®,
which we in-licensed and began detailing in the fourth quarter of
2020.
We also manufacture and sell devices, components and fully
assembled and packaged product to our partners. Partnered product
sales decreased 7.1% for the three months ended September 30, 2021
due to a decrease in epinephrine auto injector shipments and
sumatriptan sales to Teva and lower production and sales volumes of
Makena®
for AMAG, partially offset by higher sales volumes of teriparatide
to Teva. For the nine months ended September 30, 2021, partnered
product sales decreased 15.8% due to a decrease in sumatriptan
sales to Teva, lower production and sales volumes of
Makena®
for AMAG and a decrease in shipments of epinephrine auto injectors
to Teva, partially offset by higher teriparatide sales to
Teva.
Licensing and Development Revenue
Licensing and development revenues include license fees received
from partners for the right to use our intellectual property and
amounts earned in joint development arrangements with partners
under which we perform joint development activities or develop new
products on their behalf. Licensing and development revenue
decreased 14.8% for the three months ended September 30, 2021
primarily driven by fluctuations in timing of various stages and
phases in development activities. For the nine months ended
September 30, 2021, licensing and development revenue increased
80.7% primarily as a result of incremental development and
maintenance activities with Teva to support replacement of molds
and tooling related to the commercial production of the epinephrine
auto injector and continuing development activities under the other
ongoing partnered development projects, partially offset by a
decline in development activities with Pfizer.
Royalties
Royalty revenue increased 69.9% and 83.3% for the three and nine
months ended September 30, 2021, respectively, principally due
to an increase in royalties from Teva on its net sales of generic
EpiPens®.
Cost of Revenue
The following table summarizes our cost of product sales and
development revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Increased / (Decreased) |
|
Nine Months Ended
September 30, |
|
Increased / (Decreased) |
2021 |
|
2020 |
|
$ |
|
% |
|
2021 |
|
2020 |
|
$ |
|
% |
Cost of product sales |
$ |
14,039 |
|
|
$ |
13,615 |
|
|
$ |
424 |
|
|
3.1 |
% |
|
$ |
38,167 |
|
|
$ |
38,556 |
|
|
$ |
(389) |
|
|
(1.0) |
% |
Cost of development revenue |
2,390 |
|
|
2,902 |
|
|
(512) |
|
|
(17.6) |
% |
|
11,147 |
|
|
5,485 |
|
|
5,662 |
|
|
103.2 |
% |
Total cost of revenue |
$ |
16,429 |
|
|
$ |
16,517 |
|
|
$ |
(88) |
|
|
(0.5) |
% |
|
$ |
49,314 |
|
|
$ |
44,041 |
|
|
$ |
5,273 |
|
|
12.0 |
% |
Fluctuations in cost of product sales is generally a function of
the product revenue mix in the respective periods. Proprietary
products generally have a lower cost of sales as a percentage of
revenue than partnered product sales.
Cost of development revenue decreased 17.6% for the three months
ended September 30, 2021 and increased 103.2% for the nine months
ended September 30, 2021 primarily due to, and consistent with, the
moderate quarterly decline and significant year-to-date growth in
development revenue from partnered development activities,
respectively, as shown in the revenue table above.
Research and Development Expenses
Research and development expenses consist of external costs for
clinical studies and analysis activities, design work and prototype
development, FDA application fees, personnel costs and other
general operating expenses associated with our research and
development activities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Increased / (Decreased) |
|
Nine Months Ended
September 30, |
|
Increased / (Decreased) |
2021 |
|
2020 |
|
$ |
|
% |
|
2021 |
|
2020 |
|
$ |
|
% |
Research and development |
$ |
3,923 |
|
|
$ |
2,405 |
|
|
$ |
1,518 |
|
|
63.1 |
% |
|
$ |
10,610 |
|
|
$ |
7,803 |
|
|
$ |
2,807 |
|
|
36.0 |
% |
Research and development (“R&D”) expenses increased 63.1% and
36.0% for the three and nine months ended September 30, 2021,
respectively, primarily due to our ongoing internal development
programs including, but not limited to, ATRS-1901 and ATRS-1902 and
higher employee compensation expense. Overall, R&D expense
fluctuate based on phases of development and timing of clinical
studies, including internal and external development costs
incurred. As discussed above, the FDA accepted our IND application
for ATRS-1902 in July 2021 and we initiated the Phase 1 clinical
study for adrenal crisis rescue in September 2021.
Selling, General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Increased / (Decreased) |
|
Nine Months Ended
September 30, |
|
Increased / (Decreased) |
2021 |
|
2020 |
|
$ |
|
% |
|
2021 |
|
2020 |
|
$ |
|
% |
Selling, general and administrative |
$ |
19,874 |
|
|
$ |
15,231 |
|
|
$ |
4,643 |
|
|
30.5 |
% |
|
$ |
55,185 |
|
|
$ |
46,101 |
|
|
$ |
9,084 |
|
|
19.7 |
% |
Selling, general and administrative expenses increased 30.5% and
19.7% for the three and nine months ended September 30, 2021,
respectively, primarily due to an increase in
XYOSTED®
sales and marketing costs, which were down in 2020 due to the
Pandemic as the various restrictions and limitations imposed during
the Pandemic led to decreased spending that has now returned to
pre-Pandemic levels. The increase is also attributable to sales and
marketing costs associated with our new proprietary product
NOCDURNA®,
which we in-licensed and began detailing in the fourth quarter of
2020, along with higher employee compensation. General and
administrative expenses also increased primarily driven by higher
professional service fees, compensation costs, facility costs and
insurance expense to support the continued growth of the
business.
Income Tax Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Increased / (Decreased) |
|
Nine Months Ended
September 30, |
|
Increased / (Decreased) |
2021 |
|
2020 |
|
$ |
|
% |
|
2021 |
|
2020 |
|
$ |
|
% |
Income tax expense |
$ |
1,828 |
|
|
$ |
— |
|
|
$ |
1,828 |
|
|
100.0 |
% |
|
$ |
3,561 |
|
|
$ |
— |
|
|
$ |
3,561 |
|
|
100.0 |
% |
Effective tax rate |
25.3 |
% |
|
— |
% |
|
|
|
|
|
20.7 |
% |
|
— |
% |
|
|
|
|
Income tax expense was recorded in both the three and nine months
ended September 30, 2021 driven by the generation of income
before income taxes. We recorded no income tax expense through
September 30, 2020 as a result of our full valuation allowance on
our deferred taxes that was released in the fourth quarter of 2020.
The effective income tax rate for the three and nine months ended
September 30, 2021 reflected net discrete income tax benefits
related to share-based compensation expense in connection with
stock option exercises and vesting of performance and restricted
stock units, which favorably impacted the effective tax rate by
0.1% for the quarter and 5.1% year to date.
Net Income and Earnings per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Increased / (Decreased) |
|
Nine Months Ended
September 30, |
|
Increased / (Decreased) |
2021 |
|
2020 |
|
$ |
|
% |
|
2021 |
|
2020 |
|
$ |
|
% |
Net income |
$ |
5,393 |
|
|
$ |
4,996 |
|
|
$ |
397 |
|
|
7.9 |
% |
|
$ |
13,606 |
|
|
$ |
4,815 |
|
|
$ |
8,791 |
|
|
182.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
— |
% |
|
$ |
0.08 |
|
|
$ |
0.03 |
|
|
$ |
0.05 |
|
|
166.7 |
% |
Dilutive |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
— |
% |
|
$ |
0.08 |
|
|
$ |
0.03 |
|
|
$ |
0.05 |
|
|
166.7 |
% |
Liquidity and Capital Resources
As of September 30, 2021, we had cash and cash equivalents of
$57.4 million. Our principal liquidity needs are to fund our
product manufacturing costs, research and development activities,
sales and marketing and other general operating expenses, as well
as capital expenditures and debt service. We believe that the
combination of our current cash and cash equivalents, projected
product sales, development revenue and royalties will provide us
with sufficient funds to meet our obligations and support
operations through at least the next twelve months from the date of
this report.
Long-term Debt Financing
As of September 30, 2021, we were party to a loan and security
agreement, as amended, with Hercules Capital, Inc. (the “Term
Loan”). The amortizing Term Loan was secured by substantially all
of our assets, excluding intellectual property, and accrued
interest at a prime-based variable rate with a maximum of 9.5%,
which was 8.5% as of September 30, 2021. In June and September
2021, we made principal prepayments of $15.0 million and $5.0
million, respectively, and paid 1.0% prepayment fees. The
outstanding principal balance under the Term Loan was $20.0 million
and $40.0 million as of September 30, 2021 and
December 31, 2020, respectively.
The Term Loan, as amended, provided for payments of interest-only
until August 1, 2021 with a maturity date of July 1, 2022, both of
which could be extended contingent upon satisfaction of a certain
loan extension milestones and upon formal request of such
extension. In July 2021, we requested, and the lender granted, the
extension of the interest-only period to August 1, 2022 and
maturity date to July 1, 2024 in accordance with the loan and
security agreement, as amended. We are required to pay an end of
term fee equal to 4.25% of the first $25.0 million and 3.95% of all
other borrowings under the loan, payable upon the earlier of July
1, 2022 or full repayment of the loan.
On November 1, 2021, we entered into a Credit Agreement (the
“Credit Agreement”) with Wells Fargo Bank, National Association, as
administrative agent for the lenders, for credit facilities in an
aggregate principal amount of up to $40.0 million with a maturity
date of November 1, 2024. The Credit Agreement consists of a $20.0
million term loan facility (the “Term Loan Facility”) and a $20.0
million revolving credit facility, $5.0 million of which is
available for the issuance of letters of credit and $1.0 million of
which is available for swingline loans (the “Revolving Credit
Facility”), (collectively the “Credit Facilities”), which are
secured by substantially all of our assets. The Term Loan Facility
was funded upon execution of the Credit Agreement with the proceeds
used to repay our $20.0 million Term Loan with Hercules Capital and
to pay fees and expenses incurred in connection with the early
repayment. The Revolving Credit Facility remains available for
future use and is expected to be used for ongoing working capital
requirements and other general corporate purposes as needed.
Payments under the Term Loan Facility are due in consecutive
quarterly installments on the last business day of each of March,
June, September and December, commencing on March 31, 2022.
Interest accrues at either the base rate or LIBOR plus the
applicable margin, which varies based on our consolidated total
leverage ratio and will initially be 1.50% for base rate loans and
2.50% for LIBOR loans. The transaction is expected to provide
approximately $1.2 million in annual interest expense savings based
on an interest rate of 2.5875% (one-month LIBOR rate plus the
applicable margin of 2.50%) as of November 1, 2021.
Cash Flow Comparison
The following table summarizes our cash flows from total
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
|
2021 |
|
2020 |
Total cash provided by (used in): |
|
|
|
Operating activities |
$ |
27,127 |
|
|
$ |
14,217 |
|
Investing activities |
(4,960) |
|
|
12,607 |
|
Financing activities |
(17,938) |
|
|
146 |
|
Effect of exchange rate changes on cash |
(1) |
|
|
1 |
|
Increase (decrease) in cash and cash equivalents |
4,228 |
|
|
26,971 |
|
Cash and cash equivalents, beginning of period |
53,137 |
|
|
23,201 |
|
Cash and cash equivalents, end of period |
$ |
57,365 |
|
|
$ |
50,172 |
|
Operating Activities
Operating cash inflows are generated primarily from net product
sales, license and development fees and royalties. Operating cash
outflows consist principally of expenditures for manufacturing
costs, personnel costs, general and administrative expenses,
research and development activities, and sales and marketing costs.
Fluctuations in cash from operating activities are primarily a
result of the timing of cash receipts and
disbursements.
The change in the net cash from operating activities was primarily
a result of the increase in our net income and changes in operating
assets and liabilities due to timing of cash receipts and cash
disbursements, principally driven by depletion of inventory, a
reduction in contract assets and accounts payable, and an increase
in accounts receivable.
Investing Activities
Net cash used in investing activities for the nine months ended
September 30, 2021 was primarily for capital expenditures related
to our manufacturing facility. Net cash provided by investing
activities for the nine months ended September 30, 2020 was
comprised of $20.5 million in cash receipts from maturities of
short-term investments offset by capital expenditures of $7.9
million primarily for our manufacturing facility.
Financing Activities
Net cash used in financing activities for the nine months ended
September 30, 2021 consisted of $20.0 million in principal
prepayments on our Term Loan, $2.8 million paid to taxing
authorities in connection with net-share settled share-based awards
for which we withheld shares equivalent to the value of the
employee's tax obligation for the applicable income and other
employment taxes and $0.2 million prepayment fee on our Term Loan,
partially offset by $5.1 million in proceeds received from
exercises of stock options. Net cash provided by financing
activities for the nine months ended September 30, 2020 included
$1.5 million in proceeds from the exercise of stock options,
partially offset by $1.4 million paid to taxing authorities in
connection with net-share settled stock-based awards.
Critical Accounting Policies and Use of Estimates
The preceding discussion and analysis of our results of operations
and financial condition is based upon our condensed consolidated
financial statements, which have been prepared in accordance with
GAAP. The preparation of these condensed consolidated financial
statements requires us to make judgments and estimates that affect
the reported amounts of assets, liabilities, revenue and expenses.
We base our estimates on historical experience and on various other
factors that we believe are reasonable under the circumstances.
Actual results could differ from our estimates, and significant
variances could materially impact our financial condition and
results of operations.
The accounting policies we believe to be most critical to
understanding our results of operations and financial condition
related to revenue recognition and valuation of deferred tax
assets, which are fully described in our Annual Report on Form 10-K
for the year ended December 31, 2020.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any off-balance
sheet arrangements, including any arrangements with any structured
finance, special purpose or variable interest
entities.
Item 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We are exposed to foreign exchange rate fluctuations of the Swiss
Franc to the U.S. dollar as the financial position and operating
results of our subsidiaries in Switzerland are translated into U.S.
dollars for consolidation. In addition, we have exposure to
exchange rate fluctuations between the Euro and the U.S. dollar for
some of our transactions. We do not currently use derivative
financial instruments to hedge against exchange rate risk. The
effect of foreign exchange rate fluctuations on our financial
results for the period ended September 30, 2021 was not
material.
Interest Rate Risk
We may also be exposed to interest rate risk and interest rate
fluctuations as a result of our long-term debt financing. As of
September 30, 2021, the outstanding principal balance on our Term
Loan was $20.0 million, and accrued interest at a calculated
prime-based variable rate, which was 8.5%, with a maximum interest
rate of 9.5%. A hypothetical increase or decrease in the interest
rate of 1.0% would have resulted in additional or lower annual
interest expense of $0.2 million. In November 2021, we replaced our
Term Loan with a Term Loan Facility which carries a floating
interest rate of 2.5875% (one-month LIBOR rate plus the applicable
margin of 2.50%) as of November 1, 2021 which is expected to reduce
our annual interest expense by approximately 69.7%.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, under the supervision and with the participation of
our Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) as of the end of the period covered by this
report. The evaluation was performed to determine whether our
disclosure controls and procedures have been designed and are
functioning effectively to provide reasonable assurance that the
information required to be disclosed by us in reports filed under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commission’s rules and is accumulated and communicated to
management, including our principal executive and principal
financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure. Based on such evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that our disclosure
controls and procedures as of the end of the period covered by this
report were effective.
Internal Control over Financial Reporting
There were no material changes in our internal control over
financial reporting during the fiscal quarter to which this report
relates that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Because of the inherent
limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of
fraud, if any, have been detected. The design of any system of
controls is also based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because
of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be
detected.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information set forth under “Note 10—Commitments and
Contingencies—Pending
Litigation”
to the Condensed Consolidated Financial Statements included in Item
I of Part I of this Quarterly Report on Form 10-Q is incorporated
herein by reference.
Item 1A. RISK FACTORS
In addition to the information contained in this report, you should
carefully consider the risk factors discussed in Item 1A of Part I
of our Annual Report on Form 10-K for the year ended December 31,
2020, which could materially affect our business, financial
condition or future results. The information below includes an
additional risk relating to our exclusive license agreement of
TLANDO®.
The risks described below and in our Annual Report on Form 10-K are
not the only risks we face. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial
may also materially adversely affect our business, financial
condition and/or operating results in future periods.
We recently entered into an exclusive license agreement with
Lipocine for TLANDO®
in the U.S. TLANDO®
may not receive final FDA approval or be successfully
commercialized.
TLANDO®
received tentative FDA approval on December 8, 2020, for
testosterone replacement therapy in adult males indicated for
conditions associated with a deficiency or absence of endogenous
testosterone: primary hypogonadism (congenital or acquired) and
hypogonadotropic hypogonadism (congenital or acquired). In granting
tentative approval, the FDA concluded that, at that time,
TLANDO®
met all required quality, safety and efficacy standards necessary
for approval. TLANDO®
has not received final approval and is not yet eligible for final
approval and marketing in the U.S. At the earliest,
TLANDO®
will be eligible for final approval and marketing upon expiration
of the exclusivity period previously granted to Clarus
Therapeutics, Inc. for JATENZO®,
the TLANDO®
reference listed drug, on March 27, 2022. We will not be able to
market TLANDO®
in the U.S. until we receive final approval.
There is no assurance that we will receive final approval for
TLANDO®,
as developments between the time of the tentative approval and our
filing for final approval may delay or prevent final approval,
including, but not limited to changes to product quality,
chemistry, manufacturing and controls, labeling, the reference
listed drug, and FDA listed patents and exclusivities.
Even if we receive final approval for TLANDO®,
we may not be able to successfully commercialize the product. For
instance, payers, health care providers, and patients may not
accept or adopt a new oral testosterone replacement therapy, we may
not receive adequate coverage or reimbursement, and post-approval
requirements, including post-market study requirements may prove to
be costly or may reveal unfavorable product attributes or
results.
Finally, although we have the option to license and develop TLANDO
XR, we may never exercise this option. If we do exercise our
option, further development of TLANDO XR may not be successful and
we may not receive regulatory approval to market the product. Even
if we do receive regulatory approval, it is also possible that we
may not be able to successfully commercialize the
product.
Item 6. EXHIBITS
(a) Exhibit Index
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Exhibit No. |
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Description |
10.1 |
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10.2 |
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31.1 |
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31.2 |
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32.1 |
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32.2 |
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101.INS |
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XBRL Instance Document (the instance document does not appear in
the Interactive Data File because its XBRL tags are embedded within
the Inline XBRL document) (filed herewith). |
101.SCH |
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Inline XBRL Taxonomy Extension Schema Document (filed
herewith). |
101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed
herewith). |
101.DEF |
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Inline XBRL Taxonomy Extension Definition Document (filed
herewith). |
101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document (filed
herewith). |
101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
(filed herewith). |
104 |
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Cover Page Interactive Data File (the cover page interactive data
does not appear in the Interactive Data File because its XBRL tags
are embedded within the Inline XBRL document) (filed
herewith). |
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.
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ANTARES PHARMA, INC. |
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(Registrant) |
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Date: |
November 4, 2021 |
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/s/ Robert F. Apple |
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Robert F. Apple |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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Date: |
November 4, 2021 |
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/s/ Fred M. Powell |
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Fred M. Powell |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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