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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

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 001-36714


JAGUAR HEALTH, INC.

(Exact name of registrant as specified in its charter)


Delaware

46-2956775

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

200 Pine Street, Suite 400

San Francisco, California 94104

(Address of principal executive offices, zip code)

(415) 371-8300

(Registrant’s telephone number, including area code)


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, 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.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

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 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

 

Trading Symbol(s)

 

Name of each exchange on which registered:

Common Stock, Par Value $0.0001 Per Share

 

JAGX

 

The NASDAQ Capital Market

As of November 6, 2020 there were 69,441,067 shares of voting common stock, par value $0.0001 per share, outstanding, 21,821,410 shares of non-voting common stock, par value $0.0001 per share, outstanding (convertible into 20,782 shares of voting common stock), 6,559 shares of Series B-2 convertible preferred stock, par value $0.0001 per share, outstanding (convertible into 1,246,210 shares of voting common stock, subject to certain restrictions as provided in the Certificate of Designation for the Series B-2 convertible preferred stock), 571,600 shares of Series C perpetual preferred stock, par value $0.0001 per share, outstanding, and 853,771 shares of Series D perpetual preferred stock, par value $0.0001 per share, outstanding.


Page
No.

PART I. — FINANCIAL INFORMATION

1

Item 1. Condensed Consolidated Financial Statements

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations

2

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

54

Item 3. Quantitative and Qualitative Disclosures About Market Risk

78

Item 4. Controls and Procedures

79

PART II. — OTHER INFORMATION

81

Item 1. Legal Proceedings

81

Item 1A. Risk Factors

82

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

83

Item 3. Defaults upon senior securities

83

Item 4. Mine safety disclosures

83

Item 5. Other Information

83

Item 6. Exhibits

84

SIGNATURE

86


PART I. — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

JAGUAR HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

(In thousands, except share and per share data)

    

2020

    

2019

Assets

(unaudited)

Current assets:

Cash

$

1,349

$

3,495

Restricted cash

388

Accounts receivable

1,505

1,692

Accounts receivable - pledged

 

3,150

 

Other receivable

3

2

Inventory

2,219

2,129

Operating lease - right-of-use asset

553

Prepaid expenses and other current assets

2,497

1,263

Total current assets

 

10,723

 

9,522

Property and equipment, net

686

710

Intangible assets, net

24,759

26,024

Other assets

 

66

 

154

Total assets

$

36,234

$

36,410

Liabilities, convertible preferred stock and stockholders' equity

Current liabilities:

Accounts payable

$

5,456

$

5,352

Accrued liabilities

6,975

2,922

Warrant liability

126

3

Operating lease liability

337

Notes payable, net of discount

 

6,781

 

6,778

Series D perpetual preferred stock: $0.0001 par value; 977,300 and zero shares authorized at September 30, 2020 and December 31, 2019, respectively; 848,117 and zero shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively; (redemption amount of $6,785 and zero at September 30, 2020 and December 31, 2019, respectively; liquidation preference of $6,785 and zero at September 30, 2020 and December 31, 2019, respectively)

6,430

Total current liabilities

 

25,768

 

15,392

Notes payable long term

2,660

450

Total liabilities

28,428

15,842

Commitments and contingencies (See Note 6)

Series A redeemable convertible preferred stock: $0.0001 par value, zero and 5,524,926 shares authorized at September 30, 2020 and December 31, 2019, respectively; zero and 5,524,926 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively; (redemption amount of zero and $12,739 at September 30, 2020 and December 31, 2019, respectively; liquidation preference of zero and $9,199 at September 30, 2020 and December 31, 2019, respectively)

9,895

Stockholders' equity

Series B convertible preferred stock: $0.0001 par value, zero and 11,000 shares authorized at
September 30, 2020 and December 31, 2019, respectively; zero and 1,971 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

476

Series B-2 convertible preferred stock: $0.0001 par value, 10,165 shares authorized at
September 30, 2020 and December 31, 2019; 7,534 and 10,165 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

916

1,236

Series C perpetual preferred stock: 1,011,000 and zero shares authorized at September 30, 2020 and December 31, 2019, respectively; 849,521 and zero shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively; (redemption amount of $6,796 and zero at September 30, 2020 and December 31, 2019, respectively; liquidation preference of $6,796 and zero at September 30, 2020 and December 31, 2019, respectively)

4,773

Common stock - voting: $0.0001 par value, 150,000,000 shares authorized at
September 30, 2020 and December 31, 2019; 48,862,970 and 14,273,061 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

5

 

1

Common stock - non-voting: $0.0001 par value, 50,000,000 shares authorized at
September 30, 2020 and December 31, 2019; 40,301,237 shares issued and outstanding at September 30, 2020 and December 31, 2019

4

4

Additional paid-in capital

 

160,238

 

142,046

Accumulated deficit

 

(158,130)

 

(133,090)

Total stockholders' equity

7,806

10,673

Total liabilities, convertible preferred stock and stockholders' equity

$

36,234

$

36,410

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


JAGUAR HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands, except share and per share data)

    

2020

    

2019

    

2020

    

2019

Product revenue

$

2,773

$

973

$

6,809

$

4,268

Total revenue

2,773

973

6,809

4,268

Operating expenses

Cost of product revenue

784

948

2,491

3,073

Research and development

 

1,522

 

1,307

 

4,509

 

4,426

Sales and marketing

1,529

1,698

4,728

5,436

General and administrative

4,313

3,107

11,218

9,817

Settlement of Tempesta Royalty License Agreement

640

640

Impairment of indefinite-lived intangible assets

4,000

Series B convertible preferred stock inducement expense

1,647

Series 3 warrants inducement expense

3,696

Total operating expenses

 

8,148

 

7,700

 

28,289

 

27,392

Loss from operations

 

(5,375)

 

(6,727)

 

(21,480)

 

(23,124)

Interest expense

 

(581)

 

(1,353)

 

(1,259)

 

(5,557)

Other income, net

194

29

190

49

Change in fair value of financial instruments

(2,104)

842

(2,491)

1,003

Loss on extinguishment of debt

(336)

(4,941)

Loss before income tax

(7,866)

(7,545)

(25,040)

(32,570)

Income tax expense

(10)

(10)

Net loss and comprehensive loss

(7,866)

(7,555)

(25,040)

(32,580)

Deemed dividend attributable to accretion of Series A redeemable convertible preferred stock

(349)

(1,332)

Deemed dividend attributable to Series B preferred stock

(3,876)

(3,876)

Stock dividend attributable to Series C perpetual preferred stock

(56)

(56)

Deemed dividend attributable to the Series 1 warrant modification

(252)

(252)

Deemed dividend attributable to Series 1, Series 2 and Bridge warrant holders

(856)

Net loss attributable to common shareholders

$

(8,271)

$

(11,683)

$

(27,284)

$

(36,708)

Net loss per share, basic and diluted

$

(0.21)

$

(2.00)

$

(1.03)

$

(13.37)

Weighted-average common shares outstanding, basic and diluted

 

40,218,324

5,841,790

26,467,423

2,746,523

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


JAGUAR HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

Series A

Series B

Series B-2

Series C

 

Convertible
Preferred Stock

Convertible
Preferred Stock

Convertible
Preferred Stock

Perpetual
Preferred Stock

Common 
Stock - voting

Common 
Stock - non-voting

Additional 

Accumulated

Total
Stockholders'

(In thousands, except share data)

    

Shares

    

Amount

    

    

Shares

    

Amount

Shares

    

Amount

Shares

    

Amount

Shares

    

Amount

Shares

    

Amount

paid-in capital

deficit

Equity

Balances as of June 30, 2020

5,524,926

$

10,878

$

7,534

$

916

$

32,408,421

$

3

40,301,237

$

4

$

150,885

$

(150,264)

$

1,544

Shares issued on exercise of Series 3 warrants

8,248,330

1

5,992

5,993

Shares issued on exercise of Series 1 and Series 2 warrants

1,154,266

565

565

Series A convertible preferred stock redeemed and Series C perpetual preferred issued under the exchange transaction

(5,524,926)

(11,227)

842,500

4,717

150

4,867

Stock dividend attributable to Series C perpetual preferred stock of $8 per share

7,021

56

(56)

Shares issued to third party for services

2,289,474

879

879

Shares issued in exchange of CVP Exchange Notes

4,761,904

1

1,497

1,498

Accretion to redemption value of redeemable preferred stock

349

(349)

(349)

Fractional shares

20

Shares issued upon exercise of stock options

555

Stock-based compensation

675

675

Net loss

(7,866)

(7,866)

Balances as of September 30, 2020

$

$

7,534

$

916

849,521

$

4,773

48,862,970

$

5

40,301,237

$

4

$

160,238

$

(158,130)

$

7,806

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


JAGUAR HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

(Unaudited)

 

Series A

Series B

Series B-2

Series C

 

Convertible
Preferred Stock

Convertible
Preferred Stock

Convertible
Preferred Stock

Perpetual
Preferred Stock

Common 
Stock - voting

Common 
Stock - non-voting

Additional 

Accumulated

Total
Stockholders'

(In thousands, except share data)

    

Shares

    

Amount

    

    

Shares

    

Amount

Shares

    

Amount

Shares

    

Amount

Shares

    

Amount

Shares

    

Amount

paid-in capital

deficit

Equity

Balances as of June 30, 2019

5,524,926

$

9,000

$

$

$

1,799,381

$

1

40,301,237

$

4

$

117,925

$

(119,576)

$

(1,646)

Issuance of Series B convertible preferred stock, net

10,787

2,241

2,241

Beneficial conversion feature of the Series B convertible preferred stock

(3,876)

3,876

Deemed dividend on the Series B convertible preferred stock

3,876

(3,876)

Issuance of common stock in Class A Units, net

2,886,500

1,201

1,201

Issuance of Series 1 warrants in Class A and B Units

5,305

5,305

Issuance of Series 2 warrants in Class A and B Units

5,305

5,305

Modification of Series 1 warrants

252

252

Deemed dividend attributable to Series 1 warrant modification

(252)

(252)

Bridge warrant reclassification from liability to equity

4,259

4,259

LOC warrant reclassification from liability to equity

71

71

Issuance of common stock upon conversion of Series B convertible preferred stock

(8,816)

(1,831)

4,408,000

1,831

Shares issued in exchange of CVP Exchange Notes

301,577

1,089

1,089

Stock-based compensation

1,110

1,110

Net loss

(7,555)

(7,555)

Balances as of September 30, 2019

5,524,926

$

9,000

1,971

$

410

$

$

9,395,458

$

1

40,301,237

$

4

$

138,096

$

(127,131)

$

11,380

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


JAGUAR HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

(Unaudited)

 

Series A

Series B

Series B-2

Series C

 

Convertible
Preferred Stock

Convertible
Preferred Stock

Convertible
Preferred Stock

Perpetual
Preferred Stock

Common 
Stock - voting

Common 
Stock - non-voting

Additional 

Accumulated

Total
Stockholders'

(In thousands, except share data)

    

Shares

Amount

  

  

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

paid-in capital

deficit

Equity

Balances as of January 1, 2020

5,524,926

$

9,895

1,971

$

476

10,165

$

1,236

$

14,273,061

$

1

40,301,237

$

4

$

142,046

$

(133,090)

$

10,673

Shares issued on exercise of Series 1, Series 2, and 2019 Bridge Note warrants

548,962

392

392

Shares issued on exercise of Series 2 warrants and inducement offer conversion of Series B-1 convertible preferred stock

1,250,000

1

2,340

2,341

Shares issued on exercise of Series 1, Series 2, and 2019 Bridge Note warrants, net of issuance costs of $461; May 2020

8,670,852

1

3,787

3,788

Shares issued on conversion of Series 1, Series 2, and 2019 Bridge Note warrants; June 2020

732,315

359

359

Shares issued on exercise of Series 3 warrants

8,248,330

1

5,992

5,993

Shares issued on exercise of Series 1 and Series 2 warrants

1,154,266

565

565

Issuance of common stock in PIPE financing, net of issuance costs of $51

1,714,283

668

668

Shares issued in Underwriter settlement agreement

100,000

45

45

Warrants issued in Underwriter settlement agreement

31

31

Underwriter settlement offering cost

(185)

(185)

Conversion of Series B-2 convertible preferred stock into common stock

(2,631)

(320)

499,890

320

Conversion of Series B convertible preferred stock into common stock

(1,971)

(476)

4,423,251

476

Shares issued to Oasis as consideration under the March 2020 equity purchase agreement

68,807

33

33

Shares issued to Oasis under the March 2020 equity purchase agreement, put option exercise, net of issuance costs of $13

52,000

10

10

Series A convertible preferred stock redeemed and Series C perpetual preferred issued under the exchange transaction

(5,524,926)

(11,227)

842,500

4,717

150

4,867

Stock dividend attributable to Series C perpetual preferred stock of $8 per share

7,021

56

(56)

Shares issued to third party for services

2,364,474

916

916

Shares issued in exchange of CVP Exchange Notes

4,761,904

1

1,497

1,498

Accretion to redemption value of redeemable preferred stock

1,332

(1,332)

(1,332)

Fractional shares

20

Shares issued upon exercise of stock options

555

Stock-based compensation

2,184

2,184

Net loss

(25,040)

(25,040)

Balances as of September 30, 2020

$

$

7,534

$

916

849,521

$

4,773

48,862,970

$

5

40,301,237

$

4

$

160,238

$

(158,130)

$

7,806

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


JAGUAR HEALTH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

(Unaudited)

 

Series A

Series B

Series B-2

Series C

 

Convertible
Preferred Stock

Convertible
Preferred Stock

Convertible
Preferred Stock

Perpetual
Preferred Stock

Common 
Stock - voting

Common 
Stock - non-voting

Additional 

Accumulated

Total
Stockholders'

(In thousands, except share data)

    

Shares

    

Amount

  

  

Shares

Amount

Shares

    

Amount

Shares

    

Amount

Shares

Amount

Shares

Amount

paid-in capital

deficit

Equity

Balances as of January 1, 2019

5,524,926

$

9,000

$

$

$

351,472

$

40,301,237

$

4

$

99,930

$

(94,551)

$

5,383

Issuance of common stock, net of offering costs

195,319

2,602

2,602

Issuance of common stock, net of offering costs, March 2019

19,019