What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-10 · 53 added, 84 removed, 306 unchanged (31% of the section changed)

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You should read the following discussion and analysis in conjunction with the unaudited interim consolidated financial statements, and the related footnotes thereto, appearing elsewhere in this report, and in conjunction with management’s discussion and analysis and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 which wa s filed with the Securities and Exchange Commission, or SEC, on March 1, 2021 .

We are a biopharmaceutical company developing novel therapies for the management of central nervous system, or CNS, disorders for which there are limited treatment options.

We are a biopharmaceutical company developing novel therapies for the management of central nervous system, or CNS, conditions that have limited treatment options.

By focusing on this therapeutic area, we are addressing significant and growing markets where current treatment options are limited or inadequate.

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AXS-07 is being developed for the acute treatment of migraine, for which we have completed two Phase 3 controlled trials, which we refer to as the MOMENTUM study and the INTERCEPT study, and one Phase 3 long-term open-label trial, which we refer to as the MOVEMENT study.

We plan to submit an NDA for AXS-07 for the acute treatment of migraine.

An NDA has been submitted for filing for AXS-07 for the acute treatment of migraine.

AXS-09 is being developed for the treatment of CNS disorders.

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AXS-14 is being developed for the treatment of fibromyalgia.

We plan to submit an NDA for AXS-14 in fourth quarter of 2022 for the management of fibromyalgia following a pre-NDA meeting with the FDA.

Additionally, we are currently evaluating other product candidates, which we intend to develop for CNS disorders.

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AXS-05 has been granted FDA Breakthrough Therapy designation for both the treatment of MDD and the treatment of Alzheimer’s disease agitation, as well as Fast Track designations for the treatment of Alzheimer’s disease agitation and treatment resistant depression.

We have completed two pivotal, one Phase 2 and one Phase 3, trials of AXS-05 in MDD, which we refer to as the ASCEND and GEMINI trials, respectively.

We have completed two pivotal trials , one Phase 2 and one Phase 3, of AXS-05 in MDD, which we refer to as the ASCEND and GEMINI trials, respectively.

AXS-05 achieved the primary endpoint in both the ASCEND and GEMINI trials.

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We have completed a Phase 3 trial of AXS-05 in TRD, which we refer to as the STRIDE-1 trial, which met key secondary endpoints but did not reach statistical significance on the primary endpoint.

Additionally, we have initiated the MERIT (Mechanistic Evaluation of Response in TRD) trial, a Phase 2, double-blind, placebo-controlled, randomized withdrawal study in patients with TRD.

Additionally, we have completed a Phase 2, double-blind, placebo-controlled, multi-center, relapse prevention study in patients with TRD , which we call the MERIT trial .

In the MERIT trial, AXS-05 achieved its primary and secondary endpoint s by delaying time to relapse and preventing relapse as compared to placebo .

We have also completed a Phase 2/3 trial of AXS-05 in AD agitation, which we refer to as the ADVANCE-1 trial.

AXS-05 achieved the primary endpoint in the ADVANCE-1 trial.

We have initiated the ACCORD (Assessing Clinical Outcomes in Alzheimer’s Disease Agitation) trial, a Phase 3, double blind, placebo-controlled, randomized withdrawal trial in patients with AD agitation, and one open-label long-term safety study in AD agitation.

We are conducting the ACCORD trial, a Phase 3, double blind, placebo-controlled, randomized withdrawal trial in patients with AD agitation, and one open-label long-term safety study in AD agitation.

AXS-05 is also being developed as an aid to smoking cessation treatment and a positive Phase 2 trial in this indication has been completed under a research collaboration between us and Duke University.

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AXS-07 achieved the co-primary endpoints in both the MOMENTUM and INTERCEPT trials.

We plan to submit an NDA for AXS-07 for the acute treatment of migraine supported by the positive results from the MOMENTUM and INTERCEPT trials.

An NDA has been submitted for filing for AXS-07 for the acute treatment of migraine supported by the positive results from the MOMENTUM and INTERCEPT trials.

An open-label, long-term, safety study of AXS-07 in patients with migraine known as the MOVEMENT trial has also been completed.

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AXS-12 is a highly selective and potent norepinephrine reuptake inhibitor.

AXS-12 has been granted FDA Breakthrough Therapy designation and Orphan Drug Designation for the treatment of narcolepsy.

AXS-12 has been granted FDA Orphan Drug Designation for the treatment of narcolepsy.

We have completed a Phase 2 trial with AXS-12, which we refer to as the CONCERT trial.

AXS-12 achieved the primary endpoint in the CONCERT trial.

We plan to initiate a Phase 3 trial with AXS-12 in narcolepsy in the third quarter of 2021.

AXS-14, esreboxetine, is a novel, oral, investigational medicine in development for the treatment of fibromyalgia.

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We have in-licensed data from Pfizer which includes a completed Phase 2 trial and Phase 3 trial in fibromyalgia, both of which were positive.

We plan to submit an NDA for AXS-14 in the fourth quarter of 2022 for the management of fibromyalgia.

Since our incorporation in January 2012, our operations to date have included organizing and staffing our company, business planning, raising capital, developing our compounds, and engaging in other discovery and preclinical activities.

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We have incurred significant operating expenses and net losses since inception.

We incurred net losses of $29.3 million and $32.5 million for the three months ended March 31, 2021 and 2020, respectively.

Our accumulated deficit as of March 31, 2021 was $308.1 million, and we expect to incur significant expenses and increasing operating losses for the foreseeable future.

We incurred net losses of $61.5 million and $50.8 million for the six months ended June 30, 2021 and 2020, respectively.

Our accumulated deficit as of June 30, 2021 was $340.3 million, and we expect to incur significant expenses and increasing operating losses for the foreseeable future.

We expect to continue to incur expenses in connection with the development of our product candidates, including with respect to conducting clinical trials and seeking regulatory approval for our current product candidates and any other product candidates that we develop or in-license and advance to clinical development.

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In April 2021, we announced that the FDA has accepted for filing the NDA for AXS-05 for the treatment of MDD, and has granted the application Priority Review resulting in a PDUFA target action date of August 22, 2021.

In August 2021, we announced that AXS-05 achieved primary and key secondary endpoints in the MERIT Phase 2 Trial in treatment resistant depression.

In June 2021, we submitted an NDA for filing for AXS-07 for the acute treatment of migraine.

In July 2021, we announced that we were notified by the FDA that the FDA has rescinded our Breakthrough Therapy Designation for our AXS-12 product candidate for the treatment of cataplexy in narcolepsy, due to the FDA approving an additional drug product for the treatment of cataplexy in narcolepsy subsequent to granting AXS-12 Breakthrough Therapy Designation.

In June 2021, we announced that we plan to submit an NDA for AXS-14 for the management of fibromyalgia following a pre-NDA meeting with the U.S.

Food and Drug Administration.

Financial Overview

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This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made.

The following table summarizes our research and development expenses for our primary programs for the three months ended March 31, 2021 and 2020:

The following table summarizes our research and development expenses for our primary programs for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six months ended

Other research and development

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Three Months Ended

Six months ended

Operating expenses:

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Interest and amortization of debt discount (expense) income

Comparison of the three months ended March 31, 2021 and 2020

Comparison of the three months ended June 30, 2021 and 2020

Research and Development Expenses.

Our research and development expenses for the three months ended March 31, 2021 were $16.6 million, compared to $27.5 million for the three months ended March 31, 2020, a decrease of $10.9 million.

The decrease was driven by a one-time charge of $10.2 million for the Pfizer license agreement in the comparable prior period along with conclusion of several clinical trials, which were ongoing in the comparable prior period.

The current period included a $2.9 million PDUFA fee related to the NDA submission for AXS-05.

This fee will be refunded subsequent to the end of the first quarter, as our Small Business Waiver request for the fee was recently granted by the FDA.

Our research and development expenses for the three months ended June 30, 2021 were $14.5 million, compared to $10.5 million for the three months ended June 30, 2020, an increase of $4.0 million.

The increase was driven by costs to support the NDA filings and personnel expense which includes an increase in headcount along with an increase in stock compensation expense.

General and Administrative Expenses.

Our general and administrative expenses for the three months ended March 31, 2021 were $11.2 million, compared to $5.0 million for the three months ended March 31, 2020, an increase of $6.2 million.

The increase was primarily due to pre-commercial activities along with increased stock compensation expense.

Our general and administrative expenses for the three months ended June 30, 2021 were $16.3 million, compared to $7.2 million for the three months ended June 30, 2020, an increase of $9.1 million.

The increase was primarily due to pre-commercial activities and personnel expense which includes an increase in headcount along with an increase in stock compensation expense.

Interest and amortization of debt discount (expense) income.

Interest and amortization of debt discount expense for the three months ended March 31, 2021 was $1.4 million, compared to interest income of less than $0.1 million for the three months ended March 31, 2020, a change of $1.4 million.

Interest and amortization of debt discount expense for the three months ended June 30, 2021 was $1.4 million, compared to $0.5 million for the three months ended June 30, 2020, an increase of $0.9 million.

The change is mainly due to a higher outstanding principal amount on our debt in 2021 as compared to the comparable period in 2020.

Comparison of the six months ended June 30, 2021 and 2020

Research and Development Expenses.

Our research and development expenses for the six months ended June 30, 2021 were $31.1 million, compared to $38.1 million for the six months ended June 30, 2020, a decrease of $7.0 million.

The decrease was driven by a one-time charge of $10.2 million for the Pfizer license agreement in the comparable period in 2020, offset by costs to support the NDA filings.

General and Administrative Expenses.

Our general and administrative expenses for the six months ended June 30, 2021 were $27.6 million, compared to $12.2 million for the six months ended June 30, 2020, an increase of $15.4 million.

The increase was primarily due to pre-commercial activities and personnel expense which includes an increase in headcount along with an increase in stock compensation expense.

Interest and amortization of debt discount (expense) income.

Interest and amortization of debt discount expense for the six months ended June 30, 2021 was $ 2.9 million, compared to $ 0.5 million for the six months ended June 30, 2020 , an increase of $ 2.4 million.

The change is mainly due to a higher outstanding principal amount on our debt in 202 1 as compared to the comparable period in 20 20 .

Liquidity and Capital Resources

Since our inception through March 31, 2021, we have financed our operations primarily through proceeds from equity offerings and debt borrowings.

Since our inception through June 30, 2021, we have financed our operations primarily through proceeds from equity offerings and debt borrowings.

See discussion below.

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The initial tranche of $20.0 million was funded shortly after executing the loan agreement.

The second tranche of $4.0 million was available to be drawn, at our option, subject to the achievement of positive data, on or prior to August 15, 2019, with respect to our ongoing Phase 2 clinical trial for AXS 12 in narcolepsy, sufficient to submit a Phase 3 protocol to FDA, provided that we had not received any objections from the FDA within thirty days after submission of such Phase 3 protocol A portion of the initial tranche was used to satisfy our existing obligations under our November 2016 term loan facility with SVB, as amended in November 2018, and such obligations are considered fully repaid and extinguished.

The second tranche of $4.0 million was available to be drawn, at our option, subject to the achievement of positive data, on or prior to August 15, 2019, with respect to our then ongoing Phase 2 clinical trial for AXS- 12 in narcolepsy, sufficient to submit a Phase 3 protocol to FDA, provided that we had not received any objections from the FDA within thirty days after submission of such Phase 3 protocol A portion of the initial tranche was used to satisfy our existing obligations under our November 2016 term loan facility with SVB, as amended in November 2018, and such obligations are considered fully repaid and extinguished.

In September 2020, we terminated and repaid all amounts outstanding under 2019 Term Loan in connection with our entry into the Loan Agreement (see below).

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SVB Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the December 2019 Sales Agreement.

For the year ended December 31, 2020, the Company received approximately $14.6 million in gross proceeds through the sale of 167,243 shares, of which net proceeds were approximately $14.1 million.

For the six months ended June 30, 2021, we received approximately $7.4 million in gross proceeds through the sale of 110,296 shares, of which net proceeds were approximately $7.2 million.

For the year ended December 31, 2020, we received approximately $14.6 million in gross proceeds through the sale of 167,243 shares, of which net proceeds were approximately $14.1 million.

In December 2019, we entered into a new Sales Agreement with SVB Leerink, or the December 2019 Sales Agreement, pursuant to which we may sell up to $80 million in shares of our common stock from time to time through SVB Leerink, acting as our sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement.

SVB Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the December 2019 Sales Agreement.

We received approximately $6.3 million in gross proceeds through the sale of 93,877 shares, of which net proceeds were approximately $6.1 million during the three months ended March 31, 2021.

For the year ended December 31, 2019, we received approximately $7.3 million in gross proceeds through the sale of 89,390 shares, of which net proceeds were approximately $7.1 million.

In September 2020, we entered into the Loan Agreement with Hercules for the 2020 Term Loan, which consists of several tranches in an aggregate amount of up to $225.0 million.

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At the time any of our securities covered by the 2019 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

We believe our current cash, along with the committed capital from the term loan facility, will be sufficient to fund our anticipated operations, based on our current operating plans which includes costs for the commercial launch of AXS-05 in MDD and AXS-07 in migraine into at least 2024.

and AXS-07 in migraine into at least 2024.

Because the process of commercializing products and evaluating product candidates in clinical trials is costly and the timing of progress in these trials is uncertain, it is possible that the assumptions upon which we have based this estimate may prove to be wrong, and we could use our capital resources sooner than we currently expect.

The following table summarizes our primary sources and uses of cash for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

Net cash (used in) provided by:

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Operating Activities.

Cash used in operating activities for the three months ended March 31, 2021 was $27.2 million as compared to $23.3 million for the three months ended March 31, 2020.

The increase of $3.9 million in net cash used was mainly due to the NDA submission fees of $2.9 million as well as the build-out of the commercial function.

Cash used in operating activities for the six months ended June 30, 2021 was $52.6 million as compared to $42.2 million for the six months ended June 30, 2020.

The increase of $10.4 million in net cash used was mainly due the build-out of the commercial function and related commercialization costs.

Investing Activities.

Cash used in investing activities for the purchase of property and equipment was less than $0.1 million for the three months ended March 31, 2021 and 2020.

Cash used in investing activities for the purchase of property and equipment was less than $0.1 million for the six months ended June 30, 2021 and 2020.

Financing Activities.

Cash provided by financing activities was $ 8.0 million for the three months ended March 31, 2021 , which included net proceeds from the sale of common stock through our Sales Agreement with Leerink of $ 6.1 million and proceeds from the issuance of common stock upon exercise of employee stock options of $1.

Cash provided by financing activities was $0.6 million for the three months ended March 31, 2020 , which are proceeds from the issuance of common stock upon exercise of employee stock options.

Cash provided by financing activities was $10.0 million for the six months ended June 30, 2021, which included net proceeds from the sale of common stock through our Sales Agreement with Leerink of $7.2 million and proceeds from the issuance of common stock upon exercise of employee stock options of $2.9 million, offset by cash paid out related to tax withholdings on stock awards of $0.08 million.

Cash provided by financing activities was $12.9 million for the six months ended June 30, 2020, which included net proceeds from the sale of common stock through our Sales Agreement with Leerink of $12.1 million and proceeds from the issuance of common stock upon exercise of employee stock options of $0.8 million.

Funding requirements

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In connection with the 2020 Term Loan, Antecip consented to the collateral assignment of one of the license agreements, among other things, under a direct agreement with us and Hercules.

November 2016 Loan and Security Agreement—Silicon Valley Bank

In November 2016, we entered into the 2016 Original Term Loan with SVB and Life Sciences Loans, LLC, for a term loan of up to $20.0 million.

The initial tranche of $10.0 million was funded shortly after executing the loan agreement.

We were scheduled to make interest only payments on the loan until December 1, 2017, which could have been extended under certain circumstances.

Under the terms of the loan, we had the opportunity, but not the obligation to, draw two additional tranches of $5.0 million each prior to November 9, 2017 and December 31, 2017, subject to the achievement of certain clinical and financial milestones.

Because we did not achieve the conditional criteria to access the second and third tranches before the specified dates, the $10.0 million in additional term loan advances expired.

The 2016 Original Term Loan accrued interest at an annual rate equal to 4.50% plus the prime rate, which was the greater of 3.50% or the Wall Street Journal prime rate, and was payable monthly.

Following the interest only payment period, we began making monthly payments of principal and interest.

In addition, we were required to pay a final payment fee of 8.5% of the principal amount extended to us on the date of repayment of the outstanding loan.

We were permitted to prepay all, but not less than all, of the 2016 Original Term Loan subject to a prepayment premium of 3.0% of the outstanding principal if prepaid within two years of the effective date of the loan, 2.0% of the outstanding principal if prepaid during the third year of the loan, and 1.0% of the outstanding principal if prepaid after the third year.

The term loan was collateralized by a security interest in all of our assets except intellectual property.

Our intellectual property was subject to a negative pledge.

In connection with the loan, SVB and Life Science Loans, LLC, received warrants to purchase an aggregate 65,228 shares of our common stock at an exercise price of $7.41 per share, which were exercisable for seven years from the date of issuance.

We allocated the proceeds of $10.0 million based on the relative fair values of the debt instrument and the warrant instrument.

The relative fair value of the warrants of approximately $0.3 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt.

The discount on the debt was being amortized to interest expense over the term of the debt.

In November 2018, we amended the 2016 Original Term Loan with SVB and WestRiver, to provide an additional $4 million growth capital loan, related to our narcolepsy clinical program with AXS-12.

The additional capital was available to be drawn, at our option, subject to the achievement of a specified clinical milestone.

In connection with the 2016 Amended Term Loan, SVB and WestRiver received warrants to purchase an aggregate 15,750 shares of our common stock at an exercise price of $3.06 per share, which were exercisable for seven years from the date of issuance.

Our obligations under the 2016 Amended Term Loan, along with the ability to draw down on the additional $4.0 million tranche, were considered to be performed and completed in connection with the establishment of the 2019 Term Loan during March 2019.

March 2019 Loan and Security Agreement—Silicon Valley Bank

In March 2019, we entered into the 2019 Term Loan with SVB and WestRiver consisting of an initial $20.0 million tranche, which was funded shortly upon closing, with the remaining $4.0 million available to be drawn, at our option, subject to the achievement of positive data, on or prior to August 15, 2019, with respect to our ongoing Phase 2 clinical trial for AXS-12 in narcolepsy, sufficient to submit a Phase 3 protocol to the FDA, provided that we have not received any objections from the FDA within thirty days after submission of such Phase 3 protocol.

A portion of the first tranche was used to satisfy our then-existing obligations under our 2016 Amended Term Loan and such obligations are considered to be fully repaid and completed.

The 2019 Term Loan accrued interest on the unpaid principal balance of the outstanding loan advances at a floating per annum rate equal to the greater of ( i ) seven and one-half of one percent (7.50%) and (ii) two percent (2.0%) above the prime rate and is payable monthly.

The 2019 Term Loan initially had an interest-only monthly payment period for twelve months which was extendable to 18 months upon drawing of the second tranche.

Following the interest only payment period, we would have begun making monthly payments of principal and interest.

In addition, we were initially required to pay a final payment fee of 6.0% of the principal amount extended to us on the date of repayment of the outstanding loan, which was increased to 6.3% in connection with the First Amendment to the 2019 Term Loan, as described below.

We were permitted to prepay all, but not less than all, of the 2019 Term Loan, subject to a prepayment premium of 3.0% of the outstanding principal if prepaid within one year of the effective date of the loan, 2.0% of the outstanding principal if prepaid after the first anniversary of the effective date but on prior to the second anniversary of the effective date, and 1.0% of the outstanding principal if prepaid after the second anniversary of the effective date.

The term loan was collateralized by a security interest in all of our assets except intellectual property.

Our intellectual property was subject to a negative pledge.

In connection with the 2019 Term Loan, SVB and WestRiver received warrants, or the March 2019 Warrants, to purchase an aggregate 70,000 shares of our common stock at an exercise price of $8.10 per share, which were exercisable for seven years from the date of issuance.

The warrants were to be earned based upon the usage of the facility and are exercisable until March 4, 2026.

The warrants were classified as a component of stockholders’ equity, of which 58,332 warrants were immediately exercisable and the remaining 11,668 warrants would be earned upon drawing of the second $4.0 million tranche under the loan.

In connection with the First Amendment to the 2019 Term Loan, the shares of common stock issuable under each of the March 2019 Warrants were fixed at 29,167 shares, as described further below.

We allocated the proceeds of $20.0 million based on the relative fair values of the debt instrument and the warrant instrument.

The relative fair value of the warrants of approximately $0.4 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt.

The discount on the debt was amortized to interest expense over the term of the debt.

July 2019 First Amendment to Loan and Security Agreement—Silicon Valley Bank

In July 2019, we entered into the First Amendment to the 2019 Term Loan.

Under the First Amendment to the 2019 Term Loan, the interest-only monthly payment period of the 2019 Term Loan was extended to 18 months after the date of the 2019 Term Loan, which may be further extended to 24 months upon receipt by us of the Term B Loan Advance.

Our ability to draw down the Term B Loan Advance was extended to December 31, 2019, subject to our achievement of the Milestone Event prior to or on December 31, 2019.

The Loan Advances matured on February 1, 2023.

Pursuant to the 2019 Term Loan, as amended by the First Amendment to the 2019 Term Loan, following the interest-only payment period, we would have begun making monthly payments of principal in equal monthly installments for 30 consecutive months (provided, that, upon the occurrence of the Milestone Event, the repayment schedule will be decreased to 24 consecutive months) and monthly payments of interest, until the Maturity Date.

Interest accrued on the unpaid principal balance of the outstanding Loan Advances at a floating per annum rate equal to the greater of (i) seven and one-half of one percent (7.50%) and (ii) two percent (2.0%) above the prime rate.

The First Amendment to the 2019 Term Loan increased the final payment fee, payable upon our repayment of the Loan Advances from 6.0% to 6.30% of the original principal amount of the Loan Advances.

We could have prepaid all, but not less than all of the Loan Advances, subject to a prepayment fee of 3.0% of any amount prepaid prior to the first anniversary of July 25, 2019, or the First Amendment Effective Date, 2.0% of the amount prepaid if the prepayment occurs after the first anniversary of the First Amendment Effective Date through and including the second anniversary of the First Amendment Effective Date, or 1.0% of the amount prepaid if the prepayment occurs after the second anniversary of the First Amendment Effective Date, but prior to the Maturity Date.

These percentages were unchanged from the original 2019 Term Loan.

In connection with the First Amendment to the 2019 Term Loan, the March 2019 Warrants were amended to fix the number of shares that may be issued upon exercise of each such March 2019 Warrant at 29,167 shares of common stock, and SVB and WestRiver were issued the July 2019 Warrants, which become exercisable only upon funding of the Term B Loan Advance, to purchase 5,750 shares of our common stock at a price per share equal to $25.71.

The July 2019 Warrants replace the portion of the March 2019 Warrants that could originally be earned by SVB and WestRiver upon funding of the Term B Loan Advance.

The July 2019 Warrants, if earned, would have been exercisable until July 24, 2026 and would be exercised automatically on a net issuance basis if not exercised prior to the expiration date and if the then-current fair market value of one share of our common stock is greater than the exercise price then in effect.

September 2020 Loan and Security Agreement – Hercules

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GAAP not paid after the 180th day following the invoice for such account payable which amount we refer to as the Qualified Cash A/P Amount.

Effective upon the later of ( i ) the last calendar month of the calendar quarter that is twelve months following the earlier of (x) the date that the First Milestone is achieved and (y) the date that the Second Milestone is achieved, or (ii) the date on which the outstanding principal amount of the term loan advances under the Loan Agreement is equal to or greater than $65.0 million, we are required to (A) ensure that at all times its market capitalization exceeds $2.0 billion, and that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 65% of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, (B) ensure that at all times that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 100% of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, or (C) achieve at least 60% of the net product revenue solely from the sale of AXS-05 and AXS-07 (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but will not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing six-month basis as of the date of our most recent quarterly financial statement, determined on a quarterly basis.

Effective upon the later of (i) the last calendar month of the calendar quarter that is twelve months following the earlier of (x) the date that the First Milestone is achieved and (y) the date that the Second Milestone is achieved, or (ii) the date on which the outstanding principal amount of the term loan advances under the Loan Agreement is equal to or greater than $65.0 million, neither of which have occurred yet , we are required to (A) ensure that at all times its market capitalization exceeds $2.0 billion, and that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 65% of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, (B) ensure that at all times that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 100% of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, or (C) achieve at least 60% of the net product revenue per the board of directors approved forecast solely from the sale of AXS-05 and AXS-07 (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but will not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing six-month basis as of the date of our most recent quarterly financial statement, determined on a quarterly basis.

Restrictions on our ability to incur additional indebtedness, pay dividends, encumber its intellectual property, or engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses, with certain exceptions.

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Employees and Human Capital Management

As of May 3, 2021, we had 70 full‑time employees.

As of August 2.

2021, we had 93 full‑time employees.

None of our employees is represented by a collective bargaining agreement and we have never experienced any work stoppage.

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Given the nature and type of our short-term investments, we do not believe that the COVID-19 pandemic will have a material impact on our current investment liquidity.

Although there is uncertainty related to the anticipated impact of the COVID-19 pandemic on our future results, we believe our current cash reserves, coupled with our access to additional capital through the December 2019 Sales Agreement, leave us well-positioned to manage our business through this crisis as it continues to unfold.

Although there is uncertainty related to the anticipated impact of the COVID-19 pandemic on our future results, we believe our current cash reserves, coupled with our access to additional capital through the December 2019 Sales Agreement and the Hercules Loan Agreement, leave us well-positioned to manage our business through this crisis as it continues to unfold.

However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the COVID-19 pandemic are still uncertain.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis