What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-12 · 101 added, 84 removed, 156 unchanged (54% of the section changed)

17 unchanged sentences

consider other matters set forth in our SEC filings including the Risk Factors set forth in Part I, Item 1A of our 2021 10-K.

are a unique pharmaceutical company focused on developing, acquiring, and commercializing innovative pharmaceutical products that fulfill

an unmet patient need.

Since the formation of our company in 2017, we have used our expertise in business development, regulatory, and

product development to assemble a diversified portfolio of eleven products.

Six of our products have been approved by the FDA and commercially

We plan to continue growing our business through the acquisition of additional late-stage, high-value product candidates.

are a innovative pharmaceutical company focused on developing, acquiring, and commercializing innovative pharmaceutical products that fulfill

an unmet need in patients suffering from rare diseases.

The Company currently commercializes two rare disease products, ALKINDI SPRINKLE®

for the treatment of adrenocortical insufficiency and Carglumic Acid for the treatment of acute hyperammonemia due to N-acetylglutamate

synthase (NAGS) deficiency, and has two additional product candidates in late-stage development.

The Company is developing dehydrated alcohol injection, which has received Orphan Drug Designation for the treatment of methanol poisoning,

and the ZENEO® hydrocortisone autoinjector for the treatment of adrenal crisis.

addition, the Company is entitled to royalties or milestone payments from six FDA-approved products that the Company developed and out-licensed.

The products include Alaway® Preservative Free, EPRONTIA TM , Cysteine Hydrochloride, Zonisade®, Biorphen®, and

of Operations

the three months ended March 31, 2022, we had $2,176 in revenue from product sales and royalties which generated a gross profit

We had total revenue of $11,897 for the three-month period ended March 31, 2021 which reflected Azurity and Bausch

milestone revenues for $11,000 plus product sales and royalty revenues which generated a total gross profit of $10,307 for the period.

the three months ended June 30, 2022, we had $7,358 in revenue from licensing, product sales and royalties which reflected $5,000 of

revenue from the Dr.

Reddy’s agreement and generated a gross profit of $4,613.

We had total revenue of $3,067 for the three-month

period ended June 30, 2021 which reflected Azurity milestone revenues of $2,500 plus product sales and royalty revenues which generated

a total gross profit of $2,893 for the period.

the six months ended June 30, 2022, we had $9,534 in revenue from licensing, product sales and royalties which generated a gross profit

We had total revenue of $14,964 for the three-month period ended June 30, 2021 which reflected Azurity and Bausch milestone

revenues of $14,000 plus product sales and royalty revenues which generated a total gross profit of $13,163 for the period.

and Development Expenses

the three months ended March 31, 2022 we incurred $1,618 of research and development expenses (“R&D”) as compared to

the $886 for the same period in 2021.

The increase was primarily due to a $500 technical batch milestone fee to Crossject for Zeneo hydrocortisone

autoinjector development and continued development efforts for our other new product candidates.

and Administrative Expenses

and administrative (“G&A”) expenses consist primarily of employee compensation expenses, legal and professional fees,

product marketing expenses, distribution expenses, business insurance, travel expenses and general office expenses.

the three-month periods ended March 31, 2022 and 2021, we incurred $4,927 and $4,058, respectively, of G&A expenses.

For the three months ended June

30, 2022, we incurred $690 of research and development (“R&D”) expenses as compared to the $1,990 for the same period

The decrease was primarily due to a $500 fee to Crossject upon execution of the agreement for Zeneo hydrocortisone autoinjector

development in 2021 and decreased development costs for our other new product candidates.

For the six months ended June

30, 2022, we incurred $2,308 of R&D expenses as compared to the $2,876 for the same period in 2021 due to decreased development activities

General and Administrative Expenses

General and administrative (“G&A”)

expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, distribution expenses,

business insurance, travel expenses and general office expenses.

For the three-month periods ended

June 30, 2022 and 2021, we incurred $5,263 and $3,228, respectively, of G&A expenses.

The $2,035 increase in G&A expense was mainly

due to incremental marketing, legal, compensation, and product related expenses to support our product sales growth.

the six-month periods ended June 30, 2022 and 2021, we incurred $10,059 and $7,249, respectively, of G&A expenses.

The $2,810 increase

in G&A expense was mainly due to increased compensation expenses to support our product sales growth and increased legal expenses

on our Paragraph IV patent challenge related to L-Cysteine, partially offset by reduced product marketing expenses related to Alkindi

Sprinkle commercialization.

in G&A expense was mainly due to incremental legal, compensation, and product related expenses to support our product sales growth.

and Capital Resources

of March 31, 2022, we had total assets of $23.2 million, cash and cash equivalents of $15.2 million and working capital of $15.3

We had previously capitalized our operations from the June 2017 private placement of approximately $20.1 million of Series A

preferred stock which converted into shares of our common stock concurrent with our IPO in November 2018 and also the IPO which provided

us with net proceeds of $22.0 million.

In addition, we entered into a Credit Agreement with SWK Holdings in November 2019 whereby we

drew a $5.0 million loan amount at closing and an additional $2.0 million in August 2020.

In March and April 2020, we received net proceeds

of approximately $7.8 million from the sale of shares of our common stock, and in October 2020, we received net proceeds of approximately

$21.0 million from a public offering of our common stock at an offering price of $7.00 per share.

We believe that our existing funding,

revenues from our approved products and additional milestone payments expected to be paid in 2022 will be sufficient for at least the

next twelve months of our operations.

However, our projected estimates for our product development spending, administrative expenses

and our working capital requirements could be inaccurate, or we may experience growth more quickly or on a larger scale than we expect,

any of which could result in the depletion of capital resources more rapidly than anticipated and could require us to seek additional

financing earlier than we expect to support our operations.

following table sets forth a summary of our cash flows for the three-month periods ended March 31, 2022 and 2021:

Three months ended

March 31, 2022

Three months ended

March 31, 2021

of June 30, 2022, we had total assets of $23.0 million, cash and cash equivalents of $17.0 million and working capital of $16.0 million.

We had previously capitalized our operations from the June 2017 private placement of approximately $20.1 million of Series A preferred

stock which converted into shares of our common stock concurrent with our IPO in November 2018 and also the IPO which provided us with

net proceeds of $22.0 million.

In addition, we entered into a Credit Agreement with SWK Holdings in November 2019 whereby we drew a $5.0

million loan amount at closing and an additional $2.0 million in August 2020.

In March and April 2020, we received net proceeds of approximately

$7.8 million from the sale of shares of our common stock, and in October 2020, we received net proceeds of approximately $21.0 million

from a public offering of our common stock at an offering price of $7.00 per share.

We believe that our existing funding, revenues from

our approved products and additional milestone payments expected to be paid in 2022 will be sufficient for at least the next twelve months

of our operations.

However, our projected estimates for our product development spending, administrative expenses and our working capital

requirements could be inaccurate, or we may experience growth more quickly or on a larger scale than we expect, any of which could result

in the depletion of capital resources more rapidly than anticipated and could require us to seek additional financing earlier than we

expect to support our operations.

following table sets forth a summary of our cash flows for the six-month periods ended June 30, 2022 and 2021:

Six months ended

June 30, 2022

Six months ended

June 30, 2021

Net cash provided by operating activities

Cash used in investing activities

Cash (used in) provided by investing activities

Cash flows (used in) provided by financing activities

Change in cash and cash equivalents

decrease in cash provided by operating activities was mainly a result of the net income in the 2021 period partially offset by changes

in working capital as compared to the net loss in the 2022 period and favorable working capital changes – in particular, the collection

of the $5,000 milestone from Azurity related to the December 2021 product launch for EPRONTIA®.

The 2022 financing activity

was an initial payment on our loan principal (see Note 5) whereas the 2021 financing activity was the result of stock option exercises.

decrease in cash provided by investing activities was mainly a result of a $700 sale of lab equipment in 2021 that combined with a

$750 Rezipres milestone payment to Sintetica in 2022.

The 2022 financing activity included an initial $385 payment on our loan

principal (see Note 5) whereas the 2021 financing activity was higher as a result of stock option exercises.

Accounting Policies

condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States of America

condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States

The preparation of our condensed financial statements and related disclosures requires us to make estimates and

49 unchanged sentences

will be more than one year.

sell Biorphen in the U.S.

to wholesale pharmaceutical distributors, who then sell the product to hospitals and other end-user customers.

Sales to wholesalers are made pursuant to purchase orders subject to the terms of a master agreement, and delivery of individual shipments

of Biorphen represent performance obligations under each purchase order.

We use a third-party logistics (“3PL”) vendor to

process and fulfill orders and have concluded it is the principal in the sales to wholesalers because it controls access to the 3PL vendor

services rendered and directs the 3PL vendor activities.

We have no significant obligations to wholesalers to generate pull-through sales.

In addition, we sell our Alkindi Sprinkle product to one pharmacy distributor customer which provides order fulfillment and inventory

storage/distribution services.

prices initially billed to wholesalers are subject to discounts for prompt payment and subsequent chargebacks when the wholesalers sell

Biorphen at negotiated discounted prices to members of certain group purchasing organizations (“GPOs”) and government programs.

In addition, we pay fees to wholesalers for their distribution services, inventory reporting and chargeback processing.

We pay GPOs fees

for administrative services and for access to GPO members and concluded the benefits received in exchange for these fees are not distinct

from our sales of Biorphen, and accordingly we apply these amounts to reduce revenues.

Wholesalers also have rights to return unsold

product nearing or past the expiration date.

Because of the shelf life of Biorphen and our lengthy return period, there may be a significant

period of time between when the product is shipped and when we issue credits on returned product.

For our Alkindi Sprinkle product, we

bill at the initial product list prices which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements

which are recorded as a reduction of net revenues at the date of sale/shipment.

sell our Alkindi Sprinkle product to one pharmacy distributor customer which provides order fulfillment and inventory storage/distribution

We may sell products in the U.S.

to wholesale pharmaceutical distributors, who then sell the product to hospitals and other

end-user customers.

Sales to wholesalers are made pursuant to purchase orders subject to the terms of a master agreement, and delivery

of individual shipments of products represent performance obligations under each purchase order.

We use a third-party logistics (“3PL”)

vendor to process and fulfill orders and have concluded it is the principal in the sales to wholesalers because it controls access to

the 3PL vendor services rendered and directs the 3PL vendor activities.

We have no significant obligations to wholesalers to generate

pull-through sales.

our Alkindi Sprinkle product, we bill at the initial product list prices which are subject to offsets for patient co-pay assistance and

potential state Medicaid reimbursements which are recorded as a reduction of net revenues at the date of sale/shipment.

Selling prices

initially billed to wholesalers are subject to discounts for prompt payment and subsequent chargebacks when products are sold at negotiated

discounted prices to members of certain group purchasing organizations (“GPOs”) and government programs.

In addition, we

pay fees to wholesalers for their distribution services, inventory reporting and chargeback processing.

We pay GPOs fees for administrative

services and for access to GPO members and concluded the benefits received in exchange for these fees are not distinct from our sales,

and accordingly we apply these amounts to reduce revenues.

Wholesalers also have rights to return eligible, unsold product nearing or

past the expiration date.

Because of product shelf life and our lengthy return period, there may be a significant period of time between

when the product is shipped and when we issue credits on returned product.

estimate the transaction price when we receive each purchase order, taking into account the expected reductions of the selling price

1 unchanged sentence

We have developed estimates for future returns and chargebacks

of Biorphen and the impact of the other discounts and fees we pay.

Our sales of Alkindi Sprinkle to our distributor are not subject to

When estimating these adjustments to the transaction price, we reduce it sufficiently to be able to assert that it is probable

that there will be no significant reversal of revenue when the ultimate adjustment amounts are known.

recognize revenue from Biorphen product sales and related cost of sales upon product delivery to the wholesaler location.

At that time,

the wholesalers take control of the product as they take title, bear the risk of loss of ownership, and have an enforceable obligation

They also have the ability to direct sales of product to their customers on terms and at prices they negotiate.

Although wholesalers

have product return rights, we do not believe they have a significant incentive to return the product to us.

We store our Alkindi Sprinkle

inventory at our pharmacy distributor customer location and sales are recorded when stock is pulled and shipped to fulfill specific patient

and the impact of the other discounts and fees we pay.

Our sales of Alkindi Sprinkle to our distributor are not subject to returns.

estimating these adjustments to the transaction price, it is sufficiently reduced to be able to assert that it is probable that there

will be no significant reversal of revenue when the ultimate adjustment amounts are known.

store our Alkindi Sprinkle inventory at our pharmacy distributor customer location and sales are recorded when stock is pulled and shipped

to fulfill specific patient orders.

We may recognize revenue from other product sales and related cost of sales upon product delivery

to the wholesaler location.

At that time, the wholesalers take control of the product as they take title, bear the risk of loss of ownership,

and have an enforceable obligation to pay us.

They also have the ability to direct sales of product to their customers on terms and at

prices they negotiate.

Although wholesalers have product return rights, we do not believe they have a significant incentive to return

the product to us.

recognition of revenue from product sales, the estimated amounts of credit for product returns, chargebacks, distribution fees, prompt

payment discounts, state Medicaid and GPO fees are included in sales reserves, accrued liabilities and net of accounts receivable.

payment discounts, state Medicaid and GPO fees are included in sales reserves, accrued liabilities and net accounts receivable.

monitor actual product returns, chargebacks, discounts and fees subsequent to the sale.

74 unchanged sentences

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