3 unchanged sentences
(In thousands, except share and per share data)
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
31 unchanged sentences
Undesignated preferred stock, $ 0.01 par value — 10,000,000 shares authorized;
−Removed: no shares issued or outstanding as of June 30, 2021 and December 31, 2020
−Removed: Common stock, $ 0.01 par value - 400,000,000 shares
−Removed: authorized, 249,617,550 and 242,117,089 shares issued and outstanding
−Removed: at June 30, 2021 and December 31, 2020, respectively
+Added: no shares issued or outstanding as of September 30, 2021 and December 31, 2020
+Added: Common stock, $ 0.01 par value - 400,000,000 shares authorized,
+Added: 250,245,831 and 242,117,089 shares issued and outstanding
+Added: at September 30, 2021 and December 31, 2020, respectively
Additional paid-in capital
7 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
Net revenue — commercial product sales
6 unchanged sentences
Asset impairment
−Removed: Loss (gain) on foreign currency translation
+Added: (Gain) loss on foreign currency translation
Loss on purchase commitments
5 unchanged sentences
Interest expense on Mann Group promissory notes
−Removed: Loss on extinguishment of debt
+Added: Gain (loss) on extinguishment of debt, net
Other income (expense)
−Removed: Total other expense
+Added: Total other income (expense)
Loss before provision for income taxes
1 unchanged sentence
Net loss per share - basic and diluted
−Removed: Shares used to compute basic and diluted net loss per share
+Added: Shares used to compute net loss per share - basic and diluted
See notes to condensed consolidated financial statements.
3 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
Other comprehensive loss:
32 unchanged sentences
BALANCE, JUNE 30, 2020
+Added: Stock-based compensation expense
+Added: Issuance of common stock associated
+Added: with debt interest payment
+Added: Net issuance of common stock associated
+Added: with stock options and restricted stock
+Added: Issuance of common stock in at the market
+Added: Issuance cost associated with at the market
+Added: Issuance of common stock under Employee
+Added: Stock Purchase Plan
+Added: BALANCE, SEPTEMBER 30, 2020
Comprehensive
25 unchanged sentences
BALANCE, JUNE 30, 2021
+Added: Net issuance of common stock associated
+Added: with stock options and restricted stock
+Added: Issuance of common stock under Employee
+Added: Stock Purchase Plan
+Added: Stock-based compensation expense
+Added: BALANCE, SEPTEMBER 30, 2021
See notes to condensed consolidated financial statements.
2 unchanged sentences
(In thousands)
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net loss to net cash used in operating activities:
−Removed: Loss on extinguishment of debt
+Added: Loss on extinguishment of debt, net
Stock-based compensation expense
18 unchanged sentences
CASH FLOWS FROM INVESTING ACTIVITIES:
+Added: Proceeds from sale of debt securities
Purchase of debt securities
23 unchanged sentences
Interest paid in cash, net of amounts capitalized
+Added: Addition of right-of-use asset
+Added: Right-of-use asset modification
+Added: Addition of operating lease liability
+Added: Operating lease liability modification
NON-CASH INVESTING AND FINANCING ACTIVITIES:
2 unchanged sentences
Payment of 2024 convertible notes through issuance of common stock
+Added: Forgiveness of PPP loan
Non-cash construction in progress and property and equipment
+Added: Reclassification of investments from long-term to current
Payment of Mann Group convertible note interest through issuance of common stock
11 unchanged sentences
In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included.
−Removed: The results of operations for the three and six months ended June 30, 2021 may not be indicative of the results that may be expected for the full year.
+Added: The results of operations for the three and nine months ended September 30, 2021 may not be indicative of the results that may be expected for the full year.
Financial Statement Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
4 unchanged sentences
These effects could have a material impact on the estimates and assumptions used in the preparation of the condensed consolidated financial statements.
−Removed: The more significant estimates include revenue recognition and gross-to-net adjustments, assessing long-lived assets for impairment, clinical trial expenses, inventory costing and recoverability, recognized loss on purchase commitment, milestone rights liability, stock-based compensation and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities, and the valuation allowance recorded against net deferred tax assets.
+Added: The more significant estimates include revenue recognition, including gross-to-net adjustments, stand-alone selling price considerations, assessing long-lived assets for impairment, clinical trial expenses, inventory costing and recoverability, recognized loss on purchase commitment, milestone rights liability, stock-based compensation and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities, and the valuation allowance recorded against net deferred tax assets.
Business — MannKind is a biopharmaceutical company focused on the development and commercialization of inhaled therapeutic products for patients with endocrine and orphan lung diseases.
1 unchanged sentence
Food and Drug Administration (“FDA”) in June 2014.
−Removed: Since September 2018, the Company has been collaborating with United Therapeutics to develop an inhaled formulation of treprostinil, known as Tyvaso DPI.
−Removed: In April 2021, United Therapeutics submitted a new drug application (“NDA”) to the FDA seeking approval of Tyvaso DPI.
+Added: Since September 2018, the Company has been collaborating with United Therapeutics Corporation (“United Therapeutics” or “UT”) to develop an inhaled formulation of treprostinil, known as Tyvaso DPI.
+Added: In April 2021, United Therapeutics submitted a new drug application (“NDA”) to the FDA seeking approval of Tyvaso DPI for the treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD).
+Added: In October 2021, the FDA issued a complete response letter to United Therapeutics pursuant to which the FDA declined to approve the NDA at this time, noting one deficiency related to an open inspection issue at a third-party analytical testing center for treprostinil.
+Added: The complete response letter did not pertain to MannKind, and no issues were cited by the FDA as it relates to MannKind’s facility in Connecticut for manufacturing, testing and packaging of finished Tyvaso DPI, including its associated device.
+Added: On October 18, 2021, UT stated that it believes that the single deficiency identified in the complete response will be resolved quickly and that Tyvaso DPI can receive approval by the summer of 2022, if not earlier.
Basis of Presentation — The condensed consolidated financial statements have been prepared in accordance with GAAP.
1 unchanged sentence
In addition, the Company expects to continue to incur significant expenditures for the foreseeable future in support of its manufacturing operations, sales and marketing costs for Afrezza, and development of other product candidates in the Company’s pipeline.
−Removed: As of June 30, 2021, the Company had capital resources of $ 62.5 million in cash and cash equivalents, $ 100.0 million in short-term investments, $ 39.0 million in long-term investments, an accumulated deficit of $ 3.1 billion and total principal amount of outstanding borrowings of $ 293.3 million.
−Removed: In August 2019, the Company and its wholly owned subsidiary, MannKind LLC, entered into a credit and security agreement with MidCap Financial Trust (as amended, the “MidCap credit facility”).
−Removed: The MidCap Credit Facility currently provides a secured term loan facility with a potential aggregate principal amount of up to $ 110.0 million, leaving a balance of $ 50.0 million outstanding as of December 31, 2020.
−Removed: In April 2021, $ 10.0 million of the outstanding principal amount was repaid leaving a balance of $ 40.0 million at June 30, 2021.
+Added: As of September 30, 2021, the Company had capital resources of $ 51.7 million in cash and cash equivalents, $ 87.3 million in short-term investments, $ 42.1 million in long-term investments, an accumulated deficit of $ 3.1 billion and total principal amount of outstanding borrowings of $ 288.4 million.
+Added: In August 2019, MannKind and its wholly owned subsidiary, MannKind LLC, entered into a credit and security agreement with MidCap Financial Trust (as amended, the “MidCap credit facility”).
+Added: The MidCap Credit Facility currently provides a secured term loan facility with a potential aggregate principal amount of up to $ 100.0 million, with a balance of $ 40.0 million outstanding as of September 30, 2021.
See Note 6 – Borrowings .
4 unchanged sentences
These reclassifications had no effect on the reported condensed consolidated balance sheets or statements of operations.
−Removed: An adjustment has been made to the condensed consolidated statements of cash flows for the six months ended June 30, 2020 to combine payment of employment taxes related to vested restricted stock units and exercise of stock options in the cash flows from financing activities.
−Removed: These changes in classification do not affect previously reported cash flows from operating or investing activities.
+Added: An adjustment has been made to the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 to combine payment of employment taxes related to vested restricted stock units and exercise of stock options in
+Added: the cash flows from financing activities.
+Added: These changes in classification do not affect previously re ported cash flows from operating or investing activities.
Principles of Consolidation — The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.
27 unchanged sentences
The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.
−Removed: The Company’s analysis also contemplates application of the constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the estimates detailed below as of June 30, 2021 and, therefore, the transaction price was not reduced further during the six months ended June 30, 2021.
+Added: The Company’s analysis also contemplates application of the constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the estimates detailed below as of September 30, 2021 and, therefore, the transaction price was not reduced further during the nine months ended September 30, 2021.
Actual amounts of consideration ultimately received may differ from the Company’s estimates.
−Removed: If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net revenue — commercial product sales and earnings in the period such variances become known.
+Added: If actual results in the future
+Added: vary from the Company’s estimates, the Company will adjust these estimates, which would affect net revenue — commercial product sales and earnings in the period such variances become known.
Significant judgment is required in estimating gross-to-net adjustments considering legal interpretations of applicable laws and regulations, historical experience, payer channel mix, current contract prices under applicable programs, unbilled claims, processing time lags and inventory levels in the distribution channel.
6 unchanged sentences
The Company’s current return reserve percentage is estimated to be in the single-digits.
−Removed: Adjustments to the returns reserve have been made in the past and may be necessary in the future based on revised estimates to our assumptions.
+Added: Adjustments to the returns reserve have been made in the past and may be necessary in the future based on revised estimates to the Company’s assumptions.
Provider Chargebacks and Discounts — Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company.
31 unchanged sentences
If concluded to be a single performance obligation, the transaction price for the single performance obligation is recognized as revenue over the estimated period of when the performance obligation is satisfied.
+Added: If the license is considered to be a distinct performance obligation, then the estimated revenue is included in the transaction price for the contract, which is then allocated to each performance obligation based on the respective standalone selling prices.
+Added: If the revenue for a sales-based or usage-based royalty is promised in exchange for an intellectual property license, the Company recognizes revenue as the latter of the subsequent sale or usage occurs or the performance obligation to which the royalty has been allocated has been satisfied or partially satisfied.
Whenever the Company determines that an arrangement should be accounted for over time, the Company determines the period over which the performance obligations will be performed, and revenue will be recognized over the period the Company is expected to complete its performance obligations.
25 unchanged sentences
Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration, other revenue, and earnings in the period of adjustment.
−Removed: PPP loan — On April 10, 2020, the Company received the proceeds from a loan in the amount of approximately $ 4.9 million (the “PPP loan”) from JPMorgan Chase Bank, N.A., as lender, pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).
+Added: PPP loan — In April 2020, the Company received the proceeds from a loan in the amount of approximately $ 4.9 million (the “PPP loan”) from JPMorgan Chase Bank, N.A., as lender, pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).
The Company accounted for the PPP loan as a financial liability in accordance with ASC Topic 470, Debt .
7 unchanged sentences
These costs, in addition to the impact of the revaluation of inventory for standard costing, and write-offs of inventory are recorded as expenses in the period in which they are incurred, rather than as a portion of inventory costs.
−Removed: The cost of goods sold excludes the cost of insulin purchased under our Insulin Supply Agreement (the “Insulin Supply Agreement”) with Amphastar Pharmaceuticals, Inc.
+Added: The cost of goods sold excludes the cost of insulin purchased under the Company’s Insulin Supply Agreement (the “Insulin Supply Agreement”) with Amphastar Pharmaceuticals, Inc.
(“Amphastar”).
1 unchanged sentence
Cash and Cash Equivalents and Restricted Cash —The Company considers all highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase, that are readily convertible into cash to be cash equivalents.
−Removed: As of June 30, 2021 and December 31, 2020, cash equivalents were comprised of money market accounts with maturities less than 90 days from the date of purchase.
+Added: As of September 30, 2021 and December 31, 2020, cash equivalents were comprised of money market accounts and U.S.
+Added: Treasury securities with maturities less than 90 days from the date of purchase.
The Company records restricted cash when cash and cash equivalents are restricted as to withdrawal or usage.
1 unchanged sentence
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to amounts reported on the condensed consolidated statements of cash flows (in thousands):
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
−Removed: June 30, 2020
+Added: September 30, 2020
Cash and cash equivalents
3 unchanged sentences
Treasury securities.
−Removed: For the three and six months ended June 30, 2021, the Company held short-term and long-term investments of debt securities, including commercial paper and bonds.
+Added: For the three and nine months ended September 30, 2021, the Company held short-term and long-term investments of debt securities, including commercial paper and bonds.
The Company intends to hold its investments until maturity and are therefore stated at amortized cost.
−Removed: Those investments with maturities less than 12 months are included in short-term investments and investments with maturities in excess of twelve months are included in long-term investments in our condensed consolidated balance sheets.
−Removed: The amortization of the Company’s investments is recognized as interest expense in the condensed consolidated statements of operations and was approximately $ 0.1 million for the three and six months ended June 30, 2021.
−Removed: There was no such amortization for the three or six months ended June 30, 2020.
−Removed: No allowance for credit losses on held-to-maturity securities was required as of June 30, 2021.
+Added: Those investments with maturities less than 12 months are included in short-term investments and investments with maturities in excess of twelve months are included in long-term investments in the condensed consolidated balance sheets.
+Added: The amortization of the Company’s investments is recognized as interest expense in the condensed consolidated statements of operations and was approximately $ 0.2 million and $ 0.3 million for the three and nine months ended September 30, 2021, respectively.
+Added: There was no such amortization for the three or nine months ended September 30, 2020.
+Added: No allowance for credit losses on held-to-maturity securities was required as of September 30, 2021.
Available-for-Sale Investment — In June 2021, the Company invested $ 3.0 million in Thirona Bio, Inc.
7 unchanged sentences
The Company determines fair value of its available-for-sale investments using level 3 inputs.
−Removed: As of June 30, 2021, the Company evaluated the fair value of its investment in Thirona and determined that the fair value approximates the carrying value of $ 3.0 million.
+Added: As of September 30, 2021, the Company evaluated the fair value of its investment in Thirona and determined that the fair value approximates the carrying value of $ 3.0 million.
In June 2021, the Company and Thirona also entered into a collaboration agreement to develop a compound for the treatment of fibrotic lung diseases.
2 unchanged sentences
Cash and cash equivalents are held in high credit quality institutions.
−Removed: Cash equivalents consist of interest-bearing money market accounts.
+Added: Cash equivalents consist of interest-bearing money market accounts and U.S.
+Added: Treasury securities with maturities less than 90 days.
Investments generally consist of commercial paper, corporate notes or bonds and U.S.
26 unchanged sentences
In August 2019, the Company recorded a $ 1.5 million commitment asset and a $ 0.4 million other asset for deferred debt issuance costs related to the future funding commitments of the MidCap Credit Facility.
−Removed: A quarterly assessment was performed to determine if
−Removed: the Company was on target to achieve certain required milestone conditions in order for the Company to access further borrowings under the MidCap credit facility .
−Removed: The Company determined that such milestone conditions related to Afrezza trailing net revenue we re unlikely to be achieved.
−Removed: As a result, a n asset impairment of $ 1.9 million was recognized during the six months ended June 30 , 2020 and is reflected in the Company’s condensed consolidated statement s of operations .
−Removed: S ee Note 6 – Borrowings for further information on the MidCap credit facility .
+Added: A quarterly assessment was performed during the second quarter of 2020 to determine if the Company was on target to achieve certain required milestone conditions in order for the Company to access further borrowings under the MidCap credit facility.
+Added: The Company determined that such milestone conditions related to Afrezza trailing net revenue were unlikely to be achieved.
+Added: As a result, an asset impairment of $ 1.9 million is reflected in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2020 .
+Added: See Note 6 – Borrowings for further information on the MidCap credit facility.
Recognized Loss on Purchase Commitments — The Company assesses whether losses on long-term purchase commitments should be accrued.
3 unchanged sentences
If, subsequent to an accrual, a purchase commitment is successfully renegotiated, the gain is recognized in the Company’s condensed consolidated statements of operations.
−Removed: The liability balance of the recognized loss on insulin purchase commitments was $ 88.7 million and $ 95.3 million as of June 30, 2021 and December 31, 2020, respectively.
−Removed: No new contracts were identified in 2020 or in the first six months of 2021 that required a new loss on purchase commitment accrual.
+Added: The liability balance of the recognized loss on insulin purchase commitments was $ 85.3 million and $ 95.3 million as of September 30, 2021 and December 31, 2020, respectively.
+Added: No new contracts were identified in 2020 or in the first nine months of 2021 that required a new loss on purchase commitment accrual.
Milestone Rights Liability — On July 1, 2013, in conjunction with the execution of a financing facility with Deerfield Private Design Fund II L.P.
1 unchanged sentence
, the Company issued to Deerfield Private Design Fund II, L.P.
−Removed: and Horizon Santé FLML SÁRL (the “Milestone Purchasers”) certain rights to receive payments of up to $ 90.0 million, of which $ 65.0 million remains payable as of June 30, 2021 upon the occurrence of specified strategic and sales milestones, including the achievement of specified net sales figures (the “Milestone Rights”).
+Added: and Horizon Santé FLML SÁRL (the “Milestone Purchasers”) certain rights to receive payments of up to $ 90.0 million, of which $ 65.0 million remains payable as of September 30, 2021 upon the occurrence of specified strategic and sales milestones, including the achievement of specified net sales figures (the “Milestone Rights”).
The Company analyzed the Milestone Rights and determined that they did not meet the definition of a freestanding derivative.
21 unchanged sentences
For uncertain tax positions, the Company determines whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements.
−Removed: For those tax positions where it is “not more likely than not” that a tax benefit will be sustained, no tax benefit is recognized.
−Removed: Penalties, if
−Removed: probable and reasonably estimable, are recognized as a component of income tax expense.
+Added: tax positions where it is “not more likely than not” that a tax benefit will be sustained, no tax benefit is recognized.
+Added: Penalties, if probable and reasonably estimable, are recognized as a component of income tax expense.
The Company has reduced its deferred tax assets for uncertain tax positions but has not recorded liabilities for income tax expense, penalties, or interest.
18 unchanged sentences
Accounts receivable, net consists of the following (in thousands):
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
5 unchanged sentences
Accounts receivable – collaborations and services
+Added: Accounts receivable, gross
+Added: Allowance for doubtful accounts
+Added: Total accounts receivable – collaborations and services, net
Total accounts receivable, net
−Removed: As of June 30, 2021 and December 31, 2020, the allowance for doubtful accounts was de minimis .
−Removed: The Company had three wholesale distributors representing approximately 88 % of commercial accounts receivable as of June 30, 2021 and approximately 82 % and 82 % of gross sales for the three and six months ended June 30, 2021, respectively.
+Added: As of September 30, 2021 and December 31, 2020, the allowance for doubtful accounts for accounts receivable – commercial was de minimis .
+Added: The Company had three wholesale distributors representing approximately 87 % of commercial accounts receivable as of September 30, 2021 and approximately 81 % and 82 % of gross sales for the three and nine months ended September 30, 2021, respectively.
+Added: As of September 30, 2021, the allowance for accounts receivable – collaborations and services was $ 0.8 million and was related to $ 1.5 million of accounts receivable for Vertice Pharma, a collaboration partner for the co-promotion of Thyquidity.
+Added: The Company had one collaboration partner, United Therapeutics, that comprised approximately 79 % of the collaboration and services accounts receivable as of September 30, 2021 and approximately 99 % and 95 % of gross sales from collaborations and services for the three and nine months ended September 30, 2021, respectively.
Inventories consist of the following (in thousands):
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
3 unchanged sentences
Total inventory
−Removed: Work-in-process and finished goods as of June 30, 2021 and December 31, 2020 include conversion costs and exclude the cost of insulin.
+Added: Work-in-process and finished goods as of September 30, 2021 and December 31, 2020 include conversion costs and exclude the cost of insulin.
All insulin inventory on hand was written off and the projected loss on the purchase commitment contract to purchase future insulin was accrued as of the end of 2015.
−Removed: Raw materials inventory included $ 0.8 million of pre-launch inventory as of June 30, 2021 and December 31, 2020, which consisted of FDKP received in November 2019 that will be used to manufacture Afrezza under an enhanced manufacturing process for FDKP.
+Added: Raw materials inventory included $ 0.8 million of pre-launch inventory as of September 30, 2021 and December 31, 2020, which consisted of FDKP received in November 2019 that will be used to manufacture Afrezza under an enhanced manufacturing process for FDKP.
The Company expects to receive FDA approval of the new source of FDKP in 2023, after which the pre-launch raw materials inventory will be reclassified as raw materials inventory for use in the manufacturing of Afrezza and Tyvaso DPI.
2 unchanged sentences
Inventory that was forecasted to become obsolete due to expiration is recorded in costs of goods sold in the condensed consolidated statements of operations.
−Removed: For the six months ended June 30, 2020, there was an inventory write-off of $ 0.5 million as a result of this assessment.
−Removed: There was no inventory write-off for the three and six months ended June 30, 2021.
+Added: For the nine months ended September 30, 2020, there was an inventory write-off of $ 0.5 million as a result of this assessment.
+Added: There were no inventory write-offs for the three months ended September 30, 2020 or the three and nine months ended September 30, 2021.
Property and Equipment
1 unchanged sentence
Estimated Useful
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
6 unchanged sentences
Total property and equipment, net
−Removed: Depreciation expense related to property and equipment for the three and six months ended June 30, 2021 and 2020 was as follows (in thousands):
+Added: ____________________
+Added: Construction in progress includes $ 1.6 million of equipment under construction for the manufacturing expansion for UT (the “UT Equipment”).
+Added: See Note 7 – Collaboration, Licensing and Other Arrangements .
+Added: Depreciation expense related to property and equipment for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
Depreciation Expense
+Added: On November 8, 2021 , the Company closed a transaction to sell certain real estate located at One Casper Street, Danbury, CT (the “Property”) to an affiliate of Creative Manufacturing Properties (the “Purchaser”) for a sales price of $ 102.3 million, subject to terms and the conditions contained in a purchase and sale agreement.
+Added: Effective with the closing of this transaction, the Company entered into a 20 -year lease agreement with the purchaser (the “Sale-Leaseback Transaction”) .
+Added: See Note 14 – Subsequent Event .
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were comprised of the following (in thousands):
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
8 unchanged sentences
Total accrued expenses and other current liabilities
−Removed: Included in salary and related expenses is approximately $ 1.0 million of deferred social security taxes as permitted under the CARES Act.
−Removed: The Company was permitted to defer the employer share of social security taxes otherwise owed on dates beginning March 27, 2020 and ending December 31, 2020.
−Removed: The amount of the deferral was based on wages paid from April through December 2020.
−Removed: The Company received notification of forgiveness by the SBA for the full principal balance of the PPP loan as discussed in Note 6 – Borrowings .
−Removed: Therefore, the deferred social security taxes will be repaid in August 2021.
Carrying amount of principal borrowings consist of the following (in thousands):
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
5 unchanged sentences
___________________
−Removed: The amendment to the Mann Group convertible note resulted in a substantial premium of $ 22.1 million based on the fair value post modification, which contributed to the loss on extinguishment in the condensed consolidated statement of operations for the three and six months ended June 30, 2021 and was recognized as additional paid-in capital in the condensed consolidated balance sheet as of June 30, 2021.
+Added: The amendment to the Mann Group convertible note in the second quarter of 2021 resulted in a substantial premium of $ 22.1 million based on the fair value post modification, which contributed to the loss on extinguishment in the condensed consolidated statement of operations for the nine months ended September 30, 2021 and was recognized as additional paid-in capital in the condensed consolidated balance sheet as of September 30, 2021.
The accounting for the $ 22.1 million loss on extinguishment did not result in a change in the financial position of the Company.
−Removed: The following table provides a summary of the Company’s debt and key terms as of June 30, 2021:
−Removed: June 30, 2021
+Added: The following table provides a summary of the Company’s debt and key terms as of September 30, 2021:
+Added: September 30, 2021
December 31, 2020
16 unchanged sentences
$ 4.9 million
−Removed: $ 4.9 million
2024 convertible notes (5)
7 unchanged sentences
In April 2021, the Company prepaid $ 35.1 million principal balance as well as accrued unpaid interest .
−Removed: In July 2021, the Company received full forgiveness from the SBA for the $ 4.9 million principal balance of the PPP loan.
+Added: In July 2021, the Company received full forgiveness from the SBA for the $ 4.9 million principal balance of the PPP loan and recognized a gain on extinguishment of debt for the full principal balance and a de minimis amount of accrued but unpaid interest .
In February 2021, the $ 5.0 million principal balance was converted into 1,666,667 shares of the Company’s common stock .
−Removed: The maturities of our borrowings as of June 30, 2021 are as follows (in thousands):
+Added: The maturities of the Company’s borrowings as of September 30, 2021 are as follows (in thousands):
Total principal payments
18 unchanged sentences
The conversion rate for the Senior convertible notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture, but will not be adjusted for any accrued and unpaid interest.
−Removed: In addition, following certain corporate events that occur prior to the maturity date of the Senior convertible notes or if the Company delivers a notice of redemption in respect of the Senior convertible notes, the Company will, in certain circumstances, increase the conversion rate of the Senior convertible notes for a holder who elects to convert its Notes in connection with such a corporate event or convert its Notes called for redemption during the related redemption period (as defined in the Indenture), as the case may be.
+Added: In addition, following certain corporate events that occur prior to the maturity date of the Senior convertible notes or if the Company delivers a notice of redemption in respect of the Senior convertible notes, the Company will, in certain circumstances, increase the conversion rate of the Senior convertible notes for a holder who elects to convert its Senior convertible notes in connection with such a corporate event or convert its Notes called for redemption during the related redemption period (as defined in the Indenture), as the case may be.
The Company may not redeem the Senior convertible notes prior to March 6, 2024 .
The Company may redeem for cash all or any portion of the Senior convertible notes, at its option, on or after March 6, 2024 and prior to the 36th scheduled trading day immediately preceding the maturity date, if the last reported sale price of Common Stock has been at least 130 % of the conversion price for the Senior convertible notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Senior convertible notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
−Removed: If the Company elects to redeem less than all of the outstanding Notes, at least $ 75.0 million aggregate principal amount of Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.
+Added: If the Company elects to redeem less than all of the outstanding Senior convertible notes, at least $ 75.0 million aggregate principal amount of Senior convertible notes must be outstanding and not subject to redemption as of the relevant redemption notice date.
No sinking fund is provided for the Senior convertible notes.
2 unchanged sentences
If certain bankruptcy and insolvency-related events of default involving the Company (and not just any of its significant subsidiaries) occur, 100 % of the principal of and accrued and unpaid interest on the Senior convertible notes will automatically become due and payable.
−Removed: If an event of default with respect to the Senior convertible notes, other than certain bankruptcy and insolvency-related events of default involving the Company (and not just any of its significant subsidiaries), occurs and is continuing, the trustee, by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the trustee, may, and the trustee at the request of such holders shall, declare 100 % of the principal of and accrued and unpaid interest, if any, on all the Senior convertible notes to be due and payable.
+Added: If an event of default with respect to the Senior convertible notes, other than certain bankruptcy and insolvency-related events of default involving the Company (and not just any of its significant subsidiaries), occurs and is continuing, the trustee, by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Senior convertible notes by notice to the Company and the trustee, may, and the trustee at the request of such holders shall, declare 100 % of the principal of and accrued and unpaid interest, if any, on all the Senior convertible notes to be due and payable.
Notwithstanding the foregoing, the Indenture provides that, to the extent the Company so elects, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will, for the first 365 days after the occurrence of such an event of default consist exclusively of the right to receive additional interest on the Senior convertible notes as set forth in the Indenture .
3 unchanged sentences
The Company’s net proceeds from the Offering were approximately $ 222.7 million, after deducting the initial purchasers’ discounts and commissions and the estimated Offering expenses payable by the Company.
−Removed: As of June 30, 2021, the unamortized debt issuance cost was $ 6.8 million.
+Added: As of September 30, 2021, the unamortized debt issuance cost was $ 6.4 million.
MidCap credit facility — I n August 2019, the Company entered into the MidCap credit facility and borrowed the first advance of $ 40.0 million (“Tranche 1”) in August 2019 and the second advance of $ 10.0 million (“Tranche 2”) in December 2020.
21 unchanged sentences
The prepayment penalty of $ 1.0 million related to the payment of $ 10.0 million was capitalized and will be amortized over the remaining life of the debt.
−Removed: As of June 30, 2021, the unamortized debt discount was $ 0.4 million and the unamo rtized prepayment penalty was $ 0.9 million .
+Added: As of September 30, 2021, the unamortized debt discount was $ 0.4 million and the unamo rtized prepayment penalty was $ 0.9 million .
The Company’s obligations under the MidCap credit facility are secured by a security interest on substantially all of its assets, including intellectual property.
3 unchanged sentences
however, this covenant will be eliminated in the event that Tyvaso DPI is approved by the FDA.
−Removed: As of June 30, 2021, the Company was in compliance with the financial and minimum cash covenants.
+Added: As of September 30, 2021, the Company was in compliance with the financial and minimum cash covenants.
The MidCap credit facility also contains customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, listing of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties.
5 unchanged sentences
As a result of Tranche 2, the Company issued warrants to purchase an aggregate of 111,853 shares of the Company’s common stock, at an exercise price equal to $ 2.91 per share.
−Removed: The MidCap warrants are immediately exercisable and expire on the earlier to occur of the seventh anniversary of the respective issue date or, in certain circumstances, the closing of a merger, sale or other consolidation transactions in which the consideration is cash, stock of a publicly traded acquirer, or a combination thereof.
The Company determined that these warrants met the criteria for equity classification and accounted for such warrants in additional paid-in capital.
+Added: Subsequent to September 30, 2021, the Tranche 1 and Tranche 2 MidCap warrants were exercised in full.
Mann Group promissory notes — In August 2019, the Company issued a $ 35.0 million note that is convertible into shares of the Company’s common stock at $ 2.50 per share (the “Mann Group convertible note”) and issued a non-convertible note to Mann Group in an aggregate principal amount of $ 35.1 million (the “Mann Group non-convertible note” and , together with the Mann Group convertible note, the “Mann Group promissory notes”) as part of a restructuring of its then existing indebtedness to Mann Group.
2 unchanged sentences
The amendment to the Mann Group convertible note resulted in a debt extinguishment with a substantial premium based on the fair value post extinguishment.
−Removed: The fair value in excess of the face amount of $ 18.4 million contributed to a loss on extinguishment of $ 22.1 million in our condensed consolidated statement of operations for the three and six months ended June 30, 2021 and resulted in a corresponding debt premium of $ 22.1 million which was recognized as additional paid-in capital in our condensed consolidated balance sheet as of June 30, 2021.
+Added: The fair value in excess of the face amount of $ 18.4 million contributed to a loss on extinguishment of $ 22.1 million in the condensed consolidated statement of operations for the three and nine months ended September 30, 2021 and resulted in a corresponding debt premium of $ 22.1 million which was recognized as additional paid-in capital in the condensed consolidated balance sheet as of September 30, 2021.
The accounting for the $22.1 million loss on extinguishment did not result in a change in the financial position of the Company.
3 unchanged sentences
Interest on the convertible note will be payable in kind by adding the amount thereof to the principal amount;
−Removed: provided that with respect to interest accruing from and after January 1, 2021, the Company may, at its option, elect to pay any such interest on any interest payment date, if certain conditions are met, in shares of the Company’s common
−Removed: stock at a price per shall equal to the last reported sale price on the trading day immediately prior to the payment date.
+Added: provided that with respect to interest accruing from and after January 1, 2021, the Company may, at its option, elect to pay any such interest on any interest payment date, if certain conditions are met, in shares of the Company’s common stock at a price per shall equal to the last reported sale price on the trading day immediately prior to the payment date.
Pursuant to the terms of the Mann Group convertible note, Mann Group converted $ 3.0 million of accrued interest and $ 7.0 million of principal into 1.2 million shares and 2.8 million shares, respectively, of the Company’s common stock in the fourth quarter of 2020.
−Removed: During the six months ended June 30, 2021, Mann Group converted $ 0.4 million of interest and $ 9.6 million of principal into 4,000,000 shares of common stock.
+Added: During the nine months ended September 30 , 2021 , Mann Group converted $ 0.4 million of interest and $ 9.6 million of principal into 4,000,000 shares of common stock.
On April 22, 2021, the Company repaid the entire principal amount of $ 35.1 million outstanding under the Mann Group non-convertible note, together with all accrued and unpaid interest thereon.
1 unchanged sentence
On July 28, 2021, the Company received notification from the SBA that the full principal amount of the PPP loan was forgiven.
+Added: The Company recognized a $ 4.9 million gain on extinguishment of debt for the forgiveness of the principal amount and accrued but unpaid interest for the three and nine months ended September 30, 2021.
Prior to being forgiven, the PPP loan was evidenced by a promissory note dated April 9, 2020 that matured on April 9, 2022 and bore interest at a rate of 0.98 % per annum (which was being deferred).
8 unchanged sentences
In February 2021, the Company converted the $ 5.0 million 2024 convertible notes with the issuance of 1,666,667 shares of the Company’s common stock.
−Removed: Amortization of debt discount and debt issuance cost related to all borrowings for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):
+Added: Amortization of debt discount and debt issuance cost related to all borrowings for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
Amortization of debt discount
Amortization of debt issuance cost
−Removed: Milestone Rights — As of June 30, 2021 and December 31, 2020, the remaining Milestone Rights liability balance was $ 5.9 million and $ 7.3 million, respectively, which was based on initial fair value estimates calculated using the income approach and reduced by milestone achievement payments made.
+Added: Milestone Rights — As of September 30, 2021 and December 31, 2020, the remaining Milestone Rights liability balance was $ 5.9 million and $ 7.3 million, respectively, which was based on initial fair value estimates calculated using the income approach and reduced by milestone achievement payments made.
During the first quarter of 2021, the Company achieved the second Afrezza net sales milestone specified by the Milestone Rights.
3 unchanged sentences
Collaboration, Licensing and Other Arrangements
−Removed: Revenue from collaborations and services for the three and six months ended June 30, 2021 and 2020 are as follows (in thousands):
+Added: Revenue from collaborations and services for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
UT License Agreement
3 unchanged sentences
Total revenue from collaborations and services
−Removed: United Therapeutics License Agreement — In September 2018, the Company and United Therapeutics Corporation (“United Therapeutics” or “UT”) entered into an exclusive global license and collaboration agreement (the “UT License Agreement”) for the rights to the Company’s dry powder formulation of treprostinil (“Tyvaso DPI”) and associated inhalation delivery devices.
+Added: United Therapeutics License Agreement — In September 2018, the Company and UT entered into an exclusive global license and collaboration agreement (the “UT License Agreement”) for the rights to the Company’s dry powder formulation of treprostinil (“Tyvaso DPI”) and associated inhalation delivery devices.
Under the UT License Agreement, UT is responsible for global development, regulatory and commercial activities with respect to Tyvaso DPI.
5 unchanged sentences
At the inception of the agreement, the Company identified one distinct, performance obligation.
−Removed: The Company determined that the key deliverables include the license, supply of product to be used in clinical development, and certain research services upon achievement of specified development targets.
+Added: The Company determined that the key deliverables include the license, supply of product to be used in clinical development, and certain research services upon achievement of specified development targets (“R&D Services”).
Due to the specialized and unique nature of these services and their direct relationship with the license, the Company has determined that these deliverables represent one distinct bundle and thus, one performance obligation.
2 unchanged sentences
The Company expected to complete the activities specified in the initial development plan and to achieve the milestone events (including a $ 2.7 million increase in total consideration pursuant to the agreement executed in December 2020) by December 31, 2021 for total consideration of approximately $ 105.8 million, which included an upfront payment, four milestone payments, various pass-through costs and payments for clinical supplies.
−Removed: Through March 2021, the Company recognized revenue ratably over a 13-quarter period ending December 2021, which represented the estimated period to satisfy the performance obligation.
+Added: Revenue was allocated as follows:
+Added: Distinct Performance Obligation
+Added: Transaction Price
+Added: Allocation of Price
+Added: Recognition Method
+Added: Progress Measure
+Added: Recognition Period
+Added: (in millions)
+Added: R&D Services and License
+Added: Sep 2018 - Dec 2021
+Added: ___________________
+Added: Recognition period represents the estimated period to satisfy the performance obligation.
In May 2021, UT and the Company updated the development plan under the UT License Agreement to provide for additional process-development and stability-testing activities as well as the expansion of the Company’s commercial manufacturing capacity.
4 unchanged sentences
and (4) certain design and construction activities in anticipation of expansion of the Company’s commercial manufacturing facility (“Facility Expansion Services”).
−Removed: The total consideration for the updated development plan of $ 50.2 million was allocated to the four distinct performance obligations based on management’s assessment of the stand-alone selling price of each performance obligation.
+Added: T he total consideration for the updated development plan of $ 50.2 million was allocated to the four distinct performance obligations based on management’s assessment of the stand-alone selling price of each performance obligation.
Consideration of $ 0.7 million for additional clinical supplies was added in June 2021 for a total of $ 50.9 million .
−Removed: The R&D Services performance obligation was allocated a total of $ 18.3 million, which will be recognized on a ratable basis from May 2021 through October 2021;
−Removed: the estimated date when the performance obligation for the initial development services will be substantially completed.
−Removed: The Company allocated $ 4.6 million, $ 7.2 million, and $ 20.7 million to the Pre-Commercial Services, Next-gen R&D Services, and Facility Expansion Services performance obligations, respectively.
−Removed: The Company determined that the Pre-Commercial Services and Next-gen R&D Services performance obligations will be satisfied over time using the input method based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract.
+Added: Revenue was allocated as follows:
+Added: Transaction Price
+Added: Allocation of Price (1)
+Added: Recognition Method
+Added: Progress Measure
+Added: (in millions)
+Added: Total transaction price
+Added: Distinct Performance Obligation
+Added: R&D Services and License
+Added: May 2021 - Oct 2021
+Added: Pre-Commercial Services
+Added: % of completion of costs
+Added: Next-Gen R&D Services
+Added: % of completion of costs
+Added: Facility Expansion Services (4)
+Added: Point in time
+Added: Transfer of control
+Added: ___________________
+Added: Allocation is based on management’s assessment of the stand-alone selling price of each performance obligation.
+Added: Represents the estimated period when the R&D Services performance obligation will be substantially complete.
+Added: Pre-Commercial Services and Next-Gen R&D Services performance obligations will be satisfied over time using the input method based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract.
Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.
+Added: The Company will also be acting as agent for the procurement of equipment for the manufacturing expansion for the UT Equipment.
+Added: The $ 5.3 million received from UT for the UT Equipment was recognized as deposits from customer on the condensed consolidated balance sheet and will be released as the title is transferred to UT .
The Facility Expansion Services performance obligation would be recognized as control of manufactured products is transferred to the customer.
−Removed: The Company will also be acting as agent for the procurement of equipment for the manufacturing expansion for UT (the “UT Equipment”).
−Removed: The $ 5.3 million received from UT for the UT Equipment was recognized as deposits from customer on our condensed consolidated balance sheet and will be released as the title is transferred to UT.
−Removed: As of June 30, 2021, deferred revenue consisted of $ 20.0 million, which was classified as current on the condensed consolidated balance sheet.
+Added: On August 12, 2021, the Company and United Therapeutics entered into a commercial supply agreement (the “CSA”), pursuant to which the Company is responsible for manufacturing and supplying to United Therapeutics, and United Therapeutics is responsible for purchasing from the Company on a cost-plus basis, Tyvaso DPI and BluHale inhalation profiling devices, as required for commercial distribution and sale by United Therapeutics.
+Added: In addition, United Therapeutics is responsible for supplying treprostinil at its expense in quantities necessary to enable the Company to manufacture Tyvaso DPI as required by the CSA.
+Added: The activities and deliverables under CSA and the current development plan resulted in three distinct performance obligations which include:
+Added: (1) the license, supply of product to be used in clinical development, and continued development and approval support for Tyvaso DPI (“R&D Services and License”);
+Added: (2) development activities for the next generation of Tyvaso DPI (“Next-Gen R&D Services”);
+Added: and (3) a material right associated with future commercial manufacturing and supply of product (“Manufacturing Services”).
+Added: The total revised anticipated cash flows of $ 221.5 million from the transaction was allocated to the three distinct performance obligations as follows.
+Added: Anticipated Cash Flow
+Added: Allocation (1)
+Added: Recognition Method
+Added: Progress Measure
+Added: (in millions)
+Added: Total anticipated cash flow
+Added: Distinct Performance Obligation
+Added: R&D Services and License (2)
+Added: Aug 2021 - Oct 2021
+Added: Next-Gen R&D Services
+Added: % of completion of costs
+Added: Manufacturing Services
+Added: Point in time
+Added: Transfer of control
+Added: ___________________
+Added: Allocation is based on management’s assessment of the stand-alone selling price of each performance obligation.
+Added: The license for the Company’s IP was considered to be interdependent with the development activities to support approval of Tyvaso DPI.
+Added: A sales-based royalty is promised in exchange for the IP license;
+Added: therefore, the royalties associated with the license are excluded from the determination of the transaction price and the Company will recognize revenue as the sale of Tyvaso DPI to a patient occurs.
+Added: Represents the estimated period when the R&D Services performance obligation will be substantially complete.
+Added: The Next-Gen R&D Services performance obligation will be satisfied over time using the input method based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract.
+Added: Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.
+Added: The Manufacturing Services performance obligation will be recognized as control of manufactured products is transferred to the customer;
+Added: therefore, no revenue associated with this obligation was recognized during the three or nine months ended September 30, 2021.
+Added: The allocation of transaction price is based on the Company’s estimated production and the ultimate cash flows may vary as manufacturing purchase orders are received.
+Added: As of September 30, 2021, deferred revenue consisted of $ 13.8 million, which was classified as current on the condensed consolidated balance sheet.
+Added: As amended by an amendment dated October 16, 2021, the term of the CSA continues until December 31, 2031 (unless earlier terminated) and is thereafter renewed automatically for additional, successive two-year terms unless (i) United Therapeutics provides notice to the Company at least 24 months in advance of such renewal that United Therapeutics does not wish to renew the CSA or (ii) the Company provides notice to United Therapeutics at least 48 months in advance of such renewal that the Company does not wish to renew the CSA .
+Added: The Company and United Therapeutics each have normal and customary termination rights, including termination for material breach that is not cured within a specific timeframe or in the event of liquidation, bankruptcy or insolvency of the other party.
Vertice Pharma Co-Promotion Agreement — In December 2020, the Company entered into a co-promotion agreement with Vertice Pharma where the Company’s sales force will promote Thyquidity to adult endocrinologists, pediatric endocrinologists and other healthcare providers who treat hypothyroidism.
−Removed: Following the commercial launch of Thyquidity, in consideration of the sales and promotional activities provided by the Company’s sales force, Vertice is obligated to pay fixed quarterly payments to the Company, as well as variable consideration based on gross profits resulting from all sales of Thyquidity.
+Added: Following the commercial launch of Thyquidity, in consideration of the sales and promotional activities provided by the Company’s sales force, Vertice Pharma is obligated to pay fixed quarterly payments to the Company, as well as variable consideration based on gross profits resulting from all sales of Thyquidity.
Vertice Pharma launched Thyquidity in collaboration with the Company in February 2021.
7 unchanged sentences
Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.
−Removed: As of June 30, 2021, a contract asset of approximately $ 0.1 million was recognized as other assets in the condensed consolidated balance sheet.
−Removed: Subsequent to June 30, 2021, the Company and Vertice Pharma entered into an amendment to the Vertice Pharma Co-Promotion Agreement that modifies the terms of payment where 50 % of the previously fixed consideration will be subject to certain promotional conditions, resulting in variable consideration, for the third quarter of 2021.
+Added: In July 2021, the Company and Vertice Pharma entered into an amendment to the Vertice Pharma Co-Promotion Agreement that modifies the terms of payment where 50 % of the previously fixed consideration will be subject to certain promotional conditions, resulting in variable consideration.
+Added: In September 2021, the Company and Vertice Pharma mutually agreed that the Company would cease promotional activities under the co-promotion agreement effective September 30, 2021, other than certain transitional activities that continued until October 15, 2021.
+Added: The Company and Vertice Pharma are currently negotiating a final settlement of all obligations related to the termination of the co-promotion agreement.
+Added: As of September 30, 2021, the Company fully reserved $ 0.8 million of revenue from the co-promotion of Thyquidity, which was recognized as allowance for doubtful accounts – collaborations and services, which is included in accounts receivable, net in the consolidated balance sheet.
+Added: In addition, the Company recognized an impairment on contract assets of $ 0.1 million related to variable consideration from gross profits which was recognized during the nine months ended September 30, 2021.
+Added: There was no variable consideration from gross profits recognized during the three months ended September 30, 2021.
Thirona Collaboration Agreement — In June 2021, the Company and Thirona entered into a collaboration agreement to evaluate the therapeutic potential of Thirona’s compound for the treatment of pulmonary fibrosis.
8 unchanged sentences
In September 2019, the Company delivered its first shipment of Afrezza to Biomm and recorded it as net revenue — commercial product sales for $ 0.7 million, in advance of the planned launch of the product in Brazil by Biomm.
−Removed: During the second quarter of 2020, the Company sold $ 0.2 million of product to Biomm.
−Removed: No additional shipments were made to Biomm in 2020 or the first six months of 2021.
+Added: During the second quarter of
+Added: 2020, t he Company sold $ 0.2 million of product to Biomm .
+Added: No additional s hipments were made to Biomm in 2020 or the first nine months of 2021 .
Cipla License and Distribution Agreement — In May 2018 , the Company and Cipla Ltd.
4 unchanged sentences
The nonrefundable licensing fee was recorded in deferred revenue and is being recognized in net revenue – collaborations over 15 years, representing the estimated period to satisfy the performance obligation.
−Removed: The additional milestone payments represent variable
−Removed: consideration for which the Company has not recognized any revenue because of the uncertainty of obtaining marketing approval.
−Removed: As of June 3 0 , 202 1 , the d eferred revenue balance was $ 1.7 million , of which $ 0.1 million i s classified as current and $ 1.6 million is classified as long term in the condensed consolidated balance sheets .
−Removed: AMSL Distribution Agreement — In May 2019, the Company entered into an exclusive marketing and distribution agreement with the AMSL Diabetes division of Australasian Medical & Scientific Ltd.
−Removed: (“AMSL Diabetes”) for the commercialization of Afrezza in Australia.
−Removed: Under the terms of this agreement, AMSL Diabetes is responsible for obtaining regulatory and reimbursement approvals to distribute Afrezza in Australia.
−Removed: Upon regulatory approval, AMSL Diabetes will conduct sales, marketing, and customer support and distribution activities whereas the Company will be responsible for the supply and manufacturing of Afrezza.
+Added: The additional milestone payments represent variable consideration for which the Company has not recognized any revenue because of the uncertainty of obtaining marketing approval.
+Added: As of September 30, 2021, the deferred revenue balance was $ 1.7 million, of which $ 0.1 million is classified as current and $ 1.6 million is classified as long term in the condensed consolidated balance sheets.
+Added: AMSL Distribution Agreement — In May 2019, the Company entered into an exclusive marketing and distribution agreement with Australasian Medical & Scientific Ltd.
+Added: (“AMSL”) for the commercialization of Afrezza in Australia.
+Added: Under the terms of this agreement, AMSL is responsible for obtaining regulatory and reimbursement approvals to distribute Afrezza in Australia.
+Added: On August 1, 2021, Dexcom, Inc.
+Added: acquired all of the outstanding shares of AMSL As a result, on November 4, 2021, the Company exercised its right under the marketing and distribution agreement to terminate such agreement on ten days’ written notice.
Fair Value of Financial Instruments
7 unchanged sentences
Cash Equivalents and Restricted Cash — Cash equivalents consist of highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase that are readily convertible into cash.
−Removed: As of June 30, 2021 and December 31, 2020, the Company held $ 62.5 million and $ 67.0 million, respectively, of cash and cash equivalents.
−Removed: The Company held zero and $ 0.2 million in restricted cash as of June 30, 2021 and December 31, 2020, which are comprised of money market funds.
−Removed: Restricted cash was used to collateralize a letter of credit.
+Added: As of September 30, 2021 and December 31, 2020, the Company held $ 51.7 million and $ 67.0 million, respectively, of cash and cash equivalents.
+Added: As of December 31, 2020, the Company held $ 0.2 million in restricted cash, which was comprised of money market funds for the collateralization of a letter of credit.
The fair value of these money market funds was determined by using quoted prices for identical investments in an active market (Level 1 in the fair value hierarchy).
+Added: There was no restricted cash as of September 30, 2021.
Investments — Investments consist of highly liquid investments that are intended to facilitate liquidity and capital preservation.
1 unchanged sentence
The measurement of which is based on a market approach using quoted market values (Level 1 in the fair value hierarchy).
−Removed: As of June 30, 2021, the Company held $ 100.0 million of short-term investments and $ 39.0 million of long-term investments.
+Added: As of September 30, 2021, the Company held $ 87.3 million of short-term investments and $ 42.1 million of long-term investments.
Financial Liabilities — The following tables set forth the fair value of the Company’s financial instruments (Level 3 in the fair value hierarchy) (in millions):
−Removed: June 30, 2021
+Added: September 30, 2021
Carrying Value
10 unchanged sentences
A change in yield of + or – 2 % would result in a fair value of $ 37.6 million and $ 41.7 million, respectively.
−Removed: The April 2021 amendment to the Mann Group convertible note resulted in a substantial premium of $ 22.1 million based on the fair value post modification which was recognized as additional paid-in capital in the condensed consolidated balance sheet as of June 30, 2021.
+Added: The April 2021 amendment to the Mann Group convertible note resulted in a substantial premium of $ 22.1 million based on the fair value post modification which was recognized as additional paid-in capital in the condensed consolidated balance sheet as of September 30, 2021.
The accounting for the $ 22.1 million loss on extinguishment did not result in a change in the financial position of the Company.
−Removed: The fair value assessed as of June 30, 2021 was determined by applying a discounted cash flow analysis with a hypothetical yield of 12 % and volatility of 96 % to the straight note and a binomial option pricing model for the value of the conversion feature.
−Removed: A change in yield of + or – 2 % would result in a fair value of $ 43.9 million and $ 45.9 million, respectively.
−Removed: Fair value determined by applying a discounted cash flow analysis with a hypothetical yield of 12 %.
+Added: The fair value assessed as of September 30, 2021 was determined by applying a discounted cash flow analysis with a hypothetical yield of 12 % and volatility of 95 % to the straight note and a binomial option pricing model for the value of the conversion feature.
A change in yield of + or – 2 % would result in a fair value of $ 37.1 million and $ 39.1 million, respectively.
19 unchanged sentences
No other class of capital stock is authorized.
−Removed: As of June 30, 2021 and December 31, 2020, 249,617,550 and 242,117,089 shares of common stock, respectively, were issued and outstanding and no shares of preferred stock were outstanding.
+Added: As of September 30, 2021 and December 31, 2020, 250,245,831 and 242,117,089 shares of common stock, respectively, were issued and outstanding and no shares of preferred stock were outstanding.
In February 2018 , the Company entered into a controlled equity offering sales agreement (the “CF Sales Agreement”) with Cantor Fitzgerald & Co.
1 unchanged sentence
Under the Sales Agreement, Cantor Fitzgerald may sell shares by any method deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended.
−Removed: For the six months ended June 30, 2021, the Company sold an aggregate of 578,063 shares of the Company’s common stock at a weighted average purchase price of $ 3.26 per share for an aggregate gross proceeds of approximately $ 1.9 million pursuant to the Sales Agreement.
−Removed: For the six months ended June 30, 2020, the Company sold an aggregate of 7,871,461 shares of the Company’s common stock at a weighted average purchase price of $ 1.64 per share for an aggregate gross proceeds of approximately $ 12.9 million pursuant to the CF Sales Agreement.
+Added: For the nine months ended September 30, 2021, the Company sold an aggregate of 578,063 shares of the Company’s common stock at a weighted average purchase price of $ 3.26 per share for an aggregate gross proceeds of approximately $ 1.9 million pursuant to the Sales Agreement.
+Added: For the nine months ended September 30, 2020, the Company sold an aggregate of 9,401,827 shares of the Company’s common stock at a
+Added: weighted average purchase price of $ 1.66 per share for an aggregate gross proceeds of approximately $ 15.6 million pursuant to the CF Sales Agreement.
In the first quarter of 2021, Mann Group converted $ 0.4 million of interest and $ 9.6 million of principal into 4,000,000 shares of common stock in accordance with the terms of the Mann Group convertible note.
2 unchanged sentences
See Note 6 – Borrowings .
−Removed: For the three and six months ended June 30, 2021, the Company received $ 0.1 million from the market price stock purchase plan for 25,000 shares.
−Removed: There was a de minimis amount of market price stock purchase plan transactions for the three and six months ended June 30, 2020.
+Added: For the nine months ended September 30, 2021, the Company received $ 0.1 million from the market price stock purchase plan (“MPSPP”) for 25,000 shares and a de minimis amount for the nine months ended September 30, 2020.
+Added: There were no MPSPP transactions during the three months ended September 30, 2021 and 2020.
+Added: Subsequent to September 30, 2021, MidCap exercised all outstanding warrants to purchase 1,283,467 shares of the Company’s common stock through a cashless exercise that resulted in the net issuance of 964,113 shares.
+Added: See Note 6 – Borrowings .
Earnings per Common Share (“EPS”)
3 unchanged sentences
The following tables summarize the components of the basic and diluted EPS computations (in thousands, except per share amounts):
−Removed: Three Months Ended June 30,
−Removed: Six Months Ended June 30,
+Added: Three Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
EPS — basic and diluted:
4 unchanged sentences
Potentially dilutive securities outstanding that are considered antidilutive are summarized as follows (in shares):
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended
+Added: September 30,
Senior convertible notes
9 unchanged sentences
Stock-Based Compensation Expense
−Removed: During the six months ended June 30, 2021, the Company granted the following awards:
+Added: During the nine months ended September 30, 2021, the Company granted the following awards:
+Added: Three Months Ended
+Added: Three Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Employee awards:
8 unchanged sentences
RSUs had a weighted average grant date fair value of $ 4.31 per share and vested immediately upon grant, but the underlying shares of common stock will not be delivered until there is a separation of service, such as resignation, retirement or death.
−Removed: As of June 30, 2021, there was $ 3.4 million of unrecognized stock-based compensation expense related to options and PNQs, which is expected to be recognized over a weighted average period of approximately 1.6 years, and $ 12.6 million and $ 12.5 million of unrecognized stock-based compensation expense related to RSUs and Market RSUs, respectively, which is expected to be recognized over a weighted average period of approximately 3.4 and 2.6 years, respectively.
−Removed: Total stock-based compensation expense recognized in the condensed consolidated statements of operations for the three months ended June 30, 2021 and 2020 was as follows (in thousands):
+Added: RSUs had a weighted average grant date fair value of $ 3.97 per share and a vesting period of 4 years.
+Added: As of September 30, 2021, there was $ 0.3 million of unrecognized stock-based compensation expense related to options and PNQs, which is expected to be recognized over a weighted average period of approximately 1.72 years, and $ 11.6 million and $ 11.2 million of unrecognized stock-based compensation expense related to RSUs and Market RSUs, respectively, which is expected to be recognized over a weighted average period of approximately 3.19 and 2.31 years, respectively.
+Added: Total stock-based compensation expense recognized in the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
RSUs and options
2 unchanged sentences
Employee Stock Purchase Plan
−Removed: The Company provides all employees, including executive officers, the ability to purchase our common stock at a discount under our 2004 employee stock purchase plan (the “ESPP”).
−Removed: The ESPP is designed to comply with Section 423 of the Internal Revenue Code and provides all employees with the opportunity to purchase up to $ 25,000 worth of our common stock (based on the undiscounted fair market value at the commencement of the offering period) each year at a purchase price that is the lower of 85 % of the fair market value of the common stock on either the date of purchase or the commencement of the offering period.
+Added: The Company provides all employees, including executive officers, the ability to purchase common stock at a discount under the Company’s 2004 employee stock purchase plan (the “ESPP”).
+Added: The ESPP is designed to comply with Section 423 of the Internal Revenue Code and provides all employees with the opportunity to purchase up to $ 25,000 worth of common stock (based on the undiscounted fair market value at the commencement of the offering period) each year at a purchase price that is the lower of 85 % of the fair market value of the common stock on either the date of purchase or the commencement of the offering period.
An employee may not purchase more than 5,000 shares of common stock on any purchase date.
The executives’ rights under the ESPP are identical to those of all other employees.
−Removed: The Company issued 292,981 and 333,727 shares of common stock pursuant to the ESPP for the six months ended June 30, 2021 and 2020, respectively.
−Removed: There were approximately 1.3 million shares of common stock available for issuance under the ESPP as of June 30, 2021.
+Added: The Company issued 527,049 and 626,818 shares of common stock pursuant to the ESPP for the nine months ended September 30, 2021 and 2020, respectively.
+Added: There were approximately 1.1 million shares of common stock available for issuance under the ESPP as of September 30, 2021.
Commitments and Contingencies
3 unchanged sentences
The maximum amount of potential future indemnification is unlimited;
−Removed: however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid.
+Added: however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future
+Added: amounts paid.
The Company believes the fair value of these indemnification agreements is minimal.
3 unchanged sentences
Litigation — The Company is subject to legal proceedings and claims which arise in the ordinary course of its business.
−Removed: As of June 30, 2021, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company and no accrual has been recorded.
+Added: As of September 30, 2021, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company and no accrual has been recorded.
The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations.
1 unchanged sentence
The Company’s policy is to accrue for legal expenses in connection with legal proceedings and claims as they are incurred.
−Removed: Following the public announcement in January 2016 of the election by sanofi-aventis U.S.
−Removed: LLC (“Sanofi”) to terminate a license and collaboration agreement (the “Sanofi License Agreement”) between the Company and Sanofi and the subsequent decline in the Company’s stock price, two motions were submitted to the district court at Tel Aviv, Economic Department for the certification of a class action against the Company and certain of its officers and directors.
−Removed: In general, the complaints allege that the Company and certain of its officers and directors violated Israeli and U.S.
−Removed: securities laws by making materially false and misleading statements regarding the prospects for Afrezza, thereby artificially inflating the price of its common stock.
−Removed: The plaintiffs are seeking monetary damages.
−Removed: In November 2016, the district court dismissed one of the actions without prejudice.
−Removed: In the remaining action, the district court ruled in October 2017 that U.S.
−Removed: law will apply to this case.
−Removed: The plaintiff appealed this ruling, and following an oral hearing before the Supreme Court of Israel, decided to withdraw his appeal.
−Removed: Subsequently, in November 2018, the Company filed a motion to dismiss the certification motion.
−Removed: In September 2019, the plaintiff brought a motion to amend his claim, which the court denied in January 2020.
−Removed: The plaintiff appealed this denial to the Supreme Court of Israel, which issued a decision in July 2021 upholding the lower court decision.
−Removed: Subsequently, the plaintiff withdrew his complaint and the district court dismissed the motion to certify, bringing the litigation to an end.
−Removed: Contingencies — In July 2013, the Company entered into a n a greement with the Milestone Purchasers, pursuant to which the Company granted the Milestone R ights to receive payments up to $ 90.0 million upon the occurrence of specified strategic and sales milestones, $ 65.0 million of which remains payable upon achievement of such milestones (see Note 6 – Borrowings ).
−Removed: The fair value of the Milestone Rights is recorded in the condensed consolidated balance sheet, including $ 1.1 million in accrued expenses and other current liabilities and $ 4.8 million in milestone rights liabilit y .
+Added: Contingencies — In July 2013, the Company entered into an agreement with the Milestone Purchasers, pursuant to which the Company granted the Milestone Rights to receive payments up to $ 90.0 million upon the occurrence of specified strategic and sales milestones, $ 65.0 million of which remains payable upon achievement of such milestones (see Note 6 – Borrowings ).
+Added: The fair value of the Milestone Rights is recorded in the condensed consolidated balance sheet, including $ 1.1 million in accrued expenses and other current liabilities and $ 4.8 million in milestone rights liability.
Commitments — In July 2014, the Company entered into the Insulin Supply Agreement with Amphastar pursuant to which Amphastar manufactures for and supplies to the Company certain quantities of recombinant human insulin for use in Afrezza.
1 unchanged sentence
In May 2021, the Company and Amphastar amended the Insulin Supply Agreement to extend the term and restructure the annual purchase commitments.
−Removed: In connection with the amendment, the Company agreed to pay $ 2.0 million of amendment fees, which were recognized in cost of goods sold for the three and six months ended June 30, 2021.
−Removed: The remaining purchase commitments as of June 30, 2021 and March 31, 2021 (pre-amendment) were as follows:
−Removed: June 30, 2021
+Added: In connection with the amendment, the Company agreed to pay $ 2.0 million of amendment fees, which were recognized in cost of goods sold for the nine months ended September 30, 2021.
+Added: The remaining purchase commitments as of September 30, 2021 and March 31, 2021 (pre-amendment) were as follows:
+Added: September 30, 2021
March 31, 2021
4 unchanged sentences
On November 30, 2020, in connection with the third amendment to the MidCap credit facility, the Company issued warrants to purchase an aggregate of 111,853 shares of the Company’s common stock, at an exercise price of $ 2.91 per share.
−Removed: (see Note 6 – Borrowings ).
−Removed: Vehicle Leases – During the second quarter of 2018, the Company entered into a lease agreement with Enterprise Fleet Management Inc.
−Removed: During the six months ended June 30, 2021, 10 vehicles were removed from the fleet, resulting in a fleet size of 78 vehicles.
+Added: Subsequent to September 30, 2021, MidCap exercised all outstanding warrants (see Note 6 – Borrowings ).
+Added: Vehicle Leases – During the second quarter of 2018, the Company entered into a master lease agreement with Enterprise Fleet Management Inc.
+Added: During the nine months ended September 30, 2021, 50 vehicles were retired and 37 of those vehicles were replaced, resulting in a fleet size of 76 vehicles.
No gain or loss was recorded.
−Removed: The revised monthly payment inclusive of maintenance fees, insurance and taxes is approximately $ 69,000 .
+Added: The revised monthly payment inclusive of maintenance fees, insurance and taxes is approximately $ 0.1 million and the additional right of use asset and lease obligation is approximately $ 0.5 million in the consolidated balance sheets.
The lease expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations.
12 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: September 30,
+Added: Nine Months Ended
+Added: September 30,
Operating lease costs
Variable lease costs
−Removed: June 30, 2021
+Added: September 30, 2021
December 31, 2020
1 unchanged sentence
Weighted average discount rate
−Removed: Future minimum office and vehicle lease payments as of June 30, 2021 and December 31, 2020, are as follows (in thousands):
−Removed: June 30, 2021
+Added: Future minimum office and vehicle lease payments as of September 30, 2021 and December 31, 2020, are as follows (in thousands):
+Added: September 30, 2021
December 31, 2020
3 unchanged sentences
The Company’s tax years since 2016 remain subject to examination by federal, state and foreign tax authorities.
+Added: Subsequent Event
+Added: Sale-Leaseback Transaction of our Manufacturing Facility —On November 8, 2021, the Company closed the Sale-Leaseback Transaction with a sales price of $ 102.3 million for the Property, which included the Company’s manufacturing facility (commonly known as Building 1) consisting of approximately 263,900 square feet, but did not include the Company’s adjacent research and development facility (commonly known as Building 8).
+Added: Effective with the closing of the Sale-Leaseback Transaction, the Company and the Purchaser entered into a lease agreement (the “Lease”), pursuant to which the Company leased the Property from the Purchaser for an initial term of 20 years, with four renewal options of five years each.
+Added: The total annual rent under the Lease starts at approximately $ 9.5 million per year, subject to a 50% rent abatement during the first year of the Lease, and will increase annually by (i) 2.5% in the second through fifth year of the Lease and (ii) 3% in the sixth and each subsequent year of the Lease, including any renewal term.
+Added: The Company is responsible for payment of operating expenses, property taxes and insurance for the Property.
+Added: The Purchaser will hold a security deposit of $ 2.0 million during the Lease term.
+Added: Pursuant to the terms of the Lease, the Company has four options to repurchase the Property, in 2026, 2031, 2036 and 2041, for the greater of (i) $ 102.3 million and (ii) the fair market value of the Property .
+Added: Effective with the closing of the Sale-Leaseback Transaction, the Company and the Purchaser also entered into a right of first refusal agreement (the “ROFR”), pursuant to which the Company has a right to re-purchase the Property from the Purchaser in accordance with terms and conditions set forth in the ROFR.
+Added: Specifically, if the Purchaser receives, and is willing to accept, a bona fide purchase offer for the Property from a third-party purchaser, the Company has certain rights of first refusal to purchase the Property on the same material terms as proposed in such bona fide purchase offer.
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.