What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 116 added, 60 removed, 333 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

19 unchanged sentences

Preferred stock, par value $ 0.01 per share, 20,000,000 shares authorized;

none issued and outstanding at June 30, 2021 and December 31, 2020.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at June 30, 2021 and December 31, 2020;

62,490,940 and 61,671,231 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively.

none issued and outstanding at September 30, 2021 and December 31, 2020.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at September 30, 2021 and December 31, 2020;

62,542,268 and 61,671,231 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Product sales, net

5 unchanged sentences

Loss from operations

Loss on early extinguishment of debt

Interest expense

Loss before income tax benefit

Income tax benefit

Comprehensive loss

5 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities:

3 unchanged sentences

Depreciation and amortization

Loss on early extinguishment of debt

Deferred income tax

Fair value settlement upon termination of cap call contract

Changes in operating assets and liabilities:

6 unchanged sentences

Proceeds from the sale and maturities of investments

Net cash provided by investing activities

Net cash provided by/(used in) investing activities

Financing activities:

Proceeds upon exercise of stock options and warrants

At the market offering costs

Proceeds upon exercise of stock options and warrants

Payments on finance lease obligations

Proceeds from issuance of convertible senior notes

Payments for debt issuance costs

Purchases of capped calls related to convertible senior notes

Payments for repurchases of convertible senior notes

Proceeds from termination of capped call contracts

Proceeds from issuance of common stock, net

Net cash provided by financing activities

13 unchanged sentences

OMIDRIA qualifies for separate payment when used on Medicare Part B patients in ambulatory surgery centers under a policy adopted by the Centers for Medicare and Medicaid Services (“CMS”) in 2019 and directed to non-opioid pain management surgical drugs.

Our drug candidate narsoplimab is the subject of a biologics license application (“BLA”) under priority review by the U.S.

Our drug candidate narsoplimab is the subject of a biologics license application (“BLA”) pending before the U.S.

Food and Drug Administration (“FDA”) for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy (“HSCT-TMA”).

On October 18, 2021, we announced the receipt of a Complete Response Letter (“CRL”) from FDA regarding the BLA.

We are completing a briefing package to accompany a request for a Type A meeting with FDA to discuss the CRL and determine the most expeditious path forward for the approval of narsoplimab in the treatment of HSCT-TMA.

We also have multiple late-stage clinical development programs in our pipeline, which are focused on:

5 unchanged sentences

generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.

The information as of June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020 includes all adjustments, which include normal recurring adjustments, necessary to present fairly our interim financial information.

The information as of September 30, 2021 and December 31, 2020 and for the three and nine months ended September 30, 2021 and 2020 includes all adjustments, which include normal recurring adjustments, necessary to present fairly our interim financial information.

The Condensed Consolidated Balance Sheet at December 31, 2020 has been derived from our audited financial statements but does not include all of the information and footnotes required by GAAP for audited annual financial information.

2 unchanged sentences

Risks and Uncertainties

The COVID-19 pandemic and the responses to it by various governmental authorities, the medical community and others have had a significant impact on our business.

It is not possible to estimate precisely the future impact of the COVID-19 pandemic on our business, operations or financial results due to the unknown magnitude, duration and outcome of the pandemic.

We have filed with FDA our BLA for narsoplimab in HSCT-TMA, which has been granted priority review with an FDA action date of October 17, 2021 under the Prescription Drug User Fee Act (“PDUFA”).

We anticipate, but cannot guarantee, that narsoplimab will receive FDA approval and will commercially launch in the U.S.

Our sales and marketing strategies for the commercial launch of narsoplimab for HSCT-TMA include various milestones at which we

commit to incremental spending, providing for flexibility in the timing of costs incurred should the approval of narsoplimab be delayed.

If approved, we cannot fully predict the timing or the magnitude of narsoplimab revenues.

We plan to continue to fund our operations for the next twelve months with our cash and investments from sales of OMIDRIA and, if FDA approval is granted, from sales of narsoplimab for HSCT-TMA.

In addition, we may utilize funds available under our line of credit, which allows us to borrow up to 85 % of our available accounts receivable borrowing base, less certain reserves, or $ 50.0 million, whichever is less.

The line of credit matures August 2, 2022 .

We also entered into a sales agreement to sell shares of our common stock, from time to time, up to an aggregate offering amount of $ 150.0 million through an “at the market” equity offering program.

As of September 30, 2021, we had cash, cash equivalents and short-term investments of $ 50.4 million and an accounts receivable-based line of credit that allows us to borrow up to the lesser of $ 50.0 million or 85 % of our accounts receivable borrowing base, less certain reserves.

For the nine months ended September 30, 2021, we incurred losses from operations of $ 72.9 million, including non-cash charges of $ 14.4 million.

For the three months ended September 30, 2021, we incurred losses from operations of $ 18.3 million, including non-cash charges of $ 6.4 million.

operating activities was $ 91.5 million for the nine months ended September 30, 2021.

We will continue to incur losses from operating activities until our revenues exceed operating costs and debt service obligations.

We are unable to include in the determination regarding our prospects as a going concern amounts available under our accounts receivable-based line of credit or any proceeds from debt transactions or other financing instruments despite our successful track record in accessing capital through these avenues.

We also have not included any potential partnerships related to our products or product candidates.

The conditions described above, when evaluated within the constraints of the accounting literature, raise substantial doubt with respect to our ability to meet our obligations through November 9, 2022 and, therefore, to continue as a going concern.

We plan to continue to fund our operations for the next twelve months with our cash and investments, from sales of OMIDRIA and potentially from sales of narsoplimab for HSCT-TMA, if FDA approval is granted within that time period.

In addition, we may utilize funds available under our line of credit which matures August 2, 2022.

Should it be necessary or determined to be strategically advantageous, we could pursue debt financings as well as public and private offerings of our equity securities, similar to those we have previously completed, or other strategic transactions, which may include licensing a portion of our existing technology.

Should it be necessary to manage our operating expenses, we would reduce our projected cash requirements by delaying clinical trials, reducing selected research and development efforts, or implementing other restructuring activities.

In this regard, in March 2021 we entered into a sales agreement to sell shares of our common stock, from time to time, in an “at the market” equity offering facility through which we may offer and sell shares of our common stock having an aggregate amount up to $ 150.0 million.

In addition, should it be necessary to manage our operating expenses, we would reduce our projected cash requirements by delaying clinical trials, reducing selected research and development efforts, or implementing other restructuring activities.

The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

The COVID-19 pandemic and the responses to it by various governmental authorities, the medical community and others had a significant impact on our business in the first six months of 2020.

We use a single contract manufacturer to supply the OMIDRIA drug product and a separate company to package OMIDRIA for commercial sale.

We are completing the process of establishing a second OMIDRIA supplier.

We generally use different contract manufacturers to produce drug substance, drug product and to perform final packaging for our drug product candidates.

We endeavor to maintain reasonable levels of drug supply for our commercial and clinical trial use and other manufacturers are available should we need to change suppliers.

A change in suppliers;

however, could cause a delay in delivery of OMIDRIA or our clinical trial material that would adversely affect our business.

Use of Estimates

15 unchanged sentences

We reflect each of these accruals or allowances as either a reduction in the related accounts receivable or as an accrued liability depending on how the amount is expected to be settled.

We sell OMIDRIA through a limited number of wholesalers.

We review the credit quality of our wholesalers on an annual basis by considering factors such as historical experience, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay.

Credit losses for all periods presented were immaterial.

Inventory is stated at the lower of cost or market determined on a specific identification basis in a manner that approximates the first-in, first-out (“FIFO”) method.

5 unchanged sentences

Right of Use Assets and Related Lease Liabilities

We record operating leases as right-of-use assets and recognize the related lease liabilities equal to the fair value of the lease payments using our incremental borrowing rate when the implicit rate in the lease agreement is not readily

We recognize variable lease payments when incurred.

13 unchanged sentences

Recently Adopted Pronouncements

On January 1, 2021, we adopted Accounting Standard Update (“ ASU”) 2020-06, Debt—Debt with Conversion Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) on a modified retrospective basis.

On January 1, 2021, we adopted Accounting Standard Update (“A SU”) 2020-06, Debt—Debt with Conversion Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) on a modified retrospective basis.

ASU 2020-06 removes the separate liability and equity accounting for our convertible senior notes.

2 unchanged sentences

On January 1, 2021, we adopted ASU 2019-12, Income Taxes (Topic 740), which is intended to simplify various aspects of the income tax accounting guidance, including elimination of the exception to the incremental approach of intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for example, other comprehensive income).

We adopted the standard on a prospective basis and the impact to our consolidated financial statements for the three and six months ended June 30, 2021 was immaterial.

We adopted the standard on a prospective basis and the impact to our consolidated financial statements for the three and nine months ended September 30, 2021 was immaterial.

Note 3—Net Loss Per Share

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Outstanding options to purchase common stock

4 unchanged sentences

Accounts receivable, net consist of the following:

September 30,

(In thousands)

2 unchanged sentences

Total accounts receivables, net

Trade receivables are net of product return and chargeback allowances of $ 1.9 million and $ 1.2 million as of June 30, 2021 and December 31, 2020, respectively.

Trade receivables are net of product return and chargeback allowances of $ 2.0 million and $ 1.2 million as of September 30, 2021 and December 31, 2020, respectively.

Inventory consists of the following:

September 30,

(In thousands)

5 unchanged sentences

Property and equipment, net consists of the following:

September 30,

(In thousands)

5 unchanged sentences

Total property and equipment, net

For the three months ended June 30, 2021 and 2020, depreciation and amortization expenses were $ 0.4 million for each of the two periods.

For the six months ended June 30, 2021 and 2020, depreciation and amortization expenses were $ 0.7 million and $ 0.8 million, respectively.

For the three months ended September 30, 2021 and 2020, depreciation and amortization expense was $ 0.3 million and $ 0.4 million, respectively.

For the nine months ended September 30, 2021 and 2020, depreciation and amortization expense was $ 1.1 million and $ 1.2 million, respectively.

Accrued Expenses

Accrued expenses consist of the following:

September 30,

(In thousands)

8 unchanged sentences

Note 5—Fair-Value Measurements

As of June 30, 2021, and December 31, 2020, all investments were classified as short-term and available-for-sale on the accompanying Condensed Consolidated Balance Sheets.

As of September 30, 2021, and December 31, 2020, all investments were classified as short-term and available-for-sale on the accompanying Condensed Consolidated Balance Sheets.

Investment income, which was included as a component of other income, consists of interest earned.

7 unchanged sentences

Our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis are as follows:

June 30, 2021

September 30, 2021

(In thousands)

5 unchanged sentences

Money-market funds classified as non-current restricted investments

Cash held in demand deposit accounts of $ 12.7 million and $ 10.5 million is excluded from our fair-value hierarchy disclosure as of June 30, 2021 and December 31, 2020, respectively.

There were no unrealized gains or losses associated with our investments as of June 30, 2021 or December 31, 2020.

Cash held in demand deposit accounts of $ 7.4 million and $ 10.5 million is excluded from our fair-value hierarchy disclosure as of September 30, 2021 and December 31, 2020, respectively.

There were no unrealized gains or losses associated with our investments as of September 30, 2021 or December 31, 2020.

The carrying amounts reported in the accompanying Condensed Consolidated Balance Sheets for receivables, accounts payable, other current monetary assets and liabilities approximate fair value.

5 unchanged sentences

The line of credit matures August 2, 2022 and is secured by all our assets excluding intellectual property and development program inventories.

As of June 30, 2021 and December 31, 2020, no amounts were outstanding under the Line of Credit Agreement.

As of September 30, 2021 and December 31, 2020, no amounts were outstanding under the Line of Credit Agreement.

Note 7—Unsecured Convertible Senior Notes

5 unchanged sentences

Subsequent to the adoption date, interest expense is reduced as a result of accounting for the unsecured convertible notes wholly as a liability measured at amortized cost.

Unsecured convertible senior notes outstanding at June 30, 2021 and December 31, 2020 are as follows:

Balance as of June 30, 2021

Unsecured convertible senior notes outstanding at September 30, 2021 and December 31, 2020 are as follows:

Balance as of September 30, 2021

(In thousands)

17 unchanged sentences

(2) Included in the Condensed Consolidated Balance Sheet within additional paid-in capital at December 31, 2020.

With adoption of ASU 2020-06 on January 1, 2021, amounts were reclassified to unsecured convertible senior notes, net.

With the adoption of ASU 2020-06 on January 1, 2021, amounts were reclassified to unsecured convertible senior notes, net.

2023 Unsecured Convertible Senior Notes

1 unchanged sentence

The 2023 Notes accrue interest at an annual rate of 6.25 % per annum, payable semi-annually in arrears on May 15 and November 15 of each year.

As of September 30, 2021, the unamortized debt issuance costs of $ 1.4 million will be amortized to interest expense at an effective interest rate of 7.02 % over the remaining term.

The 2023 Notes mature on November 15, 2023 unless earlier purchased, redeemed or converted in accordance with their terms.

4 unchanged sentences

In connection with the partial repurchase of the 2023 Notes, we entered into a capped call termination contract to unwind a proportionate amount of the 2023 Capped Call.

As of June 30, 2021, approximately 4.9 million shares remained outstanding on the 2023 Capped Call.

As of September 30, 2021, approximately 4.9 million shares remained outstanding on the 2023 Capped Call.

The following table sets forth total interest expense recognized in connection with the 2023 Notes:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

6 unchanged sentences

The 2026 Notes mature on February 15, 2026, unless earlier purchased, redeemed or converted in accordance with their terms.

As of September 30, 2021, the unamortized debt issuance costs of $ 5.6 million will be amortized to interest expense at an effective interest rate of 5.89 % over the remaining term.

The initial conversion rate is 54.0906 shares of our common stock per $ 1,000 of note principal (equivalent to an initial conversion price of approximately $ 18.4875 per share of common stock), which equals approximately 12.2 million shares of common stock issuable upon conversion, subject to adjustment in certain circumstances.

11 unchanged sentences

The following table sets forth interest expense recognized related to the 2026 Notes:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

2 unchanged sentences

Amortization of debt issuance costs

Future minimum payments for the 2023 and 2026 Notes as of June 30, 2021 are as follows:

Amortization of debt discount

Future minimum payments for the 2023 and 2026 Notes as of September 30, 2021 are as follows:

(In thousands)

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

Cash paid for amounts included in the measurement of lease liabilities is as follows:

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

These licenses may require milestone payments in connection with clinical development or commercial milestones as well as low single to low double-digit royalties on the net income or net sales of the product.

For the three and six months ended June 30, 2021 and 2020, development milestone expenses were insignificant.

not owe any royalties on OMIDRIA.

Should narsoplimab be approved for HSCT-TMA, we would be obligated to pay low single-digit royalties on net sales of the product.

For the three and nine months ended September 30, 2021 and 2020, development milestones were insignificant.

We do not owe any royalties on OMIDRIA.

Should narsoplimab be approved for HSCT-TMA in the U.S., we would be obligated to pay approval milestones of $ 1.7 million and low single-digit royalties on net sales of the product.

Note 10—Shareholders’ Deficit

1 unchanged sentence

On March 1, 2021, we entered into a sales agreement to sell shares of our common stock having an aggregate offering price of up to $ 150.0 million, from time to time, through an “at the market” equity offering program.

As of June 30, 2021, we have not sold any shares under this program.

As of September 30, 2021, we have not sold any shares under this program.

In March 2021, a cashless exercise was executed for 43,115 warrants, resulting in the issuance of 24,901 shares of our common stock.

As of June 30, 2021, 200,000 warrants remained outstanding with an exercise price of $ 23.00 per share.

As of September 30, 2021, 200,000 warrants remained outstanding with an exercise price of $ 23.00 per share.

The warrants expire on April 12, 2023.

In conjunction with the issuance of our 2026 Notes, on August 14, 2020, we sold 6.9 million shares of our common stock at a public offering price of $ 14.50 per share.

After deducting underwriter discounts and offering expenses, we received net proceeds from the transaction of $ 93.7 million.

Amendment of 2017 Omnibus Incentive Compensation Plan (the “Plan”)

At the June 11, 2021 annual meeting, shareholders approved the increase of the number of shares of common stock authorized for issuance under the Plan by 4,000,000 , to bring the total number of shares of common stock authorized to 12,600,000 .

Interim Condensed Consolidated Statements of Shareholders’ Deficit

10 unchanged sentences

Balance June 30, 2021

Exercise of stock options

Stock-based compensation expense

Balance September 30, 2021

(In thousands)

6 unchanged sentences

Balance June 30, 2020

Issuance of common stock in direct offering, net of offering costs

Exercise of stock options

Stock-based compensation expense

Equity component of 2026 Notes, net of issuance costs

Purchases of 2026 Capped Calls

Equity component of early extinguishment of 2023 Notes

Termination of the 2023 Capped Call contracts related to debt repurchased

Tax benefit related to issuance of 2026 Notes, net of extinguishment

Balance September 30, 2020

Note 11—Stock-Based Compensation

Our stock option plans provide for the grant of incentive and non-qualified stock options, restricted stock awards, warrants and other stock awards to employees, non-employee directors and consultants.

In July 2021, annual stock option grants exercisable for a total of approximately 2.1 million shares of common stock were awarded to eligible participants for the 2020 annual performance period.

The options have an exercise price of $ 14.99 per share and vest monthly on a straight-line basis over four years .

Stock-based compensation expense is as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2021

Estimated weighted-average fair value

8 unchanged sentences

Balance at December 31, 2020

Balance at June 30, 2021

Vested and expected to vest at June 30, 2021

Exercisable at June 30, 2021

As of June 30, 2021, there were 2.6 million unvested options outstanding that will vest over a weighted-average period of 2.3 years.

Balance at September 30, 2021

Vested and expected to vest at September 30, 2021

Exercisable at September 30, 2021

As of September 30, 2021, there were 4.1 million unvested options outstanding that will vest over a weighted-average period of 2.7 years.

The total estimated compensation expense yet to be recognized on outstanding options is $ 33.6 million.

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 1. Financial Statements