What changed in this filing

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Item 1A. Risk Factors

2023-09-28 compared with 2022-09-22 · 15 added, 44 removed, 606 unchanged (9% of the section changed)

8 unchanged sentences

Currently, we have no commitments to obtain any additional financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.

We have a history of substantial net losses, including a net loss of $36.2 million for the year ended June 30, 2022, we expect to incur substantial net losses over the next few years, and we may never achieve or maintain profitability.

We have a history of substantial net losses, including a net loss of $27.5 million for the year ended June 30, 2023.

We expect to incur substantial net losses over the next few years, and we may never achieve or maintain profitability.

As of June 30, 2023, we had an accumulated deficit of $415.5 million.

4 unchanged sentences

Until we commenced selling Vyleesi in July 2020 upon termination of our license agreement with AMAG, we had not had any product available for commercial sale since 2005 and we have not received any revenues from the sale of our product candidates.

Because our marketing program for Vyleesi is limited and relatively new, and because of the impact of COVID-19 on marketing outreach, we cannot accurately forecast sales of Vyleesi.

Although we had positive net sales after product allowances for the year ended June 30, 2022, we had sales and marketing expenditures in excess of net sales which may continue in future years.

Because our marketing program for Vyleesi is limited and relatively new we cannot accurately forecast sales of Vyleesi.

For the foreseeable future, we will have to fund our operations and capital expenditures from license, royalty and contract revenue under license agreements, existing cash balances and outside sources of financing, which may not be available on acceptable terms, if at all.

4 unchanged sentences

We intend to focus future efforts on our MC1r product candidates, primarily for ocular indications.

As of June 30, 2022, we had cash and cash equivalents of $29.9 million, with current liabilities of $16.3 million.

Based on our available cash and cash equivalents, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued and we intend to seek additional funding to complete development activities and required clinical trials for our MC1r product candidates and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA.

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $11.0 million, with current liabilities of $15.1 million.

Based on our available cash, cash equivalents and marketable securities, we have concluded that substantial doubt exists about our ability to continue as a going concern for one year from the date our consolidated financial statements are issued and we are seeking additional funding to complete development activities and required clinical trials for our MC1r product candidates and, if those clinical trials are successful (which we cannot predict), to complete submission of required regulatory applications to the FDA.

We cannot predict product sales for Vyleesi for HSDD in the United States, so we may not have significant recurring revenue and may need to depend on financing or partnering to sustain our operations.

98 unchanged sentences

If we are not able to obtain adequate supplies of Vyleesi, it will be difficult for us to market and commercialize Vyleesi and compete effectively.

We may need to obtain a new manufacturer of the Vyleesi active drug ingredient , which will be a time consuming and costly process.

Our agreement with Lonza Ltd.

(“Lonza”) to manufacturer the Vyleesi active drug ingredient expires December 31, 2022, and Lonza has advised us that they will not renew our contract, but we remain in discussions with Lonza on contract peptide manufacturing.

We are actively evaluating potential new contract manufacturers but establishing a new contractual relationship and establishing and validating manufacturing in a manner that complies with FDA regulations is a time-consuming and costly process.

We believe we have sufficient supplies of Vyleesi active drug ingredient to meet forecast demand for at least the next several years, but if we are not able to obtain adequate new supplies of Vyleesi active drug ingredient once existing supplies are exhausted, we will not be able to manufacture the Vyleesi combination product.

The effect of COVID-19 and other possible pandemics and outbreaks could result in material adverse effects on our clinical trials, business, financial condition.

and results of operations.

We have active and planned clinical trial sites in the United States, and our licensees have planned clinical trial sites in Asia-Pacific countries.

As the COVID-19 pandemic continues around the globe, we may experience disruptions that could severely impact our clinical trials, including Phase 3 clinical trials with PL9643 in the United States for dry eye disease, a Phase 2 clinical trial with PL8177 for ulcerative colitis, and clinical trials planned to be conducted in China and Korea by our licensees for Vyleesi, Fosun and Kwangdong.

It is possible that the COVID-19 pandemic may delay enrollment in our clinical trials due to prioritization of medical and hospital resources toward the outbreak, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results.

The COVID-19 pandemic may also result in the inability of our suppliers to deliver clinical drug supplies on a timely basis or at all.

In addition, medical centers and hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an infectious disease.

Such events may result in a period of business disruption, and in reduced operations, or doctors and medical providers may be unwilling to participate in our clinical trials.

The COVID-19 pandemic and measures to prevent the spread of COVID-19 subject us to various risks and uncertainties that could materially adversely affect our clinical trials, business, financial condition, and results of operation, including the following:

our ability to recruit subjects for clinical trials and studies for our product candidates and to timely complete clinical trials and other studies;

our ability to successfully market Vyleesi, given significant limitations in person-to-person marketing and contacts, including limitations in educating physicians and other health care professionals about the benefits, administration and use of Vyleesi for HSDD;

adverse impacts on our ability to manufacture and distribute Vyleesi, including due to the negative impact of COVID-19 on air travel, as well as temporary disruptions, restrictions or closures of facilities of our suppliers and contract manufacturers in the Vyleesi manufacturing chain;

adverse impacts of COVID-19 on our ability to successful manufacture product candidates for clinical trials and to successfully manufacture Vyleesi for the United States market and clinical trials elsewhere in the world;

adverse impacts on our operations resulting from remote working arrangements;

limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families, delays or difficulties in conducting site visits and other required travel, and the desire of employees to avoid contact with large groups of people;

the inability of global suppliers of raw materials or components used in the manufacture of our products, or contract manufacturers of our products, to supply and/or transport those raw materials, components and products to us in a timely and cost effective manner due to shutdowns, interruptions or delays, limiting and precluding the production of our finished products, impacting our ability to supply customers, reducing our sales, increasing our costs of goods sold, and reducing our absorption of overhead;

the illiquidity or insolvency of our suppliers, vendors and customers, or their inability to pay our invoices in full or in a timely manner, due to the reduction in their revenues caused by the cancellation or delay of procedures and other factors, which could potentially reduce our cash flow and our liquidity;

delays in our ability, and the ability of our development partners, to conduct, enroll and complete clinical development programs;

the instability to worldwide economies, financial markets, social institutions, labor markets and the healthcare systems as a result of the COVID-19 pandemic, which could result in an economic downturn that could adversely impact our business, results of operations and financial condition, as well as that of our investors, suppliers, customers or other business partners;

changes in customer behavior and preferences for Vyleesi, as customers may experience financial difficulties or may delay or reduce their spending in light of COVID-19;

the continuation or exacerbation of the COVID-19 pandemic after social distancing and other similar measures have been relaxed.

Most of our employees have transitioned to remote working arrangements, and we have not determined how long these arrangements will last.

While remote working has not had a significant adverse impact on our financial results or our operations to date, there can be no assurance that these arrangements will not ultimately result in lower work efficiency and productivity, which in turn may adversely affect our business.

Certain employees, such as laboratory personnel, cannot work remotely, and COVID-19 may adversely affect our ability to conduct research and preclinical studies, and undertake other activities related to development of potential products.

The extent to which the global COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain or treat its impact, among others.

The COVID-19 pandemic has adversely affected economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition, and results of operations, including our ability to obtain additional funding, if needed.

The ongoing military conflict between Russia and Ukraine could cause geopolitical instability, economic uncertainty, financial markets volatility and capital markets disruption, which may adversely affect our revenue, financial condition, or results of operations.

278 unchanged sentences

In its approval of Vyleesi, under the FFDCA the FDA imposed certain postmarketing requirements, consisting of two studies, one a prospective, registry-base, observational cohort study that compares obstetrical, maternal, fetal/neonatal, and infant outcomes in women exposed to Vyleesi during pregnancy to an internal, unexposed cohort of pregnant women, and the other a retrospective cohort study using electronic claims data that compares maternal, fetal/neonatal, and infant outcomes in women exposed to Vyleesi during pregnancy to an internal, unexposed cohort of pregnant women, and one clinical trial in lactating women who have received Vyleesi to assess potential adverse effects in the breastfed infant and measure bremelanotide concentrations in breast milk using a validated assay.

We are evaluating requirements, timelines and costs for these studies and the clinical trial.

We are evaluating requirements, timelines and costs for these studies and the clinical trial, and seeking further guidance from the FDA.

We do not know the outcomes of the studies or the clinical trial, and do not know whether the outcomes would adversely affect approvals of Vyleesi.

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If our operating results in any future period fall below the expectations of securities analysts or investors, our stock price may fall by a significant amount.

For the 12-month period ended June 30, 2022, the price of our stock has been volatile, ranging from a high of $24.00 per share to a low of $6.45 per share on an adjusted Reverse Stock Split basis.

For the 12-month period ended June 30, 2023, the price of our stock has been volatile, ranging from a high of $8.60 per share to a low of $1.82 per share.

In addition, the stock market in general, and the market for biotechnology companies in particular, has experienced extreme price and volume fluctuations that may have been unrelated or disproportionate to the operating performance of individual companies.

12 unchanged sentences

If one or more equity research analysts ceases coverage of us, or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.

Holders of our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock may have interests different from our common stockholders.

Holders of our Series A Preferred Stock may have interests different from our common stockholders.

We are permitted under our certificate of incorporation to issue up to 10,000,000 shares of preferred stock.

We can issue shares of our preferred stock in one or more series and can set the terms of the preferred stock without seeking any further approval from our common stockholders.

As of September 21, 2022, there are 4,030 shares of Series A Preferred Stock, 8,100,000 shares of Series B Convertible Redeemable Preferred Stock (“Series B Preferred Stock”), and 900,000 shares of Series C Convertible Redeemable Preferred Stock (“Series C Preferred Stock”) outstanding.

As of September 27, 2023, there are 4,030 shares of Series A Preferred Stock outstanding.

Each share of Series A Preferred Stock is convertible at any time, at the option of the holder, and such conversion could dilute the value of our common stock to current stockholders and could adversely affect the market price of our common stock.

1 unchanged sentence

Upon (i) liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, (ii) sale or other disposition of all or substantially all of the assets of the Company, or (iii) any consolidation, merger, combination, reorganization or other transaction in which the Company is not the surviving entity or in which the shares of common stock constituting in excess of 50% of the voting power of the Company are exchanged for or changed into other stock or securities, cash and/or any other property, after payment or provision for payment of the debts and other liabilities of the Company, the holders of Series A Preferred Stock will be entitled to receive, pro rata and in preference to the holders of any other capital stock, an amount per share equal to $100 plus accrued but unpaid dividends, if any

Series B and C Preferred Stock have liquidation preferences, and the Series B and C Preferred Stock is, at the option of the holder under defined contractual terms, convertible to common stock or subject to redemption in cash or note.

Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our stockholders’ sole source of gains.

24 unchanged sentences

3,550 shares issuable on the conversion of our immediately convertible Series A Preferred Stock, subject to adjustment, for no further consideration;

1,200,000 shares issuable on the conversion of our immediately convertible Series B Preferred Stock, subject to adjustment, for no further consideration;

133,333 shares issuable on the conversion of our immediately convertible Series C Preferred Stock, subject to adjustment, for no further consideration;

1,550,600 shares issuable upon the exercise of stock options at a weighted-average exercise price of $8.27 per share;

1 unchanged sentence

279,700 shares of common stock which have vested under restricted stock unit agreements, but are subject to provisions to delay delivery;

66,666 shares issuable upon the exercise of warrants at an exercise price of $12.50 per share, issued in conjunction with the Series B and Series C Preferred Stock, of which 33,333 are currently exercisable and expire on May 11, 2026, and the remaining are exercisable only in the event that a Redemption Consideration Election is made and expire on May 11, 2026.

66,666 shares issuable upon the exercise of warrants at an exercise price of $12.50 per share, issued in conjunction with the Series B and Series C Preferred Stock, all of which are currently exercisable and expire on May 11, 2026;

1,818,182 shares of common stock issuable upon exercise of common warrants issued in conjunction with an offering in November 2022;

up to 90,909 shares of common stock issuable upon exercise of placement agent warrants with an exercise price of $6.875 per share issued to the placement agent or its designees as compensation in connection with an offering in November 2022;

405,145 shares of common stock available for future issuance under our 2011 Stock Incentive Plan.

If the holders convert, exercise, or receive these securities, or similar dilutive securities we may issue in the future, stockholders may experience dilution in the net book value of their common stock.

18 unchanged sentences

Unresolved Staff Comments

Cybersecurity

Not applicable.

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-K

Item 1A. Risk Factors