QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
• | our expected commercial launch timing of MYCAPSSA in the United States, if the U.S. Food and Drug Administration, or the FDA, accepts our manufacturing supplement, or CBE-30 supplement, to our approved NDA; |
• | our expectations regarding the FDA’s review and acceptance of our CBE-30 supplement and the second manufacturing supplement we plan to submit; |
• | our ability to obtain supply of sufficient amounts of octreotide capsules to support our planned commercial launch in the United States and clinical trials; |
• | our views as to our readiness for commercial launch of MYCAPSSA in the United States, including our plans with respect our customer-facing team, the nature of our planned commercialization activities and strategy, our pricing of MYCAPSSA, and related assumptions; |
• | our views as to potential future results of our commercialization efforts in the United States with respect to MYCAPSSA, including our expectations with respect to the scope, level and availability of reimbursement by private and government payors; |
• | our development of octreotide capsules for the treatment of acromegaly; |
• | our efforts to potentially obtain regulatory approval of octreotide capsules in the European Union by conducting the MPOWERED Phase 3 clinical trial; |
• | the timing and receipt and announcement of top-line and other clinical data, including our ability to release top-line data from the MPOWERED trial during the fourth quarter of 2020; |
• | the therapeutic benefits, effectiveness and safety of octreotide capsules; |
• | our estimates of the size and characteristics of the markets that may be addressed by octreotide capsules; |
• | the commercial success and market acceptance of octreotide capsules or any future product candidates that are approved for marketing in the United States or other countries; |
• | our ability to generate future revenue; |
• | the safety and efficacy of therapeutics marketed by our competitors that are targeted to indications which octreotide capsules have been developed to treat; |
• | our ability to leverage our Transient Permeability Enhancer, or TPE, platform to develop and commercialize novel oral product candidates incorporating peptides that are currently only available in injectable or other non-absorbable forms; |
• | the possibility that competing products or technologies may make MYCAPSSA, other product candidates we may develop and commercialize or our TPE technology obsolete; |
• | our ability to secure collaborators to license, manufacture, market and sell octreotide capsules or any products for which we receive regulatory approval in the future; |
• | our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; |
• | our product development and operational plans generally; and |
• | our estimates and expectations regarding our capital requirements, cash and expense levels and liquidity sources. |
Item 1. |
Financial Statements |
June 30, 2020 |
December 31, 2019 |
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(in thousands except share data) |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ | $ | ||||||
Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Other assets |
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Restricted cash |
— | |||||||
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Other current liabilities |
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Total current liabilities |
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Deferred royalty obligation |
— | |||||||
Long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 9) |
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Stockholders’ equity: |
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Common stock, $ June 30, 2020 and December 31, 2019; issued and outstanding |
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Preferred stock, $ |
— | |||||||
Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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2020 |
2019 |
2020 |
2019 |
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(in thousands except share and per share data) |
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Operating expenses: |
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General and administrative |
$ | $ | $ | $ | ||||||||||||
Research and development |
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Total operating expenses |
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Loss from operations |
( |
) | ( |
) | ( |
) | ( |
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Interest and other income, net |
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Interest expense |
( |
) | — | ( |
) | — | ||||||||||
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Loss before income taxes |
( |
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) | ( |
) | ( |
) | ||||||||
Provision for income taxes |
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Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Earnings per share |
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Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Weighted-average shares outstanding: |
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Basic |
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Diluted |
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For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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2020 |
2019 |
2020 |
2019 |
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(in thousands) |
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Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other comprehensive income (loss): |
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Unrealized gain (loss) on available for sale securities, net |
( |
) | ||||||||||||||
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Total other comprehensive income (loss): |
( |
) | ||||||||||||||
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Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Common Stock |
Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated |
Total Stockholders’ |
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Shares |
Amount |
Capital |
Income (Loss) |
Deficit |
Equity |
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(in thousands except share data) |
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Balance, December 31, 2019 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Exercise of stock options |
— | — | ||||||||||||||||||||||
Other comprehensive loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
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Balance, March 31, 2020 |
( |
) | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
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Balance, June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
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Common Stock |
Additional Paid-in |
Accumulated Other Comprehensive |
Accumulated |
Total Stockholders’ |
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Shares |
Amount |
Capital |
Income (Loss) |
Deficit |
Equity |
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(in thousands except share data) |
||||||||||||||||||||||||
Balance, December 31, 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||
Additional paid in capital on account of vested portion of restricted stock |
— | — | — | — | ||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
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Balance, March 31, 2019 |
( |
) | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Exercise of stock options |
— | — | — | |||||||||||||||||||||
Issuance of common stock in follow-on offering, net |
— | — | ||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
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Balance, June 30, 2019 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
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Six Months Ended June 30, |
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2020 |
2019 |
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(in thousands) |
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Operating Activities: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation |
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Stock-based compensation |
||||||||
Accretion on marketable securities, net |
( |
) | ( |
) | ||||
Non-cash lease expense |
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Amortization of debt discount and issuance costs |
— | |||||||
Benefit for deferred income taxes |
( |
) | ( |
) | ||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses and other current assets |
( |
) | ||||||
Insurance Recovery (Note 9) |
— | |||||||
Accounts payable and accrued expenses |
( |
) | ||||||
Settlement Liability (Note 9) |
— | ( |
) | |||||
Other assets |
( |
) | ||||||
Other current and long-term liabilities |
( |
) | ( |
) | ||||
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Net cash used in operating activities |
( |
) | ( |
) | ||||
Investing Activities: |
||||||||
Purchases of marketable securities |
( |
) | ( |
) | ||||
Maturities of marketable securities |
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Purchases of property and equipment |
( |
) | ( |
) | ||||
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|
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Net cash provided by (used in) investing activities |
( |
) | ||||||
Financing Activities: |
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Proceeds from the issuance of common stock, net |
— | |||||||
Exercise of stock options |
||||||||
Payments of short-term borrowing |
( |
) | — | |||||
Proceeds from deferred royalty obligation, net |
— | |||||||
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Net cash provided by financing activities |
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Net increase in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
$ | $ | ||||||
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Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
— | |||||||
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|
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Total cash, cash equivalents and restricted cash |
$ | $ | ||||||
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|
1. |
Description of Business and Summary of Significant Accounting Policies |
As of June 30, 2020 |
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Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value |
|||||||||||||
($ in thousands) |
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Money market funds |
$ | $ | — | $ | — | $ | ||||||||||
Corporate notes |
— | |||||||||||||||
Commercial paper |
— | |||||||||||||||
U.S. treasury shares |
— | — | ||||||||||||||
Total |
$ | $ | $ | — | $ | |||||||||||
As of December 31, 2019 |
||||||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value |
|||||||||||||
($ in thousands) |
||||||||||||||||
Money market funds |
$ | $ | — | $ | — | $ | ||||||||||
Corporate notes |
— | |||||||||||||||
Commercial paper |
— | |||||||||||||||
Total |
$ | $ | $ | — | $ | |||||||||||
June 30, 2020 |
December 31, 2019 |
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($ in thousands) |
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Cash and cash equivalents |
$ | $ | ||||||
Marketable securities |
||||||||
Restricted cash |
— | |||||||
Total |
$ | $ | ||||||
• |
Level 1 |
• |
Level 2 |
• |
Level 3 |
Fair Value Measurements at June 30, 2020 |
||||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total |
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Financial assets |
($ in thousands) |
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Cash equivalents: |
||||||||||||||||
Money market funds |
$ | $ | — | $ | — | $ | ||||||||||
U.S. treasury shares |
— | — | ||||||||||||||
Corporate notes |
— | — | ||||||||||||||
Commercial paper |
— | — | ||||||||||||||
|
|
|
|
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|
|
|||||||||
Total cash equivalents |
$ | $ | $ | — | $ | |||||||||||
Marketable securities: |
||||||||||||||||
Corporate notes |
$ | — | $ | $ | — | $ | ||||||||||
Commercial paper |
— | — | ||||||||||||||
|
|
|
|
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|
|
|
|||||||||
Total marketable securities |
— | — | ||||||||||||||
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|
|
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Total |
$ | $ | $ | — | $ | |||||||||||
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|
|||||||||
Financial liabilities |
||||||||||||||||
Derivative liabilities |
$ | — | $ | — | $ | $ |
Fair Value Measurements at December 31, 2019 |
||||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total |
||||||||||||
Financial assets |
($ in thousands) |
|||||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | $ | — | $ | — | $ | ||||||||||
Corporate notes |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cash equivalents |
$ | $ | $ | — | $ | |||||||||||
Marketable securities: |
||||||||||||||||
Corporate notes |
$ | — | $ | $ | — | $ | ||||||||||
Commercial paper |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total marketable securities |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | — | $ | |||||||||||
|
|
|
|
|
|
|
|
June 30, 2020 |
December 31, 2019 |
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($ in thousands) |
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Accrued research and development expenses |
$ | $ | ||||||
Accrued general, administrative and other expenses |
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Accrued payroll and employee benefits |
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|
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Total accrued expenses |
$ | $ | ||||||
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|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
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2020 |
2019 |
2020 |
2019 |
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($ in thousands) |
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General and administrative |
$ | $ | $ | $ | ||||||||||||
Research and development |
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|
|
|
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|
|
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Total |
$ | $ | $ | $ | ||||||||||||
|
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|
|
Six Months Ended June 30, |
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2020 |
2019 |
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Expected volatility |
% | % | ||||||
Expected term (years) |
||||||||
Risk-free interest rate |
% | % | ||||||
Expected dividend yield |
% | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2020 |
2019 |
2020 |
2019 |
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($ in thousands) |
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The components of lease expense were as follows: |
||||||||||||||||
Operating lease expense |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
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Supplemental cash flow information related to leases was as follows: |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from operating leases |
$ | $ | $ | $ | ||||||||||||
Right-of-use |
||||||||||||||||
Operating leases |
$ | $ | $ | $ |
June 30, 2020 |
||||
($ in thousands) |
||||
Supplemental balance sheet information related to leases was as follows: |
||||
Right-of-use |
$ | |||
|
|
|
|
|
Other current liabilities |
$ | |||
Long-term liabilities |
||||
|
|
|||
Total lease liabilities |
$ | |||
|
|
|||
Weighted average remaining lease term—operating leases |
||||
Weighted average discount rate—operating leases |
% |
($ in thousands) |
||||
Remainder of 2020 |
$ | |||
2021 |
||||
2022 |
||||
|
|
|||
Total future minimum lease payments |
||||
Less: imputed interest |
( |
) | ||
|
|
|||
Total |
$ | |||
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
2020 |
2019 |
$ Change |
% Change |
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($ in thousands) |
||||||||||||||||||||||||||||||||
Research and development |
$ | 9,672 | $ | 5,522 | $ | 4,150 | 75 | % | $ | 17,797 | $ | 11,993 | $ | 5,804 | 48 | % | ||||||||||||||||
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|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
2020 |
2019 |
$ Change |
% Change |
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($ in thousands) |
||||||||||||||||||||||||||||||||
General and administrative |
$ | 10,665 | $ | 2,644 | $ | 8,021 | 303 | % | $ | 18,247 | $ | 5,094 | $ | 13,153 | 258 | % | ||||||||||||||||
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• | the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for octreotide capsules and any other future product candidates for which we receive marketing approval; |
• | proceeds, if any, received from commercial sales of octreotide capsules and any future product candidates for which we receive marketing approval; |
• | the costs, timing and outcome of the development and regulatory review of octreotide capsules and our CBE-30 supplement and planned prior approval manufacturing supplement; |
• | the progress and results of our ongoing clinical trials of octreotide capsules or any future clinical trials or studies we may conduct; |
• | the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and |
• | the extent to which we develop, acquire or in-license other product candidates and technologies or explore or consummate other strategic transactions. |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
($ in thousands) |
||||||||
Cash flows provided by (used in): |
||||||||
Operating activities |
$ | (28,952 | ) | $ | (16,108 | ) | ||
Investing activities |
49,354 | (8,646 | ) | |||||
Financing activities |
23,937 | 32,262 |
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
Item 4. |
Controls and Procedures |
Item 1. |
Legal Proceedings |
Item 1A. |
Risk Factors |
• | the efficacy and safety of MYCAPSSA in a larger number of patients in a non-clinical setting than those demonstrated in our clinical trials; |
• | our ability to manufacture sufficient commercial supplies of MYCAPSSA in compliance with regulatory requirements; |
• | the effectiveness of our sales, marketing and distribution efforts, particularly during the remote, COVID-19 environment; |
• | the incidence and prevalence of acromegaly patients in the U.S. that respond to and tolerate treatment with octreotide or lanreotide; |
• | the timing of market introduction of MYCAPSSA; |
• | the ability of MYCAPSSA to successfully compete against other products; acceptance by the medical community and patients of MYCAPSSA as a safe and effective product; |
• | the potential and perceived advantages of MYCAPSSA over alternative products; |
• | the ability to distinguish safety and efficacy from existing alternatives; |
• | the willingness of medical professionals to prescribe and patients to use MYCAPSSA and continue to use MYCAPSSA instead of alternative products; |
• | the prevalence and severity of adverse side effects; |
• | the convenience of prescribing, administrating and initiating patients on MYCAPSSA; |
• | the potential and perceived value and relative cost of MYCAPSSA over alternative products, including generic products or treatments; |
• | the availability of coverage and adequate reimbursement and pricing by private and government payors; |
• | the successful completion of any clinical trials, regulatory approval and commercialization of MYCAPSSA for one or more label expansion indications; and |
• | our ability to enforce our intellectual property rights with respect to MYCAPSSA. |
• | the FDA could withdraw its approval of MYCAPSSA, impose restrictions on its distribution or require the addition of labeling warnings or restrictions; |
• | we could be required to change the way MYCAPSSA is promoted or administered or conduct additional clinical studies; |
• | we could be sued and held liable for any harm caused to patients; or |
• | our reputation may suffer. |
• | foreign regulatory authorities, institutional review boards, or IRBs, or ethics committees may disagree with the design or conduct of our clinical trials; |
• | the results of our clinical trials may not provide acceptable evidence of octreotide capsules’ safety and efficacy; |
• | the results of our clinical trials may not be sufficiently robust or meet the level of statistical or clinical significance required by, the EMA or other regulatory agencies for marketing approval; |
• | the dosing of octreotide capsules in a particular clinical trial may not be at an optimal level; |
• | patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to octreotide capsules; |
• | the data collected from our clinical trials may not be sufficient to obtain regulatory approval in the European Union or elsewhere; and |
• | even if we obtain marketing approval in one or more countries, future safety or other issues could result in the suspension or withdrawal of regulatory approval in such countries. |