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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to

Commission File Number 001-36365

 

SCYNEXIS, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

56-2181648

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

1 Evertrust Plaza, 13th Floor

Jersey City, New Jersey

 

07302-6548

(Address of principal executive offices)

 

(Zip Code)

 

(201)-884-5485

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

SCYX

Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 


As of November 1, 2023, there were 37,207,799 shares of the registrant’s Common Stock outstanding.

 

 


Table of Contents

 

SCYNEXIS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

PART I FINANCIAL INFORMATION

 

1

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

 

1

 

 

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022

 

2

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

 

3

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

 

4

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

32

Item 4.

 

Controls and Procedures

 

32

 

 

 

PART II OTHER INFORMATION

 

32

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

32

Item 1A.

 

Risk Factors

 

32

Item 6.

 

Exhibits

 

34

 

 

 

Signatures

 

35

 

 


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SCYNEXIS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

September 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

44,071

 

 

$

45,814

 

Short-term investments

 

 

44,001

 

 

 

27,689

 

Prepaid expenses and other current assets

 

 

3,172

 

 

 

2,503

 

License agreement receivable

 

 

2,349

 

 

 

 

License agreement contract asset

 

 

19,309

 

 

 

 

Accounts receivable, net

 

 

2,245

 

 

 

2,101

 

Inventory, net

 

 

13,114

 

 

 

899

 

Restricted cash

 

 

380

 

 

 

55

 

Total current assets

 

 

128,641

 

 

 

79,061

 

Investments

 

 

17,115

 

 

 

 

Other assets

 

 

25

 

 

 

5,511

 

Deferred offering costs

 

 

73

 

 

 

73

 

Restricted cash

 

 

164

 

 

 

163

 

Intangible assets, net

 

 

103

 

 

 

408

 

Operating lease right-of-use asset (See Note 8)

 

 

2,425

 

 

 

2,594

 

Total assets

 

$

148,546

 

 

$

87,810

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,490

 

 

$

5,937

 

Accrued expenses

 

 

9,543

 

 

 

5,628

 

Deferred revenue, current portion

 

 

2,435

 

 

 

 

Other liabilities, current portion (See Note 7)

 

 

 

 

 

5,771

 

Operating lease liability, current portion (See Note 8)

 

 

325

 

 

 

282

 

Warrant liabilities

 

 

997

 

 

 

 

Total current liabilities

 

 

16,790

 

 

 

17,618

 

Deferred revenue

 

 

1,646

 

 

 

 

Warrant liabilities

 

 

23,638

 

 

 

18,644

 

Convertible debt and derivative liability (See Note 7)

 

 

11,808

 

 

 

11,001

 

Loan payable

 

 

 

 

 

34,393

 

Operating lease liability (See Note 8)

 

 

2,673

 

 

 

2,921

 

Total liabilities

 

 

56,555

 

 

 

84,577

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, authorized 5,000,000 shares as of September 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 37,175,815 and 32,682,342 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

40

 

 

 

36

 

Additional paid-in capital

 

 

427,612

 

 

 

425,485

 

Accumulated deficit

 

 

(335,661

)

 

 

(422,288

)

Total stockholders’ equity

 

 

91,991

 

 

 

3,233

 

Total liabilities and stockholders’ equity

 

$

148,546

 

 

$

87,810

 

The accompanying notes are an integral part of the financial statements.

1


Table of Contents

 

SCYNEXIS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product (loss) revenue, net

 

$

(614

)

 

$

1,557

 

 

$

984

 

 

$

3,567

 

License agreement revenue

 

 

2,375

 

 

 

 

 

 

133,360

 

 

 

 

Total revenue

 

 

1,761

 

 

 

1,557

 

 

 

134,344

 

 

 

3,567

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

379

 

 

 

189

 

 

 

940

 

 

 

432

 

Research and development

 

 

6,466

 

 

 

6,430

 

 

 

20,342

 

 

 

19,410

 

Selling, general and administrative

 

 

5,014

 

 

 

16,739

 

 

 

17,328

 

 

 

47,001

 

Total operating expenses

 

 

11,859

 

 

 

23,358

 

 

 

38,610

 

 

 

66,843

 

(Loss) income from operations

 

 

(10,098

)

 

 

(21,801

)

 

 

95,734

 

 

 

(63,276

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt issuance costs and discount

 

 

360

 

 

 

396

 

 

 

2,616

 

 

 

1,194

 

Interest income

 

 

(1,263

)

 

 

(531

)

 

 

(2,590

)

 

 

(724

)

Interest expense

 

 

212

 

 

 

1,379

 

 

 

2,908

 

 

 

3,669

 

Warrant liabilities fair value adjustment

 

 

(7,468

)

 

 

6,497

 

 

 

5,991

 

 

 

(13,215

)

Derivative liabilities fair value adjustment

 

 

(182

)

 

 

42

 

 

 

182

 

 

 

(1,120

)

Total other (income) expense

 

 

(8,341

)

 

 

7,783

 

 

 

9,107

 

 

 

(10,196

)

(Loss) income before taxes

 

 

(1,757

)

 

 

(29,584

)

 

 

86,627

 

 

 

(53,080

)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

(4,700

)

Net (loss) income

 

$

(1,757

)

 

$

(29,584

)

 

$

86,627

 

 

$

(48,380

)

Net (loss) income per share attributable to common stockholders – basic

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – basic

 

$

(0.04

)

 

$

(0.62

)

 

$

1.81

 

 

$

(1.18

)

Net (loss) income per share attributable to common stockholders – diluted

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – diluted

 

$

(0.04

)

 

$

(0.62

)

 

$

1.78

 

 

$

(1.18

)

Weighted average common shares outstanding – basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

47,891,996

 

 

 

47,503,821

 

 

 

47,829,614

 

 

 

40,965,908

 

Diluted

 

 

47,891,996

 

 

 

47,503,821

 

 

 

49,397,273

 

 

 

40,965,908

 

The accompanying notes are an integral part of the financial statements.

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SCYNEXIS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

86,627

 

 

$

(48,380

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

451

 

 

 

451

 

Stock-based compensation expense

 

 

2,067

 

 

 

3,232

 

Accretion of investments discount

 

 

(702

)

 

 

(90

)

Amortization of debt issuance costs and discount

 

 

2,616

 

 

 

1,194

 

Change in fair value of warrant liabilities

 

 

5,991

 

 

 

(13,215

)

Change in fair value of derivative liabilities

 

 

182

 

 

 

(1,120

)

Noncash operating lease expense for right-of-use asset

 

 

169

 

 

 

155

 

Write off of deferred asset for commitment fees

 

 

514

 

 

 

 

Prepayment fee for loan payable payment

 

 

263

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses, other assets, deferred costs, and other

 

 

(668

)

 

 

(571

)

License agreement contract asset

 

 

(19,309

)

 

 

 

License agreement receivable

 

 

(2,349

)

 

 

 

Accounts receivable

 

 

(144

)

 

 

(1,632

)

Inventory

 

 

(7,387

)

 

 

474

 

Accounts payable, accrued expenses, deferred revenue, other liabilities, and other

 

 

(427

)

 

 

2,425

 

Net cash provided by (used in) operating activities

 

 

67,894

 

 

 

(57,077

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of intangible assets

 

 

 

 

 

(9

)

Purchase of investments

 

 

(73,275

)

 

 

(27,380

)

Maturity of investments

 

 

40,550

 

 

 

 

Net cash used in investing activities

 

 

(32,725

)

 

 

(27,389

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from common stock issued

 

 

 

 

 

47,248

 

Payments of offering costs and underwriting discounts and commissions

 

 

 

 

 

(3,638

)

Proceeds from loan payable

 

 

 

 

 

5,000

 

Payments of loan payable issuance costs

 

 

 

 

 

(26

)

Payments of loan payable

 

 

(36,383

)

 

 

 

Payment of loan payable prepayment fee

 

 

(263

)

 

 

 

Proceeds from employee stock purchase plan issuances

 

 

42

 

 

 

18

 

Repurchase of shares to satisfy tax withholdings

 

 

18

 

 

 

 

Net cash (used in) provided by financing activities

 

 

(36,586

)

 

 

48,602

 

Net decrease in cash, cash equivalents, and restricted cash

 

 

(1,417

)

 

 

(35,864

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

46,032

 

 

 

104,702

 

Cash, cash equivalents, and restricted cash at end of period

 

$

44,615

 

 

$

68,838

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

3,248

 

 

$

3,308

 

Cash received for interest

 

$

2,644

 

 

$

636

 

Noncash financing and investing activities:

 

 

 

 

 

 

Deferred offering costs reclassified to additional paid-in capital

 

$

 

 

$

77

 

Reclass of warrant liability to additional paid-in capital

 

$

 

 

$

71

 

Reclass of deferred asset associated with issuance of loan payable to debt discount

 

$

 

 

$

206

 

 

The accompanying notes are an integral part of the financial statements.

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SCYNEXIS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business and Basis of Preparation

Organization

SCYNEXIS, Inc. (“SCYNEXIS” or the “Company”) is a Delaware corporation formed on November 4, 1999. SCYNEXIS is a biotechnology company, headquartered in Jersey City, New Jersey, and is pioneering innovative medicines to overcome and prevent difficult-to-treat and drug-resistant infections. The Company is developing its proprietary class of enfumafungin-derived antifungal compounds (“fungerps") as broad-spectrum, systemic antifungal agents for multiple fungal indications. Ibrexafungerp is the first representative of this novel class of antifungals with additional assets from the “fungerp” family, including SCY-247, in pre-clinical stages of development. In June 2021, the U.S. Food and Drug Administration (“FDA”) approved BREXAFEMME® (ibrexafungerp tablets) for treatment of patients with vulvovaginal candidiasis (“VVC”), also known as vaginal yeast infection. In December 2022, the Company announced that the FDA approved a second indication for BREXAFEMME for the reduction in the incidence of recurrent vulvovaginal candidiasis ("RVVC").

In March 2023, the Company entered into a license agreement (the "License Agreement") with GlaxoSmithKline Intellectual Property (No. 3) Limited ("GSK") in which the Company granted GSK an exclusive (even as to the Company and its affiliates), royalty-bearing, sublicensable license for the development and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (See Note 12). The parties closed the transactions contemplated by the License Agreement in May 2023 and the Company received an upfront payment of $90.0 million.

The Company was party to a Loan and Security Agreement, dated May 13, 2021, with Hercules Capital, Inc. ("Hercules Capital") and Silicon Valley Bridge Bank, N.A. (now a division of First Citizens Bank, “SVB”) (the "Loan Agreement"), pursuant to which Hercules Capital, SVB and each of the other lenders from time-to-time party to the Loan Agreement (collectively, the “Lenders”) loaned to the Company $35.0 million as of March 31, 2023. Upon receipt by the Company of the $90.0 million upfront payment from GSK in May 2023, all amounts payable under the Loan Agreement were fully paid (see Note 7).

Following a recent review by GSK of the manufacturing process and equipment at the vendor that manufactures the ibrexafungerp drug substance, the Company became aware that a non-antibacterial beta-lactam drug substance was manufactured using equipment common to the manufacturing process for ibrexafungerp. Current FDA draft guidance recommends segregating the manufacture of non-antibacterial beta-lactam compounds from other compounds since beta-lactam compounds have the potential to act as sensitizing agents that may trigger hypersensitivity or an allergic reaction in some people. In the absence of the recommended segregation, there is a risk of cross contamination. It is not known whether any ibrexafungerp has been contaminated with a beta-lactam compound and the Company has not received reports of any adverse events due to the possible beta-lactam cross contamination. Nonetheless, out of an abundance of caution and in line with GSK’s recommendation, the Company has recalled BREXAFEMME® (ibrexafungerp tablets) from the market and placed a temporary hold on clinical studies of ibrexafungerp, including the Phase 3 MARIO study, until a mitigation strategy is determined.

The patient-level and clinical product recall has been initiated and the Company is working with an experienced vendor to manage the process. The Company has begun engaging with the FDA and during a meeting in September 2023, the FDA concurred with the Company’s voluntary hold and placed a clinical hold on ibrexafungerp. The Company is working to provide additional information to the FDA and discuss potential paths for resolution of this issue. The clinical hold and recall affect the Company's two ongoing clinical studies: the Phase 3 MARIO study and a Phase 1 lactation study. The hold does not impact the recently completed FURI, CARES, VANQUISH and SCYNERGIA clinical studies, for which dosing is complete. The FDA determined that the compassionate use program for ibrexafungerp, which provides ibrexafungerp to patients with limited or no other treatment options, can continue provided the patient’s treating physician concludes a favorable benefit-risk assessment and the patient is made aware of and consents to the risk. This applies to patients currently in the program, as well as for new patients, pending confirmation of available supply. The Company's pre-clinical stage compound, SCY-247, is not affected by these developments.

The clinical hold and recall create uncertainty as to the timing of achieving, and the Company's ability to achieve, the milestones under the License Agreement. Refer to Note 5 and Note 12 for further information regarding the Company's assessment of the potential impact of this uncertainty as it relates to inventory and revenue, respectively.

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The Company had an accumulated deficit of $335.7 million at September 30, 2023. The Company's capital resources primarily comprised cash and cash equivalents and investments of $105.2 million at September 30, 2023. While the Company believes its capital resources are sufficient to fund the Company’s on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements, the Company's liquidity could be materially affected over this period by: (1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding; (2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements; (3) negative regulatory events or unanticipated costs related to its development of ibrexafungerp; (4) its ability to successfully achieve the development, regulatory, and commercial milestones under its License Agreement with GSK, particularly in light of the discovery that a non-antibacterial beta-lactam drug substance was manufactured using equipment common to the manufacturing process for ibrexafungerp and resulting product recall; and (5) any other unanticipated material negative events or costs. One or more of these events or costs could materially affect the Company’s liquidity. If the Company is unable to meet its obligations when they become due, the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to its operating plan. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and judgments include: revenue recognition including gross to net estimates and the identification of performance obligations in licensing arrangements; estimates for the relative standalone selling price and measure of progress under the input method for the License Agreement; the determination of the fair value of stock-based compensation grants; the estimate of services and effort expended by third-party research and development service providers used to recognize research and development expense; and the estimates and assumptions utilized in measuring the fair values of the warrant and derivative liabilities each reporting period.

Unaudited Condensed Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”), as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, and cash flows. The results of operations for the three and nine months ended September 30, 2023, are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes set forth in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023.

2. Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements and notes follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2022, except as described below.

Product Recall

The Company establishes reserves for product recalls on a product-specific basis when circumstances giving rise to the recall become known. The Company estimates product returns from consumers and customers across distribution channels, utilizing third-party data and other assumptions, and these are recorded within gross-to-net expenses on the Company’s unaudited condensed, consolidated statement of operations. Additionally, the Company estimates costs for any additional fees, including but not limited to freight and destruction charges for returned products and costs incurred by third party vendors. These expenses are recorded within selling, general, and administrative expenses within the Company’s unaudited condensed, consolidated statement of operations as they are in excess of the initial revenue recognized. These estimates are updated and reevaluated each period and the related reserves are adjusted when these factors indicate that the recall reserves are either insufficient to cover or exceed the estimated product recall expenses. Significant changes in the assumptions used to develop estimates for product recall reserves could affect key financial information, including accounts receivable, inventory, accrued liabilities, net sales, gross profit, operating expenses and net income (loss). During the three and nine-months ended September

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30, 2023, the Company recorded products recall reserves of $3.8 million, specifically for the voluntary recall of certain lots of BREXAFEMME. The Company reviews the product recall reserve for adequacy and adjusts the product recall accrual, if necessary, based on actual experience and estimated costs to be incurred.

Allowance for Credit Losses

The Company reviews its held-to-maturity investments for credit losses on a collective basis by major security type and in line with the Company's investment policy. As of September 30, 2023, the Company's held-to-maturity investments were in securities that are issued by the U.S. government and in corporate and agency bonds, are highly rated, and have a history of zero credit losses. The Company reviews the credit quality of its accounts receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company's accounts receivable are with customers that do not have a history of uncollectibility nor a history of significantly aged accounts receivables. As of September 30, 2023, the Company did not recognize a credit loss allowance for its investments or accounts receivable.

Basic and Diluted Net (Loss) Income per Share of Common Stock

The Company calculates net (loss) income per common share in accordance with ASC 260, Earnings Per Share. Basic net (loss) income per common share for the three and nine months ended September 30, 2023 and 2022 was determined by dividing net (loss) income applicable to common stockholders by the weighted average number of common shares outstanding during the period. Per ASC 260, Earnings Per Share, the weighted average number of common shares outstanding utilized for determining the basic net (loss) income per common share for the three and nine months ended September 30, 2023 includes the outstanding pre-funded warrants to purchase 7,516,267 and 3,200,000 shares of common stock issued in the April 2022 Public Offering and December 2020 public offering, respectively. The outstanding pre-funded warrants to purchase 11,666,667 and 3,200,000 shares of common stock issued in the April 2022 Public Offering and December 2020 public offering were included in the three and nine months ended September 30, 2022, respectively. Diluted net (loss) income per common share for the three and nine months ended September 30, 2023 and 2022 was determined as follows (in thousands, except share and per share amounts):

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net (loss) income

$

(1,757

)

 

$

(29,584

)

 

$

86,627

 

 

$

(48,380

)

Dilutive effect of convertible debt

 

 

 

 

 

 

 

1,437

 

 

 

 

Net (loss) income allocated to common shares

$

(1,757

)

 

$

(29,584

)

 

$

88,064

 

 

$

(48,380

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

47,891,996

 

 

 

47,503,821

 

 

 

47,829,614

 

 

 

40,965,908

 

Dilutive effect of convertible debt

 

 

 

 

 

 

 

1,138,200

 

 

 

 

Dilutive effect of restricted stock units

 

 

 

 

 

 

 

429,459

 

 

 

 

Weighted average common shares outstanding – diluted

 

47,891,996

 

 

 

47,503,821

 

 

 

49,397,273

 

 

 

40,965,908

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – diluted

$

(0.04

)

 

$

(0.62

)

 

$

1.78

 

 

$

(1.18

)

 

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The following potentially dilutive shares of common stock and outstanding restricted stock units that contain certain performance contingencies have not been included in the computation of diluted net (loss) income per share for the three and nine months ended September 30, 2023 and 2022, as the result would be anti-dilutive or the performance contingencies have not been met:

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Outstanding stock options

 

1,960,411

 

 

 

2,125,002

 

 

 

1,960,411

 

 

 

2,125,002

 

Outstanding restricted stock units

 

2,054,970

 

 

 

990,015

 

 

 

400,000

 

 

 

990,015

 

Warrants to purchase common stock associated with March 2018 public offering – Series 2

 

 

 

 

798,810

 

 

 

 

 

 

798,810

 

Warrants to purchase common stock associated with December 2020 public offering - Series 2

 

6,800,000

 

 

 

6,800,000

 

 

 

6,800,000

 

 

 

6,800,000

 

Warrants to purchase common stock associated with April 2022 Public Offering

 

15,000,000

 

 

 

15,000,000

 

 

 

15,000,000

 

 

 

15,000,000

 

Warrants to purchase common stock associated with Loan Agreement

 

198,811

 

 

 

198,819

 

 

 

198,811

 

 

 

198,819

 

Common stock associated with March 2019 Notes

 

1,138,200

 

 

 

1,138,200

 

 

 

 

 

 

1,138,200

 

Warrants to purchase common stock associated with Danforth

 

50,000

 

 

 

50,000

 

 

 

50,000

 

 

 

50,000

 

Total

 

27,202,392

 

 

 

27,100,846

 

 

 

24,409,222

 

 

 

27,100,846

 

Reclassification of Prior Year Amounts

Certain prior year amounts have been reclassified for consistency with the current year presentation.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments in ASU 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”), which revised the effective dates for ASU 2016-13 for public business entities that meet the SEC definition of a smaller reporting company to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2016-13 during the three months ended March 31, 2023 and the adoption did not materially impact the unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity’s Own Equity: Accounting for Convertible Instruments and Contracts in and Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 reduce the number of accounting models for convertible debt instruments and revises certain guidance relating to the derivative scope exception and earnings per share. The amendments in ASU 2020-06 are effective for public business entities that meet the definition of a SEC filer and a smaller reporting company for fiscal years beginning after December 15, 2023, and interim periods within those years. As a smaller reporting company, the Company is currently evaluating the impact ASU 2020-06 will have on its unaudited condensed consolidated financial statements.

3. Investments

The following table summarizes the investments at September 30, 2023 (in thousands):

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Table of Contents

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair Value

 

As of September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Maturities < 1 Year

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

$

7,197

 

 

$

 

 

$

(1

)

 

$

7,196

 

Corporate bonds

 

 

33,077

 

 

 

 

 

 

(33

)

 

 

33,044

 

Agency bonds

 

 

3,727

 

 

 

 

 

 

(3

)

 

 

3,724

 

Total short-term investments

 

$

44,001

 

 

$

 

 

$

(37

)

 

$

43,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturities > 1 Year

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds