Y-mAbs(YMAB) - 2022 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This part provides the company's financial information, including consolidated statements, management's analysis, market risk, and controls Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, equity changes, cash flows, and detailed notes Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2022, and December 31, 2021 | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $133,665 | $181,564 | | Total current assets | $153,920 | $202,261 | | TOTAL ASSETS | $165,178 | $212,783 | | Total current liabilities | $29,450 | $27,875 | | TOTAL LIABILITIES | $33,782 | $32,677 | | TOTAL STOCKHOLDERS' EQUITY | $131,396 | $180,106 | Consolidated Statements of Net Income / (Loss) and Comprehensive Income / (Loss) This section details the company's financial performance, including revenues, expenses, and net income or loss for the specified periods | Metric (in thousands) | Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenue, net | $9,797 | $8,951 | $20,283 | $14,334 | | License revenue | $1,000 | $2,000 | $1,000 | $2,000 | | Total revenues | $10,797 | $10,951 | $21,283 | $16,334 | | Cost of goods sold | $1,140 | $200 | $2,972 | $293 | | R&D expenses | $26,420 | $19,778 | $49,332 | $41,357 | | SG&A expenses | $23,082 | $13,475 | $36,520 | $25,445 | | Loss from operations | $(39,945) | $(22,712) | $(67,641) | $(50,971) | | Net income / (loss) | $(41,131) | $(22,937) | $(69,199) | $10,476 | | Basic EPS | $(0.94) | $(0.53) | $(1.58) | $0.25 | Consolidated Statements of Changes in Stockholders' Equity This section outlines the changes in the company's equity, including accumulated deficit and additional paid-in capital, over the reporting periods - The accumulated deficit increased significantly from $(340,475) thousand at December 31, 2021, to $(409,674) thousand at June 30, 2022, primarily due to net losses incurred during the period[31] - Additional paid-in capital increased by $18,756 thousand, driven by stock-based compensation expense and proceeds from exercised stock options[31] Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities for the six-month periods | Cash Flow Activity (in thousands) | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(48,025) | $(50,617) | | Net cash provided by investing activities | $0 | $61,569 | | Net cash provided by financing activities | $32 | $107,966 | | Net increase / (decrease) in cash and cash equivalents | $(47,899) | $118,953 | | Cash and cash equivalents at end of period | $133,665 | $233,587 | Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements and accounting policies NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS This note describes Y-mAbs Therapeutics, Inc. as a commercial-stage biopharmaceutical company focused on cancer therapeutics - Y-mAbs Therapeutics, Inc. is a commercial-stage biopharmaceutical company focused on developing and commercializing novel, antibody-based therapeutic products for cancer, leveraging proprietary antibody platforms and deep expertise[37] NOTE 2—BASIS OF PRESENTATION This note details the company's financial condition, including accumulated deficit and cash position, and its going concern considerations - The Company has incurred losses since inception (except for Q1 2021) and had an accumulated deficit of $409,674,000 as of June 30, 2022, and $340,475,000 as of December 31, 2021[41] - DANYELZA (naxitamab-gqgk) was approved by the FDA in November 2020, but other drug candidates require significant R&D, clinical testing, and regulatory approval prior to commercialization[40] - As of June 30, 2022, the Company had cash and cash equivalents of $133,665,000, which are expected to fund operating expenses and capital expenditure requirements through at least the next 12 months[43][45] NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the company's significant accounting policies, including revenue recognition, fair value measurements, and inventory valuation - The Company recognizes revenue from DANYELZA sales when the customer obtains control, generally upon receipt at the end-user hospital, with estimates for rebates, chargebacks, and discounts[66][67] - License revenue includes a $1,000,000 non-refundable milestone payment received in April 2022 from Adium Pharma S.A. for the updated FDA BLA dossier for DANYELZA[70] Fair Value Measurements at June 30, 2022 (in thousands): | | Level 1 | Level 2 | Level 3 | Total | | : | :------ | :--------- | :------ | :--------- | | Money market funds | $— | $111,857 | $— | $111,857 | Fair Value Measurements at December 31, 2021 (in thousands): | | Level 1 | Level 2 | Level 3 | Total | | : | :------ | :--------- | :------ | :--------- | | Money market funds | $— | $166,729 | $— | $166,729 | NOTE 4—PRODUCT REVENUE This note provides a breakdown of product revenue, net of allowances, and identifies major customers for DANYELZA sales | Metric (in thousands) | Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenue, net | $9,797 | $8,951 | $20,283 | $14,334 | - Product sales are recorded net of allowances for rebates, chargebacks, discounts, and distribution-related fees. As of June 30, 2022, accounts receivable allowances were $797,000 and accrued liabilities were $3,082,000[75][77] - Major customers (Mckesson, AmerisourceBergen, Cardinal Health) accounted for a significant portion of gross product revenue (71%, 10%, and 11% respectively for Q2 2022; 64%, 17%, and 11% respectively for H1 2022)[78] NOTE 5—NET LOSS PER SHARE This note presents the calculation of basic and diluted net loss per share, including the treatment of potentially dilutive securities | Metric | Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income / (loss) (numerator) (in thousands) | $(41,131) | $(22,937) | $(69,199) | $10,476 | | Weighted-average shares outstanding, basic | 43,719 | 43,569 | 43,714 | 42,725 | | Basic net income / (loss) per share | $(0.94) | $(0.53) | $(1.58) | $0.25 | | Weighted-average shares outstanding, diluted | 43,719 | 43,569 | 43,714 | 45,080 | | Diluted net income / (loss) per share | $(0.94) | $(0.53) | $(1.58) | $0.23 | - Potentially dilutive securities (stock options and RSUs) totaling 6,972,558 shares as of June 30, 2022, were excluded from diluted EPS calculation due to the net loss, making their effect antidilutive[79] NOTE 6—INVENTORIES This note details the composition of inventories, including raw material, work in progress, and finished goods, and their classification | Inventory Category (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Raw Material | $1,500 | $0 | | Work In Progress | $9,306 | $4,741 | | Finished Goods | $1,276 | $771 | | Total Inventories | $12,082 | $5,512 | - The Company classified $1,500,000 of raw material and $3,788,000 of work in progress inventories as noncurrent assets, expecting their utilization beyond one year from the balance sheet date[81] NOTE 7—INTANGIBLE ASSETS, NET This note describes the company's intangible assets, primarily related to DANYELZA commercialization, and their amortization - Intangible assets, net, totaled $1,574,000 as of June 30, 2022, primarily related to capitalized milestone payments following DANYELZA's FDA approval and commercialization, amortized over a 10-year useful life[82][83] NOTE 8—ACCRUED LIABILITIES This note provides a breakdown of accrued liabilities, including licensing, clinical, compensation, manufacturing, and sales reserves | Accrued Liability (in thousands) | June 30, 2022 | December 31, 2021 | | :------------------------------- | :------------ | :---------------- | | Accrued licensing, milestone and royalty payments | $2,438 | $3,090 | | Accrued clinical costs | $872 | $915 | | Accrued compensation and board fees | $4,151 | $1,877 | | Accrued manufacturing costs | $6,251 | $2,622 | | Accrued sales reserves | $3,082 | $2,615 | | Other | $273 | $1,421 | | Total | $17,067 | $12,540 | NOTE 9—LICENSE AGREEMENTS AND COMMITMENTS This note outlines significant license agreements and commitments, including potential milestone payments to MSK and MIT - The Company has significant license agreements with Memorial Sloan Kettering Cancer Center (MSK) and Massachusetts Institute of Technology (MIT), including MSK License, CD33 License, SADA License, and MabVax Agreement, involving contingent milestone and royalty payments[85] Maximum Potential Milestone Payments (in thousands): | Agreement | Clinical Milestones | Regulatory Milestones | Sales-based Milestones | | :-------- | :------------------ | :-------------------- | :--------------------- | | MSK | $2,450 | $9,000 | $20,000 | | CD33 | $550 | $500 | $7,500 | | MabVax | $200 | $1,200 | $0 | | SADA | $4,730 | $18,125 | $23,750 | - A $10,714,000 charge related to the former CEO's departure was recorded in SG&A expenses for the three and six months ended June 30, 2022, including a $9,286,000 non-cash stock-based compensation expense[100] NOTE 10—STOCKHOLDERS' EQUITY This note details the company's common stock, authorized shares, and significant equity transactions, including a public offering - As of June 30, 2022, the Company had 43,720,038 shares of common stock issued, with 100,000,000 shares authorized. No preferred stock has been issued[102][103][104] - In April 2020, 213,996 shares were issued to non-employee researchers for the SADA Technology, with 80% vested by June 30, 2022. A $7,376,000 fair value was recognized as R&D expense[105] - In February 2021, the Company completed a public offering, issuing 2,804,878 shares of common stock for aggregate net proceeds of approximately $107,725,000[107][108] NOTE 11—SHARE-BASED COMPENSATION This note presents the stock-based compensation expense and unrecognized compensation for employee stock options and RSUs Stock-Based Compensation Expense (in thousands): | Category | Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock options | $13,549 | $4,752 | $18,566 | $9,380 | | Restricted Stock Units | $84 | $75 | $158 | $145 | - Stock-based compensation for Q2 2022 includes $9,286,000 related to the former CEO's departure, recorded in SG&A expenses[111][112] - As of June 30, 2022, unrecognized compensation expense for employee stock options was $27,608,000 (expected to vest over 2.65 years) and for RSUs was $575,000 (expected to vest over 2.20 years)[121][124] NOTE 12—RELATED PARTY TRANSACTIONS This note discloses related party transactions, primarily with MSK, including costs incurred and amounts owed - MSK is a shareholder, and the Company incurred $1,434,000 and $2,808,000 in costs (milestones, royalties, R&D) under agreements with MSK for the three and six months ended June 30, 2022, respectively[125] - As of June 30, 2022, the Company owed MSK a total of $5,686,000 ($345,000 in accounts payable and $5,341,000 in accrued liabilities)[125] NOTE 13—INCOME TAXES This note explains the company's income tax position, including the absence of current/deferred taxes and the full valuation allowance - The Company provided no current and deferred income taxes on net losses for the three and six months ended June 30, 2022, and maintains a full valuation allowance on its U.S. and foreign deferred tax assets due to cumulative and forecasted losses[127][129] NOTE 14—OTHER BENEFITS This note describes the company's 401(k) savings plan and confirms no matching contributions were made during the periods - The Company offers a 401(k) savings plan for U.S. employees but made no matching contributions for the three or six months ended June 30, 2022 and 2021[130] NOTE 15 —GAIN FROM SALE OF PRIORITY REVIEW VOUCHER This note details the gain recognized from the sale of the DANYELZA Priority Review Voucher in the prior year - In the six months ended June 30, 2021, the Company recognized a net gain of $62,010,000 from the sale of its DANYELZA Priority Review Voucher (PRV) to United Therapeutics Corporation, retaining 60% of the net proceeds[132] - No corresponding gain from PRV sales was recognized during the three and six months ended June 30, 2022[133] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, operational results, liquidity, and critical accounting policies Overview This section provides an overview of Y-mAbs as a biopharmaceutical company, its key products, and its financial outlook - Y-mAbs is a commercial-stage biopharmaceutical company focused on antibody-based cancer therapeutics, with DANYELZA® (naxitamab-gqgk) approved by the FDA in November 2020 for relapsed/refractory high-risk neuroblastoma[136][137] - The company resubmitted its Biologics License Application (BLA) for omburtamab in March 2022, which was accepted for priority review by the FDA in May 2022 with an action date of November 30, 2022[139] - The company has an accumulated deficit of $409.7 million as of June 30, 2022, and expects to continue incurring significant net operating losses due to ongoing R&D and commercialization efforts[150] Recent Developments This section highlights recent operational impacts from global events and updates on regulatory submissions for product candidates - The COVID-19 pandemic and geopolitical events, including the Russia-Ukraine conflict, have adversely impacted operations, leading to the termination of DANYELZA clinical trials in Russia and suspension of regulatory activities there[160][162][167] - The FDA accepted the BLA for omburtamab for Priority Review with a PDUFA action date of November 30, 2022, and an advisory committee meeting is planned for October 2022[169] Components of Our Results of Operations This section explains the key components of the company's revenues and expenses, including product sales, license fees, and R&D costs - Product revenue is derived from DANYELZA sales, recognized upon customer control, net of rebates, chargebacks, and discounts[170][188][190] - License revenue includes payments for licensing rights to DANYELZA and omburtamab, such as the $1.0 million milestone from Adium Pharma S.A. in Q2 2022[171][172][203] - Research and development expenses are expensed as incurred and are expected to increase significantly due to advancing product candidates, clinical trials, and regulatory submissions[175][178] Critical Accounting Policies and Significant Judgments and Estimates This section details the critical accounting policies and significant management estimates impacting financial reporting, such as revenue recognition and stock option valuation - Management makes significant estimates for net product revenues, R&D accruals, milestone/royalty payments, and stock option valuations, which are periodically reviewed and adjusted[186] - Revenue recognition for product sales involves estimating deductions for rebates, chargebacks, and discounts based on contracts, government programs, and payor mix[190] - Stock options are valued using the Black-Scholes model, with expected volatility estimated from peer companies and historical Y-mAbs data, and a 'simplified' method for expected term due to limited historical data[198][201] Results of Operations This section analyzes the company's financial performance by comparing key revenue and expense metrics across different reporting periods Comparison of the Three Months Ended June 30, 2022 and 2021 This section compares the company's financial performance, including revenues, expenses, and net loss, for the three-month periods | Metric (in thousands) | June 30, 2022 | June 30, 2021 | Amount Change | Percentage Change | | :-------------------- | :------------ | :------------ | :------------ | :---------------- | | Product revenue, net | $9,797 | $8,951 | $846 | 9% | | License revenue | $1,000 | $2,000 | $(1,000) | (50%) | | Total revenues | $10,797 | $10,951 | $(154) | (1%) | | Cost of goods sold | $1,140 | $200 | $940 | 470% | | R&D expenses | $26,420 | $19,778 | $6,642 | 34% | | SG&A expenses | $23,082 | $13,475 | $9,607 | 71% | | Net Loss | $(41,131) | $(22,937) | $(18,194) | 79% | - The 71% increase in SG&A expenses was primarily due to a $10.7 million charge related to the departure of the former Chief Executive Officer[211] - R&D expenses increased by $6.6 million, driven by a $5.3 million increase in outsourced manufacturing (including $2.9 million for naxitamab clinical trial vials) and an $0.8 million increase in clinical trials, mainly for omburtamab[210] Comparison of the Six Months Ended June 30, 2022 and 2021 This section compares the company's financial performance, including revenues, expenses, and net income/loss, for the six-month periods | Metric (in thousands) | June 30, 2022 | June 30, 2021 | Amount Change | Percentage Change | | :-------------------- | :------------ | :------------ | :------------ | :---------------- | | Product revenue, net | $20,283 | $14,334 | $5,949 | 42% | | License revenue | $1,000 | $2,000 | $(1,000) | (50%) | | Total revenues | $21,283 | $16,334 | $4,949 | 30% | | Cost of goods sold | $2,972 | $293 | $2,679 | 914% | | R&D expenses | $49,332 | $41,357 | $7,975 | 19% | | SG&A expenses | $36,520 | $25,445 | $11,075 | 44% | | Net income / (loss) | $(69,199) | $10,476 | $(79,675) | (761%) | - Net income shifted to a significant net loss of $(69,199) thousand in H1 2022 from a net income of $10,476 thousand in H1 2021, primarily due to the absence of the $62.0 million gain from the PRV sale in 2021[214][227] - SG&A expenses increased by $11.1 million, mainly due to the $10.7 million charge related to the former CEO's departure[224] Liquidity and Capital Resources This section discusses the company's cash position, operating cash flows, and future funding requirements for its ongoing operations and development programs - As of June 30, 2022, cash and cash equivalents were $133.7 million, down from $181.6 million at December 31, 2021. The company expects current cash to fund operations through mid-2024[229][241] - Net cash used in operating activities decreased by $2.6 million to $48.0 million for the six months ended June 30, 2022, primarily due to improved accounts receivable collections[234] - The company will require substantial additional funding for DANYELZA commercialization, omburtamab development, and other pipeline programs, with capital raising potentially through equity, debt, or collaborations[237][245] Recent Accounting Pronouncements This section outlines the adoption of recent accounting standards and their immaterial impact on the company's financial statements - The Company adopted ASU 2020-10, ASU 2021-04, and ASU 2020-06 effective January 1, 2022, with no material impact on its consolidated financial statements or disclosures[72] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, specifically interest rate and foreign currency exchange risks, and their immaterial impact - The company's exposure to interest rate risk is considered immaterial, as cash equivalents are primarily held in highly rated securities, including a Treasury money market fund, with short-term maturities[260] - Primary foreign currency exchange risk is to the Danish Kroner (DKK); an immediate 10% change in the DKK to USD exchange rate would not materially affect cash balances[261] Item 4. Controls and Procedures This section details the evaluation of disclosure controls and procedures, confirming their effectiveness and noting internal control modifications - Management, including the Interim CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2022[262] - A new cloud-based accounting and general ledger system was implemented during Q2 2022 to improve financial close processes, resulting in modified internal controls[264] PART II — OTHER INFORMATION This part provides additional information, including legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings This section discloses a pending stockholder lawsuit against the President and Interim CEO, alleging short swing profits - A stockholder lawsuit was filed against Mr. Thomas Gad, President and Interim CEO, alleging short swing profits from a transaction on March 10, 2021[267] - Mr. Gad's motion to dismiss the lawsuit was denied on August 8, 2022, moving the case into the discovery phase[267] - The Company and Mr. Gad believe the claim is without merit and do not expect a probable gain or liability to be realized by the Company[267] Item 1A. Risk Factors This comprehensive section details numerous risks that could materially and adversely affect the company's business, financial condition, and future growth Risks Related to Our Financial Condition and Need for Additional Capital This section highlights risks associated with the company's limited operating history, accumulated losses, and ongoing need for substantial additional funding - The company has a limited operating history, incurred significant losses ($409.7 million accumulated deficit as of June 30, 2022), and expects continued losses, with DANYELZA being its only approved product[269][270][274] - Significant payment obligations to MSK and MIT under license agreements (e.g., $2.5M clinical, $9.0M regulatory, $20.0M sales-based for MSK License) may strain cash resources or necessitate additional funding[279][283] - Substantial additional funding will be required for ongoing R&D and commercialization efforts; failure to obtain it could lead to delays, reductions, or termination of programs and license agreements[284][286] Risks related to product development and commercialization This section addresses risks inherent in drug development, clinical trials, regulatory approvals, and market acceptance of products - Drug development is lengthy, expensive, and uncertain; clinical trials may fail to demonstrate safety/efficacy, leading to delays or inability to obtain marketing approval[291][293] - The COVID-19 pandemic and the Russia-Ukraine conflict have adversely impacted clinical trials, manufacturing, and commercialization efforts, causing delays and potential long-term disruptions[303][308][318] - Commercial success of DANYELZA and future products depends on market acceptance by physicians, patients, and payors, which is influenced by efficacy, safety, pricing, and competition[324][326] Risks related to our dependence on third parties This section outlines risks arising from reliance on third parties for clinical trials, manufacturing, and strategic collaborations - The company relies heavily on third parties (CROs, CMOs, MSK) for clinical trials, manufacturing, and R&D; failures in their performance or compliance could delay development and commercialization[382][386][398] - High dependence on CMOs like EMD/Merck for omburtamab production and SpectronRx for radiolabeling poses risks, including manufacturing difficulties, supply shortages, and regulatory compliance issues[389][390][396] - Strategic collaborations for DANYELZA and omburtamab in certain jurisdictions (e.g., Takeda Israel, Swixx BioPharma, SciClone, Adium) carry risks of insufficient resource allocation, disagreements, or termination, impacting revenue generation[409][411] Risks related to government regulation; market approval and other legal compliance matters This section details risks associated with regulatory approval processes, post-approval compliance, and healthcare fraud and abuse laws - The FDA regulatory approval process is lengthy, unpredictable, and costly; failure to obtain or delays in marketing approval for omburtamab or other candidates would significantly harm the business[414][419][429] - Compliance with post-approval regulatory requirements is ongoing and costly; non-compliance or unanticipated problems could lead to withdrawn approvals, marketing restrictions, or substantial penalties[451][455][456][458] - Relationships with healthcare providers and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, GDPR), with potential for significant penalties for non-compliance[475][476][479][482] Risks related to our intellectual property This section covers challenges in protecting intellectual property, dependence on in-licensed IP, and potential litigation risks - Protecting intellectual property (patents, trademarks, trade secrets) is difficult and costly; patents may not be broad enough, challenged, or expire, allowing competitors to use similar technologies[504][505][515][523] - Dependence on in-licensed IP from MSK and MIT means loss of licenses or inability to acquire additional rights could hinder product development[506][509][511] - Litigation related to patent infringement or trade secret misappropriation is costly, time-consuming, and could result in substantial damages, injunctions, or loss of valuable IP rights[524][529][532][537] Risks related to employee matters and managing growth This section discusses risks related to key personnel dependence, management challenges, and the need for organizational growth - The company is highly dependent on its executive officers and key personnel; the recent departure of the CEO and challenges in attracting/retaining qualified talent could harm the business[549][550][551] - Anticipated significant growth in employees and operations (sales, marketing, clinical, regulatory) requires improved managerial, operational, and financial systems, posing management challenges[554][556] Risks related to our common stock This section addresses risks concerning significant stockholder influence, anti-takeover provisions, and potential stock dilution - Executive officers, directors, and principal stockholders collectively own ~30.11% of common stock, enabling significant influence over stockholder approval matters and potentially delaying acquisitions[557] - Provisions in corporate charter documents and Delaware law (e.g., classified board, advance notice requirements, preferred stock issuance) could discourage or prevent changes in control or management[558][560] - The company has never paid cash dividends and does not anticipate doing so, making capital appreciation the sole source of investment gain. Future sales of common stock could dilute existing stockholders and depress market price[562][563][568] General risk factors This section covers broader risks including macroeconomic conditions, geopolitical events, business disruptions, and product liability - Macroeconomic conditions, including inflation, and geopolitical events like the Russia-Ukraine conflict, have adversely affected the business, leading to suspended clinical trials in Russia and market volatility[571][572][574] - Business disruptions from natural disasters, epidemics (e.g., COVID-19), cyberattacks, or other events could seriously harm revenue, financial condition, and increase costs, as the company relies on third parties for critical operations[582][585][609][610] - Product liability lawsuits pose an inherent risk, potentially leading to substantial liabilities, decreased demand, reputational damage, and financial strain, with insurance coverage possibly being inadequate[586][588] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported for the period[616] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported for the period[617] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company[618] Item 5. Other Information This section indicates that there is no other information to report for the period - No other information was reported for the period[620] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate governance documents, stock option and retention bonus agreements, certifications, and XBRL interactive data files - Exhibits include Amended and Restated Certificate of Incorporation and Bylaws, Form of Stock Option Grant Notice, Retention Bonus Agreements, Certifications of Principal Executive and Financial Officers, and Inline XBRL Instance Document[623]