OptiNose(OPTN) - 2021 Q2 - Quarterly Report

Forward-Looking Statements This section details forward-looking statements regarding XHANCE revenue, operating expenses, clinical trial timelines, and liquidity, protected by safe harbor provisions Forward-Looking Statements This section details forward-looking statements regarding XHANCE revenue, operating expenses, clinical trial timelines, and liquidity, protected by safe harbor provisions - The company expects XHANCE net product revenues for the full year of 2021 to be at least $80.0 million[9] - Total GAAP operating expenses for 2021 are projected to be between $137.0 million and $142.0 million, including approximately $10.0 million in non-cash stock-based compensation[9] - Top-line results from the first of two Phase 3b chronic sinusitis clinical trials are expected in the first quarter of 2022, with the second trial's results anticipated in the second quarter of 2022[9] - Management believes existing cash and cash equivalents are sufficient to fund operations for at least the next twelve months from the filing date of this report[9] PART I — FINANCIAL INFORMATION Financial Statements This section presents OptiNose's unaudited interim consolidated financial statements for periods ended June 30, 2021 Consolidated Balance Sheet Highlights | Account | June 30, 2021 ($ thousands) | December 31, 2020 ($ thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $93,916 | $144,156 | | Total current assets | $132,594 | $180,652 | | Total assets | $139,515 | $188,813 | | Total current liabilities | $46,798 | $52,172 | | Long-term debt, net | $126,043 | $125,202 | | Total liabilities | $176,588 | $182,025 | | Total stockholders' equity (deficit) | $(37,073) | $6,788 | Consolidated Statement of Operations Highlights | Metric | Three Months Ended June 30, 2021 ($ thousands) | Three Months Ended June 30, 2020 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Net product revenues | $18,357 | $10,272 | $29,317 | $17,334 | | Total revenues | $18,357 | $10,272 | $30,317 | $17,334 | | Total operating expenses | $37,912 | $32,871 | $72,062 | $66,219 | | Loss from operations | $(19,555) | $(22,599) | $(41,745) | $(48,885) | | Net loss | $(23,502) | $(25,852) | $(49,555) | $(54,708) | | Net loss per share | $(0.44) | $(0.56) | $(0.93) | $(1.19) | Consolidated Statement of Cash Flows Highlights | Cash Flow Activity | Six Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2020 ($ thousands) | | :--- | :--- | :--- | | Cash used in operating activities | $(50,518) | $(51,518) | | Cash used in investing activities | $(10) | $(309) | | Cash provided by financing activities | $276 | $29,950 | | Net decrease in cash | $(50,252) | $(21,886) | Notes to Unaudited Interim Consolidated Financial Statements These notes provide detailed context for the financial statements, covering business operations, liquidity, accounting policies, and debt agreements - The company is a specialty pharmaceutical firm focused on ENT and allergy specialists, with its first commercial product being XHANCE®, approved for treating nasal polyps[31] - As of June 30, 2021, the company had cash and cash equivalents of $93.9 million and acknowledges it will likely require additional capital to meet future debt service obligations and fund operations[32][33] - The company has a $130 million debt financing agreement (Pharmakon Senior Secured Notes) with funds managed by Pharmakon Advisors, LP, bearing interest at 10.75% and maturing in September 2024, with covenants including a minimum cash balance of $30 million[65][70][73] - Subsequent to the quarter end, on August 11, 2021, the company entered into an Open Market Sale Agreement with Jefferies LLC to issue and sell up to $50 million of its common stock[91] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition, operations, COVID-19 impact, XHANCE performance, clinical development, and liquidity - The COVID-19 pandemic continues to adversely impact XHANCE prescription growth and net revenue, causing delays in clinical trial enrollment and pushing top-line results for chronic sinusitis trials to Q1 and Q2 2022[98][102] XHANCE Performance Metrics (Q2 2021 vs. Q2 2020) | Metric | Q2 2021 | Q2 2020 | Growth | | :--- | :--- | :--- | :--- | | Total Prescriptions | 82,900 | 62,500 | 33% | | New Prescriptions | 29,000 | 18,700 | 55% | | Refill Prescriptions | 53,900 | 43,800 | 23% | | Average Net Revenue per Rx | $221 | $164 | 35% | - The company expects full-year 2021 XHANCE net product revenues to be at least $80.0 million and total GAAP operating expenses to be between $137.0 million and $142.0 million[129][164] - As of June 30, 2021, the company had $93.9 million in cash and cash equivalents, which is believed sufficient to fund operations for at least the next twelve months, including maintaining the minimum cash balance required by its debt facility[151][167] Qualitative and Quantitative Disclosure About Market Risk As a smaller reporting company, OptiNose is exempt from providing qualitative and quantitative disclosures about market risk - As a smaller reporting company, Optinose is not required to provide disclosures about market risk[173] Controls and Procedures The company's CEO and CFO concluded that disclosure controls were effective as of June 30, 2021, with no material changes to internal controls - The company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2021[176] - There were no changes in internal control over financial reporting during the three months ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, internal controls[177] PART II — OTHER INFORMATION Other Information This section discloses a post-period event where OptiNose entered an agreement to sell up to $50.0 million of common stock - On August 11, 2021, the Company entered into an Open Market Sale Agreement with Jefferies LLC, allowing it to issue and sell common stock for an aggregate sales price of up to $50.0 million through an "at the market" offering[179] - Jefferies will act as the sales agent and will receive a commission of up to 3.0% of the gross proceeds from any shares sold under the agreement[180] Exhibits This section lists all exhibits filed with the Form 10-Q, including the Open Market Sale Agreement and CEO/CFO certifications - The list of exhibits includes the Open Market Sale Agreement dated August 11, 2021, between the Company and Jefferies LLC[186] - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Exchange Act are filed as exhibits 31.1, 31.2, 32.1, and 32.2[186]