f
美國
證券交易委員會
華盛頓特區20549
表格
(標記一個)
截至2024年6月30日季度結束
或者
在從 到的過渡期間
委員會檔案編號
（根據其組織憲章規定的正式名稱）
|
|
|
|
註冊者的電話號碼，包括區域號碼: (
根據交易所法案第12(b)條規定註冊的證券：
OTC粉紅開放市場 |
請以勾選方式表示，登記者（1）在過去12個月內（或登記者要求提交此類報告的較短期間）已提交證券交易所法案第13或15(d)條所需提交的所有報告，且（2）過去90天以來一直受到此類報告要求的規定。
請用核選符號表示，是否在過去的12個月內（或該簡短期間）按照本章節的Regulation S-t第405條規定，已提交所有需要提交的互動數據文件（§ 232.405）。
請以勾選標記指示該登記業者是否為大型迅速歸檔者、迅速歸檔者、非迅速歸檔者、或較小的報告公司，亦或為新興成長型公司。請參閱《交易所法》第120億2條關於「大型迅速歸檔者」、「迅速歸檔者」、「較小的報告公司」和「新興成長型公司」的定義。
大型迅速歸檔者☐ | 快速提交申報者☐ |
☒ | 較小型報告公司 |
新興成長型公司 |
如果是新興增長公司，請用勾選號表示發行人是否選擇不使用按照交易所法案第13(a)條提供的遵守任何新的或修訂的財務會計準則的延長過渡期。 ☐
請勾選是否該登記者爲外殼公司（依據交易所法案第1202條）。是
指出每個發行人普通股類別截至最新實際日期的流通股數。
普通股，面值$0.001 | 截至2024年11月5日，流通股份： |
關於前瞻性陳述的警語
這份表格10-Q季度報告或這份“季度報告”包含涉及重大風險和不確定性的前瞻性陳述。前瞻性陳述主要包含在名為“管理層對財務狀況和業績的討論與分析”的部分，但也包含在本季度報告的其他部分，以及一些如“風險因素”等章節，包括從我們最近的“年度報告10-K”中引用到本季度報告中的部分。在某些情況下，您可以通過“可能”、“或許”、“將會”、“可能”、“將”、“應該”、“期望”、“打算”、“計劃”、“目標”、“預期”、“相信”、“估計”、“預測”、“規劃”、“潛在”、“持續進行”和“正在進行”等字詞來識別前瞻性陳述，或其他旨在表明關於未來的陳述。這些陳述涉及已知和未知的風險、不確定性和其他因素，可能導致我們的實際結果、活動水平、業績或成就與這些前瞻性陳述所表達或暗示的信息有實質差異。儘管我們相信我們對這份季度報告中的每份前瞻性陳述具有合理基礎，但我們警告您，這些陳述基於我們和我們對未來的期望的目前已知事實和因素的組合，我們不能確定。前瞻性陳述包括關於： 年度報告10-K中的或“年度報告”。在一些情況下，您可以通過“可能”、“或許”、“將會”、“可能”、“將”、“應該”、“期望”、“打算”、“計劃”、“目標”、“預期”、“相信”、“估計”、“預測”、“規劃”、“潛在”、“持續進行”和“正在進行”等字詞來識別前瞻性陳述，或其他旨在表明關於未來的陳述。
| ● | 關於我們的戰略性替代評估流程以及有關潛在交易的時間和成功，我們的計劃和預期； |
| ● | 我們普通股交易價格的波動性，以及我們在OTC Pink Open Market上交易普通股的能力，特別是在維持活躍的股票市場方面； |
| ● | 保留我們的高管、主要員工或董事的成功，或者所需的變更； |
| ● | 我們OLINVYk的銷售以及我們成功商業化其他可能獲得監管批准的產品候選人的能力； |
| ● | 我們的銷售、營銷和製造能力及策略； |
| ● | 我們產品候選品的任何正在進行或計劃中的臨床試驗和非臨床研究； |
| ● | 美國食品和藥物管理局對我們產品候選品可能要求的未來臨床試驗的程度； |
| ● | 我們能否利用目前的現金資源提供未來營業費用和資本支出，或在未來取得額外基金的能力； |
| ● | 我們產品候選品獲得和維持監管批准的時機和可能性； |
| ● | 我們開發和潛在商業化我們產品候選品的計劃； |
| ● | 我們產品候選品的臨床效用和潛在市場接受程度，尤其是考慮現有和未來的競爭； |
| ● | 我們產品候選品市場的規模； |
| ● | 我們所依賴的第三方表現，包括合約製造機構、供應商、合約研究機構、分銷商和物流供應商； |
| ● | 我們確定或收購具有重要商業潛力且符合我們商業目標的其他產品候選者的能力； |
| ● | 健康流行病和其他傳染性疾病爆發可能影響我們的運營，並可能對我們的業務和財務狀況造成重大不利影響的程度； |
ii
| ● | our intellectual property position and our ability to obtain and maintain patent protection and defend our intellectual property rights against third parties. |
You should refer to the “Risk Factors” section of this Quarterly Report and our Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
iii
PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
TREVENA, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
| September 30, 2024 | December 31, 2023 | ||||
Assets |
|
|
| |||
Current assets: |
|
|
| |||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | — | ||||
Prepaid expenses and other current assets | |
| | |||
Total current assets |
| |
| | ||
Restricted cash, net of current portion |
| |
| | ||
Property and equipment, net |
| |
| | ||
Right-of-use lease assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and stockholders’ deficit |
|
|
|
| ||
Current liabilities: |
|
|
|
| ||
Accounts payable, net | $ | | $ | | ||
Accrued expenses and other current liabilities |
| |
| | ||
Current portion of loans payable, net |
| |
| — | ||
Lease liabilities | | | ||||
Total current liabilities |
| |
| | ||
Loans payable, net |
| |
| | ||
Leases, net of current portion |
| |
| | ||
Warrant liability | |
| | |||
Total liabilities |
| |
| | ||
Stockholders’ deficit: |
|
|
|
| ||
Preferred stock—$ |
|
| ||||
Common stock—$ |
| |
| | ||
Additional paid-in capital |
| |
| | ||
Accumulated deficit |
| ( |
| ( | ||
Total stockholders’ deficit |
| ( |
| ( | ||
Total liabilities and stockholders’ deficit | $ | | $ | | ||
See accompanying notes to consolidated financial statements.
1
TREVENA, INC.
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share data)
Three Months Ended | Nine Months Ended |
| |||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
Revenue: |
|
|
|
| |||||||||
Product revenue | $ | ( | $ | | $ | | $ | | |||||
License and royalty revenue | | | | | |||||||||
Total revenue |
| |
| |
| |
| | |||||
Operating expenses: |
|
|
|
| |||||||||
Cost of goods sold | | | | | |||||||||
Selling, general and administrative |
| |
| |
| | | ||||||
Research and development |
| |
| |
| | | ||||||
Total operating expenses |
| |
| |
| |
| | |||||
Loss from operations |
| ( |
| ( |
| ( |
| ( | |||||
Other income (expense): |
|
|
|
|
|
| |||||||
Change in fair value of warrant liability |
| |
| |
| | | ||||||
Other income, net |
| |
| |
| | | ||||||
Interest income |
| |
| |
| | | ||||||
Interest expense |
| ( |
| ( | ( | ( | |||||||
Loss on foreign currency exchange | — | ( | ( | ( | |||||||||
Foreign income tax expense | ( | — | ( | ( | |||||||||
Total other income, net |
| |
| |
| |
| | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Per share information: |
|
|
|
|
| ||||||||
Net loss per share of common stock, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Weighted average common shares outstanding, basic and diluted |
| |
| |
| |
| | |||||
See accompanying notes to consolidated financial statements.
2
TREVENA, INC.
Consolidated Statements of Stockholders’ (Deficit) Equity (Unaudited)
(in thousands, except share data)
Stockholders' (Deficit) Equity | |||||||||||||||||
Accumulated | |||||||||||||||||
Common Stock | Other | ||||||||||||||||
Number | $ | Additional | Comprehensive | Total | |||||||||||||
of | Par | Paid-in | Accumulated | Income | Stockholders' | ||||||||||||
| Shares |
| Value |
| Capital | Deficit |
| (Loss) |
| (Deficit) Equity | |||||||
Balance, January 1, 2024 |
| | $ | | $ | | $ | ( | $ | — | $ | ( | |||||
Stock-based compensation expense |
| — | — | | — | — |
| | |||||||||
Exercise of pre-funded warrant | | — | — | — | — | — | |||||||||||
Net loss |
| — | — | — | ( | — |
| ( | |||||||||
Balance, March 31, 2024 |
| | $ | | $ | | $ | ( | $ | — | $ | ( | |||||
Stock-based compensation expense |
| — | — | | — | — |
| | |||||||||
Exercise of pre-funded warrant | | — | — | — | — | — | |||||||||||
Transfer of shares held in abeyance | | — | — | — | — | — | |||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
| | — | — | — | — |
| — | |||||||||
Net loss |
| — | — | — | ( | — |
| ( | |||||||||
Balance, June 30, 2024 |
| | $ | | $ | | $ | ( | $ | — | $ | ( | |||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
| | — | — | — | — | — | ||||||||||
Warrant amendment | — | — | | — | — | | |||||||||||
Net loss |
| — | — | — | ( | — | ( | ||||||||||
Balance, September 30, 2024 |
| | $ | | $ | | $ | ( | $ | — | $ | ( | |||||
Balance, January 1, 2023 |
| $ | $ | $ | ( | $ | $ | ||||||||||
Stock-based compensation expense |
| — | — | — | — | ||||||||||||
Unrealized loss on marketable securities |
| — | — | — | — | ( | ( | ||||||||||
Exercise of pre-funded warrants and related reclassification of warrant liability |
| — | — | ||||||||||||||
Net loss |
| — | — | — | ( | — | ( | ||||||||||
Balance, March 31, 2023 |
| $ | $ | $ | ( | $ | — | $ | |||||||||
Stock-based compensation expense |
| — | — | — | — | ||||||||||||
Issuance of common stock, net of issuance costs |
| — | — | ||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
| — | — | — | — | — | |||||||||||
Exercise of pre-funded warrants and related reclassification of warrant liability |
| — | — | — | |||||||||||||
Net loss |
| — | — | — | ( | ( | |||||||||||
Balance, June 30, 2023 |
| $ | $ | $ | ( | $ | — | $ | |||||||||
Stock-based compensation expense |
| — | — | — | — | ||||||||||||
Issuance of common stock, net of issuance costs |
| — | — | — | |||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
| — | — | — | — | — | |||||||||||
Net loss |
| — | — | — | ( | — | ( | ||||||||||
Balance, September 30, 2023 |
| | $ | | $ | | $ | ( | $ | — | $ | |
See accompanying notes to consolidated financial statements.
3
TREVENA, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine Months Ended | ||||||
September 30, | ||||||
| 2024 |
| 2023 | |||
Operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
| ||||
Depreciation |
| | | |||
Stock-based compensation |
| | | |||
Noncash interest expense on loan |
| | | |||
Change in fair value of warrant liability | ( | ( | ||||
Change in right-of-use asset | | | ||||
Changes in operating assets and liabilities: |
| |||||
Prepaid expenses and other assets |
| | ( | |||
Inventories | — | | ||||
Operating lease liabilities | ( | ( | ||||
Accounts payable, accrued expenses and other liabilities |
| ( | ( | |||
Net cash used in operating activities |
| ( |
| ( | ||
Investing activities: |
|
|
|
| ||
Purchases of property and equipment |
| — | ( | |||
Net cash used in investing activities |
| — |
| ( | ||
Financing activities: |
|
|
|
| ||
Proceeds from issuance of common stock, net of issuance costs |
| — | | |||
Proceeds from exercise of pre-funded warrants | — | | ||||
Finance lease payments | ( | ( | ||||
Proceeds from debt | | | ||||
Net cash provided by financing activities |
| |
| | ||
Net decrease in cash, cash equivalents and restricted cash |
| ( |
| ( | ||
Cash, cash equivalents and restricted cash—beginning of period |
| | | |||
Cash, cash equivalents and restricted cash—end of period | $ | | $ | | ||
Supplemental disclosure of cash flow information: |
|
|
|
| ||
Cash paid for interest | $ | — | $ | | ||
Reclassification of warrant liability upon exercise of pre-funded warrants | $ | — | $ | | ||
See accompanying notes to consolidated financial statements.
4
TREVENA, INC.
Notes to Unaudited Consolidated Financial Statements
September 30, 2024
1. Organization and Description of the Business
Trevena, Inc., or the Company, is a biopharmaceutical company focused on the development and commercialization of novel medicines for patients affected by central nervous system, or CNS, disorders. The Company operates in
Since commencing operations in 2007, the Company has devoted substantially all of its financial resources and efforts to commercialization and research and development, including nonclinical studies and clinical trials. The Company has never been profitable. In late 2017, the Company submitted a new drug application, or NDA, for OLINVYK® (OLINVYK) injection, or OLINVYK, to the United States Food and Drug Administration, or the FDA. In August 2020, the FDA approved the NDA for OLINVYK and the Company initiated commercial launch of OLINVYK in the first quarter of 2021. While OLINVYK remains available for purchase by customers, we have substantially eliminated commercial support for the product to preserve capital as we explore strategic alternatives.
Since its inception, the Company has incurred losses and negative cash flows from operations. At September 30, 2024, the Company had an accumulated deficit of $
2. Summary of Significant Accounting Policies
Reverse Stock Split
On August 13, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation to effect a -for-25 reverse stock split pursuant to which each 25 shares of the Company’s issued and outstanding common stock immediately prior to the effective time, which was 12:01 am ET on August 13, 2024, were combined into one share of the Company’s common stock. Fractional shares were not issued and stockholders who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split received an amount in cash equal to $
All of the share and per share amounts discussed in the accompanying consolidated financial statements have been adjusted to reflect the effect of this reverse split.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the ASC and Accounting Standards Updates, or ASUs, of the FASB. The Company’s functional currency is the U.S. dollar.
5
The consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s consolidated balance sheets as of September 30, 2024, its results of operations and its comprehensive loss for the nine months ended September 30, 2024 and 2023, its consolidated statements of stockholders’ equity for the period from January 1, 2024 to September 30, 2024 and for the period January 1, 2023 to September 30, 2023, and its consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2023. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies. The financial data and other information disclosed in these notes related to the nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.
Principles of Consolidation
In connection with the royalty-based financing agreement disclosed in Note 5, the Company established
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management used significant estimates in the following areas, among others: stock-based compensation expense, the determination of the fair value of stock-based awards, the fair value of common stock warrants, the accounting for research and development costs, accrued expenses, the recoverability of the Company’s net deferred tax assets and related valuation allowance, and the amortization of debt expenses. The financial data and other information disclosed in these notes are not necessarily indicative of the results to be expected for any future year or period. The Company bases its estimates on historical experience and also on assumptions that it believes are reasonable, however, actual results could significantly differ from those results.
Fair Value of Financial Instruments
The carrying amount of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, accounts payable, and accrued expenses approximate their fair values, given their short-term nature. Additionally, the Company believes the carrying value of the loan payable approximates its fair value as the interest rate is reflective of the rate the Company could obtain on debt with similar terms and conditions. Certain of the Company’s common stock warrants are carried at fair value, as disclosed in Note 3.
The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. See Note 3 for additional information.
Product Revenue
Product revenue is recognized at the point in time when our performance obligations with our customers have been satisfied. At contract inception, we determine if the contract is within the scope of ASC Topic 606 and then evaluate the contract using the following five steps: (i) identify the contract with the customer; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue at the point in time when the Company satisfies a performance obligation.
OLINVYK is sold to wholesalers in the US (collectively, “customers”). These customers subsequently resell OLINVYK generally to hospitals, ambulatory surgical centers and other purchasers of OLINVYK. We recognize revenue from OLINVYK sales at the point customers obtain control of the product, which generally occurs upon delivery.
6
Revenue is recorded at the transaction price, which is the amount of consideration we expect to receive in exchange for transferring products to a customer. We determine the transaction price based on fixed consideration in our contractual agreements, which includes estimates of variable consideration which are more fully described below. The transaction price is allocated entirely to the performance obligation to provide pharmaceutical products. In determining the transaction price, a significant financing component does not exist since the timing from when we deliver product to when the customers pay for the product is less than one year and the customers do not pay for product in advance of the transfer of the product.
Variable Consideration
The Company includes an estimate of variable consideration in its transaction price at the time of sale when control of the product transfers to the customer. Variable consideration includes distributor chargebacks, prompt payment (cash) discounts, distribution service fees and product returns.
The Company assesses whether or not an estimate of its variable consideration is constrained and has determined that the constraint does not apply, since it is probable that a significant reversal in the amount of cumulative revenue will not occur in the future when the uncertainty associated with the variable consideration is subsequently resolved. The Company’s estimates for variable consideration are adjusted as required at each reporting period for specific known developments that may result in a change in the amount of total consideration it expects to receive.
Distributor Chargebacks
When a product that is subject to a contractual price agreement is sold to a third party, the difference between the price paid to the Company by the wholesaler and the price under the specific contract is charged back to the Company by the wholesaler. Utilizing this information, the Company estimates a chargeback percentage for each product and records an allowance for chargebacks as a reduction to revenue when the Company records sales of the products. We reduce the chargeback allowance when a chargeback request from a wholesaler is processed. Reserves for distributor chargebacks are included in accounts receivable, net on the consolidated balance sheet.
Prompt Payment (Cash) Discounts
The Company provides customers with prompt payment discounts which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period. The Company’s prompt payment discount reserves are based on actual net sales and contractual discount rates. Reserves for prompt payment discounts are included in accounts receivable, net on the consolidated balance sheet.
Distribution Service Fees
The Company pays distribution service fees to its customers based on a fixed percentage of the product price. These fees are not in exchange for a distinct good or service and therefore are recognized as a reduction of the transaction price. The Company reserves for these fees based on actual net sales, contractual fee rates negotiated with the customer and the mix of the products in the distribution channel that remain subject to fees. Reserves for distribution service fees are included in accounts receivable, net on the consolidated balance sheet.
Product Returns
Generally, the Company’s customers have the right to return any unopened product during the eighteen (18) month period beginning six (6) months prior to the labeled expiration date and ending twelve (12) months after the labeled expiration date. The Company does not currently rely on industry data in its analysis of returns reserve. As the Company sold OLINVYK and established historical sales over a longer period of time (i.e., two to three years), the Company placed more reliance on historical purchasing, demand and return patterns of its customers when evaluating its reserves for product returns. OLINVYK has a forty-eight (48) month shelf life.
The Company recognizes the amount of expected returns as a refund liability, representing the obligation to return the customer’s consideration. Since the returns primarily consist of expired and short dated products that will not be resold, the Company does not record a return asset for the right to recover the goods returned by the customer at the
7
time of the initial sale (when recognition of revenue is deferred due to the anticipated return). Accrued product return estimates are recorded in accrued expenses and other current liabilities on the consolidated balance sheet.
3. Fair Value of Financial Instruments
ASC 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.
ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:
| ● | Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. |
| ● | Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. |
| ● | Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The following table presents fair value of the Company’s cash, cash equivalents, restricted cash and warrant liability as of September 30, 2024 and December 31, 2023 (in thousands):
| September 30, | Quoted Prices in Active Markets | Significant Other Observable Inputs | Unobservable Inputs | ||||||||
Description: | 2024 |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
Assets: |
| |||||||||||
Cash | $ | | $ | | $ | — | $ | — | ||||
Money Market Funds | | | — | — | ||||||||
Restricted Cash |
| |
| |
| — |
| — | ||||
Total assets measured and recorded at fair value | $ | | $ | | $ | — |
| $ | — | |||
Liabilities: |
|
|
|
|
|
|
|
| ||||
Warrant Liability |
| |
| — |
| — |
| | ||||
Total liabilities measured and recorded at fair value | $ | | $ | — | $ | — | $ | | ||||
8
December 31, | Quoted Prices in Active Markets | Significant Other Observable Inputs | Unobservable Inputs | |||||||||
Description: |
| 2023 |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets: |
| |||||||||||
Cash | $ | | $ | | $ | — | $ | — | ||||
Money Market Funds |
| | | — | — | |||||||
Restricted Cash | |
| |
| — |
| — | |||||
Total assets measured and recorded at fair value | $ | | $ | | $ | — | $ | — | ||||
Liabilities: |
|
|
|
|
|
|
|
| ||||
Warrant Liability |
| |
| — |
| — |
| | ||||
Total liabilities measured and recorded at fair value | $ | | $ | — | $ | — | $ | | ||||
| (1) | The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities. |
The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were transfers between Level 2 and Level 3 during the nine months ended September 30, 2024.
December 2023 Equity Offering and Warrant Issuance
The common stock warrants issued in connection with the Company’s private placement and warrant exercise transactions in December 2023 (collectively, the “December 2023 Offering”) were classified as liabilities at the time of issuance due to certain cash settlement adjustment features that were not deemed to be indexed to the Company’s stock. The warrant liability is remeasured each reporting period with the change in fair value recorded to other income (expense) in the consolidated statement of operations and comprehensive loss until the warrants are exercised, expired, reclassified or otherwise settled. The fair value of the warrant liability was determined using Level 3 inputs and was estimated using a Black-Scholes Option Pricing Model.
The assumptions used to estimate the fair value were as follows:
| |||||||
| September 30, 2024 |
| December 31, 2023 |
| |||
Expected term of warrants (in years) | | | |||||
Risk-free interest rate |
| | % | | % | ||
Expected volatility |
| | % | | % | ||
Dividend yield |
| — | % | — | % | ||
The following is a roll forward of the December 2023 Offering common stock warrant liability (in thousands):
| Warrant Liability | ||
Balance, December 31, 2023 | $ | | |
Change in fair value |
| ( | |
Balance, September 30, 2024 | $ | | |
9
Warrants
As of September 30, 2024, the Company had the following common stock warrants outstanding:
Classification | Warrants | Exercise Price | Expiration Date | ||||
December 2023 Offering Warrants | Liability | | $ | 4/19/2029 | |||
R-Bridge warrants | Equity | | $ | 7/3/2029 | |||
Other warrants | Equity | | $ | 12/23/2025 - 3/31/2027 | |||
|
4. Inventories
Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories. Inventory includes the cost of API, raw materials and third-party contract manufacturing and packaging services. Indirect overhead costs associated with production and distribution are recorded as period costs in the period incurred. Costs of drug product to be consumed in any current or future clinical trials will continue to be recognized as research and development expense.
The Company periodically evaluates the carrying value of inventory on hand using the same lower of cost or net realizable value approach as that used to initially value the inventory. Valuation adjustments may be required for slow-moving or obsolete inventory or in any situations where market conditions have caused net realizable value to fall below the carrying cost of the inventory.
Inventory consists of the following (in thousands):
| September 30, 2024 |
| December 31, 2023 | |||
Finished goods | $ | | $ | | ||
Inventory Valuation Adjustment | ( | ( | ||||
Total Inventories | $ | - | $ | - | ||
As of September 30, 2024 and December 31, 2023, the Company fully reserved finished goods to account for slow moving or obsolete inventory due to uncertainty of commercial activities and future expected OLINVYK sales. Subsequent disposals of product nearing product expiration and shipments of OLINVYK to customers result in a reduction to finished goods and a corresponding reduction to the inventory reserve. During the three months ended September 30, 2024, the Company disposed of $
5. Loans Payable
In April 2022, the Company, through its wholly owned subsidiary, Trevena SPV2 LLC (“SPV2”), entered into a royalty-based loan agreement (as amended, the “Loan Agreement”) with R-Bridge, pursuant to which the Company was eligible to receive up to $
10
The following table summarizes the impact of the Loan Agreement on the Company’s consolidated balance sheet as follows (in thousands):
| September 30, | ||
2024 | |||
Principal and accreted interest | $ | | |
Unamortized debt discount |
| ( | |
Carrying Value | $ | | |
Current portion of loans payable, net |
| ( | |
Loans payable, net | $ | | |
The term loans mature on the earlier of (i) the (15) year anniversary of the closing date in March 2022 and (ii) the date on which the license agreement with Nhwa expires. Repayment of any borrowings and related interest will be made quarterly beginning June 30, 2022. Repayment will be in the form of (i) a
In April 2022, the Company placed $
Repayments of all borrowings, interest and other related payments, under the Loan Agreement are secured by substantially all of the assets associated with the license agreement with Nhwa, the Chinese intellectual property related to OLINVYK, and deposit accounts established to hold amounts received on account for repayment of the borrowings and related interest under the Loan Agreement. The Loan Agreement contains certain customary affirmative and negative covenants and contains customary defined events of default, upon which any outstanding principal and unpaid interest shall be due on demand. At September 30, 2024, there were no events of default pursuant to the Loan Agreement and the Company was in compliance with all covenants. Interest expense is imputed based on the estimated loan repayment period, which takes into consideration estimated future revenue in the United States and China. Changes in estimates are recognized prospectively and may have a material impact on liability balance.
In connection with the first tranche borrowings in April 2022, the Company issued a warrant to R-Bridge to purchase
In July 2024, the Company amended the Loan Agreement (the “Amendment”) with respect to the second tranche for $
11
warrants that had been previously issued to R-Bridge as part of the Royalty Financing were amended to reduce the exercise price and to extend the exercise period to
The Company does not expect its existing balance of cash and cash equivalents as of September 30, 2024 to be sufficient to fund operations for one year after the date of this filing, and management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. In consideration of the foregoing, the Amendment was determined to be a troubled debt restructuring. In connection with this analysis, R-Bridge was deemed to have granted a concession as the calculated effective borrowing rate after the Amendment was lower than immediately prior to the Amendment. As a result, no gain was recognized for the concession since the Amendment is being accounted for on a prospective basis. Additionally, the estimated payments from future royalties are less than the carrying value of the Royalty Financing. Therefore, no interest expense will be recognized prospectively until such time as the estimated royalty payments are greater than the carrying value of the Royalty Financing. Third-party costs related to the Amendment of $
During the nine months ended September 30, 2024, the Company recognized interest expense of $
The accounting for the Loan Agreement requires the Company to make certain estimates and assumptions, particularly about future royalties under the license agreement with Nhwa and sales of OLINVYK in the United States and China. Such estimates and assumptions are utilized in determining the expected repayment term, amortization period of the debt discount, accretion of interest expense and classification between current and long-term portions of amounts outstanding. The Company amortizes the debt discount into interest expense over the expected term of the arrangement using the interest method based on projected cash flows. Similarly, the Company classifies as current debt for the Loan Agreement, amounts that are expected to be repaid during the succeeding twelve months after the reporting period end. However, the repayment of amounts due under the Loan Agreement is variable because the cash flows to be utilized for periodic payments is a function of amounts received by the Company with respect to the royalties and net product sales.
Accordingly, the estimates of the magnitude and timing of amounts to be available for debt service are subject to significant variability and thus, subject to significant uncertainty. Therefore, these estimates and assumptions are likely to change, which may result in future adjustments to the portion of the debt that is classified as a current liability, the amortization of debt discount and the accretion of interest expense. Other amounts that may become due and payable under the Loan Agreement, including amounts shared between the parties with respect to cash flows received in excess of pre-defined thresholds, are recognized as additional interest expense when they become probable and estimable. The amount of principal to be repaid in each of the five succeeding years is not fixed and determinable.
6. Stockholders’ (Deficit) Equity
Equity Offerings
Under its Amended and Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”), the Company was authorized to issue up to
December 2023 Equity Offering and Warrant Issuance
On December 28, 2023, the Company and a single investor entered into a securities purchase agreement whereby the Company issued
12
Concurrent with the execution of the securities purchase agreement above, the Company and the investor entered into an inducement agreement whereby the Company agreed to reduce the exercise price of
The Company received $
The warrants issued did not meet the requirements to be indexed to equity and equity classified and, as such, are classified as liabilities at fair value with changes in fair value recorded within other income (expense), net on the consolidated statements of operations and comprehensive loss.
Equity Incentive Plan
The estimated grant date fair value of the Company’s share-based awards is amortized on a straight-line basis over the awards’ service periods. Share based compensation expense recognized was as follows (in thousands):
Nine Months Ended September 30, | |||||||
| 2024 | 2023 |
| ||||
Research and development | $ | | $ | | |||
Selling, general and administrative |
| |
| | |||
Total stock-based compensation | $ | | $ | | |||
Stock Options
A summary of stock option activity and related information through September 30, 2024 follows:
Options Outstanding | |||||||
|
|
| Weighted | ||||
Average | |||||||
Weighted | Remaining | ||||||
Average | Contractual | ||||||
Number of | Exercise | Term | |||||
Shares | Price | (in years) | |||||
Balance, December 31, 2023 |
| | $ | | |||
Granted |
| | | ||||
Exercised |
| — | — | ||||
Forfeited/Cancelled |
| ( | ` | | |||
Balance, September 30, 2024 |
| | $ | | |||
Vested or expected to vest at September 30, 2024 |
| | $ | | |||
Exercisable at September 30, 2024 |
| | $ | | |||
The aggregate intrinsic value of options exercisable as of September 30, 2024, was
The Company uses the Black Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s common stock, assumptions related to the expected price volatility of the Company’s common stock, the period during which the options will be outstanding, the rate of return on risk free investments and the expected dividend yield for the Company’s stock.
13
The per-share weighted-average grant date fair value of the options granted to employees and directors during the nine months ended September 30, 2024 and 2023 was estimated at $
September 30, | ||||||
| 2024 |
| 2023 |
|
| |
Expected term of options (in years) |
|
|
|
| ||
Risk-free interest rate |
| | % | | % |
|
Expected volatility |
| | % | | % |
|
Dividend yield |
| — | % | — | % |
|
Restricted Stock Units (“RSUs”)
RSU-related expense is recognized on a straight-line basis over the vesting period. Upon vesting, these awards may be settled on a net-exercise basis to cover any required withholding tax with the remaining amount converted into an equivalent number of shares of common stock.
The following is a summary of changes in the status of non-vested RSUs during the nine months ended September 30, 2024:
|
| ||||
Weighted | |||||
Average | |||||
Number of | Grant Date | ||||
Awards | Fair Value | ||||
Non-vested at December 31, 2023 |
| | $ | | |
Granted |
| — | — | ||
Vested |
| ( | | ||
Forfeited/Cancelled |
| ( | | ||
Non-vested at September 30, 2024 |
| | $ | | |
For the nine months ended September 30, 2024, the Company recorded $
As of September 30, 2024, there was $
Shares Available for Future Grant
At September 30, 2024, the Company has the following shares available to be granted under its equity incentive plans:
|
| Inducement | ||
2023 Plan | Plan | |||
Available at December 31, 2023 |
| |
| |
Authorized |
| — | — | |
Granted |
| ( | — | |
Shares withheld for taxes not issued | | — | ||
Forfeited/Cancelled |
| | — | |
Available at September 30, 2024 |
| |
| |
14
Shares Reserved for Future Issuance
At September 30, 2024, the Company has reserved the following shares of common stock for issuance:
Stock options outstanding under 2013 Plan |
| |
Stock options outstanding under 2023 Plan | | |
Restricted stock units outstanding under 2013 Plan | | |
Stock options outstanding under Inducement Plan |
| |
Warrants outstanding |
| |
Total shares of common stock reserved for future issuance |
| |
7. Commitments and Contingencies
Leases
The Company leases office space in Chesterbrook, Pennsylvania and equipment. The Company’s principal office is located at 955 Chesterbrook Boulevard, Chesterbrook, Pennsylvania, where the Company currently leases approximately
Supplemental balance sheet information related to leases was as follows (in thousands):
| September 30, 2024 |
| December 31, 2023 | |||
Operating leases: |
|
|
|
| ||
Operating lease right-of-use assets |
| $ | |
| $ | |
| | |||||
| | |||||
$ | | $ | | |||
Finance leases: | ||||||
Property and equipment, at cost | $ | | $ | | ||
Accumulated depreciation | ( | ( | ||||
Property and equipment, net | | | ||||
| | |||||
— | | |||||
$ | | $ | | |||
15
The components of lease expense were as follows (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Operating lease costs: | ||||||||||||
Operating lease expense | $ | | $ | | $ | | $ | | ||||
Other income | ( | ( | ( | ( | ||||||||
Total operating lease costs | $ | | $ | ( | $ | | $ | | ||||
Finance lease costs: | ||||||||||||
Amortization of right-of-use assets | | | | |||||||||
Interest on lease liabilities | — | — | — | — | ||||||||
Total finance lease costs | $ | | $ | | $ | | $ | | ||||
Supplemental cash flow information related to leases was as follows (in thousands):
Nine Months Ended | ||||||
September 30, | ||||||
| 2024 |
| 2023 | |||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
| ||
Operating cash flows from operating leases | $ | ( | $ | ( | ||
Financing cash flows from finance leases | ( |
| ( | |||
Our lease liabilities will mature, as follows (in thousands):
| Operating Leases |
| Financing Leases | |||
2024 (October 1 - December 31) | | | ||||
2025 | | | ||||
2026 | | — | ||||
2027 | | — | ||||
2028 | | — | ||||
Total minimum lease payments | $ | | $ | | ||
Less: imputed interest | ( | — | ||||
Lease liability | $ | | $ | | ||
Per the terms of our sublease, we expect the following inflows (in thousands):
| Sublease | ||
2024 (October 1 - December 31) | | ||
2025 | | ||
2026 | | ||
2027 | | ||
2028 | | ||
Total minimum lease payments | $ | | |
16
Weighted average lease term and discount rates are as follows:
Nine Months Ended September 30, | ||||||
| 2024 |
| 2023 | |||
Weighted average remaining lease term (years) | ||||||
Operating leases | ||||||
Finance leases | ||||||
Weighted average discount rate | ||||||
Operating leases | ||||||
Finance leases | ||||||
8. Product Revenue
Performance Obligation
The Company’s performance obligation is the supply of finished pharmaceutical products to its customers. The Company’s customers consist of major wholesale distributors. The Company’s customer contracts generally consist of both a master agreement, which is signed by the Company and its customer, and a customer submitted purchase order, which is governed by the terms and conditions of the master agreement.
Revenue is recognized when the Company transfers control of its products to the customer, which occurs at a point-in-time, upon delivery.
The Company offers standard payment terms to its customers and has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing, since the period between when the Company transfers the product to the customer and when the customer pays for that product is one year or less. Taxes collected from customers relating to product revenue and remitted to governmental authorities are excluded from revenues. The consideration amounts due from customers as a result of product revenue are subject to variable consideration.
The Company offers standard product warranties which provide assurance that the product will function as expected and in accordance with specifications. Customers cannot purchase warranties separately and these warranties do not give rise to a separate performance obligation. The Company permits the return of product under certain circumstances, mainly upon at or near product expiration, instances of shipping errors or where product is damaged in transit. The Company accrues for the customer’s right to return as part of its variable consideration.
Sales-Related Deductions
The following table presents a roll forward of the major categories of sales-related deductions included in trade receivable allowances for the nine months ended September 30, 2024 (in thousands):
| Sales Discounts |
| Chargebacks |
| Fee for Service | ||||
Balance, January 1, 2024 | $ | | | | |||||
Provision related to sales recorded in the period |
| | | | |||||
Credits / payments during the period |
| — | ( | — | |||||
Adjustments related to prior period sales |
| — | — | — | |||||
Balance, September 30, 2024 | $ | | $ | | $ | | |||
As of September 30, 2024, the Company’s outstanding accounts receivable of $
17
9. License and Royalty Revenue
License and Commercialization Agreement with Pharmbio Korea Inc.
In April 2018, the Company entered into an exclusive license agreement with Pharmbio Korea Inc., or Pharmbio, for the development and commercialization of OLINVYK for the management of moderate to severe acute pain in South Korea. Under the terms of the agreement, the Company received an upfront, non-refundable cash payment of $
In accordance with the terms of the agreement, Pharmbio is solely responsible for all development and regulatory activities in South Korea. The parties have formed a Joint Development Committee with equal representation from the Company and Pharmbio to provide overall coordination and oversight of the development of OLINVYK in South Korea. The parties also agreed to form a Joint Manufacturing and Commercialization Committee at least
License Agreement with Jiangsu Nhwa Pharmaceutical Co. Ltd.
In April 2018, the Company also entered into an exclusive license agreement with Jiangsu Nhwa Pharmaceutical Co. Ltd., or Nhwa, for the development and commercialization of OLINVYK for the management of moderate to severe acute pain in China. Under the terms of this agreement, the Company received an upfront, non-refundable cash payment of $
In accordance with the terms of the agreement, Nhwa is solely responsible for all development and regulatory activities in China. The parties have formed a Joint Development Committee with equal representation from the Company and Nhwa to provide overall coordination and oversight of the development of OLINVYK in China. The parties also formed a Joint Manufacturing and Commercialization Committee to provide overall coordination and oversight of the manufacture and commercialization of OLINVYK in China.
18
For the three and nine months ended September 30, 2024 and 2023, license revenue in the accompanying consolidated statements of operations and comprehensive loss is comprised of the following:
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Pharmbio Korea Inc. | $ | — | $ | — | $ | — | $ | — | |||
Jiangsu Nhwa Pharmaceutical Co. Ltd. | — | — | — | | |||||||
Total license revenues | $ | — | $ | — | $ | — | $ | | |||
Jiangsu Nhwa Pharmaceutical Co. Ltd. | | | | | |||||||
Total royalty revenues | $ | | $ | | $ | | $ | | |||
Total license and royalty revenues | $ | | $ | | $ | | $ | | |||
Royalty revenue recorded for the three and nine months ended September 30, 2024, relates to royalties earned on OLINVYK sales by Nhwa in China and payable to R-Bridge.
License revenue recorded for the nine months ended September 30, 2023 related to the milestone payment that became payable by Nhwa upon regulatory approval of OLINVYK in China.
10. Net Loss Per Common Share
The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (in thousands, except share and per share data):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
Basic and diluted net loss per common share calculation: |
|
|
|
|
|
|
|
|
| ||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Weighted average common shares outstanding |
| |
| |
| |
| | |||||
Net loss per share of common stock - basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||
The following outstanding securities at September 30, 2024 and 2023 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive:
September 30, | ||||
| 2024 |
| 2023 | |
Options outstanding |
| | | |
RSUs outstanding | | | ||
Warrants outstanding |
| | | |
Total |
| |
| |
11. Subsequent Event
On October 5, 2024, in connection with certain cost-cutting measures, the Board of Directors of the Company approved the termination of employment, without cause, the Company’s President and Chief Executive Officer, the Company’s Executive Vice President, Chief Operating Officer and Chief Financial Officer and the Company’s Senior Vice President and Chief Medical Officer. The terminations did not involve any disagreement concerning the Company’s operations, policies or practices. In connection with the termination of employment without cause, severance, accrued bonuses and medical benefits in connection with their employment agreements in the amount of $
19
the Company accelerated the vesting of stock options, RSUs and performance stock units in accordance with their employment agreements on October 8, 2024.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2023, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on April 1, 2024. Unless the context otherwise requires, we use the terms “Trevena,” “Company,” “we,” “us” and “our” to refer to Trevena, Inc.
Overview
We are a biopharmaceutical company focused on developing and commercializing novel medicines for patients affected by central nervous system, or CNS, disorders. Our only commercialized product, OLINVYK® (oliceridine) injection, or OLINVYK, was approved by the United States Food and Drug Administration (the “FDA”), in August 2020. In October 2020, we announced that OLINVYK had received scheduling from the U.S. Drug Enforcement Administration (the “DEA”), and was classified as a Schedule II controlled substance. We initiated commercial launch of OLINVYK in the first quarter of 2021.
While OLINVYK remains available for purchase by customers, we have substantially eliminated commercial support for the product to preserve capital as we explore strategic alternatives. Potential strategic alternatives that may be explored or evaluated include, but are not limited to, a sale, license, divestiture or discontinuation of U.S. commercial sales of OLINVYK; or a sale, merger or wind down of the Company. There can be no assurance regarding the schedule for completion of the strategic review process, that this strategic review process will result in the Company pursuing any transaction or that any transaction, if pursued, will be completed.
OLINVYK is an opioid agonist for use in adults for the management of acute pain severe enough to require an intravenous opioid analgesic and for whom alternative treatments are inadequate. We are also developing a pipeline of product candidates based on our proprietary product platform, including TRV045 for diabetic neuropathic pain, epilepsy, and seizure disorders; and TRV734 for moderate-to-severe acute and chronic pain and opioid use disorders.
We are also developing TRV045, our novel sphingosine-1-phosphate, or S1P, receptor modulator that may offer a new, non-opioid approach to managing chronic pain, as well as for treating epilepsy and seizure disorders. TRV045 targets the S1P subtype 1 receptor and data suggests that TRV045 may effectively reverse neuropathic pain and reduce seizure risk without the immune-suppressing activity, or lymphopenia, observed with currently approved therapeutics targeting S1P receptors. In September 2023 we announced positive data from two clinical proof-of-concept studies. TRV045 demonstrated statistically significant analgesic effect in a capsaicin-induced model of neuropathic pain. TRV045 also demonstrated a statistically significant evidence of CNS activity as measured by resting state EEG power spectral analysis in a transcranial magnetic stimulation, or TMS, study. Subjects in both studies were enrolled outside of the United States, and the studies were not conducted under the Investigational New Drug Application for TRV045.
Since our incorporation in late 2007, our operations have included organizing and staffing our company, business planning, raising capital, discovering and developing our product candidates, and establishing our intellectual property portfolio. We have financed our operations primarily through private placements and public offerings of our equity securities and debt borrowings. As of September 30, 2024, we had an accumulated deficit of $605.6 million. Our net loss was $17.5 million and $23.8 million for the nine months ended September 30, 2024 and 2023, respectively. Our ability to become and remain profitable depends on our ability to generate revenue or sales. We do not expect to generate significant revenue or sales unless and until we or a collaborator successfully commercialize OLINVYK or obtain marketing approval for and successfully commercialize TRV045 or TRV734.
We expect to incur significant expenses and operating losses for the foreseeable future even as we eliminate commercial support for OLINVYK. We will need to obtain substantial additional funding in connection with our continuing operations. We will seek to fund our operations through the sale of equity, debt financings or other sources,
20
including potential strategic transactions, including collaborations. However, we may be unable to raise additional funds or enter into such other agreements when needed on favorable terms, or at all. If we fail to raise capital or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue our operations, development programs, and/or any future commercialization efforts.
Recent Developments
Reverse Stock Split
Effective as of 12:01 am ET on August 13, 2024 (the “Effective Time”), the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-25 reverse stock of the Company’s common stock (the “Reverse Stock Split”). The Company’s common stock began trading on a split-adjusted basis when the market opened on August 13, 2024.
As a result of the Reverse Stock Split, each 25 shares of the Company’s issued and outstanding common stock immediately prior to the Effective Time were combined into one validly issued, fully paid and non-assessable share of common stock. In addition, proportional adjustments were made to all outstanding securities or other rights convertible or exercisable into shares of the Company’s common stock, including all options and warrants. The Reverse Stock Split did not have any effect on the stated par value of the Company’s common stock. No fractional shares were issued in connection with the Reverse Stock Split, and stockholders who would otherwise be entitled to a fractional share received a proportional cash payment. All of the shares and per share amounts discussed in this Quarterly Report on Form 10-Q have been adjusted to reflect the effect of the Reverse Stock Split.
Nasdaq Delisting
On October 4, 2024, the Company received notice that the Nasdaq Hearings Panel (the “Panel”) had determined to delist the Company’s common stock from The Nasdaq Stock Market LLC (“Nasdaq”) due to the Company’s failure to comply with the minimum stockholder’s equity requirement under Nasdaq Listing Rule 5550(b)(1) (the “Equity Standard Rule”). As previously disclosed, the Panel had provided the Company until October 2, 2024, to regain compliance with the Equity Standard Rule. Trading in the Company’s common stock was suspended on Nasdaq effective with the open of business on October 8, 2024 (the “Delisting”). Subsequent to the Delisting, the Company’s common stock began trading on the Pink Open Market operated by the OTC Markets Group, Inc. (commonly referred to as the “pink sheets”) on October 8, 2024 under the trading symbol “TRVN.”
Transition of Executive Officers
On October 5, 2024, in connection with certain cost-cutting measures, the Board of Directors of the Company approved the termination of employment, without cause, of Carrie L. Bourdow, the Company’s President and Chief Executive Officer; Barry Shin, the Company’s Executive Vice President, Chief Operating Officer and Chief Financial Officer; and Mark A. Demitrack, MD, the Company’s Senior Vice President and Chief Medical Officer. The terminations did not involve any disagreement concerning the Company’s operations, policies or practices.
Also, on October 5, 2024, the Company entered into consulting agreements with Mr. Shin and Dr. Demitrack pursuant to which Mr. Shin and Dr. Demitrack will provide assistance, advice and expertise on corporate strategy, commercial and pipeline assets and other business topics as directed by the Company. Ms. Bourdow continues to serve as Chairman of the Board, Acting Chief Executive Officer and principal executive officer; Mr. Shin continues to serve as Acting Chief Operating Officer and Chief Financial Officer, principal financial officer and principal accounting officer; and Dr. Demitrack continues to serve as Acting Chief Medical Officer, following their respective terminations of employment. Following these cost-cutting measures, the Company had four full-time employees remaining.
On November 6, 2024, the Company entered into a consulting agreement with Ms. Bourdow in her capacity as Acting Chief Executive Officer and principal executive officer, pursuant to which Ms. Bourdow will receive cash compensation at an hourly rate generally consistent with her prior compensation levels for services to the Company.
21
Resignation of Certain Directors
On November 5, 2024, in connection with ongoing cost-cutting measures, Mark Corrigan, M.D.; Marvin H. Johnson, Jr.; Jake R. Nunn; and Anne M. Phillips, M.D informed the Company of his or her intent to resign from the Board and the committees thereof, effective as of November 5, 2024. None of these resignations was related to any disagreement with the Company over any of its operations, policies or practices.
Upon the effectiveness of the resignations, the Board decreased the size of the Board to three members, with Carrie Bourdow continuing to serve as Chairman of the Board, and Scott Braunstein, M.D. and Barbara Yanni continuing to serve as directors of the Company.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as the reported revenues and expenses during the reported periods. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are more fully described in the notes to our audited consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K. However, we believe that the following accounting policies are important to understanding and evaluating our reported financial results, and we have accordingly included them in this discussion.
Product Revenue
We account for product revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC 606). We perform the following five steps to recognize revenue under ASC 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only recognize revenue when we believe that it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services that will be transferred to the customer.
We sell OLINVYK to wholesalers in the US (collectively, “customers”). These customers subsequently resell our products generally to hospitals, ambulatory surgical centers and other purchasers of OLINVYK. We recognize revenue from OLINVYK sales at the point customers obtain control of the product, which generally occurs upon delivery. The transaction price that is recognized as revenue for products includes an estimate of variable consideration which is more fully described below.
Variable Consideration
We include an estimate of variable consideration in our transaction price at the time of sale when control of the product transfers to the customer. Variable consideration includes distributor chargebacks, prompt payment (cash) discounts, distribution service fees and product returns.
We assess whether or not an estimate of our variable consideration is constrained based on the probability that a significant reversal in the amount of cumulative revenue may occur in the future when the uncertainty associated with the variable consideration is subsequently resolved. Actual amounts of consideration ultimately received may vary from
22
our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect product sales and earnings in the period such variances become known.
Distributor Chargebacks
When a product is sold to a third party that is subject to a contractual price agreement, the difference between the price paid to us by the wholesaler and the price under the specific contract is charged back to us by the wholesaler. Utilizing this information, we estimate a chargeback percentage for each product and record an allowance for chargebacks as a reduction to revenue when we record our sale of the products. We reduce the chargeback allowance when a chargeback request from a wholesaler is processed. Reserves for chargebacks are included in accounts receivable, net on the consolidated balance sheet.
Product Returns
Generally, our customers have the right to return any unopened product during the eighteen (18) month period beginning six (6) months prior to the labeled expiration date and ending twelve (12) months after the labeled expiration date. We do not currently rely on industry data in our analysis of returns reserve. As we sold OLINVYK and established historical sales over a longer period of time (i.e., two to three years), we placed more reliance on historical purchasing, demand from hospitals and ambulatory surgical centers, return patterns of our customers and the amount of OLINVYK held by wholesalers, when evaluating our reserves for product returns. OLINVYK has a forty-eight (48) month shelf life.
We recognize the amount of expected returns as a refund liability, representing the obligation to return the customer’s consideration. Since the returns primarily consist of expired and short dated products that will not be resold, we do not record a return asset for the right to recover the goods returned by the customer at the time of the initial sale (when recognition of revenue is deferred due to the anticipated return). Accrued product return estimates are recorded in accrued expenses and other current liabilities on the consolidated balance sheet.
Stock-Based Compensation
We have applied the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or ASC 718, to account for stock-based compensation for employees. We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant.
We have equity incentive plans under which various types of equity-based awards including, but not limited to, incentive stock options, non-qualified stock options, restricted stock unit awards and performance stock unit awards, may be granted to employees, non-employee directors, and non-employee consultants. We also have an inducement plan under which various types of equity-based awards, including non-qualified stock options and restricted stock unit awards, may be granted to new employees.
We recognize compensation expense on a straight-line basis over the requisite service period for all stock-based awards based on the estimated grant-date fair values. For restricted stock unit awards to employees, the fair value is based on the closing price of our common stock on the date of grant. The fair value of stock options is determined using the Black-Scholes option pricing model. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention of paying cash dividends. We elected an accounting policy to record forfeitures as they occur.
See Note 6, included in Part 1, Item 1 of this Quarterly Report, for a discussion of the assumptions we used in determining the grant date fair value of options granted under the Black-Scholes option pricing model, as well as a summary of the stock option activity under our stock-based compensation plan for all years presented.
Loans Payable
In April 2022, the Company’s wholly owned subsidiary, SPV2, entered into a Loan Agreement with R-Bridge, pursuant to which the Company may be eligible to receive up to $40.0 million in term loan borrowings. Term loan borrowings were to be advanced in three tranches. The first tranche of $15.0 million was advanced in April 2022. The second tranche of $10.0 million was to become available upon achievement of either a commercial or financing
23
milestone as set forth in the Loan Agreement. The third tranche of $15.0 million was received in August 2023 upon the first commercial sale of OLINVYK in China.
In July 2024, we entered into an amendment to the Loan Agreement with R-Bridge with respect to the second tranche of term loan borrowings (the “Amendment”). In connection with the Amendment, the Company received a $2.0 million payment from R-Bridge and is eligible to receive an additional $8.0 million based upon achievement of certain US partnering and US commercial milestones for OLINVYK. In addition, the outstanding liability in connection with the Royalty Financing was reduced by $10.0 million. Also as part of the Amendment, (i) certain OLINVYK Chinese IP that had been previously pledged to R-Bridge under the Royalty Financing was transferred to R-Bridge, (ii) warrants that had previously been issued to R-Bridge as part of the Royalty Financing were amended to reduce the exercise price and to extend the exercise period to five years from the date of the Amendment, and (iii) the existing cap on US royalty payable to R-Bridge was increased from $10.0 million to $12.0 million (with no minimum or fixed payments).
See Note 5, included in Part 1, Item 1 of this Quarterly Report, for a discussion of the accounting treatment of the Amendment as a troubled debt restructuring.
Under the relevant accounting guidance, the Loan Agreement has been accounted for as a debt instrument that will be amortized using the effective interest method over the life of the arrangement. In order to determine the amortization of the liability, we are required to estimate the total amount of future royalty payments to be paid to R-Bridge. Consequently, we impute interest on the unamortized portion of the liability and record interest expense related to the Loan Agreement accordingly. Due to the significant judgments and factors related to the estimates of future payments under the Loan Agreement, there are significant uncertainties surrounding the amount and timing of future payments and the related interest expense we recognize. We record non-cash interest expense within our consolidated statements of operations over the term of the Loan Agreement.
Recent Accounting Pronouncements
None.
Results of Operations
Comparison of the three and nine months ended September 30, 2024 and 2023 (in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
| 2024 |
| 2023 |
| Change |
| 2024 |
| 2023 |
| Change |
| |||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Product revenue | $ | (21) | $ | 1 | $ | (22) | $ | 13 | $ | 28 | $ | (15) | |||||||
License and royalty revenue | 304 | 179 | 125 | 615 | 3,179 | (2,564) | |||||||||||||
Total revenue | 283 | 180 | 103 | 628 | 3,207 | (2,579) | |||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cost of goods sold | 114 | 175 | (61) | 305 | 389 | (84) | |||||||||||||
Selling, general and administrative |
| 3,880 |
| 4,572 |
| (692) |
| 13,323 |
| 15,799 |
| (2,476) | |||||||
Research and development |
| 1,866 |
| 4,260 |
| (2,394) |
| 8,958 |
| 12,160 |
| (3,202) | |||||||
Total operating expenses |
| 5,860 |
| 9,007 |
| (3,147) |
| 22,586 |
| 28,348 |
| (5,762) | |||||||
Loss from operations |
| (5,577) |
| (8,827) |
| 3,250 |
| (21,958) |
| (25,141) |
| 3,183 | |||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Change in fair value of warrant liability |
| 441 |
| 682 |
| (241) |
| 4,624 |
| 2,385 |
| 2,239 | |||||||
Other income, net |
| 38 |
| 61 |
| (23) |
| 145 |
| 118 |
| 27 | |||||||
Interest income |
| 190 |
| 377 |
| (187) |
| 781 |
| 989 |
| (208) | |||||||
Interest expense |
| (1) |
| (210) |
| 209 |
| (1,035) |
| (1,778) |
| 743 | |||||||
Loss on foreign currency transactions | — | (13) | 13 | (4) | (34) | 30 | |||||||||||||
Foreign income tax expense | (30) | — | (30) | (61) | (300) | 239 | |||||||||||||
Total other income, net |
| 638 |
| 897 |
| (259) |
| 4,450 |
| 1,380 |
| 3,070 | |||||||
Net Loss | $ | (4,939) | $ | (7,930) | $ | 2,991 | $ | (17,508) | $ | (23,761) | $ | 6,253 | |||||||
24
Revenue
We derive our revenue from providing OLINVYK to our customers and activities pursuant to our licensing agreements related to the development and commercialization of OLINVYK in China and South Korea. For the three months ended September 30, 2024, we recorded negative $21,000 in product revenue due to a returns reserve adjustment of $26,000. For the nine months ended September 30, 2024, we recorded $13,000 in product revenue from the shipment of drug product to wholesalers. For the three and nine months ended September 30, 2023, we recorded $1,000 and $28,000, respectively, in product revenue from the shipment of drug product to wholesalers.
License and royalty revenue recorded for the three and nine months ended September 30, 2024, relates to royalties earned on OLINVYK sales by Nhwa in China and payable to R-Bridge. License and royalty revenue for the three months ended September 30, 2023 relates to royalties earned on OLINVYK sales by Nhwa in China. License and royalty revenue for the nine months ended September 30, 2023 relates to the milestone payment that became payable by Nhwa upon regulatory approval of OLINVYK in China.
As noted, in 2022 we recorded a returns reserve adjustment of $0.4 million for expected returns from our wholesalers. This adjustment was due, in part, to feedback we received in October 2022 from one of our wholesalers indicating that the wholesaler intended to return a significant portion of its supply of OLINVYK. As a result, we evaluated our returns reserves and updated our estimates to reflect this expected return, as well as potential increased probability of returns from our other wholesalers. In the fourth quarter of 2023, we recorded a returns reserve adjustment of $0.1 million for expected returns from our wholesalers. In the third quarter of 2024, we recorded a returns reserve adjustment of $26,000 for expected returns from our wholesalers. These adjustments were due, in part, on our evaluation of historical purchasing trends, the remaining expiry period of inventory held by our wholesalers and the potential increase in the probability of returns from our wholesalers.
As further background on our methodology with respect to returns reserves, every quarter since our launch of OLINVYK, we review the amounts of OLINVYK held at our wholesalers to evaluate the likelihood of expected product returns. In our analysis, we consider a range of factors including the level of sales from our wholesalers to hospitals, ambulatory surgical centers (“ASCs”) and other purchasers of OLINVYK, which our wholesalers report to us on a regular basis, as well as any new customer contracts. Based on information from our wholesalers, sales from our wholesalers to hospitals and ASCs, which we refer to as commercial sell through, have occurred, at a low level, every quarter since our commercial launch in February 2021. Commercial sell through of OLINVYK from our wholesalers to hospitals and ASCs for the three and nine months ended September 30, 2024 was approximately $16,800 and $65,600, respectively. Commercial sell through from our wholesalers to hospitals and ASCs for the three and nine months ended September 30, 2023 was approximately $20,300 and $58,700, respectively.
In our returns reserve analysis, we also consider feedback from our wholesalers, group purchasing organizations and users of OLINVYK, as well as additional factors such as new safety data, or clinical or health economic data for OLINVYK that may affect future adoption and sales trends. Examples include OLINVYK data we announced in July 2023 with respect to reduced cost per admission for hospitals and reduced average length of hospital stay, for OLINVYK-treated patients compared to matched patients treated with other IV opioids. We also consider factors that may negatively affect sales of OLINVYK, such as the price of OLINVYK compared to conventional IV opioids, which are generally generic and available at a lower initial cost relative to OLINVYK. Other factors may include the public perception of opioids in general, as well as the FDA’s and HHS’ policy initiatives that may limit the promotion and marketing of opioids.
We incorporate these factors as we consider the need for any adjustment for slow-moving or obsolete product on a quarterly basis.
25
Gross product revenue, and adjustments applied to calculate net product revenue, are set forth below (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Product revenue, gross | $ | 16 | $ | 10 | $ | 65 | $ | 44 | |||
GTN Accruals | |||||||||||
Chargebacks and cash discounts | (2) | (1) | (9) | (3) | |||||||
Returns | 1 | (7) | (2) | (8) | |||||||
Other rebates, discounts and adjustments | (4) | (1) | (9) | (5) | |||||||
Total GTN Accruals | (5) | (9) | (20) | (16) | |||||||
Product revenue | 11 | 1 | 45 | 28 | |||||||
Adjustments to prior period accruals | |||||||||||
Returns reserve | (32) | — | (32) | — | |||||||
Other GTN accrual adjustments | — | — | — | — | |||||||
Product revenue, net | $ | (21) | $ | 1 | $ | 13 | $ | 28 | |||
Cost of goods sold
Cost of goods sold for product revenue includes third party logistics costs, shipping costs, and indirect overhead costs which are recorded as period costs in the period incurred.
The following table provides information regarding cost of goods sold during the periods indicated, including percent changes (dollar amounts in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2024 | 2023 | % Increase (Decrease) | 2024 | 2023 | % Increase (Decrease) | |||||||||
Cost of goods sold | $ | 114 | $ | 175 | (35%) | $ | 305 | $ | 389 | (22%) | ||||
Cost of goods sold decreased by less than $0.1 million for the three and nine months ended September 30, 2024, compared to the same periods in 2023, due to a reduction in indirect overhead costs.
Selling, general and administrative expense
Selling, general and administrative expenses consist principally of salaries and related costs for personnel in our executive, finance, commercial, and other administrative areas, including expenses associated with stock‑based compensation and travel. Other selling, general and administrative expenses include professional fees for legal, field sales organization, medical affairs, market research, consulting, and accounting services.
Selling, general and administrative expenses for the three months ended September 30, 2024, decreased by $0.7 million, or 15%, as compared to the same period in 2023 and decreased by $2.5 million, or 16%, for the nine months ended September 30, 2024, as compared to the same period in 2023. The decrease was primarily related to a reduction in full time employees and a reduction in marketing activities.
Research and development expense
Research and development expenses consist primarily of costs incurred for research and the development of our product candidates, including costs associated with the regulatory approval process. In addition, research and development expenses include salaries and related costs for our research and development personnel and stock-based compensation expense and travel expenses for such individuals. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than
26
those in earlier stages of clinical development, primarily due to the increased size, complexity and duration of later-stage clinical trials.
Research and development costs are expensed as incurred and are tracked by discovery program and subsequently by product candidate once a product candidate has been selected for development. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.
Research and development expenses decreased by $2.4 million, or 56%, for the three months ended September 30, 2024, as compared to the same period in 2023, and decreased by $3.2 million, or 26%, for the nine months ended September 30, 2024, as compared to the same period in 2023. The following table summarizes our research and development expenses (in thousands):
Three Months Ended |
| Nine Months Ended | ||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
TRV045 | $ | 466 | $ | 2,596 | $ | 4,177 | $ | 6,824 | ||||
OLINVYK |
| 87 |
| 132 |
| 503 |
| 479 | ||||
TRV250 |
| — |
| 26 |
| 4 |
| 2 | ||||
TRV027 |
| 6 |
| 31 |
| 47 |
| 116 | ||||
Personnel-related costs | 848 | 758 | 2,449 | 2,631 | ||||||||
Other research and development |
| 459 |
| 717 |
| 1,778 |
| 2,108 | ||||
$ | 1,866 | $ | 4,260 | $ | 8,958 | $ | 12,160 | |||||
The decrease in research and development expenses incurred during the three and nine months ended September 30, 2024 compared to the same period in 2023 was primarily driven by decreased spend on TRV045 studies that were completed in 2023 and due to lower personnel costs.
Total other income, net
Total other income, net for the three months ended September 30, 2024 decreased by $0.3 million as compared to the same period in 2023. The decrease was driven by a $0.2 million decrease in the change in fair value of the warrant liability and a $0.2 million decrease in interest income ended September 30, 2024. Total other income, net for the nine months ended September 30, 2024 increased by $3.1 million as compared to the same period in 2023. For the nine months ended September 30, 2024, the increase was driven by a $2.2 million increase in the change in fair value of the warrant liability and a $0.7 million decrease in interest expense.
Liquidity and Capital Resources
We have historically funded substantially all of our operations through the sale and issuance of our equity securities, debt securities and borrowings under debt facilities. We have also received an aggregate of $12.1 million pursuant to licensing agreements for the development and commercialization of OLINVYK in China and South Korea.
At September 30, 2024, we had an accumulated deficit of $605.6 million, working capital of $9.6 million, cash and cash equivalents of $13.5 million, and restricted cash of $0.6 million. In November 2020, we filed a $250.0 million shelf registration statement, which includes our at-the-market program with H.C. Wainwright & Co., LLC., of which there was approximately $33.7 million of available capacity as of September 30, 2024, subject to the restrictions set forth in General Instruction I.B.6 of Form S-3.
Our primary use of cash is to fund operating expenses, which consist of research and development expenditures, commercialization expenditures, and other selling, general and administrative expenditures. We anticipate these expenses to decrease in 2024 as we substantially eliminate commercial support of OLINVYK. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in accounts payable and accrued expenses.
Net cash used in operating activities was $21.1 million and $27.1 million for the nine months ended September 30, 2024 and 2023, respectively. We incurred net losses of $17.5 million and $23.8 million for those same periods.
27
Our success is dependent on finding a commercial partner for OLINVYK, continuing to advance or partner our other product candidates, including TRV045 and obtaining adequate capital to fund operating losses until we become profitable. We expect that our existing balance of cash and cash equivalents as of September 30, 2024 will not be sufficient to fund the Company’s operating expenses and capital expenditure requirements for one year after the date of this filing and therefore management has concluded that substantial doubt exists about our ability to continue as a going concern.
Cash Flows
The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):
September 30, | |||||||
| 2024 |
| 2023 |
| |||
Net cash (used in) provided by: |
|
|
|
|
| ||
Operating activities | $ | (21,106) | $ | (27,050) | |||
Investing activities |
| — |
| (20) | |||
Financing activities |
| 1,675 |
| 22,282 | |||
Net decrease in cash, cash equivalents and restricted cash | $ | (19,431) | $ | (4,788) | |||
Net cash used in operating activities
Net cash used in operating activities was $21.1 million for the nine months ended September 30, 2024 as compared to $27.1 million for the nine months ended September 30, 2023. Net cash used in operating activities for the nine months ended September 30, 2024 includes a $17.5 million net loss as compared to $23.8 million for the prior period. The net loss was $6.3 million lower due to a decrease in selling, general and administrative expenses from the reduction of OLINVYK commercial activities, lower research and development expenses due to TRV045 studies that were completed in 2023, and lower personnel costs.
Net cash used in investing activities
Net cash used in investing activities was $0.0 million for the nine months ended September 30, 2024, as compared to $20,000 for the nine months ended September 30, 2023. The decrease is due to capital expenditures related to cybersecurity and technology updates in 2023.
Net cash provided by financing activities
Net cash provided by financing activities was $1.7 million for the nine months ended September 30, 2024, which was primarily due proceeds from the Amendment, partially offset by finance lease payments.
Net cash provided by financing activities was $22.3 million for the nine months ended September 30, 2023, which was due to $14.8 million of net proceeds from the Loan Agreement and $7.5 million from the HCW ATM Program.
Operating and Capital Expenditure Requirements
We have not achieved profitability since our inception, and we expect to continue to incur net losses and negative cash flows from operations for the foreseeable future. We expect our cash expenditures to continue to be significant in the near term as we continue to make OLINVYK available for purchase by customers, and continue to advance TRV045. Over the next twelve months, we anticipate that our total operating expenses will decrease compared to the previous twelve months.
28
We believe that our cash and cash equivalents as of September 30, 2024, together with interest thereon, will not be sufficient to fund the Company’s operating expenses and capital expenditure requirements for one year after the date of this filing. Our anticipated operating expenses involve significant risks and uncertainties and are dependent on our current assessment of the extent and costs of activities required to support our operations and advance our other product candidates. In the future, we anticipate that we will need to raise substantial additional financing to fund our operations. To meet these requirements, we may seek to sell equity or convertible securities in public or private transactions that may result in significant dilution to our stockholders. We may offer and sell shares of our common stock under the existing registration statement or any registration statement we may file in the future. If we raise additional funds through the issuance of convertible securities, these securities could have rights senior to those of our common stock and could contain covenants that restrict our operations.
Ultimately, there can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all. Our future capital requirements will depend on many factors, including:
| ● | our ability to successfully find a commercial partner for OLINVYK and commercialize our other product candidates; |
| ● | our ability to generate sales and other revenues from OLINVYK or any of our other product candidates, once approved, including setting an acceptable price for and obtaining adequate coverage and hospital formulary acceptance of such products; |
| ● | the size and growth potential of the markets for OLINVYK and our ability to serve those markets; |
| ● | the scope, progress, results and costs of researching and developing our product candidates or any future product candidates, both in the United States and in territories outside the United States; |
| ● | the number and development requirements of any other product candidates that we may pursue; |
| ● | our ability to enter into collaborative agreements for the development and/or commercialization of our product candidates, including for OLINVYK; |
| ● | the costs, timing, and outcome of any regulatory review of OLINVYK and any future product candidates, both in the United States and in territories outside the United States; |
| ● | the costs, timing, and extent of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; |
| ● | the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; |
| ● | any product liability or other lawsuits related to our products or us; |
| ● | the expenses needed to attract and retain skilled personnel; and |
| ● | the costs involved in preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending our intellectual property-related claims, both in the United States and in territories outside the United States. |
Please see “Risk Factors” section of this Quarterly Report and our Annual Report for additional risks associated with our substantial capital requirements.
Other Commitments
In the course of normal business operations, we have agreements with contract service providers to assist in the performance of our research and development and manufacturing activities. We can elect to discontinue the work under these agreements at any time. We also could enter into additional collaborative research, contract research,
29
manufacturing and supplier agreements in the future, which may require upfront payments and even long-term commitments of cash.
We have no material non-cancelable purchase commitments with contract manufacturers or service providers as we have generally contracted on a cancelable basis.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024, the end of the period covered by this Quarterly Report.
Based on our evaluation, our CEO and CFO concluded that our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the date of our Quarterly Report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
30
PART II
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
Our business is subject to numerous risks. You should carefully consider the following risks and all other information contained in this Quarterly Report, as well as general economic and business risks, together with any other documents we file with the SEC. If any of the following events actually occur or risks actually materialize, it could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our common stock to decline.
There have been no material changes to our risk factors disclosed in our Annual Report for the year ended December 31, 2023, with the exception of the following risk factors. The risk factors disclosed in our Annual Report are incorporated herein by reference.
Because our common stock is quoted on the OTC Pink Open Market, instead of a national securities exchange, our stockholders may experience significant volatility in the market price of our stock and have difficulty selling their shares.
Our common stock is currently quoted on the OTC Pink Open Mark (the “OTC Pink”), under the ticker symbol “TRVN”. The OTC Pink is a regulated quotation service that displays real-time quotes and last sale prices in over-the-counter securities. Trading in shares quoted on the OTC Pink is often thin and characterized by volatility. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume and market conditions. As a result, there may be wide fluctuations in the market price of the shares of our common stock for reasons unrelated to operating performance, and this volatility, when it occurs, may have a negative effect on the market price for our securities. Moreover, the OTC Pink is not a stock exchange, and trading of securities on this platform is more sporadic than the trading of securities listed on a national quotation system or stock exchange. Accordingly, our stockholders may not be able to realize a fair price of their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our common stock improves.
An active trading market for our common stock may not continue to develop or be sustained.
Although our common stock is listed on the OTC Pink Open Market, we cannot assure you that an active, liquid trading market for our shares will continue to develop or be sustained. If an active market for our common stock does not continue to develop or is not sustained, it may be difficult for you to sell shares quickly or without depressing the market price for the shares or to sell your shares at all.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, modified or terminated a Rule b-1 trading
31
arrangement or non-Rule b-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
32
ITEM 6. EXHIBITS
The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.
Exhibit |
| Description |
10.1 | Separation Agreement and General Release, dated October 5, 2024, by and between the Company and Carrie L. Bourdow (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 10, 2024). | |
10.2 | Separation Agreement and General Release, dated October 5, 2024, by and between the Company and Barry Shin (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 10, 2024). | |
10.3 | Separation Agreement and General Release, dated October 5, 2024, by and between the Company and Mark A. Demitrack, MD (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 10, 2024). | |
10.4 | Consulting Agreement, dated October 5, 2024, by and between the Company and Barry Shin (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 10, 2024). | |
10.5 | Consulting Agreement, dated October 5, 2024, by and between the Company and Mark A. Demitrack, MD (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 10, 2024). | |
10.6# | Consulting Agreement, dated November 6, 2024, by and between the Company and Carrie L. Bourdow. | |
31.1# | ||
31.2# | ||
32.1*# | ||
32.2*# | ||
101# | The following financial information from this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023, (iii) Consolidated Statements of Stockholders’ Equity for the period from January 1, 2024 to September 30, 2024, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023, and (v) Notes to Unaudited Consolidated Financial Statements, tagged as blocks of text. | |
104# | Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
* | These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
# | Filed herewith. |
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 7, 2024
TREVENA, INC. | ||
By: | /s/ BARRY SHIN | |
Barry Shin | ||
Acting Chief Operating Officer and Chief Financial Officer | ||
34