optn-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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

For the quarterly period ended September 30, 2021


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

For the transition period from ___________ to ______________.

Commission file number: 001-38241

OPTINOSE, INC.

(Exact name of registrant as specified in its charter)


Delaware			42-1771610
(State of other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1020 Stony Hill Road, Suite 300

Yardley, Pennsylvania 19067

(Address of principal executive offices, including zip code)

(267) 364-3500

(Registrant’s telephone number including area code)

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

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

OPTN

Nasdaq Global Select Market

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

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

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


Large accelerated filer ☐	Accelerated filer	☐
Non-accelerated filer ☒	Smaller reporting company	☒
	Emerging growth company	☒

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

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

The number of shares of the registrant's common stock outstanding at October 31, 2021 was 53,449,567 shares.

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	NOTE REGARDING FORWARD-LOOKING STATEMENTS	1
	PART I — FINANCIAL INFORMATION

Item 1.		4
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	4
	Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	5
	Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020	6
	Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the nine months ended September 30, 2021 and 2020	7
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	9
	Notes to Unaudited Interim Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Qualitative and Quantitative Disclosure About Market Risk	34
Item 4.	Controls and Procedures	34
	PART II — OTHER INFORMATION	36






Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 6.	Exhibits	39
	Signatures	40

_________________________

Unless the context otherwise requires, all references in this Form 10-Q to "Optinose," "Company," "we," "us," and "our" refer to OptiNose, Inc. and its subsidiaries.

_________________________

Trademark Notice

OPTINOSE® and XHANCE® are trademarks of ours in the United States. All other trademarks, trade names and service marks appearing in this Form 10-Q are the property of their respective owners. We do not intend our use or display of other companies' trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among others, statements relating to:

▪the impact of, our plans regarding and the uncertainties caused by, the COVID-19 pandemic, including without limitation, our expectation that the COVID-19 pandemic will negatively impact XHANCE prescription and product revenue growth rates for the remainder of 2021 and into 2022;

▪the potential uses for and advantages of XHANCE®, our product candidates and Exhalation Delivery System (EDS) devices and technologies;

▪our planned product development activities, studies and clinical trials in pursuit of a follow-on indication for XHANCE for the treatment of chronic sinusitis;

▪the potential for XHANCE to be the first drug therapy approved by the U.S. Food and Drug Administration (FDA) for the treatment of chronic sinusitis;

▪the potential for XHANCE to be the standard of care for the treatment of chronic rhinosinusitis with and without nasal polyps;

▪the potential for continued XHANCE prescription and net revenue growth and potential drivers of such growth;

▪the potential for direct-to-consumer (DTC) advertising to be a future driver of XHANCE prescription growth;

▪the potential benefits of our patient affordability programs and their potential effect on XHANCE demand and financial results;

▪the potential for XHANCE prescriptions to be affected by the seasonality impact observed in the intranasal steroid (INS) market;

▪the potential for XHANCE prescriptions and average net revenue per prescription to be adversely impacted by the annual resetting of patient healthcare insurance plan deductibles and changes in individual patients' healthcare insurance coverage, both of which often occur in January;

▪our expectation that consolidated XHANCE net product revenues for the full year of 2021 will be between $71.0 and $75.0 million;

▪our expectation that average net product revenues per prescription for the full year of 2021 will exceed $210 and the factors supporting such growth;

▪our expectation that our total GAAP operating expenses in 2021 will be between $132.0 million and $137.0 million and that our non-cash stock-based compensation expense will be approximately $10.0 million;

▪our expectation that top-line results will be available from the first of our two ongoing Phase 3b chronic sinusitis clinical trials in the first quarter of 2022 and from the second clinical trial in the second quarter of 2022;

▪our belief that, based on the results of blinded interim analyses and our assumptions and estimates relating to the trial, the initial targeted statistical power will be achieved with the approximately 330 patients currently enrolled in our first chronic sinusitis trial and the approximately 210 patients currently enrolled in our second chronic sinusitis trial;

▪our belief that existing cash and cash equivalents will be sufficient to maintain the minimum cash balance required under the Note Purchase Agreement that we entered into with funds managed by Pharmakon Advisors, LP, the investment manager of the BioPharma Credit Funds (the Note Purchase Agreement) and to fund our operations for at least the next twelve months from the filing date of this Form 10-Q if, in the event of a default, the holders of the notes issued pursuant to the Note Purchase Agreement do not otherwise elect to accelerate repayment of all unpaid principal and accrued interest under the Note Purchase Agreement;

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▪our ability to continue as a going concern and maintain compliance with the financial covenants to achieve certain minimum trailing twelve-month consolidated XHANCE net product sales and royalties and other covenants under the Note Purchase Agreement and, if required, our ability to obtain a waiver or modification of such covenants;

▪our expectation that the research and development costs associated with the conduct of our current chronic sinusitis clinical trials will significantly decrease;

▪our ability to maintain sufficient inventory of XHANCE and for our manufacturers to timely supply XHANCE;

▪our development, timing of data and funding plans for OPN-019 and the potential benefits of OPN-019; and

▪the accuracy of our estimates regarding expenses, future revenue, capital requirements and need for additional financing;

as well as other statements relating to our future operations, financial performance and financial condition, prospects, strategies, objectives or other future events. Forward-looking statements appear primarily in the sections of this Form 10-Q entitled “Item 1. Financial Statements,” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In some cases, you can identify forward-looking statements by words such as “may,” “will,” “could,” “would,” “should,” “expect,” “confident,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “scheduled” and similar expressions, although not all forward-looking statements contain these identifying words.

Forward-looking statements are based upon our current expectations and assumptions and are subject to a number of known and unknown risks, uncertainties and other factors that could cause actual results to differ materially and adversely from those expressed or implied by such statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Form 10-Q and in our annual report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (SEC), and in particular, the risks and uncertainties discussed therein under the caption “Risk Factors”. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. As a result, you should not place undue reliance on forward-looking statements.

Additionally, the forward-looking statements contained in this Form 10-Q represent our views only as of the date of this Form 10-Q (or any earlier date indicated in such statement). While we may update certain forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if new information becomes available in the future. However, you are advised to consult any further disclosures we make on related subjects in the reports that we file with the SEC.

The foregoing cautionary statements are intended to qualify all forward-looking statements wherever they may appear in this Form 10-Q. For all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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MARKET, INDUSTRY AND OTHER DATA

This Form 10-Q contains estimates, projections, market research and other data generated by independent third parties, by third parties on our behalf and by us concerning markets for XHANCE, XHANCE market access, the INS market and prescription data. Information that is based on estimates, projections, market research or similar methodologies is inherently subject to uncertainties and actual results, events or circumstances may differ materially from results, events and circumstances reflected in this information. As a result, you are cautioned not to give undue weight to such information.

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PART I

ITEM 1. FINANCIAL STATEMENTS

OptiNose, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)


	September 30, 2021		December 31, 2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	84,226	$	144,156
Accounts receivable, net	24,088		23,394
Inventory	13,161		9,042
Prepaid expenses and other current assets	3,967		4,060
Total current assets	125,442		180,652
Property and equipment, net	1,515		2,028
Other assets	4,960		6,133
Total assets	$	131,917	$	188,813
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable	$	6,502	$	5,489
Accrued expenses and other current liabilities	47,125		46,683
Total current liabilities	53,627		52,172
Long-term debt, net	126,542		125,202
Other liabilities	3,217		4,651
Total liabilities	183,386		182,025
Stockholders' equity (deficit):
Common stock, $0.001 par value; 200,000,000 shares authorized at September 30, 2021 and December 31, 2020; 53,449,567 and 52,945,865 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	53		53
Additional paid-in capital	542,996		534,585
Accumulated deficit	(594,437)		(527,765)
Accumulated other comprehensive loss	(81)		(85)
Total stockholders' equity (deficit)	(51,469)		6,788
Total liabilities and stockholders' equity (deficit)	$	131,917	$	188,813

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Net product revenues	$	21,826	$	15,436	$	51,143	$	32,770
Licensing revenues	—		—		1,000		—
Total revenues	21,826		15,436		52,143		32,770
Costs and expenses:
Cost of product sales	2,411		2,221		6,576		5,276
Research and development	6,654		6,524		20,058		16,930
Selling, general and administrative	25,801		24,575		80,293		77,332
Total operating expenses	34,866		33,320		106,927		99,538
Loss from operations	(13,040)		(17,884)		(54,784)		(66,768)
Other (income) expense:
Interest income	(9)		(31)		(42)		(396)
Interest expense	4,072		3,350		11,959		9,506
Foreign currency (gains) losses	14		11		38		44
Gain on sale of equipment	$	—	$	—	$	(67)	$	—
Net loss	$	(17,117)	$	(21,214)	$	(66,672)	$	(75,922)
Net loss per share of common stock, basic and diluted	$	(0.32)	$	(0.43)	$	(1.25)	$	(1.62)
Weighted average common shares outstanding, basic and diluted	53,334,669		48,907,514		53,151,730		46,914,561

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Comprehensive Loss

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(17,117)	$	(21,214)	$	(66,672)	$	(75,922)
Other comprehensive loss:
Foreign currency translation adjustment	2		13		4		(17)
Comprehensive loss	$	(17,115)	$	(21,201)	$	(66,668)	$	(75,939)

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Changes in Stockholders' Equity (Deficit)

(in thousands, except share data)


Nine Months Ended September 30, 2021
	Stockholders' Equity (Deficit)
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balance at December 31, 2020	52,945,865	$	53	$	534,585	$	(527,765)	$	(85)	$	6,788
Stock compensation expense	—	—		2,596		—		—		2,596
Vesting of restricted stock units	166,709	—		—		—		—		—
Foreign currency translation adjustment	—	—		—		—		2		2
Net loss	—	—		—		(26,053)		—		(26,053)
Balance at March 31, 2021	53,112,574	$	53	$	537,181	$	(553,818)	$	(83)	$	(16,667)
Stock compensation expense	—	—		2,729		—		—		2,729
Vesting of restricted stock units	37,034	—		—		—		—		—
Issuance of common stock under employee stock purchase plan	135,525	—		367		—		—		367
Foreign currency translation adjustment	—	—		—		—		—		—
Net loss	—	—		—		(23,502)		—		(23,502)
Balance at June 30, 2021	53,285,133	$	53	$	540,277	$	(577,320)	$	(83)	$	(37,073)
Stock compensation expense	—	—		2,680		—		—		2,680
Vesting of restricted stock units	140,555	—		—		—		—		—
Exercise of common stock options	23,879	—		39		—		—		39
Foreign currency translation adjustment	—	—		—		—		2		2
Net loss	—	—		—		(17,117)		—		(17,117)
Balance at September 30, 2021	53,449,567	$	53	$	542,996	$	(594,437)	$	(81)	$	(51,469)

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Nine Months Ended September 30, 2020
	Stockholders' Equity (Deficit)
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
	Shares	Amount
Balance at December 31, 2019	45,906,162	$	46	$	489,565	$	(427,980)	$	(48)	$	61,583
Stock compensation expense	—	—		2,429		—		—		2,429
Foreign currency translation adjustment	—	—		—		—		(25)		(25)
Net loss	—	—		—		(28,856)		—		(28,856)
Balance at March 31, 2020	45,906,162	$	46	$	491,994	$	(456,836)	$	(73)	$	35,131
Stock compensation expense	—	—		2,748		—		—		2,748
Exercise of common stock options	15,806	—		71		—		—		71
Issuance of common stock under employee stock purchase plan	70,305	—		516		—		—		516
Foreign currency translation adjustment	—	—		—		—		(5)		(5)
Net loss	—	—		—		(25,852)		—		(25,852)
Balance at June 30, 2020	45,992,273	$	46	$	495,329	$	(482,688)	$	(78)	$	12,609
Stock compensation expense	—	—		2,615		—		—		2,615
Exercise of common stock options	43,636	—		5		—		—		5
Sale of common stock, net of issuance costs	6,000,000	6		33,399		—		—		33,405
Issuance of common stock with Pharmakon Amendment	44,643	—		250		—		—		250
Foreign currency translation adjustment	—	—		—		—		13		13
Net loss	—	—		—		(21,214)		—		(21,214)
Balance at September 30, 2020	52,080,552	$	52	$	531,598	$	(503,902)	$	(65)	$	27,683

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2021 and 2020

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Operating activities:
Net loss	$	(66,672)	$	(75,922)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	478		1,036
Stock-based compensation	8,027		7,857
Amortization of debt discount and issuance costs	1,364		899
Gain on sale of property and equipment	(67)

SEC Form 10-Q filed by OptiNose, Inc.