optn-20220630

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 June 30, 2022


			☐			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 August 11, 2022 was 83,277,504 shares.

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

Item 1.		4
	Consolidated Balance Sheets as of June 3 0 , 2022 and December 31, 2021	4
	Consolidated Statements of Operations for the three and six months ended June 3 0 , 2022 and 2021	5
	Consolidated Statements of Comprehensive Loss for the three and six months ended June 3 0 , 2022 and 2021	6
	Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the six months ended June 3 0 , 2022 and 2021	7
	Consolidated Statements of Cash Flows for the six months ended June 3 0 , 2022 and 2021	8
	Notes to Unaudited Interim Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Qualitative and Quantitative Disclosure About Market Risk	34
Item 4.	Controls and Procedures	34
	PART II — OTHER INFORMATION	35






Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 5.	Other Information	35
Item 6.	Exhibits	37
	Signatures	39

_________________________

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®, XHANCE®, EDS® and EXHALATION DELIVERY SYSTEMTM 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;

▪the potential uses for and advantages of XHANCE® and the Exhalation Delivery System (EDS) and related technologies;

▪our planned activities in pursuit of a follow-on indication for chronic sinusitis;

▪our plan to submit a supplemental new drug application for XHANCE to the U.S. Food and Drug Administration (FDA) by the end of 2022;

▪the potential for XHANCE to be the first product approved by the 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;

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

▪our expectation for XHANCE prescriptions to be impacted by the seasonality observed in the intranasal steroid (INS) market and the seasonal variation in patient visits with their doctor resulting in reduced XHANCE prescription demand in the third quarter;

▪our expectation 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 the research and development costs associated with the conduct of our chronic sinusitis program will significantly decrease;

▪our expectation that our GAAP operating expenses in 2022 will be between $129.0 million and $134.0 million and that our non-cash stock-based compensation expense will be approximately $9.0 million;

▪our expectation that XHANCE net product revenues for the full year of 2022 will be between $85.0 million and $92.0 million;

▪our expectation that the average net product revenue per prescription for XHANCE for the full year of 2022 will exceed $220;

▪our belief that our 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 twelve months from the filing date of this Form 10-Q;

▪our ability to maintain compliance with the financial covenant to achieve certain minimum trailing twelve-month consolidated XHANCE net product sales and royalties and other provisions under the Note Purchase Agreement and the consequences of failing to do so;

▪our expectations and the accuracy of our estimates regarding our future expenses, revenue, capital requirements, potential sources of capital and consequences of failing to obtain additional capital;

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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,” “intend,” “plan,” “anticipate,” "target," “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, 2021, 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)


	June 30, 2022		December 31, 2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	78,264	$	110,502
Accounts receivable, net	25,766		35,449
Inventory	10,973		11,847
Prepaid expenses and other current assets	3,054		2,581
Total current assets	118,057		160,379
Property and equipment, net	1,063		1,347
Other assets	3,712		4,345
Total assets	$	122,832	$	166,071
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	9,829	$	8,013
Accrued expenses and other current liabilities	45,209		51,222
Total current liabilities	55,038		59,235
Long-term debt, net	127,483		126,418
Other liabilities	1,094		2,190
Total liabilities	183,615		187,843
Stockholders' deficit:
Common stock, $0.001 par value; 200,000,000 shares authorized at June 30, 2022 and December 31, 2021; 83,044,366 and 82,238,900 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	83		82
Additional paid-in capital	594,009		588,288
Accumulated deficit	(654,791)		(610,061)
Accumulated other comprehensive loss	(84)		(81)
Total stockholders' deficit	(60,783)		(21,772)
Total liabilities and stockholders' deficit	$	122,832	$	166,071

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2022 and 2021

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Net product revenues	$	20,582	$	18,357	$	35,342	$	29,317
Licensing revenues	—		—		—		1,000
Total revenues	20,582		18,357		35,342		30,317
Costs and expenses:
Cost of product sales	2,143		2,425		4,157		4,165
Research and development	4,270		8,179		9,072		13,404
Selling, general and administrative	29,514		27,308		58,853		54,493
Total operating expenses	35,927		37,912		72,082		72,062
Loss from operations	(15,345)		(19,555)		(36,740)		(41,745)
Other (income) expense:
Interest income	(36)		(12)		(170)		(33)
Interest expense	4,086		4,012		8,159		7,888
Foreign currency (gains) losses	2		14		1		22
Gain on sale of equipment	—		(67)		—		(67)
Net loss	$	(19,397)	$	(23,502)	$	(44,730)	$	(49,555)
Net loss per share of common stock, basic and diluted	$	(0.23)	$	(0.44)	$	(0.54)	$	(0.93)
Weighted average common shares outstanding, basic and diluted	82,740,096		53,120,574		82,594,786		53,059,492

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Comprehensive Loss

For the Three and Six Months Ended June 30, 2022 and 2021

(in thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(19,397)	$	(23,502)	$	(44,730)	$	(49,555)
Other comprehensive loss:
Foreign currency translation adjustment	(2)		—		(3)		2
Comprehensive loss	$	(19,399)	$	(23,502)	$	(44,733)	$	(49,553)

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Changes in Stockholders' Deficit

(in thousands, except share data)


Six Months Ended June 30, 2022
	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, 2021	82,238,900	$	82	$	588,288	$	(610,061)	$	(81)	$	(21,772)
Stock compensation expense	—	—		1,998		—		—		1,998
Vesting of restricted stock units	262,942	—		—		—		—		—
Issuance of common stock under employee stock purchase plan	179,206	1		249		—		—		250
Foreign currency translation adjustment	—	—		—		—		(1)		(1)
Net loss	—	—		—		(25,333)		—		(25,333)
Balance at March 31, 2022	82,681,048	$	83	$	590,535	$	(635,394)	$	(82)	$	(44,858)
Stock compensation expense	—	—		3,474		—		—		3,474
Vesting of restricted stock units and exercise of options	363,318	—		—		—		—		—
Foreign currency translation adjustment	—	—		—		—		(2)		(2)
Net loss	—	—		—		(19,397)		—		(19,397)
Balance at June 30, 2022	83,044,366	$	83	$	594,009	$	(654,791)	$	(84)	$	(60,783)


Six Months Ended June 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)

See accompanying notes to unaudited interim consolidated financial statements

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OptiNose, Inc.

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2022		2021
Operating activities:
Net loss	$	(44,730)	$	(49,555)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	256		324
Stock-based compensation	5,444		5,343
Amortization of debt discount and issuance costs	1,065		861
Gain on sale of property and equipment	—		(67)
Changes in operating assets and liabilities:
Accounts receivable	9,683		2,679

Prepaid expenses and other assets	446		451
Inventory	950		(4,218)
Accounts payable	1,810		(1,900)
Accrued expenses and other liabilities	(7,397)		(4,436)
Cash used in operating activities	(32,473)		(50,518)
Investing activities:
Purchases of property and equipment	(50)		(115)

Proceeds from sale of property and equipment	—		105
Cash used in investing activities	(50)		(10)
Financing activities:


Cash paid for financing costs	27		(91)
Proceeds from issuance of common stock under employee stock purchase plan	249		367


Cash provided by financing activities	276		276
Effects of exchange rate changes on cash and cash equivalents	3		—
Net decrease in cash, cash equivalents and restricted cash	(32,244)		(50,252)
Cash, cash equivalents and restricted cash at beginning of period	110,515		144,179
Cash, cash equivalents and restricted cash at end of period	$	78,271	$	93,927
Supplemental disclosure of noncash activities:
Fixed asset purchases within accounts payable and accrued expenses	$	18	$	23
Recognition of right-of-use assets	$	287	$

SEC Form 10-Q filed by OptiNose Inc.