Marketing Salery

EAGLE PHARMACEUTICALS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

IceCure Medical : Notice of Meeting, Proxy Statement and Proxy Card for the Annual and Special General Meeting of Shareholders to be held on Thursday, March 3, 2022 - Form 6-K
Written by publisher team

The following discussion and analysis of financial condition and results of
operations is provided to enhance the understanding of, and should be read in
conjunction with, Part I, Item 1, "Business" and Item 8, "Financial Statements
and Supplementary Data." For information on risks and uncertainties related to
our business that may make past performance not indicative of future results, or
cause actual results to differ materially from any forward-looking statements,
see "Special Note Regarding Forward-Looking Statements," and Part I, Item 1A,
"Risk Factors."


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Overview


We are an integrated pharmaceutical company focused on finding ways to help
medicines do more for patients. Along with our collaborators, we have the
capabilities to take a molecule from preclinical research through regulatory
approval and into the marketplace, including development, manufacturing and
commercialization of our products and product candidates. Our business model
applies our scientific expertise, proprietary research-based insights and
marketplace proficiency to identify challenging-to-treat diseases of the central
nervous system or metabolic critical care therapeutic areas as well as in
oncology. By focusing on patients' unmet needs, we strive to provide healthcare
professionals with urgently needed treatment solutions that are designed to
improve patient care and outcomes and create near- and long-term value for our
stakeholders, including patients and healthcare providers and our employees,
marketing partners, collaborators and stockholders.

Our science-based business model has a proven track record with the U.S. Food
and Drug Administration, or FDA, approval and commercial launches of three
products: Ryanodex, Belrapzo and Bendeka. We market our products through
marketing partners and/or our internal direct sales force. We market Ryanodex
and Belrapzo, and Teva markets Bendeka through its subsidiary, Cephalon, Inc.
RIn February 2020, we received final FDA approval for PEMFEXY™ (pemetrexed for
injection) , a branded alternative to Alimta for metastatic non-squamous
non-small cell lung cancer and malignant pleural mesothelioma. On February 1,
2022, we announced the commercial availability of PEMFEXY™ in the United States.

With several pipeline projects underway and the potential for product launches
over the next few years, we believe we have many growth opportunities ahead. We
believe that each of our pipeline projects currently has the potential to enter
the market as a first-in-class, first-to-file or best-in-class product. In
particular, we are applying our expertise to conduct novel research regarding
the potential for Ryanodex to address conditions including nerve agent, acute
radiation syndrome, traumatic brain injury/concussion and Alzheimer's disease as
well as investigations of compounds such as EA-114 (our fulvestrant product
candidate) for patients with HR-positive advanced breast cancer. Our clinical
development program also includes a license agreement with Combioxin, SA under
which the Company was granted exclusive, worldwide development commercialization
rights to CAL02, a novel first-in-class antitoxin agent for Phase 2b/3
development for the treatment of severe pneumonia in combination with
traditional antibacterial drugs and a license agreement with AOP Orphan, for the
commercial rights to its product, landiolol in the United States. Landiolol is a
leading hospital emergency use product, which is currently approved in Europe
for the treatment of non-compensatory sinus tachycardia and tachycardic
supraventricular arrhythmias.

Recent Developments

PEMFEXY

On February 1, 2022, we announced the commercial availability of our novel
product PEMFEXY™ (pemetrexed for injection). A branded alternative to ALIMTA®,
Eagle's PEMFEXY is a ready-to-use liquid with a unique J-code approved to treat
nonsquamous non-small cell lung cancer and mesothelioma.

In February 2020, Eagle received final approval from the U.S. Food and Drug
Administration of its New Drug Application for PEMFEXY, following the settlement
agreement of patent litigation with Eli Lilly and Company (NYSE: LLY) in
December 2019. The agreement provided for a release of all claims by the parties
and allows for an initial entry of PEMFEXY into the market (equivalent to
approximately a three-week supply of current ALIMTA utilization) on February 1,
2022 and a subsequent uncapped entry on April 1, 2022.

Landiol

On January 31, 2022, we announced that AOP Orphan Pharmaceuticals GmbH, Member
of the AOP Health Group, ("AOP Health"), with whom we entered into a licensing
agreement in August 2021, has engaged with the U.S. Food and Drug Administration
("FDA") to obtain alignment on the content and format of the pre-clinical and
clinical data required to support a new drug application ("NDA") seeking
approval of Landiolol, a novel therapeutic, for the short-term reduction of
ventricular rate in patients with supraventricular tachycardia, including atrial
fibrillation and atrial flutter.

In August 2021Eagle entered into a licensing agreement with AOP Healtha privately owned Austrian company devoted to the treatment of rare and special diseases, for the commercial rights to Landiolol in the United States.

Vasopressin

On January 18, 2022, we announced the commercial availability of our recently
approved product, vasopressin, an A-rated generic alternative to Vasostrict®,
with 180 days of marketing exclusivity.



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On December 15, 2021, the FDA approved Eagle's abbreviated new drug application
("ANDA") for vasopressin, a product that is indicated for use to increase blood
pressure in adults with vasodilatory shock (e.g., post-cardiotomy or sepsis) who
remain hypotensive despite fluids and catecholamines.

TREAKISYM

As of January 5, 2022Eagle’s bendamustine franchise continues to grow, including the launch of the TREAKISYM ready-todilute (“RTD”) formulation in
Japan in the first quarter of 2021. Together with a potential approval of the rapid infusion (“RI”) (50ml) liquid formulation.

Fulvestrant


As of January 5, 2022, based on discussions with the FDA, we reformulated and
plan to commence human pilot studies of our fulvestrant product candidate for
the treatment of HR+/HER- advanced breast cancer shortly.

CAL02

As of January 5, 2022we were preparing to begin clinical trials for CAL02, a novel approach to the treatment of severe bacterial pneumonia, later in 2022.

Executive Officer Transitions


On September 27, 2021, our board of directors appointed Scott Tarriff as our
President and Michael Moran as our Executive Vice President, Chief Commercial
Officer. In addition, David Pernock, our former President and Chief Operating
Officer since January 2017, was appointed as Executive Vice President,
Operations.

On December 27, 2021, Judith Ng-Cashin, MD, ceased to serve as our Executive Vice President, Chief Medical Officer. We are currently in search for a replacement.

On December 31, 2021, David Pernockceased to serve as our Executive Vice President, Operations.

COVID-19 Business Update


In response to the ongoing COVID-19 pandemic, we have taken and continue to take
active measures designed to address and mitigate the impact of the COVID-19
pandemic on its business, such as remote working policies, facilitating
management's daily communication to address employee and business concerns and
providing frequent updates to the Board. We anticipate that the COVID-19
pandemic may have an impact on the clinical development timeline for EA-114. We
anticipate that the COVID-19 pandemic will continue to delay our supply chain
and marketing and sales efforts for certain of its products, including Bendeka,
although it is not currently expected that any disruption would be material. The
COVID-19 pandemic and associated lockdowns have resulted in a decrease in
healthcare utilization broadly and specifically lead to a continuing reduction
in the utilization of physician-administered oncology products including
Belrapzo and Bendeka. In addition, the COVID-19 pandemic has delayed the timing
of ongoing litigation, including the litigation with Par Pharmaceutical, Inc.
and its affiliated entities with respect to Vasopressin, and we anticipate that
such delays will continue for the duration of the pandemic. While we have
experienced variable financial impacts to date, the ongoing COVID-19 pandemic,
including the global economic slowdown, government measures taken in response
thereto, the overall disruption of global healthcare systems and other risks and
uncertainties associated with the pandemic, could materially adversely affect
our business, financial condition, results of operations and growth prospects.
We continue to closely monitor the COVID-19 pandemic as we evaluate and evolve
our business plans and response strategy. The impact of the COVID-19 pandemic on
our business and financial condition is more fully described below in Trends and
Uncertainties.

Financial Operations Overview

Revenue

Our revenue consists of product sales, royalty and license and other revenue.


Product Sales. As of December 31, 2021, we have recognized revenues from product
sales of Bendeka, Treakisym, Ryanodex and Belrapzo. Sales of Bendeka and
Treakisym were made to our commercial partners, Teva and SymBio, respectively.
Sales to our commercial partners are typically made at little or no profit for
resale. Ryanodex and Belrapzo were sold directly to wholesalers, hospitals and
surgery centers through a third-party logistics partner.


We typically enter into agreements with group purchasing organizations acting on
behalf of their hospital members, in connection with the hospitals' purchases of
our direct commercial products. Based on these agreements, most of our hospital


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customers have contracted prices for products and volume-based rebates on
product purchases. These amounts are estimated and recorded at the time of sale.
In the case of discounted pricing, we typically pay a chargeback, representing
the difference between the price invoiced to the wholesaler and the customer
contract price.

Royalty Revenue. We recognize revenue from royalties based on a percentage of
Teva's net sales of Bendeka and SymBio's net sales of Treakisym. Royalty revenue
is recognized as earned in accordance with contract terms when it can be
reasonably estimated and collectability is reasonably assured.

License and Other Revenue. Our revenues may either be in the form of the
recognition of deferred revenues upon milestone achievement for which cash has
already been received or recognition of revenue upon milestone achievement for
which the payment is reasonably assured to be received in the future.

The primary factors that determine our revenues derived from Bendeka are:

•the level of orders submitted by our commercial partner, Teva;

•the rate at which Teva can convert the current market to Bendeka;

•the level of institutional demand for Bendeka;

•unit sales prices charged by Teva, net of any sales reserves; and

•the level of orders submitted by wholesalers, hospitals and surgery centers.

The primary factors that may determine our revenues derived from TREAKISYM are:

•the level of orders submitted by our commercial partner, Symbioi;

•the level of institutional demand for TREAKISYM; and

•unit sales prices charged by Symbio, net of any sales reserves.

The primary factors that may determine our revenues derived from Ryanodex, Belrapzo and our future products are:

the effectiveness of our sales force;

•the level of orders submitted by wholesalers, hospitals and surgery centers;

•the level of institutional demand for our products; and

•unit sales prices, net of any sales reserves.

Cost of Revenues


Cost of revenue consists of the costs associated with producing our products for
our commercial partners. In particular, our cost of revenue includes production
costs of our products paid to a contract manufacturing organization coupled with
shipping and customs charges, cost of royalty and the amortization of intangible
assets. Cost of revenue may also include the effects of product recalls, if
applicable.


Research and Development

Costs for research and development are charged to expenses as incurred and
include: employee-related expenses including salaries, benefits, travel and
stock-based compensation expense for research and development personnel;
expenses incurred under agreements with contract research organizations,
contract manufacturing organizations and service providers that assist in
conducting clinical and preclinical studies; costs associated with preclinical
activities and development activities; costs associated with regulatory
operations; and depreciation expense for assets used in research and development
activities.

Costs for certain development activities, such as clinical studies, are recognized 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 on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the patterns of costs incurred, and are reflected in the consolidated financial statements as prepaid expenses or accrued expenses as deemed appropriate. Recoveries of previously recognized research and development expenses from third parties are recorded as a reduction to research and development expense in the period it becomes realizable.

Selling, General and Administrative


Selling, general and administrative costs consist of employee-related costs
including salaries, benefits and other related costs, stock-based compensation
for executive, finance, sales and operations personnel. Selling, general and
administrative expenses also include facility and related costs, professional
fees for legal, consulting, tax and accounting services, insurance, selling,
marketing, market research, advisory board and key opinion leaders, depreciation
and general corporate expenses.



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Income Taxes


We account for income taxes using the liability method in accordance with
Financial Accounting Standards Board Accounting Standards Codification Topic
740, "Income Taxes," or ASC 740.  Deferred tax assets and liabilities are
determined based on temporary differences between financial reporting and tax
bases of assets and liabilities and are measured by applying enacted rates and
laws to taxable years in which differences are expected to be recovered or
settled.  Further, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income (loss) in the period that the rate
changes.  A valuation allowance is required when it is "more likely than not"
that all or a portion of deferred tax assets will not be realized. ASC 740 also
prescribes a comprehensive model for how a company should recognize, measure,
present and disclose in its financial statements uncertain tax positions that it
has taken or expects to take on a tax return, including a decision whether to
file or not file a return in a particular jurisdiction.  We recognize any
interest and penalties accrued related to unrecognized tax benefits as income
tax expense. The benefit (provision) for income taxes was based on the
applicable federal and state tax rates for those periods. The effective tax rate
for the years ended December 31, 2021, 2020 and 2019 reflect items such as the
impact of a valuation allowance established and adjusted for the fair value
adjustments on our investment in Tyme, certain non-deductible executive
compensation, changes in state filing positions partially offset by credits for
research and development activity.




Results of Operations

Comparison of Years Ended December 31, 2021 and December 31, 2020

Revenues
                                  Year Ended December 31,
                                    2021                2020         (Decrease)
                                               (in thousands)
Product sales, net          $      65,023$  72,323$   (7,300)
Royalty revenue                   106,523              110,479          (3,956)
License and other revenue               -                5,000          (5,000)
Total revenue               $     171,546$ 187,802$  (16,256)



Product sales decreased $7.3 million in the year ended December 31, 2021,
primarily driven by decreases in product sales of Bendeka of $4.3 million,
Belrapzo of $3.8 million, due to price decreases and Ryanodex of $3.0 million,
due to volume decreases. In addition, the COVID-19 pandemic and associated
lockdowns have resulted in a decrease in healthcare utilization broadly and
specifically have led to a reduction in the utilization of
physician-administered oncology products including Belrapzo and Bendeka. These
decreases were partially offset by $3.9 million in product sales of Treakisym,
following the launch of Treakisym RTD in Japan by Symbio in the first quarter of
2021.

Royalty transfer decreased $4.0 million in the year ended December 31, 2021
Primarily as a result of lower royalties on Teva’s sales of Bendeka of $7.7 millionwhich were partially offset by new royalties on Symbio’s sales of Treakisym of $4.2 million.


License and other revenue reflects a $5.0 million milestone payment that we
earned during 2020 when SymBio received regulatory approval for Treakisym RTD
bendamustine formulation from the Pharmaceuticals and Medical Devices Agency in
Japan.


Cost of Revenue
                                 Year Ended December 31,
                                   2021                 2020        (Decrease)
                                              (in thousands)
Cost of product sales     $      31,528$ 33,647$    (2,119)
Cost of royalty revenue          10,652                11,818           (1,166)
Total cost of revenue     $      42,180$ 45,465$    (3,285)

Cost of product sales decreased $2.1 million in the year ended December 31, 2021primarily as a result of decreased product sales of Bendeka, Ryanodex, and Belrapzo, each related to lower unit sales, partially offset by increased product sales of

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Treakisym resulting from product unit sales, following the launch of Treakisym RTD in Japan by Symbio in the first quarter of 2021.


Cost of royalty revenue decreased $1.2 million in the year ended December 31,
2021 primarily as a result of a decrease in royalty revenue on Teva's sales of
Bendeka, coupled with lower cost of royalty associated with Belrapzo and the
ending of royalties related to Argatroban.

Research and Development

The table below details our research and development expenses by significant project for the periods presented.

                                                               Year Ended December 31,               Increase /
                                                               2021                 2020             (Decrease)
                                                                              (in thousands)
Fulvestrant                                              $       7,016$   6,802$        214
Vasopressin                                                      6,976              4,727                 2,249
Ryanodex related projects                                        1,692              2,865                (1,173)
CAL02 / Combioxin                                               10,334                  -                10,334
Landilol / AOP                                                   5,005                  -                 5,005
Pemfexy                                                          2,211                608                 1,603
All other projects                                               3,014              3,085                   (71)
Salary and other personnel related                              15,027             12,698                 2,329
Research and development                                 $      51,275$  30,785$     20,490


The increase primarily resulted from a $10.0 million upfront payment related to
our license agreement with Combioxin, a $5.0 million upfront payment related our
licensing agreement with AOP Orphan, a $2.3 million increase in development cost
for vasopressin, a $1.6 million increase related to Pemfexy, coupled with a $2.0
million total increase in salaries, bonuses, and severance, included with Salary
and other personnel related costs.

Selling, General and Administrative

                                             Year Ended December 31,
                                               2021                 2020    

(Decrease)

                                                          (in thousands)
Selling, general and administrative   $      75,322$ 78,598

$ (3,276)



The decrease is primarily related to lower stock compensation expense of $5.2
million, the non-recurrence of $2.5 million of costs related to the
collaboration with Tyme in 2020, partially offset by increased expense related
to salaries and bonuses of $2.3 million and ongoing litigation matters of $1.9
million.

Other (Expense) Income, net
                                                               Year Ended December 31,                (Decrease) /
                                                               2021                   2020              Increase
                                                                              (in thousands)
Interest income                                        $        560$     562          $         (2)
Interest expense                                             (1,635)                 (2,577)                  942
Other (expense) income                                       (6,242)                 (8,262)                2,020
Total other (expense) income, net                      $     (7,317)

$ (10,277)$ 2,960

Interest income primarily decreased due to lower interest rates associated with money market funds as compared to the year ended December 31, 2020.


Interest expense decreased primarily due to lower total long-term debt
outstanding due to recurring principal payments required by the Revised Credit
Agreement. This decrease is primarily due to lower borrowings from our revolving
credit facility during 2021 as compared to the year ended December 31, 2020.

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Our other (expense) income, net decreased $2.0 million for the year ended
December 31, 2021 as compared to the year ended December 31, 2020. The $6.2
million expense amount for the year ended December 31, 2021 primarily resulted
from fair value adjustments on equity investment in Tyme. The $8.3 million
expense amount for the year ended December 31, 2020 related to fair value
adjustments on equity investment in Tyme in the amount of $5.3 million and the
related fair value adjustments related to the final settlement of the $25.0
million ASR transaction with JPMorgan. We determined the ASR contained a forward
contract and therefore we recorded fair value adjustments on unsettled
accelerated share repurchase agreement in the amount of $3.0 million in the year
ended December 31, 2020.

Provision for income taxes
                                 Year Ended December 31,
                                  2021               2020
                                      (in thousands)
Provision for income taxes   $    (4,079)$ (10,688)
Effective tax rate                   (90)  %            47  %



Our provision for income taxes was based on the applicable federal and state tax
rates for those periods. The effective tax rate for the year ended December 31,
2021, reflects certain non-deductible executive compensation, tax effect on
stock options exercises, net of forfeitures and valuation allowance established
on the deferred tax asset for an unrealized capital loss in our investment in
Tyme partially offset by credits for research and development activities. The
effective tax rate for the year ended December 31, 2020, reflects the impact of
a valuation allowance established on the deferred tax asset for an unrealized
capital loss in our investment in Tyme, certain non-deductible executive
compensation, non-deductible nature of the fair value adjustment of our ASR
agreement and changes in state filing positions partially offset by credits for
research and development activities.


Net (Loss) Income


Net loss for the year ended December 31, 2021 was $8.6 million as compared to a
net income of $12.0 million for the year ended December 31, 2020, as a result of
the factors discussed above.

Comparison of Years Ended December 31, 2020 and December 31, 2019

Revenues
                                  Year Ended December 31,
                                    2020                2019         (Decrease)
                                               (in thousands)
Product sales, net          $      72,323$  73,989$    (1,666)
Royalty revenue                   110,479              112,903           (2,424)
License and other revenue           5,000                9,000           (4,000)
Total revenue               $     187,802$ 195,892$    (8,090)


Product sales decreased $1.7 million in the year ended December 31, 2020,
primarily driven by decreases in product sales of Bendeka of $15.7 million
coupled with decreases in Belrapzo's product sales of $2.1 million primarily due
to volume decreases. In addition, the COVID-19 pandemic and associated lockdowns
have resulted in a decrease in healthcare utilization broadly and specifically
have led to a reduction in the utilization of physician-administered oncology
products including Belrapzo and Bendeka. The decreased sales were partially
offset by increases in product sales of Ryanodex of $15.2 million due to higher
volume coupled with product sales of $0.9 million from the 2020 product launch
of Treakisym.

Royalty revenue decreased $2.4 million in the year ended December 31, 2020 as a
result of decreases in royalties on Teva's sales of Bendeka of $1.1 million and
royalties on sales of Argatroban of $1.3 million.

Our license and other revenue decreased $4.0 million in the year ended December
31, 2020 as compared to the year ended December 31, 2019. In 2019, we received
an upfront cash payment of $9.0 million upon execution of an amendment to the
Bendeka License Agreement, dated March 29, 2019 to terminate Teva's obligation
to pay future milestones and royalties on Bendeka sales outside of the U.S. In
2020, we received a $5.0 million milestone payment earned in the three months
ended

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September 30, 2020 from SymBio upon regulatory approval of Treakisym ready-to-dilute (250 ml) liquid bendamustine formulation from the
Pharmaceuticals and Medical Devices Agency in Japan.

Cost of Revenue
                                 Year Ended December 31,
                                   2020                 2019        (Decrease)
                                             (in thousands)
Cost of product sales     $      33,647$ 47,891$  (14,244)
Cost of royalty revenue          11,818                13,006          (1,188)
Total cost of revenue     $      45,465$ 60,897$  (15,432)


Cost of product sales decreased $14.2 million in the year ended December 31,
2020, primarily as a result of decreased product sales of Belrapzo and Bendeka,
partially offset by increased product sales of Ryanodex and the 2020 product
launch of Treakisym.

Cost of royalty revenue decreased $1.2 million in the year ended December 31,
2020 primarily as a result of a decrease in royalty revenue on Teva's sales of
Bendeka.

Research and Development

The table below details our research and development expenses by significant project for the periods presented.

                                                               Year Ended December 31,               Increase /
                                                               2020                 2019             (Decrease)
                                                                              (in thousands)
Fulvestrant                                              $       6,802$   5,053$      1,749
Vasopressin                                                      4,727              7,779                (3,052)
Ryanodex related projects                                        1,972          $   5,192                (3,220)
All other projects                                               4,586          $   3,980                   606
Salary and other personnel related                       $      12,698$  14,806                (2,108)
Research and development                                 $      30,785$  36,810$     (6,025)


The decrease primarily resulted from a decrease in clinical study project
spending for vasopressin and Ryanodex for EHS indication, and employee-related
costs, primarily stock compensation expense. This decrease was partially offset
by increased spend related to Fulvestrant.

Selling, General and Administrative

                                             Year Ended December 31,
                                               2020                 2019    

Increase

                                                        (in thousands)
Selling, general and administrative   $      78,598$ 76,370

$ 2,228



The increase is primarily related to $2.5 million of costs related to the
collaboration with Tyme, coupled with $4.5 million increase in stock
compensation. These increases were partially offset by travel and entertainment
expense which decreased by $2.0 million primarily due to Covid-19 restrictions
on travel coupled with a decrease in external legal fees related to ongoing
litigation matters of $3.2 million.


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Other (Expense) Income, net

                                                             Year Ended December 31,               (Decrease) /
                                                             2020                  2019              Increase
                                                                            (in thousands)
Interest income                                        $          562          $   2,169$    (1,607)
Interest expense                                               (2,577)            (2,686)                 109
Other (expense) income                                         (8,262)               700               (8,962)
Total other (expense) income, net                      $      (10,277)

$183$ (10,460)

Interest income primarily decreased due to lower interest rates associated with money market funds as compared to the year ended December 31, 2019.

Interest expense primarily decreased due to a lower total long-term debt outstanding due to recurring principal payments required by the Revised Credit Agreement.


Our other (expense) income, net increased $9.0 million for the year ended
December 31, 2020 as compared to the year ended December 31, 2019. This increase
is related to fair value adjustments on equity investment in Tyme in the amount
of $5.3 million and the related fair value adjustments related to the final
settlement of the $25.0 million ASR transaction with JPMorgan as part of the
Company's Share Repurchase Program. The Company determined the ASR contained a
forward contract and therefore the Company recorded fair value adjustments on
the accelerated share repurchase agreement in the amount of $3.0 million in the
year ended December 31, 2020. The increase in other expense is also related to
our settlement agreement in December 2019 with Lilly for $0.7 million.

Provision for income taxes

                                   Year Ended December 31,
                                   2020                   2019
                                        (in thousands)
Provision for income taxes   $     10,688$ 7,685
Effective tax rate                     47   %               35  %


Our provision for income taxes was based on the applicable federal and state tax
rates for those periods. The effective tax rate for the year ended December 31,
2020 reflects the impact of a valuation allowance established on the deferred
tax asset for an unrealized capital loss in our investment in Tyme, certain
non-deductible executive compensation, non-deductible nature of the fair value
adjustment of our ASR agreement and changes in state filing positions partially
offset by credits for research and development activity. The effective tax rate
for the year ended December 31, 2019 reflects the impact of certain
non-deductible executive compensation partially offset by credits for research
and development activity.

Net Income

Net income for the year ended December 31, 2020 was $12.0 million as compared to
a net income of $14.3 million for the year ended December 31, 2019, as a result
of the factors discussed above.


Liquidity and Capital Resources


Our principal sources of liquidity are our cash and cash equivalents, cash flows
from operations and availability of borrowing under our revolving credit
facility. Our primary uses of cash are to fund working capital requirements,
including repayment of debt, product development costs, operating expenses as
well as repurchases of our common stock. Cash and cash equivalents were $97.7
million, and $103.2 million as of December 31, 2021 and December 31, 2020,
respectively.

For the year ended December 31, 2021, we recorded net loss of $8.6 million. As
of December 31, 2021, we had a working capital surplus of $98.2 million. For the
year ended December 31, 2020, we recorded net income of $12.0 million.

We believe that our cash and cash equivalents and future cash flows from
operations will be sufficient to fund our currently anticipated working capital
requirements for at least the next twelve months. We believe we will be able to
meet our expected future cash and working capital requirements through a
combination of cash flows from operations, cash and cash equivalents,
availability of borrowings under our revolving credit facility and additional
funding in the capital markets, if needed.


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The COVID-19 pandemic has disrupted and continues to disrupt the U.S. healthcare
system, global economies and global capital markets. There are significant
uncertainties surrounding the full extent and duration of the impact of the
COVID-19 pandemic on our business and operations. We have experienced variable
financial impacts to date, as a result of the COVID-19 pandemic and the ongoing
pandemic could have a material adverse impact on our financial condition and
results of operations in the future, including our ability to obtain financing
when and if needed. The impact of COVID-19 on our business and financial
condition is more fully described below in Trends and Uncertainties.


Operating Activities:


Net cash provided by operating activities for the year ended December 31, 2021
was $28.2 million. Net loss for the same period was $8.6 million more than
offset by the net of non-cash adjustments of approximately $27.3 million from
deferred income taxes, depreciation expense, noncash operating lease expense
related to right-of-use assets, amortization expense of intangible assets,
convertible promissory note related credit losses, stock-based compensation
expense, fair value adjustments on equity investment, amortization of debt
issuance costs, fair value adjustments related to derivative instrument, and
accretion of discount on convertible promissory note. Net changes in working
capital increased cash from operating activities by approximately $9.5 million,
due to changes in working capital accounts. The total amount of accounts
receivable as of December 31, 2021 was approximately $41.1 million, which
included $15.0 million related to product sales and $26.1 million related to
royalty revenue. Receivables from our product sales have payment terms ranging
from 30 to 70 days with select extended terms to wholesalers on initial
purchases of product launch quantities. Our receivables from royalty revenue are
due 45 days from the end of the quarter or year end.

Net cash provided by operating activities for the year ended December 31, 2020
was $49.5 million. Net income for the same period was $12.0 million before
non-cash adjustments of approximately $36.7 million from deferred income taxes,
depreciation expense, noncash operating lease expense related to right-of-use
assets, amortization expense of intangible assets, stock-based compensation
expense, fair value adjustments on equity investment, amortization of debt
issuance costs and fair value adjustments on settled accelerated share
repurchase agreement. Net changes in working capital decreased cash provided
from operating activities by approximately $0.8 million, due to an increase in
accounts receivable of $3.1 million, an increase in inventory of $1.5 million, a
decrease in accrued expenses and other liabilities of $4.4 million, coupled with
a decrease in prepaid expenses and other current assets of $11.4 million, and an
increase in accounts payable of $0.8 million. The total amount of accounts
receivable as of December 31, 2020 was approximately $51.1 million. Receivables
from our product sales have payment terms ranging from 30 to 75 days with select
extended terms to wholesalers on initial purchases of product launch quantities.
Our receivables from royalty revenue are due 45-days from the end of the
quarter.

Net cash provided by operating activities for the year ended December 31, 2019
was $56.0 million. Net income for the same period was $14.3 million before
non-cash adjustments of approximately $27.3 million from deferred income taxes,
depreciation expense, noncash operating lease expense related to right-of-use
assets, amortization expense of intangible assets, stock-based compensation
expense, and amortization of debt issuance costs. Net changes in working capital
increased cash provided from operating activities by $14.4 million, due to a
decrease in accounts receivable of $18.5 million primarily due to Belrapzo
launch in 2018, a decrease in inventory of $1.7 million, an increase in accrued
expenses and other liabilities of $4.1 million, partially offset by an increase
in other assets of $0.6 million, a decrease in prepaid expenses and other
current assets of $4.8 million, and a decrease in accounts payable of $4.5
million. The total amount of accounts receivable at December 31, 2019 was
approximately $48.0 million.

Investing Activities:

During the years ended December 31, 20212020 and 2019, we invested $0.3 million, $0.7 millionand $0.8 millionrespectively, for the purchase of property and equipment.

Net cash used in investing activities for the year December 31, 2021 primarily was as a result of $ 5.0 million of investment to purchase a convertible promissory note of a privately held clinical-stage biotechnology company.


Net cash used in investing activities for the year December 31, 2020 primarily
was $17.5 million related to our purchase of 10 million restricted shares of
Tyme's common stock.

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Financing Activities:


Net cash used by financing activities for the year ended December 31, 2021 was
$28.4 million, as a result of $8.0 million of principal payments for outstanding
debt under our Revised Credit Agreement with JPMorgan Chase Bank, N.A., as
administrative agent and the lenders party thereto, or the Credit Agreement,
$21.2 million in payments related to the repurchases of our common stock, $1.6
million of payments associated with employee withholding tax upon vesting of
stock-based awards, partially offset by $2.4 million of proceeds from common
stock exercises of employee stock options.

Net cash used in financing activities for the year ended December 31, 2020 was
$37.9 million, as a result of $5.0 million of principal payments for debt
required by the Company's Second Amended and Restated Credit Agreement with
JPMorgan Chase Bank, N.A., as administrative agent and the lenders party
thereto, or the Revised Credit Agreement, $35.0 million in payments related to
the repurchases of our common stock, $1.5 million of payments associated with
employee withholding tax upon vesting of stock-based awards, partially offset by
$3.7 million of proceeds from common stock exercises of employee stock options.

Net cash used in financing activities for the year ended December 31, 2019 was
$24.2 million, primarily resulting from principal payments for debt required by
the Revised Credit Agreement of $6.0 million and payments related to the
repurchases of our common stock of $18.0 million.

Trends and Uncertainties

Impact of the COVID-19 Pandemic


The COVID-19 pandemic has resulted in authorities implementing aggressive
actions. Government authorities in the United States have recommended or imposed
various social distancing, quarantine, and isolation measures on large portions
of the population, and similar measures have also been taken in many other
countries around the world. While many of these
governmental restrictions have begun to be lifted, the timing and extent to
which such orders and restrictions will be removed
remains uncertain. Both the COVID-19 pandemic and the containment and mitigation
efforts related to the pandemic have had a serious adverse impact on the U.S.
economy and the economies of other countries around the world, the severity and
duration of which are uncertain. There is no guarantee that prior or new
restrictions will not be reinstated in response to the continued spread of
COVID-19.

During the year ended December 31, 2021, we have experienced a variable impact
on our business and financial condition due to the COVID-19 pandemic, which
impacts include a decrease in revenue from sales of Belrapzo resulting, in part,
from a decrease in inventory stocking and utilization rates, as well as a
decrease in research and development expenses partially resulting from
preclinical program delays. We also incurred an insignificant amount of
incremental administrative costs related to the COVID-19 pandemic. The COVID-19
pandemic, including containment and mitigation measures, has impacted, and is
expected to continue to impact, our business and operations in a number of ways,
including:
•Day-to-Day Operations: Since mid-March 2020, certain of our employees,
including customer-facing employees, had been primarily working remotely. The
duration and extent of these restrictions are anticipated to be eased in the
short term. During the second quarter of 2021, we developed and implemented
plans to resume in-person work practices while adhering to relevant health
authority guidance. We may incur additional expenses in 2022 related to the
impact of the COVID-19 pandemic on our operations, including updates to our
facilities to align with safety protocols.
•Manufacturing and Supply Chain: We are working closely with our commercial
partners and third-party manufacturers to mitigate potential disruptions as a
result of the COVID-19 pandemic by continuing to monitor the supply and
availability of Bendeka, Ryanodex and Belrapzo for the patients who rely on
these products. We anticipate that the COVID-19 pandemic will continue to delay
our supply chain and marketing and sales efforts for certain of our products,
including Bendeka, although it is not currently expected that any disruption
would be material. If the COVID-19 pandemic continues to persist for an extended
period of time and impacts essential distribution systems such as FedEx and
postal delivery, we could experience future disruptions to our supply chain and
operations, and associated delays in the manufacturing and our clinical supply,
which would adversely impact our development activities.
•Marketing and Sale of Products: In addition to the impact on our product
revenues resulting in a decrease in sales from Belrapzo, driven, in part, by the
COVID-19 pandemic, we have also observed a reduction in the number of Bendeka
patients visiting infusion centers, hospitals and clinics for intravenous
administration of Bendeka due to interruptions in healthcare services, and the
patients' inability to visit administration sites as well as desire to avoid
contact with infected individuals. In addition, our sales and marketing teams
have been working remotely and our virtual initiatives with respect to marketing
and supporting the sale and administration of our products have not been as
effective as our in-person sales and marketing activities.

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•Liquidity and Capital Resources: We believe that our cash and cash equivalents
and availability of borrowings under our Credit Agreement will be sufficient to
fund our currently anticipated working capital requirements for at least the
next twelve months. While the COVID-19 pandemic has not had, and we do not
expect it to have, a material adverse effect on our liquidity, the situation
continues to rapidly evolve and has already resulted in a significant disruption
of global financial markets. If the disruption persists or deepens, we could
experience an inability to access additional capital when and if needed. If we
are unable to obtain funding, we could be forced to delay, reduce or eliminate
distribution of our commercialized products, product portfolio expansion or some
or all of our research and development programs, which would adversely affect
our business prospects. We expect to be able to obtain future funding under the
terms of the Credit Agreement, for general corporate purposes and any strategic
acquisitions.
•Regulatory Activities: We may experience further delays in the timing of NDA
review and/or our interactions with FDA due to, for example, absenteeism by
governmental employees, inability to conduct planned physical inspections
related to regulatory approval, or the diversion of FDA's efforts and attention
to approval of other therapeutics or other activities related to the COVID-19
pandemic, which could further delay approval decisions with respect to
regulatory submissions or obtain new product approvals.
•Clinical Development Timelines: The clinical trial timelines for certain of our
product candidates have been delayed given difficulties with limited patient
enrollment resulting from the impact of the COVID-19 pandemic, and we expect
that our clinical trial timelines will continue to be impacted for the duration
of the pandemic.

There are significant uncertainties surrounding the extent and duration of the
impact of the COVID-19 pandemic on our business and operations. We continue to
evaluate the impact of the COVID-19 pandemic on our operating results and
financial condition. The COVID-19 pandemic has had a variable impact on our
results of operations during the year ended December 31, 2021 and, it could have
a material adverse impact on our financial condition and results of operations
in the future.

Contractual Obligations

Our future material contractual obligations include the following (in
thousands):
Obligation                      Total                2022         2023         2024        2025
Operating leases (1)          $  4,329$  1,423$ 1,455$ 1,038$ 413
Credit facility                 26,000              26,000            -            -          -
Purchase obligations (2)        69,549              69,549            -            -          -
Total obligations             $ 99,878$ 96,972$ 1,455$ 1,038$ 413



(1) We lease our corporate office location. On August 8, 2019, we amended the
lease for our corporate office location in order to rent additional office space
and extend the term of our existing lease to June 30, 2025. The Company also
leases its lab space under a lease agreement that expires on April 30, 2024. We
also lease office space located in Palm Beach Gardens, FL. The new lease
agreement commenced on November 1, 2021 and will expire 36 months from the lease
commencement date, which is October 31, 2024. Rental expense was $1,407, $1,323,
and $1,146, for the year ended December 31, 2021, 2020, and 2019, respectively.
The remaining future lease payments under the operating leases, exclusive of any
renewal option periods, are $4,329 as of December 31, 2021, payable monthly.

(2) As of December 31, 2021, the Company has purchase obligations in the amount
of $69,549 which represents the contractual commitments under contract
manufacturing and supply agreements with suppliers. The obligation under the
supply agreement is primarily for finished product, inventory, and research and
development.


Recent Accounting Pronouncements


Recent Accounting Pronouncements - Not Yet Adopted
In March 2020, the FASB issued Update 2020-04 Reference Rate Reform (Topic 848),
Facilitation of the Effects of Reference Rate Reform on Financial Reporting to
provide temporary optional guidance to ease the potential burden in accounting
for reference rate reform. The amendments in Update 2020-04 are elective and
apply to all entities that have contracts, hedging relationships, and other
transactions that reference LIBOR, formerly known as the London Interbank
Offered Rate,
or another reference rate expected to be discontinued due to reference rate
reform. The new guidance provides optional expedients, including; (1) Simplify
accounting analyses under current GAAP for contract modifications, such as
modifications of contracts within the scope of Topic 470, Debt, that will be
accounted for by prospectively adjusting the effective interest rate, as if any
modification was not substantial. That is, the original contract and the new
contract shall be accounted for as if they were not substantially different from
one another; (2) Simplify the assessment of hedge effectiveness and allow
hedging relationships affected by reference rate reform to continue; (3) Allow a
one-time election to sell or transfer debt securities

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classified as held to maturity before January 1, 2020 that reference a rate
affected by reference rate reform. The amendments are effective for all entities
from the beginning of an interim period that includes the issuance date of the
ASU. An entity may elect to apply the amendments prospectively through December
31, 2022. The adoption of ASU 2020-4 is not expected to have a material impact
on the Company's financial position or results of operations.

Critical Accounting Policies and Estimates


The preparation of financial statements in conformity with U.S. GAAP requires us
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and other financial information. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. The amount of assets and
liabilities reported in our consolidated balance sheets and the amounts reported
in our consolidated statements of operations are affected by estimates and
assumptions, which are used for, but not limited to, the accounting for revenue
recognition. The accounting estimates discussed below involve a significant
level of estimation uncertainty and have had or are reasonably likely to have a
material impact on our financial condition or results of operations. Actual
results could differ materially from our estimates. For additional accounting
policies, see Note 2 to our Consolidated Financial Statements-Summary of
Significant Accounting Policies.

Revenue Recognition


Revenue is recognized when a customer obtains control of promised goods or
services, in an amount that reflects the consideration which the entity expects
to receive in exchange for those goods or services. To determine revenue
recognition for arrangements that an entity determines are within the scope of
ASC 606, the Company performs the following five steps: (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. The Company only
applies the five-step model to contracts when it is probable that the entity
will collect the consideration it is entitled to in exchange for the goods or
services it transfers to the customer. At contract inception, once the contract
is determined to be within the scope of ASC 606, the Company assesses the goods
or services promised within each contract and determines those that are
performance obligations, and assesses whether each promised good or service is
distinct. The Company then recognizes as revenue the amount of the transaction
price that is allocated to the respective performance obligation when (or as)
the performance obligation is satisfied. Sales, value add, and other taxes
collected on behalf of third parties are excluded from revenue.

Product revenue - The Company recognizes net revenue on sales to its commercial
partners and to end users. In each instance, revenue is generally recognized
when the customer obtains control of the Company's product, which occurs at a
point in time, and may be upon shipment or upon delivery based on the
contractual shipping terms of a contract.

Revenue on sales to commercial partners relates to Bendeka and Treakisym. Sales
to our commercial partners are presented gross because the Company is primarily
responsible for fulfilling the promise to provide the product, is responsible to
ensure that the product is produced in accordance with the related supply
agreement and bears risk of loss while the inventory is in-transit to the
commercial partner.

Revenue is measured as the amount of consideration the Company expects to
receive in exchange for transferring products or services to a customer. To the
extent the transaction price includes variable consideration, the Company
estimates the amount of variable consideration that should be included in the
transaction price utilizing the expected value method to which the Company
expects to be entitled. As such, revenue on sales to end users for Belrapzo and
Ryanodex are recorded net of certain deductions. Our products are contracted
with a limited number of oncology distributors and hospital buying groups with
narrow differences in ultimate realized contract prices used to estimate our
chargeback and rebate reserves. Variable consideration is included in the
transaction price if, in the Company's judgment, it is probable that a
significant future reversal of cumulative revenue under the contract will not
occur. Estimates of variable consideration are made using the expected value
method and determination of whether to include estimated amounts in the
transaction price are based largely on an assessment of the Company's
anticipated performance and all information (historical, current and forecasted)
that is reasonably available. The Company believes that the estimates it has
established are reasonable based upon current facts and circumstances. Applying
different judgments to the same facts and circumstances could result in the
estimated amounts to vary.


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Components of Gross-to-Net (GTN) Estimates


Chargebacks: Chargebacks are discounts that occur when certain contracted
customers, including group purchasing organizations, or GPOs, public health
service institutions and federal government entities purchasing via the Federal
Supply Schedule, purchase from the Company's distributors. The Company's
distributors purchase product from us at invoice price, then resell the product
to certain contracted customers on the basis of prices negotiated between us and
the providers. The difference between the distributors' purchase price and the
typically lower certain contracted customers' purchase price is refunded to the
distributors through a chargeback credit. We record estimates for these
chargebacks at the time of sale as deductions from gross revenues, with
corresponding adjustments to our accounts receivable allowances.


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