jnp-10q_20170930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2017

OR

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 1-10352

 

JUNIPER PHARMACEUTICALS, INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

59-2758596

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

33 Arch Street

Boston, Massachusetts

 

02110

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (617) 639-1500

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes      No  

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

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

  (Do not check if a smaller reporting company)

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 Exchange Act).    Yes  ☐    No  ☒

The number of shares outstanding of the registrant’s common stock as of October 31, 2017: 10,844,113.

 


 

EXPLANATORY NOTE

Unless the context indicates otherwise, references in this Quarterly Report to “Juniper Pharmaceuticals,” “Juniper,” “the Company,” “we” “our,” and “us” mean Juniper Pharmaceuticals, Inc. and its subsidiaries.

 


 

Juniper Pharmaceuticals, Inc.

Table of Contents

 

 

 

 

 

Page

 

 

Part I—Financial Information

 

 

Item 1.

 

Financial Statements (unaudited)

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016

 

1

 

 

Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2017 and 2016

 

2

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine month periods ended September 30, 2017 and 2016

 

3

 

 

Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2017 and 2016

 

4

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

5

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

18

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

31

Item 4.

 

Controls and Procedures

 

31

 

 

 

 

 

 

 

Part II—Other Information

 

 

Item 1.

 

Legal Proceedings

 

33

Item 1A.

 

Risk Factors

 

33

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

33

Item 3.

 

Defaults Upon Senior Securities

 

33

Item 4.

 

Mine Safety Disclosures

 

33

Item 5.

 

Other Information

 

33

Item 6.

 

Exhibits

 

34

Signatures

 

35

 

 

 

 


 

Part I—Financial Information

Item 1. Financial Statements

 

Juniper Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

 

 

 

September 30,

2017

 

 

December 31,

2016

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,106

 

 

$

20,994

 

Accounts receivable, net

 

 

6,521

 

 

 

6,573

 

Inventories

 

 

5,897

 

 

 

5,621

 

Prepaid expenses and other current assets

 

 

2,152

 

 

 

1,539

 

Total current assets

 

 

36,676

 

 

 

34,727

 

Property and equipment, net

 

 

15,127

 

 

 

13,366

 

Intangible assets, net

 

 

817

 

 

 

969

 

Goodwill

 

 

9,056

 

 

 

8,342

 

Other assets

 

 

79

 

 

 

167

 

Total assets

 

$

61,755

 

 

$

57,571

 

Liabilities, contingently redeemable preferred stock, and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,607

 

 

$

3,893

 

Accrued expenses and other

 

 

5,739

 

 

 

5,271

 

Deferred revenue

 

 

7,444

 

 

 

5,624

 

Current portion of long-term debt

 

 

535

 

 

 

204

 

Total current liabilities

 

 

18,325

 

 

 

14,992

 

Long-term debt, net of current portion

 

 

3,369

 

 

 

2,203

 

Other noncurrent liabilities

 

 

148

 

 

 

56

 

Total liabilities

 

 

21,842

 

 

 

17,251

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Contingently redeemable series C preferred stock, 0 and 0.55 shares issued and

   outstanding at September 30, 2017 and December 31, 2016, respectively (liquidation

   preference of $550)

 

 

 

 

 

550

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 1,000 shares authorized Series B convertible

   preferred stock, 0 and 0.13 shares issued and outstanding at September 30, 2017 and

   December 31, 2016, respectively (liquidation preference of $0 and $13 as of

   September 30, 2017 and December 31, 2016, respectively)

 

 

 

 

 

 

Common stock $0.01 par value; 150,000 shares authorized; 12,257 issued and 10,844

   outstanding at September 30, 2017 and December 31, 2016

 

 

123

 

 

 

123

 

Additional paid-in capital

 

 

291,857

 

 

 

290,636

 

Treasury stock (at cost), 1,413 shares at September 30, 2017 and December 31, 2016

 

 

(8,601

)

 

 

(8,601

)

Accumulated deficit

 

 

(240,128

)

 

 

(237,360

)

Accumulated other comprehensive loss

 

 

(3,338

)

 

 

(5,028

)

Total stockholders’ equity

 

 

39,913

 

 

 

39,770

 

Total liabilities, contingently redeemable preferred stock, and stockholders’ equity

 

$

61,755

 

 

$

57,571

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1


 

Juniper Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

8,389

 

 

$

7,057

 

 

$

25,684

 

 

$

20,716

 

Service revenues

 

 

4,597

 

 

 

3,337

 

 

 

12,505

 

 

 

9,964

 

Royalties

 

 

 

 

 

1,162

 

 

 

 

 

 

2,963

 

Total revenues

 

 

12,986

 

 

 

11,556

 

 

 

38,189

 

 

 

33,643

 

Cost of product revenues

 

 

5,160

 

 

 

3,683

 

 

 

14,776

 

 

 

11,892

 

Cost of service revenues

 

 

2,559

 

 

 

2,022

 

 

 

7,149

 

 

 

6,630

 

Total cost of revenues

 

 

7,719

 

 

 

5,705

 

 

 

21,925

 

 

 

18,522

 

Gross profit

 

 

5,267

 

 

 

5,851

 

 

 

16,264

 

 

 

15,121

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

517

 

 

 

259

 

 

 

1,306

 

 

 

910

 

Research and development

 

 

2,291

 

 

 

2,304

 

 

 

5,285

 

 

 

8,234

 

General and administrative

 

 

3,238

 

 

 

3,111

 

 

 

12,263

 

 

 

9,815

 

Restructuring charge

 

 

756

 

 

 

 

 

 

756

 

 

 

 

Total operating expenses

 

 

6,802

 

 

 

5,674

 

 

 

19,610

 

 

 

18,959

 

(Loss) income from operations

 

 

(1,535

)

 

 

177

 

 

 

(3,346

)

 

 

(3,838

)

Interest expense, net

 

 

(47

)

 

 

(24

)

 

 

(105

)

 

 

(74

)

Other income, net

 

127

 

 

 

90

 

 

 

179

 

 

 

296

 

Total non-operating income

 

80

 

 

 

66

 

 

 

74

 

 

 

222

 

(Loss) income before income taxes

 

 

(1,455

)

 

 

243

 

 

 

(3,272

)

 

 

(3,616

)

Income tax (benefit) expense

 

 

(45

)

 

 

(5

)

 

 

(45

)

 

 

47

 

Net (loss) income

 

$

(1,410

)

 

$

248

 

 

$

(3,227

)

 

$

(3,663

)

Basic net (loss) income per common share

 

$

(0.13

)

 

$

0.02

 

 

$

(0.26

)

 

$

(0.34

)

Diluted net (loss) income per common share

 

$

(0.13

)

 

$

0.02

 

 

$

(0.26

)

 

$

(0.34

)

Basic weighted average common shares outstanding

 

 

10,844

 

 

 

10,799

 

 

 

10,817

 

 

 

10,791

 

Diluted weighted average common shares outstanding

 

 

10,844

 

 

 

11,060

 

 

 

10,817

 

 

 

10,791

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2


 

Juniper Pharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss)

 

$

(1,410

)

 

$

248

 

 

$

(3,227

)

 

$

(3,663

)

Other comprehensive income (loss) components:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

639

 

 

 

(658

)

 

 

1,690

 

 

 

(2,863

)

Total other comprehensive income (loss)

 

 

639

 

 

 

(658

)

 

 

1,690

 

 

 

(2,863

)

Comprehensive income (loss)

 

$

(771

)

 

$

(410

)

 

$

(1,537

)

 

$

(6,526

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

Juniper Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

September 30,

 

 

 

2017

 

 

2016

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(3,227

)

 

$

(3,663

)

Reconciliation of net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,668

 

 

 

1,435

 

Stock-based compensation expense

 

 

1,216

 

 

 

804

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

356

 

 

 

1,680

 

Inventories

 

 

(274

)

 

 

(1,215

)

Prepaid expenses and other current assets

 

 

(550

)

 

 

282

 

Other non-current assets

 

 

88

 

 

 

18

 

Accounts payable

 

 

897

 

 

 

2,836

 

Accrued expenses and other

 

 

298

 

 

 

354

 

Deferred revenue

 

 

1,761

 

 

 

1,149

 

Net cash provided by operating activities

 

 

2,233

 

 

 

3,680

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,404

)

 

 

(2,256

)

Net cash used in investing activities

 

 

(2,404

)

 

 

(2,256

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from loan facility

 

 

954

 

 

 

 

Proceeds from equipment loans

 

 

1,501

 

 

 

 

Principal payments on debt

 

 

(1,269

)

 

 

(175

)

Dividends paid

 

 

(14

)

 

 

(21

)

Net cash provided by (used in) financing activities

 

 

1,172

 

 

 

(196

)

Effect of exchange rate changes on cash and cash equivalents

 

 

111

 

 

 

(158

)

Net increase in cash and cash equivalents

 

 

1,112

 

 

 

1,070

 

Cash and cash equivalents, beginning of period

 

 

20,994

 

 

 

13,901

 

Cash and cash equivalents, end of period

 

$

22,106

 

 

$

14,971

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

85

 

 

$

67

 

Supplemental noncash information

 

 

 

 

 

 

 

 

Purchases of equipment through accounts payable and accrued expenses

 

$

100

 

 

$

 

Excess of carrying value of Series C Preferred Stock over redemption value

 

$

459

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

Juniper Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) Interim Condensed Consolidated Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Annual Report on Form 10-K of Juniper Pharmaceuticals, Inc. (“Juniper” or the “Company”) for the year ended December 31, 2016 filed with the SEC on March 7, 2017 (the “2016 Annual Report”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2017, and its results of operations for the three and nine months ended September 30, 2017 and 2016, and cash flows for the nine months ended September 30, 2017 and 2016. The condensed consolidated balance sheet at December 31, 2016, was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements. Results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results for the year ending December 31, 2017 or any period thereafter.

At September 30, 2017, cash and cash equivalents were $22.1 million.  The Company’s future funding requirements depend on a number of factors, including the rate of market acceptance of its current and future products and services and the resources the Company devotes to developing and supporting the same.  The Company believes that current cash and cash equivalents, as well as cash generated from operations, will be sufficient to meet anticipated cash needs for working capital, including potentially advancing a product candidate, and capital expenditures through the next twelve months from the date of the filing of this Form 10-Q.  The Company may be dependent on its ability to raise additional capital to finance operations and further fund research and development programs.  If the Company is not able to raise additional capital on terms acceptable to it, or at all, as and when needed, it may be required to curtail its operating spend including spend related to its research and development programs.

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to, revenue recognition, allowance for doubtful accounts, inventory reserve, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, restructuring charges and fair value of stock options. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates.

 

(2) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands):

 

 

 

September 30,

2017

 

 

December 31,

2016

 

Raw materials

 

$

2,020

 

 

$

856

 

Work in process

 

 

3,099

 

 

 

3,806

 

Finished goods

 

 

778

 

 

 

959

 

Total

 

$

5,897

 

 

$

5,621

 

 

The inventory reserve balance at September 30, 2017 was $0.3 million. No reserve was required at December 31, 2016. During the three and nine months ended September 30, 2017, the Company recorded charges in the condensed consolidated statements of operations for excess and obsolete inventory of $0.3 million and $0.5 million, respectively. No charges were recorded for the three and nine months ended September 30, 2016.

5


 

(3) Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that fair value of the asset may be less than the carrying value of the asset. The Company determined a triggering event occurred in September 2017 based on Juniper’s announcement of a corporate reprioritization which aimed to re-focus its resources on the core business of Crinone® progesterone gel and JPS and to focus its research and development organization on its hormone replacement therapy initiative, its lead IVR program, and the Company would seek to partner its other IVR programs.

In accordance with Accounting Standard Codification, or ASC 350, Goodwill and Other Intangibles (“ASC 350”), the Company uses the two-step approach for each reporting unit. The first step compares the carrying amount of the reporting unit to its estimated fair value (Step 1) utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated using a risk-adjusted discount rate. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed wherein the reporting unit’s carrying value is compared to the implied fair value (Step 2). To the extent that the carrying value of goodwill exceeds the implied fair value of goodwill, impairment exists and must be recognized.

Juniper concluded that the business represents two reporting units for goodwill impairment testing, which are product and service. Juniper’s goodwill is assigned to the Company’s service reporting unit. Juniper performed an impairment test as of the date of the triggering event and determined the Company’s goodwill is not impaired as of that date.

Changes to goodwill during the nine months ended September 30, 2017 were as follows (in thousands):

 

 

 

Total

 

Balance—December 31, 2016

 

$

8,342

 

Effects of foreign currency translation

 

 

714

 

Balance—September 30, 2017

 

$

9,056

 

 

Intangible assets consist of the following at September 30, 2017 and December 31, 2016 (in thousands):

 

 

 

Trademark

 

 

Developed

Technology

 

 

Customer

Relationships

 

 

Total

 

Gross carrying amount

 

$

300

 

 

$

1,370

 

 

$

1,240

 

 

$

2,910

 

Foreign currency translation adjustment

 

 

(65

)

 

 

(206

)

 

 

(187

)

 

 

(458

)

Accumulated amortization

 

 

(235

)

 

 

(792

)

 

 

(608

)

 

 

(1,635

)

Balance—September 30, 2017

 

$

 

 

$

372

 

 

$

445

 

 

$

817

 

 

 

 

Trademark

 

 

Developed

Technology

 

 

Customer

Relationships

 

 

Total

 

Gross carrying amount

 

$

300

 

 

$

1,370

 

 

$

1,240

 

 

$

2,910

 

Foreign currency translation adjustment

 

 

(53

)

 

 

(298

)

 

 

(270

)

 

 

(621

)

Accumulated amortization

 

 

(247

)

 

 

(617

)

 

 

(456

)

 

 

(1,320

)

Balance—December 31, 2016

 

$

 

 

$

455

 

 

$

514

 

 

$

969

 

 

Amortization expense related to developed technology is classified as a component of cost of service revenues in the accompanying consolidated statements of operations. Amortization expense related to trademark and customer relationships is classified as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Amortization expense for the three months ended September 30, 2017 and 2016 was $0.1 million.  Amortization expense for the nine months ended September 30, 2017 and 2016 was $0.2 million and $0.3 million, respectively.  Amortization expense on existing intangible assets as of September 30, 2017 is as follows (in thousands):

 

Year ending December 31,

 

Total

 

Remainder of 2017

 

$

78

 

2018

 

 

287

 

2019

 

 

260

 

2020

 

 

192

 

Total

 

$

817

 

6


 

 

(4) Debt and other Contractual Obligations

In September 2013, Juniper assumed debt of $3.9 million in connection with its acquisition of Juniper Pharma Services (“JPS”). JPS had entered into a Business Loan Agreement (“Loan Agreement”) covering three loan facilities (collectively referred to as the “original agreements”) with Lloyds TSB Bank (“Lloyds”) as administrative agent. In May 2017, JPS repaid one of the existing loan facilities upon which JPS subsequently entered into a new loan facility with the same administrative agent for the same outstanding balance.  The refinancing was accounted for as a modification with no resulting gain or loss. The remaining original agreements and the new agreement are collectively referred to as the “loan facilities”.

As of September 30, 2017, the Company owed $2.5 million on the loan facilities. The loan facilities are due for repayment over periods ranging from 7-15 years. Two of the facilities bear interest at the Bank of England’s base rate plus 1.95%, and 2.55%, respectively. The interest rates at September 30, 2017 for these facilities were 2.45% and 3.05%, respectively. The third facility is a fixed rate agreement bearing interest at 2.99% per annum. The weighted average interest rate for the three loan facilities for the three months ended September 30, 2017 was 2.76%. The Loan Agreement is secured by the mortgaged property and an unlimited lien on other assets of JPS. The original agreements under the Loan Agreement contains financial covenants that limit the amount of indebtedness JPS may incur, requires JPS to maintain certain levels of net worth, and restricts JPS’s ability to materially alter the character of its business. The new loan facility contains the same financial covenants outlined above in addition to a covenant which requires that JPS maintain certain levels of earnings before interest, taxes, depreciation and amortization. As of September 30, 2017, the Company is in compliance with all of the covenants under the Loan Agreement.

In September 2013, as part of the acquisition of JPS, Juniper assumed a $2.5 million obligation under a grant arrangement with the Regional Growth Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. JPS used this grant to fund the building of its second facility, which includes analytical labs, office space, and a manufacturing facility. As part of the arrangement, JPS is required to create and maintain certain full-time equivalent personnel levels through October 1, 2017. As of September 30, 2017, the Company is in compliance with the covenants of the arrangement. The obligation ended on October 1, 2017. As of the date of this filing, the Company’s obligation under the grant arrangement is complete and the Company met all compliance requirements through October 1, 2017.

 

The income from the Regional Growth Fund was on a decelerated basis through October 1, 2017. As of September 30, 2017, the Company had recorded all deferred revenue previously recognized under this arrangement. Other income associated with the Regional Growth Fund obligation for the three months ended September 30, 2017 and 2016 was $0.2 million and $0.2 million, respectively. Other income associated with the Regional Growth Fund obligation for the nine months ended September 30, 2017 and 2016 was $0.6 million and $0.5 million, respectively.

 

Juniper leases its U.S. corporate office under an operating lease.  Additionally, Juniper financed certain equipment under loan agreements with payments through March 2022.  In October 2015, the Company entered into a lease agreement for its corporate office in Boston, Massachusetts. The initial term of the lease agreement is approximately 39 months and ends in 2019, which includes a three-month free rent period. In January and March 2017, the Company entered into loans of $0.9 million and $0.6 million, respectively, for equipment in its Nottingham, U.K. facility.  The interest rate for the two loans was 2.09% at September 30, 2017.  The transactions were considered failed sales-leaseback arrangements as the Company will obtain title to the equipment at the end of the term of the financing for little or no consideration. These failed sale-leaseback arrangements have been recorded as a component of long-term debt on the Company’s condensed consolidated balance sheets. The initial terms of the loans are 60 months.  

 

Commitments under Juniper’s debt and lease arrangements are as follows as of September 30, 2017 (in thousands):

 

 

 

Operating

Leases

 

 

Debt

Principal

Payments

 

 

Total

 

Remainder of 2017

 

$

109

 

 

$

132

 

 

$

241

 

2018

 

 

443

 

 

 

540

 

 

 

983

 

2019

 

 

74

 

 

 

563

 

 

 

637

 

2020

 

 

 

 

 

582

 

 

 

582

 

2021

 

 

 

 

 

602

 

 

 

602

 

Thereafter

 

 

 

 

 

1,485

 

 

 

1,485

 

Total minimum debt and lease payments

 

$

626

 

 

$

3,904

 

 

$

4,530

 

 

 

7


 

(5) Intravaginal Ring Technology License

In March 2015, the Company obtained an exclusive worldwide license (“License Agreement”) to the intellectual property rights for a novel segmented intravaginal ring (“IVR”) technology. Due to its novel polymer and segmentation composition, the Company believes the IVR has the potential to deliver one or more drugs, including hormones and larger molecules such as peptides, at different dosages and release rates within a single segmented ring. Drugs such as progesterone and leuprolide have already been tested using the technology and demonstrated sustained release for up to three weeks. This technology was developed by Dr. Robert Langer from the Massachusetts Institute of Technology (“MIT”) and Dr. William Crowley from Massachusetts General Hospital (“MGH”) and Harvard Medical School. Drs. Langer and Crowley have each agreed to serve a three-year term as strategic advisors to the Company in exchange for an upfront one-time payment plus quarterly fees and equity compensation.

Unless earlier terminated by the parties, the License Agreement will remain in effect until the later of (i) the date on which all issued patents and filed patent applications within the licensed patent rights have expired or been abandoned and (ii) one year after the last sale for which a royalty is due under the License Agreement or 10 years after such expiration or abandonment date referred to in (i), whichever is earlier. Juniper has the right to terminate the License Agreement by giving 90 days advance written notice to MGH. MGH has the right to terminate the License Agreement based on the Company’s failure to make payments due under the License Agreement, subject to a 15 day cure period, or the Company’s failure to maintain the insurance required by the License Agreement. MGH may also terminate the License Agreement based on Juniper’s non-financial default under the License Agreement, subject to a 60 day cure period.

Pursuant to the terms of the License Agreement, Juniper has agreed to reimburse MGH for all costs associated with the preparation, filing, prosecution and maintenance of the licensed patent rights, and has agreed to pay MGH a $50,000 annual license fee on each of the first five year anniversaries of the effective date of the License Agreement, and a $100,000 annual license fee beginning on the sixth anniversary of the effective date of the License Agreement and on each subsequent anniversary thereafter. The annual license fee is creditable against any royalties or sublicense income payable in each calendar year.

Under the terms of the License Agreement, Juniper has agreed to use commercially reasonable efforts to develop and commercialize at least one product and/or process related to the IVR technology, which efforts will include the making of certain minimum annual expenditures in each of the first five years following the effective date of the License Agreement. Juniper has also agreed to pay MGH certain milestone payments totaling up to $1.2 million tied to the Company’s achievement of certain development and commercialization milestones, and certain annual royalty payments based on net sales of any such patented products or processes developed by Juniper.

 

(6) Segments and Geographic Information

The Company and its subsidiaries currently operate in two segments: product and service. The product segment oversees the supply chain and manufacturing of Crinone, the Company’s sole commercialized product. The product segment included the royalty stream the Company received from Allergan for Crinone sales in the United States, which ceased with the November 2016 agreement with Allergan, as well as the development of new product candidates. The service segment includes product development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers, as well as the characterizing and developing of pharmaceutical product candidates for the Company’s internal programs and managing certain preclinical activities including manufacturing of the Company’s pipeline products. In September 2013, the Company acquired JPS, a U.K.-based provider of pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services to the pharmaceutical industry. The Company conducts its advanced formulation, analytical and consulting services through JPS. The Company has integrated its supply chain management for its sole commercialized product, Crinone, into those operations and have therefore sought to capture synergies by transferring all operational activities related to its historic business.  The Company owns certain plant and equipment physically located at third party contractor facilities in the United Kingdom and Switzerland.

The Company’s largest customer, Merck KGaA, utilizes a Switzerland-based subsidiary to acquire product from the Company, which it then sells throughout the world excluding the United States.  Up until November 2016, the Company’s primary domestic customer, Allergan, Plc (“Allergan”), was responsible for the commercialization and sale of Crinone in the United States. In November 2016, the Company entered into an agreement with Allergan to monetize future royalty payments.  Under the agreement, the Company received a one-time payment of $11.0 million representing all future royalty amounts payable.

8


 

The following tables show selected information by geographic area (in thousands):

Revenues:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

United States

 

$

3,230

 

 

$

2,851

 

 

$

7,245

 

 

$

7,066

 

Switzerland

 

 

8,505

 

 

 

7,081

 

 

 

26,021

 

 

 

20,772

 

United Kingdom

 

 

751

 

 

 

981

 

 

 

2,788

 

 

 

3,474

 

Other countries

 

 

500

 

 

 

643

 

 

 

2,135

 

 

 

2,331

 

Total

 

$

12,986

 

 

$

11,556

 

 

$

38,189

 

 

$

33,643

 

 

Total assets:

 

 

 

September 30,

2017

 

 

December 31,

2016

 

United States

 

$

22,780

 

 

$

21,423

 

Switzerland

 

 

3,358

 

 

 

4,673

 

United Kingdom

 

 

35,529

 

 

 

31,288

 

Other countries

 

 

88

 

 

 

187

 

Total

 

$

61,755

 

 

$

57,571

 

 

Long-lived assets:

 

 

 

September 30,

2017

 

 

December 31,

2016

 

United States

 

$

500

 

 

$

663

 

Switzerland

 

 

438

 

 

 

369

 

United Kingdom

 

 

15,083

 

 

 

13,468

 

Other countries

 

 

2

 

 

 

2

 

Total

 

$

16,023

 

 

$

14,502

 

 

Long-lived assets include fixed assets, intangibles and other assets.

No other individual country represented greater than 10% of total revenues, total assets, or long-lived assets for any period presented.

For the three and nine months ended September 30, 2017, Merck KGaA accounted for 100% of the product segment revenue. For the three and nine months ended September 30, 2016, Merck KGaA accounted for 86% and 87% of the product segment revenue, respectively. For the three and nine months ended September 30, 2016, Allergan accounted for 14% and 13% of the product segment revenue, respectively. At September 30, 2017 and December 31, 2016, Merck KGaA made up 100% of the product segment accounts receivable.

For the three and nine months ended September 30, 2017 the same customer accounted for 46% and 31% of the service segment total revenue, respectively.  No customers accounted for 10% or more of the service segment total revenue for the three and nine months ended September 30, 2016.  At September 30, 2017, one customer accounted for 41% of total service segment accounts receivable, respectively. At December 31, 2016, two customers accounted for 18% and 13% of total service segment net accounts receivable.

9


 

The following summarizes other information by segment for the three months ended September 30, 2017 (in thousands):

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

8,389

 

 

$

 

 

$

8,389

 

Service revenues

 

 

 

 

 

4,597

 

 

 

4,597

 

Total revenues

 

$

8,389

 

 

$

4,597

 

 

$

12,986

 

Cost of product revenues

 

$

5,160

 

 

$

 

 

$

5,160

 

Cost of service revenues

 

 

 

 

 

2,559

 

 

 

2,559

 

Total cost of revenues

 

$

5,160

 

 

$

2,559

 

 

$

7,719

 

Gross profit

 

$

3,229

 

 

$

2,038

 

 

$

5,267

 

Total operating expenses

 

 

 

 

 

 

 

 

 

 

6,802

 

Total non-operating expense

 

 

 

 

 

 

 

 

 

 

80

 

Loss before income taxes

 

 

 

 

 

 

 

 

 

$

(1,455

)

 

The following summarizes other information by segment for the three months ended September 30, 2016 (in thousands):

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

7,057

 

 

$

 

 

$

7,057

 

Service revenues

 

 

 

 

 

3,337

 

 

 

3,337

 

Royalties

 

 

1,162

 

 

 

 

 

 

1,162

 

Total revenues

 

$

8,219

 

 

$

3,337

 

 

$

11,556

 

Cost of product revenues

 

$

3,683

 

 

$

 

 

$

3,683

 

Cost of service revenues

 

 

 

 

 

2,022

 

 

 

2,022

 

Total cost of revenues

 

$

3,683

 

 

$

2,022

 

 

$

5,705

 

Gross profit

 

$

4,536

 

 

$

1,315

 

 

$

5,851

 

Total operating expenses

 

 

 

 

 

 

 

 

 

 

5,674

 

Total non-operating income

 

 

 

 

 

 

 

 

 

 

66

 

Income before income taxes

 

 

 

 

 

 

 

 

 

$

243

 

 

The following summarizes other information by segment for the nine months ended September 30, 2017 (in thousands):

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

25,684

 

 

$

 

 

$

25,684

 

Service revenues

 

 

 

 

 

12,505

 

 

 

12,505

 

Total revenues

 

$

25,684

 

 

$

12,505

 

 

$

38,189

 

Cost of product revenues

 

$

14,776

 

 

$

 

 

$

14,776

 

Cost of service revenues

 

$

 

 

$

7,149

 

 

$

7,149

 

Total cost of revenues

 

 

14,776

 

 

 

7,149

 

 

 

21,925

 

Gross profit

 

$

10,908

 

 

$

5,356

 

 

$

16,264

 

Total operating expenses

 

 

 

 

 

 

 

 

 

 

19,610

 

Total non-operating expense

 

 

 

 

 

 

 

 

 

 

74

 

Loss before income taxes

 

 

 

 

 

 

 

 

 

$

(3,272

)

 

10


 

The following summarizes other information by segment for the nine months ended September 30, 2016 (in thousands):

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

20,716

 

 

$

 

 

$

20,716

 

Service revenues

 

 

 

 

 

9,964

 

 

 

9,964

 

Royalties

 

 

2,963

 

 

 

 

 

 

2,963

 

Total revenues

 

$

23,679

 

 

$

9,964

 

 

$

33,643

 

Cost of product revenues

 

$

11,892

 

 

$

 

 

$

11,892

 

Cost of service revenues

 

 

 

 

 

6,630

 

 

 

6,630

 

Total cost of revenues