jnp-10q_20180630.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 June 30, 2018

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 August 3, 2018: 11,319,757.

 


 

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 June 30, 2018 and December 31, 2017

 

1

 

 

Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2018 and 2017

 

2

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six month periods ended June 30, 2018 and 2017

 

3

 

 

Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2018 and 2017

 

4

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

5

Item 2.

 

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

 

20

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

30

Item 4.

 

Controls and Procedures

 

31

 

 

 

 

 

 

 

Part II—Other Information

 

 

Item 1.

 

Legal Proceedings

 

32

Item 1A.

 

Risk Factors

 

32

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)

 

 

 

June 30,

2018

 

 

December 31,

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,826

 

 

$

21,446

 

Accounts receivable, net

 

 

10,772

 

 

 

4,734

 

Inventories

 

 

6,280

 

 

 

6,326

 

Prepaid expenses and other current assets

 

 

3,228

 

 

 

3,467

 

Total current assets

 

 

41,106

 

 

 

35,973

 

Property and equipment, net

 

 

17,074

 

 

 

15,229

 

Intangible assets, net

 

 

587

 

 

 

744

 

Goodwill

 

 

8,928

 

 

 

9,123

 

Other assets

 

 

73

 

 

 

151

 

Total assets

 

$

67,768

 

 

$

61,220

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,173

 

 

$

4,038

 

Accrued expenses and other

 

 

7,398

 

 

 

5,615

 

Deferred revenue

 

 

887

 

 

 

6,141

 

Current portion of long-term debt

 

 

544

 

 

 

546

 

Total current liabilities

 

 

16,002

 

 

 

16,340

 

Long-term debt, net of current portion

 

 

2,909

 

 

 

3,253

 

Deferred tax liability

 

 

300

 

 

 

 

Other non-current liabilities

 

 

64

 

 

 

115

 

Total liabilities

 

 

19,275

 

 

 

19,708

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock $0.01 par value; 150,000 shares authorized; 12,525 issued and 11,105

   outstanding at June 30, 2018 and 12,257 issued and 10,844

   outstanding at December 31, 2017

 

 

125

 

 

 

123

 

Additional paid-in capital

 

 

294,584

 

 

 

292,108

 

Treasury stock (at cost), 1,420 shares at June 30, 2018 and 1,413 shares at

   December 31, 2017

 

 

(8,661

)

 

 

(8,601

)

Accumulated deficit

 

 

(233,802

)

 

 

(238,961

)

Accumulated other comprehensive loss

 

 

(3,753

)

 

 

(3,157

)

Total stockholders’ equity

 

 

48,493

 

 

 

41,512

 

Total liabilities and stockholders’ equity

 

$

67,768

 

 

$

61,220

 

 

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

June 30

 

 

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

9,343

 

 

$

9,569

 

 

$

19,417

 

 

$

17,295

 

Service revenues

 

 

5,717

 

 

 

4,387

 

 

 

11,167

 

 

 

7,908

 

License revenues

 

 

250

 

 

 

 

 

 

250

 

 

 

 

Total revenues

 

 

15,310

 

 

 

13,956

 

 

 

30,834

 

 

 

25,203

 

Cost of product revenues

 

 

6,158

 

 

 

5,303

 

 

 

12,174

 

 

 

9,617

 

Cost of service revenues

 

 

2,959

 

 

 

2,347

 

 

 

5,969

 

 

 

4,590

 

Total cost of revenues

 

 

9,117

 

 

 

7,650

 

 

 

18,143

 

 

 

14,207

 

Gross profit

 

 

6,193

 

 

 

6,306

 

 

 

12,691

 

 

 

10,996

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

563

 

 

 

410

 

 

 

982

 

 

 

788

 

Research and development

 

 

1,055

 

 

 

1,648

 

 

 

2,029

 

 

 

2,994

 

General and administrative

 

 

6,518

 

 

 

4,604

 

 

 

10,607

 

 

 

9,025

 

Total operating expenses

 

 

8,136

 

 

 

6,662

 

 

 

13,618

 

 

 

12,807

 

Loss from operations

 

 

(1,943

)

 

 

(356

)

 

 

(927

)

 

 

(1,811

)

Interest expense, net

 

 

(29

)

 

 

(30

)

 

 

(74

)

 

 

(58

)

Other income, net

 

 

758

 

 

 

10

 

 

 

559

 

 

 

52

 

Total non-operating income (expense)

 

 

729

 

 

 

(20

)

 

 

485

 

 

 

(6

)

Loss before income taxes

 

 

(1,214

)

 

 

(376

)

 

 

(442

)

 

 

(1,817

)

Income tax expense

 

 

300

 

 

 

 

 

 

300

 

 

 

 

Net loss

 

 

(1,514

)

 

 

(376

)

 

 

(742

)

 

 

(1,817

)

Adjustments attributable to preferred stockholders

 

 

 

 

 

452

 

 

 

 

 

 

445

 

Net (loss) income available to common stockholders

 

$

(1,514

)

 

$

76

 

 

$

(742

)

 

$

(1,372

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per common share

 

$

(0.14

)

 

$

0.01

 

 

$

(0.07

)

 

$

(0.13

)

Diluted net (loss) income per common share

 

$

(0.14

)

 

$

(0.03

)

 

$

(0.07

)

 

$

(0.13

)

Basic weighted average common shares outstanding

 

 

11,103

 

 

 

10,803

 

 

 

11,023

 

 

 

10,803

 

Diluted weighted average common shares outstanding

 

 

11,103

 

 

 

10,954

 

 

 

11,023

 

 

 

10,803

 

 

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

 

2


 

Juniper Pharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(in thousands)

(unaudited)

 

 

 

Three Months Ended

June 30

 

 

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net loss

 

$

(1,514

)

 

$

(376

)

 

$

(742

)

 

$

(1,817

)

Other comprehensive (loss) income components:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(1,536

)

 

 

823

 

 

 

(596

)

 

 

1,051

 

Total other comprehensive (loss) income

 

 

(1,536

)

 

 

823

 

 

 

(596

)

 

 

1,051

 

Comprehensive (loss) income

 

$

(3,050

)

 

$

447

 

 

$

(1,338

)

 

$

(766

)

 

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)

 

 

 

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(742

)

 

$

(1,817

)

Reconciliation of net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,211

 

 

 

1,075

 

Stock-based compensation expense

 

 

1,069

 

 

 

845

 

Deferred tax liability

 

 

300

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(6,188

)

 

 

(145

)

Inventories

 

 

46

 

 

 

409

 

Prepaid expenses and other current assets

 

 

487

 

 

 

(240

)

Accounts payable

 

 

2,915

 

 

 

(805

)

Accrued expenses and other

 

 

1,898

 

 

 

(335

)

Deferred rent

 

 

(23

)

 

 

(18

)

Deferred revenue

 

 

469

 

 

 

1,522

 

Net cash provided by operating activities

 

 

1,442

 

 

 

491

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,092

)

 

 

(1,404

)

Net cash used in investing activities

 

 

(3,092

)

 

 

(1,404

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from sale of common stock / exercise of options

 

 

1,407

 

 

 

 

Proceeds from loan facility

 

 

 

 

 

954

 

Proceeds from equipment loans

 

 

 

 

 

1,501

 

Principal payments on debt

 

 

(274

)

 

 

(1,143

)

Payments to satisfy employee taxes due on vesting of restricted awards

 

 

(60

)

 

 

 

Dividends paid

 

 

 

 

 

(7

)

Net cash provided by financing activities

 

 

1,073

 

 

 

1,305

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(43

)

 

 

78

 

Net (decrease) increase in cash and cash equivalents

 

 

(620

)

 

 

470

 

Cash and cash equivalents, beginning of period

 

 

21,446

 

 

 

20,994

 

Cash and cash equivalents, end of period

 

$

20,826

 

 

$

21,464

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

75

 

 

$

50

 

Supplemental noncash information

 

 

 

 

 

 

 

 

Purchases of equipment through accounts payable and accrued expenses

 

$

470

 

 

$

327

 

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

 

$

 

 

$

459

 

Redemption of Series C Preferred Stock and dividend included in accounts payable

 

$

 

 

$

98

 

 

 

 

 

 

 

 

 

 

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, 2017 filed with the SEC on March 9, 2018 (the “2017 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 June 30, 2018, and its results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. The condensed consolidated balance sheet at December 31, 2017 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 six months ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018 or any period thereafter.

At June 30, 2018, cash and cash equivalents were $20.8 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 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. 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 evaluate future anticipated capital or operational needs.

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 reserves, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, 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 or market, determined on a first-in, first-out method. The Company monitors standard costs on a monthly basis and updates them annually as necessary to reflect change in raw material costs and labor and overhead rates. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands): 

 

 

 

June 30,

2018

 

 

December 31,

2017

 

Raw materials

 

$

1,382

 

 

$

1,921

 

Work in process

 

 

4,060

 

 

 

3,299

 

Finished goods

 

 

838

 

 

 

1,106

 

Total

 

$

6,280

 

 

$

6,326

 

 

5


 

The Company provides inventory allowances when conditions indicate that the selling price could be less than cost due to physical deterioration, usage, obsolescence, reductions in estimated future demand and reductions in selling prices. The Company balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact its gross margins. The inventory reserve balance at June 30, 2018 and December 31, 2017 was $0.2 million and 0.5 million, respectively.   No charges for excess and obsolete inventory were incurred during the three months ended June 30, 2018 or 2017. During the six months ended June 30, 2018 and 2017, the Company recorded charges in the condensed consolidated statements of operations for excess and obsolete inventory of $11,000 and $0.2 million, respectively.

(3) Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets 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.

Changes to goodwill during the six months ended June 30, 2018 were as follows (in thousands):

 

 

 

Total

 

Balance—December 31, 2017

 

$

9,123

 

Effects of foreign currency translation

 

 

(195

)

Balance—June 30, 2018

 

$

8,928

 

 

The Company capitalizes and includes in intangible assets the costs of trademark, developed technology and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 3 to 7 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, (“ASC 820”). If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life.

 

Intangible assets consist of the following at June 30, 2018 and December 31, 2017 (in thousands):

 

 

 

Trademark

 

 

Developed

Technology

 

 

Customer

Relationships

 

 

Total

 

Gross carrying amount

 

$

300

 

 

$

1,370

 

 

$

1,240

 

 

$

2,910

 

Foreign currency translation adjustment

 

 

(53

)

 

 

(223

)

 

 

(201

)

 

 

(477

)

Accumulated amortization

 

 

(247

)

 

 

(888

)

 

 

(711

)

 

 

(1,846

)

Balance—June 30, 2018

 

$

 

 

$

259

 

 

$

328

 

 

$

587

 

 

 

 

Trademark

 

 

Developed

Technology

 

 

Customer

Relationships

 

 

Total

 

Gross carrying amount

 

$

300

 

 

$

1,370

 

 

$

1,240

 

 

$

2,910

 

Foreign currency translation adjustment

 

 

(53

)

 

 

(198

)

 

 

(179

)

 

 

(430

)

Accumulated amortization

 

 

(247

)

 

 

(839

)

 

 

(650

)

 

 

(1,736

)

Balance—December 31, 2017

 

$

 

 

$

333

 

 

$

411

 

 

$

744

 

 

Amortization expense for the three months ended June 30, 2018 and 2017 was $0.1 million. Amortization expense for the six months ended June 30, 2018 and 2017 was $0.2 million and $0.2 million, respectively. 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.

6


 

As of June 30, 2018, amortization expense remaining on existing intangible assets is as follows (in thousands):

 

Year ending December 31,

 

Total

 

Remainder of 2018

 

$

142

 

2019

 

 

256

 

2020

 

 

189

 

Total

 

$

587

 

 

(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 June 30, 2018, the Company owed $2.3 million on the loan facilities. All facilities are due for repayment over periods ranging from 7-15 years from the date of drawdown. Two of the facilities bear interest at the Bank of England’s base rate plus 1.95%, and 2.55%, respectively. The weighted average interest rates at June 30, 2018 for these two 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 June 30, 2018 was 2.76%. The loan facilities are secured by the mortgaged property and an unlimited lien on other assets of JPS. The loan facilities contain financial covenants that limit the amount of indebtedness Juniper Pharma Services may incur, requires Juniper Pharma Services to maintain certain levels of net worth, and restricts Juniper Pharma Services’ ability to materially alter the character of its business. As of June 30, 2018, the Company is in compliance with all of the covenants under the loan facilities.

 

As of June 30, 2018, the Company owed $1.2 million on its equipment loans. During the quarter ending March 31, 2017, the Company entered into two loans totaling $1.5 million with payments through March 2022 for equipment in its Nottingham, U.K. facility at an interest rate of 2.09%. 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.  

 

In October 2015, the Company entered into an operating lease agreement for its corporate office in Boston, Massachusetts. The initial term of the lease agreement is approximately 39 months and ends in the January of 2019, which includes a three-month free rent period.

 

In December 2016, the Company entered into an API Supply Agreement for a manufacturer of progesterone under which the Company has agreed to annual minimum volume commitments until December 2019.

 

The Company’s significant outstanding contractual obligations relate to operating leases for the Company’s facilities, loan agreements and minimum volume commitments. The Company’s facility leases are non-cancellable and contain renewal options. The Company’s future contractual obligations as of June 30, 2018 include the following (in thousands):

 

 

 

Total

 

 

Remainder of 2018

 

 

2019

 

 

2020

 

 

2021

 

 

2022

 

 

Thereafter

 

Operating lease

   obligations

 

$

296

 

 

$

222

 

 

$

74

 

 

$

 

 

$

 

 

$

 

 

$

 

Loan principal repayments

 

 

2,255

 

 

 

116

 

 

 

237

 

 

 

243

 

 

 

250

 

 

 

257

 

 

 

1,152

 

Capital lease obligations

 

 

1,198

 

 

 

154

 

 

 

317

 

 

 

331

 

 

 

344

 

 

 

52

 

 

 

 

 

Minimum purchase

   obligation

 

 

5,375

 

 

 

3,401

 

 

 

1,974

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

9,124

 

 

$

3,893

 

 

$

2,602

 

 

$

574

 

 

$

594

 

 

$

309

 

 

$

1,152

 

 

 

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 each agreed to serve a three-year term, which ended in March 2018, 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.

Daré Bioscience, Inc.

On April 24, 2018, Juniper entered into an Exclusive License Agreement with Daré Bioscience, Inc. (Daré), the “Daré License Agreement”)  pursuant to which the Company granted Daré (a) an exclusive worldwide license under certain patent rights (i) owned by the Company and (ii) exclusively licensed to the Company under the License Agreement, dated as of March 25, 2015, by and between Juniper and The General Hospital Corporation, as amended, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive worldwide license under certain technological information owned by the Company to make, have made, use, have used, sell, have sold, import and have imported products and processes. Daré is also entitled to sublicense the rights granted to it under the Daré License Agreement.

As consideration, the Company received in May 2018 a $250,000 license fee from Daré in connection with the execution of the Daré License Agreement. In addition, the Company is entitled to receive an annual license maintenance fee from Daré in the amount of $50,000 for the first two anniversaries of the effective date of the Daré License Agreement, increasing to $100,000 for each anniversary thereafter. The Company is also entitled to receive potential future development and sales milestone payments of up to $43.8 million (up to $13.5 million in development milestones and up to $30.3 million in sales milestones) for each product or process covered by the licenses granted under the Daré License Agreement. The Company is also eligible to receive mid-single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the Daré Licensee Agreement. The royalty term shall terminate on a product-by-product basis (or process-by-process) basis on the latest of (i) the expiration date of the last valid claim within the licensed patent rights in a country, (ii) ten (10) years following the first commercial sale of a product or process in a country, or (iii) the entry of generic competition for a product or process in a country, provided that if there is no generic competition for a product or process in a country by the ten (10) year anniversary of the first commercial sale of a product or process in a country, the royalty term shall terminate on the ten (10) year anniversary of the first commercial sale of such product or process in the country. In addition, if Daré sublicenses any of its rights under the Daré License Agreement, the Company is eligible to a low double-digit percentage of all sublicense income received by Daré for the sublicense of such rights to a third party, in lieu of the royalties on net sales noted above.

 

 

8


 

 

(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 service segment includes product development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers as well as characterizing and developing pharmaceutical product candidates for the Company’s internal programs. The Company conducts its advanced formulation, analytical and consulting services through its subsidiary, Juniper Pharma Services, the Company’s U.K.-based provider of pharmaceutical development, clinical trial manufacturing and advanced analytical and consulting services to the pharmaceuticals industry. The Company has integrated its supply chain management for Crinone into those operations and has 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 (the “U.K.”) 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 (the “U.S.”).   

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

Revenues:

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

United States

 

$

3,917

 

 

$

2,387

 

 

$

7,459

 

 

$

4,015

 

Switzerland

 

 

9,518

 

 

 

9,759

 

 

 

19,796

 

 

 

17,516

 

United Kingdom

 

 

1,182

 

 

 

1,088

 

 

 

1,975

 

 

 

2,037

 

Other countries

 

 

693

 

 

 

722

 

 

 

1,604

 

 

 

1,635

 

Total

 

$

15,310

 

 

$

13,956

 

 

$

30,834

 

 

$

25,203

 

 

Total assets:

 

 

 

June 30,

2018

 

 

December 31,

2017

 

United States

 

$

20,886

 

 

$

21,683

 

Switzerland

 

 

7,362

 

 

 

1,366

 

United Kingdom

 

 

39,491

 

 

 

38,129

 

Other countries

 

 

29

 

 

 

42

 

Total

 

$

67,768

 

 

$

61,220

 

 

Long-lived assets:

 

 

 

June 30,

2018

 

 

December 31,

2017

 

United States

 

$

345

 

 

$

523

 

Switzerland

 

 

1,257

 

 

 

535

 

United Kingdom

 

 

16,129

 

 

 

15,064

 

Other countries

 

 

3

 

 

 

2

 

Total

 

$

17,734

 

 

$

16,124

 

 

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

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

For the three and six months ended June 30, 2018 and 2017, Merck KGaA accounted for 100% of the product segment revenue. At June 30, 2018 and December 31, 2017, Merck KGaA made up 100% of the product segment accounts receivable.

9


 

For the three and six months ended June 30, 2018 and 2017, the same customer accounted for 41% and 28% and 37% and 23% of the service segment total revenue, respectively.  No additional customers accounted for 10% or more of the service segment total revenue for the three or six months ended June 30, 2018 and 2017.  At June 30, 2018 and December 31, 2017, one customer accounted for 47% and 53% of total service segment accounts receivable, respectively.

The following summarizes other information by segment for the three months ended June 30, 2018 (in thousands):

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

9,343

 

 

$

 

 

$

9,343

 

Service revenues

 

 

 

 

 

5,717

 

 

 

5,717

 

License revenues

 

 

250

 

 

 

 

 

 

250

 

Total revenues

 

$

9,593

 

 

$

5,717

 

 

$

15,310

 

Cost of product revenues

 

 

6,158

 

 

 

 

 

 

6,158

 

Cost of service revenues

 

 

 

 

 

2,959

 

 

 

2,959

 

Total cost of revenues

 

$

6,158

 

 

$

2,959

 

 

$

9,117

 

Gross profit

 

$

3,435

 

 

$

2,758

 

 

$

6,193

 

Total operating expenses

 

 

 

 

 

 

 

 

 

 

8,136

 

Total non-operating income

 

 

 

 

 

 

 

 

 

 

729

 

Loss before income taxes

 

 

 

 

 

 

 

 

 

$

(1,214

)

 

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

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

9,569

 

 

$

 

 

$

9,569

 

Service revenues

 

 

 

 

 

4,387

 

 

 

4,387

 

Total revenues

 

$

9,569

 

 

$

4,387

 

 

$

13,956

 

Cost of product revenues

 

 

5,303

 

 

 

 

 

 

5,303

 

Cost of service revenues

 

 

 

 

 

2,347

 

 

 

2,347

 

Total cost of revenues

 

$

5,303

 

 

$

2,347

 

 

$

7,650

 

Gross profit

 

$

4,266

 

 

$

2,040

 

 

$

6,306

 

Total operating expenses

 

 

 

 

 

 

 

 

 

 

6,662

 

Total non-operating expense

 

 

 

 

 

 

 

 

 

 

(20

)

Loss before income taxes

 

 

 

 

 

 

 

 

 

$

(376

)

 

 

 

The following summarizes other information by segment for the six months ended June 30, 2018 (in thousands):

 

 

 

Product

 

 

Service

 

 

Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

19,417

 

 

$

 

 

$

19,417

 

Service revenues

 

 

 

 

 

11,167

 

 

 

11,167

 

License revenues

 

 

250

 

 

 

 

 

 

250

 

Total revenues

 

$

19,667

 

 

$

11,167

 

 

$

30,834

 

Cost of product revenues

 

 

12,174

 

 

 

 

 

$

12,174

 

Cost of service revenues

 

 

 

 

 

5,969

 

 

$

5,969

 

Total cost of revenues

 

$

12,174

 

 

$

5,969

 

 

 

18,143

 

Gross profit

 

$

7,493

 

 

$