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Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the Quarterly Period Ended June 30, 2021

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: 001-39450

 

HARMONY BIOSCIENCES HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

82-2279923

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

630 W. Germantown Pike, Suite 215, Plymouth Meeting, PA

 

19462

(Address of principal executive offices)

 

(Zip Code)

 

(484) 539-9800

(Registrant’s telephone number, including area code)

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.00001 value per share

 

HRMY

 

The Nasdaq Stock Market LLC

(Nasdaq Global Market)

 

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

 

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

 

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

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

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

 

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

 

As of August 5, 2021, there were 57,008,474 shares of the registrant’s common stock, par value $0.00001 value per share, outstanding.

 

 


Table of Contents

 

 

TABLE OF CONTENTS

 

 

 

Page

Part I. Financial Information

 

3

Item 1. Financial Statements

 

3

Condensed Consolidated Balance Sheets (Unaudited)

 

3

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

 

4

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

 

5

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

6

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

35

Item 4. Controls and Procedures

 

35

Part II. Other Information

 

36

Item 1. Legal Proceedings

 

36

Item 1A. Risk Factors

 

36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

36

Item 3. Defaults upon Senior Securities

 

36

Item 4. Mine Safety Disclosures

 

36

Item 5. Other Information

 

36

Item 6. Exhibits

 

37

Signatures

 

38

 

 

2


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

June 30,

2021

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

159,686

 

 

$

228,631

 

Trade receivables, net

 

 

31,196

 

 

 

22,176

 

Inventory, net

 

 

4,951

 

 

 

3,823

 

Prepaid expenses

 

 

7,322

 

 

 

6,959

 

Other current assets

 

 

1,559

 

 

 

1,302

 

Total current assets

 

 

204,714

 

 

 

262,891

 

NONCURRENT ASSETS:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

944

 

 

 

938

 

Restricted cash

 

 

750

 

 

 

750

 

Intangible assets, net

 

 

153,135

 

 

 

162,343

 

Other noncurrent assets

 

 

152

 

 

 

152

 

Total noncurrent assets

 

 

154,981

 

 

 

164,183

 

TOTAL ASSETS

 

$

359,695

 

 

$

427,074

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Trade payables

 

$

2,006

 

 

$

2,556

 

Accrued compensation

 

 

6,043

 

 

 

8,942

 

Accrued expenses

 

 

26,653

 

 

 

122,727

 

Other current liabilities

 

 

1,893

 

 

 

314

 

Total current liabilities

 

 

36,595

 

 

 

134,539

 

NONCURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Long term debt, net

 

 

195,610

 

 

 

194,250

 

Other noncurrent liabilities

 

 

939

 

 

 

1,105

 

Total noncurrent liabilities

 

 

196,549

 

 

 

195,355

 

TOTAL LIABILITIES

 

 

233,144

 

 

 

329,894

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Preferred stock - $0.00001 par value; 10,000,000 shares and 0 shares authorized at June 30, 2021 and December 31, 2020, respectively; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Common stock—$0.00001 par value; 500,000,000 shares authorized at June 30, 2021 and December 31, 2020, respectively;  57,000,139 shares and 56,890,569 issued and outstanding at June 30, 2021 and December 31, 2020, respectively

 

 

1

 

 

 

1

 

Additional paid in capital

 

 

593,242

 

 

 

585,374

 

Accumulated deficit

 

 

(466,692

)

 

 

(488,195

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

126,551

 

 

 

97,180

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

359,695

 

 

$

427,074

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

 

3


Table of Contents

 

 

HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net product revenues

 

$

73,821

 

 

$

38,005

 

 

$

133,495

 

 

$

57,845

 

Cost of product sold

 

 

12,687

 

 

 

6,456

 

 

 

23,097

 

 

 

9,930

 

Gross profit

 

 

61,134

 

 

 

31,549

 

 

 

110,398

 

 

 

47,915

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

6,498

 

 

 

4,169

 

 

 

11,177

 

 

 

7,600

 

Sales and marketing

 

 

17,022

 

 

 

12,443

 

 

 

32,529

 

 

 

25,697

 

General and administrative

 

 

14,302

 

 

 

7,628

 

 

 

28,848

 

 

 

15,772

 

Total operating expenses

 

 

37,822

 

 

 

24,240

 

 

 

72,554

 

 

 

49,069

 

Operating income (loss)

 

 

23,312

 

 

 

7,309

 

 

 

37,844

 

 

 

(1,154

)

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

(22,639

)

Other income (expense), net

 

 

4

 

 

 

(400

)

 

 

(15

)

 

 

(1,546

)

Interest expense, net

 

 

(7,227

)

 

 

(6,936

)

 

 

(14,354

)

 

 

(13,308

)

Income (loss) before income taxes

 

 

16,089

 

 

 

(27

)

 

 

23,475

 

 

 

(38,647

)

Income taxes

 

 

(1,972

)

 

 

 

 

 

(1,972

)

 

 

 

Net income (loss) and comprehensive income (loss)

 

$

14,117

 

 

$

(27

)

 

$

21,503

 

 

$

(38,647

)

Accumulation of dividends on preferred stock

 

 

 

 

 

(10,446

)

 

 

 

 

 

(20,891

)

Net income (loss) available to common stockholders

 

$

14,117

 

 

$

(10,473

)

 

$

21,503

 

 

$

(59,538

)

EARNINGS (LOSS) PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.25

 

 

$

(1.34

)

 

$

0.38

 

 

$

(7.63

)

Diluted

 

$

0.24

 

 

$

(1.34

)

 

$

0.37

 

 

$

(7.63

)

Weighted average number of shares of common stock - basic

 

 

56,940,840

 

 

 

7,805,848

 

 

 

56,916,282

 

 

 

7,798,928

 

Weighted average number of shares of common stock - diluted

 

 

58,592,876

 

 

 

7,805,848

 

 

 

58,635,195

 

 

 

7,798,928

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

4


Table of Contents

 

HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share and per share data)

 

 

 

Common Stock

 

 

Additional

paid-in

 

 

Accumulated

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

equity

 

Balance as of December 31, 2020

 

 

56,890,569

 

 

$

1

 

 

$

585,374

 

 

$

(488,195

)

 

$

97,180

 

Net income

 

 

 

 

 

 

 

 

 

 

 

21,503

 

 

 

21,503

 

Exercise of stock options

 

 

109,570

 

 

 

 

 

 

660

 

 

 

 

 

 

660

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,208

 

 

 

 

 

 

7,208

 

Balance as of June 30, 2021

 

 

57,000,139

 

 

$

1

 

 

$

593,242

 

 

$

(466,692

)

 

$

126,551

 

 

 

 

Common Stock

 

 

Additional

paid-in

 

 

Accumulated

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

(deficit)

 

Balance as of March 31, 2021

 

 

56,892,406

 

 

$

1

 

 

$

588,687

 

 

$

(480,809

)

 

$

107,879

 

Net income

 

 

 

 

 

 

 

 

 

 

 

14,117

 

 

 

14,117

 

Exercise of options

 

 

107,733

 

 

 

 

 

 

648

 

 

 

 

 

 

648

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,907

 

 

 

 

 

 

3,907

 

Balance as of June 30, 2021

 

 

57,000,139

 

 

$

1

 

 

$

593,242

 

 

$

(466,692

)

 

$

126,551

 

 

 

 

 

Convertible Preferred

Stock

Series A, B, & C

 

 

 

Common Stock

 

 

Additional

paid-in

 

 

Accumulated

 

 

Total

stockholders’ equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

(deficit)

 

Balance as of December 31, 2019

 

 

318,510,205

 

 

$

411,275

 

 

 

 

7,787,470

 

 

$

 

 

$

 

 

$

(422,862

)

 

$

(422,862

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,647

)

 

 

(38,647

)

Preferred stock dividend, Series A

 

 

 

 

 

17,688

 

 

 

 

 

 

 

 

 

 

(1,048

)

 

 

(16,640

)

 

 

(17,688

)

Preferred stock accretion, Series A

 

 

 

 

 

1,551

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,551

)

 

 

(1,551

)

Preferred stock dividend, Series B

 

 

 

 

 

604

 

 

 

 

 

 

 

 

 

 

 

 

 

(604

)

 

 

(604

)

Preferred stock accretion, Series B

 

 

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

(12

)

Preferred stock dividend, Series C

 

 

 

 

 

2,599

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,599

)

 

 

(2,599

)

Preferred stock accretion, Series C

 

 

 

 

 

280

 

 

 

 

 

 

 

 

 

 

 

 

 

(280

)

 

 

(280

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

30,553

 

 

 

 

 

 

251

 

 

 

 

 

 

251

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

797

 

 

 

 

 

 

797

 

Repurchase and cancellation of common units

 

 

 

 

 

 

 

 

 

(12,175

)

 

 

 

 

 

 

 

 

(167

)

 

 

(167

)

Balance as of June 30, 2020

 

 

318,510,205

 

 

$

434,009

 

 

 

 

7,805,848

 

 

$

 

 

$

 

 

$

(483,362

)

 

$

(483,362

)

 

 

 

Convertible Preferred

Stock

Series A, B, & C

 

 

 

Common Stock

 

 

Additional

paid-in

 

 

Accumulated

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares (1)

 

 

Amount

 

 

capital

 

 

deficit

 

 

deficit

 

Balance as of March 31, 2020

 

 

318,510,205

 

 

$

422,642

 

 

 

 

7,805,848

 

 

$

 

 

$

 

 

$

(472,330

)

 

$

(472,330

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27

)

 

 

(27

)

Preferred stock dividend, Series A

 

 

 

 

 

8,844

 

 

 

 

 

 

 

 

 

 

(529

)

 

 

(8,315

)

 

 

(8,844

)

Preferred stock accretion, Series A

 

 

 

 

 

775

 

 

 

 

 

 

 

 

 

 

 

 

 

(775

)

 

 

(775

)

Preferred stock dividend, Series B

 

 

 

 

 

302

 

 

 

 

 

 

 

 

 

 

 

 

 

(302

)

 

 

(302

)

Preferred stock accretion, Series B

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

(6

)

Preferred stock dividend, Series C

 

 

 

 

 

1,300

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,300

)

 

 

(1,300

)

Preferred stock accretion, Series C

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

(140

)

 

 

(140

)

Exercise of options

 

 

 

 

 

 

 

 

 

12,175

 

 

 

 

 

 

100

 

 

 

 

 

 

100

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

429

 

 

 

 

 

 

429

 

Repurchase and cancellation of common units

 

 

 

 

 

 

 

 

 

(12,175

)

 

 

 

 

 

 

 

 

(167

)

 

 

(167

)

Balance as of June 30, 2020

 

 

318,510,205

 

 

$

434,009

 

 

 

 

7,805,848

 

 

$

 

 

$

 

 

$

(483,362

)

 

$

(483,362

)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

 

5


Table of Contents

 

 

HARMONY BIOSCIENCES HOLDINGS, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except share and per share data)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (loss)

 

$

21,503

 

 

$

(38,647

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

200

 

 

 

194

 

Intangible amortization

 

 

9,208

 

 

 

3,693

 

Stock-based and employee stock purchase compensation expense

 

 

7,208

 

 

 

797

 

Stock appreciation rights market adjustment

 

 

(130

)

 

 

139

 

Warrant expense

 

 

 

 

 

1,584

 

Debt issuance costs amortization

 

 

1,361

 

 

 

680

 

Loss on debt extinguishment

 

 

 

 

 

22,639

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

(9,019

)

 

 

(10,984

)

Inventory

 

 

(1,128

)

 

 

(995

)

Prepaid expenses and other assets

 

 

(622

)

 

 

(2,987

)

Other non-current assets

 

 

 

 

 

789

 

Trade payables

 

 

(550

)

 

 

(4,287

)

Accrued expenses and other current liabilities

 

 

2,606

 

 

 

5,456