Jaguar Health, Inc 10-Q for FY2023 Q1
Jaguar Health, Inc. (JAGX)
About this 10-Q
Jaguar Health, Inc filed this 10-Q on May 15, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $12.2M
- compared with a net loss of $17.99M a year earlier
- Diluted EPS
- -$2.39
- compared with -$23.10 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of registrant as specified in its charter)
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incorporation or organization) | | Identification No.) |
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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.
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).
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 ◻ | Smaller reporting company | |
| | | Emerging growth company |
If an emerging growth company, indicate by a 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol(s) |
| Name of each exchange on which registered: |
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As of May 15, 2023, there were (i)
PART I. — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | March 31, | | December 31, | ||
(In thousands, except share and per share data) |
| 2023 |
| 2022 | ||
| (unaudited) | | | | ||
Assets | | | | | | |
Current assets: | | | | | | |
Cash | | $ | | $ | ||
Accounts receivable | | | | | ||
Other receivable | | | | | ||
Inventory | | | | | ||
Prepaid expenses and other current assets | | | | | ||
Total current assets | |
| |
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Property and equipment, net | | | | | ||
Operating lease - right-of-use asset | | | | | ||
Intangible assets, net | | | | | ||
Other assets | |
| |
| ||
Total assets | | $ | | $ | ||
| | | | | | |
Liabilities and Stockholders' equity (deficit) | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | | $ | ||
Accrued liabilities | | | | | ||
Operating lease liability, current | | | | | ||
Notes payable, current | |
| |
| ||
Total current liabilities | |
| |
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Operating lease liability, net of current portion | | | | | ||
Notes payable, net of discount, net of current portion (includes hybrid instrument designated at Fair Value Option amounting to $ | | | | | ||
Total liabilities | | | | | ||
| | | | | | |
Commitments and contingencies (See Note 6) | | | | | | |
| | | | | | |
Stockholders' equity (deficit) | | | | | | |
Series B-2 convertible preferred stock: | | | | | ||
Series C perpetual preferred stock: | | | | | ||
Series E perpetual preferred stock: | | | | | ||
Common stock - voting: $ | |
| |
| — | |
Common stock - non-voting: $ | | | | | ||
Additional paid-in capital | |
| |
| ||
Noncontrolling interest | | | | | ( | |
Accumulated deficit | |
| ( | |
| ( |
Accumulated other comprehensive loss | | | ( | | | ( |
Total Stockholders' equity (deficit) | | | | | ( | |
Total liabilities and Stockholders' equity (deficit) | | $ | | $ | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSES
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands, except share and per share data) |
| 2023 |
| 2022 | ||
Product revenue | | $ | | $ | ||
Operating expenses | | | | | | |
Cost of product revenue | | | | | ||
Research and development | |
| |
| ||
Sales and marketing | | | | | ||
General and administrative | | | | | ||
Total operating expenses | |
| |
| ||
Loss from operations | |
| ( | |
| ( |
Interest expense | |
| ( | |
| ( |
Loss on extinguishment of debt | | | — | | | ( |
Change in fair value of financial instruments and hybrid instrument designated at Fair Value Option | | | ( | | | ( |
Other income (expense) | | | ( | | | |
Loss before income tax | | | ( | | | ( |
Income tax expense | | | | | ||
Net loss | | $ | ( | | $ | ( |
Net loss attributable to noncontrolling interest | | $ | ( | | $ | ( |
Net loss attributable to common stockholders | | ( | | ( | ||
Net loss per share, basic and diluted | | ( | | ( | ||
Weighted-average common shares outstanding, basic and diluted | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSES
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
(In thousands, except share and per share data) |
| 2023 |
| 2022 | ||
Net loss | | $ | ( | | $ | ( |
Other comprehensive loss | | | ( | | | — |
Net comprehensive loss | | $ | ( | | $ | ( |
Common stockholders: | | | | | | |
Net loss attributable to common stockholders | | $ | ( | | $ | ( |
Other comprehensive loss attributable to common stockholders | | | | | | |
Translation adjustments | | | ( | | | — |
Net loss and comprehensive loss attributable to common stockholders | | $ | ( | | $ | ( |
Non-controlling interests: | | | | | | |
Net loss attributable to non-controlling interests | | $ | ( | | $ | ( |
Other comprehensive loss attributable to non-controlling interests | | | | | | |
Translation adjustments | | | ( | | | — |
Net loss and comprehensive loss attributable to non-controlling interests | | $ | ( | | $ | ( |
3
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(Unaudited)
| | | | | | | | | | | | | | | ||||||||||
| Common | | Common | | Additional | | Noncontrolling | | Accumulated | | Accumulated | | Total | |||||||||||
(In thousands, except share data) | Shares |
| Amount | | Shares |
| Amount | | paid-in capital | | interest | | deficit | | loss | | Equity | |||||||
Balances as of January 1, 2023 | | | $ | — | | | | $ | — | | $ | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Shares issued in At the Market offering, net of issuance and offering costs of $ | | | | | — | | | — | | | | | — | | | — | | | — | | | |||
Shares issued to Iliad in exchange of notes payable and accrued interest | | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Shares issued to Irving in exchange of notes payable and accrued interest | | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Shares issued to third party for services | | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Additional investments from non-controlling interests | — | | | — | | — | | | — | | | — | | | | | — | | | — | | | ||
Stock-based compensation | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Net loss | — | | | — | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Translation loss | — | | | — | | — | | | — | | | — | | | ( | | | — | | | ( | | | ( |
Balances as of March 31, 2023 | | | $ | | | | $ | — | | $ | | $ | | $ | ( | | $ | ( | | $ | ||||
4
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(Unaudited)
| | | | | | | | | | | | | | | ||||||||||
| Common | | Common | | Additional | | Noncontrolling | | Accumulated | | Accumulated | | Total | |||||||||||
(In thousands, except share data) | Shares |
| Amount | | Shares |
| Amount | | paid-in capital | | interest | | deficit | | loss | | Equity | |||||||
Balances as of January 1, 2022 | | | $ | — | | | | $ | — | | $ | | $ | | $ | ( | | $ | — | | $ | |||
Shares issued in At the Market offering, net of issuance and offering costs of $ | | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Shares issued to Iliad in exchange of notes payable and accrued interest | | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Shares issued to third party for services | | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Stock-based compensation | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | ||
Net loss | — | | | — | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Balances as of March 31, 2022 | | | $ | — | | | | $ | — | | $ | | $ | | $ | ( | | $ | — | | $ | |||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
.
5
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
(in thousands) |
| 2023 |
| 2022 | ||
Cash flows from operating activities | | | | | ||
Net loss and comprehensive loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss and comprehensive loss to net cash used in operating activities: | | | | | | |
Amortization of debt issuance costs, debt discount, and non-cash interest expense | | | | | ||
Depreciation and amortization expense | |
| |
| ||
Stock-based compensation, vested and released restricted stock units and exercised stock options | |
| |
| ||
Change in fair value of financial instruments and hybrid instrument designated at Fair Value Option | | | | | ||
Shares issued in exchange for services | | | | | ||
Amortization of operating lease - right-of-use-asset | | | | | ||
Loss on extinguishment of debt | | | | | ||
Equity in loss in joint venture | | | | | — | |
Changes in assets and liabilities | |
| | |
| |
Accounts receivable | | | | | ( | |
Other receivable | | | | | ( | |
Inventory | |
| ( | |
| |
Prepaid expenses and other current assets | |
| ( | |
| |
Other assets | | | ( | | | ( |
Accounts payable | | | ( | | | ( |
Accrued liabilities | |
| |
| ||
Operating lease liability | | | ( | | | ( |
Total cash used in operating activities | |
| ( | |
| ( |
Cash flows from investing activity | | | | | | |
Purchase of equipment | | | | | — | |
Costs incurred in software development activities | | | | | — | |
Total cash used in investing activity | |
| |
| — | |
Cash flows from financing activities | |
| | |
| |
Proceeds from issuance of shares in At the Market offering, net of issuance and offering costs of $ | | | | | ||
Proceeds from notes payable with Streeterville | | | | | ( | |
Payment of Tempesta Note | | | ( | | | — |
Repayment of insurance financing | | | ( | | | ( |
Investment from non-controlling interest | | | | | ( | |
Total cash provided by financing activities | | | | | ||
Effects of foreign exchange rate changes on assets and liabilities | | | | | ( | |
Net increase in cash | |
| |
| ||
Cash at beginning of the year | | | | | ||
Cash at end of the year | | $ | | $ | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
JAGUAR HEALTH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
| | Three Months Ended | ||||
| | March 31, | ||||
| | 2023 | | 2022 | ||
Supplemental schedule of cash flow information | | | | | | |
Cash paid for interest | | $ | | $ | ||
Cash paid for taxes | | $ | — | | $ | — |
Supplemental schedule of non-cash financing and investing activities | | | | | | |
Shares issued to Iliad in exchange of notes payable and accrued interest | | $ | | $ | ||
Shares issued to Irving in exchange of notes payable and accrued interest | | $ | | $ | — | |
Recognition of operating lease - right-of-use asset and operating lease liability | | $ | | $ | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
JAGUAR HEALTH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Business
Jaguar Health, Inc. (“Jaguar” or the “Company”) was founded in San Francisco, California as a Delaware corporation on June 6, 2013 (inception). The Company was a majority-owned subsidiary of Napo until the close of the Company's initial public offering on May 18, 2015. The Company was formed to develop and commercialize first-in-class prescription and non-prescription products for companion animals.
On July 31, 2017, Jaguar completed a merger with Napo pursuant to the Agreement and Plan of Merger dated March 31, 2017, by and among Jaguar, Napo, Napo Acquisition Corporation (“Merger Sub”), and Napo's representative (the “Merger Agreement”). In accordance with the terms of the Merger Agreement, upon the completion of the merger, Merger Sub merged with and into Napo, with Napo surviving as the wholly owned subsidiary (the “Merger” or “Napo Merger”). Immediately following the Merger, Jaguar changed its name from “Jaguar Animal Health, Inc.” to “Jaguar Health, Inc.” Napo now operates as a wholly owned subsidiary of Jaguar focused on human health including the ongoing development of crofelemer and commercialization of Mytesi.
On March 15, 2021, Jaguar established Napo EU S.p.A (which changed its name in December 2021 to “Napo Therapeutics”) in Milan, Italy as a subsidiary of Napo. Napo Therapeutics’ core mission is to provide access to crofelemer in Europe to address significant rare/orphan disease indications, including, initially, two key orphan target indications: Short bowel syndrome (“SBS”) with intestinal failure and congenital diarrheal disorders (“CDD”).
The Company manages its operations through
Nasdaq Communication and Compliance
Minimum Bid Price Requirement
On February 18, 2022, the Company received a letter from the Staff of Nasdaq indicating that the bid price of the Company’s common stock for the last
On January 23, 2023, the Company effected a reverse split of the Company’s issued and outstanding shares of common stock, par value $
On February 7, 2023, the Company received a letter from the Nasdaq Office of General Counsel notifying that the minimum bid price deficiency had been cured and that the Nasdaq had determined to continue listing the Company’s common stock on the Nasdaq Stock Market.
Liquidity and Going Concern
The Company, since its inception, has incurred recurring operating losses and negative cash flows from operations and has an accumulated deficit of $
8
Although the Company plans to finance its operations and cash flow needs through equity and/or debt financing, collaboration arrangements with other entities, license royalty agreements, as well as revenue from future product sales, the Company does not believe its current cash balances are sufficient to fund its operating plan through one year from the issuance of these unaudited condensed consolidated financial statements. The Company has an immediate need to raise cash. There can be no assurance that additional funding will be available to the Company on acceptable terms, or on a timely basis, if at all, or that the Company will generate sufficient cash from operations to adequately fund operating needs. If the Company is unable to obtain an adequate level of financing needed for the long-term development and commercialization of our products, the Company will need to curtail planned activities and reduce costs. Doing so will likely have an adverse effect on our ability to execute our business plan; accordingly, there is substantial doubt about the ability of the Company to continue in existence as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and on a basis consistent with the annual consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2022. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by U.S. GAAP for complete financial statements.
There has been no material change to the Company's significant accounting policies during the three months ended March 31, 2023, as compared to the significant accounting policies described in Note 2 of the “Notes to Consolidated Financial Statements” in the Company's Annual Report on Form 10-K as of and for the year ended December 31, 2022, which was filed to SEC on March 24, 2023.
Except as noted above, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly the financial position as of March 31, 2023, results of operations for the three months ended March 31, 2023, and 2022, changes in convertible preferred stock and stockholders' equity for the three months ended March 31, 2023, and 2022, and cash flows for the three months ended March 31, 2023 and 2022. The interim results are not necessarily indicative of the results for any future interim periods or for the entire year
Principles of Consolidation
The consolidated financial statements have been prepared in accordance with U.S. GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of the Company and its subsidiaries with controlling interest. All inter-company transactions and balances have been eliminated in consolidation. The reporting currency of the Company is the U.S dollar.
Non-controlling interest
The Company consolidates the results of Napo Therapeutics, which is owned
9
ended March 31, 2023, an additional investment from a private entity amounting to €
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its unaudited consolidated financial statements and the accompanying notes. The accounting policies that reflect the Company’s more significant estimates and judgments and that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results are the valuation of stock options, restricted stock units (“RSUs”), valuation of hybrid instruments designated at fair value option (“FVO”), valuation of warrant liabilities, acquired in-process research and development (“IPR&D”), and useful lives assigned to long-lived assets; impairment assessment of non-financial assets; valuation adjustments for excess and obsolete inventory; allowance for doubtful accounts; deferred taxes and valuation allowances on deferred tax assets; evaluation and measurement of contingencies; and recognition of revenue, including estimates for product returns. Those estimates could change, and as a result, actual results could differ materially from those estimates.
In March 2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic. During the year ended December 31, 2022, the Company’s financial results were not significantly affected by the COVID-19 outbreak. The Company has considered all information available as of the date of issuance of these financial statements and the Company is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. The extent to which the COVID-19 outbreak affects the Company’s future financial results and operations will depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the outbreak, and current or future domestic and international actions to contain and treat it.
Cash
The Company’s cash on deposit may exceed United States federally insured limits at certain times during the year. The Company maintains cash accounts with certain major financial institutions in the United States. The Company does not have cash equivalents as of March 31, 2023 and December 31, 2022.
Accounts Receivable
Accounts receivable is recorded net of allowances for discounts for prompt payment and credit losses.
The Company utilizes a loss rate approach in determining its lifetime expected credit losses on receivables from customers. This method calculates an estimate of credit losses based on historical experience, credit quality, age of the accounts receivable balances, and current and forecasted economic and business conditions that may affect a customer’s ability to pay. In determining the loss rates, the Company evaluates information related to its historical losses, adjusted for existing conditions and further adjusted for the period of time that can reasonably be forecasted. The facts and circumstances as of the balance sheet date are used to adjust the estimate for periods beyond those that can reasonably be forecasted.
The past due status of accounts receivable is determined based on the contractual due dates for payments. A receivable is deemed past due when payment hasn’t been received 30 days after the contractual due date. The credit loss allowance was immaterial as of March 31, 2023 and December 31, 2022. The corresponding expense for the credit loss allowance is reflected in general and administrative expenses.
Current Expected Credit Losses
The Company recognizes an allowance for credit losses for financial assets carried at amortized cost to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on credit losses that are
10
expected to arise over the contractual term of the asset, which includes consideration of historical credit loss information adjusted for current conditions and reasonable and supportable forecasts.
Changes in the allowance for credit losses are recorded as provision of (or reversal of) credit loss expense. Assets are written off when the Company determines that such are deemed uncollectible. Write-offs are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the necessary allowance at the balance sheet date.
Concentrations
Cash is the financial instrument that potentially subjects the Company to a concentration of credit risk as cash is deposited with a bank and cash balances are generally in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits.
For the three months ended March 31, 2023, and 2022, substantially all of the Company’s revenue was derived from the sale of Mytesi. In looking at sales by the Company to distributors whose net revenue percentage of total net revenue was equal to or greater than
| | Three Months Ended |
| |||
| | | March 31, |
| ||
| | | 2023 |
| 2022 | |
|
| | (unaudited) |
| ||
Customer 1 | | | | % | | % |
Customer 2 | | | | % | | % |
Customer 3 | | | — | | | % |
The Company is subject to credit risk from its accounts receivable related to its sales. The Company generally does not perform evaluations of customers' financial condition and generally does not require collateral. Accounts receivable balance of the significant customers as a percentage of total accounts receivable is as follows:
|
| March 31, | | December 31, | ||
| | 2023 | | 2022 | ||
| | (unaudited) | | | | |
Customer 1 | | | % | | | % |
Customer 2 | | | % | | | % |
The Company is subject to concentration risk from its suppliers. The Company sources raw material used to produce the active pharmaceutical ingredient (“API”) in Mytesi from
Other Risks and Uncertainties
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to war, rapid technological change, obtaining second source suppliers, regulatory approval from the FDA or other regulatory authorities, the results of clinical trials and the achievement of milestones, market acceptance of the Company’s product candidates, competition from other products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.
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Recent Global Events
Macroeconomic conditions, including the war in Ukraine and related sanctions, exchange rate and interest rate volatility, and inflationary pressures, will continue to evolve globally. The greatest impact was a decline in Europe where the impacts of foreign currency exchange rates, the war in Ukraine, and energy inflation were the greatest. The Company’s partially owned subsidiary in Italy, Napo Therapeutics, does not generate any revenue yet for the three months ended March 31, 2023. There were no significant changes in the subsidiary’s operations for the three months ended March 31, 2023, because of these recent global events.
Conditions within the Banking Sector
In March 2023, Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”), two regional banks in the U.S., experienced large deposit outflows that ultimately resulted in the failure of these banks and the appointment of the FDIC as receiver. This created significant market disruption and uncertainty for those companies and individual customers who bank with those institutions. The FDIC guaranteed all deposits in SVB and Signature and announced the creation of the Bank Term Funding Program, which offers loans of up to one year to banks and other eligible institutions.
First Republic, another U.S. regional bank, also experienced large withdrawals of deposits, raising concerns about its financial stability. On May 1, 2023, First Republic was placed under FDIC receivership and the FDIC entered into a purchase and assumption agreement with JPM Chase Bank, N.A. under which JPM Chase Bank, N.A. will assume all of the deposits and substantially all of the assets of First Republic. Although the U.S. Department of Treasury, the Federal Reserve and the FDIC have taken measures to stabilize the financial system, uncertainty and liquidity concerns in the broader financial services industry remain. As of March 31, 2023, the Company had
Fair Value
The Company’s financial instruments include accounts receivable, accounts payable, accrued liabilities, warrant liability, operating lease liability, equity-linked financial instruments, and debt. The recorded carrying amount of accounts receivable, accounts payable and accrued liabilities reflect their fair value due to their short-term nature. Other financial liabilities are initially recorded at fair value, and subsequently measured at either fair value or amortized cost using the effective interest method. See Note 3 for the fair value measurements.
Fair Value Option
ASC 825-10, Financial Instruments, provides FVO election that allows companies an irrevocable election to use fair value as the initial and subsequent accounting measurement attribute for certain financial assets and liabilities. ASC 825-10 permits entities to elect to measure eligible financial assets and liabilities at fair value on an ongoing basis. Unrealized gains and losses on items for which the FVO has been elected are reported in earnings. The decision to elect the FVO is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method. In accordance with the options presented in ASC 825-10, the Company elected to present the aggregate of fair value and non-fair-value amounts in the same line item in the consolidated balance sheets and parenthetically disclose the amount measured at fair value in the aggregate amount.
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Cost is initially recorded at the invoiced amount of raw materials or API, including the sum of qualified expenditures and charges in bringing the inventory to its existing condition and location. The Company calculates inventory valuation adjustments when conditions indicate that net realizable value is less than cost due to physical deterioration, usage, obsolescence, reductions in estimated future demand or reduction in selling price. Inventory write-
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downs are measured as the difference between the cost of inventory and net realizable value. The Company does
Prelaunch Inventory
The Company’s policy is to capitalize costs for prelaunch inventories within the drug development phase that evidence that the product’s reasonably likely critical attributes for success are present and feasible, and the key causes of failures are absent based on management’s assumptions.
Property and Equipment
Land is stated at cost, reflecting the fair value of the property at July 31, 2017, the date of the Napo merger. Equipment is stated at cost, net of accumulated depreciation. Equipment begins to be depreciated when it is placed into service. Depreciation is calculated using the straight-line method over estimated useful lives ranging between
Expenditures for repairs and maintenance of assets are charged to expense as incurred. Costs of major additions and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives. Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts and any resulting gain or loss is included in the unaudited condensed consolidated comprehensive loss.
Software Developed for Internal Use
The Company capitalizes the costs of developing software for internal use. These costs include both purchased software and internally developed software. Costs of developing software are expensed until technological feasibility has been established. Thereafter, all costs are capitalized and are carried at the lower of unamortized cost or net realizable value. Internally developed and purchased software costs are generally amortized over
Long-lived Assets
The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment and definite-lived intangible assets, to determine whether indicators of impairment exist that warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives. If the Company determines that an impairment trigger has been met, the Company evaluates the realizability of its long-lived assets (asset group) based on a comparison of projected undiscounted cash flows from use and eventual disposition with the carrying value of the related asset. Any write-downs (which are measured based on the difference between the fair value and the carrying value of the asset) are treated as permanent reductions in the carrying amount of the assets (asset group). Based on this evaluation, the Company believes that, as of each of the balance sheet dates presented, none of the Company’s long-lived assets were impaired. The Company’s had
Indefinite-lived Intangible Assets
Acquired IPR&D are intangible assets acquired in the July 2017 Napo merger. Under ASC 805, IPR&D are initially recognized at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. During the development period, these assets will not be amortized as charges to earnings; instead, these assets will be tested for impairment on an annual basis or more frequently if impairment indicators are identified. An impairment loss is measured based on the excess of the carrying amount over the asset’s fair value. The Company recorded
13
Leases
The Company accounts for its leases in accordance with ASC 842, Leases.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. Because the interest rate implicit in lease contracts is typically not readily determinable, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.
The Company elected to include both the lease and non-lease components as a single component and account for it as a lease.
Research and Development Expense
Research and development expense consists of expenses incurred in performing research and development activities including related salaries, clinical trials and related drug and non-drug product costs, contract services and other outside service expenses. Research and development expense is charged to operating expense in the period incurred.
Clinical Trial Accruals
Clinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with clinical research organizations and clinical sites. The Company determines the costs to be recorded based upon validation with the external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).
The Company’s policy typically permits returns if the product is damaged, defective, or otherwise cannot be used when received by the customer if the product has expired. Returns are accepted for product that will expire within three months or that have expired up to one year after their expiration dates. Estimates for expected returns of expired products are based primarily on an ongoing analysis of our historical return patterns.
The Company recognizes revenue in accordance with the core principle of ASC 606 or when there is a transfer of control of promised goods or services to customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services.
The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.
The Company does not adjust the amount of consideration for the effects of a significant financing component if, at contract inception, the expected period between the transfer of promised goods or services and customer payment is one year or less.
The Company has elected to treat shipping and handling activities as fulfillment costs.
Additionally, the Company elected to record revenue net of sales and other similar taxes.
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Contracts and Agreements
Effective January 16, 2019, the Company engaged Cardinal Health as its exclusive third-party logistics distribution agent for commercial sales of the Company’s Mytesi product and to perform certain other services which include, without limitation, storage, distribution, returns, customer support, financial support, Electronic Data Interchange (“EDI”) and system access support (the “Exclusive Distribution Agreement”).
On September 3, 2021, the Company ended its engagement with Cardinal Health as its exclusive title model customer for commercial sales and fully implemented its limited distribution Specialty Pharmacy model. Cardinal Health continues to provide third-party logistics services for Mytesi.
The Company's Canalevia-CA1 and Neonorm products are primarily sold to distributors, who then sell the products to the end customers. Since 2021, the Company has entered into
Performance obligations
For animal health products sold by the Company, the single performance obligation identified above is the Company’s promise to transfer the Company’s animal health products to distributors based on specified payment and shipping terms in the arrangement. Product warranties are assurance-type warranties that do not represent a performance obligation. For the Company’s human health product, Mytesi, the single performance obligation identified above is the Company’s promise to transfer Mytesi to specialty pharmacies, based on specified payment and shipping terms as outlined in the Exclusive Distribution Agreement.
Transaction price
For contracts with Cardinal Health and other distributors, the transaction price is the amount of consideration to which the Company expects to collect in exchange for transferring the promised goods or services. The transaction price of Mytesi is the Wholesaler Acquisition Cost (“WAC”), and the transaction price of Canalevia-CA1 and Neonorm is the manufacturer’s list price, net of discounts, returns, and price adjustments.
Allocate transaction price
For contracts with Cardinal Health and other distributors, the entire transaction price is allocated to the single performance obligation contained in each contract.
Revenue recognition
For contracts with Cardinal Health, for the Company, a single performance obligation is satisfied at a point in time, upon the FOB terms of each contract when control, including title and all risks, has transferred to the customer.
Disaggregation of Product Revenue
Human
Sales of Mytesi are recognized as revenue at a point in time when the products are delivered to the wholesaler. Net revenues from the sale of Mytesi were $
15
Animal
The Company recognized Canalevia-CA1 products revenues of $
Contracts – Specialty Pharmacies
Effective October 1, 2020, the Company engaged a private company as an authorized specialty pharmacy provider of the Company’s Mytesi product. Under the Specialty Product Distribution Agreement, the Company shall supply the products to the private company’s specialty pharmacies, through a designated wholesaler, in such amounts as may be ordered. There is no minimum purchase or inventory requirement. The specialty pharmacies were authorized distributors of record for all National Drug Codes (“NDCs”) of Mytesi.
Effective April 20, 2021, the Company engaged another private company as an authorized specialty pharmacy provider of Mytesi. Under the Specialty Pharmacy Distribution and Services Agreement, the private company shall sell and dispense the Mytesi directly ordered from the Company at the agreed price to patients within the territories identified in the agreement.
The Company has entered into agreements with a total of
Performance obligations
The single performance obligation is the Company’s promise to transfer Mytesi to specialty pharmacies, based on specified payment and shipping terms as outlined in the agreements.
Transaction price
The transaction price is the amount of consideration to which the Company expects to collect in exchange for transferring the promised goods or services. The transaction price of Mytesi is the WAC, net of estimated discounts, returns, and price adjustments.
Allocate transaction price
The entire transaction price is allocated to the single performance obligation contained in each contract.
Revenue recognition
The single performance obligation is satisfied at a point in time, upon the free on board (“FOB”) terms of each contract when control, including title and all risks, has transferred to the customer.
Product Revenue
Sales of Mytesi are recognized as revenue at a point in time when the products are delivered to the specialty pharmacies. Net revenues from the sale of Mytesi to the specialty pharmacies were $
Collaboration Revenue
Revenue recognition for collaboration agreements requires significant judgment. The Company’s assessments and estimates are based on contractual terms, historical experience and general industry practice. Revisions in these values or estimations have the effect of increasing or decreasing collaboration revenue in the period of revision.
16
On September 24, 2018, the Company entered into a Distribution, License and Supply Agreement (“License Agreement”) with Knight Therapeutics ("Knight"). The License Agreement has a term of
Modifications to Liability-classified Instruments
In accounting for debt modifications and exchange transactions, it is the Company’s policy to first determine whether it qualifies as a troubled debt restructuring (“TDR”) pursuant to the guidance provided in ASC 470-60. A debt modification or exchange transaction that is not within the scope of the ASC 470-60 is accounted for under ASC 470-50 to determine if the transaction is a mere modification or an extinguishment.
For the three months ended March 31, 2023, the Company entered into another amendment on the terms of its October 2020 and December 2020 Purchase Agreements (see Note 7).
Modifications to Equity-classified Instruments
In accounting for modifications of equity-classified warrants, it is the Company’s policy to determine the impact by analogy to the share-based compensation guidance of ASC 718, Compensation - Stock Compensation (“ASC 718”). The model for a modified share-based payment award that is classified as equity and remains classified in equity after the modification is addressed in ASC 718-20-35-3. Pursuant to that guidance, the incremental fair value from the modification is recognized as an expense in the statements of operations to the extent the modified instrument has a higher fair value; however, in certain circumstances, such as when an entire class of warrants is modified, the measured increase in fair value may be more appropriately recorded as a deemed dividend, depending upon the nature of the warrant modification.
The Company did not modify any equity-classified warrants for the three months ended March 31, 2023, and 2022.
In accounting for amendments to preferred stock, it is the Company’s policy to measure the impact by analogy to ASC 470-50 in determining if such an amendment is an extinguishment or a modification. If the amendment results in an extinguishment, the Company follows the SEC staff guidance in ASC 260-10-S99-2 and ASC 470-20. If the amendment results in a modification, the Company follows the model in either ASC 718 or ASC 470-50, depending on the nature of the amendment.
The Company did not modify any equity-classified preferred stock for the three months ended March 31, 2023 and 2022.
Stock-based Compensation
The Company's Stock Incentive Plan (see Note 11) provides for the grant of stock options, restricted stock and restricted stock unit awards. The Company measures stock awards granted to employees, non-employees and directors at estimated fair value on the date of grant and recognizes the corresponding compensation expense of the awards, net of estimated forfeitures, over the requisite service periods, which correspond to the vesting periods of the awards. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company issues stock awards with only service-based vesting conditions, and records compensation expense for these awards using the straight-line method.
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The Company uses the grant date fair market value of its common stock to determine the grant date fair value of options granted to employees, non-employees and directors. The Company measures and recognizes compensation expense for all stock options and restricted stock units (“RSUs”) granted to its employees and directors based on the estimated fair value of the award on the grant date. The Company uses the Black-Scholes valuation model to estimate the fair value of stock option awards. The fair value is recognized as expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis. The Company believes that the fair value of stock options granted to non-employees is more reliably measured than the fair value of the services received. The determination of the grant date fair value of options using an option pricing model is affected by the Company’s estimated Common Stock fair value and requires management to make a number of assumptions including the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends.
The Company estimates the fair value of stock options using the Black-Scholes option valuation model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair market value of common stock is based on the closing price of the Company’s common stock as reported on the date of the grant.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
The Company has adopted the provisions of ASC 740, Income Taxes Related to Uncertain Tax Positions. Under these principals, tax positions are evaluated in a two-step process. The Company first determines whether it is more-likely-than-not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement.
Foreign Currency Remeasurement and Translation
The functional currency of Napo Therapeutics is Euro. The Company follows ASC 830, Foreign Currency Matters (“ASC 830”). ASC 830 requires the assets, liabilities, and results of operations of a foreign operation to be measured using the functional currency of that foreign operation. Exchange gains or losses from remeasuring transactions and monetary accounts in a currency other than the functional currency are included in current earnings.
For certain subsidiaries, translation adjustments result from the process of translating the functional currency of subsidiary financial statements into the U.S. Dollar reporting currency. These translation adjustments are reported separately and accumulated in the unaudited condensed consolidated balance sheets as a component of accumulated other comprehensive loss.
Comprehensive Loss
The Company follows ASC 220, Comprehensive Income, which establishes standards for reporting and displaying comprehensive income and its components (revenue, expenses, gains and losses) in a full set of general-purpose financial statements.
For the months ended March 31, 2023 and 2022, the amount of other comprehensive losses from translation adjustments were $
18
Basic and Diluted Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the year by the weighted-average number of common shares outstanding during the year. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders for the year by the weighted-average number of common shares, including potential dilutive shares of common stock assuming the dilutive effect of potential dilutive securities. For years in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, because their impact would be anti-dilutive to the calculation of net loss per common share. Diluted net loss per common share is the same as basic net loss per common share for the three months ended March 31, 2023 and 2022.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on the Company’s financial statements and related disclosures as at March 31, 2023.
3. Fair Value Measurements
ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
| ● | Level 1 – Observable inputs such as quoted prices (unadjusted) for identical instruments in active markets. |
| ● | Level 2 – Observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations whose significant inputs are observable. |
| ● | Level 3 – Unobservable inputs that reflect the reporting entity’s own assumptions. |
The following tables set forth the fair value of the Company’s financial instruments that were measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.
| | March 31, 2023 | ||||||||||
(in thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Warrant liability | | $ | — | | $ | — | | $ | — | | $ | — |
Streeterville note | | | — | | | — | | | | | ||
Total fair value | | $ | — | | $ | — | | $ | | $ | ||
| | December 31, 2022 | ||||||||||
(in thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Warrant liability | | $ | — | | $ | — | | $ | — | | $ | — |
Streeterville note | | $ | — | | $ | — | | $ | | $ | ||
Total fair value | | $ | — | | $ | — | | $ | | $ | ||
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The change in the estimated fair value of Level 3 liabilities is summarized below:
| | Three Months Ended | ||||
| | March 31, 2023 | ||||
(in thousands) | | Warrant liability |
| Streeterville note | ||
Beginning fair value of Level 3 liability |
| $ | — |
| $ | |
Additions | | | — | | | — |
Exercises | | | — | | | — |
Change in fair value |
|
| — | | | |
Ending fair value of Level 3 liability |
| $ | — |
| $ | |
Warrant Liability
The warrants associated with the Level 3 warrant liability were valued at
Streeterville Note
The fair value of the Streeterville Note at January 13, 2021, date of issuance and as of March 31, 2023 amounting to $
The Company determined and performed the valuations of the Streeterville Note with the assistance of an independent valuation service provider. On a quarterly basis, the Company considers the main Level 3 inputs used derived as follows:
| ● | Discount rate for the Streeterville note which was determined using a comparison of various effective yields on bonds as of the valuation date |
| ● | Market indications for vouchers, which affect the Return Bonus from the sale of Tropical Disease Priority Review Voucher (“TDPRV”) |
| ● | Weighted probability of cash outflows which was estimated based on the entity's knowledge of the business and how the current economic environment is likely to impact the timing of the cash outflows, attributed to the different repayment features of the note |
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The following table summarizes the quantitative information about the significant unobservable inputs used in Level 3 fair value measurement:
| | Range of Inputs | | | ||
| | (probability-weighted average) | | Relationship of unobservable inputs | ||
Unobservable Inputs | | 2023 | | 2022 | | to fair value |
Risk Adjusted Discount Rate | | | | If discount rate is adjusted to total of additional | ||
Sales Proceeds: Amount of comparable TDPRV | | $ | | $ | | If expected cash flows by Management considered the lowest amount of market indications for vouchers, FV would have decreased by $ |
Range of Probability for Timing of Cash Flows: | | | | If expected cash flows by Management considered the Scenario with the least amount of indicated value, FV would have decreased by $ | ||
Fair Value Option
Beginning January 1, 2021, the Company elected to apply the FVO accounting to selected financial instruments to align the measurement attributes of those instruments under U.S. GAAP and to simplify the accounting model applied to those financial instruments. The Company elected to apply FVO accounting to the entire class of hybrid instruments, including structured notes, of which there are assessed embedded derivatives that would be eligible for bifurcation. Changes in the fair value of FVO assets and liabilities as well as the mark-to-market adjustment on the entire class of hybrid instruments, including derivatives and the net realized gains or losses on these instruments are reported in the change in fair value of financial instruments and hybrid instrument designated at FVO in the unaudited condensed consolidated comprehensive loss.
As of March 31, 2023, the Company did not note any fair value movement on FVO liabilities attributable to any instrument-specific credit risk, which should be recorded in other comprehensive income (loss).
Hybrid Instruments
The Company elected to apply FVO accounting to all of the hybrid instruments issued, including structured notes. The valuation of the hybrid instruments is predominantly driven by the derivative features embedded within the instruments. The Company determined and performed the valuations of the hybrid instruments with the assistance of an independent valuation service provider. The valuation methodology utilized is consistent with the income approach for estimating the fair value of the interest-bearing portion of the instrument and the related derivatives. Cash flows of the hybrid instruments in their entirety, including the embedded derivatives, are discounted at an appropriate rate for the applicable duration of the instrument. Interest on the interest-bearing portion of the instrument that is held to maturity is
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aggregated as gain (loss) on instruments designated at fair value and related derivatives in the change in fair value of financial instruments and hybrid instruments designated at FVO of the unaudited condensed consolidated comprehensive loss.
The following table summarizes the fair value and unpaid principal balance for items the Company accounts for under FVO:
(in thousands) | | Fair value | | Unpaid Principal Balance | | Fair Value Over (Under) Unpaid Principal Balance | |||
At March 31, 2023 | | | | | | | | | |
Hybrid Instrument: | | | | | | | | | |
Streeterville note | | $ | | $ | | $ | |||
4. Balance Sheet Components
Inventory
Inventory at March 31, 2023 and December 31, 2022 consisted of the following:
| | March 31, | | December 31, | ||
|
| 2023 |
| 2022 | ||
(in thousands) | | (unaudited) | | | ||
Raw Material | | $ | | $ | ||
Work in Process | | | | | ||
Finished Goods | | | | | ||
Inventory | | $ | | $ | ||
Prelaunch Inventory
Costs capitalized for the Company’s lyophilized drug amounting to
Property and Equipment, net
Property and equipment at March 31, 2023 and December 31, 2022 consisted of the following:
| | March 31, | | December 31, | ||
|
| 2023 |
| 2022 | ||
(in thousands) | | (unaudited) | | | | |
Land | | $ | | $ | ||
Lab equipment | | | | | ||
Software | | | | | ||
Furniture and fixtures | | | | | ||
Computers and peripherals | | | | | ||
Total property and equipment at cost | |
| |
| ||
Accumulated depreciation | |
| ( | |
| ( |
Property and equipment, net | | $ | | $ | ||
22
Depreciation and amortization expense was $
Intangible Assets, net
Intangible assets at March 31, 2023 and December 31, 2022 consisted of the following:
| | March 31, | | December 31, | ||
|
| 2023 | | 2022 | ||
(in thousands) | | (unaudited) | | | | |
Developed technology | | $ | | $ | ||
Accumulated developed technology amortization | |
| ( | |
| ( |
Developed technology, net | |
| |
| ||
In-process research and development | | | | | ||
In process research and development, net | |
| |
| ||
Trademarks | |
| |
| ||
Accumulated trademark amortization | |
| ( | |
| ( |
Trademarks, net | |
| |
| ||
Internal use software costs - registry | | | | | ||
Accumulated internal use software costs amortization | |
| ( | |
| ( |
Internal use software costs - registry, net | |
| |
| ||
Patents | | | | — | ||
Accumulated patents amortization | | | ( | | | — |
Patents, net | | | | | ||
Total intangible assets, net | | $ | | $ | ||
Amortization expense of finite-lived intangible assets was $
The following table summarized the Company’s estimated future amortization expense of intangible assets with finite lives as of March 31, 2023:
(in thousands) |
| Amounts | |
2023 | | | |
2024 | | | |
2025 | | | |
2026 | | | |
2027 | | | |
Thereafter | | | |
| | $ | |
5. Related Party Transactions
BOD Cash Compensation
The Company makes BOD cash compensation on a quarterly basis based on the Director Compensation Program. For the three months ended March 31, 2023, and 2022, Company paid approximately $
23
6. Commitments and Contingencies
Commitments
Leases
On April 6, 2021, the Company entered into an office lease agreement of approximately
The base rent under the lease were $
On October 7, 2021, the Company entered into an agreement for the lease of office premises from November 1, 2021 to April 30, 2022, subject to automatic renewal for subsequent periods until terminated by either party. Base rent amounted to €
On October 10, 2021, the Company also entered into a short-term office lease in Milan, Italy. The term of the lease began on November 1, 2021, subject to automatic renewal equal to the present term until terminated by mutual agreement. On January 26, 2022, the lease agreement was amended whereby the term was extended by
On December 22, 2021, the Company entered into an agreement for the lease of
On January 25, 2022, the Company entered into an agreement for the lease of office premises from March 1, 2022 to December 31, 2023, subject to automatic renewal for subsequent periods until terminated by either party. Base rent amounted to €
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In May 2022, the Company entered into an agreement for the lease of
In October 2022, the Company entered into an agreement for the lease of
In November 2022, the Company entered into an agreement for the lease of
The table below provided additional details of the office space lease presented in the unaudited condensed consolidated balance sheet as of March 31, 2023 and December 31, 2022:
| March 31, | | December 31, | ||
| 2023 | | 2022 | ||
(in thousands) | (unaudited) | | | | |
Operating lease - right-of-use asset | $ | | $ | ||
| | | | | |
Operating lease liability, current | | | | ||
Operating lease liability, net of current portion | | | | ||
Total | $ | | $ | ||
| | | | | |
Weighted-average remaining life (years) | | | | ||
Weighted-average discount rate | | | | ||
Lease cost included in general and administrative expenses in the unaudited consolidated statements of comprehensive loss for the three months ended March 31, 2023 and 2022 was approximately $
For the three months ended March 31, 2023 and 2022, cash paid for operating lease liabilities recognized under operating cash flows amounted to $
25
The following table summarizes the undiscounted cash payment obligations for operating lease liability as of March 31, 2023.
| March 31, | |
| 2023 | |
(in thousands) | | |
2023 | | |
2024 | | |
2025 | | |
2026 | | |
Total undiscounted operating lease payments | | |
Imputed interest expenses | | ( |
Total operating lease liability | | |
Less: Operating lease liability, current | | |
Operating lease liability, net of current portion | $ | |
Rent and lease expense included in the general and administrative expenses in the unaudited condensed consolidated statements of comprehensive loss the three months ended March 31, 2023 and 2022 was approximately $
Purchase Commitment
On September 3, 2020, the Company entered into a manufacturing and supply agreement (the “Agreement”) with Glenmark Life Sciences Limited (“Glenmark”), pursuant to which Glenmark will continue to serve as the Company’s manufacturer of crofelemer for use in Mytesi, the Company’s human prescription drug product approved by the U.S. Food and Drug Administration, and for other crofelemer-based products manufactured by the Company or its affiliates for human or animal use. The term of the Agreement is approximately
Master Services Agreement (“MSA”)
On October 5, 2020, the Company entered into another MSA for clinical research organization services (the “2020 MSA”) and a service order under such 2020 MSA with Integrium. The service order covers the Company’s planned upcoming pivotal Phase 3 clinical trial for cancer-therapy related diarrhea. As consideration for its services, the Company will pay Integrium a total amount of up to approximately $
26
Asset Transfer and Transition Commitment
On September 25, 2017, the Company entered into the Termination, Asset Transfer and Transition Agreement dated September 22, 2017 with Glenmark. As a result of the agreement, the Company now controls commercial rights for Mytesi for all indications, territories and patient populations globally, and also holds commercial rights to the existing regulatory approvals for crofelemer in Brazil, Ecuador, Zimbabwe and Botswana. In exchange, the Company agrees to pay Glenmark
Revenue Sharing Commitment Update
On December 14, 2017, the Company announced its entry into a collaboration agreement with Seed Mena Businessmen Services LLC (“SEED”) for Equilevia™, the Company's non-prescription, personalized, premium product for total gut health in equine athletes. According to the terms of the Agreement, the Company will pay SEED
Joint Venture - Magdalena Biosciences, Inc.
In January 2023, Jaguar and Filament Health (“Filament”), with Funding from One Small Planet, formed the U.S.-based joint venture Magdalena Biosciences, Inc. (“Magdalena”). Magdalena’s focus is on the development of novel, natural prescription medicines derived from plants for mental health indications including, initially, attention-deficit/hyperactivity disorder (“ADHD”) in adults. The goal of the collaboration is to extend the botanical drug development capabilities of Jaguar and Filament in order to develop pharmaceutical-grade, standardized drug candidates for mental health disorders, and to partner with a potential future licensee to develop and commercialize these novel plant-based drugs. This new venture aligns with Jaguar's mental health Entheogen Therapeutics Initiative (“ETI”) and Filament's corporate mission to develop novel, natural prescription medicines from plants. Magdalena will leverage Jaguar's proprietary medicinal plant library and Filament's proprietary drug development technology. Jaguar’s library of
The Company accounted for its
| | March 31, | |
|
| 2023 | |
(in thousands) | | (unaudited) | |
Revenue | | $ | — |
Operating expenses | | | ( |
Loss before income tax | | | ( |
Income tax expense | | | — |
Net loss | | $ | ( |
Net loss attributable to the Company | | $ | ( |
27
Contingencies
From time to time, the Company maybe a party to various legal actions, both inside and outside the U.S., arising in the ordinary course of its business or otherwise. The Company accrues amounts, to the extent they can be reasonably estimated, that the Company believes will result in a probable loss (including, among other things, probable settlement value), to adequately address any liabilities related to legal proceedings and other loss contingencies. A loss or a range of loss is disclosed when it is reasonably possible that a material loss will incur and can be estimated, or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. The Company did not have any material accruals for any currently active legal action in its unaudited condensed balance sheets as of March 31, 2023, as the Company could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.
7. Debt
Notes payable at March 31, 2023 and December 31, 2022 consisted of the following:
| | | | | | |
| | March 31, | | December 31, | ||
| | 2023 | | 2022 | ||
(in thousands) | | (unaudited) | | | | |
Royalty Interest | | $ | | $ | ||
Streeterville Note | | | | | ||
Insurance Financing | | | | | ||
Tempesta Note | | | | | ||
| | |
| | ||
Less: unamortized discount and debt issuance costs | |
| ( |
|
| ( |
Note payable, net of discount | | $ |
| $ | ||
Notes payable - non-current, net | | $ | | $ | ||
Notes payable - current, net | | $ | | $ | ||
Future maturities of the notes payable not designated at FVO as of March 31, 2023 are as follows:
| | | |
(in thousands) | | Amounts | |
Periods ended March 31, | | | |
2024 | | $ | |
2025 | | | |
2026 | | | |
| | | |
Less: unamortized discount and debt issuance costs | | | ( |
Total | | $ | |
Future maturities are based on contractual minimum payments. Timing of maturities may fluctuate based on future revenue.
Sale of Future Royalty Interest
October 2020 Purchase Agreement
On October 8, 2020, the Company entered into another royalty interest purchase agreement (the “October 2020 Purchase Agreement”) with Iliad, pursuant to which the Company sold to Iliad a royalty interest entitling Iliad to receive
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$
Until such time as the Royalty Repayment Amount has been paid in full, the Company will pay Iliad
The Royalty Interest amount of $
Pursuant to the October 2020 Purchase Agreement, if the weekly volume weighted average price (“VWAP”) of the Company’s common stock is not equal or greater than the minimum VWAP of $
On April 13, 2021, the Company entered into an exchange agreement with Iliad, pursuant to which the parties agreed to partition $
On February 11, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the parties agreed to partition $
On March 2, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the parties agreed to partition $
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On March 4, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the parties agreed to partition $
On March 9, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the parties agreed to partition $
Because the period between the first and last exchanges occurred within a 12-month period and each was individually assessed as a modification, the debt terms that existed prior to the February 13 exchange was used in the application of the 10% test on the cumulative assessment performed. The exchanges were cumulatively accounted for as an extinguishment and resulted to a loss of $
On April 14, 2022, the Company entered into amendments (the “Royalty Interest Global Amendments”) to its existing royalty interests including the Royalty Interest in the original principal amount of $
On May 13, 2022, the Company entered into an exchange agreement with Iliad, pursuant to which the parties agreed to partition $
On July 25, 2022, the Company entered into another exchange agreement with Iliad, pursuant to which the parties agreed to partition $
On November 18, 2022, the Company entered into another exchange agreement with Iliad, pursuant to which the parties agreed to partition $
On March 17 and 23, 2023, the Company entered into another exchange agreement with Iliad, pursuant to which the parties agreed to partition $
The exchanges that occurred within the 12-month period prior to May 13, 2022 exchange were previously accounted for as extinguishment, therefore, cumulative assessment was not performed anymore. The subsequent
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exchanges were accounted for as a modification. As of March 31, 2023, the forecasted future revenues changed which resulted to a new discount rate of
Interest expense for the three months ended March 31, 2023 and 2022 was $
December 2020 Purchase Agreement
On December 22, 2020, the Company entered into a royalty interest purchase agreement (the “December 2020 Purchase Agreement”) with Irving Park Capital, LLC (“Irving”), a company affiliated with CVP, pursuant to which the Company sold to Irving a royalty interest entitling Irving to receive $
Until such time as the Royalty Repayment Amount has been paid in full, the Company will pay Irving
The Royalty Interest amount of $
On April 14, 2022, under the Royalty Interest Global Amendments, the Company is granted at its sole discretion, the right to exchange from time to time, all or any of the Royalty Interest under the original principal amount of $
On February 8, 2023, the Company entered into an exchange agreement with Irving, pursuant to which the parties agreed to partition $
Interest expense for the three months ended March 31, 2023 and 2022 was $
March 2021 Purchase Agreement
On March 8, 2021, the Company entered into a purchase agreement (the “March 2021 Purchase Agreement”) with Streeterville Capital, LLC (“Streeterville”), a company affiliated with CVP, pursuant to which the Company sold a
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royalty interest entitling Streeterville to $
The Company will be obligated to make minimum royalty payments on a monthly basis beginning at the earlier of (a) 36 months following the closing date or (b)
The Royalty Interest amount of $
On April 14, 2022, under the Royalty Interest Global Amendments, the Company is granted at its sole discretion, the right to exchange from time to time, all or any of the Royalty Interest under the original principal amount of $
On August 17, 2022, the Company entered into an exchange agreement (the “Royalty Interest Exchange Agreement”) with Streeterville to (i) partition a new royalty interest in the royalty repayment amount of $
On September 30, 2022, the Company entered into an exchange agreement with Streeterville, pursuant to which the parties agreed to partition $
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Interest expense for the three months ended March 31, 2023 and 2022 was $
August 2022 Purchase Agreement
On August 24, 2022, the Company entered into another royalty interest purchase agreement (the “August 2022 Purchase Agreement”) with Streeterville, pursuant to which the Company sold to Streeterville (the entitling “Investor”) a royalty interest to receive $
The Company will be obligated to make minimum royalty payments on a monthly basis beginning on January 1, 2024 in an amount equal to the greater of (A) $
Pursuant to the terms of the Royalty Interest, the Company has the right to exchange from time to time at the Company’s sole discretion all or any portion of the Royalty Interest for shares of Common Stock at a price per share equal to the Nasdaq Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) as of the date of the applicable exchange. At issuance, based on projected cash outflows from future revenue streams, the discount rate was
Interest expense for the three months ended March 31, 2023, and 2022 was $
Streeterville Note
On January 13, 2021, the Company issued a secured promissory note to Streeterville in the original principal amount of $
At any time following the occurrence of a trial failure which refers to any of the following: (i) the Company abandons the clinical trial with NP-300 for an indication for the symptomatic relief of infectious diarrhea for cholera; (ii) the Company fails to start the Phase 1 clinical trial of NP-300 for the symptomatic relief of infectious diarrhea for cholera by July 1, 2022; or (iii) the Company fails to meet all primary endpoints in the pivotal trials of NP-300 for the symptomatic relief if infectious diarrhea for cholera with statistical significance, Streeterville may elect to increase the outstanding balance as of the date of the trial failure by
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Streeterville elects to apply the Trial Failure Effect, it reserves the right to declare the outstanding balance immediately due and payable at any time. As of March 31, 2023, no trial failure occurred.
Streeterville is entitled to a maximum of
Beginning on the earlier of (a)
After Streeterville becomes aware of the occurrence of any default, Streeterville may accelerate the note, with the outstanding balance becoming immediately due and payable in cash at the Mandatory Default Amount (i.e., the outstanding balance following the application of the Default Effect). Streeterville reserves the right to declare the outstanding balance immediately due and payable at any time following the default. Default Effect means multiplying the outstanding balance as of the date of default by
In connection with the note issuance, the Company has entered into a security agreement with Streeterville, pursuant to which Streeterville will receive a first priority security interest in all existing and future NP-300 technology, and any TDPRV and the sale proceeds therefrom that may be granted to the Company by the FDA in connection with the development of NP-300 for the cholera indication. The Company also agreed, with certain exceptions, not to grant any lien on any of the collateral securing the note and not to grant any license under any of the intellectual property relating to such collateral. The grant of security interest has become effective upon the receipt of the Salix Waiver on April 6, 2021 in observance to the requirement of the settlement agreement previously entered by the Company with Salix Pharmaceuticals, Inc.
The Company irrevocably elected to initially and subsequently apply the FVO accounting to the entire note. The fair value at transaction date was equal to the cash proceeds received of $
Insurance Financing
May 2022 First Insurance Financing
In May 2022, the Company entered into a premium finance agreement for $
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March 2023 First Insurance Financing
In March 2023, the Company entered into a premium finance agreement for $
2019 Tempesta Note
In October 2019, the Company entered into a License Termination and Settlement Agreement with Dr. Michael Tempesta, pursuant to which certain royalty payment disputes between the Company and Tempesta were settled. Per the terms of the Agreement, Tempesta received $
8. Warrants
The following table summarizes information about warrants outstanding and exercisable into shares of the Company’s common stock as of March 31, 2023 and December 31, 2022:
| | | | |
| | March 31, | | December 31, |
| | 2023 | | 2022 |
| | (unaudited) | | |
Warrants outstanding, beginning balance | | | | |
Issuances | | — | | — |
Exercises | | | ||
Expirations and cancelations | | — | | ( |
Warrants outstanding, ending balance | | | | |
As of March 31, 2023, and 2022, the Company’s outstanding warrants have an exercise price ranging from $
9. Preferred Stock
At March 31, 2023 and December 31, 2022, preferred stock consisted of the following:
| | | | | | | | | | | | |
| | | | | | | | | | | Liquidation | |
(in thousands, except share and per share data) | | Shares |
| Issued and |
| Carrying | | Preference | ||||
Series | | Authorized | | Outstanding | | Value | | per Share | ||||
B-2 | | | | | | | | $ | — | | $ | — |
C | | | | | | | | | — | | | — |
E | | | | | | | | | — | | | — |
Total | | | | | | | $ | — | | | | |
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Series C Perpetual Preferred Stock
In September 2020, the Company entered into an exchange agreement with Iliad to issue
The preferred stock has been classified as permanent stockholders' equity in accordance with authoritative guidance for the classification and measurement of perpetual shares without mandatory redemption period because the redemption option was ultimately in the control of the Company. There were
Series E Preferred Stock
On August 18, 2022, the Company entered into an agreement (the “Securities Purchase Agreement”) with a third party to issue
On October 4, 2022, the Company redeemed all
10. Stockholders' Equity
As of March 31, 2023 and December 31, 2022, the Company had reserved shares of common stock, on an as-if converted basis, for issuance as follows:
| | March 31, | | December 31, |
| | 2023 | | 2022 |
| | (unaudited) | | |
Options issued and outstanding |
| | | |
Inducement options issued and outstanding | | | | |
Options available for grant under stock option plans |
| | | |
Restricted stock unit awards issued and outstanding |
| | | |
Warrants issued and outstanding |
| | | |
Total |
| |
| |
Common Stock
The holders of common stock are entitled to
The holders of non-voting common stock are not entitled to vote, except on an as converted basis with respect to any change of control of the Company that is submitted to the stockholders of the Company for approval. Shares of the Company's non-voting common stock have the same rights to dividends and other distributions and are convertible into shares of the Company's common stock on a
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At a special meeting of stockholders of Jaguar Health, Inc. (the “Company”) held on September 30, 2022 (the “Special Meeting”), the Company’s stockholders approved an amendment (the “Sixth Amendment”) to the Company’s Third Amended and Restated Certificate of Incorporation (the “COI”) to effect an increase in the number of authorized shares of the Company’s voting common stock, par value $
Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved the Authorized Share Increase and the filing of the Sixth Amendment to effectuate the Authorized Share Increase. On September 30, 2022, the Company filed the Sixth Amendment with the Secretary of State of the State of Delaware (the “DE Secretary of State”), and the Authorized Share Increase became effective in accordance with the terms of the Sixth Amendment immediately upon filing with the DE Secretary of State (the “Effective Time”).
The Company is now authorized to issue a total number of
Reverse Stock Split
On September 3, 2021, the reverse stock split of the Company’s issued and outstanding voting common stock at a ratio not less than -for-2 and not greater than -for-20 became effective. Upon effectivity, every shares of the Company’s issued and outstanding common stock immediately prior to the effective time shall automatically be reclassified into one share of common stock without any change in the par value.
On January 20, 2023, the Company approved a seventh amendment to the Company’s Third Amended and Restated Certificate of Incorporation to effect a -for-75 reverse stock split of the Company’s issued and outstanding shares of voting common stock, effective January 23, 2023. Upon effectivity, every shares of the Company’s issued outstanding common stock immediately prior to the effective time shall automatically be reclassified into one share of common stock without any change in the par value per share.
The reverse stock split reduces the number of shares of common stock issuable upon the conversion of the Company’s outstanding non-voting common stock and the exercise or vesting of its outstanding stock options and warrants in proportion to the ratio of the reverse stock split and causes a proportionate increase in the conversion and exercise prices of such non-voting common stock, stock options and warrants. In addition, the number of shares reserved for issuance under the Company’s equity compensation plans immediately prior to the effective time will be reduced proportionately. The reverse stock split did not change the total number of authorized shares of common stock or preferred stock.
At the Market Offering (“ATM”)
December 2021 ATM Agreement
On December 10, 2021, the Company entered into an ATM Agreement (“December 2021 ATM Agreement”) with Ladenburg, pursuant to which the Company may offer and sell, from time to time through Ladenburg, shares of common stock having an aggregate offering price of up to $
On February 2, 2022, the Company entered into an amendment to the December 2021 ATM Agreement, pursuant to which, the aggregate offering amount of the shares of the Company’s common stock which the Company may sell and issue through Ladenburg, as the sales agent, was increased from $
During the three months ended March 31, 2023, the Company issued an aggregate of
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Noncontrolling Interest
As a result of the merger on November 3, 2021 between Napo EU and Dragon SPAC, the Company assumed a non-controlling interest amounting to $
During the three months ended March 31, 2023 and 2022, noncontrolling interest increased by $
11. Stock-based Compensation
2013 Equity Incentive Plan
In November 2013, the Company's board of directors and sole stockholder adopted the Jaguar Health, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). The 2013 Plan allows the Company's board of directors to grant stock options, restricted stock awards and restricted stock unit awards to employees, officers, directors and consultants of the Company. Following the effective date of the IPO and after effectiveness of any grants under the 2013 Plan that were contingent on the IPO,
2014 Stock Incentive Plan
Effective May 12, 2015, the Company adopted the Jaguar Health, Inc. 2014 Stock Incentive Plan (“2014 Plan”). The 2014 Plan provides for the grant of options, restricted stock and restricted stock units to eligible employees, directors and consultants to purchase the Company's common stock. The term of an incentive stock option may not exceed
On April 13, 2022, the Board of Directors of the Company approved a Registration Statement to register an additional
As of March 31, 2023, there were
2020 New Employee Inducement Award Plan
Effective June 16, 2020, the Company adopted the Jaguar Health, Inc. New Employee Inducement Award Plan (“2020 Inducement Award Plan”) and, subject to the adjustment provisions of the Inducement Award Plan, reserved
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previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.
On April 13, 2022, the Board of Directors of the Company approved an amendment to the 2020 Inducement Award Plan to reserve an additional
As of March 31, 2023, there were
Stock Options and Restricted Stock Units (“RSUs”)
The following table summarizes the incentive plan activity for the three months ended March 31, 2023 and year ended December 31, 2022:
| | | | | | | | | | | | | | |
| | | | | | | | Weighted | | Weighted Average | | | | |
| | Shares | | Stock | | | | Average | | Remaining | | Aggregate | ||
| | Available | | Options | | RSUs | | Stock Option | | Contractual Life | | Intrinsic | ||
(in thousands, except share and per share data) |
| for Grant |
| Outstanding |
| Outstanding |
| Exercise Price |
| (Years) |
| Value* | ||
Outstanding at January 1, 2022 | | | | | | | | $ | | | | $ | ||
Additional shares authorized | | | | — | | — | | | — | | | | | — |
Options granted | | ( | | | | — | | | | | | | | — |
Options exercised | | — | | — | | — | | | — | | | | | — |
Options canceled | | | | ( | | — | | | | | | | | — |
RSUs granted | | ( | | — | | | | | — | | | | | — |
RSUs vested and released | | — | | — | | ( | | | — | | | | | — |
RSUs cancelled | | — | | — | | ( | | | — | | | | | — |
Outstanding at December 31, 2022 | | | | | | | | $ | | | | $ | — | |
Additional shares authorized | | — | | — | | — | | | — | | — | | | — |
Options granted | | — | | — | | — | | | — | | — | | | — |
Options exercised | | — | | — | | — | | | — | | — | | | — |
Options canceled | | | | ( | | — | | | | | — | | | — |
RSUs granted | | ( | | — | | | | | — | | — | | | — |
RSUs vested and released | | — | | — | | — | | | — | | — | | | — |
RSUs cancelled | | — | | — | | — | | | — | | — | | | — |
Outstanding at March 31, 2023 | | | | | | | | $ | | | | $ | — | |
Exercisable at March 31, 2023 | | |
| | | | | $ | |
| | $ | — | |
Vested and expected to vest at March 31, 2023 | | |
| | | | | $ | |
| | $ | — | |
*Fair market value of Jaguar stock on March 31, 2023 was $
The intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the Company's common stock for options that were in-the-money.
The number of options exercised during the three months ended March 31, 2023 and year ended December 31, 2022 were
The weighted average grant date fair value of stock options granted was
The number of options that vested for the three months ended March 31, 2023 and for the year ended December 31, 2022 was
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Stock-Based Compensation
The following table summarizes stock-based compensation expense related to stock options, inducement stock options and RSUs for the three months ended March 31, 2023, and 2022, and are included in the unaudited condensed consolidated comprehensive loss as follows:
| | | | | | | |
| | Three Months Ended | | ||||
| | March 31, | | ||||
(in thousands) |
| 2023 |
| 2022 | | ||
Research and development expense | | $ | | $ | | ||
Sales and marketing expense | |
| |
| | ||
General and administrative expense | |
| |
| | ||
Total | | $ | | $ | | ||
As of March 31, 2023, the Company had $
The fair value of options granted during the three months ended March 31, 2023, and 2022, respectively, were calculated using the range of assumptions set forth below:
| | March 31, | | December 31, |
| | 2023 | | 2022 |
|
| (unaudited) | | |
Volatility | | — | | |
Expected term (years) | | — |
| |
Risk-free interest rate | | — |
| |
Expected dividend yield | | — | | — |
401(k) Plan
The Company sponsors a 401(k) defined contribution plan covering all employees. There were
12. Net Loss Per Share
The following table presents the calculation of basic and diluted net loss per share of common stock for the periods indicated:
| | | | ||||
| | | Three Months Ended March 31, | ||||
(In thousands, except share and per share data) |
| | 2023 |
| 2022 | ||
Net loss attributable to common stockholders (basic and diluted) | | | $ | ( | | $ | ( |
Shares used to compute net loss per common share, basic and diluted | | | | | | | |
Net loss per share attributable to common stockholders, basic and diluted | | | $ | ( | | $ | ( |
Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company's potentially dilutive securities which include stock options, convertible preferred stock, RSUs and common stock warrants have been excluded from the computation of diluted net
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loss per share as they would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company's net loss position.
The following outstanding common stock equivalents have been excluded from diluted net loss per common share for the three months ended March 31, 2023, and December 31, 2022 because their inclusion would be anti-dilutive.
| | March 31, | | December 31, |
| | 2023 | | 2022 |
|
| (unaudited) | | |
Options issued and outstanding | | | | |
Inducement options issued and outstanding | | | | |
Restricted stock units issued and outstanding | | | | |
Warrants issued and outstanding | | | | |
Total | | | | |
As of March 24, 2023, there were
13. Segment Data
The Company has
The Company's reportable segments net revenues and net loss for the three months ended March 31, 2023, and 2022 consisted of the following:
| | Three Months Ended | ||||
| | March 31, | ||||
(in thousands) |
| 2023 |
| 2022 | ||
Revenue from external customers |
| |
|
| |
|
Human Health | | $ | | $ | ||
Animal Health | |
| |
| ||
Consolidated Totals | | $ | | $ | ||
| | | | | | |
Segment net loss | |
|
| |
|
|
Human Health | | $ | ( | | $ | ( |
Animal Health | |
| ( | |
| ( |
Consolidated Totals | | $ | ( | | $ | ( |
The Company's reportable segments assets consisted of the following:
| | | | | | |
| | March 31, | | December 31, | ||
|
| 2023 | | 2022 | ||
(in thousands) | | (unaudited) | | | | |
Segment assets |
| |
| |
| |
Human Health | | $ | | $ | ||
Animal Health | |
| |
| ||
Total | | $ | | $ | ||
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The reconciliation of segments assets to the consolidated assets is as follows:
| | | | | | |
| | March 31, | | December 31, | ||
(in thousands) |
| 2023 |
| 2022 | ||
| | (unaudited) | | | | |
Total assets for reportable segments | | $ | | $ | ||
Less: Investment in subsidiary | |
| ( | |
| ( |
Less: Intercompany loan | |
| ( | |
| ( |
Consolidated Totals | | $ | | $ | ||
14. Subsequent Events
December 2021 ATM Agreement
Subsequent to March 31, 2023, the Company has issued an additional
December 2020 Royalty Interest Exchange Agreement
On May 8, 2023, the Company entered into an exchange agreement with Irving to (i) partition a new royalty interest in the royalty repayment amount of $
PIPE Purchase Agreement
On May 8, 2023, the Company entered into a Securities Purchase Agreement (the “PIPE Purchase Agreement”) with certain investors named therein (collectively the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers in a private placement an aggregate of (i)
Each share of Series G Preferred Stock is convertible into shares of Common Stock. The Series G Preferred Stock terms are set forth in a Certificate of Designation of Preferences, Rights, and Limitations of Series G Convertible Preferred Stock (the “Certificate of Designation”) filed with the Secretary of State of Delaware and effective on May 9, 2023.
The PIPE Warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on the later of (i) January 1, 2024, and (ii) the date on which the approval by the Company’s stockholders (the “Stockholder Approval”) to remove both the Voting Cap and the Conversion Cap (both as defined below) is obtained (the “Initial Exercise Date”) and ending on the
On May 10, 2023, the Company issued warrants equivalent to
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The PIPE Purchase Agreement provides that during the period commencing on the signing of the PIPE Purchase Agreement and ending October 22, 2023, the Company will not effect or enter into any agreement to (i) issue securities in exchange for any securities of the Company issued and outstanding on the date of the PIPE Purchase Agreement pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), or (ii) effect issuance by the Company of Common Stock or Common Stock Equivalents, subject to certain customary exceptions set forth in the PIPE Purchase Agreement including, among others, issuance of shares of Common Stock pursuant to the At The Market Offering Agreement, dated December 10, 2021, by and between the Company and Ladenburg Thalmann & Co. Inc., as amended (the “Ladenburg Thalmann ATM”), provided that such issuance in the Ladenburg Thalmann ATM has consented.
Standstill Agreement
On May 8, 2023, the Company and NAPO Pharmaceuticals, Inc., a wholly-owned subsidiary of the Company, entered into a standstill agreement (the “Standstill Agreement”) with Iliad and Streeterville with respect to
Standstill Agreement provides that for a period beginning on the effective date of the Standstill Agreement (the “Effective Date”) and ending on the earliest of: (1) the date that is
Following the expiration or earlier termination of the Standstill Period: (i) the Company shall resume making Royalty Payments in accordance with the terms and conditions of the transaction documents of the Royalty Interests, and (ii) all restrictions applicable to Investor’s buying, selling, or otherwise trading in the Company’s Common Stock shall immediately and automatically terminate with no action required on the part of either Investor or Company.
As a material inducement and consideration for Investor’s agreement to enter into the Standstill Agreement, the Company agreed to issue (i) Iliad warrants to purchase up to
The Standstill Warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on the later of (i) January 1, 2024 and (ii) the date on which the Stockholder Approval is obtained (the “Standstill Warrant Initial Exercise Date”) and ending on the
Minimum Bid Price Requirement
On May 10, 2023, the Company received a letter from the Staff of Nasdaq indicating that the bid price for the Company’s common stock for the last
Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted a
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will be met if the Company evidences a closing bid price of at least $
The Company is diligently working to evidence compliance with the minimum bid price requirement for continued listing on Nasdaq; however, there can be no assurance that the Company will be able to regain compliance or that Nasdaq will grant the Company a further extension of time to regain compliance, if necessary. If the Company fails to regain compliance with the Nasdaq continued listing standards, its common stock will be subject to delisting from Nasdaq.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q, and with our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K as of and for the year ended December 31, 2022 which was filed to the SEC on March 24, 2023 and amended on April 28, 2023.
Overview
Jaguar Health, Inc. (“Jaguar” or the “Company”) is a commercial stage pharmaceuticals company focused on developing novel, plant-based, sustainably derived prescription medicines for people and animals with gastrointestinal (“GI”) distress, including chronic, debilitating diarrhea. Jaguar's wholly owned subsidiary, Napo Pharmaceuticals, Inc. (“Napo”), focuses on developing and commercializing proprietary plant-based human pharmaceuticals from plants harvested responsibly from rainforest areas. Our crofelemer drug product candidate is the subject of the OnTarget study, an ongoing pivotal Phase 3 clinical trial for prophylaxis of diarrhea in adult cancer patients receiving targeted therapy. As announced, Jaguar achieved a major milestone with completion of patient enrollment in OnTarget. Jaguar is the majority stockholder of Napo Therapeutics S.p.A. (“Napo Therapeutics”), an Italian corporation established by Jaguar in Milan, Italy in 2021 that focuses on expanding crofelemer access in Europe. Napo Therapeutics’ core mission is to provide access to crofelemer in Europe to address significant rare/orphan disease indications, including, initially, two key rare disease target indications: Short bowel syndrome (“SBS”) with intestinal failure and/or congenital diarrheal disorders (“CDD”). Jaguar Animal Health is a tradename of Jaguar Health.
Jaguar was founded in San Francisco, California as a Delaware corporation on June 6, 2013 (inception). The Company was a majority-owned subsidiary of Napo until the close of the Company's initial public offering on May 18, 2015. The Company was formed to develop and commercialize first-in-class prescription and non-prescription products for companion animals.
On July 31, 2017, Jaguar completed a merger with Napo pursuant to the Agreement and Plan of Merger dated March 31, 2017, by and among Jaguar, Napo, Napo Acquisition Corporation (“Merger Sub”), and Napo's representative (the “Merger Agreement”). In accordance with the terms of the Merger Agreement, upon the completion of the merger, Merger Sub merged with and into Napo, with Napo surviving as the wholly owned subsidiary (the “Merger” or “Napo Merger”). Immediately following the Merger, Jaguar changed its name from “Jaguar Animal Health, Inc.” to “Jaguar Health, Inc.” Napo now operates as a wholly owned subsidiary of Jaguar focused on human health including the ongoing development of crofelemer and commercialization of Mytesi.
Napo’s marketed drug Mytesi (crofelemer 125 mg delayed-release tablets) is a first-in-class oral botanical drug product approved by the U.S. Food and Drug Administration (“FDA”) for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. To date, this is the only oral plant-based botanical prescription medicine approved under the FDA’s Botanical Guidance. The Company’s Canalevia-CA1 (crofelemer delayed-release tablets) drug is the first and only oral plant-based prescription product that is FDA conditionally approved to treat chemotherapy-induced diarrhea (“CID”) in dogs.
Crofelemer was granted ODD by the U.S. FDA in February 2023 for microvillus inclusion disease (“MVID”), a rare CDD condition, and granted ODD for MVID by the European Medicines Agency (“EMA”) in October 2022. Crofelemer was granted ODD for SBS by the EMA in December 2021 and by the FDA in August 2017. In 2023, Jaguar and Napo Therapeutics plan to support third-party investigator-initiated proof-of-concept (POC) studies of crofelemer in patients with SBS with intestinal failure or CDD, focused on obtaining POC data showing reduction of requirements of parenteral support, including parenteral nutrition and/or IV fluids. In accordance with the guidelines of specific European Union countries, publications of data from POC trials could support participation in early patient access programs for crofelemer for SBS or CDD, potentially in 2024, especially for patients with intestinal failure requiring parenteral support. Participation in early access programs, which do not exist in the United States, provides an opportunity for reimbursement while impacting the morbidity and high cost of care for these chronic unmet needs.
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Napo Therapeutics is initiating efforts to commence clinical development of crofelemer in SBS patients in support of the company’s key focus on leveraging the EMA’s accelerated conditional marketing authorization pathway in Europe for these rare diseases. SBS affects approximately 10,000 to 20,000 people in the U.S., according to the Crohn's & Colitis Foundation, and it is estimated that the population of SBS patients in Europe is approximately the same size. Despite limited treatment options, the global SBS market exceeded $568 million in 2019 and is expected to reach $4.6 billion by 2027, according to a report by Vision Research Reports.
Most of the activities of the Company are focused on the development and/or commercialization of Mytesi, the ongoing clinical development of crofelemer for the prophylaxis of diarrhea in adult patients receiving targeted cancer therapy, and our prioritized clinical program centered around investigator-initiated POC trials of crofelemer for SBS and CDD.
In the field of animal health, we are continuing limited activities related to developing and commercializing first-in-class gastrointestinal products for dogs, dairy calves and foals.
Crofelemer is a novel, first-in-class anti-secretory antidiarrheal drug which has a normalizing effect on electrolyte and fluid balance in the gut, and this mechanism of action has the potential to benefit multiple disorders that cause gastrointestinal distress, including diarrhea and abdominal discomfort. Crofelemer is in development for multiple possible follow-on indications, including for our lead Phase 3 program in CTD, investigating prophylaxis of diarrhea related to targeted therapy with or without standard chemotherapy. Crofelemer delayed-release tablets are also being evaluated in diarrhea-predominant irritable bowel syndrome (“IBS-D”) and idiopathic/functional diarrhea in investigator-initiated trials.
Crofelemer powder for oral solution is being developed to support orphan or rare disease indications for infants and/or children with SBS and/or CDD, such as MVID.
In addition, a second-generation proprietary anti-secretory antidiarrheal drug (“NP-300”) is in development for symptomatic relief and treatment of moderate-to-severe diarrhea, with or without concomitant antimicrobial therapy, from bacterial, viral and parasitic infections including Vibrio cholerae, the bacterium that causes cholera. This program is being pursued with the potential targeted incentive from the FDA of a tropical disease priority review voucher.
In January 2023, Jaguar and Filament Health (“Filament”), with funding from One Small Planet, formed the U.S.-based joint venture Magdalena Biosciences, Inc. (“Magdalena”). Magdalena’s focus is on the development of novel, natural prescription medicines derived from plants for mental health indications including, initially, attention-deficit/hyperactivity disorder (“ADHD”) in adults. The goal of the collaboration is to extend the botanical drug development capabilities of Jaguar and Filament in order to develop pharmaceutical-grade, standardized drug candidates for mental health disorders, and to partner with a potential future licensee to develop and commercialize these novel plant-based drugs. This new venture aligns with Jaguar's mental health Entheogen Therapeutics Initiative (“ETI”) and Filament's corporate mission to develop novel, natural prescription medicines from plants. Magdalena will leverage Jaguar's proprietary medicinal plant library and Filament's proprietary drug development technology. Jaguar’s library of 2,300 highly characterized medicinal plants and 3,500 plant extracts, all from firsthand ethnobotanical investigation by Jaguar and members of the ETI Scientific Strategy Team, is a key asset we have generated over 30 years that bridges the knowledge of traditional healers and Western medicine. Magdalena holds an exclusive license to plants and plant extracts in Jaguar's library, not including any sources of crofelemer or NP-300, for specific indications and is in the process of identifying plant candidates in the library that may prove beneficial for addressing indications such as ADHD.
In December 2021, we received conditional approval from the FDA to market Canalevia-CA1 (crofelemer delayed-release tablets), our oral plant-based prescription drug and the only available veterinary drug for the treatment of chemotherapy-induced diarrhea (“CID”) in dogs, and Canalevia-CA1 is now available to multiple leading veterinary distributors in the U.S. Canalevia-CA1 is a tablet that is given orally and can be prescribed for home treatment of CID. Canalevia-CA1 is conditionally approved by the FDA under application number 141-552. Conditional approval allows for commercialization of the product while Jaguar Animal Health continues to collect the substantial evidence of effectiveness required for full approval. We have received Minor Use in a Major Species (“MUMS”) designation from the FDA for Canalevia-CA1 to treat CID in dogs. FDA has established a "small number" threshold for minor use in each of the seven major species covered by the MUMS act. The small number threshold is currently 80,000 for dogs,
46
representing the largest number of dogs that can be affected by a disease or condition over the course of a year and still have the use qualify as a minor use.
We believe Jaguar is poised to realize a number of synergistic, value adding benefits—an expanded pipeline of potential blockbuster human follow-on indications of crofelemer, and a second-generation anti-secretory agent—upon which to build global partnerships. Jaguar, through Napo, holds global unencumbered rights for crofelemer, Mytesi, and Canalevia-CA1. Additionally, several of the drug product opportunities in Jaguar’s crofelemer pipeline are backed by Phase 2 and proof of concept evidence from human clinical trials.
Financial Operations Overview
On a consolidated basis, we have not yet generated enough revenue to date to achieve break even or positive cash flows, and we expect to continue to incur significant research and development and other expenses. Our net loss was $12.4 million and $18.2 million for the three months ended March 31, 2023, and 2022, respectively. As of March 31, 2023, we had a total stockholders' equity of $7.7 million, an accumulated deficit of $279.2 million, and cash of $14.4 million. We expect to continue to incur losses and experience increased expenditures for the foreseeable future as we expand our product development activities, seek necessary approvals for our product candidates, conduct species-specific formulation studies for our non-prescription products, establish API manufacturing capabilities and begin additional commercialization activities.
Revenues
Our product and collaboration revenue consist of the following:
| ● | Revenues from the sale of our human drug Mytesi, which is sold through distributors and wholesalers and specialty pharmacies. |
| ● | Revenues from the sale of our animal products branded as Canalevia-CA1, Neonorm Calf and Neonorm Foal. Our Canalevia-CA1, Neonorm and botanical extract products are primarily sold to distributors, who then sell the products to the end customers. |
| ● | Our policy typically permits returns if the product is damaged, defective, or otherwise cannot be used when received by the customer if the product has expired. Returns are accepted for product that will expire within six months or that have expired up to one year after their expiration dates. Estimates for expected returns of expired products are based primarily on an ongoing analysis of our historical return patterns. |
See “Results of Operations” below for more detailed discussion on revenues.
Cost of Revenue
Cost of revenue consists of direct drug substance and drug product materials expense, direct labor, distribution fees, royalties and other related expenses associated with the sale of our products.
Research and Development Expense
Research and development expenses consist primarily of clinical and contract manufacturing expense, personnel and related benefits expense, stock-based compensation expense, employee travel expense, and reforestation expenses. Clinical and contract manufacturing expense consists primarily of costs to conduct stability, safety and efficacy studies, and manufacturing startup at an outsourced API provider in Italy. It also includes expenses with a third-party provider for the transfer of the Mytesi manufacturing process, and the related feasibility and validation activities.
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We typically use our employee and infrastructure resources across multiple development programs. We track outsourced development costs by prescription drug product candidate and non-prescription product and we track personnel or other internal costs related to development to specific programs or development compounds.
The timing and amount of our research and development expenses will depend largely upon the outcomes of current and future trials for our prescription drug product candidates as well as the related regulatory requirements, the outcomes of current and future species-specific formulation studies for our non-prescription products, manufacturing costs and any costs associated with the advancement of our line extension programs. We cannot determine with certainty the duration and completion costs of the current or future development activities.
The duration, costs and timing of trials, formulation studies and development of our prescription drug and non-prescription products will depend on a variety of factors, including:
| ● | the scope, rate of progress, and expense of our ongoing, as well as any additional clinical trials, formulation studies and other research and development activities; |
| ● | future clinical trial and formulation study results; |
| ● | potential changes in government regulations; and |
| ● | the timing and receipt of any regulatory approvals. |
A change in the outcome of any of these variables with respect to the development of a prescription drug product candidate or non-prescription product could mean a significant change in the costs and timing associated with our development activities.
We expect research and development expense to increase due to the start-up costs associated with our clinical trials for other indications.
Sales and Marketing Expense
Sales and marketing expenses consist of personnel and related benefits expense, stock-based compensation expense, direct sales and marketing expense, employee travel expense, and management consulting expense. We currently incur sales and marketing expenses to promote Mytesi. We do not have significant marketing or promotional expenses related to Neonorm Calf or Neonorm Foal for the three months ended March 31, 2023, and 2022.
We expect sales and marketing expense to increase going forward as we focus on expanding our market access activities and commercial partnerships for the development of follow-on indications of Mytesi and crofelemer.
General and Administrative Expense
General and administrative expenses consist of personnel and related benefits expense, stock-based compensation expense, employee travel expense, legal and accounting fees, rent and facilities expense, and management consulting expense.
In the near term, we expect general and administrative expense to remain flat as we focus on our pipeline development and market access expansion. This will include efforts to grow the business.
Interest Expense
Interest expense consists primarily of non-cash and cash interest costs related to our borrowings.
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Critical Accounting Policies and Significant Judgments and Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the consolidated financial statements. Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are described in Note 2 of the unaudited condensed consolidated financial statements. Our critical accounting policies and estimates were described in Part II, Item 7, Critical Accounting Policies and Estimates, in our Annual Report on Form 10-K for the year ended December 31, 2022.
Results of Operations
Comparison for the three months ended March 31, 2023 and 2022
The following table summarizes the Company’s results of operations with respect to the items set forth in such table for the three months ended March 31, 2023 and 2022 together with the change in such items in dollars and as a percentage.
| Three Months Ended | | | | | |
| ||||
| March 31, | | | | | | | ||||
(in thousands) | 2023 |
| 2022 |
| Variance |
| Variance % | | |||
Product revenue | $ | 1,972 | | $ | 2,625 | | $ | (653) |
| (24.9) | % |
Operating Expenses |
|
| |
|
| |
| |
|
| |
Cost of product revenue |
| 345 | |
| 455 | |
| (110) |
| (24.2) | % |
Research and development |
| 4,775 | |
| 4,945 | |
| (170) |
| (3.4) | % |
Sales and marketing |
| 1,884 | |
| 2,835 | |
| (951) |
| (33.5) | % |
General and administrative |
| 4,813 | |
| 6,144 | |
| (1,331) |
| (21.7) | % |
Total operating expenses |
| 11,817 | |
| 14,379 | |
| (2,562) |
| (17.8) | % |
Loss from operations |
| (9,845) | |
| (11,754) | |
| 1,909 |
| (16.2) | % |
Interest expense |
| (2,181) | |
| (4,194) | |
| 2,013 |
| (48.0) | % |
Loss on extinguishment of debt |
| — | |
| (2,815) | |
| 2,815 |
| (100.0) | % |
Change in fair value of financial instruments and hybrid instrument designated at Fair Value Option |
| (359) | |
| (233) | |
| (126) |
| 54.1 | % |
Other income (expense) |
| (12) | |
| 832 | |
| (844) |
| (101.4) | % |
Loss before income tax |
| (12,397) | |
| (18,164) | |
| 5,767 |
| (31.7) | % |
Income tax expense | | — | | | — | | | — | | 100.0 | % |
Net loss | | (12,397) | | | (18,164) | | | 5,767 | | (31.7) | % |
Net loss attributable to noncontrolling interest | | (195) | | | (178) | | | (17) | | 9.6 | % |
Net loss attributable to common stockholders | $ | (12,202) | | $ | (17,986) | | $ | 5,784 | | (32.2) | % |
Revenue
Product revenue
We transitioned from selling to the wholesalers that resell the product to retail pharmacies to the closed Specialty Pharmacy distribution networks throughout the year 2021 and we fully transitioned in the fourth quarter of the year 2022. The transition caused a one-time inventory draw-down of Mytesi across our third-party logistics warehouse, wholesalers, distributors, and retail stores. This significantly contributed to the decrease of $598,000 of Mytesi gross revenue.
49
Sales discounts were $303,000 and $320,000 for the three months ended March 31, 2023 and 2022, respectively, a decrease of $27,000, in line with our switch to the closed Specialty Pharmacy distribution network. No wholesaler fees were recognized for the three months ended March 31, 2023.
Medicaid and AIDS Drug Assistance Program (“ADAP”) rebates accounted for $560,000 and $504,000 for the three months ended March 31, 2023 and 2022, respectively, an increase of $56,000 primarily due to the WAC decrease implemented by the Company which resulted in lower government rebates from Medicaid, ADAP, public health services programs.
Due to the Company’s arrangements, including elements of variable consideration, gross product sales are reduced in order to reflect the expected consideration to arrive at net product sales. Deductions to reduce gross product sales to net product sales for the three months ended March 31, 2023 and 2022 were as follows:
| Three Months Ended | | | ||||||||
| March 31, | | | ||||||||
(in thousands) | 2023 |
| 2022 |
| Variance |
| Variance % | ||||
Gross product sales | | | | | | | | | | |
|
Mytesi | $ | 2,797 | | $ | 3,395 | | $ | (598) |
| (17.6) | % |
Canalevia | | 28 | | | 44 | |
| (16) |
| (36.4) | % |
Neonorm | | 18 | | | 20 | |
| (2) |
| (10.0) | % |
Total gross product sales | | 2,843 | | | 3,459 | |
| (616) |
| (17.8) | % |
Medicaid rebates | | (560) | | | (504) | |
| (56) |
| 11.1 | % |
Sales discounts | | (303) | | | (320) | | | 17 | | (5.3) | % |
Sales returns | | (8) | | | (10) | | | 2 | | (20.0) | % |
Wholesaler fee | | — | | | — | | | — | | — | % |
Net product sales | $ | 1,972 | | $ | 2,625 | | $ | (653) |
| (24.9) | % |
Our gross product revenues were $2.8 million and $3.5 million for the three months ended March 31, 2023 and 2022, respectively. These periods reflect revenue from the sale of our human drug Mytesi and our animal products branded as Neonorm Calf and Neonorm Foal.
Our Canalevia product was recently launched in 2022 with revenues of $28,000 and $44,000 for the three months ended March 31, 2023 and 2022, respectively. Sales and marketing expenses for Canalevia products are not significant during 2023.
Our Neonorm product revenues were $18,000 and $20,000 the three months ended March 31, 2023 and 2022, respectively. Sales and marketing expenses for Neonorm products are not significant during 2023 and during the same period in 2023.
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Cost of Product Revenue
| | Three Months Ended | | | | | |
| ||||
| | March 31, | | | | | |
| ||||
(in thousands) |
| 2023 |
| 2022 |
| Variance |
| Variance % | ||||
Cost of Product Revenue | | | | | | | | | | | |
|
Material cost |
| $ | 188 |
| $ | 250 |
| $ | (62) |
| (24.8) | % |
Direct labor | |
| 282 | |
| 162 | |
| 120 |
| 74.1 | % |
Royalties | |
| — | |
| 8 | |
| (8) |
| (100.0) | % |
Distribution fees | |
| (2) | |
| 7 | |
| (9) |
| (128.6) | % |
Other | |
| (123) | |
| 28 | |
| (151) |
| (539.3) | % |
Total |
| $ | 345 |
| $ | 455 |
| $ | (110) |
| (24.2) | % |
The change in cost of product revenue of $110,000 for the month three months ended March 31, 2023 compared to 2022 was primarily due to:
| ● | Direct labor increased $120,000 from $162,000 for the three months ended March 31 2022 to $282,000 in 2023, due to increased resources in manufacturing. |
| ● | Material cost decreased $62,000 from $250,000 for the three months ended March 31, 2022 to $188,000 in 2023, due to decreased in materials used in manufacturing. |
| ● | Other costs decreased $151,000 from $28,000 for the three months ended March 31, 2022 to negative $123,000 in the same period in 2023 due to additions in write-offs of non-conforming inventory. |
Research and Development
The following table presents the components of research and development (“R&D”) expense for the three months ended March 31, 2023 and 2022 together with the change in such components in dollars and as a percentage:
| | Three Months Ended | | | | | |
| ||||
| | March 31, | | | | | |
| ||||
(in thousands) |
| 2023 |
| 2022 |
| Variance |
| Variance % | ||||
Research and Development: |
| |
|
| |
|
| |
|
|
| |
Clinical and contract manufacturing | | $ | 2,247 | | $ | 1,645 | | $ | 602 |
| 36.6 | % |
Personnel and related benefits | | | 1,448 | | | 2,002 | | | (554) |
| (27.7) | % |
Stock-based compensation | |
| 227 | |
| 348 | | | (121) |
| (34.8) | % |
Materials expense and tree planting | |
| 96 | |
| 71 | | | 25 |
| 35.2 | % |
Travel, other expenses | |
| 60 | |
| 21 | | | 39 |
| 185.7 | % |
Other | |
| 697 | |
| 858 | | | (161) |
| (18.8) | % |
Total | | $ | 4,775 | | $ | 4,945 | | $ | (170) |
| (3.4) | % |
The decrease in R&D expense of $170,000 for the three months ended March 31, 2023 compared to the same period in 2022 was largely due to:
| ● | Personnel and related benefits decreased $554,000 from $2.0 million for the three months ended March 31, 2022 to $1.4 million in the same period in 2023 due to the lesser headcount. |
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| ● | Clinical and contract manufacturing expenses increased $602,000 from $1.6 million for the three months ended March 31, 2022 to $2.2 million in the same period in 2023 largely due to increased clinical trial activities related to start-up of CTD and other indications, additional CMC manufacturing, consulting and contractors’ expenses, and cholera/lechlemer research expenses. |
| ● | Stock-based compensation decreased $121,000 from $348,000 in the n three months ended March 31, 2022 to $227,000 in the same period in 2023 primarily due to lesser options and RSUs granted during the period as compared to 2022. |
| ● | Materials expense and tree planting increased $25,000 from $71,000 for the three months ended March 31, 2022 to $96,000 in the same period in 2023 primary due to higher number of activities involving tree planting activities. |
| ● | Travel, and other expenses increased $39,000 from $21,000 for the three months ended March 31, 2022 to $60,000 in the same period in 2023 primarily due to more travel activities with the clinical trials. |
| ● | Other expenses consisting of consulting, formulation and regulatory fees decreased $161,000 from $858,000 for the three months ended March 31, 2022 to $697,000 in the same period in 2023. |
Sales and Marketing
The following table presents the components of sales and marketing (“S&M”) expense for the three months ended March 31, 2023, and 2022 together with the change in such components in dollars and as a percentage:
| | Three Months Ended | | | | | |
| ||||
| | March 31, | | | | | |
| ||||
(in thousands) |
| 2023 |
| 2022 |
| Variance |
| Variance % | ||||
Sales and Marketing: |
| |
|
| |
|
| |
|
|
| |
Personnel and related benefits | | $ | 893 | | $ | 1,157 | | $ | (264) |
| (22.8) | % |
Direct marketing fees and expense | | | 565 | | | 1,101 | | | (536) |
| (48.7) | % |
Stock-based compensation | |
| 49 | |
| 82 | |
| (33) |
| (40.2) | % |
Other | |
| 377 | |
| 495 | |
| (118) |
| (23.8) | % |
Total | | $ | 1,884 | | $ | 2,835 | | $ | (951) |
| (33.5) | % |
The decrease in S&M expense of $951,000 for the three months ended March 31, 2023 compared to the same period in 2022 was largely due to:
| ● | Direct marketing fees and expenses decreased $536,000 from $1.1 million for the three months ended March 31, 2022 to $565,000 in the same period in 2023 due to decreased patient access programs and other Mytesi marketing initiatives. |
| ● | Personnel and related benefits decreased $264,000 from $1.2 million for the three months ended March 31, 2022 to $893,000 in the same period in 2023 due to decrease in headcount in sales and marketing. |
| ● | Stock-based compensation decreased $33,000 from $82,000 for the three months ended March 31, 2022 to $49,000 in the same period in 2023 primarily due to fewer options and RSUs granted during the period. |
| ● | Other expenses decreased $118,000 from $495,000 for the three months ended March 31, 2022 to $377,000 in the same period in 2023 due to lower consulting and contractor services and a greater number of travels for sales and marketing personnel. |
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General and Administrative
The following table presents the components of general and administrative (“G&A”) expense for the three months ended March 31, 2023, and 2022 together with the change in such components in dollars and as a percentage:
| | Three Months Ended | | | | | |
| ||||
| | March 31, | | | | | |
| ||||
(in thousands) |
| 2023 |
| 2022 |
| Variance |
| Variance % | ||||
General and Administrative: |
| |
|
| |
|
| |
|
|
| |
Personnel and related benefits | | $ | 1,210 | | $ | 1,794 | | $ | (584) |
| (32.6) | % |
Public company expense | |
| 489 | |
| 748 | |
| (259) |
| (34.6) | % |
Stock-based compensation | |
| 204 | |
| 633 | |
| (429) |
| (67.8) | % |
Legal services | |
| 711 | |
| 522 | |
| 189 |
| 36.2 | % |
Third-party consulting services | | | 142 | | | 378 | | | (236) | | (62.4) | % |
Audit, tax and accounting services | |
| 316 | |
| 232 | |
| 84 |
| 36.2 | % |
Travel, other expenses | |
| 75 | |
| 157 | |
| (82) |
| (52.2) | % |
Rent and lease expense | |
| 209 | |
| 115 | |
| 94 |
| 81.7 | % |
Other | |
| 1,457 | |
| 1,565 | |
| (108) |
| (6.9) | % |
Total | | $ | 4,813 | | $ | 6,144 | | $ | (1,331) |
| (21.7) | % |
The decrease in G&A expenses of $1.3 million for the three months ended March 31, 2023 compared to the same period in 2022 was largely due to:
| ● | Personnel and related benefits decreased $584,000 from $1.8 million for the three months ended March 31, 2022 to $1.2 million in the same period in 2023 due to lower headcount. |
| ● | Public company expense decreased $259,000 from $748,000 for the three months ended March 31, 2022 to $489,000 in the same period in 2023 due less investor relations and communications consulting expenses, and no expense related to the annual shareholder meeting. |
| ● | Stock-based compensation decreased $429,000 from $633,000 for the three months ended March 31, 2022 to $204,000 in the same period in 2023 primarily due to fewer options and RSUs granted during the period. |
| ● | Audit, tax and accounting services fees increased $84,000 from $232,000 for the three months ended March 31, 2022 to $316,000 in the same period in 2023 mostly due to accounting services made during the period. |
| ● | Rent and lease expense increased $94,000 from $115,000 for the three months ended March 31, 2022 to $209,000 in the same period in 2023 primarily due to increase in fees related to occupancy of new spaces and use of vehicles. |
| ● | Travel, and other expenses decreased $82,000 from $157,000 for the three months ended March 31, 2022 to $75,000 in the same period in 2023. |
| ● | Other expenses decreased $108,000 from $1.6 million for the three months ended March 31, 2022 to $1.5 million in the same period in 2023 due to lower consulting and contractual fees, compliance expense and dues and subscription fees. |
Interest Expense, net
Interest expense decreased $2.0 million from $4.2 million for the three months ended March 31, 2022 to $2.2 million for the same period in 2023 primarily due to interest expense incurred on royalty interest agreements and Exchange Note 2.
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Change in Fair Value of Financial Instruments and Hybrid Instrument Designated at FVO
Change in fair value of financial instrument and hybrid instrument designated at FVO decreased $126,000 from a loss of $233,000 for the three months ended March 31, 2022, to a loss of $359,000 for the same period in 2023 primarily due to fair value adjustments in liability classified warrants and notes payable designated at FVO.
Liquidity and Capital Resources
Sources of Liquidity
We have incurred net losses since our inception. For the three months ended March 31, 2023, and 2022, we had net losses of $12.4 million and $18.2 million, respectively. We expect to incur additional losses in the near-term future. At March 31, 2023, we had an accumulated deficit of $279.2 million. To date, we have generated only limited revenue, and we may never achieve revenue sufficient to offset our expenses.
We had cash of $14.4 million as of March 31, 2023. We do not believe our current capital is sufficient to fund our operating plan through one year from the issuance of these unaudited condensed consolidated financial statements.
We have funded our operations primarily through the issuance of debt and equity securities, in addition to sales of our commercial products. Cash provided by financing activities for the three months ended March 31, 2023, were generated from the issuance of an aggregate of 10,463,983 shares of common stock under the ATM Agreement for total net proceeds of $17.9 million.
The Company also raised an additional net proceeds of $_______ from the issuance of _______ shares of common stock under the ATM agreement between April 1, 2023 and May ______, 2023
We expect our expenditures will continue to increase as we continue our efforts to develop our products and continue development of our pipeline in the near term. We may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. We may also not be successful in entering into partnerships that include payment of upfront licensing fees for our products and product candidates for markets outside the United States, where appropriate. If we do not generate upfront fees from any anticipated arrangements, it would have a negative effect on our operating plan. We still plan to finance our operations and capital funding needs through equity and/or debt financing as well as revenue from future product sales. However, there can be no assurance that additional funding will be available to us on acceptable terms on a timely basis, if at all, or that we will generate sufficient cash from operations to adequately fund operating needs or ultimately achieve profitability. If we are unable to obtain an adequate level of financing needed for the long-term development and commercialization of our products, we will need to curtail planned activities and reduce costs. Doing so will likely have an adverse effect on our ability to execute on our business plan.
Cash Flows for the Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
The following table shows a summary of cash flows for the three months ended March 31, 2023, and 2022:
| | Three Months Ended March 31, | | ||||
(in thousands) |
| 2023 |
| 2022 |
| ||
Total cash used in operating activities | | $ | (9,945) | | $ | (7,695) | |
Total cash used in investing activities | | | — | | | — | |
Total cash provided by financing activities | |
| 18,811 | |
| 8,150 | |
Effects of foreign exchange rate changes on assets and liabilities | |
| 32 | |
| (50) | |
Net increase in cash | | $ | 8,898 | | $ | 405 | |
54
Cash Used in Operating Activities
During the three months ended March 31, 2023, net cash used in operating activities of $9.9 million resulted from our net comprehensive loss of $12.7 million adjusted by the amortization of debt discounts and debt issuance costs of $1.3 million, stock-based compensation of $480,000, depreciation and amortization expenses of $504,000, change in fair value of financial instrument and hybrid instrument designated at FVO of $359,000, amortization of operating lease right-of-use asset of $47,000, shares issued in exchange of services of $166,000, equity in net loss in joint venture of $31,000 and changes in operating assets and liabilities of $179,000.
Cash Used in Investing Activity
During the three months ended March 31, 2023, cash used in investing activities is zero.
Cash Provided by Financing Activities
During the three months ended March 31, 2023, net cash provided by financing activities of $18.8 million consisted of $17.9 million in net proceeds from shares issued in an At the Market offering and non-controlling interest of $1.2 million, offset by $236,000 repayment of insurance financing, and $50,000 in principal payments of the notes payable.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, Chief Executive Officer and Principal Financial and Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(c) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2023, using the criteria established in Internal Control-Integrated Framework (“2013 Framework”) issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Based on our evaluation using those criteria, our management has concluded that, as of March 31, 2023, our internal control over financial
55
reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles for the reasons discussed above.
This Quarterly Report on Form 10-Q does not include an attestation report of our registered public accounting firm on our internal control over financial reporting because we are a smaller reporting company and are not subject to auditor attestation requirements under applicable SEC rules.
There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
56
PART II. — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, litigation can have a material adverse effect on us due to defense and settlement costs, diversion of our management resources, and other factors. We are not currently subject to any material legal proceedings.
Item 1A. Risk Factors
The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and related notes, before making a decision to invest in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risk and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. If any of the events or circumstances described in the following risk factors actually occur, our business, operating results, financial condition, cash flows, and prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results, and stock price.
Because of the following factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
57
Item 6. Exhibits
Exhibit No. | | Description |
3.1 | | |
3.2 | | |
3.3 | | |
3.4 | | |
4.1 | | |
10.1 | | |
10.2 | | |
10.3 | | |
31.1* | | |
31.2* | | |
32.1** | | Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002). |
32.2** | | Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002). |
101.INS | | Inline XBRL Instance Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Document |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34 47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10 Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.
# | Portions of this exhibit have been omitted pursuant to Item 601 of Regulation S-K promulgated under the Securities Act because the information (i) is not material and (ii) would be competitively harmful if publicly disclosed. |
58
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 15, 2023 | | |
| JAGUAR HEALTH, INC. | |
| | |
| By: | /s/ Carol R. Lizak |
| | Principal Financial and Accounting Officer |
59
Exhibit 31.1
PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lisa A. Conte, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Jaguar Health, Inc. for the quarter ended March 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2023 | |
| /s/ Lisa A. Conte |
| Lisa A. Conte |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
Exhibit 31.2
PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Carol Lizak, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Jaguar Health, Inc. for the quarter ended March 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2023 | |
| /s/ Carol Lizak |
| Carol Lizak |
| Principal Financial and Accounting Officer |
| |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Jaguar Health, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 15, 2023 | |
| |
| /s/ Lisa A. Conte |
| Lisa A. Conte |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Jaguar Health, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 15, 2023 | |
| |
| /s/ Carol Lizak |
| Carol Lizak |
| Principal Financial and Accounting Officer |
| |