Talphera, Inc 10-K for FY2022

Talphera, Inc. (TLPH)

10-K 2023-03-31 For: 2022-12-31

Added on April 12, 2026

About this 10-K

Talphera, Inc filed this 10-K on March 31, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.77M; down 37.2% from $2.82M a year earlier
Net income: $47.76M; compared with a net loss of $35.1M a year earlier
Diluted EPS: $5.72; compared with -$5.86 a year earlier

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Delaware	41-2193603
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	ACRX	The Nasdaq Global Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
Emerging growth company	☐

	●	Our Emergency Use Authorization, or EUA, Application for Niyad™ is premised on the declared COVID-19 health emergency.
	●	We may fail to realize the benefits expected from our acquisition of Lowell Therapeutics, Inc., or Lowell, which could adversely affect our stock price.
	●	We have signed an agreement with Vertical Pharmaceuticals, LLC, a wholly owned subsidiary of Alora Pharmaceuticals, LLC, or together Alora, to divest our sufentanil sublingual products (DSUVIA and DZUVEO) with the right to receive sales-based milestone and other payments. Upon closing, whether we receive royalties from DSUVIA is dependent on the ability of Alora to successfully commercialize DSUVIA. If Alora, we, or a potential partner, are unable to successfully commercialize DSUVIA, our business, financial condition, and results of operations will be materially harmed.
	●	Delays in clinical trials are common and have many causes, and any delay could result in increased costs to us and jeopardize or delay our ability to obtain regulatory approval and commence product sales.
	●	Our drug discovery and development efforts might not generate successful product candidates.
	●	If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
	●	If we experience delays or difficulties in enrolling patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
	●	If serious adverse effects or unexpected characteristics of our product candidates are identified during development, we may need to abandon or limit our development of some or all of our product candidates.
	●	We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
	●	The process for obtaining approval of a Premarket Approval, or PMA, or New Drug Application, or NDA, is time consuming, subject to unanticipated delays and costs, and requires the commitment of substantial resources.
	●	Our expectations for U.S. Food and Drug Administration, or FDA, approvability of our product candidates may be inaccurate.
	●	We may experience difficulties in retaining our existing employees and managing our operations.
	●	If we, or current and potential partners, are unable to compete effectively, our products may not reach their commercial potential.
	●	Coverage and adequate reimbursement may not be available for our product candidates, if approved, in the United States and in Europe, which could make it difficult for us, or our partners, to sell our products profitably.
	●	The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
	●	If we or our partners are unable to establish and maintain relationships with group purchasing organizations any future revenues or future profitability could be jeopardized.
	●	Existing and future legislation may increase the difficulty and cost for us to commercialize our products and affect the prices we may obtain.
	●	We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future.
	●	We require additional capital and may be unable to raise such capital, which would force us to delay, reduce or eliminate our commercialization efforts and product development programs and could cause us to be unable to continue to operate as a going concern and cease operations.
	●	To fund our operations, and capital requirements, we may sell additional equity securities, which may result in dilution to our stockholders, or debt securities, which may impose restrictions on our business.
	●	We have not yet generated significant product revenue and may never be profitable.
	●	Future sales of DSUVIA to the Department of Defense, or DoD, are not predictable, may occur on an irregular basis and may not meet our expectations due to various United States government-related factors that are beyond our control.
	●	The terms of our loan agreement with Oxford Finance, LLC, or Oxford, may restrict our current and future operations.
	●	We might be unable to service our existing debt due to a lack of cash flow and might be subject to default.
	●	We rely on third party manufacturers and suppliers for our product candidates in the United States and Europe.
	●	We rely on limited sources of supply for the active pharmaceutical ingredients for nafamostat-based product candidates and any disruptions in the chain of supply may cause a delay in developing our product candidates.

	Page
Summary of Principal Risk Factors
PART I	6
Item 1. Business	6
Item 1A. Risk Factors	21
Item 1B. Unresolved Staff Comments	48
Item 2. Properties	49
Item 3. Legal Proceedings	49
Item 4. Mine Safety Disclosures	49
PART II	50
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	50
Item 6. Reserved	50
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	66
Item 8. Financial Statements and Supplementary Data	66
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	66
Item 9A. Controls and Procedures	66
Item 9B. Other Information	67
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	67
PART III	67
Item 10. Directors, Executive Officers and Corporate Governance	67
Item 11. Executive Compensation	67
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	67
Item 13. Certain Relationships and Related Transactions and Director Independence	67
Item 14. Principal Accounting Fees and Services	68
PART IV	68
Item 15. Exhibits and Financial Statement Schedules	68
Item 16. Form 10-K Summary	71
SIGNATURES	72

Product/Product Candidate	Description	Target Use	Status
Niyad™	Lyophilized vial containing nafamostat for injection	Regional anticoagulant for injection into the extracorporeal circuit	Submitted an investigational device exemption, or IDE, and received Breakthrough Device Designation from the FDA. Preliminary EUA submitted.
LTX-608	Lyophilized vial containing nafamostat for injection	IV infusion as an anti-viral treatment for COVID-19	IND to be submitted following toxicology evaluation to enable Phase 2 study
LTX-608	Lyophilized vial containing nafamostat for injection	IV infusion for disseminated intravascular coagulation, or DIC	IND to be submitted following toxicology evaluation to enable Phase 2 study
LTX-608	Lyophilized vial containing nafamostat for injection	IV infusion for acute respiratory distress syndrome, or ARDS	IND to be submitted following toxicology evaluation to enable Phase 2 study
LTX-608	Lyophilized vial containing nafamostat for injection	IV infusion for acute pancreatitis	IND to be submitted following toxicology evaluation to enable Phase 2 study

Emergency services (includes pre-hospital and Emergency Department treatment)	52 million
Outpatient surgery	11 million
Hospital/surgery center/office-based procedures	20 million
Inpatient surgery/inpatient conditions	10 million

	Years Ended
	December 31,				$ Change			% Change
	2022		2021		2022 vs. 2021			2022 vs. 2021
DSUVIA	$	1,771	$	735	$	1,036			141	%
Zalviso		—		270		(270	)		(100	)%
Total product sales revenue	$	1,771	$	1,005	$	766			76	%

	Years Ended December 31,
	2022			2021
Net cash used in operating activities	$	(28,331	)	$	(30,002	)
Net cash provided by/(used in) investing activities		36,450			(26,123	)
Net cash (used in)/provided by financing activities		(507	)		41,514

		Incorporation By Reference
Exhibit Number	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date
2.1§	Agreement and Plan of Merger, dated as of November 14, 2021, by and among the Registrant, Lowell, Merger Sub 1, Merger Sub 2 and the Stockholder Representative.	10-Q	001-35068	2.1	11/15/2021

3.1	Amended and Restated Certificate of Incorporation of the Registrant.	8-K	001-35068	3.1	2/18/2011

3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.	8-K	001-35068	3.1	6/25/2019

3.3	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.	8-K	001-35068	3.1	10/25/2022

3.4	Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Registrant.	8-K	001-35068	3.1	08/04/2022

3.5	Certificate of Elimination of Series A Convertible Preferred Stock of the Registrant.	8-K	001-35068	3.2	10/25/2022

3.6	Amended and Restated Bylaws of the Registrant.	8-K	001-35068	3.1	08/12/2022

4.1	Description of Capital Stock.	10-K	001-35068	4.1	3/15/2021

4.2	Reference is made to Exhibits 3.1 through 3.3.

4.3	Specimen Common Stock Certificate of the Registrant.	S-1	333-170594	4.2	1/31/2011

4.4	Form of Warrant to Purchase Common Stock of the Registrant, dated as of May 30, 2019.	8-K	001-35068	4.1	6/3/2019

Date: March 31, 2023	AcelRx Pharmaceuticals, Inc.
	(Registrant)

	/s/ Vincent J. Angotti
	Vincent J. Angotti Chief Executive Officer and Director (Principal Executive Officer)

	/s/ Raffi Asadorian
	Raffi Asadorian Chief Financial Officer (Principal Financial and Accounting Officer)

Signature	Title	Date

/s/ Vincent J. Angotti	Chief Executive Officer and Director	March 31, 2023
Vincent J. Angotti	(Principal Executive Officer)

/s/ Raffi Asadorian	Chief Financial Officer	March 31, 2023
Raffi Asadorian	(Principal Financial and Accounting Officer)

/s/ Adrian Adams	Chairman	March 31, 2023
Adrian Adams

/s/ Richard Afable, M.D.	Director	March 31, 2023
Richard Afable, M.D.

/s/ Marina Bozilenko	Director	March 31, 2023
Marina Bozilenko

/s/ Jill Broadfoot	Director	March 31, 2023
Jill Broadfoot

/s/ Stephen J. Hoffman, Ph.D., M.D.	Director	March 31, 2023
Stephen J. Hoffman, Ph.D., M.D.

/s/ Pamela P. Palmer, M.D., Ph.D.	Director	March 31, 2023
Pamela P. Palmer, M.D., Ph.D.

/s/ Howard B. Rosen	Director	March 31, 2023
Howard B. Rosen

/s/ Mark Wan	Director	March 31, 2023
Mark Wan

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 100)	F-2
Consolidated Balance Sheets at December 31, 2022 and 2021	F-4
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021	F-5
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021	F-7
Notes to Consolidated Financial Statements	F-8
Financial Statement Schedule II	F-52

	December 31, 2022			December 31, 2021
Assets
Current Assets:
Cash and cash equivalents	$	15,275		$	7,663
Restricted cash		5,000			—
Short-term investments		495			38,967
Accounts receivable, net		309			160
Inventories, net		1,178			1,111
Prepaid expenses and other current assets		2,309			2,588
Total current assets		24,566			50,489
Operating lease right-of-use assets		3,595			4,302
Property and equipment, net		10,261			15,928
In-process research and development asset		8,819			—
Other assets		246			2,174
Restricted cash, net of current portion		—			5,000
Total assets	$	47,487		$	77,893

Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities:
Accounts payable	$	2,040		$	2,121
Accrued and other liabilities		4,266			6,524
Long-term debt, current portion		5,763			8,796
Operating lease liabilities, current portion		1,701			1,068
Total current liabilities		13,770			18,509
Long-term debt, net of current portion		—			5,007
Deferred revenue, net of current portion		1,036			1,151
Operating lease liabilities, net of current portion		2,959			3,750
Warrant liability		7,098			—
Liability related to the sale of future royalties		—			85,288
Other long-term liabilities		810			81
Total liabilities		25,673			113,786

Commitments and Contingencies
Stockholders’ Equity (Deficit)*:
Common stock, $0.001 par value—200,000,000 shares authorized as of December 31, 2022 and 2021; 8,243,680 and 6,840,967 shares issued and outstanding as of December 31, 2022 and 2021, respectively		8			7
Additional paid-in capital		447,635			437,684
Accumulated deficit		(425,829	)		(473,584	)
Total stockholders’ equity (deficit)		21,814			(35,893	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	47,487		$	77,893

	Year Ended December 31,
	2022			2021
Revenue:
Product sales	$	1,771		$	1,005
Contract and other collaboration		—			1,813
Total revenue		1,771			2,818
Operating costs and expenses:
Cost of goods sold		2,591			3,753
Research and development		5,193			4,095
Selling, general and administrative		25,672			30,935
Impairment of property and equipment		4,948			—
Total operating costs and expenses		38,404			38,783
Loss from operations		(36,633	)		(35,965	)
Other income:
Interest expense		(1,153	)		(2,291	)
Interest income and other income, net		366			124
Non-cash interest income on liability related to sale of future royalties		1,136			3,038
Gain on extinguishment of liability related to the sale of future royalties		84,052			—
Total other income		84,401			871
Net income (loss) before provision for income taxes		47,768			(35,094	)
Provision for income taxes		13			5
Net income (loss)	$	47,755		$	(35,099	)
Deemed dividend related to Series A Redeemable Convertible Preferred Stock		(186	)		—
Income allocated to participating securities		(5,240	)		—
Net income (loss) attributable to Common Shareholders, basic	$	42,329		$	(35,099	)
Net income (loss) per share of common stock, basic	$	5.73		$	(5.86	)
Shares used in computing net income (loss) per share of common stock, basic–(Note 16)		7,385,348			5,993,013
Net income (loss) attributable to Common Shareholders, diluted	$	42,342		$	(35,099	)
Net income (loss) per share of common stock, diluted	$	5.72		$	(5.86	)
Shares used in computing net income (loss) per share of common stock, diluted –(Note 16)		7,406,986			5,993,013

	Series A Redeemable Convertible Preferred Stock						Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares			Amount			Shares		Amount

Balance as of December 31, 2020		—		$	—			4,940,590	$	5	$	382,730		$	(438,485	)	$	(55,750	)
Stock-based compensation		—			—			—		—		4,609			—			4,609
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes		—			—			24,433		—		(249	)		—			(249	)
Net proceeds from issuance of common stock in connection with equity financings		—			—			1,860,078		2		44,714			—			44,716
Net proceeds from issuance of warrants in connection with equity financings		—			—			—		—		5,562			—			5,562
Issuance of common stock upon exercise of stock options		—			—			969		—		17			—			17
Issuance of common stock upon ESPP purchase		—			—			14,897		—		301			—			301
Net loss		—			—			—		—		—			(35,099	)		(35,099	)
Balance as of December 31, 2021		—			—			6,840,967		7		437,684			(473,584	)		(35,893	)
Issuance of Series A Redeemable Convertible Preferred Stock and Warrants		3,000			129			—		—		110			—			110
Deemed dividends related to Series A Redeemable Convertible Preferred Stock					186							(186	)					(186	)
Redemption of Series A Redeemable Convertible Preferred Stock and Warrants		(3,000	)		(315	)		—		—		—			—			—
Stock-based compensation		—			—			—		—		2,889			—			2,889
Issuance of common stock in connection with asset purchase		—			—			481,026		—		5,511			—			5,511
Net proceeds from issuance of common stock and pre-funded warrants in connection with equity financings		—			—			873,074		1		789			—			790
Modification of equity-classified warrants		—			—			—		—		822			—			822
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes		—			—			37,672		—		(58	)		—			(58	)
Issuance of common stock upon ESPP purchase		—			—			10,941		—		74			—			74
Net income		—			—			—		—		—			47,755			47,755
Balance as of December 31, 2022		—		$	—			8,243,680	$	8	$	447,635		$	(425,829	)	$	21,814

	Balance as of
	December 31, 2022		December 31, 2021
Cash and cash equivalents	$	15,275	$	7,663
Restricted cash		5,000		—
Restricted cash, net of current portion		—		5,000
Total cash, cash equivalents, and restricted cash	$	20,275	$	12,663

	Year Ended December 31,
Percent of Total Revenue	2022			2021
Aguettant		10	%		62	%
Grünenthal		0	%		12	%
Wholesaler A		25	%		16	%
Wholesaler B		12	%		8	%
Distributor A		28	%		5	%
Distributor B		12	%		2	%

	As of December 31,
Percent of Accounts Receivable, Net	2022			2021
Customer A		58	%		0	%
Customer B		19	%		73	%
Customer C		15	%		9	%

	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash, cash equivalents and restricted cash:
Cash	$	13,275	$	—	$	—	$	13,275
Money market funds		321		—		—		321
U.S. government agency securities		2,444		—		—		2,444
Commercial paper		4,235		—		—		4,235
Total cash, cash equivalents and restricted cash		20,275		—		—		20,275

Short-term investments:
Commercial paper		495		—		—		495
Total short-term investments		495		—		—		495
Total cash, cash equivalents, restricted cash and short-term investments	$	20,770	$	—	$	—	$	20,770

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash, cash equivalents and restricted cash:
Cash	$	1,443	$	—	$	—	$	1,443
Money market funds		2,822		—		—		2,822
Commercial paper		8,398		—		—		8,398
Total cash, cash equivalents and restricted cash		12,663		—		—		12,663

Short-term investments:
Commercial paper		29,504		—		—		29,504
Corporate debt securities		9,463		—		—		9,463
Total short-term investments		38,967		—		—		38,967
Total cash, cash equivalents, restricted cash and short-term investments	$	51,630	$	—	$	—	$	51,630

	As of December 31, 2022
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	321	$	321	$	—	$	—
U.S. government agency securities		2,444		—		2,444		—
Commercial paper		4,730		—		4,730		—
Total assets measured at fair value		7,495		321		7,174
Liabilities
Warrant liability		7,098		—		—		7,098
Total liabilities measured at fair value		7,098		—		—	$	7,098

	As of December 31,
	2022		2021
Raw materials	$	796	$	722
Work in process		338		159
Finished goods		44		230
Inventories	$	1,178	$	1,111

Consideration
Cash	$	3,536
Issuance of common stock to Lowell security holders in connection with asset acquisition		5,161
Issuance of common stock to settle Lowell’s transaction costs in connection with asset acquisition		350
Liability for issuance of 69,808 hold back shares to Lowell securityholders⁽¹⁾		800
Transaction costs		2,521
Total consideration	$	12,368

IPR&D Asset Acquired
Purchase price	$	12,368
Cash acquired		(3,549	)
Total IPR&D asset acquired⁽²⁾	$	8,819

Balance at January 1, 2021	$	49
Additions⁽¹⁾		1,237
Deductions for performance obligations satisfied:
In current period		(49	)
Balance at December 31, 2021	$	1,237
Deductions for performance obligations satisfied:
In current period		(86	)
Balance at December 31, 2022	$	1,151

2023	$	5,951
Total payments		5,951
Less amount representing interest		(134	)
Notes payable, gross		5,817
Less: Unamortized portion of EOT Fee		(26	)
Less: Unamortized discount on notes payable		(28	)
Long-term debt		5,763
Less current portion		(5,763	)
Long-term debt, net of current portion	$	—

	Year ended December 31, 2022		Year ended December 31, 2021
Operating lease costs	$	1,373	$	1,467
Gain on derecognition of operating lease		—		(522	)
Sublease income		—		(199	)
Loss on termination of sublease		—		331
Net lease costs	$	1,373	$	1,077

	December 31,			December 31,
	2022			2021
Weighted-average remaining lease term – operating leases (in years)		4.1			5.0
Weighted-average remaining discount rate – operating leases		12.8	%		12.8	%

Year:
2023	$	2,127
2024		1,090
2025		1,040
2026		1,040
2027		415
Thereafter		—
Total future minimum lease payments		5,712
Less imputed interest		(1,052	)
Total	$	4,660

Reported as:
Operating lease liabilities	$	4,660
Operating lease liabilities, current portion		(1,701	)
Operating lease liabilities, net of current portion	$	2,959

	Year ended December 31, 2022			Period from inception to December 31, 2022
Liability related to sale of future royalties — beginning balance	$	85,288		$	—
Proceeds from sale of future royalties		—			61,184
Non-cash royalty revenue		—			(1,083	)
Non-cash interest (income) expense recognized		(1,136	)		24,051
Consideration paid for termination of Royalty Monetization		(100	)		(100	)
Gain on termination of liability related to sale of future royalties		(84,052	)		(84,052	)
Liability related to sale of future royalties as of December 31, 2022	$	—		$	—

	December 31, 2022		December 31, 2021
Cost of goods sold	$	62	$	92
Research and development		570		813
Selling, general and administrative		2,257		3,704
Total	$	2,889	$	4,609

				Weighted
	Number of			*Average*
	*Restricted*			Grant Date
	Stock Units			Fair Value
Restricted stock units outstanding, January 1, 2021		69,890		$	35.75
Granted		57,448			33.65
Vested		(29,338	)		37.75
Forfeited		(9,289	)		31.56
Restricted stock units outstanding, December 31, 2021		88,711		$	34.16
Granted		58,502			7.75
Vested		(44,744	)		35.46
Forfeited		(19,691	)		25.00
Restricted stock units outstanding, December 31, 2022		82,778		$	16.97

	Number of Stock Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
								(in thousands)
December 31, 2021		714,085		$	59.79
Granted		117,022			7.75
Forfeited		(35,645	)		26.46
Expired		(69,839	)		60.42
Exercised		—			—
December 31, 2022		725,623		$	52.98		5.3	$	—
Vested and exercisable options—December 31, 2022		515,933		$	65.76		3.9	$	—
Vested and expected to vest—December 31, 2022		725,623		$	52.80		5.3	$	—

			Options Outstanding						Options Vested and Exercisable
Exercise Prices			Number of Stock Options Outstanding		Weighted-Average Remaining Contractual Life (Years)		Weighted-Average Exercise Price per Share		Shares Subject to Stock Options		Weighted-Average Exercise Price per Share
$4.62	-	$8.03		88,096		9.2	$	7.54		—	$	—
$8.36	-	$12.54		19,046		9.1	$	8.43		—	$	—
$14.40	-	$21.60		20,941		6.9	$	16.93		13,643	$	16.84
$22.40	-	$33.60		11,700		8.1	$	28.62		10,774	$	28.58
$34.40	-	$51.60		311,695		6.0	$	41.16		217,425	$	42.75
$52.00	-	$78.00		168,275		3.5	$	62.66		168,221	$	62.66
$78.40	-	$117.60		62,756		1.0	$	97.95		62,756	$	97.95
$132.00	-	$198.00		20,520		1.6	$	133.16		20,520	$	133.16
$204.40	-	$306.60		22,594		1.0	$	206.96		22,594	$	206.96
				725,623		5.3	$	52.98		515,933	$	65.76

	Year Ended December 31,
	2022		2021
Derived service period (in years)		—	2.3	–	2.6
Risk-free interest rate		—		1.5%
Expected volatility		—		90%
Expected dividend rate		—		0%