Form 8-K PUMA BIOTECHNOLOGY, INC. For: May 08
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 2018 (May 8, 2018)
PUMA BIOTECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-35703 | 77-0683487 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
10880 Wilshire Boulevard, Suite 2150
Los Angeles, California 90024
(Address of principal executive offices) (Zip Code)
(424) 248-6500
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
The information set forth below under Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 2.02 | Results of Operations and Financial Condition. |
On May 9, 2018, Puma Biotechnology, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2018. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.
The information in this Item 2.02, including the accompanying exhibit, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 2.02 shall not be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a |
Registrant.
On May 8, 2018 (the “Amendment Date”), the Company entered into a first amendment to its loan and security agreement (as amended, the “Amended Credit Facility”) with Silicon Valley Bank, as administrative and collateral agent (“SVB”), and the lenders party thereto from time to time (the “Lenders”), including Oxford Finance LLC (“Oxford”) and SVB. Under the Amended Credit Facility, the Lenders agreed to make term loans available to the Company in an aggregate amount of $155 million, consisting of (i) an aggregate amount of $125 million available on the Amendment Date (the “Term Loan A”), the proceeds of which, in part, were used to repay the original term loan A that was made by the Lenders to the Company in connection with closing of the loan and security agreement on October 31, 2017 (the “Original Term Loan A”), and (ii) an aggregate amount of $30 million available to be drawn at the Company’s option between September 30, 2018 and December 31, 2018 provided the Company has achieved a specified minimum revenue milestone and no event of default is occurring (the “Term Loan B,” and together with the Term Loan A, the “Term Loans”). Proceeds from the Term Loans may be used for working capital and general business purposes. Upon the entry into the Amended Credit Facility, the Company was required to pay the Lenders aggregate fees of $4,162,500, consisting of a first amendment facility fee of $412,500 and a final payment of $3,750,000 in connection with the repayment of the Original Term Loan A. The Amended Credit Facility is secured by substantially all of the Company’s personal property other than its intellectual property. The Company also pledged 65% of the issued and outstanding capital stock of its subsidiary, Puma Biotechnology Ltd.
The Term Loans under the Amended Credit Facility bear interest at an annual rate equal to the greater of (i) 8.25% and (ii) the sum of (a) the “prime rate,” as reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, plus (b) 3.5%. The Company is required to make monthly interest-only payments on each Term Loan commencing on the first calendar day of the calendar month following the funding date of such Term Loan, and continuing on the first calendar day of each calendar month thereafter through July 1, 2020 (the “Amortization Date”). Commencing on the Amortization Date, and continuing on the first calendar day of each calendar month thereafter, the Company will make consecutive equal monthly payments of principal, together with applicable interest, in arrears to each Lender, calculated pursuant to the Amended Credit Facility. All unpaid principal and accrued and unpaid interest with respect to each Term Loan is due and payable in full on May 1, 2023 (the “Maturity Date”). Upon repayment of the Term Loans, the Company is also required to make a final payment to the Lenders equal to 7.5% of the original principal amount of Term Loans funded.
At the Company’s option, the Company may prepay the outstanding principal balance of any Term Loan in whole but not in part, subject to a prepayment fee of 3.0% of any amount prepaid if the prepayment occurs through and including the first anniversary of the funding date of such Term Loan, 2.0% of any amount prepaid if the prepayment occurs after the first anniversary of the Funding Date of such Term Loan through and including the second anniversary of the funding date of such Term Loan, and 1.0% of the amount prepaid if the prepayment occurs after the second anniversary of the funding date of such Term Loan and prior to the Maturity Date.
The Amended Credit Facility includes affirmative and negative covenants applicable to the Company, its current subsidiary and any subsidiaries the Company creates in the future. The affirmative covenants include, among others, covenants requiring the Company to maintain its legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. The Company must also achieve product revenue, measured as of the last day of each fiscal quarter on a trailing 3-month basis, that is (i) greater than or equal to 70% of the Company’s revenue target set forth in its board-approved projections for the 2018 fiscal year and (ii) greater than or equal to 50% of the Company’s revenue target set
forth in its board-approved projections for the 2019 fiscal year. New minimum revenue levels will be established for each subsequent fiscal year by mutual agreement of the Company, SVB, as administrative agent, and the Lenders. The negative covenants include, among others, restrictions on the Company’s transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets and suffering a change in control, in each case subject to certain exceptions.
The Amended Credit Facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against the Company and the collateral securing the Amended Credit Facility, including foreclosure against the property securing the credit facilities, including its cash. These events of default include, among other things, the Company’s failure to pay principal or interest due under the Amended Credit Facility, a breach of certain covenants under the Amended Credit Facility, the Company’s insolvency, a material adverse change, the occurrence of any default under certain other indebtedness in an amount greater than $500,000 and one or more judgments against us in an amount greater than $500,000 individually or in the aggregate.
On the Amendment Date, the Company issued to SVB and Oxford, as the sole Lenders on the Amendment Date, secured promissory notes in an aggregate principal amount of $125,000,000 evidencing the Amended Credit Facility.
The foregoing description of the Amended Credit Facility and the secured promissory notes is only a summary of the material terms thereof, does not purport to be complete and is qualified in its entirety by reference to the Amended Credit Facility and the form of secured promissory note, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| 99.1 | Press Release dated May 9, 2018 | |
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 hereunto duly authorized.
| PUMA BIOTECHNOLOGY, INC. | ||||||
| Date: May 9, 2018 | By: | /s/ Alan H. Auerbach | ||||
| Alan H. Auerbach | ||||||
| Chief Executive Officer and President | ||||||
Exhibit 99.1
News Release
Puma Biotechnology Reports First Quarter 2018 Financial Results
LOS ANGELES, Calif., May 9, 2018 - Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, announced financial results for the first quarter ended March 31, 2018.
Unless otherwise stated, all comparisons are for the first quarter 2018 compared to the first quarter 2017.
On July 17, 2017, Puma Biotechnology received approval from the U.S. Food and Drug Administration (FDA) for NERLYNX® (neratinib) for the treatment of early stage HER2-positive breast cancer following adjuvant trastuzumab-based therapy, and the Company began shipment to wholesalers at the end of July 2017. Prior to the launch of NERLYNX the Company had no product revenue. Net product revenue from sales of NERLYNX in the first quarter of 2018 amounted to $36.0 million, compared to net product revenue of $6.1 million and $20.1 million in the third and fourth quarters of 2017, respectively.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss applicable to common stock of $24.3 million, or $0.65 per share, for the first quarter of 2018, compared to a net loss applicable to common stock of $72.9 million, or $1.97 per share, for the first quarter of 2017.
Non-GAAP adjusted net income was $1.1 million, or $0.03 per basic share and $0.02 per diluted share, for the first quarter of 2018, compared to non-GAAP adjusted net loss of $43.1 million, or $1.16 per basic and diluted share, for the first quarter of 2017. Non-GAAP adjusted net income (loss) excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net income (loss) and GAAP net loss per share to non-GAAP adjusted net income (loss) per share, please see the financial tables at the end of this news release.
Net cash used in operating activities for the first quarter of 2018 was $6.3 million. At March 31, 2018, Puma had cash and cash equivalents of $78.6 million, compared to cash and cash equivalents of $81.7 million at December 31, 2017.
“We made substantial progress in the commercialization of our lead product, NERLYNX® (neratinib), during the first quarter of 2018,” said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. “We quickly built momentum in the U.S. market, with net sales steadily rising since our launch. Our exclusive licensing agreements to date, with Pint Pharma in Latin America, CANbridge in mainland China and Taiwan, Medison Pharma in Israel, and Specialised Therapeutics Asia in South East Asia, demonstrate our commitment to also make NERLYNX accessible to patients globally while we continue to grow the U.S. market.
“We are also pleased with the updated National Comprehensive Cancer Network (NCCN) guidelines, which designate NERLYNX as a recommended combination treatment option for breast cancer patients with brain metastases. In addition, data on neratinib were published in the journal Nature, which included initial results from Puma’s ongoing SUMMIT Phase II ‘basket’ clinical trial in patients with tumors harboring HER2 or HER3 mutations. SUMMIT is designed to evaluate the contributions of both genetic mutation and cancer type on individual patient response to neratinib. Information generated from the trial will help guide neratinib-based targeted therapy across a broad spectrum of tumor types with HER2 or HER3 mutations, including patients with rare tumors who may not otherwise have access to investigational therapies. We believe the publication of the initial SUMMIT data in this prestigious journal reflects the novelty and quality of this precision-medicine trial design, as well as the growing understanding that both tumor type and gene mutations play an important role in individual patients’ response to cancer therapies such as neratinib.”
Mr. Auerbach added, “During 2018, we anticipate the following key milestones: (i) reporting updated Phase I/II data from neratinib plus Kadcyla (T-DM1) in the HER2-positive metastatic breast cancer trial in the second quarter of 2018; (ii) re-assessment of the Marketing Authorisation Application for neratinib by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) in mid-2018; (iii) reporting data from the Phase III trial in third-line metastatic breast cancer patients in the second half of 2018; (iv) submitting for regulatory approval for the extended adjuvant HER2-positive early stage breast cancer indication in select countries in the second half of 2018; and (v) reporting additional data from the Phase II CONTROL trial in the fourth quarter of 2018.
Revenue
Total revenue consists of net product revenue from sales of NERLYNX, Puma’s first and only commercial product to date, and license revenue. The FDA approved NERLYNX for commercial sale in the United States in July 2017 and the Company commenced shipment to wholesalers in late July. For the first quarter of 2018, total revenue was $66.5 million, of which $36.0 million was net product revenue and $30.5 million was license revenue received from Puma’s sub-licensees.
Operating Expenses
Operating expenses were $89.9 million for the first quarter of 2018, compared to $73.2 million for the first quarter of 2017.
Cost of Sales:
Cost of sales was $6.4 million for the first quarter of 2018. The Company had no product sales prior to the third quarter of 2017.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses were $36.6 million for the first quarter of 2018, compared to $18.4 million for the first quarter of 2017. The $18.2 million increase resulted primarily from increases of approximately $7.8 million in payroll and related costs, $6.6 million in marketing, market access, and legal expenses, $1.7 million in travel and related costs, and $1.7 million in stock-based compensation. These increases reflect the commercial launch of NERLYNX and overall corporate growth.
Research and Development Expenses:
Research and development (R&D) expenses were $46.9 million for the first quarter of 2018, compared to $54.8 million for the first quarter of 2017. The $7.9 million decrease resulted primarily from decreases of approximately $6.1 million for stock-based compensation and $4.0 million for clinical trial expenses, partially offset by an increase of $2.2 million for payroll and related costs in medical affairs and commercial quality assurance. For our existing clinical trials, we expect R&D expenses to decrease in subsequent quarters as clinical trials continue to wind down.
Conference Call
Puma Biotechnology will host a conference call to report its first quarter 2018 financial results and provide an update on the company’s business and outlook at 1:30 p.m. PST/4:30 p.m. EST on Wednesday, May 9, 2018. The call may be accessed by dialing 1-877-709-8150 (domestic) or 1-201-689-8354
(international) at least 10 minutes prior to the start of the call and referencing the “Puma Biotechnology Conference Call.” A live webcast of the conference call and presentation slides may be accessed on the Investors section of the Puma Biotechnology website at http://www.pumabiotechnology.com/. A replay of the call will be available approximately one hour after completion of the call and will be archived on the company’s website for 90 days.
About Puma Biotechnology
Puma Biotechnology, Inc. is a biopharmaceutical company with a focus on the development and commercialization of innovative products to enhance cancer care. The Company in-licenses the global development and commercialization rights to three drug candidates — PB272 (neratinib, oral), PB272 (neratinib, intravenous) and PB357. Neratinib, oral was approved by the U.S. Food and Drug Administration in July 2017 for the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer, following adjuvant trastuzumab-based therapy, and is marketed in the United States as NERLYNX® (neratinib) tablets. NERLYNX is a registered trademark of Puma Biotechnology, Inc.
Further information about Puma Biotechnology may be found at www.pumabiotechnology.com.
IMPORTANT SAFETY INFORMATION
NERLYNX® (neratinib) tablets, for oral use
INDICATIONS AND USAGE: NERLYNX is a kinase inhibitor indicated for the extended adjuvant treatment of adult patients with early stage HER2 overexpressed/amplified breast cancer, to follow adjuvant trastuzumab-based therapy.
CONTRAINDICATIONS: None
WARNINGS AND PRECAUTIONS:
| • | Diarrhea: Aggressively manage diarrhea occurring despite recommended prophylaxis with additional antidiarrheals, fluids, and electrolytes as clinically indicated. Withhold NERLYNX in patients experiencing severe and/or persistent diarrhea. Permanently discontinue NERLYNX in patients experiencing Grade 4 diarrhea or Grade ³ 2 diarrhea that occurs after maximal dose reduction. |
| • | Hepatotoxicity: Monitor liver function tests monthly for the first 3 months of treatment, then every 3 months while on treatment and as clinically indicated. Withhold NERLYNX in patients experiencing Grade 3 liver abnormalities and permanently discontinue NERLYNX in patients experiencing Grade 4 liver abnormalities. |
| • | Embryo-Fetal Toxicity: NERLYNX can cause fetal harm. Advise patients of potential risk to a fetus and to use effective contraception. |
ADVERSE REACTIONS: The most common adverse reactions (³ 5%) were diarrhea, nausea, abdominal pain, fatigue, vomiting, rash, stomatitis, decreased appetite, muscle spasms, dyspepsia, AST or ALT increase, nail disorder, dry skin, abdominal distention, epistaxis, weight decreased and urinary tract infection.
To report SUSPECTED ADVERSE REACTIONS, contact Puma Biotechnology, Inc. at 1-844-NERLYNX (1-844-637-5969) and www.NERLYNX.com or FDA at 1-800-FDA-1088 or www.fda.gov/medwatch.
DRUG INTERACTIONS:
| • | Gastric acid reducing agents: Avoid concomitant use with proton pump inhibitors (PPI) and H2-receptor antagonists. Separate NERLYNX by 3 hours after antacid dosing. |
| • | Strong or moderate CYP3A4 inhibitors: Avoid concomitant use. |
| • | Strong or moderate CYP3A4 inducers: Avoid concomitant use. |
| • | P-glycoprotein (P-gp) substrates: Monitor for adverse reactions of narrow therapeutic agents that are P-gp substrates when used concomitantly with NERLYNX. |
USE IN SPECIFIC POPULATIONS:
| • | Lactation: Advise women not to breastfeed. |
Please see Full Prescribing Information for additional safety information.
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the benefits of NERLYNX and neratinib, the progress and expected timing of the Company’s clinical trials, the announcement of data relative to those trials and the timing for anticipated regulatory approvals. All forward-looking statements involve risks and uncertainties that could cause the Company’s actual results to differ materially from the anticipated results and expectations expressed in these forward-looking statements. These statements are based on current expectations, forecasts and assumptions, and actual outcomes and results could differ materially from these statements due to a number of factors, which include, but are not limited to, the risk factors disclosed in the periodic and current reports filed by the Company with the Securities and Exchange Commission from time to time, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update these forward-looking statements, except as required by law.
Contacts:
Alan H. Auerbach or Mariann Ohanesian, Puma Biotechnology, Inc., +1 424 248 6500
Amiad Finkelthal or David Schull, Russo Partners, +1 212 845 4200
# # # # #
(Financial Tables Follow)
PUMA BIOTECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions except share and per share data)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Unaudited) | ||||||||
| 2018 | 2017 | |||||||
| Product revenue, net |
$ | 36.0 | $ | — | ||||
| License revenue |
30.5 | — | ||||||
|
|
|
|
|
|||||
| Total revenue |
66.5 | — | ||||||
| Operating costs and expenses: |
||||||||
| Cost of sales |
6.4 | — | ||||||
| Selling, general and administrative |
36.6 | 18.4 | ||||||
| Research and development |
46.9 | 54.8 | ||||||
|
|
|
|
|
|||||
| Totals |
89.9 | 73.2 | ||||||
|
|
|
|
|
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| Loss from operations |
(23.4 | ) | (73.2 | ) | ||||
|
|
|
|
|
|||||
| Other income (expenses): |
||||||||
| Interest income |
0.2 | 0.3 | ||||||
| Interest expense |
(1.1 | ) | — | |||||
|
|
|
|
|
|||||
| Totals |
(0.9 | ) | 0.3 | |||||
|
|
|
|
|
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| Net loss |
$ | (24.3 | ) | $ | (72.9 | ) | ||
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|
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| Net loss per common share—basic and diluted |
$ | (0.65 | ) | $ | (1.97 | ) | ||
|
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|
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| Weighted-average common shares outstanding—basic and diluted |
37,699,024 | 36,931,167 | ||||||
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PUMA BIOTECHNOLOGY, INC. AND SUBSIDIARY
LIQUIDITY AND CAPITAL RESOURCES
(in millions, unaudited)
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Cash and cash equivalents |
$ | 78.6 | $ | 81.7 | ||||
| Marketable securities |
— | — | ||||||
| Working capital |
53.1 | 48.1 | ||||||
| Stockholders’ equity |
57.5 | 53.3 | ||||||
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2018 | 2017 | |||||||
| Cash provided by (used in): |
||||||||
| Operating activities |
$ | (6.3 | ) | $ | (36.0 | ) | ||
| Investing activities |
— | (54.1 | ) | |||||
| Financing activities |
3.2 | 0.7 | ||||||
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|
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| Decrease in cash and cash equivalents |
$ | (3.1 | ) | $ | (89.4 | ) | ||
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Non-GAAP Financial Measures
In addition to operating results as calculated in accordance with generally accepted accounting principles, or GAAP, the Company uses certain non-GAAP financial measures when planning, monitoring, and evaluating operational performance. The following table presents the Company’s net loss and net loss per share calculated in accordance with GAAP and as adjusted to remove the impact of employee stock-based compensation. For the three months ended March 31, 2018 and 2017, stock-based compensation represented approximately 28.3% and 40.7% of operating expense, respectively. Although net loss is important to measure financial performance, the Company currently places an emphasis on cash burn and, more specifically, cash used in operations. Stock-based compensation appears in GAAP net loss but is removed from net loss to arrive at cash used in operations on the statement of cash flows. Due to its noncash nature, the Company believes these non-GAAP measures enhance understanding of financial performance, are more indicative of operational performance and facilitate a better comparison among fiscal periods. These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP reporting measures.
PUMA BIOTECHNOLOGY, INC. AND SUBSIDIARY
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Income (Loss) and
GAAP Net Loss Per Share to Non-GAAP Adjusted Net Income (Loss) Per Share
(in millions except share and per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| GAAP net loss |
$ | (24.3 | ) | $ | (72.9 | ) | ||||||||||
|
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|
|
|
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| Adjustments: |
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| Stock-based compensation - |
||||||||||||||||
| Selling, general and administrative |
9.0 | 7.3 | (1 | ) | ||||||||||||
| Research and development |
16.4 | 22.5 | (2 | ) | ||||||||||||
|
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|
|
|
|||||||||||||
| Non-GAAP adjusted net income (loss) |
$ | 1.1 | $ | (43.1 | ) | |||||||||||
|
|
|
|
|
|||||||||||||
| GAAP net loss per share - basic |
$ | (0.65 | ) | $ | (1.97 | ) | ||||||||||
| Adjustment to net loss (as detailed above) |
0.68 | 0.81 | ||||||||||||||
|
|
|
|
|
|||||||||||||
| Non-GAAP adjusted basic net income (loss) per share |
$ | 0.03 | $ | (1.16 | ) | (3 | ) | |||||||||
|
|
|
|
|
|||||||||||||
| GAAP net loss per share - diluted |
$ | (0.60 | ) | $ | (1.97 | ) | ||||||||||
| Adjustment to net loss (as detailed above) |
0.62 | 0.81 | ||||||||||||||
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|
|
|
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| Non-GAAP adjusted diluted net income (loss) per share |
$ | 0.02 | (4 | ) | $ | (1.16 | ) | (5 | ) | |||||||
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| (1) | To reflect a non-cash charge to operating expense for selling, general and administrative stock-based compensation. |
| (2) | To reflect a non-cash charge to operating expense for research and development stock-based compensation. |
| (3) | Non-GAAP adjusted net income (loss) per share was calculated based on 37,699,024 and 36,931,167 weighted average common shares outstanding for the three months ended March 31, 2018 and 2017, respectively. |
| (4) | Non-GAAP adjusted diluted net income per share was calculated based on 40,642,311 weighted average common shares outstanding and potentially dilutive common stock equivalents (stock options, restricted stock units and warrants) for the three months ended March 31, 2018. |
| (5) | Potentially dilutive common stock equivalents (stock options, restricted stock units and warrants) were not included in this non-GAAP adjusted diluted net loss per share for the three months ended March 31, 2017 as these shares would be considered anti-dilutive. |