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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2020 or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number: 001-36066

 

PARATEK PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

33-0960223

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

75 Park Plaza

Boston, MA 02116

(617) 807-6600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

PRTK

The Nasdaq Global Market

 

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

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

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

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

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

As of October 30, 2020, there were 45,641,206 shares of the registrant's common stock, par value $0.001 per share, outstanding.

 

 

 

 


TABLE OF CONTENTS

 

 

 

 

Page

PART I FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (unaudited)

 

2

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

 

2

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019

 

3

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019

 

4

 

 

 

 

 

Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2020 and 2019

 

5

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

6

 

 

 

 

Item 2.

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

 

26

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

37

 

 

 

 

Item 4.

Controls and Procedures

 

38

 

 

 

 

PART II OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

39

 

 

 

 

Item 1A.

Risk Factors

 

39

 

 

 

 

Item 6.

Exhibits

 

41

 

 

 

 

 

SIGNATURES

 

43

 

 

 

1


 

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share and par value amounts)

(unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,356

 

 

$

102,302

 

Marketable securities

 

 

47,142

 

 

 

113,077

 

Restricted cash

 

 

1,463

 

 

 

324

 

Accounts receivable, net

 

 

12,978

 

 

 

8,475

 

Inventories, net

 

 

19,458

 

 

 

11,579

 

Other receivables

 

 

3,556

 

 

 

1,108

 

Prepaid and other current assets

 

 

8,049

 

 

 

6,489

 

Total current assets

 

 

195,002

 

 

 

243,354

 

Long-term restricted cash

 

 

 

 

 

3,007

 

Fixed assets, net

 

 

911

 

 

 

1,227

 

Goodwill

 

 

829

 

 

 

829

 

Right-of-use assets

 

 

1,921

 

 

 

2,514

 

Other long-term assets

 

 

23

 

 

 

148

 

Total assets

 

$

198,686

 

 

$

251,079

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,039

 

 

$

4,116

 

Accrued expenses

 

 

18,492

 

 

 

16,696

 

Other current liabilities

 

 

1,368

 

 

 

3,388

 

Total current liabilities

 

 

22,899

 

 

 

24,200

 

Long-term debt

 

 

250,631

 

 

 

260,728

 

Long-term lease liabilities

 

 

1,364

 

 

 

2,095

 

Other liabilities

 

 

3,676

 

 

 

3,703

 

Total liabilities

 

 

278,570

 

 

 

290,726

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

Preferred stock:

 

 

 

 

 

 

 

 

Undesignated preferred stock: $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized, 45,639,406 and

   39,827,749 shares issued and outstanding at September 30, 2020 and December 31,

   2019, respectively

 

 

46

 

 

 

40

 

Additional paid-in capital

 

 

702,759

 

 

 

671,497

 

Accumulated other comprehensive income

 

 

100

 

 

 

74

 

Accumulated deficit

 

 

(782,789

)

 

 

(711,258

)

Total stockholders’ deficit

 

 

(79,884

)

 

 

(39,647

)

Total liabilities and stockholders’ deficit

 

$

198,686

 

 

$

251,079

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


 

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Product revenue, net

 

$

10,895

 

 

$

3,053

 

 

$

26,330

 

 

$

6,102

 

Government contract service revenue

 

 

785

 

 

 

 

 

 

1,560

 

 

 

 

Government contract grant revenue

 

 

1,866

 

 

 

 

 

 

2,303

 

 

 

 

Collaboration and royalty revenue

 

 

113

 

 

 

881

 

 

 

710

 

 

 

1,475

 

Net revenue

 

$

13,659

 

 

$

3,934

 

 

$

30,903

 

 

$

7,577

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

2,017

 

 

 

958

 

 

 

5,724

 

 

 

1,731

 

Research and development

 

 

6,687

 

 

 

8,350

 

 

 

17,636

 

 

 

30,421

 

Selling, general and administrative

 

 

20,902

 

 

 

23,636

 

 

 

65,514

 

 

 

67,874

 

Total operating expenses

 

 

29,606

 

 

 

32,944

 

 

 

88,874

 

 

 

100,026

 

Loss from operations

 

 

(15,947

)

 

 

(29,010

)

 

 

(57,971

)

 

 

(92,449

)

Other income and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

280

 

 

 

992

 

 

 

1,347

 

 

 

2,873

 

Interest expense

 

 

(5,178

)

 

 

(4,560

)

 

 

(14,974

)

 

 

(11,777

)

Other gains (losses), net

 

 

(10

)

 

 

(36

)

 

 

67

 

 

 

(72

)

Net loss

 

$

(20,855

)

 

$

(32,614

)

 

$

(71,531

)

 

$

(101,425

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale

   securities, net of tax

 

 

(154

)

 

 

(68

)

 

 

26

 

 

 

276

 

Comprehensive loss

 

$

(21,009

)

 

$

(32,682

)

 

$

(71,505

)

 

$

(101,149

)

Basic and diluted net loss per common share

 

$

(0.46

)

 

$

(1.00

)

 

$

(1.64

)

 

$

(3.12

)

Weighted average common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

45,483,346

 

 

 

32,590,454

 

 

 

43,591,724

 

 

 

32,458,010

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


 

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

For the Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

Net loss

 

$

(71,531

)

 

$

(101,425

)

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

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

437

 

 

 

(1,124

)

Stock-based compensation expense

 

 

7,925

 

 

 

10,742

 

Noncash interest expense

 

 

5,364

 

 

 

5,097

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable and other current assets

 

 

(8,707

)

 

 

(6,052

)

Inventories

 

 

(7,099

)

 

 

(7,555

)

Operating lease right-of-use asset

 

 

593

 

 

 

534

 

Accounts payable and accrued expenses

 

 

(3,754

)

 

 

1,843

 

Operating lease liability

 

 

(730

)

 

 

(1,468

)

Other liabilities and other assets

 

 

(2,072

)

 

 

893

 

Net cash used in operating activities

 

 

(79,574

)

 

 

(98,515

)

Investing activities

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(331

)

 

 

(45

)

Purchase of marketable securities

 

 

(29,625

)

 

 

(77,077

)

Proceeds from maturities of marketable securities

 

 

95,500

 

 

 

204,000

 

Net cash provided by investing activities

 

 

65,544

 

 

 

126,878

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from sale of common stock, net of costs

 

 

21,892

 

 

 

1,929

 

Principal payments on long-term debt

 

 

(10,000

)

 

 

 

Proceeds from the employee stock purchase plan

 

 

324

 

 

 

294

 

Proceeds from the issuance of long-term royalty-backed loan agreement, net of costs

 

 

 

 

 

30,554

 

Net cash provided by financing activities

 

 

12,216

 

 

 

32,777

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(1,814

)

 

 

61,140

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

105,633

 

 

 

47,502

 

Cash, cash equivalents and restricted cash at end of period

 

$

103,819

 

 

$

108,642

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

13,771

 

 

$

9,579

 

Purchases of equipment included in accrued expenses

 

$

45

 

 

$

151

 

SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Fair value of warrants issued

 

$

1,127

 

 

$

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


 

Paratek Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Deficit

 

Balances at December 31, 2019

 

 

39,827,749

 

 

$

40

 

 

$

671,497

 

 

$

74

 

 

$

(711,258

)

 

$

(39,647

)

Issuance of common stock, net of expenses

 

 

2,334,107

 

 

 

2

 

 

 

9,092

 

 

 

 

 

 

 

 

 

9,094

 

Vesting of restricted stock unit awards

 

 

212,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

35

 

 

 

 

 

 

 

 

 

35

 

Unrealized gain on available-for-sale securities, net

   of tax

 

 

 

 

 

 

 

 

 

 

 

397

 

 

 

 

 

 

397

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,500

 

 

 

 

 

 

 

 

 

2,500

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,617

)

 

 

(27,617

)

Balances at March 31, 2020

 

 

42,374,026

 

 

$

42

 

 

$

683,124

 

 

$

471

 

 

$

(738,875

)

 

$

(55,238

)

Issuance of common stock, net of expenses

 

 

2,603,171

 

 

 

3

 

 

 

11,740

 

 

 

 

 

 

 

 

 

11,743

 

Vesting of restricted stock unit awards

 

 

200,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

 

 

 

36

 

Issuance of stock under the employee stock purchase

   plan

 

 

130,055

 

 

 

 

 

 

324

 

 

 

 

 

 

 

 

 

324

 

Unrealized loss on available-for-sale securities, net

   of tax

 

 

 

 

 

 

 

 

 

 

 

(217

)

 

 

 

 

 

(217

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,953

 

 

 

 

 

 

 

 

 

2,953

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,059

)

 

 

(23,059

)

Balances at June 30, 2020

 

 

45,307,752

 

 

$

45

 

 

$

698,177

 

 

$

254

 

 

$

(761,934

)

 

$

(63,458

)

Issuance of common stock, net of expenses

 

 

238,722

 

 

 

1

 

 

 

1,054

 

 

 

 

 

 

 

 

 

1,055

 

Vesting of restricted stock unit awards

 

 

92,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

37

 

 

 

 

 

 

 

 

 

37

 

Unrealized loss on available-for-sale securities, net

   of tax

 

 

 

 

 

 

 

 

 

 

 

(154

)

 

 

 

 

 

(154

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,364

 

 

 

 

 

 

 

 

 

2,364

 

Issuance of warrants for common stock

 

 

 

 

 

 

 

 

1,127

 

 

 

 

 

 

 

 

 

1,127

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,855

)

 

 

(20,855

)

Balances at September 30, 2020

 

 

45,639,406

 

 

$

46

 

 

$

702,759

 

 

$

100

 

 

$

(782,789

)

 

$

(79,884

)

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2018

 

 

32,259,363

 

 

$

32

 

 

$

630,142

 

 

$

(128

)

 

$

(582,468

)

 

$

47,578

 

Vesting of restricted stock unit awards

 

 

156,614

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Unrealized gain on available-for-sale securities, net

   of tax

 

 

 

 

 

 

 

 

 

 

 

200

 

 

 

 

 

 

200

 

Stock-based compensation expense