10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019

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

For transition period from            to           

Commission file number 1-32302

ANTARES PHARMA, INC.

(Exact name of registrant as specified in its charter)

A Delaware Corporation (State or Other Jurisdiction of Incorporation) 41-1350192 (I.R.S. Employer Identification No.)

100 Princeton South, Suite 300, Ewing, NJ	08628
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (609) 359-3020

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 $0.01 per share	ATRS	NASDAQ

Securities registered pursuant to section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒

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 if the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒

Aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2019, was $527.9 million (based upon the last reported sale price of $3.29 per share on June 28, 2019, on the NASDAQ Capital Market).

There were 165,560,401 shares of common stock outstanding as of February 28, 2020.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the registrant’s 2020 annual meeting of stockholders to be filed within 120 days after the end of the period covered by this annual report on Form 10-K are incorporated by reference into Part III of this annual report on Form 10-K.

ANTARES PHARMA, INC.

FORM 10-K

TABLE OF CONTENTS

PART I
Item 1	Business	4
Item 1A	Risk Factors	32
Item 1B	Unresolved Staff Comments	61
Item 2	Properties	61
Item 3	Legal Proceedings	61
Item 4	Mine Safety Disclosures	62
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	63
Item 6	Selected Financial Data	64
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	65
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	73
Item 8	Financial Statements and Supplementary Data	74
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	101
Item 9A	Controls and Procedures	101
Item 9B	Other Information	101
PART III
Item 10	Directors, Executive Officers and Corporate Governance	102
Item 11	Executive Compensation	102
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	102
Item 13	Certain Relationships and Related Transactions, and Director Independence	102
Item 14	Principal Accounting Fees and Services	102
PART IV
Item 15	Exhibits and Financial Statement Schedules	103
	Signatures	106

Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and product development. In particular, these forward-looking statements include, among others, statements about:

• our expectations regarding the continued successful commercialization of XYOSTED^® (testosterone enanthate) injection for testosterone replacement therapy, including the continued success of our marketing and reimbursement strategies, the continued growth in prescriptions and sales, and continued growth in revenues related thereto;

• our expectations regarding continued sales of OTREXUP^® (methotrexate) injection;

• our expectations regarding continued sales of Sumatriptan Injection USP to our partner, Teva Pharmaceutical Industries, Ltd. (“Teva”), and Teva’s ability to successfully distribute and sell Sumatriptan Injection USP;

• our expectations regarding the ability of our partner, Teva, to continue to successfully commercialize the generic equivalent version of Mylan’s EpiPen^® (“generic epinephrine injection”), and any future revenue related thereto;

• our expectations regarding AMAG Pharmaceuticals, Inc. (“AMAG”) ability to continue to successfully commercialize the Makena^® subcutaneous auto injector, whether the FDA will pursue the withdrawal of approval for the Makena^® subcutaneous auto injector following the recent FDA advisory committee meeting, and continued future sales to AMAG and royalty revenue from the same;

• our expectations regarding continued product development with Teva of the teriparatide disposable pen injector and exenatide disposable pen injector, and Teva’s ability to obtain FDA approval and AB-rating for each of those products;

• our expectations about the development of a rescue pen for an undisclosed drug and our intention to enter into a separate supply agreement with Pfizer, Inc. (“Pfizer”) for the same;

• our expectations about our development activities with Idorsia Pharmaceuticals Ltd (“Idorsia”), including the timing and results of the clinical bridging and Phase 3 clinical trial of the drug device combination product for Selatogrel, a new chemical entity (“NCE”) being developed for the treatment of a suspected acute myocardial infarction (“AMI”) in an adult patients with a history of AMI, and the potential future FDA and global regulatory approval of the same;

• our expectations about our research and development projects, including but not limited to ATRS-1701 and ATRS-1901, the timing and results of clinical trials, and our anticipated continued reliance on third parties in conducting studies, trials and other research and development activities;

• our expectations about the timing and outcome of pending or potential claims and litigation, including without limitation, the pending securities class action and derivative actions;

• our anticipated continued reliance on contract manufacturers to manufacture our products;

• our anticipated continued reliance on third parties to provide certain services for our products including logistics, warehousing, distribution, invoicing, contract administration and chargeback processing;

• our sales and marketing plans;

• expectation about our future revenues, including the 2020 revenue guidance, our cash flows and our ability to support our operations and achieve or maintain profitability;

• our estimates and expectations regarding the sufficiency of our cash resources, anticipated capital requirements and our need for and ability to obtain additional financing;

• our expectations and estimates with regard to current accounting practices and the potential impact of new accounting pronouncements and tax legislation; and

• other statements regarding matters that are not historical facts or statements of current condition.

2

These forward-looking statements are based on assumptions that we have made in light of our industry experience as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this annual report, you should understand that these statements are not guarantees of performance results. Forward-looking statements involve known and unknown risks, uncertainties and assumptions, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.  While we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future about which we cannot be certain.  Many factors may affect our ability to achieve our objectives, including:

• delays in product introduction or unsuccessful marketing and commercialization efforts by us or our partners;

• interruptions in supply or an inability to adequately manage third party contract manufacturers to meet customer supply requirements;

• our inability to obtain or maintain adequate third-party payer coverage of marketed products;

• the timing and results of our or our partners’ research projects or clinical trials of product candidates in development including projects with Teva, Pfizer and Idorsia;

• actions by the FDA or other regulatory agencies with respect to our products or product candidates of our partners;

• our inability to generate or sustain continued growth in product sales and royalties;

• the lack of market acceptance of our and our partners’ products and future revenues from these products;

• a decrease in business from our major customers and partners;

• our inability to compete successfully against new and existing competitors or to leverage our research and development capabilities or our marketing capabilities;

• our inability to establish and maintain our sales and marketing capability, our inability to effectively market our services or obtain and maintain arrangements with our customers, partners and manufacturers;

• changes or delays in the regulatory review and approval process;

• our inability to effectively protect our intellectual property;

• costs associated with future litigation and the outcome of such litigation;

• our inability to attract and retain key personnel;

• our inability to obtain additional financing, reduce expenses or generate funds when necessary; and

• adverse economic and political conditions.

Forward-looking statements made by us in this annual report speak only as of the date of this annual report. Actual results could differ materially from those currently anticipated as a result of a number of risk factors, including, but not limited to, the risks and uncertainties discussed under the caption “Risk Factors.”  New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We do not undertake to update or revise the forward-looking statements in this annual report after the date of this annual report, except as required by law. In light of these risks and significant uncertainties, you should not regard the forward-looking statements in this annual report as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, if at all.

3

PART I

Item 1. BUSINESS

Company Overview

Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is a pharmaceutical technology company focused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies.  Our strategy is to identify new or existing approved drug formulations and apply our patented drug delivery technology to enhance the drug delivery methods.  We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using our advanced drug delivery systems that are designed to provide commercial or functional advantages, such as improved safety and efficacy, reduced side effects, and enhanced patient comfort and adherence. Our injection technology platforms include the VIBEX^® and VIBEX^® QuickShot^® pressure-assisted auto injector systems suitable for branded and generic injectable drugs in unit dose containers as well as disposable multi-dose pen injectors. We have a portfolio of proprietary and partnered commercial products and ongoing product development programs in various stages of development.  We have formed significant strategic alliances and partnership arrangements with industry leading pharmaceutical companies including Teva, AMAG, Pfizer and Idorsia.

2019 Highlights

Antares Pharma, Inc. achieved several significant operating and financial milestones in 2019:

• Record Revenue and Financial Results – We generated record revenue of $123.9 million for the year ended December 31, 2019 as compared to $63.6 million for the year ended December 31, 2018, representing growth of 95% on a year over year basis. We posted two consecutive quarters of profitability for the first time in 2019 and ended the year with operating income of $1.0 million. Our net loss and net loss per share was $2.0 million and $0.01, respectively, for the year ended December 31, 2019 as compared to $6.5 million and $0.04, respectively, for the year ended December 31, 2018.

• Successful Commercialization of XYOSTED^® – Our proprietary product XYOSTED^® (testosterone enanthate) injection, indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone, was approved by the FDA and launched for commercial sale in late 2018. Prescriptions and sales of XYOSTED^® grew steadily in 2019, resulting in annual net revenue from sales of XYOSTED^® totaling $20.8 million for the year ended December 31, 2019. We attribute this growth to successful marketing strategies and achieving targeted reimbursement coverage. XYOSTED^® is the only FDA approved subcutaneous testosterone enanthate product for once-weekly, at-home self-administration of testosterone replacement therapy.

• Supported full launch of Generic Epipen^® - In collaboration with Teva, we developed a version of our VIBEX^® auto injector for use in a combination epinephrine auto injector product that was approved by the FDA in August 2018 and commercially launched in limited quantities in late fourth quarter of 2018.  Teva’s Epinephrine Injection USP is indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients and was approved as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to Mylan, Inc.’s branded products EpiPen^® and EpiPen Jr^® and therefore, subject to state law, substitutable at the pharmacy. We are the exclusive supplier of the device and Teva is responsible for commercialization and distribution of the finished product, for which we also receive royalties on net sales.

• Global Development Agreement with Idorsia - We entered into a new global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. Selatogrel, a new chemical entity (“NCE”), is being developed for the treatment of a suspected acute myocardial infarction (“AMI”) in adult patients with a history of AMI. Idorsia will pay for the development of the combination product and will be responsible for applying for and obtaining global regulatory approvals for the product. The parties intend to enter into a separate commercial license and supply agreement pursuant to which Antares will provide fully assembled and labelled product to Idorsia at cost plus margin. Idorsia will then be responsible for global commercialization of the product, pending FDA or foreign approval. Antares will be entitled to receive royalties on net sales of the commercial product.

In addition to these significant achievements in 2019, we continued to market and sell our proprietary product OTREXUP^® (methotrexate) injection and achieve growth in prescriptions and sales of OTREXUP^®. We further developed our commercial organization and our sales and marketing capabilities, met the supply demands of our partners, devoted significant resources to our research and development programs to further our development pipeline and maintained a disciplined approach to growth and expenditures.

4

Product Portfolio Overview

The following table provides an overview of our proprietary and partnered commercial products and product opportunities:

Approved Products	Drug	Partner	Indication	Territory
XYOSTED® (testosterone enanthate)    injection	Testosterone	None	Testosterone Replacement Therapy (“TRT”)	U.S.
OTREXUP® (methotrexate) injection	Methotrexate	None	Rheumatoid Arthritis; pJIA, Psoriasis	U.S.
Sumatriptan Injection USP (generic    equivalent to Imitrex®    STATdose Pen®)	Sumatriptan succinate	Teva	Migraines	U.S.
Epinephrine Injection USP (generic    equivalent to EpiPen® and EpiPen® Jr.)	Epinephrine	Teva	Anaphylaxis	U.S.
Makena® Subcutaneous Auto Injector	Hydroxy-progesterone caproate	AMAG	Reduced Risk of Pre-term Birth	U.S.
Products in Development	Drug	Partner	Indication	Territory
Disposable Pen Injector	Exenatide	Teva	Diabetes	U.S.
Disposable Pen Injector	Teriparatide	Teva	Osteoporosis	U.S., Europe(1)
QuickShot® Auto Injector	Undisclosed	Pfizer	Undisclosed Rescue Pen	U.S.
QuickShot® Auto Injector	Selatogrel	Idorsia	Acute Myocardial Infarction	Worldwide
Drug/Device Product	ATRS-1901	None	Urologic Oncology
Drug/Device Product	ATRS-1902	None	Endocrinology

⁽¹⁾ Teva completed a decentralization registration process in 17 countries in Europe.

For a detailed discussion of our proprietary and partnered approved and marketed products, and other products currently in development, see “Our Products” and “Research and Development” sections below.

Our Strategy and Market Opportunity

Our business strategy is to identify development and commercialization opportunities that apply our patented drug delivery injection technology to new or existing approved drug formulations in order to enhance the drug delivery methods and provide commercial and/or functional advantages.  Our strategy is to pursue these opportunities both on our own or with industry leading partners. We believe this strategy offers a distinct value to patients, healthcare providers, pharmaceutical partners and our shareholders. Our focus is primarily on the market for delivery of self-administered injectable drugs, comprised of non-biologic and small molecule drugs. Our patented drug delivery technologies, such as the VIBEX^® QuickShot^®, enable the delivery of highly viscous drug compounds through fine gauge needles.

Injection is a common drug delivery pathway, and the delivery of pharmaceutical therapies through injection systems often improves the systemic bioavailability of those treatments by overcoming absorption barriers common with oral and, in some cases, transdermal delivery. Improved bioavailability is considered beneficial when evaluating the role of route of administration on pharmaceutical efficacy. We believe that our advanced injection technology platforms provide drug delivery solutions that can result in improved safety and efficacy, reduced side effects, and enhanced patient comfort and adherence.  

We also believe that many injectable products currently offered in vials and administered through needle and syringe could be replaced with user-friendly auto injectors promoting better compliance and improvement in dose accuracy.  Several manufacturers of injectable products have introduced convenient alternatives to vials, such as prefilled syringes and injector systems, and an increasing proportion of people who self-administer drugs are transitioning to prefilled syringes and other injector systems when offered. Additionally, major pharmaceutical companies market directly to consumers and encourage the use of innovative, user-friendly drug delivery systems, offering patients an ability to self-inject products at home. We believe the patient-friendly attributes of our injection technologies meet these market needs. Many pharmaceutical companies also focus on the development of important chronic care products and emergency rescue therapies that can be administered only by injection.  We believe our advanced injection technologies uniquely address these market needs and are well suited for both the branded and generic marketplace.

5

We and our partners have historically sought, and are in the process of seeking, FDA approval for certain product candidates primarily using the 505(b)(2) NDA (New Drug Application) or ANDA (Abbreviated New Drug Application) approval pathways, which are further described in the Government Regulation section below. Our technology platforms allow for device customization, which can provide multiple opportunities in both the 505(b)(2) NDA and generic market spaces. There are a number of injectable branded products that have recently lost patent protection in the U.S. that will be or have been subject to the ANDA approval pathway. By way of example, two of the products in development with our partner Teva (disposable pen injector products with teriparatide and exenatide) are being developed as generic versions of the branded products.  Unlike branded products which need to be detailed to a physician by a sales force, a generic product with an AB rating may be substitutable at the pharmacy in lieu of the branded product affording a potentially low cost, high market penetration generic product.

According to a Market Research Engine report, it is estimated that the global injectable drug delivery market will grow to $775 billion by 2024, representing a compounded annual growth rate of 11.5% in the forecast period.  This expected growth is attributable to several factors, including label expansion for approved products, increasing the patient pool for such products, a pipeline of injectable medications at various stages of clinical development, and the increasing incidence of certain diseases that will necessitate the utilization of injectable medications.

See also “Our Products” and “Research and Development” below for additional discussion of market size and opportunities relative to the current therapeutic areas associated with our existing portfolio of products and products in development.

Our Competitive Strengths

We have a proven business model of applying our patented drug delivery injection technology to new and existing therapeutic products. We believe our key competitive strengths are our proprietary injection technologies, and our ability to form significant strategic alliances with industry-leading pharmaceutical partners to develop and commercialize proprietary and partnered products. We believe our management team has unique knowledge of, and experience in the drug/device combination product space, and in identifying new product candidates that could potentially benefit from our device technology platforms, which creates opportunities for us and potential pharmaceutical partners that look to us for our unique capabilities and know-how. Our business model for developing and commercializing proprietary and partnered products has been validated, we believe, by the successive FDA approvals of our NDAs for XYOSTED^® and OTREXUP^® and our ANDA for Sumatriptan Injection USP, as well as the FDA approval of Teva’s AB-rated generic version of the EpiPen^® also utilizing our VIBEX^® auto injector.

Intellectual Property, Patents, Trade Secrets and Proprietary Information

We strive to protect and enhance the proprietary technologies that we believe are important to our business and rely on know-how and continuing technological innovation to develop, strengthen, and maintain our competitive position. When appropriate, we actively seek protection for our products and proprietary information by means of U.S. and international patents and trademarks.  We currently hold a portfolio of patents with expirations ranging from 2020 to 2036, and numerous patent applications pending in the U.S. and other countries.  These patents consist primarily of design, formulation and method-of-use patents.

In addition to our patents and patent applications, trade secrets play an important role in protecting our products and technologies and provide protection beyond patents and regulatory exclusivity.  We strive to preserve the confidentiality of our trade secrets, proprietary know-how and inventions by maintaining physical security of our sites and electronic security of our information technology systems. We also require all employees, contractors and third-party consultants with access to proprietary information to execute confidentiality agreements prohibiting the disclosure of confidential information to anyone outside the Company. These agreements also require disclosure and assignment to us of discoveries and inventions made by such individuals while devoted to Company-sponsored activities. Partners with which we have entered into development agreements have the right to certain technology developed in connection with such agreements.

Our Technology and Product Platforms

Pressure assisted auto injection is a form of parenteral drug delivery that continues to gain acceptance and demand among the medical and patient community. Encompassing a wide variety of sizes and designs, our technology operates by using pressure to force the drug, in solution or suspension, through the skin and deposits the drug into the subcutaneous or intramuscular tissue. We have designed disposable, pressure assisted auto injector devices to address acute and chronic medical needs, such as rheumatoid arthritis and psoriasis, allergic reactions, migraine headaches, testosterone deficiency and maternal health. Our current platforms include the VIBEX^® and the VIBEX^® QuickShot^® disposable pressure assisted auto injection systems and disposable pen injection systems.  

6

VIBEX^® Auto Injectors

Our proprietary VIBEX^® disposable auto injector systems combine a spring-based power source with a shielded needle, which delivers the needed drug solution subcutaneously or intramuscularly. In order to minimize the anxiety and perceived pain associated with injection-based technologies, the VIBEX^® system features a triggering collar that shields the needle from view. The patented retracting collar springs back and locks in place as a protective needle guard after the injection, making the device safe for general disposal. We believe the key competitive advantages of the VIBEX^® system include:

• Reliable subcutaneous or intramuscular injection

• Designed around conventional pre-filled syringes

• Rapid injection with ability to deliver viscous solutions

• Ease of use in emergencies

• Reduced pain

The primary goal of the VIBEX^® disposable pressure assisted auto injector is to provide a fast, safe, and time-efficient method of self-injection. This device is designed around conventional single dose pre-filled syringes, which is a primary drug container, offering ease of transition for potential pharmaceutical partners.  Our proprietary product OTREXUP^® uses the VIBEX^® auto injector system for delivery of methotrexate. We also have two license agreements with Teva for our VIBEX^® system, one for Teva’s generic epinephrine auto injector and the other for our Sumatriptan Injection USP.  

VIBEX^® QuickShot^® Auto Injectors

An advancement of our proprietary line of VIBEX^® auto injectors is the VIBEX^® QuickShot^® auto injector system, which offers a dose capacity of 1 mL or greater in a compact design. VIBEX^® QuickShot^® is designed to enhance performance on the attributes we believe most critical to patient acceptance, which are speed, comfort and discretion. VIBEX^® QuickShot^® achieves these advancements by incorporating a novel triggering mechanism and space-saving spring configuration. The unique design also accommodates fast injection of highly viscous drug products that less-powerful conventional auto injectors are typically unable to deliver.  Many self-injectable drugs that are currently marketed or in clinical development are of higher viscosity and are formulated to be administered in a 1 mL dose volume. Our proprietary product XYOSTED^® was developed using the VIBEX^® QuickShot^® auto injector platform, which is also used in the Makena^® subcutaneous auto injector that we developed with our partner AMAG.  We also have a license agreement with Pfizer to develop a rescue pen utilizing our VIBEX^® QuickShot^® auto injector system with an undisclosed Pfizer drug, and a license and development agreement with Idorsia for a drug device combination product utilizing a  variation of our VIBEX^® QuickShot^® auto injector device with a new chemical entity Selatogrel, being developed for the treatment of acute myocardial infarction.

Auto-Insert Injection Technology

We have recently developed a new and versatile auto injector system to meet evolving market needs. The Auto-Insert device builds off the capabilities of our VIBEX^® platform adding automatic needle insertion, subcutaneous or intra-muscular (“IM”) injections of up to 1 inch and delivered volumes of up to 2 mL. This new device can accommodate 1 mL standard, 1 mL long, and 2.25 mL syringes. The auto-insert technology is intended to improve compliance for drug products requiring deep IM injections.  This new device is easily convertible to different fill volumes and needle lengths and was designed specifically to meet the reliability requirements for emergency use applications while maintaining the simple and intuitive two-step process of administration of the VIBEX^® device.

Pen Injector System

Our multi-dose, disposable pen injector technology complements our portfolio of single-use pressure assisted auto injector devices.  The disposable pen injector device is designed to deliver drugs by injection through needles from multi-dose cartridges.  Our disposable pen injector is designed for chronic conditions such as diabetes, which require daily injection of a product.  Depending on dosage, our pens can deliver up to thirty days of drug.  We have licensed our pen injector device technology to Teva for two potential products: a multi-dose pen with teriparatide for the treatment of osteoporosis (a generic form of Forteo^®) and a multi-dose pen with exenatide for the treatment of diabetes (a generic version of BYETTA^®).

7

Our Products

The following is a discussion of our approved and marketed commercial products, including proprietary and partnered products.  For a discussion of other product candidates currently in development, see the “Research and Development” section below.

XYOSTED^® (testosterone enanthate) injection

XYOSTED^® (testosterone enanthate) injection is our proprietary product for subcutaneous administration of testosterone replacement therapy (“TRT”) in adult males for conditions associated with a deficiency or absence of endogenous testosterone. XYOSTED^® is the only FDA approved subcutaneous testosterone enanthate product for once-weekly, at-home self-administration and is approved and marketed in three dosage strengths, 50 mg, 75 mg and 100 mg.

According to IQVIA National Sales Perspectives^® (“NSP”) reporting of nationally projected sales activities, the overall U.S. TRT market was approximately $1.7 billion in 2019 based on wholesale acquisition costs (“WAC”). Total prescriptions in the U.S. TRT market grew by 6.6% in 2019 as compared to 2018, entirely driven by an increase in prescriptions of injectables, which increased by 11.0%. The injectable TRT market grew from $361.7 million in 2018 to $408.4 million in 2019, an increase of 12.9% based on WAC. In September 2019, XYOSTED^® became the most prescribed Branded TRT among Urologists, and as of December 2019, XYOSTED^® commanded approximately 43% of the Branded TRT market among Urologists. In October 2019, XYOSTED^® became the most prescribed Branded TRT among Endocrinologists, and as of December 2019, XYOSTED^® commanded approximately 37% share of the Branded TRT market among Endocrinologists.

We believe that XYOSTED^® provides several potential benefits over other TRT treatments such as topical gels and other forms of injectable testosterone administered via needle and syringe in healthcare settings.  These benefits include easy and virtually pain-free administration, low risk of transfer as compared to topical gels and the ability to achieve and maintain steady levels of testosterone.

Topical formulations of TRT are frequently prescribed in the U.S. However, not all men are able to adequately absorb the gel formulations or otherwise find them unacceptable for reasons including risks of transferring the gel to spouses or children, dissatisfaction with the application process, or suboptimal clinical results due to variability in exposure and compliance.  Injectable testosterone is an option for men with an inadequate response to transdermal therapies. Oral formulations of testosterone had previously been linked in studies with liver toxicity and fluctuations in testosterone levels, however, the FDA recently approved Jatenzo^®, an oral formulation of testosterone undecanoate, which was developed by Clarus Therapeutics (“Clarus”) and launched for commercial sale in February 2020.  

Competition in the U.S. testosterone replacement market includes topical solutions such as Abbvie’s Androgel^® and Androgel^® 1.62%, Perrigo’s generic 1.62% testosterone topical gel, Lilly’s Axiron^®, Endo’s Fortesta^® and Testim^® (and the authorized generic) and Allergan plc (“Allergan’s”) Androderm^®. Other forms of TRT include injectables, such as Endo’s Aveed^®, Pfizer’s Depo^®-Testosterone, and several generic testosterones in oil products sold by Actavis, Sandoz, Mylan, Teva and others, as well as Testopel^® pellets by Endo. Clarus recently launched Jatenzo^®, an oral formulation of testosterone undecanoate, and Lipocine, Inc. (“Lipocine”) is also developing an oral formulation of testosterone undecanoate, Tlando^®. Acerus Pharmaceuticals markets Natesto^™, an intra-nasal testosterone.

OTREXUP^® (methotrexate) injection

OTREXUP^® is our proprietary combination product comprised of a pre-filled methotrexate syringe and our VIBEX^® self-injection system designed to enable rheumatoid arthritis and psoriasis patients to self-inject methotrexate reliably, accurately, comfortably and conveniently at home. OTREXUP^® (methotrexate) injection is the first FDA-approved subcutaneous methotrexate for once weekly self-administration with an easy-to-use, single dose, disposable auto injector.  We currently market seven dosage strengths of OTREXUP^® in the U.S.

OTREXUP^® is indicated for use in adults with severe, active rheumatoid arthritis (“RA”) or children with active polyarticular juvenile arthritis (“pJIA”) who are intolerant of or had an inadequate response to first‑line therapy, including full dose non‑steroidal anti‑inflammatory agents, and adults with severe recalcitrant psoriasis. RA is a chronic autoimmune disease, resulting in pain, stiffness, swelling, joint damage, and loss of function of the joints. According to the Arthritis Foundation, RA affects approximately 1.5 million Americans, which is almost 0.5% of the U.S. population.  The disease onset generally occurs between the ages of 30 to 60 years in women.  In men, it often occurs later in life.  pJIA is the most common rheumatic disease in childhood, and according to the Arthritis Foundation, juvenile arthritis affects nearly 300,000 children in the U.S. Methotrexate is also used to treat psoriasis, which is believed to be an autoimmune disease characterized by thick patches of inflamed, scaly skin, created by abnormal, rapid, and excessive proliferation of skin cells.

8

Methotrexate is considered the first-line disease modifying anti-rheumatic drug (“DMARD”) prescribed to patients with RA according to the Johns Hopkins Arthritis Center.  Methotrexate is usually started at 12.5 mg, to 15 mg given orally, once-a-week, and titrated up for greater therapeutic effect, or until the patient incurs side effects.  The maximum dose given is generally 25 mg per week (10, 2.5 mg tablets given in one dose).  Studies have reported as many as 30% to 60% of patients experience gastrointestinal side effects with oral methotrexate, preventing further dose escalation or requiring discontinuation in some patients.  Also, the extent of oral absorption of methotrexate varies considerably between patients.  

We believe that OTREXUP^® offers physicians and patients an important alternative to oral methotrexate tablets and vials of the injectable form of the drug administered with a needle and syringe. OTREXUP^® provides physicians and patients a convenient, practical and virtually painless option for administering parenteral methotrexate as an alternative to proceeding directly from oral methotrexate to biologics.  Additionally, OTREXUP^® is a self-contained injection device designed to minimize accidental contact with methotrexate, a hazardous drug agent.

Medexus Pharma markets and sells Rasuvo^®, a subcutaneous injectable methotrexate, which is a direct competitor to OTREXUP^®. Cumberland Pharmaceuticals, Inc. has also recently received regulatory approval for two methotrexate product lines in the U.S.  Competition in the methotrexate market also includes tablets and parenteral forms that are currently marketed in the U.S. by several generic manufacturers, including Teva, Pfizer, Inc. (“Pfizer”), Mylan, Inc. (“Mylan”), Hospira and Accord Healthcare.  Other commonly used pharmaceutical treatments for rheumatoid arthritis include analgesics, non-steroidal anti-inflammatory drugs (NSAIDs), corticosteroids, DMARDs and biologic response modifiers.  In addition to methotrexate, the DMARDs include azathioprine (Imuran^®), cyclosporine (Neoral^®), hydroxychloroquine (Plaquenil^®), auranofin (Ridura^®), leflunomide (Arava^®) and sulfasalazine (Azulfidine^®).  The biologic response modifiers include etanercept (Enbrel^®), adalimumab (Humira^®), golimumab (Simponi^®), tocilizumab (Actemra^®), certolizumab (Cimzia^®), infliximab (Remicaid^®), abatacept (Orencia^®), and rituximab (Rituxan^®). They are often prescribed in combination with DMARDs such as methotrexate.

Sumatriptan Injection USP

We, through our partner Teva, sell Sumatriptan Injection USP, indicated in the U.S. for the acute treatment of migraine headaches and cluster headache in adults.  We received FDA approval of our ANDA for the 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors, a generic equivalent to Imitrex^® STATdose Pen^®, in December 2015.  We have a license, supply and distribution agreement with Teva, under which Teva is responsible for the manufacture and supply of the drug, and we manufacture the device and complete assembly and packaging of the finished product. Teva is responsible for commercialization and distribution.  

According to a survey commissioned by the National Headache Foundation, migraine affects nearly 37 million Americans.  Migraine headaches are often characterized by a headache of moderate or severe intensity, nausea (the most common characteristic), one-sided and/or pulsating quality, aggravated by routine physical activity, duration of hours to 2-3 days; and an attack frequency anywhere between once a year and once a week.  Healthcare professionals frequently prescribe triptans to stop migraine attacks.

The total U.S. retail anti-migraine market was $4.3 billion in 2019 according to IQVIA’s National Prescription Audit^® (“NPA”) report based on TRx Pharmacy Dollars. The majority of patients who use triptans take oral tablets.  Oral drugs accounted for $3.8 billion of the total, and injectable products accounted for approximately $283 million of the total market, measured in terms of TRx Pharmacy Dollars. While oral triptans have benefited many migraine sufferers, they are most consistently effective when taken at a relatively early stage in the migraine attack. Studies have shown that injectable sumatriptan is more effective and rapid-acting in the treatment of migraine headache that has reached the moderate to severe level of intensity.

According to IQVIA’s NPA, about 3% of triptan prescriptions are currently for injectable triptans. Sumatriptan is the only injectable triptan approved for use in the U.S.  Sumatriptan is currently available in an oral formulation, a nasal spray (Imitrex, GSK and generic) and a needleless injector (Sumavel, Astellas/Zogenix). There is extensive competition in the sumatriptan marketplace and several manufacturers offer versions of injectable sumatriptan with a delivery device, including GSK (Imitrex STATdose Pen^®), Pfizer (Alsuma), ENDO Pharmaceuticals (Sumavel DosePro), Sun Pharma (generic sumatriptan autoinjector) and Upsher-Smith (Zembrace SymTouch). One company, Sandoz, Inc. (“Sandoz”) markets an authorized generic version of GSK’s Imitrex STATdose Pen^®. At least three companies, including Teva, and Fresenius Kabi have FDA approval to market injection sumatriptan in prefilled syringes, although we are not aware of any that presently market this product configuration. Additionally, several generics manufacturers offer injectable sumatriptan in vials.

9

Epinephrine Injection USP

We developed and are the exclusive supplier of the device for Teva’s generic Epinephrine Injection USP products, indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients. Teva’s Epinephrine Injection, utilizing our patented VIBEX^® injection technology, was approved by the FDA in August 2018 as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to Mylan, Inc.’s branded products EpiPen^® and EpiPen Jr^® and therefore, subject to state law, substitutable at the pharmacy. Teva announced a limited commercial launch of its generic epinephrine product in late fourth quarter of 2018 with full commercial availability in 2019. We supply the device and Teva is responsible for the drug, assembly and packaging, distribution and commercialization of the finished product, for which we also receive royalties on Teva’s net sales.

Epinephrine is utilized for the treatment of severe allergic reactions (anaphylaxis) to insect venom, foods, drugs and other allergens as well as anaphylaxis to unknown substances or exercise-induced anaphylaxis. Mylan’s EpiPen^®, along with its own authorized generic of the product, continues to be the global market leader in the epinephrine auto injector market.  In December 2016, Mylan announced the availability of its lower-priced authorized generic to EpiPen^®, intended to address pricing concerns of the branded version. In the U.S., sales of epinephrine injection products were approximately $1.3 billion in 2019 based on WAC, according to the IQVIA NSP report. There are other companies and alternative products competing in the market. For example, in January 2017, CVS announced that a low-cost epinephrine auto injector option, the authorized generic for Adrenaclick® manufactured by Impax Laboratories, is available at all CVS Pharmacy locations. Kaléo announced the availability of AUVI-Q® (Epinephrine Injection, USP) Auto-Injector in the U.S. beginning in February 2017, and Adamis Pharmaceuticals announced FDA approval of SYMJEPI™, an epinephrine pre-filled syringe, which is marketed and distributed in the U.S. by Sandoz Inc.

Makena® (hydroxyprogesterone caproate injection) Subcutaneous Auto Injector

We developed a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® (hydroxyprogesterone caproate injection) under an exclusive license and development agreement. The Makena^® subcutaneous auto injector drug-device combination product is a ready-to-administer treatment indicated to reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered one preterm baby in the past. The product was approved by the FDA in February 2018. We are the exclusive supplier of the devices and the final assembled and packaged commercial product to AMAG.  

Makena^® is a progestin that belongs to a class of drugs called progestogens. Progestogens have been studied to reduce preterm birth and have shown varying results depending upon the subjects enrolled. The active ingredient in Makena^®, 17α hydroxyprogesterone caproate (often referred to as 17P), is the only FDA-approved treatment for pregnant women who have had a prior spontaneous preterm birth (which is a substantial risk factor for recurrent preterm birth) and has been and used for more than a decade by healthcare providers to treat patients with a history of spontaneous preterm birth. The approval of Makena^® was based on the landmark Meis trial, conducted by the National Institute of Child Health and Human Development and the Maternal-Fetal Medicine Units Network and published in the New England Journal of Medicine in 2003. The Society for Maternal Fetal Medicine Publications Committee published clinical guidelines for the use of progestogens to reduce the risk of preterm birth in the American Journal of Obstetrics and Gynecology in May 2012, which were affirmed in 2014. Preterm birth is defined as a birth prior to 37 weeks of pregnancy. According to the March of Dimes, preterm births affected nearly 380,000 babies, or one of every ten infants born in the U.S.

In October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial. Among the clinicians on the advisory committee, five of the six who practice obstetrics voted to keep Makena^® on the market and generate more data. The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. AMAG has stated that it remains committed to working with the FDA to maintain patient access to Makena^®. According to preliminary results reported by AMAG, net revenue from sales of Makena^® was estimated to be $120 to $123 million for the year ended December 31, 2019 and was $322.3 million in 2018.

Research and Development

We are committed to a strong research and development program, recognizing that the development of new product offerings is important to our future success. Our research and development efforts are focused primarily on leveraging our existing product and technology platforms by broadening their applications for use in other drug/device combination products, as well as exploring new pharmaceutical products, technologies and drug delivery methods.

10

Our research and development programs consist primarily of clinical, regulatory, formulation development, engineering and device development activities for our current products, next generation versions of current products, product extensions, and new proprietary and partnered products and technologies in development. Our internal research and development team works with external consultants, industry experts, physicians and other medical personnel in an effort to drive a robust product development pipeline. We also have a business development team that actively seeks and evaluates product opportunities and new business alliances. The following is a discussion of our significant research and development activities.

ATRS-1701

We previously disclosed a program to develop a proprietary drug device combination product for the neurology market, identified as ATRS-1701.  We completed design of a new device platform and development of a prototype. Following a careful review of our strategic plan and our pipeline, we re-prioritized our resources to focus our development efforts on potential products that better align with our current commercial infrastructure and have decided to cease further development of this program.  We intend to seek to out-license this program.    

ATRS - 1901

In 2019, we initiated development of a proprietary drug device combination product for the urology oncology market, identified as ATRS-1901. We conducted formulation development work and non-clinical studies to help advance this program and are targeting a pre-IND (Investigational New Drug) submission to the FDA by the second half of 2020.

ATRS -1902

In 2019, we identified a program to develop a proprietary drug device combination product for the endocrinology market, identified as ATRS-1902.  We are currently conducting initial formulation work and evaluating the regulatory and clinical strategies and anticipate advancing this program in 2020.    

Partnered Development Projects – We, in collaboration with our pharmaceutical partners, are engaged in research and development activities utilizing our auto injectors and disposable pen injectors. The development programs typically consist of determination of the device design, development of prototype tooling, production of prototype devices for testing and clinical studies, and development of commercial tooling and assembly. We expect development related to these products to continue, however, the development timelines are generally controlled by our partners and the extent of near-term and future development will be dependent on decisions made by our partners. The following is a summary of the development stages for each of the partnered products in development.

Pen Injector with Teriparatide

We are developing with Teva, under a license, development and supply agreement, a multi-dose disposable pen injector device with teriparatide for the treatment of osteoporosis. Teva is actively working toward a regulatory approval with the FDA for a generic version of Forteo^® (teriparatide [rDNA origin] injection) using the ANDA pathway and has indicated it is awaiting a potential FDA approval in late 2020 or early 2021.  Teva and Eli Lilly and Company (“Lilly”) settled their Paragraph IV patent litigation, the terms of which have not been disclosed. Teva also successfully completed a decentralized procedure registration process for teriparatide in 17 countries in Europe.

Teriparatide is used for the treatment of osteoporosis in postmenopausal women and men at increased risk of fracture and for glucocorticoid induced osteoporosis in men and women. According to Lilly’s 2019 annual report on Form 10-K, 2019 global sales of Forteo^® was $1.4 billion, of which $645.5 million was recorded in the U.S. and $759.1 million in the rest of the world.

Pen Injector with Exenatide

We are also developing with Teva a multi-dose pen injector device for use with a generic form of BYETTA^® (exenatide injection) for the treatment of diabetes.  Teva is working through the U.S. regulatory approval process for its exenatide pen using the ANDA pathway.

Exenatide, marketed as BYETTA^®, is used along with diet and exercise to treat type 2 diabetes, a condition in which the body does not use insulin normally and therefore cannot control the amount of sugar in the blood.  Exenatide works by stimulating the pancreas to secrete insulin when blood sugar levels are high. Insulin helps move sugar from the blood into other body tissues where it is used for energy. Exenatide also slows the emptying of the stomach and causes a decrease in appetite. Exenatide is not used to treat type 1 diabetes, a condition in which the body does not produce insulin and therefore cannot control the amount of sugar in the blood.  Exenatide is not used instead of insulin to treat people with diabetes who need insulin.  Total gross U.S. sales of BYETTA^® (exenatide) by AstraZeneca in 2019 were approximately $165 million according to IQVIA NSP. BYDUREON^®, a long acting form of the medication BYETTA^®, had approximately $1.2 billion in gross sales in the U.S. in 2019 based on WAC, according to IQVIA NSP.

11

Rescue Pen (drug undisclosed)

In August 2018, we entered into a collaboration agreement with Pfizer and began developing a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot^® auto injector and an undisclosed Pfizer drug. We will develop the product and Pfizer will be responsible for obtaining FDA approval of the combination product. We intend to enter into a separate supply agreement with Pfizer pursuant to which we will provide fully packaged commercial ready finished product to Pfizer and Pfizer will then be responsible for commercializing the product in the U.S., pending FDA approval, for which the Company will receive royalties on net sales.  We have begun design work, feasibility testing and Human Factor studies.

Rescue Device with Selatogrel

In November 2019, we entered into a new global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. Selatogrel, a new chemical entity, is being developed for the treatment of a suspected acute myocardial infarction (AMI) in adult patients with a history of AMI. Idorsia will pay for the development of the combination product and will be responsible for applying for and obtaining global regulatory approvals for the product. The parties intend to enter into a separate commercial license and supply agreement pursuant to which Antares will provide fully assembled and labelled product to Idorsia at cost plus margin. Idorsia will then be responsible for global commercialization of the product, pending FDA or foreign approval. Antares will be entitled to receive royalties on net sales of the commercial product. The product is going to be tested through usability and reliability studies tailored for emergency use to ensure safe and effective use can be demonstrated ahead of the Phase 3 study.

According to publications by Idorsia, two Phase 2 studies in patients with stable coronary artery disease and acute myocardial infarction, respectively, have met their pharmacodynamic objectives of significantly inhibiting platelet aggregation. Subcutaneous administration of selatogrel 8 mg and 16 mg has demonstrated a rapid onset of action, within 15 minutes, with the height of its effect extending over 4-8 hours, depending on the dose. Selatogrel was safe and well tolerated in both studies and there were no treatment-emergent serious bleeds.

Idorsia, in consultation with health authorities, is preparing a large, international, multi-center, Phase 3 study to investigate the efficacy and safety of subcutaneous self-administration of selatogrel for the treatment of a suspected AMI in patients with a history of AMI. Participating patients will be trained on when to inject and instructed on how to self-administer treatment.

Manufacturing

We use third parties to manufacture our products and product candidates.  To the extent that we are the sponsor of a drug/device combination product or product candidate or to the extent that we are responsible for drug and device operations with regard to products or product candidates sponsored by our partners, we must ensure that the product or product candidate is manufactured in accordance with FDA’s current Good Manufacturing Practices (“cGMPs”) for drug products and FDA’s current Quality System Regulations (“QSRs”) for medical devices and equivalent provisions in the EU and elsewhere which are required as part of the overall obligations necessary, in the EU for instance, to obtain a CE-mark. To the extent that we are only supplying the device component to one of our partners, we are responsible for compliance with QSRs. We believe that our third party manufacturers are currently in compliance with cGMPs and QSRs, to the extent applicable. Assembly and packaging of all of our products is performed by third-party service providers under our direction.  All manufacturers and suppliers are monitored and evaluated by our quality department to assess compliance with regulatory requirements and our internal quality standards and benchmarks.  We perform quality review and product release.  

We utilize a range of third-party manufacturers to manufacture and supply certain components, drugs, final assembly and finished product.  Below is a summary of our production, manufacturing, assembly and packaging arrangements with third parties:

• We have contracted with Phillips-Medisize Corporation (“Phillips”), an international outsource provider of design and manufacturing services, to produce clinical and commercial quantities of our VIBEX^® QuickShot^® auto injector device for XYOSTED^®, our VIBEX^® QuickShot^® device for the Makena^® auto injector product with AMAG, our VIBEX^® epinephrine auto injector, the undisclosed rescue device under development with Pfizer and the device with Selatogrel under development with Idorsia.  

• We utilize ComDel Innovation, Inc. (“ComDel”), a provider of integrated solutions for product development, tooling, and manufacturing, to provide manufacturing services for the VIBEX^® with sumatriptan product and for the teriparatide and exenatide pen products with Teva.

• We have contracted with Nypro Inc. (“Nypro”), an international manufacturing development company to supply commercial quantities of our VIBEX^® pressure assisted auto injector device for our OTREXUP^® and VIBEX^® epinephrine products.  

12

• We have contracted with Pharmascience Inc. to supply commercial quantities of methotrexate pre-filled syringes for OTREXUP^®.  

• We utilize Sharp Corporation (“Sharp”), an international contract packaging company, to assemble and package OTREXUP^®, XYOSTED^®, Sumatriptan Injection USP, and the Makena^® auto injector.  

• We have contracted with Fresenius Kabi to supply commercial quantities of pre-filled syringes of testosterone for XYOSTED^®.

• We utilize various pharmaceutical companies to supply the active pharmaceutical ingredient (“API”) for XYOSTED^®, OTREXUP^® and Sumatriptan Injection USP.

• Our partner Teva supplies the pre-filled syringes for Sumatriptan Injection USP.

We also have a highly experienced quality group that works with and regularly inspects or meets with our manufacturers and suppliers to review the manufacturing process for our products and to provide input on quality matters.

In addition to the above manufacturing capabilities, on July 1, 2019, we entered into a lease for approximately 75,000 square feet of office, laboratory, manufacturing and warehousing space in Minnetonka, Minnesota. The Company is performing the build-out of the premises and expects to occupy the facilities by the end of 2020 or early 2021.  The new space will support our administrative functions, product development and quality operations and provide additional manufacturing and warehousing capabilities.

Sales & Marketing

We have built a robust internal commercial organization, consisting of specialty sales representatives, management and support staff, to market and sell our proprietary products XYOSTED^® and OTREXUP^® in the U.S. We have entered into agreements with vendors for certain commercialization services such as third-party logistics, distribution, data analytics and claims processing. We may enter into licensing and or additional distribution arrangements for commercialization of our products outside the U.S.

Distribution – We have contracted with a third-party logistics provider, Cardinal Health 105, Inc., also known as Specialty Pharmaceutical Services (“Cardinal”), for key services related to logistics, warehousing and inventory management, distribution, contract administration and chargeback processing, accounts receivable management and call center management. We also utilize a division of Cardinal for sample administration. In addition, we utilize third parties to perform various other services for us relating to regulatory monitoring, including adverse event reporting, safety database management and other product maintenance services.

Trade – We have contracted with numerous wholesale distributors, including Cardinal, McKesson Corporation (“McKesson”) and Amerisource Bergen Corporation to distribute our XYOSTED^® and OTREXUP^® products to the retail pharmacies as well as the Veterans Administration and other governmental agencies.  In addition to shipping our product, these distributors provide inventory and sales reports as well as other services.  In exchange for these services, we pay fees to certain distributors based on a percentage of wholesale acquisition cost. We have also contracted with several specialty pharmacies to support fulfillment of certain prescriptions.  

Third Party Reimbursement and Pricing – In the U.S. and elsewhere, sales of pharmaceutical products to consumers depend to a significant degree on the availability of coverage and reimbursement by third-party payers, such as government and private insurance plans. Third-party payers increasingly are challenging the prices charged for medical products and services and implementing other cost containment mechanisms. This is especially true in markets where generic options exist.  It is, and will be, time consuming and expensive for us to go through the process of maintaining or seeking reimbursement for our products from Medicaid, Medicare and private payers. Our products and those of our partners may not be considered cost effective, and coverage and reimbursement may not be available or sufficient to allow us to sell our products on a competitive and profitable basis, potentially resulting in contract changes with these major payers.

Third-party payers often utilize a tiered reimbursement system, which may adversely affect demand for our products by placing them in a more expensive patient co-payment tier. Additionally, third party payers may require step edits or prior authorization. We cannot be certain that our products will successfully be placed on the list of drugs covered by particular health plan formularies or in a more preferential position on their formularies. Third-party payers are currently demanding, and will most likely continue to demand, more aggressive pricing and rebates from Antares for favorable formulary placement. Some states have also created Medicaid preferred drug lists and include drugs on those lists only when the manufacturers agree to pay a supplemental rebate. If our products are not included on these preferred drug lists, they may be subject to prior authorization. Physicians may not be inclined to prescribe OTREXUP^® or XYOSTED^® to their Medicaid patients, and even if they do prescribe it, Medicaid may not authorize payment, thereby diminishing the potential market for our products in this market segment.

13

We offer co-pay assistance programs to patients for XYOSTED^® and OTREXUP^® under which patients covered by commercial pharmacy benefit plans receive discounts on their prescriptions. Our XYOSTED^® STEADYCare Co-pay Assistance Program provides financial support to most commercially insured patients to assist with out-of-pocket costs of XYOSTED^®. In addition, certain commercially insured patients are eligible for our “first fill free” program for XYOSTED to assist the patient during the initial claims adjudication process. We utilize contract service providers to process and pay claims to patients for actual usage.

Similarly, in order to ensure coverage by Medicare Part D and commercial pharmacy benefit plans, we participate in certain rebate programs, which provide discounted prescriptions to qualified insured patients.  Under these rebate programs, we pay a rebate to the third-party administrator of the program. We also provide discounts to authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs, including discounts mandated by the Veterans Health Care Act, discounted prescriptions to DoD’s Tricare retail pharmacy program, and discounts to federal grantees and safety net providers referred to as covered entities pursuant to our pharmaceutical pricing agreement with the Department of Health and Human Services and the 340B drug discount program, which is required as a condition of Medicaid coverage. Government agencies ordering under the FSS and covered entities purchase products from the wholesale distributors at the discounted price, and the wholesale distributors then charge back the difference between the current wholesale acquisition cost and the price the entity paid for the product.

Sales, Marketing & Distribution of Partnered Products

Our partnered products may encounter some of the same reimbursement issues described above, and although we do not control the reimbursement rate or discounts contracted with third-party payers by our partners, it ultimately affects our royalty payments we receive on net sales. The industry has experienced an increasingly widening gap between gross sales and net sales after discounts.  

Epinephrine Injection USP – We are the exclusive supplier of the device used in Teva’s epinephrine injection product.  We receive payment for each device sold to Teva and royalties on Teva’s commercial sales of the product.  Teva’s epinephrine injection was approved as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to Mylan, Inc.’s branded products EpiPen^® and EpiPen Jr^® and therefore, subject to state law, is substitutable at the pharmacy. Teva is solely responsible for commercialization and distribution of the finished product.

Makena^® subcutaneous auto injector – Pursuant to our exclusive license, development and supply agreements with AMAG, AMAG is responsible for the commercialization and distribution of the Makena^® subcutaneous auto injector. AMAG supplies the pre-filled syringe of the drug to Antares, and Antares manufactures the device and oversees the assembly and packaging of the final product, which is sold to AMAG at cost plus margin. Antares receives high single digit to low double-digit royalties on net sales of the Makena^® subcutaneous auto injector as well as sales-based milestones. AMAG primarily sells Makena^® to specialty pharmacies, specialty distributors, home infusion companies and pharmacies which, in turn, sell Makena^® to healthcare providers, hospitals, government agencies and integrated delivery systems.

Sumatriptan Injection USP – Under a license, supply and distribution agreement with Teva for the auto injector product containing sumatriptan, we manufacture the device and perform final assembly and packaging of the product. Teva manufactures and supplies the drug and distributes the finished combination product in the U.S.  Teva also has an option for distribution rights in other territories.  Under the agreement, we received an upfront payment and a milestone payment upon commercial launch and are compensated at cost for shipments of product to Teva.  In addition, net profits from sales of the product, after deduction of product sales allowances such as discounts, rebates and chargebacks, are split 50/50 between us and Teva.  The term of the agreement is seven years from commercial launch, with automatic one-year renewals unless terminated by either party after the initial term.

Information about Revenues and Customer Concentrations

The Company derives 10% or more of its total revenue from the sale of its proprietary products XYOSTED^® and OTREXUP^® and from product sales of partnered products to our partners Teva and AMAG. Any disruption in sales or supply of these products could have a material adverse effect on our business. For more detail, please see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations. Significant customers, from which the Company derived 10% or more of its total revenue in each or any of the years in the three-year period ended December 31, 2019 include: Teva, AMAG, McKesson, AmerisourceBergen and Ferring.  For more detail, please refer to Note 11 – Significant Customers and Concentrations of Risk in the Notes to Consolidated Financial Statements in Part II, Item 8.

14

Collaborative Arrangements and License Agreements

We have entered into significant partnering arrangements and licensing agreements with Teva, AMAG, Pfizer, Idorsia and other pharmaceutical partners. The following is a summary of those agreements.

Teva License, Development and Supply Agreements

In July 2006, we entered into an exclusive License, Development and Supply Agreement with Teva for an epinephrine auto injector product to be marketed in the U.S. and Canada. Pursuant to the agreement, Teva is obligated to purchase all of its delivery device requirements from us. We received an upfront cash payment and a milestone payment upon FDA product approval.  We also receive a negotiated purchase price for each device sold, as well as royalties on Teva’s future sales of the product.  This agreement has been amended to provide for payment of capital equipment and other ongoing development work that was outside the scope of the original agreement.  The agreement will continue until the expiration of the last to expire patent that is filed no later than 12 months after FDA approval.  We have multiple patents that have been granted by the USPTO that cover this product, the latest of which will expire in 2033.  We have and plan to continue to file patent applications covering this product.

In December 2007, we entered into a license, development and supply agreement with Teva under which we developed and will supply a disposable pen injector for two therapeutic products: exenatide and teriparatide.  Under the agreement, we received an upfront payment and development milestones, and may receive royalties on future product sales.  This agreement has been amended numerous times and provides for payment of capital equipment and other development work that was outside the scope of the original agreement. This agreement will continue until the expiration date of the last to expire patent covering the device or product that is filed no later than 12 months after FDA approval, and will be automatically renewed for successive periods of two years each.  Currently the expiration date of the last to expire patent is 2035.

In November 2012, we entered into a license, supply and distribution agreement with Teva for an auto injector product containing sumatriptan for the treatment of migraines.  Under the agreement, we received an upfront payment and a milestone payment upon commercial launch.  Teva is responsible for the manufacture and supply of the drug, and we are responsible for the manufacture and supply of the device and assembly and packaging of the finished product.  We are compensated at cost for product shipment to Teva and Teva distributes the product in the U.S.  Teva also received an option for distribution rights in other territories.  In addition, net profits are split 50/50 between us and Teva.  The term of the agreement continues seven years from commercial launch, which was in June 2016, with automatic one-year renewals unless terminated sooner by either party in accordance with the terms of the agreement.

AMAG Agreements

In September 2014, we entered into a development and license agreement with Lumara Health, Inc., which was subsequently acquired by AMAG, to develop and supply an auto injector system for use with Makena^®, a progestin drug (hydroxyprogesterone caproate) indicated to reduce the risk of preterm birth.  Under the agreement, we granted an exclusive, worldwide, royalty-bearing license, with the right to sublicense, to certain intellectual property rights, including know-how, patents and trademarks, and received an upfront payment for our license and development activities.  We are also entitled to milestone payments upon the achievement of pre-determined amounts of net sales of the product.

AMAG was responsible for the clinical development and preparation, submission and maintenance of all regulatory applications, and is responsible for the manufacture and supply of the drug to be used in the product, and to market, distribute and sell the product.  We are the exclusive supplier of the auto injection system devices for the product and are responsible for the manufacture and supply of the devices and final assembly and packaging of the finished product.  Under the arrangement, we will receive payment for each device, and royalties based on AMAG’s net sales of products commencing on product launch in a particular country until the product is no longer developed, marketed, sold or offered for sale in such country. The royalty rates range from high single digit to low double digits and are tiered based on levels of net sales of products and decrease after the expiration of licensed patents or where there are generic equivalents to the auto injector product being sold in a particular country.

In March 2018, we entered into a manufacturing agreement with AMAG for the exclusive supply of the devices and fully assembled and packaged final finished product of the Makena^® subcutaneous auto injector. The term of the agreement is concurrent with the term of the development and license agreement and will continue until such time AMAG halts commercialization of the product. We receive a contracted price per unit on product manufactured for AMAG.

15

Pfizer Agreement

In August 2018, we entered into a collaboration agreement with Pfizer to jointly develop a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot^® auto injector and an undisclosed Pfizer drug. Pfizer will pay us for design and development services and be responsible for obtaining FDA approval of the combination product. We intend to enter into a separate supply agreement with Pfizer pursuant to which we will provide fully packaged commercial ready finished product to Pfizer and Pfizer will then be responsible for commercializing the product in the U.S., pending FDA approval, for which the Company will receive royalties on net sales and other sales-based milestone payments.

Idorsia Agreement

In November 2019, we entered into a new global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. Selatogrel, a new chemical entity, is being developed for the treatment of a suspected acute myocardial infarction (AMI) in adult patients with a history of AMI. Idorsia will pay for the development of the combination product and will be responsible for applying for and obtaining global regulatory approvals for the product. The parties intend to enter into a separate commercial license and supply agreement pursuant to which Antares will provide fully assembled and labelled product to Idorsia at cost plus margin. Idorsia will then be responsible for global commercialization of the product, pending FDA or foreign approval. Antares will be entitled to receive royalties on net sales of the commercial product.

Other Agreements

We have a licensing agreement with Allergan, plc, under which we receive royalties on sales of their oxybutynin gel product Gelnique^® 10%. The term of the agreement ends on the later of April 2024 or the expiration date of the last to expire patent. We also have a licensing agreement with Mylan, under which we receive royalties on sales of Elestrin^®.

Seasonality of Business

Certain parts of our business may be affected by seasonality. Our revenues may be influenced by many factors, including regulatory and reimbursement approvals, timing of product launches, acquisitions or divestitures, holiday schedules, and other macro-economic conditions. While our revenues do not reflect any significant degree of seasonality, customer purchases have historically been lower in the first quarter of the year due to the resetting of high-deductible health insurance plans. Seasonality may affect a quarterly comparison within any fiscal year; however, we believe this impact is generally not material to our annual consolidated results.

Competition

The pharmaceutical, medical device and biotechnology industries are intensely competitive and subject to rapid and significant technological change. We have a wide range of competitors depending upon the branded or generic marketplace, the therapeutic product category, and the product type, including dosage strengths and route of administration. Our competitors include established biotechnology development companies, specialty pharmaceutical companies, major brand name and generic manufacturers of pharmaceuticals such as Teva, Mylan, Lilly and Endo, as well as a wide range of medical device companies that sell a single or limited number of competitive products or participate in only a specific market segment.  Our competitors also include third party contract medical device design and development companies such as Scandinavian Health Ltd., Ypsomed AG, West Pharmaceutical and Owen Mumford Ltd. Many of our competitors have greater financial and other resources than we have, such as more commercial resources, larger research and development staffs and more extensive marketing and manufacturing organizations. Smaller or early stage emerging companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

Competition in the injectable drug delivery market is intensifying. We face competition from traditional needles and syringes as well as newer pen-like and sheathed needle syringes and other injection systems as well as alternative drug delivery methods including oral, transdermal and pulmonary delivery systems. Nevertheless, the majority of injections are still currently administered using needles. Because injections are typically only used when other drug delivery methods are not feasible, the auto injector systems may be made obsolete by the development or introduction of drugs or drug delivery methods which do not require injection for the treatment of conditions we have currently targeted. In addition, because we intend to, at least in part, enter into collaborative arrangements with pharmaceutical companies, our competitive position will depend upon the competitive position of the pharmaceutical company with which we collaborate for each drug application.

16

If competitors introduce new products, delivery systems or processes with therapeutic or cost advantages, our products can be subject to progressive price reductions or decreased volume of sales, or both. Branded products not only face competition from other brands, but also from generic versions. Generic versions are generally significantly less expensive than branded versions, and, where available, may be required in preference to the branded version under third-party reimbursement programs, or substituted by pharmacies. Most new products that we introduce must compete with other products already on the market or products that are later developed by competitors. Manufacturers of generic pharmaceuticals typically invest far less in research and development than research-based pharmaceutical companies and therefore can price their products significantly lower than branded products. Accordingly, when a branded product loses its market exclusivity, it normally faces intense price competition from generic forms of the product. To successfully compete for business with managed care and pharmacy benefits management organizations, we must often demonstrate that our products offer not only medical benefits but also cost advantages as compared with other forms of care.

Newly introduced generic products with limited or no other generic competition typically command higher prices initially. At the expiration of the exclusivity period, other generic distributors may enter the market, resulting in a significant price decline for the drug. As a result, the maintenance of profitable operations in generic pharmaceuticals depends, in part, on our ability to select, develop and launch new generic products in a timely and cost-efficient manner and to maintain efficient, high quality manufacturing capabilities.

Industry Trends

Based upon our experience, we believe the following significant trends have important implications for the growth of our business. Recent trends in the pharmaceutical industry include merger and acquisition activity leading to further market consolidation.  In many cases, the resulting combined pharmaceutical companies are bigger and have more financial, technical and market strength and greater resources, which increases competitive pressure in the industry.

There is ongoing effort by public and private payers to reduce the cost of drugs and reduce the overall cost of health care.  There continues to be greater pressure on drug manufacturers to provide greater discounts and rebates on their products.  The drug distribution channels are complex and involve many different parties.  Recently, such channels have undergone and continue to undergo consolidation.  Drug wholesalers and retail drug chains have merged or consolidated resulting in significantly larger organizations with greater resources and bargaining power controlling multiple levels of the drug distribution network.  Consequently, pharmaceutical companies are facing increasing pressure to reduce prices.  Additionally, the emergence of large buying groups representing independent retail pharmacies and other drug distributors, and the prevalence and influence of managed care organizations and similar institutions, enable those groups to demand larger price discounts on our products. For example, there has been a recent trend of large wholesalers and retailer customers forming partnerships, such as the alliance between CVS and Cardinal Health. As a result of this consolidation among wholesale distributors as well as the growth of large retail drug store chains, a small number of large wholesale distributors control a significant share of the market.

Government Regulation

Any potential products discovered, developed and manufactured by us or our collaborative partners must comply with comprehensive regulation by the FDA in the U.S. and by comparable authorities in other countries. These national agencies and other federal, state, and local entities regulate, among other things, the pre-clinical and clinical testing, safety, effectiveness, approval, manufacturing operations, quality, labeling, distribution, controlled substance security, export, import, storage, record keeping, safety and other reporting, sampling, advertising, marketing, and promotion of pharmaceutical products and medical devices. Facilities and certain company records are also subject to inspections by the FDA and comparable authorities or their representatives.

The FDA has broad discretion in enforcing the Federal Food, Drug and Cosmetic Act (“FFDCA”) and the regulations thereunder, and noncompliance can result in a variety of regulatory enforcement actions ranging from warning letters, product detentions, device alerts or field corrections to recalls, seizures, manufacturing shut downs, quarantines, refusal of the government to approve NDAs or ANDAs, or supplements to the same, clinical holds, injunctive actions, withdrawal of approvals, civil or criminal actions or penalties, disgorgement, adverse publicity, labeling revisions, dear healthcare provider letters, FDA debarment, exclusion from Federal healthcare programs, contract debarment or refusal of future orders under existing government contracts, consent decrees, and corporate integrity agreements.  Furthermore, new government requirements may be established that could delay or prevent regulatory approval of our products under development.

17

Drug Approval Process

FDA approval of our own and our partners’ products is required before the products may be commercialized in the U.S. Section 505 of the FFDCA describes three regulatory pathways for marketing authorization for a new drug:

• A 505(b)(1) NDA is an application that is used for the approval of a new drug that contains full reports of investigations of safety and effectiveness.

• A 505(b)(2) NDA is an application where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. This alternate route for regulatory approval permits the applicant to rely in part upon the FDA’s findings of safety and effectiveness for previously approved products and/or published scientific literature. The FDA may then approve the new product candidate for all or some of the labeled indications for which the reference product has been approved, as well as for any new strength, dosage form, route of administration or indication sought by the 505(b)(2) applicant that is supported by new clinical data and/or published scientific literature. The 505(b)(2) product, may have some or all of the same warnings and precautions in its label as the reference product.

• Section 505(j) establishes an abbreviated approval process for generic versions of approved drug products through the submission of an ANDA. An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths, route of administration, and dosage form as the listed drug, which has the same labeling, performance, characteristics, and intended use as the listed drug, and has been shown to be bioequivalent to the listed drug. Limited changes to these factors are permitted in some cases but must be pre-approved by the FDA via a suitability petition. The FDA will approve the generic product as suitable for an ANDA application if it finds that the generic product does not raise new questions of safety and effectiveness as compared to the innovator product. A product is not eligible for ANDA approval if, among other reasons, the FDA determines that it is not equivalent to the referenced listed innovator drug, if it is intended for a different use, or if it is not subject to an approved suitability petition. ANDA applicants are generally required to conduct bioequivalence testing to confirm pharmaceutical and therapeutic equivalence to the branded reference drug. Generic versions of drugs can often be substituted by pharmacists under prescriptions written for the branded reference drug, pursuant to state laws.

For both NDAs and ANDAs, the FDA reviews applications to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing methods and controls are adequate to assure and preserve the product’s identity, strength, quality, safety, potency, and purity.

The following table provides a summary description of the various regulatory pathways:

	ANDA	505(b)(2) NDA	505(b)(1) NDA
Clinical Trials/Testing    Required	Generally, bioequivalence.	Yes, to address potential differences between the branded reference product and the 505(b)(2) product, as well as bridging studies.	Yes, full reports of safety and efficacy.
Results in Orange Book    Listed Patents	No	Yes, for novel formulations, other enhancements and new indications.	Yes
Exclusivity	Potential for 180 days against other generic filers if first generic to file a substantially complete application containing a paragraph IV certification that is lawfully maintained.	Potential for 30-month stay if ANDA or 505(b)(2) applicant citing our or our partners’ product as a reference listed drug includes a paragraph IV certification. Also potential for three or five year exclusivity, like 505(b)(1) NDAs.	Potential for five years for a new chemical entity, or three years for new clinical investigations (other than  bioavailability and bioequivalence  studies) that are essential to approval of the application. Potential for 30-month stay if ANDA or 505(b)(2) applicant citing our or our partners’ product as a reference listed drug includes a paragraph IV certification.
Patent Certification Required	Yes	Yes	No
Potential orphan drug    designation Drug Status	No	Yes	Yes

18

NDA Submission

The process required by the FDA before a new drug pharmaceutical product or a change to an already approved pharmaceutical product, may be approved for marketing in the U.S. generally involves:

• pre-clinical laboratory and animal tests;

• submission to the FDA of an Investigational New Drug (“IND”) application, which must be in effect before clinical trials may begin;

• adequate and well controlled human clinical trials to establish the safety and efficacy of the drug for its intended indication(s);

• development of manufacturing processes to ensure the drug’s identity, strength, quality, and purity;

• submission to the FDA of a NDA;

• FDA compliance inspections and/or clearance of all manufacturers and facilities, as well as select clinical trial sites; and

• FDA review of the NDA in order to determine, among other things, whether the drug is safe and effective for its intended uses.

The preclinical and clinical testing and approval process takes many years and the actual time required to obtain approval, if any, may vary substantially based upon the type, complexity and novelty of the product or disease. Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including cGLPs. The results of preclinical testing are submitted to the FDA as part of an IND, to support human clinical trials along with other information, including information about product chemistry, manufacturing and controls, available scientific literature, and a proposed clinical trial protocol. Some preclinical testing may continue even after the IND is submitted. In the case of drug product candidates for which the sponsor will seek marketing approval via a 505(b)(2) NDA application, some of the above information may be abbreviated or omitted.

A sponsor of a proposed clinical trial must submit an IND application to the FDA before a clinical trial may commence.  The IND application automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions relating to one or more proposed clinical trials and places the clinical trial on a clinical hold, including concerns that human research subjects will be exposed to unreasonable health risks. If the FDA places a trial on clinical hold, the sponsor must address the issue to the FDA’s satisfaction before the trial may begin. In addition, an independent Institutional Review Board (“IRB”), covering each site proposing to conduct the clinical trial or a central IRB must review and approve the plan for any clinical trial, subject communications, and informed consent information for subjects before the trial commences at that site and it must monitor the study until completed. The FDA, the IRB, or the sponsor may suspend a clinical trial, place a trial on hold, or discontinue a trial at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk or for failure to comply with the IRB's or FDA’s requirements.

Once an IND is in effect, each new clinical protocol and any amendments to the protocols must be submitted to the IND for FDA review, and to the IRB for approval. Progress reports detailing the results of the clinical trials must also be submitted at least annually to the FDA and the IRB and more frequently if serious adverse events or other significant safety information is found.

Sponsors of clinical trials generally must register and report, at the NIH-maintained website ClinicalTrials.gov, key parameters of certain clinical trials, including clinical trial results within set timeframes. Failure to submit the required information to ClinicalTrials.gov can result in monetary penalties. Investigators must also provide certain information to the clinical trial sponsors to enable sponsors to make certain financial disclosures to the FDA. Moreover, under the 21st Century Cures Act, manufacturers or distributors of investigational drugs for the diagnosis, monitoring, or treatment of one or more serious diseases or conditions must have a publicly available policy concerning expanded access to investigational drugs.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients in accordance with the applicable protocol and all applicable laws, rules and regulations. Clinical trials are typically conducted in sequential phases, which may overlap, though in the case of a 505(b)(2) NDA, some study requirements may be abbreviated.  Studies, in addition to the below, such as pediatric studies, may also be required by the FDA:

• Phase I - During phase I, when the drug is initially given to human subjects, the product is tested for safety, dosage tolerance, absorption, distribution, metabolism and excretion. Phase I studies are often conducted with healthy volunteers depending on the drug being tested. If possible, Phase I trials may also be used to gain an initial indication of product effectiveness.

19

• Phase II - Phase II involves controlled studies in a limited patient population, typically patients with the conditions needing treatment, to evaluate preliminarily the efficacy of the product for specific, targeted indications; determine dosage tolerance and optimal dosage; and identify possible adverse effects and safety risks.

• Pivotal or Phase III - Adequate and well-controlled trials are undertaken in phase III in order to evaluate efficacy and safety in a comprehensive fashion within an expanded patient population for seeking approval of the new drug. Typically, two Phase III trials are required by FDA for product approval.

In the case of 505(b)(2) NDAs, the above studies may be abbreviated. In addition to the above traditional kinds of data required for the approval of a NDA, the 21st Century Cures Act, provides for FDA acceptance of new kinds of data such as patient experience data, real world evidence, and, for appropriate indications sought through supplemental marketing applications, data summaries.

In some cases, FDA programs may be available to expedite or simplify the process for drug development and FDA marketing application review.  For instance, drug products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means the FDA may approve the product based upon a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug or biologic from the market on an expedited basis. All promotional materials for products approved under accelerated regulations are subject to prior review by the FDA.

In addition, under the Pediatric Research Equity Act, or PREA, a NDA or supplement to a NDA for a new active ingredient, indication, dosage form, dosage regimen, or route of administration must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

The FDA, an IRB, or a sponsor may suspend or terminate clinical trials at any point in this process on various grounds, including a finding that patients are being exposed to an unacceptable health risk, if they decide it is unethical to continue the study, the clinical trial is not being conducted in accordance with FDA or IRB requirements, or based on evolving business objectives or the competitive climate. Results of pre-clinical and clinical trials must be summarized in comprehensive reports for the FDA. In addition, the results of phase III studies are subject to rigorous statistical analyses.

Following marketing approval, sponsors may also voluntarily or be required to conduct additional studies, called Phase IV studies.  For instance, the FDA may approve a NDA for a product candidate, but require that the sponsor conduct additional clinical trials to further assess the drug after NDA approval under a post-approval commitment. In addition, a sponsor may decide to conduct additional clinical trials after the FDA has approved a NDA.

The results of drug development, pre-clinical studies and clinical trials are submitted to the FDA as part of a NDA. NDAs also must contain extensive chemistry, manufacturing and control information. In most cases, the submission of a NDA is subject to a substantial application user fee. Fee waivers or reductions are available in certain circumstances.

Once the FDA receives an application, it has 60 days to review the NDA to determine if it is substantially complete to permit a substantive review and will be accepted for filing. The FDA may request additional information rather than accept a NDA for filing. Once the submission is accepted for filing, the FDA’s goal is to review 90% of all applications for non-New Molecular Entities (“NMEs”), within ten months from the submission date. For NMEs, FDA has the goal of completing its review of 90% of applications within ten months of the 60-day filing date.  The FDA, however, may give a priority review designation to drugs that are intended to treat serious conditions and, if approved, would provide significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of the serious conditions. A priority review means that the goal for the FDA is to review an application within six months of the submission date for non-NMEs and within six months of the 60-day filing date for NMEs. These timeframes, however, are only goals, which FDA may not meet.  Moreover, the review process may also be extended if the FDA requests or the NDA sponsor otherwise provides substantial additional information or clarification regarding the submission.    

20

The FDA may also refer drugs to advisory committees when it is determined that an advisory committee’s expertise would be beneficial to the regulatory decision-making process, including the evaluation of new technology. For product candidates for which no active ingredient (including any ester or salt of an active ingredient) has previously been approved by FDA, the FDA must either refer the product candidate to an advisory committee or provide in a letter a summary of the reasons why FDA did not refer the product candidate to an advisory committee.  An advisory committee is a panel that includes clinicians and other experts, which review, evaluate, and make a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

After evaluating the NDA and all related information, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a Complete Response Letter (“CRL”) describing the application deficiencies. If a CRL is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter; withdraw the application; or request an opportunity for a hearing. The FDA has the goal of reviewing 90% of application resubmissions in either two or six months of the resubmission date, depending on the kind of resubmission. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA may issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

ANDA Submissions

Much like NDAs, FDA approval is required before a generic drug equivalent to a listed drug can be marketed. Generic drugs are the pharmaceutical and therapeutic equivalents of branded products and are generally marketed under their generic (chemical) names rather than by brand names. A pharmaceutical company seeking to market a generic version of a branded drug must file a ANDA with the FDA. For ANDAs, applicants are not required to conduct complete clinical studies. Such applications, though, normally require bioavailability and/or bioequivalence studies. “Bioavailability” indicates the rate and extent to which the active ingredient or active moiety is absorbed from a drug product and becomes available at the site of drug action. “Bioequivalence” indicates that there are no significant differences in the rate and extent to which the active ingredient or active moiety becomes available at the site of drug action, when administered at the same molar dose and under similar conditions in an appropriately designed study. Generic drug products must be bioequivalent to a drug product approved by the FDA under a NDA application, referred to as a reference listed drug.  While an IND, in many cases, is not required for bioavailability and bioequivalence testing, such studies must still be conducted in accordance with Good Clinical Practices (“GCPs”) and under the supervision of an IRB.

Like NDAs, ANDAs must be accompanied by user fees.  For generic drugs, other fees, such as fees for drug master files, program fees and fees for manufacturing facilities, also may also be required to be paid by the applicant, manufacturer, and/or drug master file holder.

Following submission of an ANDA, the FDA has 60 days to evaluate the application to determine if it is substantially complete.  If the agency finds that the application is substantially complete, it will receive the application and begin its substantive review.  As part of this substantive review, the FDA will determine whether or not the generic version submitted by the company meets the necessary approval standards, including bioequivalence to the reference listed drug, adequate chemistry, manufacturing, and controls, and manufacturing facilities and clinical study sites passing pre-approval inspections.  Under FDA’s Generic Drug User Fee Act performance goals, the FDA has the goal of reviewing and acting on 90% of standard original ANDAs within ten months of submission.  Certain factors, such as the availability of other approved drug products, certain patent certifications, and certain exclusivities, may result in an ANDA being considered to be a priority ANDA, which can result in this review time being shortened to eight months, provided that a sufficiently complete and accurate pre-submission facility correspondence is submitted to FDA two months before the ANDA submission, and information provided in this correspondence remains unchanged.  

Following its completion of the review of a ANDA, the FDA will either issue an approval letter or a CRL.  If a CRL is issued, the applicant may either respond to FDA, addressing all of the deficiencies identified in the letter; withdraw the application; or request an opportunity for a hearing. FDA’s CRL review goals range from three to ten months, depending on whether a preapproval inspection is required, the response is a major or minor amendment, the application is a standard or priority review application, and whether the applicant submitted a timely, complete and accurate pre-submission facility correspondence to FDA.    Even with the applicant’s submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA may issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Upon approval, the FDA will rate generic drug products in the Orange Book.  Products meeting bioequivalence standards will typically receive an AB rating.  Under state law, such generic drug products may be able to be substituted at the pharmacy for the brand-name drug, without the intervention of the prescribing physician, unless otherwise specified by the patient or physician, Many third party payers of prescription drugs (e.g., health insurance plans, Medicare and Medicaid programs) have adopted policies to encourage the substitution of the lower-priced AB-rated generic drugs for the higher-priced branded drugs, when an AB-rated generic drug is available, as generic drugs are sold generally at prices below those of the corresponding branded products. Generic drugs may provide a cost-effective alternative for consumers, while maintaining the same active ingredient(s), dosage form, strength, route of administration, and conditions of use as the branded product.

21

Generally Applicable Requirements

Clinical trials for all product candidates must be conducted in accordance with GCPs, which include the requirements that all research subjects provide their informed consent in writing for their participation in any clinical trial as well as review and approval of the study by an IRB.  Before approving an application, the FDA may inspect one or more clinical trial sites to assure compliance with GCPs.

Further, during development, the manufacture of investigational drugs for the conduct of human clinical trials is subject to cGMP requirements. Investigational drugs and active pharmaceutical ingredients imported into the U.S. are also subject to regulation by the FDA relating to their labeling and distribution. Further, the export of investigational drug products outside of the U.S. is subject to regulatory requirements of the receiving country as well as U.S. export requirements under the FDCA.

For both NDAs and ANDAs, the FDA also may require submission of a risk evaluation and mitigation strategy (“REMS”) to ensure that the benefits of the drug outweigh the risks of the drug. The REMS plan could include medication guides, physician communication plans, and elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools. An assessment of the REMS must also be conducted at set intervals. Following product approval, a REMS may also be required by the FDA if new safety information is discovered and the FDA determines that a REMS is necessary to ensure that the benefits of the drug outweigh the risks of the drug.  

After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval. Further, should new safety information arise, additional testing, product labeling, or FDA notification may be required.

The Hatch-Waxman Amendments, Regulatory Exclusivity, and Patent Term Extension

Orange Book Patent Listing

When a NDA is submitted to the FDA seeking approval of a drug, including a 505(b)(2) NDA, the applicant is required to list certain patents whose claims cover the applicant's product or method of use with the FDA. Upon approval of a NDA, each of the patents listed in the application for the drug is then published in the Orange Book. The Orange Book listed NDA products may be cited by potential competitors in support of approval of an ANDA or 505(b)(2) NDA.  Any applicant who files an ANDA seeking approval of a generic equivalent version of a drug listed in the Orange Book or a 505(b)(2) NDA referencing a drug listed in the Orange Book must certify to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires and approval will not be sought until after the patent expiration; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. This last certification is known as a paragraph IV patent certification. The applicant may also elect to submit a "section viii" statement certifying that its proposed label does not contain (or carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent. Generally, the ANDA or 505(b)(2) NDA approval cannot be made effective by FDA until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through a paragraph IV certification or if the applicant is not seeking approval of a patented method of use.

If the ANDA or 505(b)(2) applicant makes a paragraph IV certification challenging an Orange Book-listed patent, a notice of the paragraph IV certification must be provided to each owner of the patent that is the subject of the certification and to the holder of the approved NDA to which the ANDA or 505(b)(2) application refers.

If the NDA holder or patent owners of the listed drug asserts an infringement of the patent in court within 45 days of the receipt of the paragraph IV certification notice, the FDA is prohibited from making the approval of the ANDA or 505(b)(2) application effective until the earlier of 30 months from the receipt of the paragraph IV certification, the expiration of the patent, the settlement of the lawsuit,  a decision in the infringement case that is favorable to the applicant, or such shorter or longer period as may be ordered by a court. The ANDA or 505(b)(2) application approval also will not be made effective until any applicable non-patent exclusivity listed in the Orange Book has expired as described in further detail below.

Recently, Congress, the Administration, and administrative agencies have taken certain measures to increase drug competition and thus, decrease drug prices. By example, in 2019 FDA introduced a proposed rule and draft guidance to facilitate drug importation. Congress also passed a bill requiring sponsors of NDA approved products to provide sufficient quantities of drug product on commercially reasonable market-based terms to entities developing generic and similar drug products. This bill also included provisions on shared and individual REMS for generic drug products. New legislative and regulatory efforts could ultimately have an adverse impact on our business and results of operation.

22

Non-Patent Exclusivity

The holder of an NDA may be entitled to a period of non-patent exclusivity, during which the FDA cannot make the approval of an ANDA or 505(b)(2) application that relies on the listed drug effective. For example, a pharmaceutical manufacturer may obtain five years of non-patent exclusivity upon NDA approval of a new chemical entity (“NCE”), which is a drug that contains an active moiety that has not been approved by FDA in any other NDA. An "active moiety" is defined as the molecule or ion responsible for the drug substance's physiological or pharmacological action. During the five year exclusivity period, the FDA cannot accept for filing any ANDA seeking approval of a generic version of that drug or any 505(b)(2) NDA for the same active moiety except that FDA may accept an application for filing after four years if the follow-on applicant makes a paragraph IV certification.

The holder of a NDA, including one approved under Section 505(b)(2), may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product or a new dosage form or route of administration, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted or sponsored by the applicant. Should this occur, the FDA would be precluded from making the approval of any ANDA or 505(b)(2) application effective for the protected modification until after that three-year exclusivity period has run. However, unlike NCE exclusivity, the FDA can accept an application and begin the review process during the exclusivity period.

As a general matter, because the three-year exclusivity is related to the product’s changed condition only, it does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic or modified versions of the original, unmodified drug product.  Instead, three-year exclusivity prohibits the FDA making the approval of subsequent ANDAs and 505(b)(2) NDAs that seek approval for that same changed condition and that reference the drug product with the three year exclusivity effective. Five year and three-year exclusivity will also not delay the submission or approval of a full NDA.

In addition, an applicant submitting an ANDA to the FDA may be entitled to a 180 day market exclusivity period with respect to subsequently filed generic applications if such applicant is the first to submit a substantially complete application to FDA and whose filing includes a Paragraph IV certification that the applicable patent(s) are invalid, unenforceable and/or not infringed, obtains approval, and launches the product in the marketplace without triggering any statutory forfeiture provisions. An ANDA for a product designated as competitive generic therapy that does not otherwise have patent or exclusivity protections listed in the Orange Book and that is the first approved applicant, is also eligible for a period of 180 days of regulatory exclusivity with respect to other ANDAs. These ANDA exclusivity periods, however, can be lost under certain circumstances.  Competitive generic therapies are products for which there is not more than one approved drug included in the Orange Book.

Pediatric exclusivity is another type of non‑patent marketing exclusivity in the U.S. and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory and statutory exclusivity for NDA products, including the non‑patent exclusivity period described above and patent protections. This six‑month exclusivity may be granted if a NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the required time frames, whatever statutory or regulatory periods of exclusivity or Orange Book listed patent protection cover the drug are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve an ANDA or 505(b)(2) application owing to regulatory exclusivity or listed patents. Moreover, pediatric exclusivity attaches to all formulations, dosage forms, and indications for products with existing marketing exclusivity or patent life that contain the same active moiety as that which was studied.

If approved, drug products may also be eligible for periods of U.S. patent term restoration if the approval is the first permitted commercial marketing for the product.  If granted, patent term restoration extends the patent life of a single unexpired patent, that has not previously been extended, for a maximum of five years.  The total patent life of the product with the extension also cannot exceed fourteen years from the product’ approval date.  Subject to the prior limitations, the period of the extension is calculated by adding half of the time from the effective date of an IND to the initial submission of a marketing application, and all of the time between the submission of the marketing application and its approval.  This period may be reduced by any time that the applicant did not act with due diligence.  Whether any of our product candidates will be eligible for patent term restoration is currently unknown.  Later, the applicable regulatory authorities may determine that we are not eligible for such restoration periods.

Depending on the drug product, other periods of regulatory exclusivity, such as orphan drug product exclusivity, may also block subsequent applicants.

23

Orphan Drug Designation

Some jurisdictions, including the U.S., may designate drugs for relatively small patient populations as orphan drugs. Pursuant to the Orphan Drug Act, the FDA grants orphan drug designation to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the U.S., or affecting more than 200,000 in the U.S. and for which there is no reasonable expectation that the cost of developing and making the product available in the U.S. will be recovered from U.S. sales. Additionally, sponsors must present a plausible hypothesis for clinical superiority to obtain orphan designation if there is a product already approved by the FDA that is intended for the same indication and that is considered by the FDA to be the same as the already approved product. This hypothesis must be demonstrated to obtain orphan exclusivity.  Orphan drug designation provides certain benefits, such as the opportunity for grants, tax credits, application user fee waivers, and exemption from program user fees under certain circumstances.  The tax advantages, however, were limited in the 2017 Tax Cuts and Jobs Act.  If approved for the orphan designation, orphan designated drugs may receive seven years of exclusivity, which, subject to certain exceptions, protects the drug from FDA approval of another drug with the same principal molecular features for the same orphan indication.  FDA may, however, approve a product with the same principal molecular features for the same orphan indication during this time period, if such product is able to demonstrate clinical superiority.  Orphan exclusivity can also be lost under certain circumstances, such as the inability of the application holder to ensure sufficient quantities of the product.  Orphan drugs are also exempt from the above discussed PREA requirements.

Combination Drug/Device Regulation

Our products, our products marketed by our partners, as well as our products being developed by our partners are most often categorized as “drug-device combination products” because they contain both a drug and a device to administer the drug. To date, our and our partners’ combination products have been regulated as drug, and are therefore subject to the NDA, ANDA, sNDA, sANDA and 505(b)(2) drug approval process and regulations. Combination drug/device products raise unique scientific, technical and regulatory issues. The FDA has established an Office of Combination Products (“OCP”) to address the challenges associated with the review and regulation of combination products. The OCP assists in determining strategies for the approval of drug/delivery combinations and assuring agreement within the FDA on review responsibilities.  The device specific information is filed with FDA as part of the drug approval submission or it may be filed separately in the form of a device master file, also known as the master access file (“MAF”).  MAF is not an FDA approval submission but is a filing that can be used to provide supporting data for our partners’ drug approval submissions.  A MAF will be reviewed by the FDA only when referenced in an approval submission.  By filing a MAF, we are able to provide information directly to the FDA, which can then be referenced by our partners in their drug approval submissions, without having to share our proprietary information directly with our partners.    

Where common data elements may be part of several submissions for regulatory approval, as in the case of information supporting an injection system, a MAF filing with the FDA may be the preferred route.  A delivery device that is applicable to a variety of drug/device combination products, represents another opportunity for such a filing.  Another option would be to obtain a 510(k) premarket clearance from FDA for our delivery device as a stand-alone product. We intend to pursue such strategies as permitted by the law and as directed by the FDA either through guidance documents or discussions.

Development of a device with a specific drug likely will be handled as part of the marketing application for the drug product, which may be a NDA, ANDA, or supplemental application. Under these circumstances, the device component is only approved if the drug component is approved.

To the extent that our injectors are packaged with the drug, as part of a drug delivery system, the entire package will be subject to the requirements for drug/device combination products. These include drug manufacturing requirements, drug adverse reaction and other reporting requirements, and all of the restrictions that apply to drug labeling and advertising. Additionally, such products will also be subject to certain device requirements, including QSRs and certain reporting requirements, such as medical device reports.  Sponsors of clinical studies using investigational devices are also required to comply with FDA’s investigational device exemption regulations.  These requirements necessitate additional expenditures of time and resources, which could have a substantial adverse impact on our ability to commercialize our products and our operations.

Other Post-Approval Requirements and Promotional Activities

Any product manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements related to manufacturing, recordkeeping, reporting, including adverse experience reporting, drug shortage reporting, and periodic reporting, product sampling and distribution, advertising, marketing, and promotion, and post‑approval obligations imposed as a condition of approval, such as Phase IV clinical trials, REMS, and surveillance to assess safety and effectiveness after commercialization.

24

There also are continuing annual user fee requirements. In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register and, in the case of generic drug products, self-identify their establishments with the FDA and certain state agencies and list their drug products.  Device manufacturers must also register their facilities and list the devices that they design, develop, manufacture, or import, except those subject to a drug approval.  These facilities must also pay annual registration fees. The distribution of prescription pharmaceutical product samples is also subject to the Prescription Drug Marketing Act (“PDMA”).

The FDA closely regulates the post-approval marketing and promotion of drugs and devices, including standards and regulations for direct-to-consumer advertising, dissemination of off-label information, industry-sponsored scientific and educational activities and promotional activities involving the Internet. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved label. Further, if there are any modifications to the drug, including changes in indications, labeling, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new or supplemental NDA, which may require us to develop additional data or conduct additional preclinical studies and clinical trials. Failure to comply with these requirements can result in adverse publicity, Warning Letters, Untitled Letters, corrective advertising and potential civil and criminal penalties, as well as liability under the civil False Claims Act, exclusion from participation in federal healthcare programs, mandatory compliance programs under corporate integrity agreements, debarment, and refusal of government contracts among other consequences.

Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use. Specifically, manufacturers and product sponsors may not promote a product for off-label uses and must also comply with FDA’s other promotional requirements.

Manufacturing and Quality Regulations

The FDA established regulations to require that the methods used in, and the facilities and controls used for, the manufacture, processing, packing and holding of drugs and medical devices conform to cGMPs and QSRs. The cGMP regulations the FDA enforces are comprehensive and cover all aspects of manufacturing operations and require the conduct of investigations and FDA reporting under certain circumstances. The cGMP regulations for devices, called the Quality System Regulation, are also comprehensive and cover all aspects of device design, quality, and manufacturing, including, for example, pre-production design requirements and validation; production and process controls; complaint handling and investigations; corrective and preventative actions; and distribution, installation, and servicing. Compliance with the regulations requires a continuous commitment of time, money and effort in all operational areas.

Concurrent with clinical trials, companies must also develop additional information about the chemistry and physical characteristics of the product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP and QSR requirements. The FDA conducts pre-approval inspections of facilities engaged in the development, design, import, manufacture, processing, packing, testing and holding of the drugs and devices subject to NDAs and ANDAs. In addition, manufacturers of both pharmaceutical products and active pharmaceutical ingredients (APIs) used to formulate the drug also ordinarily undergo a pre-approval inspection. Failure of any facility to pass a pre-approval inspection will result in delayed or non-approval and would have a material adverse effect on our business, results of operations, financial condition and cash flows.

The FDA also conducts periodic inspections of drug and device facilities to assess the cGMP/QSR status of marketed products. Following such inspections, the FDA may issue an untitled letter as an initial correspondence that cites violations that do not meet the threshold of regulatory significance for a Warning Letter. FDA guidelines also provide for the issuance of Warning Letters for violations of “regulatory significance” for which the failure to adequately and promptly achieve correction may be expected to result in an enforcement action. Finally, the FDA could issue a Form 483 Notice of Inspectional Observations. Moreover, depending on the violation, the FDA could take more significant enforcement actions as a result of inspectional findings.  Any of the foregoing could cause us to modify certain activities identified during the inspection. If the FDA were to find serious cGMP/QSR non-compliance during such an inspection, it could take other regulatory actions that could adversely affect our business, results of operations, financial condition and cash flows. Imported API and other components needed to manufacture our products could be rejected by U.S. Customs. In respect to domestic establishments, the FDA could initiate product seizures or request or in some instances require product recalls and seek to enjoin or otherwise limit a product’s manufacture and distribution. In certain circumstances, violations could support civil penalties, criminal prosecutions, and sanctions that include preventing that company from receiving the necessary licenses to export its products, among other consequences.

25

Controlled Substances Regulation

Certain of our drug products are considered “controlled substances” as defined in the Controlled Substances Act (“CSA”) and implementing regulations, which, depending on the controlled substance schedule, establish certain registration, security, monitoring, reporting, storage, distribution, importation, inventory, quota, record keeping, and other requirements administered by the Drug Enforcement Agency (“DEA”). The DEA regulates controlled substances as Schedule I, II, III, IV or V substances, with Schedule I and II substances considered to present the highest risk of substance abuse and Schedule V substances the lowest risk. These requirements are directly applicable to us and also applicable to our contract manufacturers and to distributors, prescribers and dispensers of our products.

The DEA regulates the handling of controlled substances through a closed chain of distribution. This control extends to the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce. The active ingredient in our product XYOSTED^®, testosterone, is listed by the DEA as a Schedule III substance under the CSA. Consequently, XYOSTED^® is subject to certain regulations under the CSA. For example, certain prescription requirements must be met for the dispensing of Schedule III controlled substances both on the federal and state level.

Annual registration is required for any facility that manufactures, distributes, imports or exports any controlled substance. Dispensers must renew their registrations every three years. The registration is specific to the particular location, activity and controlled substance schedule. The DEA typically inspects a facility to review its security measures prior to issuing a registration and on a periodic basis. Security requirements vary by controlled substance schedule.  Certain reports must also be made for controlled substances, such as reports for thefts or significant losses of any controlled substance.  Failure to maintain compliance with applicable requirements, particularly as manifested in loss or diversion, can result in administrative, civil or criminal enforcement action that could have a material adverse effect on our business, results of operations and financial condition. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate administrative proceedings to revoke those registrations. In certain circumstances, violations could result in criminal proceedings.

Individual states may also regulate controlled substances, and we, as well as our third-party suppliers and manufacturers, are subject to such regulation by several states with respect to the manufacture and distribution of certain controlled substances.

Foreign Approval Process

In addition to regulations in the U.S., we (and, where appropriate, our partners marketing medicinal products incorporating our devices) are subject to various foreign regulations governing clinical trials, manufacturing, and the commercial sales and distribution of our medicinal products. We and/or our partners must obtain approval of a medicinal product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The requirements governing the conduct of clinical trials, manufacturing, product licensing, pricing and reimbursement and the regulatory approval process all vary greatly from country to country. Additionally, the time it takes to complete the approval process in foreign countries may be longer or shorter than that required for FDA approval. Foreign regulatory approvals of our products are necessary whether or not we obtain FDA approval for such products. Finally, before a new drug may be exported from the U.S., it must either be approved for marketing in the U.S. or meet the requirements of exportation of an unapproved drug under Section 802 of the Export Reform and Enhancement Act or comply with FDA regulations pertaining to INDs.

In the European Union (“EU”), marketing authorizations for medicinal products can be obtained through several different procedures, principally the centralized procedure, the decentralized procedure and the mutual recognition procedure. The centralized procedure allows a company to submit a single application to the European Medicines Agency (“EMA”), which may provide a positive opinion regarding the application to the effect that it meets certain safety, quality and efficacy requirements. A centralized marketing authorization will be granted based on a positive opinion of the EMA as approved by the European Commission. It is valid in all EU member states and three of the four European Free Trade Association countries (Iceland, Liechtenstein and Norway). The centralized procedure is mandatory for certain medicinal products, including orphan medicinal products and biologic products, and optional for certain other high technology products. The decentralized procedure allows companies to file identical applications for authorization to several EU member states simultaneously for medicinal products that have not yet been authorized in any EU member state. The competent authority of one EU member state, selected by the applicant (the Reference Member State), assesses the application for marketing authorization. The competent authorities of the other EU member states for which marketing authorizations are sought (concerned member states) are subsequently required to grant marketing authorization for their territories on the basis of this assessment except where grounds of potential serious risk to public health require an authorization to be refused. This procedure allows companies that have a medicinal product already authorized in one EU member state to apply for this authorization to be recognized by the competent authorities in other EU member states.

26

In so far as our products may be sold as medical devices outside of the U.S. (as opposed to a delivery system of a medicinal product) we are also subject to foreign legal and regulatory requirements. Legal restrictions on the sale of imported medical devices and products vary from country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ. We primarily rely upon the companies marketing our injectors in foreign countries to obtain the necessary regulatory approvals for sales of our products in those countries.

Our Minneapolis Quality Management System has ISO 13485: 2003 certification, the medical device industry standard for our quality systems. This certification shows that our device development and manufacturing comply with standards for quality assurance, design capability and manufacturing process control. Such certification, along with compliance with the European Medical Device Directive 93/42/EC (to be replaced on May 27, 2020 by the EU Medical Devices Regulation 2017/745), enables us to affix the CE Mark (a certification indicating that a product has met EU consumer safety, health or environmental requirements) to current products and supply the device with a Declaration of Conformity. Regular surveillance audits by our notified body, British Standards Institute, are required to demonstrate continued compliance.

Other Healthcare Laws and Compliance Requirements

In the U.S., the research, manufacturing, distribution, marketing, sale and promotion of drug products and medical devices are subject to numerous regulations by various federal, state and local authorities.  

We are subject to various U.S. federal and state laws restricting certain marketing practices in the pharmaceutical industry, including anti-kickback laws and false claims laws. The federal healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs, except for activities protected by narrowly-drawn statutory and regulatory safe harbors. Liability under the federal anti-kickback statute may be established without a person or entity having actual knowledge of the statute or specific intent to violate it, and a violation of the anti-kickback statute may be grounds for a government or whistleblower claim under the federal False Claims Act. Violations of the federal anti-kickback statute may be punished by civil and criminal fines, imprisonment, and/or exclusion from participation in federal healthcare programs.

The federal civil False Claims Act prohibits, among other things, any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of federal funds, or knowingly making, or causing to be made, a false statement to get a false claim paid. Claims may be pursued by whistleblowers through qui tam actions, even if the government declines to intervene.  Intent to deceive is not necessary to establish civil liability, which may be predicated on reckless disregard for the truth.  The civil False Claims Act authorizes imposition of treble damages and a civil penalty for each false claim, such as an invoice, submitted for payment and may result in significant financial penalties and damages.  The criminal federal False Claims Act imposes criminal fines or imprisonment against individuals or entities who make or present a claim to the government knowing such claim to be false fictitious or fraudulent.  Conviction or civil judgment for violation of the False Claims Act can also result in debarment from government contracting and exclusion from participation in federal healthcare programs.

Various federal and state health care programs obligate us to report drug pricing information that is used as the basis for their reimbursement rates for pharmacies and other health care providers, prices charged certain federal agencies and non-federal purchasers, and rebates on prescriptions paid by Medicaid and other plans.  States, such as California, have also enacted transparency laws that require manufacturers to report price increases and related information.  Some government health care programs impose penalties if drug price increases exceed specified percentages or inflation rates, and these penalties can result in mandatory penny prices for certain federal and 340B program customers. Failure to comply with the rules for calculating and submitting pricing information or otherwise overcharging the government or its beneficiaries could expose us to sanctions, including False Claims Act liability.

In addition, the Physician Payment Sunshine Act provisions of the Healthcare Reform Act require extensive tracking of payments and transfers of value to physicians and teaching hospitals and public reporting of the data collected, and government agencies and private entities may inquire about our marketing practices or pursue other enforcement activities based on the disclosures in those public reports. The Sunshine Act and similar state laws impose reporting requirements for various types of payments to physicians and teaching hospitals. Failure to comply with required reporting requirements under these laws could subject manufacturers and others to substantial civil money penalties.

The majority of states also have statutes or regulations similar to the federal anti-kickback law and the False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. A number of states now require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to individual physicians in the states. Other states restrict when pharmaceutical companies may provide meals to prescribers or engage in other marketing related activities. In addition, some states require pharmaceutical companies to implement compliance programs or marketing codes of conduct.  Failure to comply with state laws could result in regulatory enforcement actions.

27

Although we may not provide financial assistance to Medicare patients taking drugs sold by us, the OIG has established guidelines that permit pharmaceutical manufacturers to make donations to charitable organizations who provide co-pay assistance to Medicare patients, provided that such organizations, among other things, are bona fide charities, are entirely independent of and not controlled by the manufacturer, provide aid to applicants on a first-come basis according to consistent financial criteria, and do not link aid to use of a donor’s product. If we or our vendors or donation recipients are deemed to fail to comply with relevant laws, regulations or evolving government guidance in the operation of these programs, we could be subject to damages, fines, penalties or other criminal, civil or administrative sanctions or enforcement actions.

Federal price reporting laws require manufacturers to calculate and report complex pricing metrics used to determine prescription rebates paid under the Medicaid Drug Rebate Program and amounts reimbursed to pharmacies and other providers by the Medicaid and Medicare programs.  Payment for a manufacturer’s drugs by these programs is conditioned on submission of this pricing information.  Failure to report accurate pricing information may result in criminal, civil, or administrative sanctions or enforcement actions.   In addition, individual states such as California have reporting requirements intended to provide drug price transparency and deter price increases.

The Veterans Health Care Act of 1992 requires, as a condition of payment by certain federal agencies and the Medicaid program, that manufacturers of “covered drugs” enter into a Master Agreement and Federal Supply Schedule (FSS) contract with the Department of Veterans Affairs through which their covered drugs must be offered for sale at a mandatory ceiling price to certain federal agencies, including the VA and Department of Defense.  FSS contracts require compliance with applicable federal procurement laws and regulations, including disclosure of commercial prices during contract negotiations and maintenance of price relationships during the term of the contract, and subject manufacturers to contractual remedies as well as administrative, civil, and criminal sanctions.  The Veterans Health Care Act also requires manufacturers to enter into pricing agreements with the Department of Health and Human Services to charge no more than a different ceiling price (derived from the Medicaid rebate percentage) to covered entities participating in the 340B drug discount program.  Failure to provide the mandatory discount may subject the manufacturer to specific civil monetary penalties.  Termination of either of these agreements also jeopardizes payment by Medicaid for the manufacturer’s drugs.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, which we refer to together as the Healthcare Reform Act, expanded healthcare coverage within the U.S., primarily through establishment of state insurance exchanges and expansion of the Medicaid program. This law substantially changed the way healthcare is financed by both governmental and private insurers and significantly impacts the pharmaceutical industry. Changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, payment of an annual fee by manufacturers of branded drugs and biological products based on their share of the federal market, benefits for patients within a coverage gap in the Medicare Part D prescription drug program (commonly known as the “donut hole”), rules regarding prescription drug benefits under the health insurance exchanges, changes to the Medicaid Drug Rebate program, expansion of the Public Health Service’s 340B drug pricing discount program, or 340B program, fraud and abuse and enforcement. These changes impact existing government healthcare programs and are resulting in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program. The Affordable Care Act has since been amended to repeal the individual health insurance mandate, change price reporting rules for authorized generics, and increase manufacturers’ share of Medicare Part D prescription costs in the donut hole, and other provisions of the law may be repealed and replaced by Congress, which may greatly affect these government and third-party programs and their effect on our business.  

In addition, we may be subject to, or our marketing activities may be limited by, data privacy and security regulation by both the federal government and the states in which we conduct our business. One such statute is the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and its implementing regulations. HIPAA established uniform standards for certain "covered entities," which are certain healthcare providers, health plans and healthcare clearinghouses, as well as their business associates, governing the conduct of specified electronic healthcare transactions and protecting the security and privacy of protected health information. The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package, included the Health Information Technology for Economic and Clinical Health Act ("HITECH"), which expanded certain of HIPAA's privacy and security standards. Among other things, HITECH makes HIPAA's security standards and certain privacy standards directly applicable to business associates. HITECH also strengthened the civil and criminal penalties that may be imposed against covered entities, business associates, and individuals, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions.  In addition, other federal and state laws, such as the California Consumer Privacy Act, may govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and may not be preempted by HIPAA, thus complicating compliance efforts.

28

The Foreign Corrupt Practices Act (“FCPA”) further prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party, or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the U.S. to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the U.S., can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, disgorgement, contractual damages, reputational harm, exclusion from participation in government healthcare programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private qui tam actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations. In particular, in the EU the data privacy regime (the General Data Protection Regulation which came into effect on May 25, 2018) is regarded as stricter than the US data protection laws. EU laws restrict the export of personal data outside the EU, for instance to the US, unless certain safeguards are in place.

Third-Party Payer Coverage and Reimbursement

The commercial success of the approved products in our portfolio depends, in part, upon the availability of coverage and adequate reimbursement from third-party payers at the federal, state and private levels. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payers to reimburse all or part of the associated healthcare costs. Sales of our product portfolio will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our product portfolio will be paid by health maintenance, managed care, pharmacy benefit, and/or similar healthcare management organizations, or are reimbursed by government health administration authorities, such as Medicare and Medicaid, private health coverage insurers and other third-party payers. The market for our product portfolio will depend significantly on access to third-party payers' formularies or lists of treatments for which third-party payers provide coverage and reimbursement.

Also, third-party payers are developing increasingly sophisticated methods of controlling healthcare costs. For example, for high cost specialty drugs, third party payers have begun demanding value-based pricing in which price is linked to performance metrics.  Further, coverage and reimbursement for therapeutic products can differ significantly from payer to payer. As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that adequate coverage and reimbursement will be obtained. The cost of pharmaceuticals and medical devices continues to generate substantial governmental and third-party payer scrutiny. We expect that the pharmaceutical industry will experience continued pricing pressures due to the trend toward managed healthcare, the increasing influence of managed care organizations and additional legislative and administrative proposals. Our results of operations and business could be adversely affected by current and future third-party payer policies as well as healthcare legislative and administrative reforms.

Some third-party payers also require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, these requirements or any announcement or adoption of such proposals could have a material adverse effect on our ability to obtain adequate prices for our product portfolio and to operate profitably.

In international markets, there are health technology assessment regimes with price ceilings and supply and demand side restraints on specific products and therapies and profit controls in certain countries including the UK. There can be no assurance that our products will be considered medically reasonable and necessary for a specific indication, that our products will be considered cost-effective by third-party payers, that an adequate level of reimbursement will be available or that the third-party payers' reimbursement policies will not adversely affect our ability to sell our products profitably.

29

Healthcare Reform

In the U.S. and foreign jurisdictions, the legislative landscape continues to evolve. There have been a number of legislative and regulatory changes to the healthcare system that will likely affect our future operations. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs, improve access, and improve quality. The Affordable Care Act (“ACA”), passed in 2010, provided more Americans with health care coverage while attempting to curb the growth in healthcare spending in the U.S. The legislation included reforms to patient rights and protections, rules for insurance companies, taxes, tax breaks, funding, spending, and amended other laws including the Food, Drug and Cosmetics Act. Since enactment of the ACA, some of its provisions have been repealed or amended, and other provisions may be repealed and replaced by Congress. Some of the main provisions of the ACA that affected the pharmaceutical and biotechnology industry include, among others, the following:

• an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;

• an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively, and inclusion of Medicaid managed care plan utilization in manufacturers’ rebate obligations;

• new methodologies by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated;

• a new Medicare Part D coverage gap discount program;

• expansion of eligibility criteria for Medicaid programs thereby potentially increasing manufacturers' Medicaid rebate liability;

• expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

• expansion of healthcare fraud and abuse laws, including the federal civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;

The Drug Supply Chain Security Act imposes on manufacturers of certain pharmaceutical products obligations related to product tracking and tracing, among others.  Among the requirements of this legislation, manufacturers are required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, are required to label drug product with a product identifier, and are required to keep certain records regarding the drug product.  The transfer of information to subsequent product owners by manufacturers is required to be done electronically. Manufacturers are also required to verify that purchasers of the manufacturers' products are appropriately licensed.  Further, manufacturers have drug product investigation, quarantine, disposition, and FDA and trading partner notification responsibilities related to counterfeit, diverted, stolen,  and intentionally adulterated products that would result in serious adverse health consequences or death to humans, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death. Similar requirements are also imposed on other trading partners in the supply chain.

We expect that additional state and federal healthcare reform measures will be adopted in the future. Legislators and regulators at both the federal and state level are increasingly focused on containing the cost of drugs, and there has been increasing legislative and enforcement interest in the U.S. with respect to specialty drug pricing practices. Specifically, there have been recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. For example, California recently enacted a transparency law requiring manufacturers to report drug price increases and related information.  In 2016, CMS issued a final rule regarding the Medicaid drug rebate program, which among other things, revises the manner in which the “average manufacturer price” is to be calculated by manufacturers participating in the program and implements certain amendments to the Medicaid rebate statute created under the ACA. However, certain aspects of the proposed rule have yet to be finalized. Similarly, 340B program regulations on civil monetary penalties for statutory violations, which had been finalized in early 2017, went into effect in 2018. In October 2018, CMS issued an advance notice of proposed rulemaking paving the way for a proposed rule in 2019 that would significantly reduce the price of drugs paid by Medicare Part B by basing reimbursement on the average prices among other industrialized countries.  Congress also amended the Medicaid statute to alter price reporting of branded products sold as authorized generics, effective 4th quarter 2019, which effectively increases the rebates paid on the brand.    These and any additional healthcare reform measures could further constrain our business or limit the amounts that federal and state governments will pay for healthcare products and services, which could result in additional pricing pressures.

30

Other Regulatory Requirements

In addition to regulations enforced by the FDA, we must also comply with regulations under the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other federal, state and local regulations. We are also subject to various laws and regulations regarding laboratory practices, the experimental use of animals, and the use and disposal of hazardous or potentially hazardous substances in connection with our research. In each of these areas, as above, the FDA and other government agencies have broad regulatory and enforcement powers, including, among other things, the ability to levy fines and civil penalties, suspend or delay issuance of approvals, seize or recall products, and withdraw approvals, any one or more of which could have a material adverse effect on us.

Corporate Information

Antares is a Delaware corporation with principal executive offices located at 100 Princeton South Corporate Center, Suite 300, Ewing, New Jersey 08628.  We have two wholly owned subsidiaries in Switzerland (Antares Pharma AG and Antares Pharma IPL AG).  On January 31, 2001, we completed a business combination to acquire the operating subsidiaries of Permatec Holding AG, headquartered in Basel, Switzerland. Upon completion of the transaction, our name was changed from Medi Ject Corporation to Antares Pharma, Inc. We were incorporated as a Delaware corporation on April 29, 2005.

Segment and Geographic Information

We have a single reportable operating segment, which encompasses all of our self-administered parenteral pharmaceutical products and technologies. See Note 2 to the Consolidated Financial Statements in Part II, Item 8 about segment financial information.

Employees

As of February 28, 2020, we had 178 full-time employees. We believe that our success is largely dependent upon our ability to attract and retain qualified employees. Although we believe that the size of our current workforce is appropriate to achieve our objectives, we may hire additional employees with specialized expertise as we continue to grow our business. We believe that we have been successful to date in attracting skilled and experienced scientific and business professionals.

Available Information

We file with the U.S. Securities and Exchange Commission (“SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other documents as required by applicable law and regulations. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  We maintain an Internet site (http://www.antarespharma.com).  We make available free of charge on or through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after electronically filing those documents with or furnishing them to the SEC.  The information on our website is not incorporated into and is not a part of this annual report.

31

Item 1A. RISK FACTORS

The following “risk factors” contain important information about us and our business and should be read in their entirety.   Additional risks and uncertainties not known to us or that we now believe to be not material could also impair our business. If any of the following risks actually occur, our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline and you could lose all of your investment.  In this Section, the terms the “Company,” “we”, “our” and “us” refer to Antares Pharma, Inc.

Risks Related to Our Operations

We have incurred significant losses to date, and there is no guarantee that we will ever achieve or sustain profitability.

We incurred net losses of $2.0 million, $6.5 million and $16.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. In addition, we had an accumulated deficit at December 31, 2019 of $278.8 million. The costs for research and development of our products, product candidates and drug delivery technologies, along with marketing and selling expenses and general and administrative expenses, have been the principal causes of our losses. Although we have reported net earnings and earnings per share in recent quarters, there is no guarantee we will continue to post quarterly profitable results of operations or achieve profitability on an annual basis. We may not ever achieve sustained profitability, and as a result your investment could be harmed.

We may need additional capital in the future in order to continue our operations.

At December 31, 2019, we had cash, cash equivalents and short-term investments of $45.7 million.  We believe the combination of our current cash and projected product sales, product development fees, license revenues, milestone payments and royalties should provide us with sufficient funds to meet our obligations and support operations through at least the first quarter of 2021.  However, we have not historically generated, and do not currently generate, enough revenue or operating cash flow to support our operations. We have historically funded our operations primarily by raising capital through equity and debt financing arrangements and may need to do so in the future. We reported net losses of $2.0 million, $6.5 million and $16.7 million, and negative cash flows from operations for each of the years ended December 31, 2019, 2018 and 2017, respectively. To the extent additional financing is needed, the failure to raise necessary cash may require the Company to defer or delay spending for research and development or cause us to curtail other controllable costs and discretionary spending.

We have funded our operations with proceeds from borrowings under a long-term debt financing arrangement.  On June 6, 2017 we entered into a loan and security agreement with Hercules Capital, Inc. for a term loan of up to $35.0 million, under which we initially borrowed $25.0 million. On June 26, 2019, we entered into an amendment of the loan agreement, which increased the aggregate principle amount available under the term loan from $35.0 million to $50.0 million. Upon signing of the amendment, an additional $15.0 million was funded to us, resulting in total principle balance outstanding under the loan of $40.0 million. Payments under the loan are interest only until the first principal payment is due on August 1, 2021. The loan is secured by substantially all of the Company’s assets, excluding intellectual property, and matures on July 1, 2022, which may be extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone.

We have also funded operations with proceeds from sales of our common stock through an “at the market” offering (the “ATM”). During 2018 and 2019, we sold a total of 4.4 million shares under the ATM, representing gross proceeds of approximately $15.6 million to us. The ATM facility was terminated effective July 6, 2019.

If we are unable to obtain financing when needed, or if the amount of such financing is not sufficient, it may be necessary for us to take significant cost saving measures or generate funding in ways that may negatively affect our business in the future.  To reduce expenses, we may be forced to make personnel reductions or curtail or discontinue development programs.  To generate funds, it may be necessary to monetize future royalty streams, sell intellectual property, divest of technology platforms or liquidate assets. However, there is no assurance that, if required, we will be able to generate sufficient funds or reduce spending to provide the required liquidity.

Long-term capital requirements will depend on numerous factors, including, but not limited to, the status of collaborative arrangements, the progress of research and development programs and the receipt of revenues from sales of products. Our ability to achieve and/or sustain profitable operations depends on a number of factors, many of which are beyond our control. These factors include, but are not limited to, the following:

• our ability to successfully commercialize, market and sell XYOSTED^® and OTREXUP^®; 

• the success of our partner, Teva, in commercializing and selling Teva’s generic epinephrine injection, and our product Sumatriptan Injection USP;

32

• the success of our partner, AMAG, in maintaining approval for and commercializing and selling their Makena^® auto injector;

• our ability to successfully develop and receive marketing approval for any product candidates;

• our and our partners’ ability to successfully develop and obtain regulatory approval, and where applicable to obtain an AB-rating, of partnered products including multi dose pens for use with exenatide and teriparatide, a rescue pen, a drug-device combination product containing selatogrel and others;

• our ability to successfully build commercial channels and sell future products if we choose not to partner the product;

• our ability to manufacture, or have manufactured, products efficiently, at the appropriate commercial scale, and with the required quality;

• timing and success of our and our partners’ development, regulatory and commercialization plans;

• the demand for our technologies from current and future pharmaceutical partners;

• our ability to increase and continue to outsource manufacturing capacity to allow for new product introductions;

• product and price competition;

• patient acceptance of our current and future products;

• our ability to obtain reimbursement for our products from third-party payers;

• our ability to develop additional commercial applications for our products;

• our ability to attract and retain the right personnel to execute our plans;

• our ability to develop, maintain or acquire patent positions;

• our ability to control costs; and

• general economic conditions.

We have significant outstanding indebtedness under a loan and security agreement.  If we do not have sufficient cash available to repay the outstanding indebtedness as it becomes due, or if an event of default were to occur providing Hercules Capital, Inc. the right to accelerate the outstanding balance of the loan and to take possession of some or all of our collateral securing the loan, either situation could have a materially adverse effect on our business.

We have entered into a loan and security agreement, referred to herein as the Hercules Loan Agreement, with Hercules Capital, Inc., for a term loan of up to $50.0 million, under which we have borrowed a total of $40.0 million.  Proceeds from the loan have been and will be used for working capital and general corporate purposes. The term loan accrues interest at a calculated prime-based variable rate with a maximum interest rate of 9.50% and requires the payment of an additional end of term charge equal to 4.25% on the first $25.0 million and 3.95% on all other advances under the loan. The Hercules Loan Agreement requires payments of interest only until the first principal payment is due on August 1, 2021. The loan is secured by substantially all of the Company’s assets, excluding intellectual property, and will mature on July 1, 2022, unless extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone

The Hercules Loan Agreement contains customary affirmative and restrictive covenants and representations and warranties, including financial reporting obligations and limitations on dividends, indebtedness, liens, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries. Our business may be adversely affected by the restrictions on our ability to operate our business. The Hercules Loan Agreement also contains other customary provisions, non-disclosure obligations, as well as indemnification rights for the benefit of the lenders. Upon the occurrence of an event of default and following any applicable cure periods, if any, a default interest rate of an additional 4.00% may be applied to the outstanding loan balances, and the lenders may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Hercules Loan Agreement.        

Additionally, we may be required to repay the outstanding indebtedness plus penalties immediately under the term loan if an event of default occurs under the Hercules Loan Agreement.  Under the Hercules Loan Agreement, an event of default will occur if, among other things, we fail to make payments as required under the Hercules Loan Agreement, we breach or default in the performance of any covenant or secured obligation under the Hercules Loan Agreement, a circumstance occurs that would reasonably be expected to have a material adverse effect on the Company, we become unable to pay our debts as they come due or are otherwise insolvent, we or our assets become subject to certain legal proceedings such as bankruptcy proceedings, a cross default to other indebtedness obligations of the Company in excess of $500,000, or a stop order is issued with respect to our common stock.

33

We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs. In that case, we may be required to delay, limit, reduce or terminate our product candidate development or commercialization efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Hercules could also exercise its rights as collateral agent to take possession and dispose of the collateral securing the loan for its benefit, which collateral includes all of our property other than our intellectual property. Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

We have limited sales and marketing experience and limited experience working with payers on coverage issues, and we can provide no assurances of continued success in commercialization of our products.

The launch and successful commercialization of a new product requires substantial dedication of financial and other resources and include steps related to manufacturing, logistics, sales and marketing, and establishing insurance coverage and reimbursement.  We launched OTREXUP^® in February 2014, and XYOSTED^® in November 2018. Although we have hired and expect to continue to hire highly qualified personnel with specialized expertise, as a company, we have limited experience commercializing pharmaceutical products on our own. In order to commercialize our products, we have built and expect to continue to build our sales, marketing, distribution, managed care and trade, managerial and other non-technical capabilities and have made and expect to continue to make arrangements with third parties to perform these services when needed.

If we are unable to successfully implement our sales and marketing plans and obtain adequate third party coverage and drive adoption by patients and physicians of our products through our sales, marketing and commercialization efforts, then we may not be able to generate sustainable revenue growth from product sales which will have a material adverse effect on our business and future product opportunities.

Similarly, we may not be successful in maintaining the necessary commercial infrastructure, including sales representatives, managed care and medical affairs. Developing and enhancing our commercial capabilities to market our products has been and will continue to be expensive and time-consuming. As we continue to develop, maintain and grow these capabilities, we will have to compete with other pharmaceutical companies to recruit, hire, train and retain sales and marketing personnel. If we have underestimated the necessary sales and marketing capabilities or have not established the necessary infrastructure to support successful commercialization, or if our efforts to do so take more time and expense than anticipated, our ability to market and sell our drug products may be adversely affected.

There is no guarantee that patients and healthcare providers will adopt our or our partners’ products, and that we and our partners will be able to receive adequate payer coverage and reimbursement.  

There is no guarantee that patients and healthcare providers will adopt any newly approved products, or that insurers will provide adequate coverage and reimbursement, or will not disadvantage our products through imposition of prior authorization, step therapy, high co-payments, or similar formulary management techniques.  Any labeled limitations on the use of a product or warnings could discourage adoption of the product by patients, healthcare providers, and insurers.

Moreover, we and our partners may experience a delay in receiving coverage and reimbursement for any new products or may not receive adequate levels of coverage or reimbursement at all. By way of example, while we have obtained significant payer coverage for our testosterone replacement treatment product, XYOSTED^®, there is no assurance we will maintain coverage with payers or at the same coverage level with existing payers in future periods. The process for obtaining payer coverage is time consuming and uncertain. If the time to obtain coverage is lengthy, or if we are unable to obtain or maintain adequate coverage or if the rebates we negotiate are higher than anticipated, it may negatively impact our revenue from product sales.  

Additionally, if patients and healthcare providers do not adopt any new product, or if insurers restrict patient access or disadvantage our or our partners’ products in their formularies or otherwise do not provide adequate coverage and reimbursement, we and our partners may not be able to generate sustainable revenue growth from product sales and royalties which will have a material adverse effect on our business and future product opportunities.

Product labeling restrictions and warnings may also discourage payers from providing adequate levels of coverage and reimbursement. We and our partners, accordingly, may need to take steps to assist patients to afford our products, such as offering bridge programs, free-trial, discounts, rebates and co-pay coupon programs. These programs, however, may not ultimately be successful.

34

New information concerning our or our partners’ products learned through required post-approval studies and product use may also result in changes to our or our partners’ products.  Should any of these events occur, they could have a material and adverse effect on our operations and business.

Any post-approval requirements, including phase IV studies and Risk Evaluation and Mitigation Strategies, or REMS, may also require the dedication of substantial time and resources.  By example, as a post-marketing requirement for XYOSTED^®, the FDA has asked us to conduct a label comprehension study that assesses patients’ understanding of key risk messages in the Medication Guide for XYOSTED^® and a study of testosterone replacement therapy in pediatric males ages 14 years and older for conditions associated with a deficiency or absence of endogenous testosterone. The label comprehension study findings may result in revisions to the Medication Guide to optimize patients’ understanding of important risks of XYOSTED^® and potentially other label restrictions or changes.  Additionally, the outcome of any post-approval studies, including the pediatric study, is uncertain and may not result in an expanded label indication or could result in additional labeling requirements or other post-approval restrictions or regulatory actions. The label comprehension study was completed and submitted to the FDA in December 2019. The pediatric study must be completed by the end of 2026, and the conduct of this study will require dedication of funds and resources.

Additionally, use of our or our partners’ products by patients and in phase IV and post-marketing studies may result in the discovery of new information concerning the products.  By example, the products may be found to be less effective than initially demonstrated, or new, more severe, or more frequent adverse events or side effects may be reported.  This may result in regulatory or other actions, including, product liability actions, enforcement actions, distribution and manufacturing restrictions, changes to product labeling and promotional materials, the imposition of post-market requirements, such as REMS or additional phase IV studies, withdrawal of marketing application approvals, withdrawal of the product from the market, refusal to approve new marketing applications or supplements, product recalls, clinical holds and suspension of clinical studies, safety alerts, dear healthcare provider letters, adverse publicity, and reimbursement and insurance coverage consequences, among others.  Should any of these events occur, they could have a material and adverse effect on our operations and business.

By way of example, in October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. The PROLONG trial was conducted as a post-market study requirement under the 2011 Makena^® accelerated approval.  Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial.  The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. We do not yet know what FDA’s decision will be, however, if FDA decides to withdraw Makena from the market, our business may be materially harmed.  Moreover, even if FDA determines that Makena^® may remain on the market, Makena^® sales may decrease or AMAG may decrease the resources that it dedicates to the manufacture, supply, commercialization, and distribution of Makena^®.  Finally, if FDA requires that AMAG conduct a new confirmatory study, AMAG may not be able to successfully conduct such study, which could ultimately result in FDA withdrawal of the Makena^® approval.  

If we or our partners are unable to achieve and maintain adequate levels of coverage and reimbursement for our or our partners’ products or any of our or our partners’ future products for which we or our partners receive regulatory approval, their commercial success may be severely hindered.

Successful sales of our products, such as XYOSTED^® and OTREXUP^®, depend on the availability of adequate coverage and reimbursement from third-party payers. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payers to reimburse all or part of the costs associated with their prescription drugs. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payers is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming coverage is approved, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

In addition, the market for our products will depend significantly on access to third-party payers' drug formularies or lists of medications for which third-party payers provide coverage and reimbursement. Health plans often use tiered formularies that prefer one branded product in a therapeutic class over another through different patient co-payment amounts and disadvantaging some products through techniques such as step therapy and prior authorization. Many states use formularies and preferred drug lists to obtain supplemental Medicaid rebates in excess of those required for Medicaid coverage.  The industry competition to be included in such formularies and not disadvantaged often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payers may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or another alternative is available. Additionally, certain third-party payers restrict or block access to

35

patients for new products until a clinical review has occurred or clinical evidence is provided to support the benefits for covered patients. These restrictions may be imposed for months or longer and some third-party payers may refuse to add new products to their formularies or otherwise restrict patient access. To ensure sales, manufacturers often must provide multiple discounts on the same drug in the chain of distribution to the health care provider and the payer.  Further, manufacturers are required to assume responsibility for Medicare Part D prescription costs for innovator drugs and biologics and authorized generics while the beneficiary is in the coverage gap.  Increasingly, payers are looking for metrics and performance-based pricing to justify increased cost of therapeutic advancements.  Even if coverage is obtained, the net realization from price concessions may negatively impact our profitability.  Government health programs also impose inflation penalties which may have adverse consequences if we increase prices in the future.

Our partnered products encounter similar issues in obtaining reimbursement from third-party payers. While we are unable to control the reimbursement rate or discounts contracted with third-party payers by our partners, these rates ultimately affect our profit sharing on Sumatriptan Injection USP and royalties on products such as Teva’s epinephrine auto injector and the Makena^® Subcutaneous Auto-Injector.

Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the U.S., no uniform policy of coverage and reimbursement for drug products exists among third-party payers. Therefore, coverage and reimbursement for drug products can differ significantly from payer to payer.

Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the U.S. and in international markets. Third-party coverage and reimbursement for XYOSTED^®, OTREXUP^® or any of our other products or product candidates for which we may receive regulatory approval may not be available or adequate in either the U.S. or international markets, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

The sale of XYOSTED^® and OTREXUP^® requires significant resources, and if we do not achieve the sales expected, we may lose the substantial investment we have made in these products.

We have and expect to continue to devote substantial resources to establish and maintain a sales and marketing capability for XYOSTED^® and OTREXUP^®. If we are unsuccessful in our commercialization efforts and do not achieve the sales levels that we expect, we may be unable to recover the large investment we have made in research, development, manufacturing, inventory and marketing efforts, and our business and financial condition could be materially adversely affected.

We rely on third parties to perform many necessary services for XYOSTED^® and OTREXUP^®, including services related to the distribution, invoicing, rebates and contract administration, storage and transportation of our products.

We have retained third-party service providers to perform a variety of functions related to the sale and distribution of our products, key aspects of which are out of our direct control. For example, we rely on Cardinal to provide key services related to logistics, warehousing and inventory management, distribution, contract administration and chargeback processing, accounts receivable management, sample administration and call center management, and, as a result, most of our finished goods inventory is stored at a single warehouse maintained by the service provider. We place substantial reliance on this provider as well as other third-party providers that perform services for us, including entrusting our inventories of products to their care and handling. We also rely on third parties to administer our drug price reporting and rebate payments and contracting obligations under federal programs. Despite our reliance on third parties, we are responsible for compliance with the applicable legal and program requirements.  By example, in certain states, we are required to hold licenses to distribute our products in the state and must comply with the associated state laws.  Moreover, if these third-party service providers fail to meet expected deadlines, or otherwise do not carry out their contractual duties to us or encounter physical damage or natural disaster at their facilities, our ability to deliver product to meet commercial demand would be significantly impaired. In addition, we utilize third parties to perform various other services for us relating to regulatory monitoring, including adverse event reporting, safety database management and other product maintenance services. If our employees or any third-party service providers fail to comply with applicable laws and regulations, we and/or they may face regulatory or False Claims Act enforcement actions. Moreover, if the quality or accuracy of the data maintained by these service providers is insufficient, our ability to continue to market our products could be jeopardized or we and/or they could be subject to regulatory sanctions. We do not currently have the internal capacity to perform these important commercial functions, and we may not be able to maintain commercial arrangements for these services on reasonable terms.

36

Our employees, independent contractors, consultants, commercial partners, manufacturers, principal investigators, or CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees, independent contractors, consultants, commercial partners, manufacturers, investigators, or contract research organizations (“CROs”) could include intentional, reckless, negligent, or unintentional failures to comply with FDA regulations, comply with applicable fraud and abuse laws, provide accurate information to the FDA, properly calculate pricing information required by federal programs, comply with federal procurement rules or contract terms, report financial information or data accurately or disclose unauthorized activities to us. This misconduct could also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter this type of misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Moreover, it is possible for a whistleblower to pursue a False Claims Act (“FCA”) case against us based on the actions or inactions of these third parties even if the government considers the claim unmeritorious and declines to intervene, which could require us to incur costs defending against such a claim. Further, due to the risk that a judgment in an FCA case could result in exclusion from federal health programs or debarment from government contracts, whistleblower cases often result in large settlements. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, and results of operations, including the imposition of significant fines or other sanctions.

We rely on third parties to manufacture our and our partners’ products. If we do not develop and maintain relationships with manufacturers and/or assemblers of our and our partners’ drug/device products or product candidates, or if such third parties are unable to manufacture or supply product, or assemble and package the final products, we may be unable to successfully manufacture, assemble, package and sell our and our partners’ products, which could have a material adverse effect on our business.

We do not currently possess the facilities to manufacture commercial quantities of our or our partners’ drug/device combination products or components, including XYOSTED^®, OTREXUP^®, VIBEX^® Sumatriptan Injection USP, epinephrine auto-injector devices, Makena^® auto injectors or any other of our or our partners’ products or product candidates.   We also do not possess the facilities to manufacture clinical supplies of any product candidates or components.  We must contract with third parties and/or our partners to produce products, components, and product candidates and to assemble and package products and components according to specifications and government regulations. The future development and delivery of our and our partners’ products and product candidates depends on the capability, timely, profitable and competitive performance of these third parties and/or our partners.  There is also no assurance that such third parties and/or our partners will be willing to manufacture, assemble or sell the drug/device products or components. A limited number of manufacturers exist that are capable of manufacturing our and our partners’ products, components, and product candidates. We and our partners may fail to contract with the necessary third parties or we and our partners may contract with third parties on terms that may not be favorable to us.  

Our and our partners’ contract manufacturers must comply with all applicable manufacturing requirements, including cGMPs for drug products and QSRs for medical devices.  Before approving any marketing application, FDA will inspect the product manufacturing facilities. We and/or our partners must obtain FDA approval for a product’s or product candidate’s manufacturing process and facilities to receive product marketing approval, which we and/or our partners may never obtain or may not be able to maintain. Moreover, following product approval, FDA regularly also inspects drug and device manufacturers to ensure continued compliance with FDA’s requirements and requires reporting certain manufacturing and quality issues.  If we or our partners are not able to obtain or maintain this approval and regulatory compliance, we and/or they would not be able to receive product approval, and commercialize and/or sell the applicable products.  Moreover, should any manufacturer fail to comply with the applicable regulatory requirements, we, our partners, and/or the manufacturer may face regulatory consequences, including enforcement actions and/or product recalls.  Additionally, use of third-party contract manufacturers exposes us to risks in the manufacturer's business such as their potential inability to perform from a technical, operational or financial standpoint. Failure by a contract manufacturer to supply product, could have a material adverse effect on our ability to generate revenue and profit.

In addition, contract manufacturers may utilize their own technology, technology developed by us, technology developed by our partners, or technology acquired or licensed from third parties. When contract manufacturers develop proprietary process technology, our reliance on such contract manufacturers is increased.  Technology transfer from the original contract manufacturer may be required. Any such technology transfer may also require transfer of requisite data for regulatory purposes, including information contained in a proprietary drug or device master file held by a contract manufacturer. We and/or our partners would be dependent on the contract manufacturer for the maintenance and right of reference to the drug or device master file.  If the contract manufacturer fails to maintain a drug or device master file or withdraws our or our partners’ right of reference, we and/or our partners may no longer be able to manufacture, develop, market, and sell our or our partners’ products or product candidates.  FDA approval of the new manufacturer and manufacturing site, as well as certain changes to the manufacturing process, would also be required in the event a contract manufacturer is no longer available to us.  We may also be required to gather data and conduct studies and analyses to support the use of a new manufacturer or manufacturing process.

37

We rely on multiple commercial supply arrangements with third-party manufacturers for, including, without limitation:

• the production and supply of the methotrexate, sumatriptan and testosterone drug substance in pre-filled syringes;

• the manufacture of prefilled syringes;

• the manufacture of device components;

• the manufacture and partial assembly of VIBEX^® and Quickshot auto injectors; and

• the final assembly and packaging of our products and product candidates and our partners’ products and product candidates.

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured products ourselves, including:

• reliance on the third party for regulatory compliance, quality assurance and adequate training and management of manufacturing staff;

• the possible breach of the manufacturing agreement or purchase orders by the third party because of factors beyond our control;

• failure to supply adequate quantities of product or product candidates or failure to supply product or product candidates meeting the required product specification or other manufacturing requirements; and

• the possibility of termination or non-renewal of the agreement or purchase orders by the third party, based on its own business priorities, at a time that is costly or inconvenient for us.

We and our partners depend on these third-party manufacturers to comply with cGMPs/QSRs enforced by the FDA and other regulatory requirements and to deliver materials on a timely basis.  To the extent that a contract manufacturer cannot deliver adequate quantities of clinical supplies that meet the applicable quality standards, our or our partners’ product development efforts may be delayed.  To the extent that a contract manufacturer cannot deliver adequate quantities of commercial products that meet the applicable quality standards, our or our partners’ commercialization efforts would be inhibited and as a result our revenue and profit may be adversely impacted.  In addition, because regulatory approval to manufacture a drug is site-specific, the FDA and other regulatory authorities will repeatedly inspect our and our partners’ current and future third-party manufacturers’ facilities for compliance with cGMPs/QSRs.  If we, our partners, or third-party manufacturers fail to comply with applicable regulatory requirements, a regulatory agency may issue warning letters or suspend or withdraw our regulatory approval for approved or in-market products, refuse to approve any marketing applications, or refuse to allow future or current development of product candidates, among other things.  Departures from the applicable quality standards can also necessitate product recalls.  Our third-party manufacturers may also fail to pass the audits by our or our partners’ internal quality and regulatory group.  Any of these actions could delay or prevent our development of products, delay or prevent the submission of these products for regulatory approval, delay or prevent marketing approval, or result in insufficient product or product candidate quantity to support commercial demand or development.  We may also be required to replace manufacturers, which would be time consuming and expensive, and we may not be able to reach favorable agreements with or FDA approval for alternative manufacturers.  As a result, our business, financial condition and results of operations could be seriously harmed. See additional risk factors associated with manufacturing in the section “Risks Related to Regulatory Matters.”

In addition, we may consider entering into additional manufacturing arrangements with manufacturers or may need to change manufacturers. In each case, we will incur significant costs in obtaining the regulatory approvals, conducting any necessary studies, and taking the other steps necessary to begin commercial or clinical supply production by these manufacturers.

We depend on Teva to manufacture the drug and finished packaged product and to distribute and commercialize the epinephrine auto-injector in the U.S.

We have entered into a license, development and supply agreement with Teva, pursuant to which we developed and are the exclusive supplier of the device for an epinephrine auto injector product marketed by Teva in the U.S.

There is no guarantee that our partnership with Teva will be successful.  Teva controls the manufacture and supply of the drug, epinephrine, and the final assembly of the devices and packaging of the finished product, and has complete control over the commercialization and sale of the epinephrine auto injector product. If, at any time, Teva ceases to manufacture and supply the epinephrine drug or fails to produce sufficient supplies of the drug, Teva will be unable to produce a finished product and we may be unable to sell our auto injectors for this product to Teva resulting in less revenue for us.

38

In addition, if Teva is unable to complete the final assembly and packaging of the finished epinephrine auto injector product, we may receive less revenue than desired or expected.   If Teva is unable to produce sufficient supplies of the drug or finished epinephrine auto injector product in accordance with the applicable manufacturing requirements or otherwise fails to comply with applicable regulatory requirements, Teva may be subject to regulatory enforcement action, which could impact its ability to produce, market, commercialize, sell, and distribute the finished drug product, and in turn, our revenue. We rely on Teva to commercialize and distribute the product, including determining the price and payer coverage. If Teva is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Additionally, Teva controls the business strategy, manufacturing and distribution decisions concerning the epinephrine auto injector product.  Such decisions by Teva may be beyond our control and may impact the success of the epinephrine auto injector product. As a result, we may receive less revenue than desired or expected. Further, Teva is subject to potential competition regarding other generic versions of the epinephrine auto injector product, and such additional competition could result in receiving less revenue than expected.

We depend on Teva to manufacture and supply the drug and to distribute and commercialize VIBEX^® Sumatriptan in the U.S.

We have entered into a license, supply and distribution agreement with Teva to distribute VIBEX^® Sumatriptan, an auto injector product containing sumatriptan for the treatment of migraines.  Under our arrangement, we will manufacture the auto injector and are responsible for final assembly and packaging of the final product and Teva will manufacture and supply the drug sumatriptan and distribute and commercialize the product in the U.S. Teva also has an option for rights in other territories.  

There is no guarantee that our partnership with Teva to distribute VIBEX^® Sumatriptan will be successful.  Teva controls the manufacture and supply of the drug, sumatriptan, which is necessary for the production of VIBEX^® Sumatriptan. If, at any time, Teva ceases to manufacture and supply us with sumatriptan or fails to produce sufficient supplies of the drug, we will be unable to produce a finished product or sell our auto injectors designed for this product to Teva.  In addition, if Teva is not able to produce sufficient supplies of the drug in accordance with cGMPs, we also will be unable to produce a finished product and we and/or Teva may be subject to regulatory enforcement action. We also rely on Teva to commercialize and distribute the product within the U.S. and if Teva is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Moreover, because we hold the FDA approved application for this product, we are responsible for FDA regulatory compliance.  Should Teva fail to comply with the applicable regulatory requirements, they or we may be subject to regulatory enforcement action.  Any enforcement action could impact the ability to produce, market, commercialize, sell, and distribute the finished drug product, and in turn, our revenue. Additionally, we may disagree with Teva on certain business strategies or its manufacturing and distribution decisions.  Such decisions by Teva may be beyond our control and may impact the success of VIBEX^® Sumatriptan and we may receive less revenue than desired or expected. We have invested significant resources in the development of VIBEX^® Sumatriptan, and, if our partnership with Teva is not profitable or is terminated for any reason, we may not receive a return on our investment and may suffer significant losses.

We depend on AMAG to manufacture and supply the drug, distribute and commercialize a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^®, and to maintain regulatory approval of the product.

We have entered into a license, development and supply agreement with AMAG to distribute a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^®, the Makena^® Auto Injector. Makena^® was first approved by FDA via the accelerated approval pathway in 2011.  In 2018, FDA approved a supplemental application for the use of Makena^® with our VIBEX^® QuickShot^® subcutaneous auto injector.

There is no guarantee that our partnership with AMAG will be successful, that AMAG will be able to maintain approval for Makena^® or that AMAG will be able to successfully manufacture, supply, commercialize, and distribute the drug product.  By example, in October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. The PROLONG trial was conducted as a post-market study requirement under the 2011 Makena^® accelerated approval.  Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial. The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. We do not yet know what FDA’s decision will be, however, if FDA decides to withdraw Makena^® from the market, our business may be materially harmed.  Moreover, even if FDA determines that Makena^® may remain on the market, Makena^® sales may decrease or AMAG may decrease the resources that it dedicates to the manufacture, supply, commercialization, and distribution of Makena^®.  Finally, if FDA requires that AMAG conduct a new confirmatory study, AMAG may not be able to successfully conduct such study, which could ultimately result in FDA withdrawal of the Makena^® approval.  

39

Additionally, AMAG controls the manufacture and supply of the drug, hydroxyprogesterone caproate, and has complete control over the launch and continuous commercialization and marketing of Makena^® Auto Injector worldwide. If, at any time, AMAG ceases to manufacture and supply us with hydroxyprogesterone caproate or fails to produce sufficient supplies of the drug, we will be unable to produce a finished product or sell our auto injectors for this product to AMAG.  In addition, if AMAG is unable to produce sufficient supplies of the drug in accordance with cGMPs or otherwise fails to comply with the applicable regulatory requirements, we also will be unable to produce a finished product and/or we and/or AMAG may be subject to regulatory enforcement action, which would impact the ability to produce, market, commercialize, sell, and distribute the finished drug product, and in turn, our revenue. We rely on AMAG to commercialize and distribute the product worldwide and if AMAG is unsuccessful in commercializing the product, the resulting revenue may be lower than expected.  Additionally, we may disagree with AMAG on certain business strategies or its manufacturing and distribution decisions.  Such decisions by AMAG may be beyond our control and may impact the success of the Makena^® Auto Injector and we may receive less revenue than desired or expected.

We and AMAG are subject to competition for generic versions of the intramuscular formulation of Makena^®, which is less costly for patients.  This competition could result in more patients utilizing the intramuscular formulation rather than the subcutaneous auto injector, thus resulting in us receiving potentially less revenue than expected.

We are dependent on numerous third parties in our supply chain for the commercial supply of our products and partners’ products most of which are currently single source suppliers, and if any of these single-source suppliers are not able to satisfy demand and alternative sources are not available, the manufacturing and distribution of our products and our partners’ products could be delayed and our business could be harmed.

The availability of our products for commercial sale depends upon our ability to procure the raw materials, components, packaging materials and finished products we need from third parties. We have entered into supply agreements with numerous third party suppliers, many of which are currently our single source for the materials necessary for certain of our products.  For example, we currently have the following single source suppliers in our supply chain for the commercial supply of XYOSTED^®, OTREXUP^®, Sumatriptan Injection USP, generic epinephrine injection devices and the Makena^® subcutaneous auto injector:

• The suppliers of the active pharmaceutical ingredient (“API”) for methotrexate and testosterone;

• Pharmascience for supply of commercial quantities of methotrexate pre-filled syringes;

• Fresenius for the supply of commercial quantities of testosterone pre-filled syringes;

• Nypro for the supply of commercial quantities of the VIBEX^® auto injectors for OTREXUP^® and certain epinephrine injection devices;

• ComDel for the supply of commercial quantities of the VIBEX^® auto injectors for Sumatriptan Injection USP;

• Teva for the supply of commercial quantities of the pre-filled syringes for Sumatriptan Injection USP;

• Phillips for the supply of commercial quantities of the VIBEX® QuickShot® device for XYOSTED^® and the Makena® subcutaneous auto injector product and certain epinephrine injection devices;

• Sharp for assembly and packaging of XYOSTED^®, OTREXUP^®, Sumatriptan Injection USP and Makena^® subcutaneous auto injector; and

• Cardinal for services related to logistics, warehousing and inventory management, distribution, contract administration and chargeback processing, accounts receivable management and call center management for XYOSTED^® and OTREXUP^®.

If any of these or other third parties are unable to supply its respective component for any reason, including due to violations of the FDA’s QSR or cGMP requirements, our or our partners’ ability to manufacture the finished product will be adversely affected and our ability to meet the distribution requirements for any product sales of such products and the resulting revenue therefrom will be negatively affected. We and our partners could also face enforcement actions or may need to engage in recalls due to issues with component suppliers. Accordingly, there can be no assurance that any failure in any part of our supply chain will not have a material adverse effect on our ability to generate revenue from our products which depend on third party suppliers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

To mitigate some of the short-term risk of relying on single source suppliers, we intend to build a safety stock of component and/or of finished goods inventories.  However, there can be no assurance that these inventories will be adequate or that we will be able to maintain our desired level of safety stock.  Additionally, maintaining a high level of safety stock exposes us to additional risks such as excess and obsolete inventory if the sales volume of our products do not meet our forecasts.

40

If we do not develop and maintain relationships with manufacturers of our device products, or if any of our suppliers experience a failure in the manufacturing process, then we may be unable to successfully manufacture and sell our products or to meet our obligations to deliver to our customers and partners.

Manufacturing of our VIBEX^® auto injector devices for OTREXUP^®, Sumatriptan Injection USP and Epinephrine Auto Injectors, and the manufacturing of our Vibex^® QuickShot^® auto injector for Makena^® and XYOSTED^®, involves high volume production of numerous complex parts as well as assembly of those parts.  The manufacture of our device products must also comply with applicable regulatory requirements. To the extent that manufacturers do not comply with the applicable regulatory requirements, we, they, or our partners may be subject to regulatory enforcement action or may need to undertake recalls.

Our planned future device business may necessitate changes and additions to our contract manufacturing and assembly process or the use of a secondary manufacturer due to the anticipated larger scale of manufacturing in our business plan.  Our devices must be manufactured in compliance with regulatory requirements, in a timely manner and in sufficient quantities while maintaining quality and acceptable manufacturing costs.  In the course of these changes and additions to our manufacturing and production methods, we may encounter difficulties, including problems involving scale-up, yields, quality control and assurance, validation and qualification, product reliability, manufacturing costs, existing and new equipment and component supplies, any of which could result in significant delays in production. We may also need to obtain FDA approval for any such changes, which may not be granted.

We rely on Nypro, Phillips and ComDel to manufacture our auto injector devices.  Any failure by our contract manufacturers to successfully manufacture the pressure assisted auto injector device in commercial quantities, be in compliance with regulatory regulations, or pass the audits by our internal quality and regulatory group or pharmaceutical partner would have a negative impact on our future revenue expectations.

We use Sharp for final assembly and packaging of many of our and our partners’ products.  Any failure by Sharp to successfully perform final assembly and packaging of our or our partners’ products, or be in compliance with regulatory requirements, may result in product shipment delays and may have a negative impact on our product availability and future revenue expectations.

Our pharmaceutical partners retain the right to audit the quality systems of our manufacturing partner, and there can be no assurance that our manufacturers will be successful in these audits. Any of these failures would negatively impact our business, financial condition and results of operations.  We will also continue to outsource manufacturing of our future products to third parties.  Such products may be price sensitive and may be required to be manufactured in large quantities, and we have no assurance that this can be done.  Additionally, use of contract manufacturers exposes us to risks in the manufacturers’ business such as their potential inability to perform from a technical, operational or financial standpoint.

Certain of our technologies contain a number of customized components manufactured by various third parties.  Regulatory requirements applicable to manufacturing can make substitution of suppliers costly and time-consuming and may require regulatory approval. In the event that we could not obtain adequate quantities of these customized components from our suppliers, there can be no assurance that we would be able to access alternative sources of such components within a reasonable period of time, on acceptable terms or at all.  The unavailability of adequate quantities, the inability to develop alternative sources, a reduction or interruption in supply or a significant increase in the price of components could have a material adverse effect on our ability to manufacture and market our products. Moreover, to the extent that manufacturers do not comply with the applicable regulatory requirements, we, they, or our partners may be subject to regulatory enforcement action.

We may incur significant liability if it is determined that we are promoting or have in the past promoted the “off-label” use of drugs or medical devices, or otherwise promoted or marketed approved products in a manner that is inconsistent with FDA’s requirements.

In the U.S. and certain other jurisdictions, companies may not promote drugs or medical devices for “off-label” uses, that is, uses that are not described in the product’s labeling and that differ from those that were approved or cleared by the FDA or other foreign regulatory agencies. Under what is known as the “practice of medicine,” physicians and other healthcare practitioners may prescribe drug products and use medical devices for off-label or unapproved uses, and such uses are common across some medical specialties. Although the FDA does not regulate a physician’s choice of medications, treatments or product uses, the FFDCA and FDA regulations significantly restrict permissible communications on the subject of off-label uses of drug products and medical devices by pharmaceutical and medical device companies. The FDA, the Federal Trade Commission (“FTC”), the Office of the Inspector General of the Department of Health and Human Services (“HHS-OIG”), the Department of Justice (“DOJ”) and various state Attorneys General also actively enforce laws and regulations that prohibit the promotion of off-label uses. As the sponsor of FDA approved products, we and our partners will not only be responsible for the actions of the companies but also can be held liable for the actions of employees and contractors, requiring that all employees and contractors engaging in regulated functions, such as product promotion, be adequately trained and monitored, which requires time and monetary expenditures.

41

If the FDA determines that a company has improperly promoted a product “off label” or otherwise not in accordance with the agency’s promotional requirements, the FDA may issue a warning letter or seek other enforcement action to limit or restrict certain promotional activities or materials or seek to have product withdrawn from the market or seize product, among other enforcement requirements.  In addition, a company that is found to have improperly promoted off-label uses may be subject to significant liability, including civil fines, criminal fines and penalties, civil damages and exclusion from federal funded healthcare programs such as Medicare and Medicaid and/or government contracting, consent decrees, corporate integrity agreements, as well as potential liability under the federal False Claims Act and applicable state false claims acts. Conduct giving rise to such liability could also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by such conduct.

Moreover, in addition to the regulatory restrictions on off-label promotion, there are other FDA restrictions on and requirements concerning product promotion and advertising, such as requirements that such communications be truthful and non-misleading and adequately supported.  FDA also has requirements concerning the distribution of drug samples.  In the event that the regulatory restrictions on off-label promotion, the FDA’s regulations and judicial case law allow companies to engage in some forms of truthful, non-misleading, and non-promotional scientific speech concerning the off-label uses of their products. We have endeavored to establish and implement extensive compliance programs in order to instruct employees on complying with the relevant advertising and promotion legal requirements. Nonetheless, the FDA, HHS-OIG, the DOJ and/or the state Attorneys General, and other regulators may take the position that we are not in compliance with promotional, advertising, and marketing requirements, and, if such non-compliance is proven, we may be subject to significant liability, including administrative, civil and criminal penalties and fines, in addition to regulatory enforcement actions.

The failure of any of our third-party licensees to develop, obtain regulatory approvals for, market, distribute and sell their products as planned may result in us not meeting revenue and profit targets.

We partner with pharmaceutical companies, such as Teva, to develop, obtain regulatory approvals for, manufacture and sell our products and technologies along with their products. We are substantially dependent on these partners to perform their obligations under our agreements with them, in accordance with all applicable regulatory requirements.  If one or more of these pharmaceutical company partners fail to pursue the development or marketing of, fail to perform their contractual obligations in accordance with all regulatory requirements, or are unable to receive marketing approval for our and our partners’ products as planned, our revenues and profits may not reach expectations or may decline. While we have agreements with our partners, we do not have any direct control over their activities. For instance, we may not be able to control the timing and other aspects of the development of products because pharmaceutical company partners may have priorities that differ from ours.  Therefore, commercialization of products under development may be delayed unexpectedly.  The success of the marketing organizations of our pharmaceutical company partners, as well as the level of priority assigned to the marketing of the products by these entities, which may differ from our priorities, will determine the success of the products incorporating our technologies.  Competition in this market could also force us or our partners to reduce the prices of our technologies below currently planned levels, which could adversely affect our revenues and future profitability.

For example, we are currently working with Teva on four products: VIBEX^® with epinephrine, VIBEX^® with sumatriptan, and two pen products with exenatide and teriparatide.  While VIBEX^® with sumatriptan and epinephrine received FDA approval, there is no assurance that development of the other two products will continue or that they will ultimately receive FDA approval in a timely manner or at all, or if FDA approved, they will be a significant revenue source for us.

We currently depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity.

For the year ended December 31, 2019, we derived approximately 41% of our revenue from Teva and 20% from AMAG.  In addition, we derived a significant portion of our product sales revenue from wholesale distributors, including AmerisourceBergen, which accounted for approximately 10% of total revenues in 2019. The loss of any of these significant customers or partners or reduction in our business activities could cause our revenues to decrease significantly and increase our continuing losses from operations.  If we do not broaden our customer base, we will continue to depend on these few customers for the majority of our revenues. Additionally, if we are unable to negotiate favorable business terms with these customers in the future, our revenues and gross profits may be insufficient to allow us to achieve and/or sustain profitability or continue operations.

None of our significant license or collaboration agreements are perpetual in nature.  Each has a specified termination date and may be terminated in advance of the termination date or renewal date by either party under different circumstances, for example a breach by us.

42

Most of our total revenues are generated from a small number of products.

We generate product sales from a limited number of individual products.  If we or our partners are unable to continue to market any one or a number of those products, such as XYOSTED^®, OTREXUP^® or our partnered device products, such as the generic Epinephrine Injection USP, Sumatriptan Injection USP and the Makena^® subcutaneous auto injector, then our total revenues, results of operations and cash flows could be materially adversely affected.  For example, if any of the products were to lose market share as the result of the entry of new competitors, or if the selling prices of any of these products were to decline significantly, there would be a direct negative impact on our reported revenues.

We have become more commercially oriented by further developing our own products and less dependent on our pharmaceutical partners, and we may not have sufficient resources to fully execute our plan.

We must make choices as to the drugs that we develop on our own. We may not make the correct choice of drug or technologies when combined with a drug, which may not be accepted by the marketplace as we expected or at all.  FDA approval processes for drugs and drugs with devices may be longer in time and/or more costly and/or require more extended clinical evaluation than anticipated.  Funds required to bring our own products to market may be more than anticipated or may not be available at all.  We have limited experience in bringing such products to market; therefore, we may experience difficulties in execution of development of internal product candidates.

If medical doctors do not prescribe our products or our partners’ products, or the medical profession, including clinics or other institutional providers, or patients do not accept our products or our partners’ products, or group purchasing organizations or other similar buying groups do not offer our products to their members, or pharmacy benefit managers, health plans, health maintenance organizations, or other managed care organizations do not cover our products or disadvantage them on their formularies, our ability to grow or maintain our revenues will be limited.

Our business is dependent on market acceptance of our products and those of our partners by physicians, the medical community, the medical profession, including clinics and other institutional providers, patients, group purchasing organizations and other similar buying groups, pharmacy benefit managers, health plans, health maintenance organizations, and other managed care organizations. Medical doctors’ willingness to prescribe, and patients’ willingness to accept, our products and those of our partners depend on many factors, including:

• perceived safety and efficacy of our or our partners’ products;

• the approved indications and claims for products, and any restrictions on the use of such products, including warnings, contraindications, restrictions, and REMS;

• the ability to maintain an acceptable product safety and efficacy profile;

• convenience and ease of administration;

• prevalence and severity of adverse side effects in both clinical trials and commercial use;

• availability of alternative treatments and perceived advantages/disadvantages;

• medical practice and standard of care;

• cost effectiveness;

• substitutability under state pharmacy laws, in the case of generic products;

• effectiveness of our marketing strategy and the pricing of our products;

• publicity concerning our products or competing products; and

• third-party coverage or reimbursement for our products and those of our partners.

Even though we have received regulatory approval for XYOSTED^®, OTREXUP^® and other products, and even if we receive regulatory approval and satisfy the above criteria for any of our product candidates, physicians may not prescribe, clinics and other providers may not purchase, and patients may not accept, our products if we do not promote our products effectively. Factors that could affect our success in marketing our products include:

• the adequacy and effectiveness of our sales force and that of any partners’ sales force;

• the adequacy and effectiveness of our or our third parties’ production, distribution and marketing capabilities and those of our partners;

43

• the success of competing treatments or products, including generics; and

• the availability and extent of reimbursement from third-party payers for our products and those of our partners.

If any of our products or product candidates or those of our partners fails to achieve market acceptance, we may not be able to market and sell the products successfully, which would limit our ability to generate revenue and could harm our business.

The failure of our licensees to perform under any of our existing licensing agreements or the failure to enter into new licensing agreements could substantially affect our revenue.

One of our business strategies is to enter into license agreements with pharmaceutical companies covering the development, manufacture, use and marketing of our drug delivery devices with specific drug therapies. Under these arrangements, the partners typically assist us in the development of the product and sponsor the collection of the appropriate data for submission for regulatory approval of the use of the drug delivery device with the licensed drug therapy.  Our licensees may also be responsible for distribution and marketing of the product or technologies for these therapies either worldwide or in specific territories.  We are currently a party to a number of such agreements, all of which are currently in varying stages of development. We may not be able to meet future milestones established in our agreements (such milestones generally being structured around satisfactory completion of certain phases of clinical development, regulatory approvals and commercialization of our product) and thus, would not receive the fees expected from such arrangements, related future royalties or product sales.  Moreover, there can be no assurance that we will be successful in executing additional collaborative agreements or that existing or future agreements will result in increased sales of our drug delivery technologies or products. In such event, our business, results of operations and financial condition could be adversely affected, and our revenues and gross profits may be insufficient to allow us to achieve and/or sustain profitability.  As a result of our collaborative agreements, we are dependent upon the development, data collection and marketing efforts of our licensees.  The amount and timing of resources such licensees devote to these efforts are not within our control, and such licensees could make material decisions regarding these efforts that could adversely affect our future financial condition and results of operations.  In addition, factors that adversely impact the introduction and level of sales of any drug or drug device covered by such licensing arrangements, including competition within the pharmaceutical and medical device industries, the timing of regulatory or other approvals and intellectual property litigation, may also negatively affect sales of our drug delivery technology. Moreover, our partners and licensees will be subject to many of the same regulatory risks as we are.  To the extent that they are not able to comply with the applicable regulatory requirements, or are not able to obtain or maintain regulatory product approvals, we and they may be subject to regulatory enforcement action, their performance of their obligations under their contracts with us may be inhibited, and we may not be able to realize the benefit of the relationship.

We are relying on partners such as Teva, AMAG, Pfizer and Idorsia for future milestone, sales and royalty revenue.  Our partners may fail to obtain FDA or foreign approvals of a product with our technologies or may be unsuccessful in commercializing a product.  Significant delays in anticipated launches of these products in development may occur.  While we assist our partners in some cases in obtaining regulatory approvals and advancing new products, we depend on these partners and cannot control their decision-making or progress in achieving such goals. Any potential loss of anticipated future revenue could have an adverse effect on our business and the value of your investment.

Timing and results of clinical trials to demonstrate the safety and efficacy of products as well as the FDA’s approval of products are uncertain.

Drug development is an inherently risky and uncertain process.  Before obtaining regulatory approvals for the sale of any new product candidates, we and our partners must demonstrate through preclinical studies and clinical trials that the product is safe and effective for each intended use. Preclinical and clinical studies may fail at any stage to demonstrate the safety and effectiveness of a product or may not be completed on schedule or at all. Likewise, we and our partners may not be able to demonstrate through clinical trials that a product candidate’s therapeutic benefits outweigh its risks. Even promising results from preclinical and early clinical studies do not always accurately predict results in later, large scale trials. A failure to demonstrate safety and efficacy could or would result in the failure to obtain regulatory approvals.

The rate of patient enrollment sometimes delays completion of clinical studies for a number of reasons. For example, there is substantial competition to enroll patients in clinical trials and such competition has delayed clinical development of our products in the past. For example, patients may not enroll in clinical trials at the rate expected, a greater number of patients may be required than initially anticipated, or patients may drop out after enrolling or be lost to follow-up in the trials or during the trials. Delays in planned patient enrollment can result in increased development costs and delays in regulatory approval. In addition, we rely on collaboration partners that may control or make changes in trial protocol and design enhancements, or encounter clinical trial compliance-related issues, which may also delay clinical trials. Product supplies may be delayed or be insufficient to treat the patients participating in the clinical trials, or manufacturers or suppliers may not meet the requirements of the FDA or foreign regulatory authorities, such as those

44

relating to cGMP and QSRs. We and our partners may also experience delays in obtaining, or we and our partners may not obtain, required initial and continuing approval of our clinical trials from institutional review boards, the FDA, or other applicable regulatory authorities. We cannot assure you that we or our partners will not experience delays or undesired results in these or any other clinical trials.  For example, the FDA may issue a CRL in response to one of our or our partners’ marketing applications.  If a CRL is issued for any of our or our partners’ product candidates, we or our partner will be delayed in marketing that product candidate, we or our partner may need to conduct additional clinical trials and collect additional data and information, including manufacturing information, make revisions to manufacturing processes, and the FDA could convene an advisory committee to obtain expert advice on issues that resulted in the CRL being issued.  Clinical trials may also be suspended, placed on hold, or terminated by us, institutional review boards, the FDA, or other applicable regulatory authorities for a number of reasons, including failure to comply with the applicable regulatory requirements, including GCPs, and issues involving subject safety.

We cannot assure you that the FDA or foreign regulatory agencies will approve, clear for marketing or certify any products developed by us or our partners, on a timely basis, if at all for any number of reasons.  For example, the FDA or foreign regulatory authorities may disagree with our or our partners’ conduct of the studies or study design, may find manufacturers or manufacturing procedures to be inadequate, may find that product candidates are not safe and effective or that they present unacceptable adverse events or risks, or may find that studies were not conducted in accordance with the applicable regulatory requirements.  Moreover, if granted, such approvals may be subject to certain limits or other costly and burdensome requirements.  Such limits and requirements may include warnings, including black box warnings, limitations on the indicated use, including the applicable population, contraindications, Risk Evaluation and Mitigation Strategies, and post-approval studies and/or monitoring. The FDA or foreign regulatory authorities may not agree with the assessment by us or our clinical partners of the clinical data or they may interpret it differently. Such regulatory authorities may require additional or expanded clinical trials. Any limitation on use imposed by the FDA or foreign regulatory agencies or delay in or failure to obtain FDA approvals or clearances of products developed by us and our partners would adversely affect the marketing of these products and our ability to generate product revenue, which would adversely affect our financial condition and results of operations.

Before obtaining regulatory approvals for certain generic products, we and our partners must conduct limited clinical or other trials to show comparability to the branded products. A failure to obtain satisfactory results in these trials would prevent us from obtaining required regulatory approvals.

An increase in the number of competitors targeting generic and 505(b)(2) ANDA opportunities and seeking U.S. market exclusivity may adversely affect our revenues and profits.

Our ability to achieve continued growth and profitability through sales of pharmaceuticals is dependent on our and our partners’ continued success in challenging patents, developing non-infringing products or developing products with increased complexity to provide opportunities with U.S. market exclusivity or limited competition. There is substantial competition in the pharmaceutical industry.  We and our partners will face competition from generic drug products, drug products that are similar to our or our partners’ products, drug products containing the same active ingredient as our or our partners’ products, and drug products for the same indication as our or our partners’ products.

Our or our partners’ products may be eligible for periods of regulatory exclusivity, as described elsewhere in this annual report.  This exclusivity, however, may not adequately protect our or our partners’ products from competition.  For instance, the FDA’s five-year NCE exclusivity and three-year new clinical investigation exclusivity would not prevent the FDA from making an approval of a competing full NDA effective.  The three-year exclusivity is also limited, as it only protects the change presented in the application.  If any periods of exclusivity that we or our partners may have do not adequately protect the applicable product or if we or they do not receive anticipated periods of regulatory exclusivity, we or they may be subject to ANDA and/or 505(b)(2) competition sooner than we anticipate.

To the extent that we or our partner succeed in being the first to market a generic version of a product, and particularly if we or our partner receives a 180-day period of exclusivity in the U.S. market, as a result of being the first applicant to submit a substantially complete ANDA with a paragraph IV certification and successfully launch the product as provided under the Hatch-Waxman Act, our and our partners’ sales, profits and profitability can be substantially increased in the period following the introduction of such product and prior to a competitor’s introduction of an equivalent product. Even after the exclusivity period ends, there is often continuing benefit for a time from having the first generic product in the market.

45

Similarly, to the extent we or our partners are able to receive exclusivity for our products, our or their sales, profits, and profitability can be positively impacted.  However, we or they may not be granted the periods of regulatory exclusivity or granted exclusivities and other protections may not adequately protect the products from competition.  For example, exclusivity does not prevent physicians from prescribing a similar product even if it is not approved for the same indication. We or our partners may also be subject to increased generic competition sooner than anticipated as FDA, Congress, and the Administration have taken steps to facilitate the approval of generic products and increase competition in the prescription drug market.  By example, in 2019 the FDA introduced a proposed rule and draft guidance to facilitate drug importation. Congress also passed a bill requiring sponsors of NDA approved products to provide sufficient quantities of drug product on commercially reasonable market-based terms to entities developing generic and similar drug products. This bill also included provisions on shared and individual REMS for generic drug products. New legislative and regulatory efforts could ultimately have an adverse impact on our business and results of operation.

Further, regardless of any granted exclusivities, we or our partners may face competition from products that are not otherwise blocked by our or our partners’ patents or exclusivities.  By example, in 2019, the FDA approved Clarus Therapeutic, Inc.’s product, Jatenzo^®, an oral testosterone undecanoate capsule for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone.  The introduction of Jatenzo^®, which was launched for commercial sale in February 2020, and other oral or competing testosterone products may materially impact our sales of XYOSTED^®.  Moreover, we or our partners may face competition from other products intended for the same use and/or that otherwise contain the same active ingredients, which may be less expensive than our or our partners’ products.  Any increase or changes in the competitive landscape for our or our partners’ products may impact product sales and the amount that can be charged for a given product.

Additionally, the number of generic manufacturers targeting significant new generic opportunities with Hatch-Waxman exclusivity, or which are complex to develop, continues to increase. Additionally, many of the smaller generic manufacturers have increased their capabilities, level of sophistication and development resources in recent years. Other companies may also be developing drugs using the 505(b)(2) pathway that are substantially similar to our products and/or product candidates. The failure to successfully develop and commercialize highly complex products could adversely affect our sales and profitability. For instance, to the extent that another company receives a period of regulatory exclusivity, the FDA may not make our application effective during that company’s exclusivity period.  This would delay our and our partners’ marketing of products and may prevent us or them from establishing a sufficient market share for our product.  Similarly, should another company obtain FDA approval for a pharmaceutically equivalent product to one of our product candidates, we may no longer be able to use the 505(b)(2) pathway.  In that case, it is the FDA’s policy that the appropriate submission would be an ANDA. We may, however, not be able to immediately submit an ANDA or have an ANDA approval made effective, as we could be blocked by others’ periods of patent and regulatory exclusivity protection.

The 180-day market exclusivity period is generally triggered by commercial marketing of the generic product or an authorized generic drug product. However, the exclusivity period can be forfeited by our failure to obtain tentative approval of our product or to launch a product within a specified statutory period. The Hatch-Waxman Act also contains other forfeiture provisions that may deprive the first “Paragraph IV” filer of exclusivity if certain conditions are met, some of which may be outside our control. Accordingly, we may face the risk that any granted exclusivity period is triggered or forfeited before we are able to commercialize a product and therefore may not be able to exploit a given exclusivity period for specific products.

We face intense competition from companies that have greater resources and capabilities.

Many of our competitors are larger and have substantially longer experience in the development and marketing of innovative and specialty consumer-oriented products. They may be able to respond more quickly to new or emerging market preferences or to devote greater resources to the development and marketing of new products and/or technologies than we can. As a result, any products and/or innovations that we develop may become obsolete or noncompetitive before we can recover the expenses incurred in connection with their development. In addition, for these product categories we must demonstrate to physicians, patients and third-party payers the benefits of our products relative to competing products that are often more familiar or otherwise better established. If competitors introduce new products or new variations on their existing products, our marketed products, even those protected by patents, may be replaced in the marketplace, we may never be able to establish a sufficient market share or we may be required to lower our prices. Moreover, to the extent that competitors are able to receive FDA approval for and launch their competing products before us or our partners, they may develop a larger market share.

In addition, our specialty pharmaceuticals business requires much greater use of a direct sales force than does our generic business. Our ability to realize significant revenues from direct marketing and sales activities depends on our ability to attract and retain qualified sales personnel. Competition for qualified sales personnel is intense. We may also need to enter into co-promotion, contract sales force or other such arrangements with third parties, for example, where our own direct sales force is not large enough or sufficiently well-aligned to achieve maximum penetration in the market. Any failure to attract or retain qualified sales personnel or to enter into third-party arrangements on favorable terms could prevent us from successfully maintaining current sales levels or commercializing new innovative and specialty products.

46

Continued consolidation in the pharmaceutical industry, and particularly in the generic pharmaceutical industry, could impact our existing partnerships, products and product candidates  

There are a limited number of companies with sufficient scale and commercial reach to effectively market many of our products. Recent trends in the pharmaceutical industry suggest additional market consolidation, further concentrating financial, technical and market strength and resources and increasing competitive pressure in the industry.  For example, in 2016 Teva completed its acquisition of the generic business of Allergan (formerly Actavis). We are presently working with Teva on four products, VIBEX^® with epinephrine, Sumatriptan Injection USP, a pen product with exenatide, and a pen product with teriparatide.  Acquisitions and integrations are time and resource intensive and Teva’s attention and resources could be diverted to other acquisition or integration related activities or opportunities, which could potentially delay or negatively impact the success of some of our products with Teva.  For other products, increased consolidation could lead to more intense competition and pricing pressure which could have a result in a substantial decrease in our revenues and harm our operating results.  Consolidation may also lead to changes in personnel at our partners, potentially impacting the composition of our relationship teams at these partners and leading to material delays in the development and marketing of our products.

Although we have applied for, and/or have received, several patents and trademarks, we may be unable to protect our intellectual property, which would negatively affect our ability to compete.

Our success depends, in part, on our ability to obtain and enforce patents for our products and device technologies and to preserve our trade secrets and other proprietary information.  If we cannot do so, our competitors may exploit our innovations and deprive us of the ability to realize revenues and profits from our developments.

We currently hold numerous patents and have numerous patent applications pending in the U.S. and other countries.  Our current patents may not be valid or enforceable and may not protect us against competitors that challenge our patents, obtain their own patents that may have an adverse effect on our ability to conduct business, or are able to otherwise circumvent our patents.  Additionally, our products and technologies are complex and one patent may not be sufficient to protect our products where a series of patents may be needed.  Further, we may not have the necessary financial resources to enforce or defend our patents or patent applications. Even issued patents may later be modified or declared invalid by the U.S. Patent and Trademark Office by analogous foreign offices or in legal proceedings. In addition, any patent applications we may have made or may make relating to inventions for our actual or potential products and technologies may not result in patents being issued or may result in patents that provide insufficient or incomplete coverage for our inventions.

To protect our trade secrets and proprietary technologies and processes, we rely, in part, on confidentiality agreements with employees, consultants and advisors.  These agreements may not provide adequate protection for our trade secrets and other proprietary information in the event of any unauthorized use or disclosure, or if others lawfully and independently develop the same or similar information.

We may seek to protect our patent rights by asserting an allegation of infringement against third parties. For instance, for any products approved via the NDA pathway, we will be required to submit certain patent information for inclusion in FDA’s Orange Book.  There is no guarantee, however, that we will be able to obtain patents that may be included in the Orange Book.  Moreover, the rules for submitting patents to the Orange Book are detailed and complex. To the extent that we do not include a patent in the Orange Book, we would not be able to avail ourselves of the protections provided in the Hatch Waxman Act, including the possibility of a 30-month stay.  To the extent that we include a patent in the Orange Book that should not be included, we could also face legal action.

If third parties identify our products as reference listed drugs in any ANDA or 505(b)(2) applications, they will be required to provide patent certifications in their applications for our listed patents, and notifications to us.  In the event such third parties make paragraph IV certifications, we would be entitled to file a patent infringement lawsuit, and if that is accomplished within 45 days after receiving the notification, it would trigger a 30-month stay against FDA making the approval of the third party’s application effective.  Patent litigation is costly and time consuming and the outcome is uncertain.  There is no assurance of success with any patent litigation.  Depending on the ultimate outcome of the litigation it may have an adverse effect on results of operations and our market penetration. We may also determine that it is not in our business interest to file a patent infringement lawsuit in response to a paragraph IV certification.

47

Others may bring infringement claims against us, which could be time-consuming and expensive to defend and the outcomes uncertain.

Third parties may claim that the manufacture, use or sale of our drug delivery technologies infringe their patent rights.  As with any litigation where claims may be asserted, we may have to seek licenses, defend infringement actions or challenge the validity of those patents in the patent office or the courts.  If these are not resolved favorably, we may not be able to continue to develop and commercialize our product candidates.  Even if we were able to obtain rights to a third party’s intellectual property, these rights may be non-exclusive, thereby giving our competitors potential access to the same intellectual property.  If we are found liable for infringement or are not able to have these patents declared invalid or unenforceable, we may be liable for significant monetary damages, encounter significant delays in bringing products to market or be precluded from participating in the manufacture, use or sale of products or methods of drug delivery covered by patents of others.  Any litigation could be costly and time-consuming and could divert the attention of our management and key personnel from our business operations.  We may not have identified, or be able to identify in the future, U.S. or foreign patents that pose a risk of potential infringement claims.  Ultimately, we may be unable to commercialize some of our product candidates as a result of patent infringement claims, which could potentially harm our business.

Additionally, we are developing and may develop other products in the future for ourselves and/or our partners using the ANDA and/or 505(b)(2) pathways.  Our partners may also do the same. There can be no assurance that those products will not be subject to litigation, which could delay or prohibit the launch of those potential products.  We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our partners’ products and/or product candidates and/or proprietary technologies infringe their intellectual property rights, including litigation resulting from filing under Paragraph IV of the Hatch-Waxman Act. These lawsuits could claim that there are existing patent rights for such drug and this type of litigation can be costly and could adversely affect our results of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that we or our commercialization partners are infringing the third party’s patents and would order us or our partners to stop the activities covered by the patents. In addition, there is a risk that a court will order us or our partners to pay the other party damages for having violated the other party’s patents. Moreover, regardless of whether we and/or our partners are ultimately successful in defending a patent infringement suit, we and/or they may be significantly delayed by a 30 month stay in the event we and/or they make a paragraph IV certification.

Product liability and product recalls could harm our business.

The development, manufacture, testing, marketing and sale of pharmaceutical products and medical devices are associated with significant risks of product liability claims or recalls. Side effects or adverse events known or reported to be associated with, or manufacturing defects in, the products sold by us could exacerbate a patient’s condition or could result in serious injury or impairments or even death. This could result in product liability claims and/or recalls of one or more of our products. To the extent that a product fails to conform to its specifications or comply with the applicable laws or regulations, we or our partners may be required to or may decide to voluntarily recall the product even if there is no immediate potential harm to a patient.  

Product liability claims may be brought by individuals seeking relief for themselves, or by groups seeking to represent a class of injured patients. Further, third party payers, either individually or as a putative class, may bring actions seeking to recover monies spent on one of our products. While we have not had to defend against any product liability claims to date, as sales of our products increase, we may have product liability claims made against us. The risk of product liability claims may also increase if a company receives a warning letter from a regulatory or other enforcement agency. We cannot predict the frequency, outcome or cost to defend any such claims.

Product liability insurance coverage is expensive, can be difficult to obtain and may not be available in the future on acceptable terms, or at all. Our product liability insurance may not cover all of the future liabilities we might incur in connection with the development, manufacture or sale of our products. In addition, we may not continue to be able to obtain insurance on satisfactory terms or in adequate amounts.

A successful claim or claims brought against us in excess of available insurance coverage could subject us to significant liabilities and could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Such claims could also harm our reputation and the reputation of our products, adversely affecting our ability to market our products successfully. Product liability claims can also result in regulatory consequences, including, but not limited to investigations and regulatory enforcement actions, as well as recalls, revocation of approvals, or labeling, marketing or promotional restrictions or changes.  In addition, defending a product liability lawsuit is expensive and can divert the attention of key employees from operating our business. Such claims can also impact our ability to initiate or complete clinical trials.

Product recalls may be issued at our discretion or at the discretion of our partners, suppliers, government agencies and other entities that have regulatory authority for pharmaceutical and medical device sales. Any recall of our products or products or their components that we supply to our partners could materially adversely affect our business by rendering us unable to sell that product or product component for some time and by adversely affecting our reputation.  In addition to the potential loss of revenue from the sale of our proprietary products, if we are unable to sell product to our partners, our potential revenue and royalty payments from our partners may be reduced or eliminated until we can re-supply product.  Recalls are costly and take time and effort to administer.  Even if a recall initially only relates to a single product, product batch, or a portion of a batch, recalls may later be expanded to additional

48

products or batches or we or our partners may incur additional costs and need to dedicate additional efforts to investigate and rule out the potential for additional impacted products or batches.  Moreover, if any of our partners recall a product due to an issue with a product or component that we supplied, they may claim that we are responsible for such issue and may seek to recover the costs related to such recall or be entitled to certain contractual remedies from us, Recalls may further result in decreased demand for our or our partners’ products, could cause our partners or distributors to return products to us for which we may be required to provide refunds or replacement products, or could result in product shortages.  Recalls may also require regulatory reporting and prompt regulators to conduct additional inspections of our or our partners’ or contractors’ facilities, which could result in findings of noncompliance and regulatory enforcement actions.  A recall could also result in product liability claims by individuals and third party payers. In addition, product liability claims or other safety issues could result in an investigation of the safety or efficacy of our products, our manufacturing processes and facilities, or our marketing programs conducted by the FDA, the European Medicines Agency (“EMA”) or the authorities of the EU member states. Such investigations could also potentially lead to a recall of our products or more serious enforcement actions, limitations on the indications for which they may be used, or suspension, variation, or withdrawal of approval. Any such regulatory action by the FDA, the EMA or the competent authorities of the EU member states could lead to product liability lawsuits as well.

If we do not have adequate insurance for product liability or clinical trial claims, then we may be subject to significant expenses relating to these claims.

Our business entails the risk of product liability and clinical trial claims. Although we have not experienced any material claims to date, any such claims could have a material adverse impact on our business.  Insurance coverage is expensive and may be difficult to obtain and may not be available in the future on acceptable terms, or at all.  We maintain product and clinical trial liability insurance and evaluate our insurance requirements on an ongoing basis.  If we are subject to a product liability claim, our product liability insurance may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses that may have been suffered.  A successful product liability claim against us, if not covered by, or if in excess of our product liability insurance, may require us to make significant compensation payments, which would be reflected as expenses on our statement of operations.  Adverse claim experience for our products or licensed technologies or medical device, pharmaceutical or insurance industry trends may make it difficult for us to obtain product liability insurance or we may be forced to pay very high premiums, and there can be no assurance that insurance coverage will continue to be available on commercially reasonable terms or at all.  Additionally, if the coverage limits of the product liability insurance are not adequate, a claim brought against us, whether covered by insurance or not, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We employ individuals who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that the we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and if we do not prevail, we could be required to pay substantial damages and could lose rights to important intellectual property. Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

If we are unable to retain our key personnel, and continue to attract additional professional staff, we may be unable to maintain or expand our business.

Because of the specialized scientific nature of our business, our ability to develop products and to compete with our current and future competitors will remain highly dependent, in large part, upon our ability to attract and retain qualified scientific, technical and commercial personnel. The loss of key scientific, technical and commercial personnel or the failure to recruit additional key scientific, technical and commercial personnel could have a material adverse effect on our business. While we have employment agreements with our key executives, we cannot assure you that we will succeed in retaining personnel or their services under existing agreements. There is intense competition for qualified personnel in the areas of our activities, and we cannot assure you that we will be able to continue to attract and retain the qualified personnel necessary for the development of our business.

We depend on information technology and computer systems to operate our business, and any failures or interruptions in our internal computer systems, including a data breach or cybersecurity incident, could have a negative impact on our business.

Despite the implementation of security measures, our internal computer systems and those of our current and any future partners, contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, attacks by computer hackers, natural disasters, terrorism, war and telecommunication and electrical failures. Cybersecurity attacks are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, misappropriation of our confidential or otherwise protected information, corruption of data.  While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur

49

and cause interruptions in our operations, it could result in a material disruption of our manufacturing activities, development programs and our business operations. For example, the loss of manufacturing records or clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential, protected health or proprietary information, we could incur liability or damage to our reputation, and the further commercialization and development of our products and product candidates could be delayed.

Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, patients or other business partners may be exposed to unauthorized persons or to the public. There can be no assurance that our efforts, or the efforts of our partners and vendors, will prevent service interruptions, or identify breaches in our systems, that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches

If we make any acquisitions, we will incur a variety of costs and might never successfully integrate the acquired product or business into ours.

We might attempt to acquire products or businesses that we believe are a strategic complement to our business model. We might encounter operating difficulties and expenditures relating to integrating an acquired product or business.  These acquisitions might require significant management attention that would otherwise be available for ongoing development of our business.  In addition, we might never realize the anticipated benefits of any acquisition. We might also make dilutive issuances of equity securities, incur debt or experience a decrease in cash available for our operations, or incur contingent liabilities and/or amortization expenses relating to goodwill and other intangible assets, in connection with future acquisitions.

Our corporate compliance program cannot guarantee that we are in compliance with all potentially applicable laws and regulations and we have incurred and will continue to incur costs relating to compliance with applicable laws and regulations.

As a pharmaceutical technology company, we are subject to a large body of legal and regulatory requirements. In addition, as a publicly-traded company we are subject to significant regulations, including the Sarbanes-Oxley Act of 2002 (“SOX”). We cannot assure you that we are or will be in compliance with all potentially applicable laws and regulations. Failure to comply with all potentially applicable laws and regulations could lead to the imposition of fines, cause the value of our common stock to decline, and impede our ability to raise capital or list our securities on certain securities exchanges. New rules could make it more difficult or costlier for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our committees and as executive officers. We cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs to comply with these rules and regulations.

We may fail to maintain effective internal controls over external financial reporting or such controls may fail or be circumvented.

SOX requires us to report on our internal controls over financial reporting, and our business and financial results could be adversely affected if we, or our independent registered public accounting firm, determine that these controls are not effective. In addition, any failure or circumvention of our internal controls and procedures or failure to comply with regulations concerning controls and procedures could have a material effect on our business, results of operation and financial condition. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our committees and as executive officers.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

50

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

We face risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt our operations and may materially and adversely affect our business and financial conditions.

Our business could be adversely impacted by the effects of the coronavirus or other epidemics.  In December 2019, a novel strain of the Coronavirus (COVID-19) emerged in China and the virus has now spread to several other countries, including the U.S., and infections have been reported globally.  The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak.  In particular, the continued spread of the coronavirus globally could materially and adversely impact our operations including without limitation, our manufacturing and supply chain, sales and marketing efforts, clinical trial operations, travel,  employee health and availability which may have a material and adverse affect on our business, financial condition and results of operations.  While we presently do not source any of our drug API, pre-filled syringes or finished goods from China, our supply chain is worldwide and accordingly could be subject to disruption in the future.  In addition, a significant outbreak of coronavirus could result in widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could affect the demand for our products and future revenue and operating results.  

Risks Related to Regulatory Matters

Our and our partners’ product candidates are subject to the inherent risk of product development, in that they may not receive regulatory marketing approval on a timely basis or at all.  If we or our partners fail to obtain, or have delays in obtaining, regulatory approvals for any product candidates, our business, financial condition and results of operations may be materially adversely affected.

We and our partners are not permitted to market any product candidates in the U.S. unless and until we or they obtain regulatory approval from the FDA. To market the product in the U.S., we or our partners must submit to the FDA and obtain FDA approval of a marketing application.  We and our partners have historically used FDA’s 505(b)(2) NDA and ANDA pathways.  A 505(b)(2) NDA must be supported by extensive clinical and preclinical data, as well as extensive information regarding chemistry, manufacturing and controls, or CMC, to demonstrate the safety and effectiveness of the applicable product candidate.  An ANDA must be supported by studies demonstrating that the product candidate is bioequivalent to the reference listed drug, as well as extensive information regarding CMC. Recently, we entered into a global agreement with Idorsia for the development of selatogrel in combination with one of our delivery devices.  As an NCE, this product candidate would require a full NDA.  For products for which our partners already hold approved drug applications, our partners would need to obtain FDA approval of supplemental applications before they could market our device with their drug product.  The number and types of preclinical studies and clinical trials that will be required varies depending on the product candidate, the approval pathway, the disease or condition that the product candidate is designed to target and the regulations applicable to any particular product candidate.

To conduct our and our partners’ clinical and preclinical studies, we and they rely on third parties, including Contract Research Organizations and clinical trial sites to carry out the studies in accordance with the written protocol, instructions, our and our partners’ agreements with them, and the applicable regulatory requirements.  There is no guarantee that we or our partners will be able to negotiate agreements with these third parties on acceptable terms, on a timely basis, or at all.  To the extent that these third parties do not carry out their responsibilities, as is required, or to the extent that we, our partners, or such third parties terminate the applicable agreements, we or our partners may need to replace them, which may take significant time, effort, and expense.  Additionally, we or our partners may be subject to regulatory enforcement action for such third parties’, our, or our partners’ actions and FDA or foreign regulatory authorities may find that the study data generated cannot form the basis for approval of a marketing application, requiring that we or our partners conduct additional preclinical and clinical studies.  Moreover, investigators and CROs may be subject to conflicts of interest that compromise or appear to compromise the resulting data.  Such third-parties may also have relationships with other entities that they may prioritize over the conduct of our or our partners’ studies.

Despite the time and expense associated with preclinical and clinical studies, failure can occur at any stage, and we or our partners could encounter problems that cause us or they to repeat or perform additional preclinical studies, CMC studies or clinical

51

trials. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including, failure to receive FDA or IRB authorization to begin a trial, negative or inconclusive results, slow or insufficient subject enrollment, failure to obtain adequate clinical supply of product candidates, and failure by us, our partners, CROs, and clinical trial sites to follow the applicable regulatory requirements, including GCPs. We or our partners may also not have sufficient funding to conduct or complete a clinical trial or pay the substantial FDA application user fees.  The FDA and similar foreign authorities could also delay, limit or deny approval of a product candidate for many reasons, including because they:

• may not deem a product candidate to be adequately safe and effective or, in the case of a generic drug product, bioequivalent to the reference listed drug;

• may not find that we have adequately bridged to the reference listed drug, in the case of a 505(b)(2) application;

• may not find the data, including foreign data, from preclinical studies, CMC studies and clinical trials to be sufficient to support a claim of safety and efficacy;

• may interpret data from preclinical studies, CMC studies and clinical trials significantly differently than we or our partners do;

• may not approve the manufacturing processes or facilities associated with our product candidates;

• may not agree with the pathway that we or our partners have chosen for our product candidates, requiring us to pursue more difficult approval pathways, including submitting full NDAs, or may not agree with our or our partners’ intended indications;

• may find that our or our partners reliance on a reference listed drug for an ANDA or 505(b)(2) application or literature for a 505(b)(2) application is not appropriate;

• may not agree with the design and/or implementation of our clinical and/or pre-clinical studies;

• may require us to conduct additional clinical and/or pre-clinical studies or gather additional information or data;

• may change approval policies (including with respect to our product candidates’ class of drugs), adopt new regulations;

• may not meet their review goal dates; or

• may not accept a submission due to, among other reasons, the content or formatting of the submission.

Significant delays also could shorten any periods during which we or our partners may have the exclusive right to commercialize our product candidates allow competitors to bring products to market before we do.  

Undesirable side effects caused by any product candidate that we or our partners develop, a lack of bioequivalence for ANDA product candidates, and/or an inability to demonstrate product candidate efficacy could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications or cause us or our partners to evaluate the future of our development programs. Undesirable side effects could also interrupt, delay, or halt clinical trials.  The regulatory review and approval process is lengthy, expensive and inherently uncertain.

By example, with regard to XYOSTED^®, we submitted a 505(b)(2) NDA to the FDA in December 2016, the NDA submission was accepted and assigned a PDUFA target date for completion of its review by October 20, 2017, and on October 20, 2017, we received a CRL from the FDA.  We provided a resubmission to the FDA in response to the CRL on March 29, 2018 and, on September 28, 2018, XYOSTED^® was approved by the FDA.  However, even if product candidates are approved, they may be subject to certain limits or other costly and burdensome requirements. For instance, the product candidates may be subject to limitations on the indicated uses for which the products may be marketed, distribution restrictions, or to other conditions of approval; may contain significant safety warnings, including boxed warnings, contraindications, and precautions; may not be approved with label statements necessary or desirable for successful commercialization; or may contain requirements for costly post‑market testing and surveillance or other requirements, including REMS, to monitor the safety or efficacy of the products.

Failure to obtain, or delays in obtaining, regulatory approvals may:

• adversely affect the commercialization of any products that we develop in the future;

• impose additional costs on us or our partners;

• diminish any competitive advantages that may be attained; and

52

• adversely affect our or our partners’ ability to generate revenues.

Moreover, the reference listed drugs for our or our partners’ product candidates will impact our or our partners’ ultimate product approvals.  By example, the labels for our or our partners’ product candidates, in the case of ANDA products will, and in the case of 505(b)(2) NDA products may include the same warnings, precautions, limitations, and other safety information as the reference listed drugs.  Any future actions or inquiries by the FDA with respect to the reference listed drug or changes to the reference listed drug’s label may require that we or our partners make changes to our labeling, change or abandon development programs that rely on such reference listed drugs, or, possibly, withdraw the product from the market.  Any of the foregoing may impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

We, or our licensees, may incur significant time and costs seeking approval for our products, which could delay the realization of revenue and, ultimately, decrease our revenues from such products.

The design, development, testing, manufacturing and marketing of pharmaceutical compounds and medical devices are subject to regulation by governmental authorities, including the FDA and comparable regulatory authorities in other countries.  The approval process is generally lengthy, expensive and subject to unanticipated delays.  We, alone or with our partners, have and may in the future pursue marketing approval for products from regulatory authorities in the U.S. and other countries for products developed internally and pursuant to our license agreements.  In the future we, or our partners, may need to seek approval for or submit FDA notifications regarding changes, including changes to manufacturing, manufacturers, and product labeling, to existing products or for newly developed products.  We or our partners may need to support these applications or notifications with certain data or information that would need to be collected or developed.  Moreover, FDA may ultimately not approve any such changes.  Our revenue and profit will depend, in part, on the successful introduction and marketing of some or all of such products by our partners or us.

Applicants for FDA approval often must submit extensive clinical data and supporting information to the FDA. Varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of a drug product.  Changes in FDA approval policy during the development period, or changes in regulatory review for each submitted NDA also may cause delays or rejection of an approval.  Even if the FDA approves a product, the approval may limit the uses or “indications” for which a product may be marketed, or may require further studies.  The FDA also can withdraw product clearances and approvals for failure to comply with regulatory requirements or if unforeseen problems follow initial marketing.

Moreover, the regulatory path for approval of combination products may be subject to review by several centers within the FDA and although precedent and guidance exists for the requirements for such combination products, there is no assurance that the FDA will not change what it requires or how it reviews such submissions.  Human clinical testing may be required by the FDA in order to commercialize these products and devices and there can be no assurance that such trials will be successful. Such changes in review processes or the requirement for clinical studies could delay anticipated launch dates or be at a cost which makes launching the product or device cost prohibitive for ourselves or our partners. Such delay or failure to launch these products or devices could adversely affect our revenues and future profitability.

We and our partners’ product candidates may also be subject to additional regulatory review.  By example the product candidates will be reviewed by different offices within FDA to ensure that the drug labeling adequately discloses all relevant information and risks.  Additionally, the instructions for use for the product candidates will be reviewed for accuracy, ease of use and educational requirements.  These reviews could increase the time needed for review completion of a successful application and may require additional studies, such as usage studies, to establish the validity of the instructions.  Such reviews and requirement may extend the time necessary for the approval of drug-device combinations.  

Our business and product development may also be adversely affected by the result and timing of the FDA’s review of Teva’s ANDAs for its exenatide and teriparatide pen products as we cannot market or sell our injector for use with these drug products in the U.S. until they have been approved by the FDA. In other jurisdictions, we, and the pharmaceutical companies with whom we are developing technologies (both drugs and devices), must obtain required regulatory approvals from regulatory agencies and comply with extensive regulations regarding safety and quality.  If approvals to market the products are delayed, if we fail to receive these approvals, or if we lose previously received approvals, our revenues may not materialize or may decline.  We may not be able to obtain all necessary regulatory approvals. Additionally, clinical data that we generate or obtain from partners from FDA regulatory filings may not be sufficient for regulatory filings in other jurisdictions and we may be required to incur significant costs in obtaining those regulatory approvals.

53

The 505(b)(2) and 505(j) (ANDA) regulatory pathway for many of our potential products is uncertain and could result in unexpected costs and delays of approvals.

Many of our and our partners’ drug/device combination product candidates may be developed via the 505(b)(2) or the ANDA route. Both the 505(b)(2) and ANDA regulatory pathways are continually evolving and advice provided in the present is based on current standards, which may or may not be applicable when we or our partner potentially submit a NDA or ANDA. Based on evolving regulatory policies, we or our partners may not be able to use the 505(b)(2) or ANDA pathways in the future, requiring that we or they pursue the costlier and time consuming 505(b)(1) full NDA pathway. We or our partners may also face delays or impediments to the approval of any product candidates if a competitor files a citizen petition with FDA.

Moreover, any FDA intervening approvals of drug products that are the same or similar to our or our partners’ product candidates could impact our potential market position and prospects, as well as impact the approval of our or our partners’ product candidates.   By example, should FDA approve a product that is pharmaceutically equivalent to one of our or our partners’ 505(b)(2) NDA product candidates before we or they submit a marketing application, we or they would be required to change the marketing application to an ANDA application.  Similarly, should FDA approve a product that is more similar to any of our or our partners’ ANDA product candidates than the current reference listed drug, we or our partners may be required to change the reference listed drug for the ANDA.  Either of these scenarios could require additional development work, and clinical or preclinical studies.  FDA intervening approvals could also delay the timeframe within which we or our partners may submit product applications to FDA or within which FDA may make approvals of such applications effective, due to periods of patent protections and regulatory exclusivities for the newly approved product. Because the FDA cannot disclose whether such predicate product(s) is under development or has been submitted at any time during another company’s review cycle, we would not know whether there are any intervening products or applications until such product or application is approved.

Drug delivery systems such as injectors are reviewed by the FDA and may be legally marketed as a medical device or may be evaluated as part of the drug approval process.   Combination drug/device products raise unique scientific, technical and regulatory issues. The FDA has established the Office of Combination Products (“OCP”) to address the challenges associated with the review and regulation of combination products. The OCP assists in determining strategies for the approval of drug/delivery combinations and assuring agreement within the FDA on review responsibilities.  We or our partners may seek approval for a product including an injector and a generic pharmaceutical by filing an ANDA claiming bioequivalence and the same labeling as a comparable referenced product or as a filing under Section 505(b)(2) if there is an acceptable reference product.  We or our partners may also seek full NDAs or, for products that are already approved, our partners may seek to amend the approval to include the use of an injector through a supplemental NDA and for products that are considered to be new molecular entities, we or our partners may seek approval through a full NDA

In reviewing the ANDA filing, the agency may decide that the unique nature of combination products leads them to question the claims of bioequivalence and/or same labeling, resulting in our re-filing the application under Section 505(b)(2).  If such combination products require filing under Section 505(b)(2) we may incur delays in product approval and may incur additional costs associated with testing, including clinical trials.  The result of an approval for a combination product under Section 505(b)(2) may result in additional selling expenses and a decrease in market acceptance due to the lack of substitutability by pharmacies or formularies.  In addition, approval under the 505(b)(2) or ANDA regulatory pathway is not a guarantee of an exclusive position for the approved product in the marketplace.

Accordingly, these regulations and the FDA’s interpretation of them might impair our ability to obtain product approval in a reasonable time, or at all, or effectively market our products.

Because our and our partners’ products and product candidates are considered to be drug/device combination products, the approval and the post-approval requirements that we and they are required to comply with will be more complex.

Our and our partners’ products and product candidates are considered to be drug/device combination products by FDA, consisting of a drug product and a drug delivery device.  If marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA. A combination product, however, is assigned to a center that will have primary jurisdiction over its pre-market review and regulation based on a determination of the product’s primary mode of action, which is the single mode of action that provides the most important therapeutic action. In the case of our and our partners’ products and product candidates, the primary mode of action is attributable to the drug component of the product, which means that the Center of Drug Evaluation and Research (CDER) has primary jurisdiction over its pre-market development and review.  These products and product candidates will be and have been subject to the FDA drug approval process, and will not require a separate FDA clearance or approval for the device component.  Even though these products and product candidates are subject to the drug approval process, we, our partners, and any of our respective contractors will be required to comply with FDA regulatory requirements related to both drugs and devices.  For instance, drug/device combination products must comply with both the drug cGMPs and device QSRs.  Depending on whether the drug and device components are at the same facility, however, FDA’s regulations provides a streamlined

54

method to comply with both sets of requirements.  Additionally, drug/device combination products will be subject to additional FDA and constituent part reporting requirements.  The development of drug/device combination products will also be more complex because the sponsor of the product application will need to demonstrate the safety and efficacy of both the drug and device components of the product.  These requirements will require additional effort and monetary expenditure to ensure that our and our partners’ products and product candidates.

NDAs submitted under Section 505(b)(2) and ANDAs subjects us to the risk that we may be subject to a patent infringement lawsuit or regulatory actions that would delay or prevent the review or approval of our product candidate.

Applicants submitting NDAs under Section 505(b)(2) of the FFDCA and ANDA applicants must provide a patent certification with their applications. One such certification is known as a Paragraph IV certification, which certifies that any patents listed in the FDA’s Orange Book are invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the product that is the subject of the application.  Under the Hatch‑Waxman Act, the holder of patents or the reference listed drug applications that the new application references may file a patent infringement lawsuit following a Paragraph IV certification, triggering a 30‑month stay. In such a case, the FDA may not make the application approval effective until the earlier of 30 months from the receipt of the notice of the Paragraph IV certification, the expiration of the patent, when the infringement case concerning each such patent is favorably decided in the applicant’s favor or settled, or such shorter or longer period as may be ordered by a court. Accordingly, we may invest a significant amount of time and expense in the development of one or more product candidates only to be subject to significant delay and patent litigation before such product candidates may be commercialized, if at all.

In addition, a 505(b)(2) or ANDA application approval will not be made effective until any existing non‑patent exclusivity have expired or, if possible, are carved out from the label.

We and our partners are subject to ongoing obligations and continued regulatory review, which may result in significant additional expense for our and their approved and unapproved products. Failure to comply with these obligations could result in regulatory and/or legal consequences.

Our and our partners’ products and product candidates are subject to extensive and rigorous government regulation by the FDA and other foreign regulatory agencies, including requirements related to research, development, pre-clinical and clinical testing before and after product approval, manufacture, safety, effectiveness, record keeping, reporting, labeling, packaging, storage, distribution, safety, deviation, and other reporting, approval, facility registration and product listing, the payment of user fees, advertising, marketing, promotion, sale, distribution, sampling, import and export of pharmaceutical and medical device products. Because our and our partners’ products and product candidates are drug/device combination products, we and they will have to comply with more regulatory requirements that would otherwise be required for products that are not combination products.  Failure to comply with FDA and other applicable regulatory requirements may, either before or after product approval, subject us to administrative or judicially imposed sanctions.  Moreover, were we or our partners to seek regulatory approval for additional indications or uses of any products that we or they may have already received marketing approval for, we or they would be subject to the risks of product development, including the failure to obtain regulatory approval.

The applicable governmental policies may also change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates or products, or that could impose additional regulatory obligations on us.  

By example, we and our partners also must comply with FDA’s promotional requirements, including FDA’s prohibition on the promotion of products for unapproved uses.  Promotional communications may receive significant attention and scrutiny from not only the FDA but also the Department of Justice, Department of Health and Human Services’ Office of Inspector General, state attorneys general, members of Congress, and the public.

The FDA will continue to monitor the product after approval for continued safety, efficacy, and compliance.  We, our partners, and contractors will also be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance with regulatory requirements. Later discovery of previously unknown adverse events or that the drug is less effective than previously thought or other problems with our products, manufacturers, or manufacturing processes, or failure to comply with regulatory requirements both before and after approval, may yield various results, including warning letters, untitled letters, cyber letters, manufacturing and distribution restrictions, changes to product labeling, post-marketing study or other requirements such as REMS, refusal to approve marketing applications or supplements, withdrawal of marketing application approvals, removal of the product from the market, labeling or promotional material modifications, product recalls, market withdrawals, field corrections, clinical holds and suspensions of clinical studies, fines, penalties, disgorgement, corporate integrity agreements, consent decrees, seizure, injunctions, prohibition on importing and exporting, dear healthcare provider letters, adverse publicity, FDA debarment, debarment from government contracts or refusal of orders under existing contracts, and exclusion from federal healthcare programs, among other consequences.  Any of these events could have other material and adverse effects on our operations and business.

55

We and our contractors, distributors, prescribers, and dispensers are required to comply with regulatory requirements related to controlled substances for XYOSTED^®, which will require the expenditure of additional time and will incur additional expenses to maintain compliance.  

XYOSTED^® is a drug/device combination product in which the drug product is testosterone.  Testosterone is a Schedule III controlled substance.  Accordingly, we, and our contractors, distributors, prescribers, and dispensers must comply with Federal controlled substances laws and regulations, enforced by the U.S. Drug Enforcement Administration (“DEA”), as well as state controlled substances laws and regulations enforced by state authorities.  These requirements include, but are not limited to, registration, security, recordkeeping, reporting, storage, distribution, importation, exportation, inventory, and other requirements.  These requirements are enforced by DEA through periodic inspections.  

To continue to engage in controlled substance activities, we, and our contractors, distributors, prescribers, and dispensers must maintain controlled substance registrations.  To the extent that we and our contractors, distributors, prescribers, and dispensers cannot obtain or maintain the necessary controlled substance registrations, we and these other third parties would not be able to continue engaging in controlled substance operations.  This would prevent the continuing commercialization of XYOSTED^® or would require that we find alternative contractors, which would take additional time and expenses, also delaying or interrupting the commercialization of XYOSTED^®.   Moreover, even if we, and our contractors, distributors, prescribers, and dispensers are able to obtain and maintain the necessary controlled substance registrations, compliance with the applicable controlled substance requirements will require significant efforts and expenditures, which could also inhibit the successful commercialization of XYOSTED^®.  If we, and our contractors, distributors, prescribers, and dispensers do not comply with the applicable controlled substance requirements, we or they may be subject to administrative, civil or criminal enforcement, including civil penalties, refusals to renew necessary registrations, revocation of registrations, criminal proceedings, or consent decrees.

Any relationships with healthcare professionals, principal investigators, consultants, customers (actual and potential) and third-party payers in connection with our current and future business activities are and will continue to be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, marketing expenditure tracking and disclosure (or “sunshine”) laws, government price reporting, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face penalties, contractual damages, reputational harm, diminished profits and future earnings.

Our business operations and activities may be directly, or indirectly, subject to various federal, state and local fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act and similar laws in some state and foreign markets. These laws may impact, among other things, our current activities with principal investigators and research subjects, as well as proposed and future sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by the federal government, state governments and foreign jurisdictions in which we conduct our business. The laws in the U.S. that may affect our ability to operate include, but are not limited to:

• the federal Anti-Kickback Statute (“AKS”), which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the referral of an individual for the furnishing or arranging for the furnishing of any item or service, or the purchase, lease, order, arrangement for, or recommendation of the purchase, lease, or order of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs, except for activities protected by narrowly-drawn statutory and regulatory safe harbors. Remuneration alleged to induce prescribing practices, reimbursement or recommendations may be subject to scrutiny if it does not qualify for a safe harbor.   The AKS has been interpreted to apply to arrangements between pharmaceutical manufacturers and prescribers, purchasers, formulary managers, and beneficiaries.  Actual knowledge of the statute or specific intent to violate it is not needed to establish liability, and a violation of the AKS may be grounds for a government or whistleblower claim under the federal civil False Claims Act;

• the civil federal False Claims Act, which imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent; knowingly making, using or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government; conspiring to defraud the government by getting a false or fraudulent claim paid or approved by the government; or knowingly making, using or causing to be made or used a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government. The FCA authorizes imposition of treble damages and a civil penalty for each false claim submitted;

• the criminal federal False Claims Act, which imposes criminal fines or imprisonment against individuals or entities who make or present a claim to the government knowing such claim to be false, fictitious or fraudulent;

56

• the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent For violations after November 2, 2015, the penalty has increased  from a minimum of $5,500 to $10,781, and a maximum of $11,000 to $21,563;

• the Veterans Health Care Act (“VHCA”) of 1992 that requires manufacturers of “covered drugs” to enter into a Master Agreement and Federal Supply Schedule contract with the Department of Veterans Affairs through which their covered drugs must be offered for sale at a mandatory ceiling price to certain federal agencies, including but not limited to, the Department of Veterans Affairs, on the Federal Supply Schedule, which requires compliance with applicable federal procurement laws and regulations and subjects manufacturers to contractual remedies as well as administrative, civil and criminal sanctions. The VHCA also requires manufacturers to enter into pricing agreements with the Department of Health and Human Services to charge no more than a different ceiling price to covered entities participating in the 340B drug discount program, and failure to provide the mandatory discount may subject the manufacturer to specific civil monetary penalties;

• the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services  relating to healthcare matters. The ACA amended the intent requirement of certain of these criminal statutes so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their respective business associates that perform services for them that involve protected health information, relating to the privacy, security and transmission of protected health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements;

• the federal Physician Payment Sunshine Act, created under the PPACA, and its implementing regulations requires manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the U.S. Department of Health and Human Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, with data collection and reporting to CMS required by 90th day of each calendar year;

• federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

• federal government price reporting laws, changed by the PPACA to, among other things, increase the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program and offer such rebates to additional populations, that require us to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs. Participation in these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs and potentially limit our ability to offer certain marketplace discounts and failure to report accurate pricing information exposes us to federal False Claims Act liability;

• the Foreign Corrupt Practices Act, a U.S. law which regulates certain financial relationships with foreign government officials (which could include, for example, certain medical professionals);

• state law equivalents of each of the above federal laws, such as anti-kickback, false claims, consumer protection and unfair competition laws which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements as well as submitting claims involving healthcare items or services reimbursed by any third-party payers, including commercial insurers; state transparency laws requiring manufacturers to report pricing information; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise

57

restricts payments that may be made to healthcare providers; state laws that require drug manufacturers to file reports with states regarding marketing  information, such as the tracking and reporting of gifts, compensations and other remuneration and items of value provided to healthcare professionals and entities (compliance with such requirements may require investment in infrastructure to ensure that tracking is performed properly, and some of these laws result in the public disclosure of various types of payments and relationships, which could potentially have a negative effect on our business and/or increase enforcement scrutiny of our activities); and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, with differing effects; and

• the Drug Supply Chain Security Act of 2013 imposes obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing.  Among the requirements of this legislation, manufacturers are required to provide certain information regarding the drug products to individuals and entities to which product ownership is transferred, are required to label drug product with a product identifier, and are required to keep certain records regarding the drug product.  The transfer of information to subsequent product owners by manufacturers is required to be done electronically.  Manufacturers are also required to verify that purchasers of the manufacturers' products are appropriately licensed.  Further, manufactures have drug product investigation, quarantine, disposition, and FDA and trading partner notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products that would result in serious adverse health consequences or death to humans, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death. Similar requirements are also imposed on other trading partners in the supply chain.

Changes in healthcare law and implementing regulations, as well as changes in healthcare policy, may impact our business in ways that we cannot currently predict and these changes could have a material adverse effect on our business and financial condition.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (together “the Healthcare Reform Act”), expanded healthcare coverage within the U.S., primarily through the establishment of state exchanges and expansion of the Medicaid program. This law substantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry. The Healthcare Reform Act contains a number of provisions that are expected to impact our business and operations, in some cases in ways we cannot currently predict. Changes that may affect our business include those governing enrollment in federal healthcare programs, reimbursement changes, benefits for patients within a coverage gap in the Medicare Part D prescription drug program (commonly known as the “donut hole”), rules regarding prescription drug benefits under the health insurance exchanges, changes to the Medicare Drug Rebate program, expansion of the Public Health Service’s 340B drug pricing discount program, fraud and abuse and enforcement. These changes will impact existing government healthcare programs and will result in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

Some states have elected not to expand their Medicaid programs by raising the income limit to 133% of the federal poverty level, as is permitted under the Healthcare Reform Act. For each state that does not choose to expand its Medicaid program, there may be fewer insured patients overall, which could impact our sales, business and financial condition. Where Medicaid patients receive insurance coverage under any of the new options made available through the Healthcare Reform Act, particularly where Medicaid patients are enrolled in managed care plans, manufacturers may be required to pay Medicaid rebates on drugs used under these circumstances, a decision that could impact manufacturer revenues.

Moreover, legislative changes to the Healthcare Reform Act remain possible. Recently, the law’s individual health insurance mandate was repealed and manufacturers’ responsibility for the cost of prescriptions in the Medicare Part D donut hole has increased.  We expect that the Healthcare Reform Act, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of our existing products or to successfully commercialize our product candidates, if approved.  In addition to the Healthcare Reform Act, there will continue to be proposals by legislators at both the federal and state levels, regulators and third party payors to keep healthcare costs down while expanding individual healthcare benefits.  For example, California recently enacted a law providing transparency into drug price increases which imposes new reporting requirements on manufacturers. CMS has also proposed reducing prices of products paid by Medicare Part B by basing their reimbursement rate on the average price among other industrialized countries.  This proposal, if adopted, could have a significant impact on our business.

To help patients afford our products XYOSTED^® and OTREXUP^®, we offer discount, rebate, and co-pay coupon programs.  Co-pay coupon programs have received some negative publicity related to their use to promote branded pharmaceutical products over other less costly alternatives. In recent years, other pharmaceutical manufacturers have been named in class action lawsuits challenging the legality of their co-pay programs under a variety of federal and state laws. In addition, at least one insurer has directed its network pharmacies to no longer accept co-pay coupons for certain specialty drugs the insurer identified. Our co-pay coupon programs could become the target of similar lawsuits or insurer actions. It is possible that the outcome of litigation against other manufacturers, changes in insurer policies regarding co-pay coupons, and/or the introduction and enactment of new legislation or regulatory action could restrict or otherwise negatively affect these programs.

58

We are dependent on third parties to decide to utilize our and our partners’ products to make them readily available at the point of care throughout their networks of pharmacies.

In addition to extensive internal efforts, the successful commercialization of our and our partners’ products require many third parties, over whom we have no control, to decide to utilize them, and to make them readily available at the point of care throughout their networks of pharmacies. These third parties include HMOs, long term care facilities, and pharmacy benefit managers, or PBMs, which use pharmacy and therapeutics committees, commonly referred to as P&T committees, to make purchasing and reimbursement decisions. Generally, before an HMO or long‑term care facility will acquire a product for its own pharmacies, or a PBM will pay retail network pharmacies on behalf of its health plans, the product must be approved for addition to that organization’s list of approved drugs, or formulary list, by the organization’s P&T committee. An institutional P&T committee typically governs all matters pertaining to the use of medications within the institution, including review of medication formulary data and recommendations for the appropriate use of drugs within the institution to the medical staff. PBM P&T committees develop the criteria for plan beneficiaries to access prescription medication, including such cost control measures as step therapy and prior authorization. The frequency of P&T committee meetings varies considerably, and P&T committees often require additional information to aid in their decision‑making process, so we may experience substantial delays in obtaining formulary approvals. Additionally, P&T committees may be concerned that the cost of acquiring a product for use in their institutions or reimbursing retail pharmacies (including any discounts or rebates we offer) outweighs clinical benefits and will resist efforts to add the product to the formulary, or implement restrictions on the usage of the drug in order to control costs. We cannot guarantee that we and/or our partners will be successful in getting the approvals we need from enough P&T committees quickly enough to maintain and grow sales of our or our partners’ products.

Our revenues may be limited if the marketing claims asserted about our products are not approved.

Once a drug product is approved by the FDA, including its labels and labeling, the Office of Prescription Drug Promotion (“OPDP”), the FDA’s marketing surveillance department within the Center for Drug Evaluation and Research, will oversee and regulate marketing claims asserted by us and our pharmaceutical company partners. We and our partners may only make claims that are consistent with the FDA approved label for the approved product.  FDA may not include all information in the approved label that is necessary for successful marketing.  If we or a pharmaceutical company partner fails to use acceptable marketing claims we may be subject to enforcement actions.

Changes in product candidate manufacturing, design or formulation may result in additional costs or delay.

As product candidates are developed through preclinical studies to late‑stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, design and formulation, are altered along the way in an effort to optimize processes and results. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the altered materials. Such changes may also require additional testing, FDA notification, or FDA approval. This could delay completion of clinical trials; require the conduct of bridging clinical trials or studies, or the repetition of one or more clinical trials; increase clinical trial costs; delay approval of our product candidates; and jeopardize our business prospects.

Risks Related to our Common Stock

The market price of our common stock has been, and may continue to be volatile and fluctuate significantly, which could result in substantial losses for investors.

The trading price for our common stock has been, and we expect it to continue to be, volatile. The price at which our common stock trades depends upon a number of factors, including our historical and anticipated operating results, our financial situation, clinical trial results, announcements of technological innovations or new products by us, our partners or our competitors, our ability or inability to raise the additional capital we may need and the terms on which we raise it, and general market and economic conditions. Some of these factors are beyond our control. Broad market fluctuations may lower the market price of our common stock and affect the volume of trading in our stock, regardless of our financial condition, results of operations, business or prospect.  Among the factors that may cause the market price of our common stock to fluctuate are the risks described in this “Risk Factors” section and other factors, including:

• fluctuations in our operating results or the operating results of our competitors;

• variance in our financial performance from the expectations of investors;

• changes in the estimation of the future size and growth rate of our markets;

• changes in accounting principles or changes in interpretations of existing principles, which could affect our financial results;

59

• failure of our products to achieve or maintain market acceptance or commercial success;

• conditions and trends in the markets we serve;

• changes in general economic, industry and market conditions;

• success of competitive products and services;

• changes in market valuations or earnings of our competitors;

• changes in our pricing policies or the pricing policies of our competitors;

• announcements of significant new products, contracts, acquisitions or strategic alliances by us or our competitors;  

• changes in legislation or regulatory policies, practices or actions;

• the commencement or outcome of litigation involving our company, our general industry or both;

• recruitment or departure of key personnel;

• changes in our capital structure, such as future issuances of securities or the incurrence of debt;

• actual or expected sales of our common stock by our stockholders; and

• the trading volume of our common stock.

In addition, the stock markets, in general, the NASDAQ Capital Market and the market for biotechnology companies in particular, may experience a loss of investor confidence. Such loss of investor confidence may result in extreme price and volume fluctuations in our common stock that are unrelated or disproportionate to the operating performance of our business, financial condition or results of operations. These broad market and industry factors may materially harm the market price of our common stock and expose us to securities class action or derivative litigation.

We are at risk of securities class action and similar litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant stock price volatility in recent years. For example, on October 23, 2017, Randy Smith filed a complaint in the District of New Jersey on behalf of a putative class of persons who purchased or otherwise acquired Antares securities against Antares, Robert F. Apple and Fred M. Powell.  In addition, in January 2018, three stockholders filed separate derivative actions, one in the District of New Jersey and two in the Superior Court of New Jersey Chancery Division, Mercer County, purportedly on our behalf, against certain directors and officers, as well as the company as a nominal defendant. There can be no assurance that we will ultimately prevail in these legal proceedings. Even if we are successful and ultimately prevail, litigation could be costly to defend and divert management’s attention and resources, which could further materially harm our financial condition and results of operations.

Future conversions or exercises by holders of options could dilute our common stock.

As of December 31, 2019, we had stock options outstanding and exercisable with a weighted average exercise price of $2.22 per share, for an aggregate of approximately 10 million shares of our common stock. Purchasers of our common stock could therefore experience dilution of their investment when and if the above options are exercised.

Sales of our common stock by our officers and directors may lower the market price of our common stock.

As of December 31, 2019, our officers and directors beneficially owned an aggregate of approximately 9.1 million shares (or approximately 5.5% of our outstanding common stock, including stock options exercisable within 60 days. If our officers and directors, or other stockholders, sell a substantial amount of our common stock, it could cause the market price of our common stock to decrease.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change," generally defined as a greater than 50% change (by value) in its equity ownership over a three year period, the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income may be limited. In addition, we may experience ownership changes in the future as a result of subsequent

60

shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.

We do not expect to pay dividends in the foreseeable future.

We intend to retain any earnings in the foreseeable future for our continued growth and, thus, do not expect to declare or pay any cash dividends in the foreseeable future.

Our failure to meet the continued listing requirements of the NASDAQ Capital Market could result in a delisting of our common stock.

If we fail to satisfy the continued listing requirements of the NASDAQ Capital Market, such as the requirement that we maintain a minimum bid price of at least $1.00 per share, NASDAQ may take steps to de-list our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we would expect to seek to take actions to restore our compliance with NASDAQ’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock or prevent our common stock from dropping below the NASDAQ minimum bid price requirement in the future.

Anti-takeover effects of certain certificate of incorporation and bylaw provisions could discourage, delay or prevent a change in control.

Our certificate of incorporation authorizes our board of directors, without action of our stockholders, to designate and issue preferred stock in one or more series, with such rights, preferences and privileges as the board of directors shall determine.  In addition, our bylaws grant our board of directors the authority to adopt, amend or repeal all or any of our bylaws, subject to the power of the stockholders to change or repeal the bylaws.  In addition, our bylaws limit who may call meetings of our stockholders.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

We currently lease approximately 13,700 square feet of office space in Ewing, New Jersey for our corporate headquarters facility.  This lease expires in October 2021.

We currently lease approximately 18,000 square feet of office, laboratory and warehouse space in Plymouth, a suburb of Minneapolis, Minnesota. This lease expires in March 2022.

On July 1, 2019, we entered into a new operating lease for approximately 75,000 square feet of office, laboratory, manufacturing and warehousing space in Minnetonka, Minnesota. We are currently performing the build-out of the premises and expect to occupy the facilities by the end of 2020 or early 2021. The lease term is 12.5 years and expires in December 2031.

We also lease a small amount of office space in Muttenz, Switzerland.  The lease is month-to-month and requires a three month notice prior to termination.

Item 3. LEGAL PROCEEDINGS

On October 23, 2017, Randy Smith filed a complaint in the District of New Jersey, captioned Randy Smith, Individually and on Behalf of All Others Similarly Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M. Powell (“Smith”), Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of persons who purchased or otherwise acquired Antares securities between December 21, 2016 and October 12, 2017, inclusive, asserting claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Antares, Robert F. Apple and Fred M. Powell.  The Smith complaint contends that defendants made false and/or misleading statements and/or failed to disclose that: (i) Antares had provided insufficient data to the FDA in connection with the NDA for XYOSTED^®; and (ii) accordingly, Antares had overstated the approval prospects for XYOSTED^®. On July 27, 2018, the court entered an order appointing Serghei Lungu as lead plaintiff, Pomerantz LLP as lead counsel, and Lite DePalma Greenberg, LLC as liaison counsel for plaintiff.  On August 3, 2018, the parties submitted a stipulation and proposed order, setting forth an agreed-upon schedule for responding to the complaint, which the court granted. Pursuant to that order, plaintiff filed a Consolidated Amended Class Action Complaint on October 9, 2018. On November 26, 2018, defendants filed a motion to dismiss.

61

Plaintiff filed an opposition to the motion on January 10, 2019 and defendants filed a reply in support of their motion on February 25, 2019. On July 2, 2019, the court dismissed the complaint in its entirety without prejudice. On July 29, 2019, plaintiff filed a Consolidated Second Amended Class Action Complaint against the same parties alleging substantially similar claims. On September 12, 2019, defendants filed a motion to dismiss the Consolidated Second Amended Class Action Complaint. Plaintiffs’ opposition was filed on October 28, 2019 and defendants’ reply in support of their motion was filed on November 27, 2019. The Company believes that the claims in the Smith action lack merit and intends to defend them vigorously.

On January 12, 2018, a stockholder of our Company filed a derivative civil action, captioned Chiru Mackert, derivatively on behalf of Antares Pharma, Inc., v. Robert F. Apple, et al., in the Superior Court of New Jersey Chancery Division, Mercer County (Case No. C-000011-18).  On January 17, 2018, another stockholder filed a derivative action in the same court, captioned Vikram Rao, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (Case No. C-000004-18). Both complaints name Robert F. Apple, Fred M. Powell, Thomas J. Garrity, Jacques Gonella, Anton Gueth, Leonard S. Jacob, Marvin Samson and Robert P. Roche, Jr. as defendants, and the Company as nominal defendant, and they assert claims for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets arising from the same facts underlying the Smith securities class action.  The plaintiffs seek damages, corporate governance and internal procedure reforms and improvements, restitution, reasonable attorneys’ fees, experts’ fees, costs, and expenses. The parties have filed a stipulation consolidating the two actions and staying the proceedings pending the court’s decision on defendants’ motion to dismiss the Smith action. 

On January 17, 2018, a stockholder of our Company filed a derivative civil action, captioned Robert Clark, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (“Clark”) (Case No. 3:18-cv-00703-MAS-DEA), against Robert F. Apple, Thomas J. Garrity, Jacques Gonella, Leonard S. Jacob, Marvin Samson, Anton G. Gueth and Robert P. Roche, Jr. as defendants, and Company as a nominal defendant.  The action was filed in the U.S. District Court for the District of New Jersey and asserts claims for breach of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and a violation of Section 14(a) of the Securities Exchange Act of 1934.  This complaint relates to the same facts underlying the Smith securities class action and the other derivative actions.  The plaintiff in Clark seeks damages, corporate governance and internal procedure reforms and improvements, reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses.   The parties have filed a stipulation staying the action pending the court’s decision on defendants’ motion to dismiss the Smith action.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

62

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock trades on the NASDAQ Capital Market under the symbol “ATRS”.  

Common Shareholders

As of February 28, 2020, we had 68 shareholders of record of our common stock and approximately 21,366 shareholders in street name.

For information on securities authorized for issuance under our equity compensation plans see “Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Dividends

We have not paid or declared any cash dividends on our common stock during the past ten years. We have no intention of paying cash dividends in the foreseeable future on our common stock.

Performance Graph

The graph below provides an indication of cumulative total stockholder returns (“Total Return”) for the Company as compared with the NASDAQ Composite Index and the NASDAQ Biotechnology Stock Index. The graph covers the period beginning December 31, 2014, through December 31, 2019. The graph assumes $100 was invested in each of our common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Stock Index on December 31, 2014 (based upon the closing price of each). Total Return assumes reinvestment of dividends.

	December 31,
	2014		2015		2016		2017		2018		2019
Antares Pharma, Inc.	$	100.00	$	47.08	$	90.66	$	77.43	$	105.84	$	182.88
NASDAQ Composite Index		100.00		105.73		113.66		145.76		140.10		189.45
NASDAQ Biotechnology Index		100.00		111.42		87.26		105.64		95.79		119.17

63

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

Item 6. SELECTED FINANCIAL DATA

The following table summarizes certain selected financial data. The selected financial data is derived from, and is qualified by reference to, our audited consolidated financial statements as of and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015 and should be read in conjunction with those statements (amounts expressed in thousands, except per share amounts). 

	At December 31,
	2019			2018			2017			2016			2015
Balance Sheet Data:
Cash and cash equivalents	$	23,201		$	27,892		$	26,562		$	27,715		$	32,899
Investments		22,520			—			4,993			—			15,012
Total assets		132,751			88,277			74,338			66,325			84,562
Long-term debt		40,395			25,126			24,858			—			—
Accumulated deficit		(278,827	)		(276,800	)		(270,285	)		(253,445	)		(229,106	)
Total stockholders’ equity		54,500			39,001			33,547			45,218			67,042

	Year Ended December 31,
	2019			2018			2017			2016			2015
Statement of Operations Data:
Product sales	$	92,103		$	47,870		$	41,695		$	40,318		$	27,533
Licensing and development revenue		7,529			6,753			11,171			10,401			16,134
Royalties		24,232			8,931			1,649			1,503			1,991
Total revenues		123,864			63,554			54,515			52,222			45,658
Cost of product sales		46,267			29,094			22,317			23,909			12,925
Cost of development revenue		4,208			1,971			5,149			4,908			6,533
Gross profit		73,389			32,489			27,049			23,405			26,200
Research and development		10,624			12,328			11,854			19,592			18,601
Selling, general and administrative		61,773			36,762			31,646			27,930			28,061
Total operating expenses		72,397			49,090			43,500			47,522			46,662
Gain on sale of assets		—			12,500			860			—			—
Operating income (loss)		992			(4,101	)		(15,591	)		(24,117	)		(20,462	)
Other income (expense)		(3,019	)		(2,414	)		(1,152	)		(122	)		(22	)
Net loss before income taxes		(2,027	)		(6,515	)		(16,743	)		(24,239	)		(20,484	)
Income tax provision		—			—			—			100			175
Net loss	$	(2,027	)	$	(6,515	)	$	(16,743	)	$	(24,339	)	$	(20,659	)
Net loss per common share (1) (2)	$	(0.01	)	$	(0.04	)	$	(0.11	)	$	(0.16	)	$	(0.14	)
Weighted average common shares outstanding		162,574			157,407			156,054			154,992			146,594

(1) Basic and diluted loss per share amounts are identical as the effect of potential common shares is anti-dilutive.

(2) We have not paid any dividends on our common stock since inception.

64

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with Item 1A. (“Risk Factors”) and our audited consolidated financial statements included elsewhere in this annual report. Some of the statements in the following discussion are forward-looking statements. See the discussion about forward-looking statements preceding Item 1. (“Business”).

Company Overview

Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is a pharmaceutical technology company focused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies.  Our strategy is to identify new or existing approved drug formulations and apply our patented drug delivery technology to enhance the drug delivery methods.  We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using our advanced drug delivery systems that are designed to provide commercial or functional advantages, such as improved safety and efficacy, reduced side effects, and enhanced patient comfort and adherence. Our intramuscular and subcutaneous injection technology platforms include the VIBEX^® and VIBEX^® QuickShot^® pressure-assisted auto injector systems suitable for branded and generic injectable drugs in unit dose containers as well as disposable multi-dose pen injectors. We have a portfolio of proprietary and partnered commercial products and ongoing product development programs in various stages of development.  We have formed significant strategic alliances and partnership arrangements with industry leading pharmaceutical companies including Teva, AMAG, Pfizer and Idorsia.  

We market and sell XYOSTED^® (testosterone enanthate) injection in the U.S., indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone. XYOSTED^® is the only FDA approved subcutaneous testosterone enanthate product for once-weekly, at-home self-administration. XYOSTED^® was approved by the FDA on September 28, 2018 and launched for commercial sale in late 2018. In connection with the launch of XYOSTED^®, we hired approximately 50 additional sales representatives and cross-trained our combined sales force to leverage our existing resources and enhance our commercial organization.

We also market and sell our proprietary product OTREXUP^® (methotrexate) injection, which is a subcutaneous methotrexate injection for once weekly self-administration with an easy-to-use, single dose, disposable auto injector, indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis.

Through our commercialization partner Teva, we sell Sumatriptan Injection USP indicated in the U.S. for the acute treatment of migraine and cluster headache in adults. We received FDA approval of our Abbreviated New Drug Application (“ANDA”) for 4 mg/0.5 mL and 6 mg/0.5 mL single-dose prefilled syringe auto-injectors, a generic equivalent to Imitrex^® STATdose Pen^®.  Sumatriptan Injection USP was the Company’s first ANDA approval of a complex generic and second product approved using the VIBEX^® auto injector platform.

We developed and supply a variation of our VIBEX^® QuickShot^® subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® (hydroxyprogesterone caproate injection) under an exclusive license and development agreement. The Makena^® subcutaneous auto injector drug-device combination product is a ready-to-administer treatment indicated to help reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered one preterm baby in the past, which was approved by the FDA in February 2018. We are the exclusive supplier of the devices and the final assembled and packaged commercial product, which was launched in the U.S. for commercial sale by AMAG in March 2018, and we receive royalties on AMAG’s net sales of the product. In October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee met to better understand and interpret the PROLONG (Progestin’s Role in Optimizing Neonatal Gestation) confirmatory clinical trial for Makena^® (hydroxyprogesterone caproate) injection. Nine advisory committee members voted to recommend that the FDA pursue withdrawal of approval for Makena^® and seven committee members voted to leave the product on the market under accelerated approval and require a new confirmatory trial. The advisory committee's recommendation, while not binding, will be considered by the FDA in making its decision. AMAG has stated that it remains committed to working with the FDA to maintain patient access to Makena^®.

In collaboration with Teva, we developed a version of our VIBEX^® auto injector for use in a generic epinephrine auto injector product that was approved by the FDA in August 2018 and commercially launched in limited quantities in late fourth quarter of 2018.  Teva’s Epinephrine Injection USP is indicated for emergency treatment of severe allergic reactions including those that are life threatening (anaphylaxis) in adults and certain pediatric patients and was approved as a generic drug product with an AB rating, meaning that it is therapeutically equivalent to Mylan, Inc.’s branded products EpiPen^® and EpiPen Jr^® and therefore, subject to state law, substitutable at the pharmacy. We are the exclusive supplier of the device and Teva is responsible for commercialization and distribution of the finished product, for which we also receive royalties on Teva’s net sales.

65

We are also collaborating with Teva on a multi-dose pen for a generic form of BYETTA^® (exenatide injection) for the treatment of type 2 diabetes, and another multi-dose pen for a generic form of Forteo^® (teriparatide [rDNA origin] injection) for the treatment of osteoporosis. Teva continues to work through the regulatory process with the FDA for exenatide and teriparatide using the ANDA pathway.

In August 2018, we entered into a collaboration agreement with Pfizer to develop a combination drug device rescue pen. This rescue pen will utilize the Antares QuickShot^® auto injector and an undisclosed Pfizer drug. We will develop the product and Pfizer will be responsible for obtaining FDA approval of the combination product. We intend to enter into a separate supply agreement with Pfizer pursuant to which we will provide fully packaged commercial ready finished product to Pfizer and Pfizer will then be responsible for commercializing the product in the U.S., pending FDA approval, for which the Company will receive royalties on net sales.

In November 2019, we entered into a new global agreement with Idorsia to develop a novel, drug-device product containing selatogrel. Selatogrel, a new chemical entity, is being developed for the treatment of a suspected acute myocardial infarction (AMI) in adult patients with a history of AMI. Idorsia will pay for the development of the combination product and will be responsible for applying for and obtaining global regulatory approvals for the product. The parties intend to enter into a separate commercial license and supply agreement pursuant to which Antares will provide fully assembled and labelled product to Idorsia at cost plus margin. Idorsia will then be responsible for global commercialization of the product, pending FDA or foreign approval. Antares will be entitled to receive royalties on net sales of the commercial product.

We are committed to advancing our internal research and development programs and continue to invest in the development of our proprietary product pipeline. Our research and development efforts are focused primarily on leveraging our existing product and technology platforms by broadening their applications for use in other drug device combination products, as well as exploring new pharmaceutical products, technologies and drug delivery methods.

We previously manufactured and sold reusable, needle-free injection devices, marketed primarily through Ferring Pharmaceuticals, Inc. and JCR Pharmaceuticals CO., Ltd. for use with human growth hormone. In October 2017, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Ferring International Center S.A. (together with Ferring Pharmaceuticals Inc. and Ferring B.V. individually and collectively referred to as “Ferring”) to sell the worldwide rights, including certain assets related to the needle-free auto injector device product line for $14.5 million (the “Ferring Transaction”) to be paid to us in installments and completed over a two-year period. The transaction was completed in October 2019, and with the completion of this transaction, Antares no longer manufactures or sells needle-free devices or components.

Results of Operations

Antares Pharma, Inc. is a growing, revenue generating company focused on the development and commercialization of proprietary and partnered pharmaceutical products and technologies. In 2019, we generated significant growth in our total revenue, including revenue from product sales and royalties, and continued to invest in our commercial infrastructure and research and development activities. Total revenues for the year ended December 31, 2019 increased to $123.9 million, as compared to $63.6 million for the year ended December 31, 2018, an increase of $60.3 million or 95%. Our net loss was $2.0 million, $6.5 million and $16.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, and we reported a net loss per share of $0.01 for the year ended December 31, 2019 as compared to $0.04 per share and $0.11 per share for the years ended December 31, 2018 and 2017, respectively.  The following is a discussion and analysis of our results of operations on a comparative basis for the years ended December 31, 2019, 2018 and 2017.

Revenues

We generate revenue from proprietary and partnered product sales, license and development activities and royalty arrangements. Total revenues for the year ended December 31, 2019 increased to $123.9 million, as compared to $63.6 million for the year ended December 31, 2018, an increase of $60.3 million or 95%. Total revenue for the year ended December 31, 2018 increased by $9.0 million or 17% as compared to $54.5 million for the year ended December 31, 2017.  

66

The following table provides details about the components of our revenue (in thousands):

	For the Years Ended December 31,
	2019		2018		2017
Proprietary product sales	$	39,215	$	17,532	$	17,946
Partnered product sales		52,888		30,338		23,749
Total product revenue		92,103		47,870		41,695
Licensing and development revenue		7,529		6,753		11,171
Royalties		24,232		8,931		1,649
Total revenue	$	123,864	$	63,554	$	54,515

Product Revenue

Revenue from product sales was $92.1 million, $47.9 million and $41.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. The increases in product revenue were driven primarily by sales of recently approved and launched products, both proprietary and partnered, as discussed below.

Proprietary Product Sales

Sales of our proprietary products XYOSTED^® and OTREXUP^®, which are presented net of estimated product returns and sales allowances, generated revenue of $39.2 million, $17.5 million and $17.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. The significant increase in our proprietary product sales for the year ended December 31, 2019 as compared to 2018 was principally attributable to sales of XYOSTED^®, which we launched for commercial sale in late 2018. Prescriptions and sales of XYOSTED^® grew steadily in 2019 and we attribute this growth to successful marketing strategies and achieving targeted reimbursement coverage. We also generated a 9% increase in net revenue from sales of OTREXUP^® in 2019 as compared to 2018.

Partnered Product Sales

We manufacture and sell devices, components and fully assembled and packaged product to our pharmaceutical development partners. Partnered product sales were $52.9 million, $30.3 million and $23.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. The increase in sales of partnered products for the year ended December 31, 2019 as compared to 2018 was principally attributable to an increase in sales of auto injector devices to Teva in connection with the recent full launch of generic Epinephrine Injection USP.  

The increase in partnered product sales for the year ended December 31, 2018 compared to 2017 was primarily attributable to an increase in sales of Makena^® subcutaneous auto injectors to AMAG following the launch of the product in March 2018, offset by decreases in revenues from sales of Sumatriptan Injection USP and pre-launch quantities of epinephrine auto injector devices to Teva.

Licensing and Development Revenue

Licensing and development revenues include license fees received from partners for the right to use our intellectual property and amounts earned in joint development arrangements with partners under which we perform development activities or develop new products on their behalf. Fluctuations in our licensing and development revenue are generally attributable to the development timelines of our various partnered development projects, the timing of which is often controlled by our partner, and the timing of achievement of certain milestones. Licensing and development revenue was $7.5 million, $6.8 million and $11.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

For the year ended December 31, 2019, licensing and development revenue was primarily attributable to our development activities with Pfizer for the development of a new rescue pen product, and with Teva, primarily in connection with the teriparatide pen injector project. In 2018, licensing and development revenue was primarily attributable to development services provided to Teva in connection with the pen injector projects for generic versions of Forteo^® and Byetta^®, continued development work for AMAG, and a $2.0 million milestone payment received from Teva in connection with the FDA approval of Teva’s epinephrine auto injector product in August 2018.  

For the year ended December 31, 2017, a majority of our development revenue was generated from AMAG in connection with the commercial development and readiness activities for the Makena^® subcutaneous auto injector and also included amounts from Teva for the ongoing development of the epinephrine auto injector and the exenatide and teriparatide pen injectors.

67

Royalties

Revenues from royalty arrangements were $24.2 million, $8.9 million and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.  We earn royalties in connection with licenses granted to our partners under license and development arrangements. Royalties are generally based upon a percentage of our partners’ net sales of the partnered product.

The significant increase in royalty revenue for the year ended December 31, 2019 as compared to 2018 was primarily attributable to royalties received from Teva on its net sales of Epinephrine Injection USP, which was launched in late 2018, and an increase in royalties received from AMAG on its net sales of the Makena^® subcutaneous auto injector. The significant increase in royalty revenue for the year ended December 31, 2018 as compared to 2017 was primarily attributable to the launch of the Makena^® subcutaneous auto injector product by AMAG in March 2018.

Cost of Revenues and Gross Profit

The following table summarizes our total cost of revenue and gross profit (in thousands):

	For the Years Ended December 31,
	2019			2018			2017
Total revenue	$	123,864		$	63,554		$	54,515
Total cost of revenue		50,475			31,065			27,466
Gross profit	$	73,389		$	32,489		$	27,049
Gross profit percentage		59	%		51	%		50	%

Our gross profit was $73.4 million for the year ended December 31, 2019 as compared to $32.5 million and $27.0 million for the years ended December 31, 2018 and 2017, respectively.  Fluctuations in our gross profit and gross profit percentage are driven by our overall revenue mix.

The increases in our gross profit and gross profit percentage for the year ended December 31, 2019 as compared to 2018 and 2017 was primarily attributable to the significant increase in royalties related to the recently approved products, which have no associated costs. Proprietary products also have a higher margin than partnered products, thus affecting the gross profit percentage on an overall basis as we have increased our proprietary product sales in 2019. The net increase in gross profit in 2018 was partially driven by a $2.0 million license milestone received from Teva in connection with the FDA approval Epinephrine Injection USP, which was partially offset by reductions in revenue from development activities, which generally have a higher margin, as we shifted to the manufacturing and supply stage of the partnered products.

Operating Expenses

Research and Development

Research and development expenses include costs incurred in connection with clinical studies, formulation development, engineering design work and prototype development, personnel costs, FDA filing fees, and other quality, regulatory and overhead costs associated with our research and development programs.  Research and development expenses were $10.6 million, $12.3 million and $11.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The decrease in research and development expenses for the year ended December 31, 2019 compared to 2018 was primarily a result of a decrease in development costs related to XYOSTED^®, which was approved by the FDA on September 28, 2018 and is now a marketed product. The increase in research and development costs for the year ended December 31, 2018 compared to 2017 was primarily due to additional spending associated with development of undisclosed potential new products and the ongoing regulatory review activities for XYOSTED^®.

Selling, General and Administrative

Selling, general and administrative expenses were $61.8 million, $36.8 million and $31.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The increase in selling, general and administrative expenses for the year ended December 31, 2019 as compared to 2018 was principally attributable to the launch and commercialization of XYOSTED^®. Sales and marketing expenses nearly doubled in 2019 principally attributable to an increase in compensation costs related to the expansion of the sales force in late 2018 and other expenses associated with the marketing of XYOSTED^®. In addition, general and administrative costs increased by approximately 25% to support the overall business growth, primarily driven by increases in professional services, business insurance, legal fees and stock-based compensation.

68

The increase in selling, general and administrative expenses for the year ended December 31, 2018 as compared to 2017 was principally attributable to the incremental sales and marketing costs associated with our preparation for a potential launch of XYOSTED^®, which was ultimately approved by the FDA and launched in late 2018.  In connection with the launch of XYOSTED^® we hired approximately 50 additional sales representatives in late 2018 and cross-trained the combined specialty sales force to leverage our existing resources and enhance our commercial organization. The increase in selling, general and administrative expenses in 2018 compared to 2017 was also attributable to an increase in compensation and benefits expense, primarily related to annual salary increases, and non-cash stock-based compensation.

Net Loss and Net Loss Per Share

Our net loss was $2.0 million, $6.5 million and $16.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, and we reported a net loss per share of $0.01 for the year ended December 31, 2019 as compared to $0.04 per share and $0.11 per share for the years ended December 31, 2018 and 2017, respectively. The reduction in our net loss and net loss per share for the year ended December 31, 2019 was primarily a result of our significant growth in revenues and gross profit from product sales and royalties offset by an increase in our selling, general and administrative expenses. The reduction in our net loss and net loss per share for the year ended December 31, 2018 as compared to 2017 was principally a result of the recognition of a $12.5 million gain on sale of assets in connection with the Ferring Transaction and our growth in revenues and gross profit, offset by an increase in operating expenses, primarily sales and marketing costs.

Liquidity and Capital Resources

At December 31, 2019 we had cash, cash equivalents and short-term investments of $45.7 million. We believe that the combination of our current cash, cash equivalents and investments, along with our projected product sales, development revenue and royalties will provide us with sufficient funds to meet our obligations and support operations through at least the first quarter of 2021.  However, we reported net losses of $2.0 million, $6.5 million and $16.7 million, and negative cash flows from operations for each of the years ended December 31, 2019, 2018 and 2017, respectively.  We had an accumulated deficit at December 31, 2019 of $278.8 million. We have not historically generated enough operating cash flow to support our operations and have funded our operations though equity offerings and debt issuance.

If additional capital is needed to support our operations or growth in the future, we may need to raise additional funds through financings, such as the issuance of additional debt, equity or notes convertible into our common stock.  However, we may be unable to obtain such financing, or obtain it on favorable terms, in which case we may be required to curtail development of new products, limit expansion of operations or accept financing terms that are not as attractive as we may desire.

Long-Term Debt Financing

On June 6, 2017, we entered into a loan and security agreement for a term loan of up to $35.0 million (the “Term Loan”), under which we initially borrowed $25.0 million (“Tranche I”), the proceeds of which are being used for working capital and general corporate purposes. Payments under the Loan Agreement were interest only until the first principal payment was originally due on August 1, 2019. On June 26, 2019, we entered into a First Amendment (the “Amendment”) to the Loan Agreement, which increased the aggregate principal amount available under the Term Loan from $35.0 million to $50.0 million and extended the interest-only payment period of the Term Loan to August 1, 2021. Upon signing of the Amendment, an additional $15.0 million (“Tranche II”) was funded to the Company.

The Company may, but is not obligated to, request one or more additional advances of at least $5.0 million, not to exceed $10.0 million in the aggregate (“Tranche III”). The Company’s option to request additional advances is available between January 1, 2020 and September 15, 2020. The interest-only payment period of the Term Loan may be further extended to August 1, 2022 if the Company achieves a certain loan extension milestone. The Company is required to pay an end of term fee (“End of Term Charge”) equal to 4.25% of Tranche I and 3.95% of the borrowings under Tranche II and Tranche III, payable upon the earlier of July 1, 2022 or repayment of the loan. The Term Loan maturity date is July 1, 2022 but may be extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone.

At the Market Common Stock Offering Program

In August 2017, we entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) under which we could offer and sell, from time to time and at our sole discretion, shares of our common stock having an aggregate offering price of up to $30.0 million through Cowen as the sales agent and/or as principal. Cowen was permitted to sell the common stock through any method deemed an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended (the “ATM Facility”). Cowen was entitled to receive a commission of 3.0% of the gross sales proceeds of any common stock sold under the Sales Agreement.

69

We sold 2.3 million and 2.1 million shares of common stock under the ATM Facility during the years ended December 31, 2019 and 2018, respectively. The sale of common stock resulted in aggregate gross proceeds of $8.1 million and $7.6 million, less sales commission and payment of offering costs, resulting in net offering proceeds to the Company of $7.8 million and $7.1 million in 2019 and 2018, respectively. No sales of common stock were made in the period ended December 31, 2017.

On June 26, 2019, the Company delivered written notice to Cowen that it was terminating its Sales Agreement effective July 6, 2019, and accordingly no additional sales have been or will be made under the ATM Facility.

Net Cash Flows from Operating Activities

Operating cash inflows are generated primarily from product sales, license and development fees and royalties.  Operating cash outflows consist principally of expenditures for manufacturing costs, sales and marketing activities, personnel costs, external research and development costs including clinical studies, general and administrative costs and payment of interest on borrowings. Net cash used in operating activities was $10.6 million, $17.3 million and $23.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.  Net operating cash used in operations is a function of the net losses incurred of $2.0 million, $6.5 million and $16.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, adjusted by noncash expenses and changes in operating assets and liabilities. Our reconciliation of net loss to operating cash flow is significantly affected by the timing of operating expenditures and cash receipts.  

The decrease in the net cash used in operating activities for the year ended December 31, 2019 versus 2018 was primarily a result of the lower net loss in 2019 as compared to 2018 and other changes in operating assets and liabilities due to timing of cash receipts and cash payments.  Cash used in operating activities for the year ended December 31, 2018 as compared to 2017 decreased primarily due to timing of cash receipts and cash payments, including the growth in accounts payable and accrued expenses, offset by an increase in accounts receivable, inventories and contract assets.

Net Cash Flows from Investing Activities

Net cash used in investing activities was $20.0 million for the year ended December 31, 2019 as compared to $11.6 million provided by investing activities for the year ended December 31, 2018.  The net cash outflow for the year ended December 31, 2019 was a result of the purchase of investment securities of $22.6 million and capital expenditures of $2.4 million, partially offset by the receipt of the $5.0 million final installment in connection with the completion of the Ferring Transaction. The net cash inflow for the year ended December 31, 2018 was attributable to the receipt of $7.5 million in connection with the Ferring Transaction and proceeds from maturities of investments of $5.0 million offset by payments for capital expenditures and patent rights.

For the year ended December 31, 2017, net cash flows used in investing activities consisted of cash outflows of $10.0 million for the purchase of investments and $1.3 million for capital expenditures and additions to patent rights, partially offset by cash inflows of $5.0 million from investment maturities and $1.9 million in proceeds, net of transaction costs, from the sale of certain assets in connection with the Ferring Transaction.

Net Cash Flows from Financing Activities

Net cash provided by financing activities was $25.9 million, $7.0 million and $26.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.  

In 2019, we received $15.0 million in new debt proceeds from borrowing under our Term Loan and paid $0.1 million in debt issuance costs.  We also raised $7.8 million in net offering proceeds from the ATM facility and generated cash proceeds of $4.4 million from the exercise of stock options.  We paid $1.1 million to taxing authorities in connection with net-share settled awards for which we withheld shares equivalent to the value of the employees’ minimum statutory obligation for the applicable income and employment taxes.  

For the year ended December 31, 2018, we raised $7.1 million in net offering proceeds in connection with the ATM facility and $0.5 million from the exercise of stock options offset by $0.5 million remitted to taxing authorities in connection with net-share settled awards for which we withheld shares equivalent to the value of the employees’ minimum statutory obligation for the applicable income and other employment taxes.

In 2017, we received $25.0 million in proceeds from the issuance of long-term debt and incurred $0.3 million in debt issuance costs.  We also received cash proceeds of $1.8 million from the exercise of stock options, and remitted $0.2 million to taxing authorities in connection with net-share settled awards for which we withheld shares equivalent to the value of the employees’ minimum statutory obligation for the applicable income and employment taxes.  

70

Contractual Obligations

The following table presents our contractual obligations and the related payments, including interest, due by period as of December 31, 2019 (in thousands):

	Payments Due by Period
			Less than		1 - 3		3 - 5		More than
	Total		1 year		years		years		5 years
Long-term debt obligations	$	51,318	$	3,761	$	47,557	$	—	$	—
Operating lease obligations		10,102		1,552		2,329		1,288		4,933
Purchase commitments		27,941		27,941		—		—		—
Total	$	89,361	$	33,254	$	49,886	$	1,288	$	4,933

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, including any arrangements with any structured finance, special purpose or variable interest entities.

Critical Accounting Policies and Use of Estimates

The preceding discussion and analysis of our results of operations and financial condition is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”.) The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances.  Actual results could differ from our estimates, and significant variances could materially impact our financial condition and results of operations.

Our significant accounting policies are more fully described in the notes to our consolidated financial statements included in this Annual Report on Form 10-K.  We believe the following accounting policies to be the most critical to understanding our results of operations and financial condition because they require the most subjective and complex judgments.  

Revenue Recognition

We adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Revenue from Contracts with Customers Topic 606 (“ASC 606”) effective January 1, 2018 using the modified retrospective transition method. The new standard superseded the former revenue recognition requirements in Topic 605 Revenue Recognition (“Topic 605”). Our results of operations for reporting periods beginning on or after January 1, 2018 are presented under Topic 606, while prior period amounts, as reported, were not adjusted. The effects of the adoption of ASC 606 in 2018 were not material to our consolidated financial statements. The following is a summary, and the critical aspects, of our revenue recognition policy under Topic 606.

We generate revenue from proprietary and partnered product sales, license and development activities and royalty arrangements.  Revenue is recognized when or as we transfer control of the promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services.

We enter into contracts with partners that often contain multiple elements such as licensing, development, manufacturing and commercialization components. These arrangements are often complex and we may receive various types of consideration over the life of the arrangement, including: up-front fees, reimbursements for research and development services, milestone payments, payments on product shipments, margin sharing arrangements, license fees and royalties.

In assessing our revenue arrangements in accordance with ASC 606 we must identify the contract, determine the transaction price including an estimation of any variable consideration we expect to receive in connection with the contract, identify the promises of goods or services to the customer and each distinct performance obligation, allocate the transaction price to each of the performance obligations, and recognize revenue when or as the performance obligations are satisfied. Each of these steps in the revenue recognition process requires management to make judgements and/or estimates. The most significant judgements and estimates involve the determination of variable consideration to be included in the transaction price, such as the estimation of product returns and sales allowances and profit sharing arrangements.

71

We base our estimates on a number of inputs including historical experience, external and independent source data, trend analysis, and a review of the facts and circumstances that exist as of each reporting date. Variable consideration is recognized at an amount we believe is not subject to significant reversal and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed. For example, we estimate returns and product sales allowances based on historical trends, inventory levels remaining in the distribution channel, the terms of contracts in place and other known factors or market expectations. We believe this provides a reasonable basis for recognizing revenue, however, actual results could differ from estimates and significant changes in estimates could impact our results of operations in future periods.

Inventory Valuation

Inventories are stated at the lower of cost or net realizable value. We value inventory using the first-in, first-out method, assuming full absorption of direct and indirect manufacturing costs and normal capacity utilization of our internal manufacturing operations. Inventory valuation is based on our judgment of probable future commercial use or sale and net realizable value. We continually evaluate and provide reserves for inventory on hand that is in excess of expected future demand. These reserves are based on estimates of forecasted product demand and the likelihood of consumption in the normal course of business, considering the expiration dates of the inventories on hand, planned production volumes and lead times required for restocking of customer inventories. Although we make every effort to ensure that our forecasts and assessments are reasonable, changes to these assumptions are possible. In such cases, our estimates may prove inaccurate and result in an understatement or overstatement of the reserves required to fairly state such inventories.

Recently Issued Accounting Pronouncements Not Yet Adopted

In 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019.

However, in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases: Effective Dates, which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting companies. A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023. The Company has historically had minimal credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-15 Intangibles – Goodwill and Other – Internal-Use Software: Accounting for Implementation Costs Incurred in Cloud Computing Arrangement that is a Service Contract, providing new guidance on a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This standard will be effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and 606. The new guidance clarifies that certain transactions between collaborative arrangement participants should be accounted for under revenue guidance, adds unit of account guidance to the collaborative arrangement guidance to align with the revenue standard, and clarifies presentation guidance for transactions with a collaborative arrangement participant that is not accounted for under the revenue standard. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements

72

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to foreign exchange rate fluctuations of the Swiss Franc to the U.S. dollar as the financial position and operating results of our subsidiaries in Switzerland are translated into U.S. dollars for consolidation. Our exposure to foreign exchange rate fluctuations also arises from transferring funds to our Swiss subsidiaries in Swiss Francs.  In addition, we have exposure to exchange rate fluctuations between the Euro and the U.S. dollar. We do not currently use derivative financial instruments to hedge against exchange rate risk.  The effect of foreign exchange rate fluctuations on our financial results for the years ended December 31, 2019, 2018, and 2017 was not material.

We are also exposed to interest rate risk and interest rate fluctuations as a result of our long-term debt financing.  Our Term Loan, with a current outstanding principal of $40.0 million, accrues interest at a calculated prime-based variable rate with a maximum interest rate of 9.50%. The interest rate in effect as of December 31, 2019 was 9.25%. A hypothetical increase or decrease in the interest rate of 1.0% would result in additional or lower incremental annual interest expense of $400,000.

73

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ANTARES PHARMA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	75
Consolidated Balance Sheets as of December 31, 2019 and 2018	77
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017	78
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2019, 2018 and 2017	79
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2019, 2018 and 2017	80
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017	81
Notes to Consolidated Financial Statements	82

74

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Antares Pharma, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Antares Pharma, Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.  

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019, due to the adoption of Financial Accounting Standards Board Accounting Standards Update (“ASU”) No. 2016-02 Leases (Topic 842), and related amendments.

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue as of January 1, 2018, due to the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

75

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness 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 the policies or procedures may deteriorate.

/s/ KPMG LLP

We have served as the Company’s auditor since 1995

Minneapolis, Minnesota

March 3, 2020

76

ANTARES PHARMA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	December 31,			December 31,
	2019			2018
Assets
Current Assets:
Cash and cash equivalents	$	23,201		$	27,892
Short-term investments		22,520			—
Accounts receivable		35,074			18,976
Inventories		16,000			11,350
Contract assets		8,235			10,442
Prepaid expenses and other current assets		3,416			2,648
Total current assets		108,446			71,308
Equipment, molds, furniture and fixtures, net		15,961			14,895
Operating lease right-of-use assets		5,463			—
Intangibles, net		478			831
Goodwill		1,095			1,095
Other assets		1,308			148
Total Assets	$	132,751		$	88,277
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	12,905		$	11,135
Accrued expenses and other liabilities		16,523			11,997
Long-term debt, current portion		—			3,043
Operating lease liabilities, current portion		1,249			—
Deferred revenue		1,738			1,018
Total current liabilities		32,415			27,193
Long-term debt		40,395			22,083
Operating lease liabilities, long-term		5,441			—
Total liabilities		78,251			49,276
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Preferred Stock:  $0.01 par, authorized 3,000 shares, none outstanding		—			—
Common Stock:  $0.01 par; authorized 300,000 shares; 165,221 and    159,721 issued and outstanding at December 31, 2019 and 2018, respectively		1,652			1,597
Additional paid-in capital		332,377			314,907
Accumulated deficit		(278,827	)		(276,800	)
Accumulated other comprehensive loss		(702	)		(703	)
		54,500			39,001
Total Liabilities and Stockholders’ Equity	$	132,751		$	88,277

See accompanying notes to consolidated financial statements.

77

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Years Ended December 31,
	2019			2018			2017
Revenue:
Product sales	$	92,103		$	47,870		$	41,695
Licensing and development revenue		7,529			6,753			11,171
Royalties		24,232			8,931			1,649
Total revenue		123,864			63,554			54,515
Cost of revenue:
Cost of product sales		46,267			29,094			22,317
Cost of development revenue		4,208			1,971			5,149
Total cost of revenue		50,475			31,065			27,466
Gross profit		73,389			32,489			27,049
Operating expenses:
Research and development		10,624			12,328			11,854
Selling, general and administrative		61,773			36,762			31,646
Total operating expenses		72,397			49,090			43,500
Gain on sale of assets		—			12,500			860
Operating income (loss)		992			(4,101	)		(15,591	)
Other income (expense):
Interest expense		(3,549	)		(2,675	)		(1,423	)
Other, net		530			261			271
Total other expense, net		(3,019	)		(2,414	)		(1,152	)
Net loss before income taxes		(2,027	)		(6,515	)		(16,743	)
Income tax provision		—			—			—
Net loss	$	(2,027	)	$	(6,515	)	$	(16,743	)
Basic and diluted net loss per common share	$	(0.01	)	$	(0.04	)	$	(0.11	)
Basic and diluted weighted average common shares outstanding		162,574			157,407			156,054

See accompanying notes to consolidated financial statements.

78

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

	Years Ended December 31,
	2019			2018			2017
Net loss	$	(2,027	)	$	(6,515	)	$	(16,743	)
Foreign currency translation adjustment		1			(3	)		15
Comprehensive loss	$	(2,026	)	$	(6,518	)	$	(16,728	)

See accompanying notes to consolidated financial statements.

79

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended December 31, 2017, 2018 and 2019

(in thousands)

	Common Stock
	Number of Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
December 31, 2016		155,168	$	1,552	$	297,826		$	(253,445	)	$	(715	)	$	45,218
Common stock issued under equity    compensation plan, net of    shares withheld for taxes		196		2		(251	)		—			—			(249	)
Exercise of options		1,311		13		1,803			—			—			1,816
Share-based compensation		—		—		3,490			—			—			3,490
Net loss		—		—		—			(16,743	)		—			(16,743	)
Cumulative effect of change in    accounting principle		—		—		97			(97	)		—			—
Other comprehensive income		—		—		—			—			15			15
December 31, 2017		156,675		1,567		302,965			(270,285	)		(700	)		33,547
Issuance of common stock		2,137		21		7,093			—			—			7,114
Common stock issued under equity    compensation plan, net of    shares withheld for taxes		462		5		(548	)		—			—			(543	)
Exercise of options		447		4		470			—			—			474
Share-based compensation		—		—		4,927			—			—			4,927
Net loss		—		—		—			(6,515	)		—			(6,515	)
Other comprehensive loss		—		—		—			—			(3	)		(3	)
December 31, 2018		159,721		1,597		314,907			(276,800	)		(703	)		39,001
Issuance of common stock		2,307		23		7,758			—			—			7,781
Common stock issued under equity    compensation plan, net of    shares withheld for taxes		664		7		(1,138	)		—			—			(1,131	)
Exercise of options		2,529		25		4,380			—			—			4,405
Share-based compensation		—		—		6,470			—			—			6,470
Net loss		—		—		—			(2,027	)		—			(2,027	)
Other comprehensive loss		—		—		—			—			1			1
December 31, 2019		165,221	$	1,652	$	332,377		$	(278,827	)	$	(702	)	$	54,500

See accompanying notes to consolidated financial statements.

80

ANTARES PHARMA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended December 31,
	2019			2018			2017
Cash flows from operating activities:
Net loss	$	(2,027	)	$	(6,515	)	$	(16,743	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		6,470			4,927			3,490
Depreciation and amortization		2,557			2,724			2,104
Accretion of interest expense		322			210			119
Increase in inventory reserve		325			592			356
Gain on sale of assets		—			(12,500	)		(860	)
Other		95			51			68
Changes in operating assets and liabilities:
Accounts receivable		(16,095	)		(7,099	)		(2,798	)
Inventories		(4,975	)		(2,667	)		(4,304	)
Contract assets		(2,793	)		(4,937	)		1,268
Prepaid expenses and other current assets		(655	)		(324	)		(942	)
Other assets		(371	)		—			(94	)
Accounts payable		926			5,164			(1,522	)
Accrued expenses and other liabilities		4,888			5,029			1,122
Deferred revenue		718			(1,977	)		(4,358	)
Net cash used in operating activities		(10,615	)		(17,322	)		(23,094	)
Cash flows from investing activities:
Proceeds from sale of assets		5,000			7,500			1,901
Purchases of equipment, molds, furniture and fixtures		(2,350	)		(854	)		(1,167	)
Purchases of investment securities		(22,645	)		—			(9,964	)
Proceeds from maturities of investment securities		—			5,000			5,000
Additions to patent rights		—			(40	)		(101	)
Net cash provided by (used in) investing activities		(19,995	)		11,606			(4,331	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		15,000			—			25,000
Payment of debt issuance costs		(136	)		—			(294	)
Proceeds from issuance of common stock, net		7,781			7,114			—
Proceeds from exercise of stock options		4,405			474			1,816
Taxes paid related to net share settlement of equity awards		(1,131	)		(543	)		(249	)
Net cash provided by financing activities		25,919			7,045			26,273
Effect of exchange rate changes on cash		—			1			(1	)
Net increase (decrease) in cash and cash equivalents		(4,691	)		1,330			(1,153	)
Cash and cash equivalents:
Beginning of year		27,892			26,562			27,715
End of year	$	23,201		$	27,892		$	26,562
Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,025		$	2,353		$	1,080
Supplemental disclosure of non-cash investing activities:
Gain on sales of assets recognized in excess of cash received	$	—		$	5,000		$	—
Purchases of equipment, molds, furniture and fixtures recorded in    accounts payable and accrued expenses	$	970		$	49		$	40
Additions to patent rights recorded in accounts payable and accrued    expenses	$	—		$	—		$	10

See accompanying notes to consolidated financial statements.

81

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

1. Description of Business

Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is a pharmaceutical technology company focused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies.  We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using advanced drug delivery technology to enhance existing drug compounds and delivery methods. Our injection technology platforms include the VIBEX^® and VIBEX^® QuickShot^® pressure-assisted auto injector systems suitable for branded and generic injectable drugs in unit dose containers and disposable multi-dose pen injectors. We have a portfolio of proprietary and partnered commercial products and ongoing product development programs in various stages of development. We have formed significant strategic alliances with Teva Pharmaceutical Industries, Ltd. (“Teva”), AMAG Pharmaceuticals, Inc. (“AMAG”), Pfizer Inc. (“Pfizer”) and Idorsia Pharmaceuticals Ltd (“Idorsia”).

The Company markets and sells its proprietary product XYOSTED^® (testosterone enanthate) injection in the U.S., which is indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone. XYOSTED^® was approved by the U.S. Food and Drug Administration (“FDA”) on September 28, 2018 and launched for commercial sale in late 2018.

The Company also markets and sells its proprietary product OTREXUP^® (methotrexate) injection in the U.S., which is indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis.

Through its commercialization partner Teva, the Company sells Sumatriptan Injection USP, indicated in the U.S. for the acute treatment of migraine and cluster headache in adults.  

In collaboration with AMAG, the Company developed a subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® (hydroxyprogesterone caproate injection) under an exclusive license and development agreement. The Makena^® subcutaneous auto injector drug-device combination product, which is a ready-to-administer treatment indicated to reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered at least one preterm baby in the past, was approved by the FDA in February 2018 and launched for commercial sale by AMAG in the first quarter of 2018. The Company is the exclusive supplier of the devices and final assembled and packaged commercial product to AMAG.

Through a license, development and supply agreement with Teva, Antares developed and is the exclusive supplier of the device for Teva’s Epinephrine Injection USP, which is indicated for emergency treatment of severe allergic reactions in adults and certain pediatric patients. The product was approved by the FDA in August 2018 and launched for commercial sale in late fourth quarter of 2018.

The Company is also developing two multi-dose pen injector products in collaboration with Teva, a combination drug device rescue pen in collaboration with Pfizer, a combination drug device product with Idorsia, and has other ongoing internal research and development programs.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Antares Pharma, Inc. and its two wholly-owned foreign subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant accounting estimates relate to revenue recognition, inventory valuation, and the valuation of equity instruments used in stock-based compensation. Actual results could differ from these estimates.

82

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Accounting Pronouncements Recently Adopted

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-02 Leases (“Topic 842”) and related amendments effective January 1, 2019, electing the package of practical expedients and applying the transition provisions as of the effective date. Reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts, as reported under previous GAAP, were not adjusted. As of December 31, 2018, the Company had non-cancellable operating leases for its corporate headquarters facility in Ewing, New Jersey, and its office, research and development facility in Plymouth, Minnesota, a suburb of Minneapolis, which were not previously required to be recorded on the balance sheet. As a result of the adoption of Topic 842, the Company recognized approximately $1.0 million in right-of-use assets and lease liabilities in connection with its existing operating leases. The adoption of Topic 842 on January 1, 2019 did not have a significant impact on the Company’s consolidated results of operations or cash flows.

On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments (“ASC 606”), applying the modified retrospective transition method to all contracts that were not completed as of the date of adoption. ASC 606 superseded the previous revenue recognition requirements in Topic 605 Revenue Recognition (“ASC 605”) and requires entities to recognize revenues when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The cumulative effect of the adoption of the new standard was not material to the Company’s consolidated financial statements. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts, as reported under ASC 605, were not adjusted. In accordance with ASC 605, revenue was previously recognized when all of the following criteria were met: persuasive evidence of the arrangement exists; delivery has occurred with no remaining performance obligations; the fee is fixed or determinable; and collectability is reasonably assured.

Recent Accounting Pronouncements Not Yet Adopted as December 31, 2019

In 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019.

However, in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases: Effective Dates, which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting companies. A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023. The Company has historically had minimal credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Accounting for Implementation Costs Incurred in Cloud Computing Arrangement that is a Service Contract, providing new guidance on a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This standard will be effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and 606. The guidance clarifies that certain transactions between collaborative arrangement participants should be accounted for under the ASC 606 revenue guidance, adds unit of account guidance to the collaborative arrangement guidance to align with the revenue standard, and clarifies presentation guidance for transactions with a collaborative arrangement participant that is not accounted for under the revenue standard. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 

83

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Foreign Currency Translation

The majority of the foreign subsidiaries’ revenues are denominated in U.S. dollars, and any required funding of the subsidiaries is provided by the U.S. parent. Nearly all operating expenses of the foreign subsidiaries are denominated in Swiss Francs. Additionally, bank accounts held by foreign subsidiaries are denominated in Swiss Francs, there is a low volume of intercompany transactions and there is not an extensive interrelationship between the operations of the subsidiaries and the parent company. As such, the Company has determined that the Swiss Franc is the functional currency for its foreign subsidiaries. The reporting currency for the Company is the United States Dollar (“USD”). The financial statements of the Company’s foreign subsidiaries are translated into USD for consolidation purposes. All assets and liabilities are translated using period-end exchange rates and statements of operations items are translated using average exchange rates for the period. The resulting translation adjustments are recorded as a separate component of stockholders’ equity, comprising all of the accumulated other comprehensive income (loss).  Sales to certain customers and purchases from certain vendors by the U.S. parent are in currencies other than the USD and are subject to foreign currency exchange rate fluctuations. Foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits at commercial banks and highly liquid investments in money market funds with maturities of three months or less. Cash equivalents are remeasured and reported at fair value each reporting period, in accordance with ASC Topic 820, Fair Value Measurements (“ASC 820”) based on quoted market prices, which is a Level 1 input within the three-level valuation hierarchy for disclosure of fair value measurements, and totaled $11,153 and $20,569 as of December 31, 2019 and 2018, respectively.

Investments

From time to time, the Company also invests in U.S. Treasury bills and government agency notes that are classified as held-to-maturity because of the Company’s intent and ability to hold the securities to maturity. Investments with maturities of one year or less are classified as short-term. The investment securities are carried at their amortized cost and fair value is determined by quoted market prices for identical or similar securities.  At December 31, 2019, the Company’s short-term investments had a carrying value of $22,520, which approximated fair value. The Company held no investments as of December 31, 2018. 

Accounts Receivable

Trade accounts receivable represents amounts billed to customers and are stated at the amount the Company expects to collect. The Company considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer and changes in customer payment terms.  At December 31, 2019, the Company’s trade accounts receivable balance was due primarily from Teva, AMAG and distributors.  Each of these customers has historically paid timely and demonstrated creditworthiness. Accordingly, the Company believes the risk of accounts being uncollectible is minimal and had no significant allowances for doubtful accounts established as of December 31, 2019 or 2018.  If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances may be required.  The Company had no material write-offs to bad debt expense in 2019, 2018 or 2017.

Royalties receivable from partners are included in accounts receivable and are typically payable to the Company within 45 to 60 days after the end of each quarter and or annual period in which they were earned.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. Certain components of the Company’s products are provided by a limited number of vendors, and the Company’s production and assembly operations are outsourced to third-party suppliers where substantially all of the Company’s inventory is located.  Disruption of supply from key vendors or third-party suppliers may have a material adverse impact on the Company’s operations.

84

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Inventory consisted of the following:

	December 31,		December 31,
	2019		2018
Raw material	$	325	$	26
Work in process		8,390		7,622
Finished goods		7,285		3,702
	$	16,000	$	11,350

The Company provides reserves for potentially excess, dated or obsolete inventories based on estimates of forecasted product demand and the likelihood of consumption in the normal course of business, considering the expiration dates of the inventories on hand, planned production volumes and lead times required for restocking of customer inventories. Although every effort is made to ensure that forecasts and assessments are reasonable, changes to these assumptions are possible. In such cases, estimates may prove inaccurate and result in an understatement or overstatement of the reserves required to fairly state such inventories. The Company’s reserve for excess, dated or obsolete inventory was $464 and $847 at December 31, 2019 and 2018, respectively. In 2019, the Company wrote off inventory of $708 and increased the reserve for excess, dated or obsolete inventory by $325. In 2018, the Company wrote off $255 of inventory and increased the reserve for excess, dated or obsolete inventory by $592.

Contract Assets

Contract assets are recognized when control of goods or services has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract. Costs that have been incurred in connection with development services provided to partners for which the associated revenue has not yet been recognized are also recorded as contract assets, and totaled $1,534 and $204 as of December 31, 2019 and 2018, respectively.  As of December 31, 2018, contract assets also included a $5,000 installment in connection with the sale and transfer of assets to Ferring as discussed in Note 9, which was received during the year ended December 31, 2019.

Equipment, Molds, Furniture, and Fixtures

Equipment, molds, furniture, and fixtures are stated at cost and are depreciated using the straight-line method over their estimated useful lives ranging from three to ten years. The Company’s equipment, molds, furniture and fixtures consisted of the following:

	December 31,			December 31,
	2019			2018
Furniture, fixtures and office equipment	$	2,480		$	2,331
Production molds and equipment		20,749			19,678
Molds and tooling in process		1,512			456
Construction in process		989			—
Less: accumulated depreciation		(9,769	)		(7,570	)
	$	15,961		$	14,895

Depreciation expense was $2,205, $2,125 and $1,536 for the years ended December 31, 2019, 2018 and 2017, respectively.

Leases

The Company recognizes right-of-use (“ROU”) assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. Certain of the Company’s lease arrangements contain renewal options that have not been included in the determination of the lease term, as they are not reasonably certain of exercise. For contracts that contain lease and non-lease components, the Company accounts for both components as a single lease component. Variable lease payments are expensed as incurred.

85

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Intangible assets

The Company capitalizes external legal costs and filing fees associated with obtaining patent rights for approved commercial and partnered products when there are projected future cash flows associated with the patent. These capitalized patent costs are amortized on a straight-line basis over the shorter of the life of the patent or the estimated useful life of the patent, which typically ranges from five to fifteen years beginning on the earlier of the date the patent is issued or the first commercial sale of product utilizing such patent rights. The Company periodically reviews capitalized patent costs to identify any amounts to be charged to expense for patents that are no longer being pursued or for which there are no future revenues or cash flows anticipated.

The Company capitalizes external legal patent defense costs and costs for pursuing patent infringements when it determines that a successful outcome is probable and will lead to an increase in the value of the patent.  The capitalized costs are amortized over the remaining life of the related patent.  If changes in the anticipated outcome were to occur that reduce the likelihood of a successful outcome of the entire action to less than probable, the capitalized costs would be charged to expense in the period in which the change is determined.

The gross carrying amount and accumulated amortization of patents was $3,661 and $3,183, respectively at December 31, 2019, and $3,794 and $2,963, respectively, at December 31, 2018. Patent amortization expense for the years ended December 31, 2019, 2018 and 2017 was $352, $599 and $568, respectively, and is recorded in selling, general and administrative expenses in the consolidated statements of operations.  The Company’s estimated aggregate patent amortization expense for the next five years is $95, $89, $83, $68 and $49 in 2020, 2021, 2022, 2023 and 2024, respectively.  

Impairment of Long-Lived Assets and Intangibles

Long-lived assets and intangibles, including patent rights, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset or asset group. This analysis can be very subjective; however, the Company utilizes the expected future undiscounted cash flows from signed license and distribution agreements and other contracts with customers to substantiate the recoverability of its long-lived assets. If the sum of the undiscounted cash flows is less than the carrying value of the asset, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Goodwill

Goodwill is evaluated for impairment annually at December 31, or more frequently if an event occurs or circumstances change that indicate that the carrying value may not be recoverable.  In performing the annual impairment test, the Company compares the fair value of the reporting unit to the carrying amount and would recognize an impairment charge to goodwill for the amount by which the carrying amount exceeds the reporting unit’s fair value.  

At December 31, 2019 and 2018, the Company had goodwill with a carrying value of $1,095, attributable to its single reporting unit. Based on the results of its evaluations, the Company determined that goodwill was not impaired, and no impairment losses were recognized in the years ended December 31, 2019, 2018, and 2017, respectively.

Revenue Recognition

The Company generates revenue from proprietary and partnered product sales, license and development activities and royalty arrangements.  Revenue is recognized when or as the Company transfers control of the promised goods or services to its customers at the transaction price, which is the amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services.

At inception of each contract, the Company identifies the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determines the transaction price including any variable consideration, allocates the transaction price to the distinct performance obligations and determines whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company reassess its reserves for variable consideration at each reporting date and makes adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known.

86

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The Company has elected to recognize the cost for freight and shipping activities as fulfilment cost. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying goods are transferred to the customer. The related shipping and freight charges incurred by the Company are included in cost of revenue.

Proprietary Product Sales

The Company sells its proprietary products OTREXUP^® and XYOSTED^® primarily to wholesale and specialty distributors. Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs described below.

The determination of certain of these reserves and sales allowances require management to make a number of judgements and estimates to reflect the Company’s best estimate of the transaction price and the amount of consideration to which it believes it is ultimately entitled to receive. The expected value is determined based on unit sales data, contractual terms with customers and third-party payers, historical and expected utilization rates, any new or anticipated changes in programs or regulations that would impact the amount of the actual rebates, customer purchasing patterns, product expiration dates and levels of inventory in the distribution channel. Reserves for prompt payment discounts are recorded as a reduction in accounts receivable. Reserves for returns, distributor fees, rebates and customer co-pay support programs are included within current liabilities in our consolidated balance sheets.

Wholesaler Distribution Fees. Distribution fees are paid to certain wholesalers based on contractually determined rates and units purchased. Since the fee paid to the customer is not for a distinct good or service, the consideration is recognized as a reduction of the transaction price of the goods delivered in accordance with ASC 606. The Company accrues the estimated fee due at the time of sale based on the contracted price and adjusts the accrual at each reporting period, if necessary, to reflect actual experience.

Prompt Pay Discounts. The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. Based on historical experience, customers take advantage of this discount and accordingly the Company accrues 100% of the cash discounts offered by reducing accounts receivable and recognizing the discount as a reduction of revenue in the same period the related sales are made. The accrual is reviewed at each reporting period and adjusted if actual experience differs from estimates.

Chargebacks. The Company provides discounts primarily to authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs and various organizations under Medicaid contracts and regulations. These entities purchase products from the wholesale distributors at a discounted price, and the wholesale distributors then charge back to the Company the difference between the current wholesale acquisition cost and the price the entity paid for the product. The Company will estimate and accrue chargebacks based on estimated wholesaler inventory levels, current contract prices and historical chargeback activity. Chargebacks are recognized as a reduction of revenue in the same period the related revenue is recognized.

Rebates. The Company participates in certain plan rebate programs, which provide discounted prescriptions to qualified insured patients.  Under these rebate programs, the Company will pay a rebate to the third-party administrator of the program, generally two to three months after the quarter in which prescriptions subject to the rebate are filled. The Company estimates and accrues for these rebates based on current contract prices, historical and estimated future percentages of product sold to qualified patients.  Rebates are recognized as a reduction of revenue in the same period the related revenue is recognized.

Patient Discount Programs. The Company also offers discount cards, co-pay coupons and free trial programs to off-set the cost of prescriptions to patients. The Company estimates the total amount that will be redeemed or utilized based on historical redemption experience and on levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.

Product Returns. Consistent with industry practice, the Company generally offers wholesalers and specialty distributors a limited right to return products, generally within six months prior to and 12 months following the product’s expiration date. The Company’s propriety products generally have expiration dates ranging from 24 to 33 months. Product returns are estimated and recorded at the time of sale based on historical return patterns. Actual returns are tracked by individual production lots and charged against reserves. Returns reserves may be adjusted, if necessary, if actual returns differ from historical estimates. Management also monitors and takes into consideration the amount of estimated product inventory in the distribution channel, product dating and any known or expected changes in the marketplace when establishing the estimated rate of returns.

87

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The following presents changes in reserves for product returns and sales allowances:

				Patient						Wholesaler			Prompt
	Rebates and			Discount						Distribution			Payment
	Chargebacks			Programs			Returns			Fees			Discounts
Balance at December 31, 2017	$	1,315		$	115		$	245		$	465		$	84
Accruals and adjustments		9,586			2,429			1,628			3,519			742
Payments and other reserve reductions		(8,207	)		(1,254	)		(720	)		(3,194	)		(610	)
Balance at December 31, 2018		2,694			1,290			1,153			790			216
Accruals and adjustments		15,383			6,716			2,520			6,393			1,491
Payments and other reserve reductions		(11,769	)		(7,161	)		(3,303	)		(5,500	)		(1,387	)
Balance at December 31, 2019	$	6,308		$	845		$	370		$	1,683		$	320

Partnered Product Sales

The Company is party to several license, development, supply and distribution arrangements with pharmaceutical partners, under which the Company produces and is the exclusive supplier of certain products, devices and/or components. Revenue is recognized when or as control of the goods transfers to the customer as follows:

The Company is the exclusive supplier of the Makena^® subcutaneous auto injector product to AMAG. Because the product is custom manufactured for AMAG with no alternative use and the Company has a contractual right to payment for performance completed to date, control is continuously transferred to the customer as product is produced pursuant to firm purchase orders. Revenue is recognized over time using the output method based on the contractual selling price and number of units produced.  The amount of revenue recognized in excess of the amount shipped/billed to the customer, if any, is recorded as contract assets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.

All other partnered product sales are recognized at the point in time in which control is transferred to the customer, which is typically upon shipment. Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no price protection or right of return. Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, if any.  For example, the Company sells Sumatriptan Injection USP to Teva at cost and is entitled to receive 50 percent of the net profits from commercial sales made by Teva, payable to the Company within 45 days after the end of the quarter in which the commercial sales are made. The Company recognizes revenue, including the estimated variable consideration it expects to receive for contract margin on future commercial sales, upon shipment of the goods to Teva.  The estimated variable consideration is recognized at an amount the Company believes is not subject to significant reversal based on historical experience, and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.

Licensing and Development Revenue

The Company has entered into several license, development and supply arrangements with pharmaceutical partners under which the Company grants a license to its device technology and know-how and provides research and development services that often involve multiple performance obligations and highly customized deliverables. For such arrangements, the Company identifies each of the promised goods and services within the contract and the distinct performance obligations at inception, and allocates consideration to each performance obligation based on relative standalone selling price, which is generally determined based on the expected cost plus margin.

If the contract includes an enforceable right to payment for performance completed to date and performance obligations are satisfied over time, the Company recognized revenue over the development period using either the input or output method depending on which is most appropriate given the nature of the distinct deliverable. For other contracts that do not contain an enforceable right to payment for performance completed to date, revenue is recognized when control is transferred to the customer.  Factors that may indicate that the transfer of control has occurred include the transfer of legal title, transfer of physical possession, the customer has obtained the significant risks and rewards of ownership of the assets and the Company has a present right to payment.

88

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The Company’s typical payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations. The Company records a liability for cash received in advance of performance, which is presented within deferred revenue on the consolidated balance sheet and recognized as revenue when the associated performance obligations have been satisfied. The Company recognized $1.0 million in licensing and development revenue in connection with contract liabilities that were outstanding as of December 31, 2018 and satisfied during the year ended December 31, 2019.

License fees and milestones received in exchange for the grant of a license to the Company’s functional intellectual property (“IP”) such as patented technology and know-how in connection with a partnered development arrangement are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is not generally distinct from the non-licensed goods or services to be provided under the contract. Milestone payments that are contingent upon the occurrence of future events, are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal will not occur when the associated uncertainty is resolved.

Royalties

The Company earns royalties in connection with licenses granted under license and development arrangements with partners. Royalties are based upon a percentage of commercial sales of partnered products with rates ranging from mid single digit to low double digit and are tiered based on levels of net sales. These sales-based royalties, for which the license was deemed the predominant element to which the royalties relate, are estimated and recognized in the period in which the partners’ commercial sales occur.  The royalties are generally reported and payable to the Company within 45 to 60 days of the end of the period in which the commercial sales are made.  The Company bases its estimates of royalties earned on actual sales information from its partners when available or estimated prescription sales from external sources and estimated net selling price. If actual royalties received are different than amounts estimated, the Company would adjust the royalty revenue in the period in which the adjustment becomes known.

Remaining Performance Obligations

Remaining performance obligations represents the transaction price of firm orders and development contract deliverables for which work has not been completed or orders fulfilled, and excludes potential purchase orders under ordering-type supply contracts with indefinite delivery or quantity.  As of December 31, 2019, the aggregate value of remaining performance obligations, excluding contracts with an original expected length of one year or less, was $7.5 million. The Company expects to recognize revenue on the remaining performance obligations over the next three years, with the majority being recognized in the next twelve months.

Share-Based Compensation

The Company utilizes share-based compensation in the form of stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”).  The Company records compensation expense associated with share-based awards granted to employees at the fair value of the award on the date of grant.  The Company uses the Black-Scholes option valuation model to determine the fair value of stock options. The fair values of RSU and PSU grants containing service or performance conditions are based on the market value of the Company’s Common Stock on the date of grant.  The fair value of PSUs containing a market condition are estimated using a Monte Carlo simulation. The value of the portion of the award that is ultimately expected to vest is expensed ratably over the requisite service period as compensation expense in the consolidated statements of operations. Forfeitures are recorded as incurred. Assumptions concerning the Company’s stock price volatility and projected employee exercise behavior over the contractual life of the award impact the estimated fair value of the stock option awards.

Research and Development

Research and development expenses include costs directly attributable to the conduct of research and development programs including personnel costs, materials and supplies associated with design work and prototype development, FDA filing fees and the cost of services provided by outside contractors such as expenses related to clinical trials.  All costs associated with research and development activities are expensed as incurred.  

89

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Net Loss Per Share

Basic net loss per share is computed by dividing net income or loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed similar to basic net loss per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options or warrants were exercised and that the proceeds from such exercise were used to acquire shares of common stock at the average market price during the reporting period.  All potentially dilutive common shares were excluded from the calculation because they were anti-dilutive for all annual periods presented.  Potentially dilutive securities excluded from dilutive loss per share were 17,103, 17,147 and 14,761 at December 31, 2019, 2018 and 2017, respectively.

Segment Information

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker currently evaluates the Company’s operations as a whole from a number of different operational perspectives, including but not limited to, on a product-by-product, customer and partner basis. The Company derives all significant revenues from self-administered parenteral pharmaceutical products and technologies, and has a single reportable operating segment of business.

Going Concern

Management is responsible for evaluating, and providing disclosure of uncertainties about, the Company’s ability to continue as a going concern. As of December 31, 2019, the Company had cash, cash equivalents and investments of $45,721. Based on management’s evaluation, management concluded there is no substantial doubt or uncertainty about the Company’s ability to meet its obligations within one year from the date the consolidated financial statements were issued.

3. Leases

As of December 31, 2018, the Company had non-cancellable operating leases for its corporate headquarters facility in Ewing, New Jersey, and its office, research and development facility in Plymouth, Minnesota, a suburb of Minneapolis. In connection with the adoption of Topic 842 on January 1, 2019, the Company recognized approximately $1.0 million in right-of-use assets and lease liabilities. During the first quarter of 2019, the Company also entered into a master operating lease arrangement for a fleet of vehicles for use by its sales force.  

In May 2019, the Company amended its existing lease of the Company’s corporate headquarters to extend the lease term for an additional two years. The lease extension period commences on November 1, 2019 and expires on October 31, 2021.

On July 1, 2019, the Company entered into a new operating lease for approximately 75,000 square feet of office, laboratory, manufacturing and warehousing space in Minnetonka, Minnesota. The initial lease term is 12.5 years and the Company may renew the lease, at its option, for one additional renewal period of three years. The landlord delivered possession of the premises to the Company on July 1, 2019 and payment of rent commenced on January 1, 2020.  The lease provides for the payment of fixed base rent and additional rent for operating expenses, insurance premiums and taxes. The Company is performing the build-out of the premises at the Company’s cost with an allowance for tenant improvement to be reimbursed by the landlord up to $1.2 million.

90

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The leases require payment of all executory costs such as maintenance and property taxes. Operating lease costs were $1,391 for the year ended December 31, 2019. Cash paid for amounts included in the measurement of operating lease liabilities was $1,401 for the year ended December 31, 2019 and non-cash operating lease ROU assets obtained in exchange for operating lease obligations were $6,511. As of December 31, 2019, the weighted average discount rate was approximately 8.3% and the weighted average remaining lease term was 8.4 years.

The following table summarizes the Company’s operating lease maturities as of December 31, 2019:

2020	$	1,552
2021		1,436
2022		893
2023		638
2024		650
Thereafter		4,933
Total remaining lease payments		10,102
Less:  Interest		(3,412	)
Total lease liabilities	$	6,690

Under the prior leasing standard, future minimum lease payments under operating leases as of December 31, 2018 were as follows:

2019	$	566
2020		233
2021		238
2022		60
Thereafter		—
Total future minimum lease payments	$	1,097

Rent expense for operating leases was $695 and $656 for the years ended December 31, 2018 and 2017, respectively.  

4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:

	December 31,		December 31,
	2019		2018
Accrued employee compensation and benefits	$	4,479	$	3,715
Product returns and sales allowances		9,206		5,927
Other liabilities		2,838		2,355
	$	16,523	$	11,997

5. Long-Term Debt

On June 6, 2017, the Company entered into a loan and security agreement (the “Loan Agreement”) with Hercules Capital, Inc., for a term loan of up to $35.0 million (the “Term Loan”), under which the Company initially borrowed $25.0 million (“Tranche I”), the proceeds of which are being used for working capital and general corporate purposes. The Term Loan is secured by substantially all of the Company’s assets, excluding intellectual property, and will mature on July 1, 2022. Interest accrues at a calculated prime-based variable rate with a maximum interest rate of 9.50%. The interest rate in effect as of December 31, 2019 and 2018 was 9.25% and 9.5%, respectively. Payments under the Loan Agreement are interest only until the first principal payment is due, which was originally on August 1, 2019.

91

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

On June 26, 2019, the Company entered into a First Amendment (the “Amendment”) to the Loan Agreement, which increased the aggregate principal amount available under the Term Loan from $35.0 million to $50.0 million and extended the interest-only payment period of the Term Loan to August 1, 2021, which may be further extended to August 1, 2022 if the Company achieves a certain loan extension milestone. Upon signing of the Amendment, an additional $15.0 million (“Tranche II”) was funded to the Company. The Term Loan maturity date remained July 1, 2022, but may be extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone. The Company may, but is not obligated to, request one or more additional advances of at least $5.0 million, not to exceed $10.0 million in the aggregate (“Tranche III”). The Company’s option to request additional advances is available between January 1, 2020 and September 15, 2020.

The Company is required to pay an end of term fee (“End of Term Charge”) equal to 4.25% of Tranche I and 3.95% of the borrowings under Tranche II and Tranche III, payable upon the earlier of July 1, 2022 or repayment of the loan. The Loan Agreement also imposes a prepayment fee of 1.0% to 3.0% if any or all of the balance is prepaid prior to the maturity date

As of December 31, 2019, and 2018, the carrying value of the Term Loan was $40,395 and $25,126, respectively, which consisted of the principal balance outstanding and the End of Term Charge accrual, less unamortized debt issuance costs that are being amortized/accrued to interest expense over the term of the Term Loan using the effective interest method. The fair value of the Company’s debt is estimated to approximate the carrying value based on management’s understanding of current market conditions and rates it could obtain for similar loans.

Future principal payments under the Term Loan, including the contractual End of Term Charge, are as follows:

2020	$	—
2021		16,215
2022		25,440
	$	41,655

6. Stockholders’ Equity

In August 2017, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) under which the Company could offer and sell, from time to time and at its sole discretion, shares of its common stock having an aggregate offering price of up to $30.0 million through Cowen as the Company’s sales agent and/or as principal. Cowen could sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended (the “ATM Facility”.) The Sales Agreement required the Company to pay a commission of 3.0% of the gross sales proceeds of any common stock sold through Cowen.

During year ended December 31, 2019, the Company sold 2,307 shares of common stock under the ATM Facility, resulting in net offering proceeds to the Company of $7,781. The Company issued 2,137 shares of common stock pursuant to the Offering and Sales Agreement during the year ended December 31, 2018 resulting in net offering proceeds to the Company of $7,114. No sales of common stock were made in the period ended December 31, 2017.

On June 26, 2019, the Company delivered written notice to Cowen that it was terminating the Sales Agreement effective July 6, 2019, and accordingly the ATM Facility is no longer available for use.

7. Share-Based Compensation

The Company has an Equity Compensation Plan (the “Plan”), which was amended and restated pursuant to stockholder approval on June 13, 2019 in order to increase the number of shares available for issuance under the Plan by 8,000, extend the term of the Plan and modify certain provisions. The Plan allows for grants in the form of incentive stock options, nonqualified stock options, stock units, stock awards, stock appreciation rights, and other stock-based awards. All of the Company’s officers, directors, employees, consultants and advisors are eligible to receive grants under the Plan.  The cumulative number of shares that have been authorized for issuance under the Plan to date is 40,200 and the maximum number of shares of stock that may be granted to any one participant during a calendar year is 4,000 shares.  Options to purchase shares of common stock are granted at exercise prices not less than 100% of fair market value on the dates of grant.  The term of each option is ten years and the options typically vest over a three-year period with a minimum vesting period of one year.  As of December 31, 2019, the Plan had approximately 7,402 shares available for grant.  

92

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Stock option exercises, and the vesting of restricted stock and performance stock awards, are satisfied through the issuance of new shares.

Stock Options

Stock option activity under the Plan as of and for the three years ended December 31, 2019 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price ($)		Term (Years)		Value ($)
Outstanding at December 31, 2016		11,314			1.84
Granted/Issued		2,986			2.67
Exercised		(1,311	)		1.38				2,226
Cancelled/Forfeited		(840	)		2.68
Outstanding at December 31, 2017		12,149			2.04
Granted/Issued		2,693			2.72
Exercised		(477	)		1.14				768
Cancelled/Forfeited		(286	)		2.43
Outstanding at December 31, 2018		14,079			2.19		6.8		8,534
Granted/Issued		2,489			3.01
Exercised		(2,572	)		1.76				6,477
Cancelled/Forfeited		(135	)		2.81
Outstanding at December 31, 2019		13,861			2.41		6.7		31,713
Exercisable at December 31, 2019		10,033			2.22		5.8		24,835

The per share weighted average fair value of options granted during 2019, 2018 and 2017 was estimated as $1.54, $1.45 and $1.37, respectively, on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below.  Expected volatilities are based on the historical volatility of the Company’s stock.  The weighted average expected life is based on both historical and anticipated employee behavior.

	December 31,
	2019			2018			2017
Risk-free interest rate		1.9	%		2.8	%		1.8	%
Annualized volatility		55.7	%		53.7	%		53.3	%
Weighted average expected life, in years		5.5			6.0			6.0
Expected dividend yield		0.0	%		0.0	%		0.0	%

Option exercises during 2019, 2018 and 2017 resulted in proceeds of $4,405, $474 and $1,816, respectively, and in the issuance of shares of common stock of 2,529 in 2019, 447 in 2018 and 1,311 in 2017. In 2019 and 2018, certain options were net exercised, whereby the Company withheld 43 and 30 shares, respectively, the fair value of which was equivalent to the aggregate exercise price and tax withholding on the date of exercise  There were no net share exercises in 2017.

Long Term Incentive Program

The Company’s Board of Directors has approved a long-term incentive program (“LTIP”) for the benefit of the Company’s senior executives.  Pursuant to the LTIP, the Company’s senior executives are awarded stock options, restricted stock units (“RSU”) and performance stock units (“PSU”) with targeted values based on similar award structures granted by the Company’s peer group.  The stock options have a ten-year term, have an exercise price equal to the closing price of the Company’s common stock on the date of grant, vest in quarterly installments over three years, were otherwise granted on the same standard terms and conditions as other stock options granted pursuant to the Plan and are included in the stock options table above. The RSUs vest in three equal annual installments, and the PSU awards vest and convert into shares of the Company’s common stock based on the Company’s attainment of certain performance goals over a performance period, which is typically three years.

93

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The performance stock unit awards and restricted stock unit awards granted under the long-term incentive program are summarized in the following table:

	Performance Stock Units					Restricted Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value ($)		Number of Shares			Weighted Average Grant Date Fair Value ($)
Outstanding at December 31, 2016		1,347			1.50		823			1.39
Granted		689			3.12		689			2.69
Vested/settled		—					(288	)		1.49
Forfeited/expired		(581	)		2.16		(67	)		1.70
Outstanding at December 31, 2017		1,455			2.20		1,157			2.12
Granted		611			2.89		611			2.70
Vested/settled		(173	)		2.18		(500	)		1.99
Forfeited/expired		(51	)		3.01		(42	)		2.68
Outstanding at December 31, 2018		1,842			2.41		1,226			2.44
Granted		593			2.99		789			2.92
Incremental shares earned		59			1.25		—			—
Vested/settled		(415	)		1.18		(614	)		2.19
Forfeited/expired		(238	)		1.12		—			—
Outstanding at December 31, 2019		1,841			3.00		1,401			2.82

The outstanding balance of PSU awards is stated at the target number of shares to be awarded upon attainment of certain performance goals. Depending on the outcome of the related performance goals, a recipient may ultimately earn a number of shares that is greater or less than the target number of units granted, ranging from 0% to 150%. The balance of PSU awards outstanding as of December 31, 2019 included 662 units granted in 2017 with a performance period ended December 31, 2019 that were subsequently deemed to be achieved and approved for settlement in the first quarter of 2020 for a total of 388 shares.

In each of the years in the three-year period ended December 31, 2019, the LTIP awards include PSUs that will be earned based on the Company’s total shareholder return (“TSR”) as compared to the Nasdaq Biotechnology Index (“NBI”) at the end of the respective annual performance periods. The fair values of the TSR PSUs granted were determined using a Monte Carlo simulation and utilized the following inputs and assumptions:

	2019 Award			2018 Award			2017 Award
Closing stock price on grant date	$	2.92		$	2.70		$	2.66
Performance period starting price	$	3.01		$	1.92		$	2.17
Term of award (in years)		2.55			2.57			2.57
Volatility		63.7	%		64.9	%		54.6	%
Risk-free interest rate		1.79	%		2.56	%		1.39	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Fair value per TSR PSU	$	3.18		$	3.27		$	3.10

The performance period starting price is measured as the average closing price over the last 20 trading days prior to the performance period start. The Monte Carlo simulation model also assumed correlations of returns of the prices of the Company’s common stock and the common stocks of the NBI companies and stock price volatilities of the NBI companies.  The fair value of the target number of shares that can be earned under the TSR PSUs is being recognized as compensation expense over the term of the award. Other PSU awards that are not market-based awards are expensed using the grant date fair value of shares expected to vest over the remaining performance period when it becomes probable that the related performance goal will be achieved.

94

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

LTIP awards are generally net-share settled such that the Company withholds shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remits cash to the appropriate taxing authorities. Total shares withheld for net-settled awards were 409, 211 and 98 in 2019, 2018 and 2017, respectively, and were based on the value of the shares on their vesting date as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities were $1,131, $543 and $249 in 2019, 2018 and 2017, respectively, and are reflected as a financing activity within the consolidated statements of cash flows. These net-share settlements reduced the number of shares that would have otherwise been issued as a result of the vesting. 

Share-based Compensation Expense

The Company incurred compensation costs in connection with share-based awards in each of the years in the three-year period ended December 31, 2019 as follows:

	December 31,
	2019		2018		2017
Stock options	$	3,436	$	2,956	$	2,378
Restricted stock units		1,830		1,173		701
Performance stock units		1,204		798		411
Total share-based compensation expense	$	6,470	$	4,927	$	3,490

As of December 31, 2019, there was $4,780 of total unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of approximately 1.9 years

8. Employee 401(k) Savings Plan

The Company sponsors a 401(k) defined contribution retirement savings plan that covers all U.S. employees who have met minimum age and service requirements. Under the plan, eligible employees may contribute a portion of their annual compensation into the plan up to the IRS annual limits. The Company has elected to make matching contributions to the plan based on a percentage of employee contributions.  For the years ended December 31, 2019, 2018 and 2017, the Company’s contributions to the plan were $993, $814 and $590, respectively.

9. Sale of Assets

In October 2017, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Ferring International Center S.A. (together with Ferring Pharmaceuticals Inc. and Ferring B.V. individually and collectively referred to as “Ferring”) to sell the worldwide rights, including certain assets, related to the needle-free auto injector device product line for a total purchase price of $14.5 million. The purchase price was to be paid in four installments consisting of the following: a $2.0 million upfront payment, which was received upon entry into the Asset Purchase Agreement and the transfer of certain assets; a second installment of $2.75 million received upon delivery of certain documentation and satisfaction of certain conditions primarily related to product manufacturing; a third installment of $4.75 million received upon satisfaction of certain conditions, including further document transfer, the successful completion of a regulatory audit by a notified body, and a pilot manufacturing run under Ferring’s supervision; and a final installment of $5.0 million due upon Ferring’s receipt of the CE Mark needed to continue to commercialize the product in certain territories and the final transfer of certain product-related inventory, equipment and agreements to Ferring (the “Completion Date”).

On May 1, 2019, the Company and Ferring entered into the First Amendment of the Asset Purchase Agreement (the “First Amendment”) to extend the term of the agreement to the third anniversary, to provide for the manufacture and delivery of additional product by Antares to Ferring prior to the Completion Date, and to bifurcate the payment of the final installment of the purchase price such that $2.5 million was paid to the Company upon the First Amendment effective date, with the final remaining payment of $2.5 million to be paid at the Completion Date, which was received in October 2019.

95

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

The Company previously recorded the gain on sale of assets as it was determined that, based on the satisfaction of certain conditions and the status of remaining closing requirements, it was probable that a significant reversal of the gain would not occur. The final installments received were recorded as a reduction to the related contract asset balance and a cash inflow from investing activities in the consolidated statement of cash flows for the year ended December 31, 2019.

10. Income Taxes

The Company was subject to taxes in both the U.S. and Switzerland in each of the years in the three-year period ended December 31, 2019. Income (loss) before income taxes was derived from the following jurisdictions:

	2019			2018			2017
U.S.	$	(1,734	)	$	(6,696	)	$	(16,762	)
Switzerland		(293	)		181			19
	$	(2,027	)	$	(6,515	)	$	(16,743	)

Effective tax rates differ from statutory income tax rates in the years ended December 31, 2019, 2018 and 2017 as follows:

	2019			2018			2017
Statutory income tax rate		(21.0	)%		(21.0	)%		(34.0	)%
State income taxes		(14.4	)		(3.8	)		(6.1	)
Valuation allowance increase		59.9			20.8			(102.0	)
Effect of foreign operations		1.0			(0.2	)		—
Change in unused net operating loss and credit carryforwards		(24.7	)		(3.9	)		2.7
Stock-based compensation		(22.3	)		(0.2	)		(3.5	)
162(m) limitation		18.2			2.9			—
Nondeductible items		1.8			3.2			(1.6	)
Impact of Tax Cuts and Jobs Act		1.5			2.2			144.5
		0.0	%		0.0	%		0.0	%

96

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Deferred tax assets (liabilities) as of December 31, 2019 and 2018 consist of the following:

	2019			2018
Gross deferred tax assets:
Net operating loss carryforward – U.S.	$	41,780		$	42,966
Net operating loss carryforward – Switzerland		52			7
Research and development tax credit carryforward		7,559			6,891
Deferred revenue		—			105
Stock-based compensation		1,999			2,324
Inventory reserve		307			440
Compensation accruals		1,154			904
Product reserves		2,329			1,302
Operating lease liabilities		1,763			—
163j interest expense limitation		475			438
Amortization		585			562
Other		61			329
Total deferred tax assets		58,064			56,268
Deferred tax liabilities:
Depreciation		(1,807	)		(1,511	)
Right-of-use asset, operating leases		(1,648	)		—
Installment obligations		—			(1,363	)
Total deferred tax liabilities		(3,455	)		(2,874	)
Net deferred tax asset before valuation allowance		54,609			53,394
Less valuation allowance		(54,609	)		(53,394	)
Net deferred tax asset	$	—		$	—

The valuation allowance for deferred tax assets as of December 31, 2019 and 2018 was $54,609 and $53,394, respectively.  The total valuation allowance increased $1,215 for the year ended December 31, 2019 and increased $1,356 for the year ended December 31, 2018.

At both December 31, 2019 and 2018, the Company had deferred tax assets, net of valuation allowances, of zero.  In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible or in which net operating loss or tax credit carryforwards can be utilized.  After considering both positive and negative evidence with respect to the U.S. deferred tax assets, management determined that as of December 31, 2019, it continues to be more likely than not that the U.S. deferred tax assets will not be realized and has recorded a valuation allowance against all U.S. deferred tax assets.

The Company has a U.S. federal net operating loss carryforward at December 31, 2019 of $166,196, which, subject to limitations of Internal Revenue Code (“IRC”) Section 382, is available to reduce income taxes payable in future years. If not used, the portion of the carryforward generated before 2018 will expire in years 2020 through 2037, and the net operating loss carryforward generated in 2018, 2019 and any future years will carry forward indefinitely. Additionally, the Company has U.S. Research Credit carryforwards of $6,888. These credits expire in years 2020 through 2039.

Utilization of U.S. net operating losses and tax credits of the Company may be subject to annual limitations under IRC Sections 382 and 383, respectively. The Company anticipates net operating losses will be utilized against current year U.S. taxable income. The annual limitations, for tax years other than 2019, if any, have not yet been determined.  When a review is performed and if any annual limitations are determined, then the gross deferred tax assets for the net operating losses and tax credits would be reduced with a reduction in the valuation allowance of a like amount.

The Company also has a Swiss net operating loss carryforward at December 31, 2019, of $365, which is available to reduce income taxes payable in future years. If not used, this carryforward will begin to expire in 2023.

97

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

As of December 31, 2019 and 2018, there were no unrecognized tax benefits. Accordingly, a tabular reconciliation from beginning to ending periods is not provided.  The Company will classify any future interest and penalties as a component of income tax expense if incurred.  To date, there have been no interest or penalties charged or accrued in relation to unrecognized tax benefits.

The Company does not anticipate that the total amount of unrecognized tax benefits will change significantly in the next twelve months. The Company is subject to federal and state examinations for the years 2013 and thereafter. There are no tax examinations currently in progress.

11. Revenues, Significant Customers and Concentrations of Risk

The following table presents the Company’s revenue on a disaggregated basis by major types and sources:

	For the Years Ended December 31,
	2019		2018		2017
Proprietary product sales	$	39,215	$	17,532	$	17,946
Partnered product sales		52,888		30,338		23,749
Total product revenue		92,103		47,870		41,695
Licensing and development revenue		7,529		6,753		11,171
Royalties		24,232		8,931		1,649
Total revenue	$	123,864	$	63,554	$	54,515

Revenues disaggregated by customer geographic location are summarized as follows:

	For the Years Ended December 31,
	2019		2018		2017
United States of America	$	120,231	$	57,033	$	48,924
Europe		3,463		6,157		5,061
Other		170		364		530
	$	123,864	$	63,554	$	54,515

Significant customers from which the Company derived 10% or more of its total revenue in any of the periods presented are as follows: 

	For the Years Ended December 31,
	2019	2018	2017
Teva	41%	31%	38%
AMAG	20%	29%	16%
AmerisourceBergen(1)	10%	11%	11%
McKesson (1)	<10%	12%	16%
Ferring	<10%	11%	10%

⁽¹⁾ Revenue from sales to distributors, net of estimated sales returns and allowances based on shipments.

98

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

12. Commitments and Contingencies

From time to time, the Company may be involved in various legal matters generally incidental to its business. Although the results of litigation and claims cannot be predicted with certainty, after discussion with legal counsel, management is not aware of any matters for which the likelihood of a loss is probable and reasonably estimable and which could have a material impact on its consolidated financial condition, liquidity, or results of operations.

On October 23, 2017, Randy Smith filed a complaint in the District of New Jersey, captioned Randy Smith, Individually and on Behalf of All Others Similarly Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M. Powell (“Smith”), Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of persons who purchased or otherwise acquired Antares securities between December 21, 2016 and October 12, 2017, inclusive, asserting claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, against Antares, Robert F. Apple and Fred M. Powell.  The Smith complaint contends that defendants made false and/or misleading statements and/or failed to disclose that: (i) Antares had provided insufficient data to the FDA in connection with the NDA for XYOSTED^®; and (ii) accordingly, Antares had overstated the approval prospects for XYOSTED^®.  On July 27, 2018, the court entered an order appointing Serghei Lungu as lead plaintiff, Pomerantz LLP as lead counsel, and Lite DePalma Greenberg, LLC as liaison counsel for plaintiff.  On August 3, 2018, the parties submitted a stipulation and proposed order, setting forth an agreed-upon schedule for responding to the complaint, which the court granted. Pursuant to that order, plaintiff filed a Consolidated Amended Class Action Complaint on October 9, 2018. On November 26, 2018, defendants filed a motion to dismiss. Plaintiff filed an opposition to the motion on January 10, 2019 and defendants filed a reply in support of their motion on February 25, 2019. On July 2, 2019, the court dismissed the complaint in its entirety without prejudice. On July 29, 2019, plaintiff filed a Consolidated Second Amended Class Action Complaint against the same parties alleging substantially similar claims. On September 12, 2019, defendants filed a motion to dismiss the Consolidated Second Amended Class Action Complaint. Plaintiffs’ opposition was filed on October 28, 2019 and defendants’ reply in support of their motion was filed on November 27, 2019. The Company believes that the claims in the Smith action lack merit and intends to defend them vigorously.

On January 12, 2018, a stockholder of the Company filed a derivative civil action, captioned Chiru Mackert, derivatively on behalf of Antares Pharma, Inc., v. Robert F. Apple, et al., in the Superior Court of New Jersey Chancery Division, Mercer County (Case No. C-000011-18).  On January 17, 2018, another stockholder filed a derivative action in the same court, captioned Vikram Rao, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (Case No. C-000004-18). Both complaints name Robert F. Apple, Fred M. Powell, Thomas J. Garrity, Jacques Gonella, Anton Gueth, Leonard S. Jacob, Marvin Samson and Robert P. Roche, Jr. as defendants, and the Company as nominal defendant, and they assert claims for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets arising from the same facts underlying the Smith securities class action.  The plaintiffs seek damages, corporate governance and internal procedure reforms and improvements, restitution, reasonable attorneys’ fees, experts’ fees, costs, and expenses. The parties have filed a stipulation consolidating the two actions and staying the proceedings pending the court’s decision on defendants’ motion to dismiss the Smith action.

On January 17, 2018, a stockholder of the Company filed a derivative civil action, captioned Robert Clark, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (“Clark”) (Case No. 3:18-cv-00703-MAS-DEA), against Robert F. Apple, Thomas J. Garrity, Jacques Gonella, Leonard S. Jacob, Marvin Samson, Anton G. Gueth and Robert P. Roche, Jr. as defendants, and Company as a nominal defendant.  The action was filed in the U.S. District Court for the District of New Jersey and asserts claims for breach of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and a violation of Section 14(a) of the Securities Exchange Act of 1934.  This complaint relates to the same facts underlying the Smith securities class action and the other derivative actions.  The plaintiff in Clark seeks damages, corporate governance and internal procedure reforms and improvements, reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses.   The parties have filed a stipulation staying the action pending the court’s decision on defendants’ motion to dismiss the Smith action.

99

ANTARES PHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

13. Quarterly Financial Data (unaudited)

	First			Second			Third			Fourth
2019
Total revenues	$	23,286		$	28,433		$	34,306		$	37,839
Gross profit		12,340			15,992			21,244			23,813
Net income (loss)		(5,539	)		(2,226	)		1,043			4,695
Net income (loss) per common share (1)		(0.03	)		(0.01	)		0.01			0.03
Weighted average shares, basic		160,446			162,734			163,119			163,952
Weighted average shares, diluted		160,446			162,734			168,503			171,238
2018
Total revenues	$	12,703		$	14,162		$	17,868		$	18,821
Gross profit		5,517			7,202			10,579			9,191
Net income (loss)		(6,193	)		(4,520	)		(1,936	)		6,134
Net income (loss) per common share (1)		(0.04	)		(0.03	)		(0.01	)		0.04
Weighted average shares, basic		156,724			157,024			157,471			158,389
Weighted average shares, diluted		156,724			157,024			157,471			162,810

⁽¹⁾ Net income (loss) per common share is computed based upon the net income or loss divided by the weighted average number of shares outstanding during each period. Basic and diluted weighted average shares and income (loss) per share amounts were identical for the periods in which the Company generated net losses, as the effect of potential common shares were anti-dilutive. For the periods in which the Company generated net income, the weighted average shares on a fully diluted basis, taking into consideration the effects of dilutive stock options, restricted stock and performance stock awards for the periods in which the Company generated net income, resulted in the income per share being mathematically the same on both a basic and diluted basis.

100

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2019, the Company’s disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2019. This assessment was based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control-Integrated Framework (2013).

The Company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the Company’s assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and board of directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness 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 the policies or procedures may deteriorate.

Based on the Company’s assessment using the COSO Internal Control-Integrated Framework (2013) criteria, management has concluded that its internal control over financial reporting was effective as of December 31, 2019 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.

The Company’s independent registered public accounting firm, KPMG LLP, has issued an audit report on the Company’s internal control over financial reporting, which appears in Item 8 of this Annual Report on Form 10-K.

Changes in internal control over financial reporting.

There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. OTHER INFORMATION

None.

101

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this item concerning our directors will be set forth under the caption “Election of Directors” in our definitive proxy statement for our 2020 annual meeting and is incorporated herein by reference.

Information required by this item concerning our executive officers will be set forth under the caption “Executive Officers of the Company” in our definitive proxy statement for our 2020 annual meeting and is incorporated herein by reference.

Information required by this item concerning compliance with Section 16(a) of the Exchange Act, as amended, will be set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement for our 2020 annual meeting, and is incorporated herein by reference.

Information required by this item concerning the audit committee of the Company, the audit committee financial expert of the Company and any material changes to the way in which security holders may recommend nominees to the Company’s Board of Directors will be set forth under the caption “Corporate Governance” in our definitive proxy statement for our 2020 annual meeting, and is incorporated herein by reference.

The Board of Directors adopted a Code of Business Conduct and Ethics, which is posted on our website at www.antarespharma.com that is applicable to all employees and directors. We will provide copies of our Code of Business Conduct and Ethics without charge upon request. To obtain a copy, please visit our website or send your written request to Antares Pharma, Inc., 100 Princeton South, Suite 300, Ewing, NJ  08628, Attn:  Corporate Secretary.   With respect to any amendments or waivers of this Code of Business Conduct and Ethics (to  the  extent  applicable  to the Company’s chief executive officer,  principal accounting officer or controller, or persons performing similar  functions)  the  Company intends to either post such amendments or waivers on its website or disclose such amendments or waivers pursuant to a Current Report on Form 8-K.

Item 11. EXECUTIVE COMPENSATION

Information required by this item will be set forth under the caption “Executive Compensation” in our definitive proxy statement for our 2020 annual meeting and is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this item concerning ownership will be set forth under the caption “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Directors and Executive Officers” in our definitive proxy statement for our 2020 annual meeting and is incorporated herein by reference. The following table provides information about our equity compensation plans as of December 31, 2019 (in thousands, except exercise price):

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column)
Equity compensation plans approved by    security holders		13,861	$	2.41		7,402
Equity compensation plans not approved by    security holders	None		None		None

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this item will be set forth under the captions “Certain Relationships and Related Transactions” and “Corporate Governance” in our definitive proxy statement for our 2020 annual meeting and is incorporated herein by reference.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this item will be set forth under the caption “Ratification of Selection of Independent Registered Public Accountants” in our definitive proxy statement for our 2020 annual meeting and is incorporated herein by reference.

102

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this annual report:

(1) Financial Statements - see Part II

(2) Financial Statement Schedules

All schedules have been omitted because they are not applicable, are immaterial or are not required because the information is included in the consolidated financial statements or the notes thereto.

(3) Item 601 Exhibits - see list of Exhibits below

(b) Exhibits

The following is a list of exhibits filed as part of this annual report on Form 10-K.

Exhibit No.	Description
3.1	Certificate of Incorporation of Antares Pharma, Inc. (Filed as exhibit 4.1 to Form S-3 on April 12, 2006 and incorporated herein by reference.)
3.2	Certificate of Amendment to Certificate of Incorporation of Antares Pharma, Inc. (Filed as exhibit 3.1 to Form 8-K on May 19, 2008 and incorporated herein by reference.)
3.3	Amended and Restated By-laws of Antares Pharma, Inc. (Filed as exhibit 3.1 to Form 8-K on May 15, 2007 and incorporated herein by reference.)
3.4	Certificate of Amendment to Certificate of Incorporation of Antares Pharma, Inc. (Filed as exhibit 3.1 to Form 8-K on May 28, 2013 and incorporated herein by reference.)
3.5	Certificate of Amendment to Certificate of Incorporation of Antares Pharma, Inc. (Filed as exhibit 10.3 to Form 10-Q on August 9, 2016 and incorporated herein by reference.)
4.1	Form of Certificate of Common Stock (Filed as exhibit 4.1 to Form S-1/A on August 15, 1996 and incorporated herein by reference.)
4.2	Registration Rights Agreement with Permatec Holding AG dated January 31, 2001 (Filed as Exhibit 10.2 to Form 10-K on April 16, 2001 and incorporated herein by reference.)
4.3	Stock Purchase Agreement with Sicor Pharmaceuticals, Inc., dated November 23, 2005 (Filed as exhibit 10.55 to Form 10-K  on March 20, 2006 and incorporated herein by reference.)
4.4+	Antares Pharma, Inc. Equity Compensation Plan, as amended and restated, and approved by stockholders (Filed as Exhibit 4.1 to the Company’s Form S-8 filed July 23, 2019 and incorporated herein by reference.)
4.5#	Description of Company’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, attached to this Form 10-K as Exhibit 4.5.
10.0	Stock Purchase Agreement with Permatec Holding AG, Permatec Pharma AG, Permatec Technologie AG and Permatec NV with First and Second Amendments dated July 14, 2000 (Filed as an exhibit to Schedule 14A on December 28, 2000 and incorporated herein by reference.)
10.1	Third Amendment of Stock Purchase Agreement, dated January 31, 2001 (Filed as exhibit 10.1 to Form 10-K on April 16, 2001 and incorporated herein by reference.)
10.2	Lease Agreement between Princeton South Investors, LLC and Antares Pharma, Inc., dated February 3, 2012 (Filed as exhibit 10.21 to Form 10-K for the year ended December 31, 2011 and incorporated herein by reference.)
10.3	First Amendment to Lease between Princeton South Investors, LLC and Antares Pharma, Inc., dated January 28, 2013. (Filed as Exhibit 10.22 to Form 10-K for the year ended December 31, 2012 and incorporated herein by reference.)

103

Exhibit No.	Description
10.4	Second Amendment to Lease between Princeton South Investors, LLC and Antares Pharma, Inc., dated December 4, 2013. (Filed as Exhibit 10.22 to Form 10-K for the year ended December 31, 2013 and incorporated herein by reference.)
10.5	Third Amendment to Lease between Princeton Office Center, LLC and Antares Pharma, Inc., dated May 7, 2019. (Filed as Exhibit 10.1 to Form 10-Q on August 6, 2019 and incorporated herein by reference.)
10.6	Lease Agreement between St. Paul Fire and Marine Insurance Company and Antares Pharma, Inc., dated December 20, 2013. (Filed as Exhibit 10.23 to Form 10-K for the year ended December 31, 2013 and incorporated herein by reference.)
10.7	Lease Agreement by and between Antares Pharma, Inc. and Whitewater Properties I, LLC dated July 1, 2019. (Filed as Exhibit 10.1 to Form 8-K on July 5, 2019 and incorporated herein by reference.)
10.8+	Antares Pharma, Inc. Severance Plan, dated May 29, 2014. (Filed as Exhibit 10.4 to Form 10-Q on August 7, 2014 and incorporated herein by reference.)
10.9	Form of Indemnification Agreement between Antares Pharma, Inc. and each of its directors and executive officers. (Filed as exhibit 10.9 to Form 10-K on March 12, 2019 and incorporated herein by reference.)
10.10	Loan and Security Agreement, dated as of June 6, 2017 by and among Antares Pharma, Inc. and Hercules Capital, Inc. and the several other banks and other financial institutions or entities from time to time party to the Loan Agreement (Filed as exhibit 10.1 to Form 8-K on June 7, 2017 and incorporated herein by reference.)
10.11	First Amendment to Loan and Security Agreement, dated as of June 26, 2019 by and among Antares Pharma, Inc. and Hercules Capital, Inc. and the several other banks and other financial institutions or entities from time to time party to the Loan Agreement (Filed as exhibit 10.1 to Form 8-K on June 27, 2019 and incorporated herein by reference.)
10.12+	Antares Pharma, Inc. Annual Incentive Plan, effective December 2, 2015 (Filed as Exhibit 99.1 to Form 8-K on December 8, 2015 and incorporated herein by reference.)
10.13+	Employment Agreement dated March 4, 2016 between Antares Pharma, Inc. and Robert F. Apple (Filed as exhibit 10.1 to Form 10-Q on May 9, 2016 and incorporated herein by reference.)
10.14+	Employment Agreement dated August 6, 2018 between Antares Pharma, Inc. and James P. Tursi, M.D. (Filed as exhibit 10.1 to Form 10-Q on November 6, 2018 and incorporated herein by reference.)
10.15+	Amended and Restated Employment Agreement dated June 30, 2016 between Antares Pharma, Inc. and Peter J. Graham (Filed as exhibit 10.2 to Form 10-Q on August 9, 2016 and incorporated herein by reference.)
10.16+	Employment Agreement effective October 31, 2016 between Antares Pharma, Inc. and Fred M. Powell (Filed as exhibit 10.1 to Form 10-Q on November 9, 2016 and incorporated herein by reference.)
10.17+	Form of Nonqualified Stock Option Grant Agreement (Filed as exhibit 10.4 to Form 10-Q on August 6, 2019 and incorporated herein by reference.)
10.18+	Form of Restricted Stock Unit Grant Agreement (Filed as exhibit 10.5 to Form 10-Q on August 6, 2019 and incorporated herein by reference.)
10.19+	Form of Restricted Stock Grant Agreement (Filed as exhibit 10.6 to Form 10-Q on August 9, 2016 and incorporated herein by reference.)
10.20+	Form of Performance Stock Unit Grant Agreement (Filed as exhibit 10.6 to Form 10-Q on August 6, 2019 and incorporated herein by reference.)
10.21+	Form of Nonqualified Stock Option Grant Agreement (Non-Employee Director) (Filed as exhibit 10.7 to Form 10-Q on August 6, 2019 and incorporated herein by reference.)
10.22+	Form of Restricted Stock Unit Grant Agreement (Non-Employee Director). (Filed as exhibit 10.8 to Form 10-Q on August 6, 2019 and incorporated herein by reference.)
23.1 #	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
31.1 #	Certification of the Chief Executive Officer of Antares Pharma, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

104

Exhibit No.	Description
31.2 #	Certification of the Chief Financial Officer of Antares Pharma, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
32.1 ##	Certification of the Chief Executive Officer of Antares Pharma, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
32.2 ##	Certification of the Chief Financial Officer of Antares Pharma, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
101.INS #	XBRL Instance Document
101.SCH#	XBRL Taxonomy Extension Schema
101.CAL#	XBRL Taxonomy Extension Calculation Linkbase
101.LAB#	XBRL Taxonomy Extension Label Linkbase
101.PRE#	XBRL Taxonomy Extension Presentation Linkbase
101.DEF#	XBRL Taxonomy Extension Definition Linkbase

+ Indicates management contract or compensatory plan or arrangement.

# Filed herewith.

## Furnished herewith.

105

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized, on the 3^rd day of March 2020.

ANTARES PHARMA, INC.

/s/ Robert F. Apple

Robert F. Apple

President and Chief Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this annual report has been signed by the following persons on behalf of the registrant in the capacities indicated on March 3, 2020.

Signature	Title
/s/ Robert F. Apple	President and Chief Executive Officer, Director
Robert F. Apple	(Principal Executive Officer)
/s/ Fred M. Powell	Executive Vice President and Chief Financial Officer
Fred M. Powell	(Principal Financial and Accounting Officer)
/s/Leonard S. Jacob	Director, Chairman of the Board
Dr. Leonard S. Jacob
/s/Thomas J. Garrity	Director
Thomas J. Garrity
/s/ Peter S. Greenleaf	Director
Peter S. Greenleaf
/s/Anton G. Gueth	Director
Anton G. Gueth
/s/Robert P. Roche, Jr.	Director
Robert P. Roche, Jr.
/s/Marvin Samson	Director
Marvin Samson
/s/Karen L. Smith	Director
Dr. Karen L. Smith

106

EX-4.5

Exhibit 4.5

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES ACT OF 1934

The following description sets forth certain material terms and provisions of our securities that are registered under Section 12 of the Securities Exchange Act of 1934, as amended.

(A) Description of Common Stock

Each holder of our common stock is entitled to one vote for each share on all matters to be voted upon by the stockholders and there are no cumulative voting rights. Subject to the preferential rights of any holders of our preferred stock, dividends may be declared and paid or set apart for payment to holders of our common stock out of any of our assets or funds legally available, but only when and as declared by our board of directors. In the event of a liquidation, dissolution or winding up of us, holders of our common stock would be entitled to share in our assets remaining after the payment of our debts and liabilities and the satisfaction of any liquidation preference granted to any holders of our outstanding shares of preferred stock. Holders of our common stock have no preemptive or conversion rights or other subscription rights and there are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

Our common stock is not convertible into, or exchangeable for, any other class or series of our capital stock. Holders of our common stock do not have preemptive or other rights to subscribe for or purchase additional securities of ours.

(B) Anti-Takeover Effects of the Company’s Certificate of Incorporation and By-Laws

Removal of Directors and Vacancies

Our Certificate of Incorporation, as amended (the “Certificate of Incorporation”) provides that directors may be removed only for cause and only by the affirmative vote of the holders of 70% of our shares of capital stock entitled to vote at an election of directors. Under our Certificate of Incorporation, any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office. The limitations on the ability of our stockholders to remove directors and fill vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of our company.

Staggered Board of Directors

Our board of directors has been divided into three classes of directors. The term of one class will expire each year. Directors for each class will be chosen for a three-year term upon the expiration of such class’s term, and the directors in the other two classes will continue in office. The staggered terms for directors may affect stockholders’ ability to change control of our company even if a change in control were in the stockholders’ interest.

No Cumulative Voting

Our Certificate of Incorporation and our Amended and Restated By-Laws (the “By-Laws”) do not provide for cumulative voting.

Stockholder Meetings

Our Certificate of Incorporation and our By-Laws provide that any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such meeting and may not be taken by written action in lieu of a meeting. Our Certificate of Incorporation and our By-Laws also provide that, except as otherwise required by law, special meetings of the stockholders may only be called by a resolution approved by the majority of our board of directors. In addition, our By-Laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of candidates for election to our board of directors. Stockholders may only consider proposals or nominations at an annual meeting specified in the notice of the meeting or brought before the meeting by or at the direction of our board of directors or by a stockholder of record on the record date for the meeting who is entitled to vote at the meeting and who has delivered timely written notice in proper form to our secretary of the stockholder’s intention to bring such business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting stockholder actions that are favored by the holders of a majority of our outstanding voting securities.

Undesignated Preferred Stock

The authorization in our Certificate of Incorporation of undesignated preferred stock makes it possible for our board of directors, without obtaining further stockholder approval, to issue preferred stock with voting rights or other rights or preferences that could impede the success of any attempt to take control of us.

Supermajority Voting for Certain Amendments to Our Certificate of Incorporation and By-laws

The General Corporation Law of the State of Delaware provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or by-laws, unless a corporation’s certificate of incorporation or by-laws, as the case may be, requires a greater percentage. Our Certificate of Incorporation requires the affirmative vote of at least 70% of the shares entitled to vote, as well as the affirmative vote of at least 70% of the shares of each class of capital stock entitled to vote as a class, to amend or repeal any provision of Articles VI, VII, VIII, IX or X of our Certificate of Incorporation. Our Certificate of Incorporation also provides that amendment or repeal of our By-Laws by stockholders requires the affirmative vote of at least 70% of the shares entitled to vote, voting as a single class, except that if our board of directors recommends that our stockholders approve an amendment or repeal, then such recommended amendment or repeal shall only require the affirmative vote of the majority of the outstanding shares entitled to vote, voting as a single class.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Antares Pharma, Inc.:

We consent to the incorporation by reference in the registration statements (Nos. 333‑167457, 333-180832, 333-189172, 333-196644, 333-211782 and 333-232775) on Form S-8, registration statements (Nos. 333-61950, 333-96739, 333-103958, 333-133218, 333-142323, 333-144748, and 333-217808) on Form S-3, and registration statements (Nos. 333-109114 and 333-114098) on Form S-2 of Antares Pharma, Inc. of our report dated March 3, 2020, with respect to the consolidated balance sheets of Antares Pharma, Inc. and subsidiaries as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2019, which report appears in the December 31, 2019 annual report on Form 10-K of Antares Pharma, Inc.

Our report refers to a change in the method of accounting for revenue and leases.

/s/ KPMG LLP

Minneapolis, Minnesota
March 3, 2020

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert F. Apple, certify that:

1. I have reviewed this report on Form 10-K for the year ended December 31, 2019 of Antares Pharma, Inc.;

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 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 15(d)-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 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:    March 3, 2020

/s/ Robert F. Apple

Robert F. Apple

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Fred M. Powell, certify that:

1. I have reviewed this report on Form 10-K for the year ended December 31, 2019 of Antares Pharma, Inc.;

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 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 15(d)-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 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:    March 3, 2020

/s/ Fred M. Powell

Fred M. Powell

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

ANTARES PHARMA, INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

The undersigned, Robert F. Apple, the Chief Executive Officer of Antares Pharma, Inc. (the “Company”), has executed this Certification in connection with the filing with the Securities and Exchange Commission of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Report”).

The undersigned hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this Certification as of the 3rd day of March, 2020.

/s/ Robert F. Apple

Robert F. Apple

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

ANTARES PHARMA, INC.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

The undersigned, Fred M. Powell, the Chief Financial Officer of Antares Pharma, Inc. (the “Company”), has executed this Certification in connection with the filing with the Securities and Exchange Commission of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Report”).

The undersigned hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this Certification as of the 3rd day of March, 2020.

/s/ Fred M. Powell

Fred M. Powell

Executive Vice President and Chief Financial Officer

XML

Share Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from the issuance of stock options		$ 4,405	$ 474	$ 1,816
Shares withheld to meet employees' minimum statutory income tax obligation		409,000	211,000	98,000
Payments for the employees' minimum statutory income tax obligation		$ 1,131	$ 543	$ 249
Employees Tax Obligations [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments for the employees' minimum statutory income tax obligation		$ 1,131	$ 543	$ 249
Amended and Restated Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in number of shares authorized		8,000,000
Share-based compensation arrangement by share-based payment award, number of shares authorized		40,200,000
Maximum number of shares of stock granted to one participant		4,000,000
Minimum percentage of exercise price		100.00%
Shares available for grant under the plan		7,402,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Per share weighted average fair value of options granted		$ 1.54	$ 1.45	$ 1.37
Proceeds from the issuance of stock options		$ 4,405	$ 474	$ 1,816
Exercise of options, shares		2,529,000	447,000	1,311,000
Shares withheld to meet employees' minimum statutory income tax obligation		43,000	30,000	0
Unrecognized compensation cost related to non-vested outstanding stock awards		$ 4,780
Weighted average period expected to be recognized		1 year 10 months 24 days
Stock Options [Member] | Long Term Incentive Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term of options granted		10 years
Vesting period		3 years
Stock Options [Member] | Amended and Restated Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term of options granted		10 years
Vesting period		3 years
Stock Options [Member] | Minimum [Member] | Amended and Restated Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		1 year
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in 2017		789,000	611,000	689,000
Restricted Stock Units [Member] | Long Term Incentive Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted in 2017		593,000	611,000	689,000
Performance Stock Units [Member] | Long Term Incentive Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Number of shares granted in 2017		662,000
Performance Stock Units [Member] | Long Term Incentive Program [Member] | Scenario, Forecast [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares approved for settlement	388,000
Performance Stock Units [Member] | Minimum [Member] | Long Term Incentive Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation award percentage		0.00%
Performance Stock Units [Member] | Maximum [Member] | Long Term Incentive Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation award percentage		150.00%

XML

Share Based Compensation - Fair Value of PSUs Granted Determined Using Monte Carlo Simulation (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award (in years)	5 years 6 months	6 years	6 years
Volatility	55.70%	53.70%	53.30%
Risk-free interest rate	1.90%	2.80%	1.80%
Expected dividend yield	0.00%	0.00%	0.00%
Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Closing stock price on grant date	$ 2.92	$ 2.70	$ 2.66
Performance period starting price	$ 3.01	$ 1.92	$ 2.17
Term of award (in years)	2 years 6 months 18 days	2 years 6 months 25 days	2 years 6 months 25 days
Volatility	63.70%	64.90%	54.60%
Risk-free interest rate	1.79%	2.56%	1.39%
Expected dividend yield	0.00%	0.00%	0.00%
Fair value per TSR PSU	$ 3.18	$ 3.27	$ 3.10

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Income (Loss) before Income Tax Domestic and Foreign

Income (loss) before income taxes was derived from the following jurisdictions:

	2019			2018			2017
U.S.	$	(1,734	)	$	(6,696	)	$	(16,762	)
Switzerland		(293	)		181			19
	$	(2,027	)	$	(6,515	)	$	(16,743	)

Summary of Effective Tax Rates Differ from Statutory Income Tax Rates

Effective tax rates differ from statutory income tax rates in the years ended December 31, 2019, 2018 and 2017 as follows:

	2019			2018			2017
Statutory income tax rate		(21.0	)%		(21.0	)%		(34.0	)%
State income taxes		(14.4	)		(3.8	)		(6.1	)
Valuation allowance increase		59.9			20.8			(102.0	)
Effect of foreign operations		1.0			(0.2	)		—
Change in unused net operating loss and credit carryforwards		(24.7	)		(3.9	)		2.7
Stock-based compensation		(22.3	)		(0.2	)		(3.5	)
162(m) limitation		18.2			2.9			—
Nondeductible items		1.8			3.2			(1.6	)
Impact of Tax Cuts and Jobs Act		1.5			2.2			144.5
		0.0	%		0.0	%		0.0	%

Summary of Deferred Tax Assets (Liabilities)

Deferred tax assets (liabilities) as of December 31, 2019 and 2018 consist of the following:

	2019			2018
Gross deferred tax assets:
Net operating loss carryforward – U.S.	$	41,780		$	42,966
Net operating loss carryforward – Switzerland		52			7
Research and development tax credit carryforward		7,559			6,891
Deferred revenue		—			105
Stock-based compensation		1,999			2,324
Inventory reserve		307			440
Compensation accruals		1,154			904
Product reserves		2,329			1,302
Operating lease liabilities		1,763			—
163j interest expense limitation		475			438
Amortization		585			562
Other		61			329
Total deferred tax assets		58,064			56,268
Deferred tax liabilities:
Depreciation		(1,807	)		(1,511	)
Right-of-use asset, operating leases		(1,648	)		—
Installment obligations		—			(1,363	)
Total deferred tax liabilities		(3,455	)		(2,874	)
Net deferred tax asset before valuation allowance		54,609			53,394
Less valuation allowance		(54,609	)		(53,394	)
Net deferred tax asset	$	—		$	—

XML

Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Summary of Operating Lease Maturities

The following table summarizes the Company’s operating lease maturities as of December 31, 2019:

2020	$	1,552
2021		1,436
2022		893
2023		638
2024		650
Thereafter		4,933
Total remaining lease payments		10,102
Less:  Interest		(3,412	)
Total lease liabilities	$	6,690

Summary of Future Minimum Lease Payments Under Operating Leases

Under the prior leasing standard, future minimum lease payments under operating leases as of December 31, 2018 were as follows:

2019	$	566
2020		233
2021		238
2022		60
Thereafter		—
Total future minimum lease payments	$	1,097

XML

Employee 401(k) Savings Plan

12 Months Ended

Dec. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Employee 401(k) Savings Plan

8. Employee 401(k) Savings Plan

The Company sponsors a 401(k) defined contribution retirement savings plan that covers all U.S. employees who have met minimum age and service requirements. Under the plan, eligible employees may contribute a portion of their annual compensation into the plan up to the IRS annual limits. The Company has elected to make matching contributions to the plan based on a percentage of employee contributions.  For the years ended December 31, 2019, 2018 and 2017, the Company’s contributions to the plan were $993, $814 and $590, respectively.

XML

Accrued Expenses and Other Liabilities

12 Months Ended

Dec. 31, 2019

Payables And Accruals [Abstract]

Accrued Expenses and Other Liabilities

4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:

	December 31,		December 31,
	2019		2018
Accrued employee compensation and benefits	$	4,479	$	3,715
Product returns and sales allowances		9,206		5,927
Other liabilities		2,838		2,355
	$	16,523	$	11,997

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

From time to time, the Company may be involved in various legal matters generally incidental to its business. Although the results of litigation and claims cannot be predicted with certainty, after discussion with legal counsel, management is not aware of any matters for which the likelihood of a loss is probable and reasonably estimable and which could have a material impact on its consolidated financial condition, liquidity, or results of operations.

On October 23, 2017, Randy Smith filed a complaint in the District of New Jersey, captioned Randy Smith, Individually and on Behalf of All Others Similarly Situated v. Antares Pharma, Inc., Robert F. Apple and Fred M. Powell (“Smith”), Case No. 3:17-cv-08945-MAS-DEA, on behalf of a putative class of persons who purchased or otherwise acquired Antares securities between December 21, 2016 and October 12, 2017, inclusive, asserting claims for purported violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, against Antares, Robert F. Apple and Fred M. Powell.  The Smith complaint contends that defendants made false and/or misleading statements and/or failed to disclose that: (i) Antares had provided insufficient data to the FDA in connection with the NDA for XYOSTED^®; and (ii) accordingly, Antares had overstated the approval prospects for XYOSTED^®.  On July 27, 2018, the court entered an order appointing Serghei Lungu as lead plaintiff, Pomerantz LLP as lead counsel, and Lite DePalma Greenberg, LLC as liaison counsel for plaintiff.  On August 3, 2018, the parties submitted a stipulation and proposed order, setting forth an agreed-upon schedule for responding to the complaint, which the court granted. Pursuant to that order, plaintiff filed a Consolidated Amended Class Action Complaint on October 9, 2018. On November 26, 2018, defendants filed a motion to dismiss. Plaintiff filed an opposition to the motion on January 10, 2019 and defendants filed a reply in support of their motion on February 25, 2019. On July 2, 2019, the court dismissed the complaint in its entirety without prejudice. On July 29, 2019, plaintiff filed a Consolidated Second Amended Class Action Complaint against the same parties alleging substantially similar claims. On September 12, 2019, defendants filed a motion to dismiss the Consolidated Second Amended Class Action Complaint. Plaintiffs’ opposition was filed on October 28, 2019 and defendants’ reply in support of their motion was filed on November 27, 2019. The Company believes that the claims in the Smith action lack merit and intends to defend them vigorously.

On January 12, 2018, a stockholder of the Company filed a derivative civil action, captioned Chiru Mackert, derivatively on behalf of Antares Pharma, Inc., v. Robert F. Apple, et al., in the Superior Court of New Jersey Chancery Division, Mercer County (Case No. C-000011-18).  On January 17, 2018, another stockholder filed a derivative action in the same court, captioned Vikram Rao, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (Case No. C-000004-18). Both complaints name Robert F. Apple, Fred M. Powell, Thomas J. Garrity, Jacques Gonella, Anton Gueth, Leonard S. Jacob, Marvin Samson and Robert P. Roche, Jr. as defendants, and the Company as nominal defendant, and they assert claims for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets arising from the same facts underlying the Smith securities class action.  The plaintiffs seek damages, corporate governance and internal procedure reforms and improvements, restitution, reasonable attorneys’ fees, experts’ fees, costs, and expenses. The parties have filed a stipulation consolidating the two actions and staying the proceedings pending the court’s decision on defendants’ motion to dismiss the Smith action.

On January 17, 2018, a stockholder of the Company filed a derivative civil action, captioned Robert Clark, Derivatively on Behalf of Antares Pharma, Inc. v. Robert F. Apple, et al. (“Clark”) (Case No. 3:18-cv-00703-MAS-DEA), against Robert F. Apple, Thomas J. Garrity, Jacques Gonella, Leonard S. Jacob, Marvin Samson, Anton G. Gueth and Robert P. Roche, Jr. as defendants, and Company as a nominal defendant.  The action was filed in the U.S. District Court for the District of New Jersey and asserts claims for breach of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and a violation of Section 14(a) of the Securities Exchange Act of 1934.  This complaint relates to the same facts underlying the Smith securities class action and the other derivative actions.  The plaintiff in Clark seeks damages, corporate governance and internal procedure reforms and improvements, reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses.   The parties have filed a stipulation staying the action pending the court’s decision on defendants’ motion to dismiss the Smith action.

XML

Summary of Significant Accounting Policies - Components of Equipment, Molds, Furniture, and Fixtures (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Less: accumulated depreciation	$ (9,769)	$ (7,570)
Equipment, molds, furniture and fixtures, Total	15,961	14,895
Furniture, Fixtures and Office Equipment [Member]
Property Plant And Equipment [Line Items]
Equipment, molds, furniture and fixtures, gross	2,480	2,331
Production Molds and Equipment [Member]
Property Plant And Equipment [Line Items]
Equipment, molds, furniture and fixtures, gross	20,749	19,678
Molds and Tooling in Process [Member]
Property Plant And Equipment [Line Items]
Equipment, molds, furniture and fixtures, gross	1,512	$ 456
Construction in Process [Member]
Property Plant And Equipment [Line Items]
Equipment, molds, furniture and fixtures, gross	$ 989

XML

Leases - Summary of Operating Lease Maturities (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Operating Lease Liabilities Payments Due [Abstract]
2020	$ 1,552
2021	1,436
2022	893
2023	638
2024	650
Thereafter	4,933
Total remaining lease payments	10,102
Less: Interest	(3,412)
Total lease liabilities	$ 6,690

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 23,201,000	$ 27,892,000
Short-term investments	22,520,000	0
Accounts receivable	35,074,000	18,976,000
Inventories	16,000,000	11,350,000
Contract assets	8,235,000	10,442,000
Prepaid expenses and other current assets	3,416,000	2,648,000
Total current assets	108,446,000	71,308,000
Equipment, molds, furniture and fixtures, net	15,961,000	14,895,000
Operating lease right-of-use assets	5,463,000
Intangibles, net	478,000	831,000
Goodwill	1,095,000	1,095,000
Other assets	1,308,000	148,000
Total Assets	132,751,000	88,277,000
Current Liabilities:
Accounts payable	12,905,000	11,135,000
Accrued expenses and other liabilities	16,523,000	11,997,000
Long-term debt, current portion		3,043,000
Operating lease liabilities, current portion	1,249,000
Deferred revenue	1,738,000	1,018,000
Total current liabilities	32,415,000	27,193,000
Long-term debt	40,395,000	22,083,000
Operating lease liabilities, long-term	5,441,000
Total liabilities	78,251,000	49,276,000
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Preferred Stock: $0.01 par, authorized 3,000 shares, none outstanding
Common Stock: $0.01 par; authorized 300,000 shares; 165,221 and 159,721 issued and outstanding at December 31, 2019 and 2018, respectively	1,652,000	1,597,000
Additional paid-in capital	332,377,000	314,907,000
Accumulated deficit	(278,827,000)	(276,800,000)
Accumulated other comprehensive loss	(702,000)	(703,000)
Total Stockholders' Equity	54,500,000	39,001,000
Total Liabilities and Stockholders’ Equity	$ 132,751,000	$ 88,277,000

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 31, 2016	$ 45,218	$ 1,552	$ 297,826	$ (253,445)	$ (715)
Balance, shares at Dec. 31, 2016		155,168,000
Common stock issued under equity compensation plan, net of shares withheld for taxes	(249)	$ 2	(251)
Common stock issued under equity compensation plan, net of shares withheld for taxes, shares		196,000
Exercise of options	1,816	$ 13	1,803
Exercise of options, shares		1,311,000
Share-based compensation	3,490		3,490
Net loss	(16,743)			(16,743)
Cumulative effect of change in accounting principle			97	(97)
Other comprehensive income (loss)	15				15
Balance at Dec. 31, 2017	33,547	$ 1,567	302,965	(270,285)	(700)
Balance, shares at Dec. 31, 2017		156,675,000
Issuance of common stock	7,114	$ 21	7,093
Issuance of common stock, shares		2,137,000
Common stock issued under equity compensation plan, net of shares withheld for taxes	(543)	$ 5	(548)
Common stock issued under equity compensation plan, net of shares withheld for taxes, shares		462,000
Exercise of options	474	$ 4	470
Exercise of options, shares		447,000
Share-based compensation	4,927		4,927
Net loss	(6,515)			(6,515)
Other comprehensive income (loss)	(3)				(3)
Balance at Dec. 31, 2018	39,001	$ 1,597	314,907	(276,800)	(703)
Balance, shares at Dec. 31, 2018		159,721,000
Issuance of common stock	7,781	$ 23	7,758
Issuance of common stock, shares		2,307,000
Common stock issued under equity compensation plan, net of shares withheld for taxes	(1,131)	$ 7	(1,138)
Common stock issued under equity compensation plan, net of shares withheld for taxes, shares		664,000
Exercise of options	4,405	$ 25	4,380
Exercise of options, shares		2,529,000
Share-based compensation	6,470		6,470
Net loss	(2,027)			(2,027)
Other comprehensive income (loss)	1				1
Balance at Dec. 31, 2019	$ 54,500	$ 1,652	$ 332,377	$ (278,827)	$ (702)
Balance, shares at Dec. 31, 2019		165,221,000

XML

Quarterly Financial Data (unaudited) - Quarterly Financial Data (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Selected Quarterly Financial Information [Abstract]
Total revenues	$ 37,839	$ 34,306	$ 28,433	$ 23,286	$ 18,821	$ 17,868	$ 14,162	$ 12,703	$ 123,864	$ 63,554	$ 54,515
Gross profit	23,813	21,244	15,992	12,340	9,191	10,579	7,202	5,517	73,389	32,489	27,049
Net income (loss)	$ 4,695	$ 1,043	$ (2,226)	$ (5,539)	$ 6,134	$ (1,936)	$ (4,520)	$ (6,193)	$ (2,027)	$ (6,515)	$ (16,743)
Net income (loss) per common share	$ 0.03	$ 0.01	$ (0.01)	$ (0.03)	$ 0.04	$ (0.01)	$ (0.03)	$ (0.04)
Weighted average shares, basic	163,952	163,119	162,734	160,446	158,389	157,471	157,024	156,724
Weighted average shares, diluted	171,238	168,503	162,734	160,446	162,810	157,471	157,024	156,724

XML

Income Taxes - Summary of Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Gross deferred tax assets:
Net operating loss carryforward – U.S.	$ 41,780	$ 42,966
Net operating loss carryforward – Switzerland	52	7
Research and development tax credit carryforward	7,559	6,891
Deferred revenue		105
Stock-based compensation	1,999	2,324
Inventory reserve	307	440
Compensation accruals	1,154	904
Product reserves	2,329	1,302
Operating lease liabilities	1,763
163j interest expense limitation	475	438
Amortization	585	562
Other	61	329
Total deferred tax assets	58,064	56,268
Deferred tax liabilities:
Depreciation	(1,807)	(1,511)
Right-of-use asset, operating leases	(1,648)
Installment obligations		(1,363)
Total deferred tax liabilities	(3,455)	(2,874)
Net deferred tax asset before valuation allowance	54,609	53,394
Less valuation allowance	$ (54,609)	$ (53,394)

XML

Revenues, Significant Customers and Concentrations of Risk

12 Months Ended

Dec. 31, 2019

Revenue From Contract With Customer [Abstract]

Revenues, Significant Customers and Concentrations of Risk

11. Revenues, Significant Customers and Concentrations of Risk

The following table presents the Company’s revenue on a disaggregated basis by major types and sources:

	For the Years Ended December 31,
	2019		2018		2017
Proprietary product sales	$	39,215	$	17,532	$	17,946
Partnered product sales		52,888		30,338		23,749
Total product revenue		92,103		47,870		41,695
Licensing and development revenue		7,529		6,753		11,171
Royalties		24,232		8,931		1,649
Total revenue	$	123,864	$	63,554	$	54,515

Revenues disaggregated by customer geographic location are summarized as follows:

	For the Years Ended December 31,
	2019		2018		2017
United States of America	$	120,231	$	57,033	$	48,924
Europe		3,463		6,157		5,061
Other		170		364		530
	$	123,864	$	63,554	$	54,515

Significant customers from which the Company derived 10% or more of its total revenue in any of the periods presented are as follows: 

	For the Years Ended December 31,
	2019	2018	2017
Teva	41%	31%	38%
AMAG	20%	29%	16%
AmerisourceBergen(1)	10%	11%	11%
McKesson (1)	<10%	12%	16%
Ferring	<10%	11%	10%

⁽¹⁾ Revenue from sales to distributors, net of estimated sales returns and allowances based on shipments.

XML

Share Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share Based Compensation

7. Share-Based Compensation

The Company has an Equity Compensation Plan (the “Plan”), which was amended and restated pursuant to stockholder approval on June 13, 2019 in order to increase the number of shares available for issuance under the Plan by 8,000, extend the term of the Plan and modify certain provisions. The Plan allows for grants in the form of incentive stock options, nonqualified stock options, stock units, stock awards, stock appreciation rights, and other stock-based awards. All of the Company’s officers, directors, employees, consultants and advisors are eligible to receive grants under the Plan.  The cumulative number of shares that have been authorized for issuance under the Plan to date is 40,200 and the maximum number of shares of stock that may be granted to any one participant during a calendar year is 4,000 shares.  Options to purchase shares of common stock are granted at exercise prices not less than 100% of fair market value on the dates of grant.  The term of each option is ten years and the options typically vest over a three-year period with a minimum vesting period of one year.  As of December 31, 2019, the Plan had approximately 7,402 shares available for grant.  

Stock option exercises, and the vesting of restricted stock and performance stock awards, are satisfied through the issuance of new shares.

Stock Options

Stock option activity under the Plan as of and for the three years ended December 31, 2019 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price ($)		Term (Years)		Value ($)
Outstanding at December 31, 2016		11,314			1.84
Granted/Issued		2,986			2.67
Exercised		(1,311	)		1.38				2,226
Cancelled/Forfeited		(840	)		2.68
Outstanding at December 31, 2017		12,149			2.04
Granted/Issued		2,693			2.72
Exercised		(477	)		1.14				768
Cancelled/Forfeited		(286	)		2.43
Outstanding at December 31, 2018		14,079			2.19		6.8		8,534
Granted/Issued		2,489			3.01
Exercised		(2,572	)		1.76				6,477
Cancelled/Forfeited		(135	)		2.81
Outstanding at December 31, 2019		13,861			2.41		6.7		31,713
Exercisable at December 31, 2019		10,033			2.22		5.8		24,835

The per share weighted average fair value of options granted during 2019, 2018 and 2017 was estimated as $1.54, $1.45 and $1.37, respectively, on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below.  Expected volatilities are based on the historical volatility of the Company’s stock.  The weighted average expected life is based on both historical and anticipated employee behavior.

	December 31,
	2019			2018			2017
Risk-free interest rate		1.9	%		2.8	%		1.8	%
Annualized volatility		55.7	%		53.7	%		53.3	%
Weighted average expected life, in years		5.5			6.0			6.0
Expected dividend yield		0.0	%		0.0	%		0.0	%

Option exercises during 2019, 2018 and 2017 resulted in proceeds of $4,405, $474 and $1,816, respectively, and in the issuance of shares of common stock of 2,529 in 2019, 447 in 2018 and 1,311 in 2017. In 2019 and 2018, certain options were net exercised, whereby the Company withheld 43 and 30 shares, respectively, the fair value of which was equivalent to the aggregate exercise price and tax withholding on the date of exercise  There were no net share exercises in 2017.

Long Term Incentive Program

The Company’s Board of Directors has approved a long-term incentive program (“LTIP”) for the benefit of the Company’s senior executives.  Pursuant to the LTIP, the Company’s senior executives are awarded stock options, restricted stock units (“RSU”) and performance stock units (“PSU”) with targeted values based on similar award structures granted by the Company’s peer group.  The stock options have a ten-year term, have an exercise price equal to the closing price of the Company’s common stock on the date of grant, vest in quarterly installments over three years, were otherwise granted on the same standard terms and conditions as other stock options granted pursuant to the Plan and are included in the stock options table above. The RSUs vest in three equal annual installments, and the PSU awards vest and convert into shares of the Company’s common stock based on the Company’s attainment of certain performance goals over a performance period, which is typically three years.

The performance stock unit awards and restricted stock unit awards granted under the long-term incentive program are summarized in the following table:

	Performance Stock Units					Restricted Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value ($)		Number of Shares			Weighted Average Grant Date Fair Value ($)
Outstanding at December 31, 2016		1,347			1.50		823			1.39
Granted		689			3.12		689			2.69
Vested/settled		—					(288	)		1.49
Forfeited/expired		(581	)		2.16		(67	)		1.70
Outstanding at December 31, 2017		1,455			2.20		1,157			2.12
Granted		611			2.89		611			2.70
Vested/settled		(173	)		2.18		(500	)		1.99
Forfeited/expired		(51	)		3.01		(42	)		2.68
Outstanding at December 31, 2018		1,842			2.41		1,226			2.44
Granted		593			2.99		789			2.92
Incremental shares earned		59			1.25		—			—
Vested/settled		(415	)		1.18		(614	)		2.19
Forfeited/expired		(238	)		1.12		—			—
Outstanding at December 31, 2019		1,841			3.00		1,401			2.82

The outstanding balance of PSU awards is stated at the target number of shares to be awarded upon attainment of certain performance goals. Depending on the outcome of the related performance goals, a recipient may ultimately earn a number of shares that is greater or less than the target number of units granted, ranging from 0% to 150%. The balance of PSU awards outstanding as of December 31, 2019 included 662 units granted in 2017 with a performance period ended December 31, 2019 that were subsequently deemed to be achieved and approved for settlement in the first quarter of 2020 for a total of 388 shares.

In each of the years in the three-year period ended December 31, 2019, the LTIP awards include PSUs that will be earned based on the Company’s total shareholder return (“TSR”) as compared to the Nasdaq Biotechnology Index (“NBI”) at the end of the respective annual performance periods. The fair values of the TSR PSUs granted were determined using a Monte Carlo simulation and utilized the following inputs and assumptions:

	2019 Award			2018 Award			2017 Award
Closing stock price on grant date	$	2.92		$	2.70		$	2.66
Performance period starting price	$	3.01		$	1.92		$	2.17
Term of award (in years)		2.55			2.57			2.57
Volatility		63.7	%		64.9	%		54.6	%
Risk-free interest rate		1.79	%		2.56	%		1.39	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Fair value per TSR PSU	$	3.18		$	3.27		$	3.10

The performance period starting price is measured as the average closing price over the last 20 trading days prior to the performance period start. The Monte Carlo simulation model also assumed correlations of returns of the prices of the Company’s common stock and the common stocks of the NBI companies and stock price volatilities of the NBI companies.  The fair value of the target number of shares that can be earned under the TSR PSUs is being recognized as compensation expense over the term of the award. Other PSU awards that are not market-based awards are expensed using the grant date fair value of shares expected to vest over the remaining performance period when it becomes probable that the related performance goal will be achieved.

LTIP awards are generally net-share settled such that the Company withholds shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remits cash to the appropriate taxing authorities. Total shares withheld for net-settled awards were 409, 211 and 98 in 2019, 2018 and 2017, respectively, and were based on the value of the shares on their vesting date as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities were $1,131, $543 and $249 in 2019, 2018 and 2017, respectively, and are reflected as a financing activity within the consolidated statements of cash flows. These net-share settlements reduced the number of shares that would have otherwise been issued as a result of the vesting. 

Share-based Compensation Expense

The Company incurred compensation costs in connection with share-based awards in each of the years in the three-year period ended December 31, 2019 as follows:

	December 31,
	2019		2018		2017
Stock options	$	3,436	$	2,956	$	2,378
Restricted stock units		1,830		1,173		701
Performance stock units		1,204		798		411
Total share-based compensation expense	$	6,470	$	4,927	$	3,490

As of December 31, 2019, there was $4,780 of total unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of approximately 1.9 years

XML

Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

3. Leases

As of December 31, 2018, the Company had non-cancellable operating leases for its corporate headquarters facility in Ewing, New Jersey, and its office, research and development facility in Plymouth, Minnesota, a suburb of Minneapolis. In connection with the adoption of Topic 842 on January 1, 2019, the Company recognized approximately $1.0 million in right-of-use assets and lease liabilities. During the first quarter of 2019, the Company also entered into a master operating lease arrangement for a fleet of vehicles for use by its sales force.  

In May 2019, the Company amended its existing lease of the Company’s corporate headquarters to extend the lease term for an additional two years. The lease extension period commences on November 1, 2019 and expires on October 31, 2021.

On July 1, 2019, the Company entered into a new operating lease for approximately 75,000 square feet of office, laboratory, manufacturing and warehousing space in Minnetonka, Minnesota. The initial lease term is 12.5 years and the Company may renew the lease, at its option, for one additional renewal period of three years. The landlord delivered possession of the premises to the Company on July 1, 2019 and payment of rent commenced on January 1, 2020.  The lease provides for the payment of fixed base rent and additional rent for operating expenses, insurance premiums and taxes. The Company is performing the build-out of the premises at the Company’s cost with an allowance for tenant improvement to be reimbursed by the landlord up to $1.2 million.

The leases require payment of all executory costs such as maintenance and property taxes. Operating lease costs were $1,391 for the year ended December 31, 2019. Cash paid for amounts included in the measurement of operating lease liabilities was $1,401 for the year ended December 31, 2019 and non-cash operating lease ROU assets obtained in exchange for operating lease obligations were $6,511. As of December 31, 2019, the weighted average discount rate was approximately 8.3% and the weighted average remaining lease term was 8.4 years.

The following table summarizes the Company’s operating lease maturities as of December 31, 2019:

2020	$	1,552
2021		1,436
2022		893
2023		638
2024		650
Thereafter		4,933
Total remaining lease payments		10,102
Less:  Interest		(3,412	)
Total lease liabilities	$	6,690

Under the prior leasing standard, future minimum lease payments under operating leases as of December 31, 2018 were as follows:

2019	$	566
2020		233
2021		238
2022		60
Thereafter		—
Total future minimum lease payments	$	1,097

Rent expense for operating leases was $695 and $656 for the years ended December 31, 2018 and 2017, respectively.  

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Preferred Stock, par value	$ 0.01	$ 0.01
Preferred Stock, shares authorized	3,000,000	3,000,000
Preferred Stock, shares outstanding	0	0
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	165,221,000	159,721,000
Common Stock, shares outstanding	165,221,000	159,721,000

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net loss	$ (2,027,000)	$ (6,515,000)	$ (16,743,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense	6,470,000	4,927,000	3,490,000
Depreciation and amortization	2,557,000	2,724,000	2,104,000
Accretion of interest expense	322,000	210,000	119,000
Increase in inventory reserve	325,000	592,000	356,000
Gain on sale of assets		(12,500,000)	(860,000)
Other	95,000	51,000	68,000
Changes in operating assets and liabilities:
Accounts receivable	(16,095,000)	(7,099,000)	(2,798,000)
Inventories	(4,975,000)	(2,667,000)	(4,304,000)
Contract assets	(2,793,000)	(4,937,000)	1,268,000
Prepaid expenses and other current assets	(655,000)	(324,000)	(942,000)
Other assets	(371,000)		(94,000)
Accounts payable	926,000	5,164,000	(1,522,000)
Accrued expenses and other liabilities	4,888,000	5,029,000	1,122,000
Deferred revenue	718,000	(1,977,000)	(4,358,000)
Net cash used in operating activities	(10,615,000)	(17,322,000)	(23,094,000)
Cash flows from investing activities:
Proceeds from sale of assets	5,000,000	7,500,000	1,901,000
Purchases of equipment, molds, furniture and fixtures	(2,350,000)	(854,000)	(1,167,000)
Purchases of investment securities	(22,645,000)		(9,964,000)
Proceeds from maturities of investment securities		5,000,000	5,000,000
Additions to patent rights		(40,000)	(101,000)
Net cash provided by (used in) investing activities	(19,995,000)	11,606,000	(4,331,000)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	15,000,000		25,000,000
Payment of debt issuance costs	(136,000)		(294,000)
Proceeds from issuance of common stock, net	7,781,000	7,114,000	0
Proceeds from exercise of stock options	4,405,000	474,000	1,816,000
Taxes paid related to net share settlement of equity awards	(1,131,000)	(543,000)	(249,000)
Net cash provided by financing activities	25,919,000	7,045,000	26,273,000
Effect of exchange rate changes on cash		1,000	(1,000)
Net increase (decrease) in cash and cash equivalents	(4,691,000)	1,330,000	(1,153,000)
Cash and cash equivalents:
Beginning of year	27,892,000	26,562,000	27,715,000
End of year	23,201,000	27,892,000	26,562,000
Supplemental disclosure of cash flow information:
Cash paid for interest	3,025,000	2,353,000	1,080,000
Supplemental disclosure of non-cash investing activities:
Gain on sales of assets recognized in excess of cash received		5,000,000
Purchases of equipment, molds, furniture and fixtures recorded in accounts payable and accrued expenses	$ 970,000	$ 49,000	40,000
Additions to patent rights recorded in accounts payable and accrued expenses			$ 10,000

XML

Summary of Significant Accounting Policies - Summary of Changes in Reserves for Product Returns and Sales Allowances (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Rebates and Chargebacks [Member]
Revenue From Contract With Customer Contractual Adjustments [Line Items]
Balance at beginning of year	$ 2,694	$ 1,315
Accruals and adjustments	15,383	9,586
Payments and other reserve reductions	(11,769)	(8,207)
Balance at end of year	6,308	2,694
Patient Discount Programs [Member]
Revenue From Contract With Customer Contractual Adjustments [Line Items]
Balance at beginning of year	1,290	115
Accruals and adjustments	6,716	2,429
Payments and other reserve reductions	(7,161)	(1,254)
Balance at end of year	845	1,290
Returns [Member]
Revenue From Contract With Customer Contractual Adjustments [Line Items]
Balance at beginning of year	1,153	245
Accruals and adjustments	2,520	1,628
Payments and other reserve reductions	(3,303)	(720)
Balance at end of year	370	1,153
Wholesaler Distribution Fees [Member]
Revenue From Contract With Customer Contractual Adjustments [Line Items]
Balance at beginning of year	790	465
Accruals and adjustments	6,393	3,519
Payments and other reserve reductions	(5,500)	(3,194)
Balance at end of year	1,683	790
Prompt Payment Discounts [Member]
Revenue From Contract With Customer Contractual Adjustments [Line Items]
Balance at beginning of year	216	84
Accruals and adjustments	1,491	742
Payments and other reserve reductions	(1,387)	(610)
Balance at end of year	$ 320	$ 216

XML

Leases - Summary of Future Minimum Lease Payments Under Operating Leases (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Operating Leases Future Minimum Payments Due [Abstract]
2019	$ 566
2020	233
2021	238
2022	60
Total future minimum lease payments	$ 1,097

XML

Revenues, Significant Customers and Concentrations of Risk - Summary of Significant Customers from which the Company Derived 10% or More of Total Revenue (Detail) - Customer Concentration Risk [Member]		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Teva [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage		41.00%	31.00%	38.00%
AMAG [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage		20.00%	29.00%	16.00%
AmerisourceBergen [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage	[1]	10.00%	11.00%	11.00%
McKesson [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage	[1]		12.00%	16.00%
McKesson [Member] | Maximum [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage	[1]	10.00%
Ferring [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage			11.00%	10.00%
Ferring [Member] | Maximum [Member]
Concentration Risk [Line Items]
Total revenue by customer, percentage		10.00%

[1] Revenue from sales to distributors, net of estimated sales returns and allowances based on shipments.

XML

Income Taxes - Summary of Effective Tax Rates Differ from Statutory Income Tax Rates (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Statutory income tax rate	(21.00%)	(21.00%)	(34.00%)
State income taxes	(14.40%)	(3.80%)	(6.10%)
Valuation allowance increase	59.90%	20.80%	(102.00%)
Effect of foreign operations	1.00%	(0.20%)
Change in unused net operating loss and credit carryforwards	(24.70%)	(3.90%)	2.70%
Stock-based compensation	(22.30%)	(0.20%)	(3.50%)
162(m) limitation	18.20%	2.90%
Nondeductible items	1.80%	3.20%	(1.60%)
Impact of Tax Cuts and Jobs Act	1.50%	2.20%	144.50%
Effective income tax rate, Total	(0.00%)	(0.00%)	(0.00%)

XML

Share Based Compensation - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stockholders Equity Note [Abstract]
Number of Shares Outstanding, Beginning Balance	14,079,000	12,149,000	11,314,000
Number of Shares Granted/Issued	2,489,000	2,693,000	2,986,000
Number of Shares Exercised	(2,572,000)	(477,000)	(1,311,000)
Number of Shares Cancelled/Forfeited	(135,000)	(286,000)	(840,000)
Number of Shares Outstanding, Ending Balance	13,861,000	14,079,000	12,149,000
Number of Shares Exercisable, Ending Balance	10,033,000
Weighted Average Exercise Price Outstanding, Beginning Balance	$ 2.19	$ 2.04	$ 1.84
Weighted Average Exercise Price Granted/Issued	3.01	2.72	2.67
Weighted Average Exercise Price Exercised	1.76	1.14	1.38
Weighted Average Exercise Price Cancelled/Forfeited	2.81	2.43	2.68
Weighted Average Exercise Price Outstanding, Ending Balance	2.41	$ 2.19	$ 2.04
Weighted Average Exercise Price Exercisable, Ending Balance	$ 2.22
Weighted Average Remaining Contractual Term (Years) Outstanding, Ending Balance	6 years 8 months 12 days	6 years 9 months 18 days
Weighted Average Remaining Contractual Term (Years) Exercisable, Ending Balance	5 years 9 months 18 days
Aggregate Intrinsic Value, Exercised	$ 6,477	$ 768	$ 2,226
Aggregate Intrinsic Value Outstanding, Ending Balance	31,713	$ 8,534
Aggregate Intrinsic Value Exercisable, Ending Balance	$ 24,835

XML

Share Based Compensation - Summary of Share Based Compensation Allocation Expense (Detail) - Long Term Incentive Program [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 6,470	$ 4,927	$ 3,490
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	3,436	2,956	2,378
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	1,830	1,173	701
Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 1,204	$ 798	$ 411

XML

Share Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Summary of Stock Option Activity

Stock option activity under the Plan as of and for the three years ended December 31, 2019 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price ($)		Term (Years)		Value ($)
Outstanding at December 31, 2016		11,314			1.84
Granted/Issued		2,986			2.67
Exercised		(1,311	)		1.38				2,226
Cancelled/Forfeited		(840	)		2.68
Outstanding at December 31, 2017		12,149			2.04
Granted/Issued		2,693			2.72
Exercised		(477	)		1.14				768
Cancelled/Forfeited		(286	)		2.43
Outstanding at December 31, 2018		14,079			2.19		6.8		8,534
Granted/Issued		2,489			3.01
Exercised		(2,572	)		1.76				6,477
Cancelled/Forfeited		(135	)		2.81
Outstanding at December 31, 2019		13,861			2.41		6.7		31,713
Exercisable at December 31, 2019		10,033			2.22		5.8		24,835

Assumptions Used in Fair Value Measurement of Options Granted

	December 31,
	2019			2018			2017
Risk-free interest rate		1.9	%		2.8	%		1.8	%
Annualized volatility		55.7	%		53.7	%		53.3	%
Weighted average expected life, in years		5.5			6.0			6.0
Expected dividend yield		0.0	%		0.0	%		0.0	%

Schedule of Performance Stock Unit Awards and Restricted Stock Granted Under Long-Term Incentive Program

The performance stock unit awards and restricted stock unit awards granted under the long-term incentive program are summarized in the following table:

	Performance Stock Units					Restricted Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value ($)		Number of Shares			Weighted Average Grant Date Fair Value ($)
Outstanding at December 31, 2016		1,347			1.50		823			1.39
Granted		689			3.12		689			2.69
Vested/settled		—					(288	)		1.49
Forfeited/expired		(581	)		2.16		(67	)		1.70
Outstanding at December 31, 2017		1,455			2.20		1,157			2.12
Granted		611			2.89		611			2.70
Vested/settled		(173	)		2.18		(500	)		1.99
Forfeited/expired		(51	)		3.01		(42	)		2.68
Outstanding at December 31, 2018		1,842			2.41		1,226			2.44
Granted		593			2.99		789			2.92
Incremental shares earned		59			1.25		—			—
Vested/settled		(415	)		1.18		(614	)		2.19
Forfeited/expired		(238	)		1.12		—			—
Outstanding at December 31, 2019		1,841			3.00		1,401			2.82

Summary of Share Based Compensation Allocation Expense

The Company incurred compensation costs in connection with share-based awards in each of the years in the three-year period ended December 31, 2019 as follows:

	December 31,
	2019		2018		2017
Stock options	$	3,436	$	2,956	$	2,378
Restricted stock units		1,830		1,173		701
Performance stock units		1,204		798		411
Total share-based compensation expense	$	6,470	$	4,927	$	3,490

Performance Stock Units [Member]

Assumptions Used in Fair Value Measurement of Options Granted

The fair values of the TSR PSUs granted were determined using a Monte Carlo simulation and utilized the following inputs and assumptions:

	2019 Award			2018 Award			2017 Award
Closing stock price on grant date	$	2.92		$	2.70		$	2.66
Performance period starting price	$	3.01		$	1.92		$	2.17
Term of award (in years)		2.55			2.57			2.57
Volatility		63.7	%		64.9	%		54.6	%
Risk-free interest rate		1.79	%		2.56	%		1.39	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Fair value per TSR PSU	$	3.18		$	3.27		$	3.10

XML

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Inventories

Inventory consisted of the following:

	December 31,		December 31,
	2019		2018
Raw material	$	325	$	26
Work in process		8,390		7,622
Finished goods		7,285		3,702
	$	16,000	$	11,350

Components of Equipment, Molds, Furniture, and Fixtures

The Company’s equipment, molds, furniture and fixtures consisted of the following:

	December 31,			December 31,
	2019			2018
Furniture, fixtures and office equipment	$	2,480		$	2,331
Production molds and equipment		20,749			19,678
Molds and tooling in process		1,512			456
Construction in process		989			—
Less: accumulated depreciation		(9,769	)		(7,570	)
	$	15,961		$	14,895

Summary of Changes in Reserves for Product Returns and Sales Allowances

The following presents changes in reserves for product returns and sales allowances:

				Patient						Wholesaler			Prompt
	Rebates and			Discount						Distribution			Payment
	Chargebacks			Programs			Returns			Fees			Discounts
Balance at December 31, 2017	$	1,315		$	115		$	245		$	465		$	84
Accruals and adjustments		9,586			2,429			1,628			3,519			742
Payments and other reserve reductions		(8,207	)		(1,254	)		(720	)		(3,194	)		(610	)
Balance at December 31, 2018		2,694			1,290			1,153			790			216
Accruals and adjustments		15,383			6,716			2,520			6,393			1,491
Payments and other reserve reductions		(11,769	)		(7,161	)		(3,303	)		(5,500	)		(1,387	)
Balance at December 31, 2019	$	6,308		$	845		$	370		$	1,683		$	320

XML

Document and Entity Information - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2019

Feb. 28, 2020

Jun. 30, 2019

Cover [Abstract]

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2019

Document Fiscal Year Focus

2019

Document Fiscal Period Focus

FY

Trading Symbol

ATRS

Entity Registrant Name

ANTARES PHARMA, INC.

Entity Central Index Key

0001016169

Current Fiscal Year End Date

--12-31

Entity Well-known Seasoned Issuer

No

Entity Current Reporting Status

Yes

Entity Voluntary Filers

No

Entity Filer Category

Accelerated Filer

Entity Small Business

true

Entity Emerging Growth Company

false

Entity Shell Company

false

Entity Common Stock, Shares Outstanding

165,560,401

Entity Public Float

$ 527.9

Entity Interactive Data Current

Yes

Title of 12(b) Security

Common Stock, par value $0.01 per share

Security Exchange Name

NASDAQ

Entity File Number

1-32302

Entity Incorporation, State or Country Code

DE

Entity Tax Identification Number

41-1350192

Entity Address, Address Line One

100 Princeton South

Entity Address, Address Line Two

Suite 300

Entity Address, City or Town

Ewing

Entity Address, State or Province

NJ

Entity Address, Postal Zip Code

08628

City Area Code

609

Local Phone Number

359-3020

Document Annual Report

true

Document Transition Report

false

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the registrant’s 2020 annual meeting of stockholders to be filed within 120 days after the end of the period covered by this annual report on Form 10-K are incorporated by reference into Part III of this annual report on Form 10-K.

XML

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (2,027)	$ (6,515)	$ (16,743)
Foreign currency translation adjustment	1	(3)	15
Comprehensive loss	$ (2,026)	$ (6,518)	$ (16,728)

XML

Long-Term Debt - Additional Information (Detail) - USD ($)		12 Months Ended
	Jun. 26, 2019	Dec. 31, 2019	Jun. 25, 2019	Dec. 31, 2018	Jun. 06, 2017
Debt Instrument [Line Items]
Carrying value of long term debt		$ 40,395,000		$ 22,083,000
Hercules Capital, Inc [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Debt instrument, maturity date Description		The Term Loan is secured by substantially all of the Company’s assets, excluding intellectual property, and will mature on July 1, 2022.
Debt instrument, maturity date		Jul. 01, 2022
Debt instrument, effective interest rate		9.25%		9.50%
Debt instrument, payment terms		Payments under the Loan Agreement are interest only until the first principal payment is due, which was originally on August 1, 2019.
Debt instrument, first principal payment due date		Aug. 01, 2019
Carrying value of long term debt		$ 40,395,000		$ 25,126,000
Hercules Capital, Inc [Member] | Term Loan [Member] | First Amendment [Member]
Debt Instrument [Line Items]
Long-term debt, face amount	$ 50,000,000.0		$ 35,000,000.0
Debt instrument, payment terms		extended the interest-only payment period of the Term Loan to August 1, 2021, which may be further extended to August 1, 2022 if the Company achieves a certain loan extension milestone.
Hercules Capital, Inc [Member] | Term Loan [Member] | Prime Based Variable Rate [Member]
Debt Instrument [Line Items]
Debt Instrument, variable interest rate		9.50%
Hercules Capital, Inc [Member] | Term Loan [Member] | Maximum [Member]
Debt Instrument [Line Items]
Long-term debt, face amount					$ 35,000,000.0
Prepayment fee percentage on principal loan prepaid		3.00%
Hercules Capital, Inc [Member] | Term Loan [Member] | Minimum [Member]
Debt Instrument [Line Items]
Prepayment fee percentage on principal loan prepaid		1.00%
Hercules Capital, Inc [Member] | Tranche I Loan [Member]
Debt Instrument [Line Items]
Long-term debt, borrowed amount					$ 25,000,000.0
Percentage of loan fee on original principal amount		4.25%
Hercules Capital, Inc [Member] | Tranche II [Member]
Debt Instrument [Line Items]
Percentage of loan fee on original principal amount		3.95%
Hercules Capital, Inc [Member] | Tranche II [Member] | First Amendment [Member]
Debt Instrument [Line Items]
Long-term debt, increase in face amount	15,000,000.0
Hercules Capital, Inc [Member] | Tranche III [Member]
Debt Instrument [Line Items]
Percentage of loan fee on original principal amount		3.95%
Hercules Capital, Inc [Member] | Tranche III [Member] | Maximum [Member] | First Amendment [Member]
Debt Instrument [Line Items]
Debt instrument, available option to request additional advance amount	10,000,000.0
Hercules Capital, Inc [Member] | Tranche III [Member] | Minimum [Member] | First Amendment [Member]
Debt Instrument [Line Items]
Debt instrument, available option to request additional advance amount	$ 5,000,000.0

XML

Summary of Significant Accounting Policies - Inventories (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw material	$ 325	$ 26
Work in process	8,390	7,622
Finished goods	7,285	3,702
Inventory, Total	$ 16,000	$ 11,350

XML

Leases - Additional Information (Detail)		12 Months Ended
	Jul. 01, 2019 USD ($) ft²	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 01, 2019 USD ($)
Regulatory Assets [Line Items]
Right-of-use assets		$ 5,463,000
Lease liability		$ 6,690,000
Lease renewal term	3 years	2 years
Lessee, operating lease, existence of option to extend		true
Description of operating lease extension period		In May 2019, the Company amended its existing lease of the Company’s corporate headquarters to extend the lease term for an additional two years. The lease extension period commences on November 1, 2019 and expires on October 31, 2021.
Leased area | ft²	75,000
Lease term	12 years 6 months
Operating lease costs		$ 1,391,000
Cash paid for operating lease liabilities		1,401,000
Non-cash operating lease ROU assets obtained in exchange for operating lease obligations		$ 6,511,000
Weighted average discount rate		8.30%
Weighted average remaining lease term		8 years 4 months 24 days
Rent expense for operating leases			$ 695,000	$ 656,000
Maximum [Member]
Regulatory Assets [Line Items]
Operating lease, allowance	$ 1,200,000
ASU 2016-02 [Member]
Regulatory Assets [Line Items]
Right-of-use assets					$ 1,000,000.0
Lease liability					$ 1,000,000.0

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Antares Pharma, Inc. and its two wholly-owned foreign subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant accounting estimates relate to revenue recognition, inventory valuation, and the valuation of equity instruments used in stock-based compensation. Actual results could differ from these estimates.

Accounting Pronouncements Recently Adopted

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-02 Leases (“Topic 842”) and related amendments effective January 1, 2019, electing the package of practical expedients and applying the transition provisions as of the effective date. Reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts, as reported under previous GAAP, were not adjusted. As of December 31, 2018, the Company had non-cancellable operating leases for its corporate headquarters facility in Ewing, New Jersey, and its office, research and development facility in Plymouth, Minnesota, a suburb of Minneapolis, which were not previously required to be recorded on the balance sheet. As a result of the adoption of Topic 842, the Company recognized approximately $1.0 million in right-of-use assets and lease liabilities in connection with its existing operating leases. The adoption of Topic 842 on January 1, 2019 did not have a significant impact on the Company’s consolidated results of operations or cash flows.

On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments (“ASC 606”), applying the modified retrospective transition method to all contracts that were not completed as of the date of adoption. ASC 606 superseded the previous revenue recognition requirements in Topic 605 Revenue Recognition (“ASC 605”) and requires entities to recognize revenues when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The cumulative effect of the adoption of the new standard was not material to the Company’s consolidated financial statements. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts, as reported under ASC 605, were not adjusted. In accordance with ASC 605, revenue was previously recognized when all of the following criteria were met: persuasive evidence of the arrangement exists; delivery has occurred with no remaining performance obligations; the fee is fixed or determinable; and collectability is reasonably assured.

Recent Accounting Pronouncements Not Yet Adopted as December 31, 2019

In 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019.

However, in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases: Effective Dates, which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting companies. A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023. The Company has historically had minimal credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Accounting for Implementation Costs Incurred in Cloud Computing Arrangement that is a Service Contract, providing new guidance on a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This standard will be effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and 606. The guidance clarifies that certain transactions between collaborative arrangement participants should be accounted for under the ASC 606 revenue guidance, adds unit of account guidance to the collaborative arrangement guidance to align with the revenue standard, and clarifies presentation guidance for transactions with a collaborative arrangement participant that is not accounted for under the revenue standard. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 

Foreign Currency Translation

The majority of the foreign subsidiaries’ revenues are denominated in U.S. dollars, and any required funding of the subsidiaries is provided by the U.S. parent. Nearly all operating expenses of the foreign subsidiaries are denominated in Swiss Francs. Additionally, bank accounts held by foreign subsidiaries are denominated in Swiss Francs, there is a low volume of intercompany transactions and there is not an extensive interrelationship between the operations of the subsidiaries and the parent company. As such, the Company has determined that the Swiss Franc is the functional currency for its foreign subsidiaries. The reporting currency for the Company is the United States Dollar (“USD”). The financial statements of the Company’s foreign subsidiaries are translated into USD for consolidation purposes. All assets and liabilities are translated using period-end exchange rates and statements of operations items are translated using average exchange rates for the period. The resulting translation adjustments are recorded as a separate component of stockholders’ equity, comprising all of the accumulated other comprehensive income (loss).  Sales to certain customers and purchases from certain vendors by the U.S. parent are in currencies other than the USD and are subject to foreign currency exchange rate fluctuations. Foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of operations.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits at commercial banks and highly liquid investments in money market funds with maturities of three months or less. Cash equivalents are remeasured and reported at fair value each reporting period, in accordance with ASC Topic 820, Fair Value Measurements (“ASC 820”) based on quoted market prices, which is a Level 1 input within the three-level valuation hierarchy for disclosure of fair value measurements, and totaled $11,153 and $20,569 as of December 31, 2019 and 2018, respectively.

Investments

From time to time, the Company also invests in U.S. Treasury bills and government agency notes that are classified as held-to-maturity because of the Company’s intent and ability to hold the securities to maturity. Investments with maturities of one year or less are classified as short-term. The investment securities are carried at their amortized cost and fair value is determined by quoted market prices for identical or similar securities.  At December 31, 2019, the Company’s short-term investments had a carrying value of $22,520, which approximated fair value. The Company held no investments as of December 31, 2018. 

Accounts Receivable

Trade accounts receivable represents amounts billed to customers and are stated at the amount the Company expects to collect. The Company considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer and changes in customer payment terms.  At December 31, 2019, the Company’s trade accounts receivable balance was due primarily from Teva, AMAG and distributors.  Each of these customers has historically paid timely and demonstrated creditworthiness. Accordingly, the Company believes the risk of accounts being uncollectible is minimal and had no significant allowances for doubtful accounts established as of December 31, 2019 or 2018.  If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances may be required.  The Company had no material write-offs to bad debt expense in 2019, 2018 or 2017.

Royalties receivable from partners are included in accounts receivable and are typically payable to the Company within 45 to 60 days after the end of each quarter and or annual period in which they were earned.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. Certain components of the Company’s products are provided by a limited number of vendors, and the Company’s production and assembly operations are outsourced to third-party suppliers where substantially all of the Company’s inventory is located.  Disruption of supply from key vendors or third-party suppliers may have a material adverse impact on the Company’s operations.

Inventory consisted of the following:

	December 31,		December 31,
	2019		2018
Raw material	$	325	$	26
Work in process		8,390		7,622
Finished goods		7,285		3,702
	$	16,000	$	11,350

The Company provides reserves for potentially excess, dated or obsolete inventories based on estimates of forecasted product demand and the likelihood of consumption in the normal course of business, considering the expiration dates of the inventories on hand, planned production volumes and lead times required for restocking of customer inventories. Although every effort is made to ensure that forecasts and assessments are reasonable, changes to these assumptions are possible. In such cases, estimates may prove inaccurate and result in an understatement or overstatement of the reserves required to fairly state such inventories. The Company’s reserve for excess, dated or obsolete inventory was $464 and $847 at December 31, 2019 and 2018, respectively. In 2019, the Company wrote off inventory of $708 and increased the reserve for excess, dated or obsolete inventory by $325. In 2018, the Company wrote off $255 of inventory and increased the reserve for excess, dated or obsolete inventory by $592.

Contract Assets

Contract assets are recognized when control of goods or services has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract. Costs that have been incurred in connection with development services provided to partners for which the associated revenue has not yet been recognized are also recorded as contract assets, and totaled $1,534 and $204 as of December 31, 2019 and 2018, respectively.  As of December 31, 2018, contract assets also included a $5,000 installment in connection with the sale and transfer of assets to Ferring as discussed in Note 9, which was received during the year ended December 31, 2019.

Equipment, Molds, Furniture, and Fixtures

Equipment, molds, furniture, and fixtures are stated at cost and are depreciated using the straight-line method over their estimated useful lives ranging from three to ten years. The Company’s equipment, molds, furniture and fixtures consisted of the following:

	December 31,			December 31,
	2019			2018
Furniture, fixtures and office equipment	$	2,480		$	2,331
Production molds and equipment		20,749			19,678
Molds and tooling in process		1,512			456
Construction in process		989			—
Less: accumulated depreciation		(9,769	)		(7,570	)
	$	15,961		$	14,895

Depreciation expense was $2,205, $2,125 and $1,536 for the years ended December 31, 2019, 2018 and 2017, respectively.

Leases

The Company recognizes right-of-use (“ROU”) assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. Certain of the Company’s lease arrangements contain renewal options that have not been included in the determination of the lease term, as they are not reasonably certain of exercise. For contracts that contain lease and non-lease components, the Company accounts for both components as a single lease component. Variable lease payments are expensed as incurred.

Intangible assets

The Company capitalizes external legal costs and filing fees associated with obtaining patent rights for approved commercial and partnered products when there are projected future cash flows associated with the patent. These capitalized patent costs are amortized on a straight-line basis over the shorter of the life of the patent or the estimated useful life of the patent, which typically ranges from five to fifteen years beginning on the earlier of the date the patent is issued or the first commercial sale of product utilizing such patent rights. The Company periodically reviews capitalized patent costs to identify any amounts to be charged to expense for patents that are no longer being pursued or for which there are no future revenues or cash flows anticipated.

The Company capitalizes external legal patent defense costs and costs for pursuing patent infringements when it determines that a successful outcome is probable and will lead to an increase in the value of the patent.  The capitalized costs are amortized over the remaining life of the related patent.  If changes in the anticipated outcome were to occur that reduce the likelihood of a successful outcome of the entire action to less than probable, the capitalized costs would be charged to expense in the period in which the change is determined.

The gross carrying amount and accumulated amortization of patents was $3,661 and $3,183, respectively at December 31, 2019, and $3,794 and $2,963, respectively, at December 31, 2018. Patent amortization expense for the years ended December 31, 2019, 2018 and 2017 was $352, $599 and $568, respectively, and is recorded in selling, general and administrative expenses in the consolidated statements of operations.  The Company’s estimated aggregate patent amortization expense for the next five years is $95, $89, $83, $68 and $49 in 2020, 2021, 2022, 2023 and 2024, respectively.  

Impairment of Long-Lived Assets and Intangibles

Long-lived assets and intangibles, including patent rights, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset or asset group. This analysis can be very subjective; however, the Company utilizes the expected future undiscounted cash flows from signed license and distribution agreements and other contracts with customers to substantiate the recoverability of its long-lived assets. If the sum of the undiscounted cash flows is less than the carrying value of the asset, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Goodwill

Goodwill is evaluated for impairment annually at December 31, or more frequently if an event occurs or circumstances change that indicate that the carrying value may not be recoverable.  In performing the annual impairment test, the Company compares the fair value of the reporting unit to the carrying amount and would recognize an impairment charge to goodwill for the amount by which the carrying amount exceeds the reporting unit’s fair value.  

At December 31, 2019 and 2018, the Company had goodwill with a carrying value of $1,095, attributable to its single reporting unit. Based on the results of its evaluations, the Company determined that goodwill was not impaired, and no impairment losses were recognized in the years ended December 31, 2019, 2018, and 2017, respectively.

Revenue Recognition

The Company generates revenue from proprietary and partnered product sales, license and development activities and royalty arrangements.  Revenue is recognized when or as the Company transfers control of the promised goods or services to its customers at the transaction price, which is the amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services.

At inception of each contract, the Company identifies the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determines the transaction price including any variable consideration, allocates the transaction price to the distinct performance obligations and determines whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company reassess its reserves for variable consideration at each reporting date and makes adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known.

The Company has elected to recognize the cost for freight and shipping activities as fulfilment cost. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying goods are transferred to the customer. The related shipping and freight charges incurred by the Company are included in cost of revenue.

Proprietary Product Sales

The Company sells its proprietary products OTREXUP^® and XYOSTED^® primarily to wholesale and specialty distributors. Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs described below.

The determination of certain of these reserves and sales allowances require management to make a number of judgements and estimates to reflect the Company’s best estimate of the transaction price and the amount of consideration to which it believes it is ultimately entitled to receive. The expected value is determined based on unit sales data, contractual terms with customers and third-party payers, historical and expected utilization rates, any new or anticipated changes in programs or regulations that would impact the amount of the actual rebates, customer purchasing patterns, product expiration dates and levels of inventory in the distribution channel. Reserves for prompt payment discounts are recorded as a reduction in accounts receivable. Reserves for returns, distributor fees, rebates and customer co-pay support programs are included within current liabilities in our consolidated balance sheets.

Wholesaler Distribution Fees. Distribution fees are paid to certain wholesalers based on contractually determined rates and units purchased. Since the fee paid to the customer is not for a distinct good or service, the consideration is recognized as a reduction of the transaction price of the goods delivered in accordance with ASC 606. The Company accrues the estimated fee due at the time of sale based on the contracted price and adjusts the accrual at each reporting period, if necessary, to reflect actual experience.

Prompt Pay Discounts. The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. Based on historical experience, customers take advantage of this discount and accordingly the Company accrues 100% of the cash discounts offered by reducing accounts receivable and recognizing the discount as a reduction of revenue in the same period the related sales are made. The accrual is reviewed at each reporting period and adjusted if actual experience differs from estimates.

Chargebacks. The Company provides discounts primarily to authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs and various organizations under Medicaid contracts and regulations. These entities purchase products from the wholesale distributors at a discounted price, and the wholesale distributors then charge back to the Company the difference between the current wholesale acquisition cost and the price the entity paid for the product. The Company will estimate and accrue chargebacks based on estimated wholesaler inventory levels, current contract prices and historical chargeback activity. Chargebacks are recognized as a reduction of revenue in the same period the related revenue is recognized.

Rebates. The Company participates in certain plan rebate programs, which provide discounted prescriptions to qualified insured patients.  Under these rebate programs, the Company will pay a rebate to the third-party administrator of the program, generally two to three months after the quarter in which prescriptions subject to the rebate are filled. The Company estimates and accrues for these rebates based on current contract prices, historical and estimated future percentages of product sold to qualified patients.  Rebates are recognized as a reduction of revenue in the same period the related revenue is recognized.

Patient Discount Programs. The Company also offers discount cards, co-pay coupons and free trial programs to off-set the cost of prescriptions to patients. The Company estimates the total amount that will be redeemed or utilized based on historical redemption experience and on levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.

Product Returns. Consistent with industry practice, the Company generally offers wholesalers and specialty distributors a limited right to return products, generally within six months prior to and 12 months following the product’s expiration date. The Company’s propriety products generally have expiration dates ranging from 24 to 33 months. Product returns are estimated and recorded at the time of sale based on historical return patterns. Actual returns are tracked by individual production lots and charged against reserves. Returns reserves may be adjusted, if necessary, if actual returns differ from historical estimates. Management also monitors and takes into consideration the amount of estimated product inventory in the distribution channel, product dating and any known or expected changes in the marketplace when establishing the estimated rate of returns.

The following presents changes in reserves for product returns and sales allowances:

				Patient						Wholesaler			Prompt
	Rebates and			Discount						Distribution			Payment
	Chargebacks			Programs			Returns			Fees			Discounts
Balance at December 31, 2017	$	1,315		$	115		$	245		$	465		$	84
Accruals and adjustments		9,586			2,429			1,628			3,519			742
Payments and other reserve reductions		(8,207	)		(1,254	)		(720	)		(3,194	)		(610	)
Balance at December 31, 2018		2,694			1,290			1,153			790			216
Accruals and adjustments		15,383			6,716			2,520			6,393			1,491
Payments and other reserve reductions		(11,769	)		(7,161	)		(3,303	)		(5,500	)		(1,387	)
Balance at December 31, 2019	$	6,308		$	845		$	370		$	1,683		$	320

Partnered Product Sales

The Company is party to several license, development, supply and distribution arrangements with pharmaceutical partners, under which the Company produces and is the exclusive supplier of certain products, devices and/or components. Revenue is recognized when or as control of the goods transfers to the customer as follows:

The Company is the exclusive supplier of the Makena^® subcutaneous auto injector product to AMAG. Because the product is custom manufactured for AMAG with no alternative use and the Company has a contractual right to payment for performance completed to date, control is continuously transferred to the customer as product is produced pursuant to firm purchase orders. Revenue is recognized over time using the output method based on the contractual selling price and number of units produced.  The amount of revenue recognized in excess of the amount shipped/billed to the customer, if any, is recorded as contract assets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.

All other partnered product sales are recognized at the point in time in which control is transferred to the customer, which is typically upon shipment. Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no price protection or right of return. Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, if any.  For example, the Company sells Sumatriptan Injection USP to Teva at cost and is entitled to receive 50 percent of the net profits from commercial sales made by Teva, payable to the Company within 45 days after the end of the quarter in which the commercial sales are made. The Company recognizes revenue, including the estimated variable consideration it expects to receive for contract margin on future commercial sales, upon shipment of the goods to Teva.  The estimated variable consideration is recognized at an amount the Company believes is not subject to significant reversal based on historical experience, and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.

Licensing and Development Revenue

The Company has entered into several license, development and supply arrangements with pharmaceutical partners under which the Company grants a license to its device technology and know-how and provides research and development services that often involve multiple performance obligations and highly customized deliverables. For such arrangements, the Company identifies each of the promised goods and services within the contract and the distinct performance obligations at inception, and allocates consideration to each performance obligation based on relative standalone selling price, which is generally determined based on the expected cost plus margin.

If the contract includes an enforceable right to payment for performance completed to date and performance obligations are satisfied over time, the Company recognized revenue over the development period using either the input or output method depending on which is most appropriate given the nature of the distinct deliverable. For other contracts that do not contain an enforceable right to payment for performance completed to date, revenue is recognized when control is transferred to the customer.  Factors that may indicate that the transfer of control has occurred include the transfer of legal title, transfer of physical possession, the customer has obtained the significant risks and rewards of ownership of the assets and the Company has a present right to payment.

The Company’s typical payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations. The Company records a liability for cash received in advance of performance, which is presented within deferred revenue on the consolidated balance sheet and recognized as revenue when the associated performance obligations have been satisfied. The Company recognized $1.0 million in licensing and development revenue in connection with contract liabilities that were outstanding as of December 31, 2018 and satisfied during the year ended December 31, 2019.

License fees and milestones received in exchange for the grant of a license to the Company’s functional intellectual property (“IP”) such as patented technology and know-how in connection with a partnered development arrangement are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is not generally distinct from the non-licensed goods or services to be provided under the contract. Milestone payments that are contingent upon the occurrence of future events, are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal will not occur when the associated uncertainty is resolved.

Royalties

The Company earns royalties in connection with licenses granted under license and development arrangements with partners. Royalties are based upon a percentage of commercial sales of partnered products with rates ranging from mid single digit to low double digit and are tiered based on levels of net sales. These sales-based royalties, for which the license was deemed the predominant element to which the royalties relate, are estimated and recognized in the period in which the partners’ commercial sales occur.  The royalties are generally reported and payable to the Company within 45 to 60 days of the end of the period in which the commercial sales are made.  The Company bases its estimates of royalties earned on actual sales information from its partners when available or estimated prescription sales from external sources and estimated net selling price. If actual royalties received are different than amounts estimated, the Company would adjust the royalty revenue in the period in which the adjustment becomes known.

Remaining Performance Obligations

Remaining performance obligations represents the transaction price of firm orders and development contract deliverables for which work has not been completed or orders fulfilled, and excludes potential purchase orders under ordering-type supply contracts with indefinite delivery or quantity.  As of December 31, 2019, the aggregate value of remaining performance obligations, excluding contracts with an original expected length of one year or less, was $7.5 million. The Company expects to recognize revenue on the remaining performance obligations over the next three years, with the majority being recognized in the next twelve months.

Share-Based Compensation

The Company utilizes share-based compensation in the form of stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”).  The Company records compensation expense associated with share-based awards granted to employees at the fair value of the award on the date of grant.  The Company uses the Black-Scholes option valuation model to determine the fair value of stock options. The fair values of RSU and PSU grants containing service or performance conditions are based on the market value of the Company’s Common Stock on the date of grant.  The fair value of PSUs containing a market condition are estimated using a Monte Carlo simulation. The value of the portion of the award that is ultimately expected to vest is expensed ratably over the requisite service period as compensation expense in the consolidated statements of operations. Forfeitures are recorded as incurred. Assumptions concerning the Company’s stock price volatility and projected employee exercise behavior over the contractual life of the award impact the estimated fair value of the stock option awards.

Research and Development

Research and development expenses include costs directly attributable to the conduct of research and development programs including personnel costs, materials and supplies associated with design work and prototype development, FDA filing fees and the cost of services provided by outside contractors such as expenses related to clinical trials.  All costs associated with research and development activities are expensed as incurred.  

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Net Loss Per Share

Basic net loss per share is computed by dividing net income or loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed similar to basic net loss per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options or warrants were exercised and that the proceeds from such exercise were used to acquire shares of common stock at the average market price during the reporting period.  All potentially dilutive common shares were excluded from the calculation because they were anti-dilutive for all annual periods presented.  Potentially dilutive securities excluded from dilutive loss per share were 17,103, 17,147 and 14,761 at December 31, 2019, 2018 and 2017, respectively.

Segment Information

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker currently evaluates the Company’s operations as a whole from a number of different operational perspectives, including but not limited to, on a product-by-product, customer and partner basis. The Company derives all significant revenues from self-administered parenteral pharmaceutical products and technologies, and has a single reportable operating segment of business.

Going Concern

Management is responsible for evaluating, and providing disclosure of uncertainties about, the Company’s ability to continue as a going concern. As of December 31, 2019, the Company had cash, cash equivalents and investments of $45,721. Based on management’s evaluation, management concluded there is no substantial doubt or uncertainty about the Company’s ability to meet its obligations within one year from the date the consolidated financial statements were issued.

XML

Sale of Assets

12 Months Ended

Dec. 31, 2019

Sale Of Assets [Abstract]

Sale of Assets

9. Sale of Assets

In October 2017, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Ferring International Center S.A. (together with Ferring Pharmaceuticals Inc. and Ferring B.V. individually and collectively referred to as “Ferring”) to sell the worldwide rights, including certain assets, related to the needle-free auto injector device product line for a total purchase price of $14.5 million. The purchase price was to be paid in four installments consisting of the following: a $2.0 million upfront payment, which was received upon entry into the Asset Purchase Agreement and the transfer of certain assets; a second installment of $2.75 million received upon delivery of certain documentation and satisfaction of certain conditions primarily related to product manufacturing; a third installment of $4.75 million received upon satisfaction of certain conditions, including further document transfer, the successful completion of a regulatory audit by a notified body, and a pilot manufacturing run under Ferring’s supervision; and a final installment of $5.0 million due upon Ferring’s receipt of the CE Mark needed to continue to commercialize the product in certain territories and the final transfer of certain product-related inventory, equipment and agreements to Ferring (the “Completion Date”).

On May 1, 2019, the Company and Ferring entered into the First Amendment of the Asset Purchase Agreement (the “First Amendment”) to extend the term of the agreement to the third anniversary, to provide for the manufacture and delivery of additional product by Antares to Ferring prior to the Completion Date, and to bifurcate the payment of the final installment of the purchase price such that $2.5 million was paid to the Company upon the First Amendment effective date, with the final remaining payment of $2.5 million to be paid at the Completion Date, which was received in October 2019.

The Company previously recorded the gain on sale of assets as it was determined that, based on the satisfaction of certain conditions and the status of remaining closing requirements, it was probable that a significant reversal of the gain would not occur. The final installments received were recorded as a reduction to the related contract asset balance and a cash inflow from investing activities in the consolidated statement of cash flows for the year ended December 31, 2019.

XML

Long-Term Debt

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Long-Term Debt

5. Long-Term Debt

On June 6, 2017, the Company entered into a loan and security agreement (the “Loan Agreement”) with Hercules Capital, Inc., for a term loan of up to $35.0 million (the “Term Loan”), under which the Company initially borrowed $25.0 million (“Tranche I”), the proceeds of which are being used for working capital and general corporate purposes. The Term Loan is secured by substantially all of the Company’s assets, excluding intellectual property, and will mature on July 1, 2022. Interest accrues at a calculated prime-based variable rate with a maximum interest rate of 9.50%. The interest rate in effect as of December 31, 2019 and 2018 was 9.25% and 9.5%, respectively. Payments under the Loan Agreement are interest only until the first principal payment is due, which was originally on August 1, 2019.

On June 26, 2019, the Company entered into a First Amendment (the “Amendment”) to the Loan Agreement, which increased the aggregate principal amount available under the Term Loan from $35.0 million to $50.0 million and extended the interest-only payment period of the Term Loan to August 1, 2021, which may be further extended to August 1, 2022 if the Company achieves a certain loan extension milestone. Upon signing of the Amendment, an additional $15.0 million (“Tranche II”) was funded to the Company. The Term Loan maturity date remained July 1, 2022, but may be extended to July 1, 2024 contingent upon satisfaction of a certain loan extension milestone. The Company may, but is not obligated to, request one or more additional advances of at least $5.0 million, not to exceed $10.0 million in the aggregate (“Tranche III”). The Company’s option to request additional advances is available between January 1, 2020 and September 15, 2020.

The Company is required to pay an end of term fee (“End of Term Charge”) equal to 4.25% of Tranche I and 3.95% of the borrowings under Tranche II and Tranche III, payable upon the earlier of July 1, 2022 or repayment of the loan. The Loan Agreement also imposes a prepayment fee of 1.0% to 3.0% if any or all of the balance is prepaid prior to the maturity date

As of December 31, 2019, and 2018, the carrying value of the Term Loan was $40,395 and $25,126, respectively, which consisted of the principal balance outstanding and the End of Term Charge accrual, less unamortized debt issuance costs that are being amortized/accrued to interest expense over the term of the Term Loan using the effective interest method. The fair value of the Company’s debt is estimated to approximate the carrying value based on management’s understanding of current market conditions and rates it could obtain for similar loans.

Future principal payments under the Term Loan, including the contractual End of Term Charge, are as follows:

2020	$	—
2021		16,215
2022		25,440
	$	41,655

XML

Revenues, Significant Customers and Concentrations of Risk - Summary of Revenue Disaggregated by Major Types and Sources (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation Of Revenue [Line Items]
Total revenue	$ 37,839	$ 34,306	$ 28,433	$ 23,286	$ 18,821	$ 17,868	$ 14,162	$ 12,703	$ 123,864	$ 63,554	$ 54,515
Total Product Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total revenue									92,103	47,870	41,695
Total Product Revenue [Member] | Proprietary Product [Member]
Disaggregation Of Revenue [Line Items]
Total revenue									39,215	17,532	17,946
Total Product Revenue [Member] | Partnered Product [Member]
Disaggregation Of Revenue [Line Items]
Total revenue									52,888	30,338	23,749
Licensing and Development Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total revenue									7,529	6,753	11,171
Royalties [Member]
Disaggregation Of Revenue [Line Items]
Total revenue									$ 24,232	$ 8,931	$ 1,649

XML

Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Operating Loss Carryforwards [Line Items]
Period of incurred losses for both book and tax purposes	3 years
Valuation allowance for deferred tax assets	$ 54,609,000	$ 53,394,000
Increased total valuation allowance	1,215,000	1,356,000
Deferred tax assets, net of valuation allowances	0	0
Unrecognized tax benefits	0	0
Interest or penalties charged in relation to unrecognized tax benefits	0	0
Interest or penalties accrued in relation to unrecognized tax benefits	$ 0	$ 0
Total unrecognized tax benefits changing period	12 months
U.S Federal Tax [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carry forward	$ 166,196,000
Research credit carryforward	6,888,000
Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carry forward	$ 365,000
Tax credit carryforward expiration year	2023
Minimum [Member] | U.S Federal Tax [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforward expiration year	2020
Tax credit carryforward expiration year	2020
Maximum [Member] | U.S Federal Tax [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforward expiration year	2037
Tax credit carryforward expiration year	2039

XML

Sale of Assets - Additional Information (Detail) - Asset Purchase Agreement [Member] - Ferring [Member] $ in Thousands		1 Months Ended		12 Months Ended
	May 01, 2019 USD ($)	Oct. 31, 2019 USD ($)	Oct. 31, 2017 USD ($) Installment	Dec. 31, 2019
Sale of Assets [Line Items]
Total purchase price			$ 14,500
Number of installments paid for purchase price | Installment			4
Description of purchase price payment				The purchase price was to be paid in four installments consisting of the following: a $2.0 million upfront payment, which was received upon entry into the Asset Purchase Agreement and the transfer of certain assets; a second installment of $2.75 million received upon delivery of certain documentation and satisfaction of certain conditions primarily related to product manufacturing; a third installment of $4.75 million received upon satisfaction of certain conditions, including further document transfer, the successful completion of a regulatory audit by a notified body, and a pilot manufacturing run under Ferring’s supervision; and a final installment of $5.0 million due upon Ferring’s receipt of the CE Mark needed to continue to commercialize the product in certain territories and the final transfer of certain product-related inventory, equipment and agreements to Ferring (the “Completion Date”).
Upfront payment received upon transfer of assets			$ 2,000
Consideration receivable on criteria completion related to product manufacturing			2,750
Consideration receivable on criteria completion related to Audit and pilot manufacturing			4,750
Consideration receivable on criteria completion related to Product commercialization			$ 5,000
Payment of final installment purchase price	$ 2,500
Final remaining payment received in completion date		$ 2,500

XML

Stockholders' Equity - Additional Information (Detail) - USD ($)	1 Months Ended	12 Months Ended
	Aug. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stockholders Equity [Line Items]
Aggregate offering price of common stock		$ 7,781,000	$ 7,114,000
Proceeds from sale of common stock		$ 7,781,000	$ 7,114,000	$ 0
Sales Agreement [Member] | Cowen and Company, LLC [Member]
Stockholders Equity [Line Items]
Percentage of commission on proceeds from gross sales of common stock	3.00%
Sales Agreement [Member] | Cowen and Company, LLC [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Aggregate offering price of common stock	$ 30,000,000.0
ATM Facility [Member]
Stockholders Equity [Line Items]
Issuance of common stock, shares		2,307,000
Proceeds from sale of common stock		$ 7,781,000
Offering and Sales Agreement [Member]
Stockholders Equity [Line Items]
Issuance of common stock, shares			2,137,000
Proceeds from sale of common stock			$ 7,114,000

XML

Share Based Compensation - Schedule of Performance Stock Unit Awards and Restricted Stock Granted Under Long-Term Incentive Program (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Performance Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning Balance	1,842,000	1,455,000	1,347,000
Number of Shares, Granted	593,000	611,000	689,000
Number of Shares, Incremental shares earned	59,000
Number of Shares, Vested/settled	(415,000)	(173,000)
Number of Shares, Forfeited/expired	(238,000)	(51,000)	(581,000)
Number of Shares, Ending Balance	1,841,000	1,842,000	1,455,000
Weighted Average Grant Date Fair Value, Beginning Balance	$ 2.41	$ 2.20	$ 1.50
Weighted Average Grant Date Fair Value, Granted	2.99	2.89	3.12
Weighted Average Grant Date Fair Value, Incremental shares earned	1.25
Weighted Average Grant Date Fair Value, Vested/settled	1.18	2.18
Weighted Average Grant Date Fair Value, Forfeited/expired	1.12	3.01	2.16
Weighted Average Grant Date Fair Value, Ending Balance	$ 3.00	$ 2.41	$ 2.20
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning Balance	1,226,000	1,157,000	823,000
Number of Shares, Granted	789,000	611,000	689,000
Number of Shares, Vested/settled	(614,000)	(500,000)	(288,000)
Number of Shares, Forfeited/expired		(42,000)	(67,000)
Number of Shares, Ending Balance	1,401,000	1,226,000	1,157,000
Weighted Average Grant Date Fair Value, Beginning Balance	$ 2.44	$ 2.12	$ 1.39
Weighted Average Grant Date Fair Value, Granted	2.92	2.70	2.69
Weighted Average Grant Date Fair Value, Vested/settled	2.19	1.99	1.49
Weighted Average Grant Date Fair Value, Forfeited/expired		2.68	1.70
Weighted Average Grant Date Fair Value, Ending Balance	$ 2.82	$ 2.44	$ 2.12

XML

Accrued Expenses and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Payables And Accruals [Abstract]

Schedule of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:

	December 31,		December 31,
	2019		2018
Accrued employee compensation and benefits	$	4,479	$	3,715
Product returns and sales allowances		9,206		5,927
Other liabilities		2,838		2,355
	$	16,523	$	11,997

XML

Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (unaudited)

13. Quarterly Financial Data (unaudited)

	First			Second			Third			Fourth
2019
Total revenues	$	23,286		$	28,433		$	34,306		$	37,839
Gross profit		12,340			15,992			21,244			23,813
Net income (loss)		(5,539	)		(2,226	)		1,043			4,695
Net income (loss) per common share (1)		(0.03	)		(0.01	)		0.01			0.03
Weighted average shares, basic		160,446			162,734			163,119			163,952
Weighted average shares, diluted		160,446			162,734			168,503			171,238
2018
Total revenues	$	12,703		$	14,162		$	17,868		$	18,821
Gross profit		5,517			7,202			10,579			9,191
Net income (loss)		(6,193	)		(4,520	)		(1,936	)		6,134
Net income (loss) per common share (1)		(0.04	)		(0.03	)		(0.01	)		0.04
Weighted average shares, basic		156,724			157,024			157,471			158,389
Weighted average shares, diluted		156,724			157,024			157,471			162,810

^{(1) Net income (loss) per common share is computed based upon the net income or loss divided by the weighted average number of shares outstanding during each period. Basic and diluted weighted average shares and income (loss) per share amounts were identical for the periods in which the Company generated net losses, as the effect of potential common shares were anti-dilutive. For the periods in which the Company generated net income, the weighted average shares on a fully diluted basis, taking into consideration the effects of dilutive stock options, restricted stock and performance stock awards for the periods in which the Company generated net income, resulted in the income per share being mathematically the same on both a basic and diluted basis.}

XML

Revenues, Significant Customers and Concentrations of Risk (Tables)

12 Months Ended

Dec. 31, 2019

Revenue From Contract With Customer [Abstract]

Summary of Revenues Disaggregated by Major Types and Sources and Customer Geographic Location

The following table presents the Company’s revenue on a disaggregated basis by major types and sources:

	For the Years Ended December 31,
	2019		2018		2017
Proprietary product sales	$	39,215	$	17,532	$	17,946
Partnered product sales		52,888		30,338		23,749
Total product revenue		92,103		47,870		41,695
Licensing and development revenue		7,529		6,753		11,171
Royalties		24,232		8,931		1,649
Total revenue	$	123,864	$	63,554	$	54,515

Revenues disaggregated by customer geographic location are summarized as follows:

	For the Years Ended December 31,
	2019		2018		2017
United States of America	$	120,231	$	57,033	$	48,924
Europe		3,463		6,157		5,061
Other		170		364		530
	$	123,864	$	63,554	$	54,515

Summary of Significant Customers from which the Company Derived 10% or More of Total Revenue

Significant customers from which the Company derived 10% or more of its total revenue in any of the periods presented are as follows: 

	For the Years Ended December 31,
	2019	2018	2017
Teva	41%	31%	38%
AMAG	20%	29%	16%
AmerisourceBergen(1)	10%	11%	11%
McKesson (1)	<10%	12%	16%
Ferring	<10%	11%	10%

⁽¹⁾ Revenue from sales to distributors, net of estimated sales returns and allowances based on shipments.

XML

Long-Term Debt - Schedule of Future Principal Payments under Term Loan, Including End of Term Charge (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Debt Disclosure [Abstract]
2021	$ 16,215
2022	25,440
Long-term debt	$ 41,655

XML

Share Based Compensation - Assumptions Used in Fair Value Measurement of Options Granted (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stockholders Equity Note [Abstract]
Risk-free interest rate	1.90%	2.80%	1.80%
Annualized volatility	55.70%	53.70%	53.30%
Weighted average expected life, in years	5 years 6 months	6 years	6 years
Expected dividend yield	0.00%	0.00%	0.00%

XML

Employee 401(k) Savings Plan - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Postemployment Benefits [Abstract]
Defined Contribution Plan, Plan Name	401(k)
Company plan contributions	$ 993	$ 814	$ 590

XML

Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data

	First			Second			Third			Fourth
2019
Total revenues	$	23,286		$	28,433		$	34,306		$	37,839
Gross profit		12,340			15,992			21,244			23,813
Net income (loss)		(5,539	)		(2,226	)		1,043			4,695
Net income (loss) per common share (1)		(0.03	)		(0.01	)		0.01			0.03
Weighted average shares, basic		160,446			162,734			163,119			163,952
Weighted average shares, diluted		160,446			162,734			168,503			171,238
2018
Total revenues	$	12,703		$	14,162		$	17,868		$	18,821
Gross profit		5,517			7,202			10,579			9,191
Net income (loss)		(6,193	)		(4,520	)		(1,936	)		6,134
Net income (loss) per common share (1)		(0.04	)		(0.03	)		(0.01	)		0.04
Weighted average shares, basic		156,724			157,024			157,471			158,389
Weighted average shares, diluted		156,724			157,024			157,471			162,810

^{(1) Net income (loss) per common share is computed based upon the net income or loss divided by the weighted average number of shares outstanding during each period. Basic and diluted weighted average shares and income (loss) per share amounts were identical for the periods in which the Company generated net losses, as the effect of potential common shares were anti-dilutive. For the periods in which the Company generated net income, the weighted average shares on a fully diluted basis, taking into consideration the effects of dilutive stock options, restricted stock and performance stock awards for the periods in which the Company generated net income, resulted in the income per share being mathematically the same on both a basic and diluted basis.}

XML

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of Future Principal Payments under Term Loan, Including End of Term Charge

Future principal payments under the Term Loan, including the contractual End of Term Charge, are as follows:

2020	$	—
2021		16,215
2022		25,440
	$	41,655

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Antares Pharma, Inc. and its two wholly-owned foreign subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant accounting estimates relate to revenue recognition, inventory valuation, and the valuation of equity instruments used in stock-based compensation. Actual results could differ from these estimates.

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2016-02 Leases (“Topic 842”) and related amendments effective January 1, 2019, electing the package of practical expedients and applying the transition provisions as of the effective date. Reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts, as reported under previous GAAP, were not adjusted. As of December 31, 2018, the Company had non-cancellable operating leases for its corporate headquarters facility in Ewing, New Jersey, and its office, research and development facility in Plymouth, Minnesota, a suburb of Minneapolis, which were not previously required to be recorded on the balance sheet. As a result of the adoption of Topic 842, the Company recognized approximately $1.0 million in right-of-use assets and lease liabilities in connection with its existing operating leases. The adoption of Topic 842 on January 1, 2019 did not have a significant impact on the Company’s consolidated results of operations or cash flows.

On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments (“ASC 606”), applying the modified retrospective transition method to all contracts that were not completed as of the date of adoption. ASC 606 superseded the previous revenue recognition requirements in Topic 605 Revenue Recognition (“ASC 605”) and requires entities to recognize revenues when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The cumulative effect of the adoption of the new standard was not material to the Company’s consolidated financial statements. Results for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, while prior period amounts, as reported under ASC 605, were not adjusted. In accordance with ASC 605, revenue was previously recognized when all of the following criteria were met: persuasive evidence of the arrangement exists; delivery has occurred with no remaining performance obligations; the fee is fixed or determinable; and collectability is reasonably assured.

Recent Accounting Pronouncements Not Yet Adopted as December 31, 2019

In 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019.

However, in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases: Effective Dates, which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting companies. A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023. The Company has historically had minimal credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Accounting for Implementation Costs Incurred in Cloud Computing Arrangement that is a Service Contract, providing new guidance on a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This standard will be effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and 606. The guidance clarifies that certain transactions between collaborative arrangement participants should be accounted for under the ASC 606 revenue guidance, adds unit of account guidance to the collaborative arrangement guidance to align with the revenue standard, and clarifies presentation guidance for transactions with a collaborative arrangement participant that is not accounted for under the revenue standard. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 

Foreign Currency Translation

Foreign Currency Translation

The majority of the foreign subsidiaries’ revenues are denominated in U.S. dollars, and any required funding of the subsidiaries is provided by the U.S. parent. Nearly all operating expenses of the foreign subsidiaries are denominated in Swiss Francs. Additionally, bank accounts held by foreign subsidiaries are denominated in Swiss Francs, there is a low volume of intercompany transactions and there is not an extensive interrelationship between the operations of the subsidiaries and the parent company. As such, the Company has determined that the Swiss Franc is the functional currency for its foreign subsidiaries. The reporting currency for the Company is the United States Dollar (“USD”). The financial statements of the Company’s foreign subsidiaries are translated into USD for consolidation purposes. All assets and liabilities are translated using period-end exchange rates and statements of operations items are translated using average exchange rates for the period. The resulting translation adjustments are recorded as a separate component of stockholders’ equity, comprising all of the accumulated other comprehensive income (loss).  Sales to certain customers and purchases from certain vendors by the U.S. parent are in currencies other than the USD and are subject to foreign currency exchange rate fluctuations. Foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of operations.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits at commercial banks and highly liquid investments in money market funds with maturities of three months or less. Cash equivalents are remeasured and reported at fair value each reporting period, in accordance with ASC Topic 820, Fair Value Measurements (“ASC 820”) based on quoted market prices, which is a Level 1 input within the three-level valuation hierarchy for disclosure of fair value measurements, and totaled $11,153 and $20,569 as of December 31, 2019 and 2018, respectively.

Investments

Investments

From time to time, the Company also invests in U.S. Treasury bills and government agency notes that are classified as held-to-maturity because of the Company’s intent and ability to hold the securities to maturity. Investments with maturities of one year or less are classified as short-term. The investment securities are carried at their amortized cost and fair value is determined by quoted market prices for identical or similar securities.  At December 31, 2019, the Company’s short-term investments had a carrying value of $22,520, which approximated fair value. The Company held no investments as of December 31, 2018. 

Accounts Receivable

Accounts Receivable

Trade accounts receivable represents amounts billed to customers and are stated at the amount the Company expects to collect. The Company considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer and changes in customer payment terms.  At December 31, 2019, the Company’s trade accounts receivable balance was due primarily from Teva, AMAG and distributors.  Each of these customers has historically paid timely and demonstrated creditworthiness. Accordingly, the Company believes the risk of accounts being uncollectible is minimal and had no significant allowances for doubtful accounts established as of December 31, 2019 or 2018.  If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances may be required.  The Company had no material write-offs to bad debt expense in 2019, 2018 or 2017.

Royalties receivable from partners are included in accounts receivable and are typically payable to the Company within 45 to 60 days after the end of each quarter and or annual period in which they were earned.

Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. Certain components of the Company’s products are provided by a limited number of vendors, and the Company’s production and assembly operations are outsourced to third-party suppliers where substantially all of the Company’s inventory is located.  Disruption of supply from key vendors or third-party suppliers may have a material adverse impact on the Company’s operations.

Inventory consisted of the following:

	December 31,		December 31,
	2019		2018
Raw material	$	325	$	26
Work in process		8,390		7,622
Finished goods		7,285		3,702
	$	16,000	$	11,350

The Company provides reserves for potentially excess, dated or obsolete inventories based on estimates of forecasted product demand and the likelihood of consumption in the normal course of business, considering the expiration dates of the inventories on hand, planned production volumes and lead times required for restocking of customer inventories. Although every effort is made to ensure that forecasts and assessments are reasonable, changes to these assumptions are possible. In such cases, estimates may prove inaccurate and result in an understatement or overstatement of the reserves required to fairly state such inventories. The Company’s reserve for excess, dated or obsolete inventory was $464 and $847 at December 31, 2019 and 2018, respectively. In 2019, the Company wrote off inventory of $708 and increased the reserve for excess, dated or obsolete inventory by $325. In 2018, the Company wrote off $255 of inventory and increased the reserve for excess, dated or obsolete inventory by $592.

Contract Assets

Contract Assets

Contract assets are recognized when control of goods or services has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract. Costs that have been incurred in connection with development services provided to partners for which the associated revenue has not yet been recognized are also recorded as contract assets, and totaled $1,534 and $204 as of December 31, 2019 and 2018, respectively.  As of December 31, 2018, contract assets also included a $5,000 installment in connection with the sale and transfer of assets to Ferring as discussed in Note 9, which was received during the year ended December 31, 2019.

Equipment, Molds, Furniture, and Fixtures

Equipment, Molds, Furniture, and Fixtures

Equipment, molds, furniture, and fixtures are stated at cost and are depreciated using the straight-line method over their estimated useful lives ranging from three to ten years. The Company’s equipment, molds, furniture and fixtures consisted of the following:

	December 31,			December 31,
	2019			2018
Furniture, fixtures and office equipment	$	2,480		$	2,331
Production molds and equipment		20,749			19,678
Molds and tooling in process		1,512			456
Construction in process		989			—
Less: accumulated depreciation		(9,769	)		(7,570	)
	$	15,961		$	14,895

Depreciation expense was $2,205, $2,125 and $1,536 for the years ended December 31, 2019, 2018 and 2017, respectively.

Leases

Leases

The Company recognizes right-of-use (“ROU”) assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. Certain of the Company’s lease arrangements contain renewal options that have not been included in the determination of the lease term, as they are not reasonably certain of exercise. For contracts that contain lease and non-lease components, the Company accounts for both components as a single lease component. Variable lease payments are expensed as incurred.

Intangible assets

Intangible assets

The Company capitalizes external legal costs and filing fees associated with obtaining patent rights for approved commercial and partnered products when there are projected future cash flows associated with the patent. These capitalized patent costs are amortized on a straight-line basis over the shorter of the life of the patent or the estimated useful life of the patent, which typically ranges from five to fifteen years beginning on the earlier of the date the patent is issued or the first commercial sale of product utilizing such patent rights. The Company periodically reviews capitalized patent costs to identify any amounts to be charged to expense for patents that are no longer being pursued or for which there are no future revenues or cash flows anticipated.

The Company capitalizes external legal patent defense costs and costs for pursuing patent infringements when it determines that a successful outcome is probable and will lead to an increase in the value of the patent.  The capitalized costs are amortized over the remaining life of the related patent.  If changes in the anticipated outcome were to occur that reduce the likelihood of a successful outcome of the entire action to less than probable, the capitalized costs would be charged to expense in the period in which the change is determined.

The gross carrying amount and accumulated amortization of patents was $3,661 and $3,183, respectively at December 31, 2019, and $3,794 and $2,963, respectively, at December 31, 2018. Patent amortization expense for the years ended December 31, 2019, 2018 and 2017 was $352, $599 and $568, respectively, and is recorded in selling, general and administrative expenses in the consolidated statements of operations.  The Company’s estimated aggregate patent amortization expense for the next five years is $95, $89, $83, $68 and $49 in 2020, 2021, 2022, 2023 and 2024, respectively.  

Impairment of Long-Lived Assets and Intangibles

Impairment of Long-Lived Assets and Intangibles

Long-lived assets and intangibles, including patent rights, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset or asset group. This analysis can be very subjective; however, the Company utilizes the expected future undiscounted cash flows from signed license and distribution agreements and other contracts with customers to substantiate the recoverability of its long-lived assets. If the sum of the undiscounted cash flows is less than the carrying value of the asset, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Goodwill

Goodwill

Goodwill is evaluated for impairment annually at December 31, or more frequently if an event occurs or circumstances change that indicate that the carrying value may not be recoverable.  In performing the annual impairment test, the Company compares the fair value of the reporting unit to the carrying amount and would recognize an impairment charge to goodwill for the amount by which the carrying amount exceeds the reporting unit’s fair value.  

At December 31, 2019 and 2018, the Company had goodwill with a carrying value of $1,095, attributable to its single reporting unit. Based on the results of its evaluations, the Company determined that goodwill was not impaired, and no impairment losses were recognized in the years ended December 31, 2019, 2018, and 2017, respectively.

Revenue Recognition

Revenue Recognition

The Company generates revenue from proprietary and partnered product sales, license and development activities and royalty arrangements.  Revenue is recognized when or as the Company transfers control of the promised goods or services to its customers at the transaction price, which is the amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services.

At inception of each contract, the Company identifies the goods and services that have been promised to the customer and each of those that represent a distinct performance obligation, determines the transaction price including any variable consideration, allocates the transaction price to the distinct performance obligations and determines whether control transfers to the customer at a point in time or over time. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company reassess its reserves for variable consideration at each reporting date and makes adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes become known.

The Company has elected to recognize the cost for freight and shipping activities as fulfilment cost. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying goods are transferred to the customer. The related shipping and freight charges incurred by the Company are included in cost of revenue.

Proprietary Product Sales

The Company sells its proprietary products OTREXUP^® and XYOSTED^® primarily to wholesale and specialty distributors. Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs described below.

The determination of certain of these reserves and sales allowances require management to make a number of judgements and estimates to reflect the Company’s best estimate of the transaction price and the amount of consideration to which it believes it is ultimately entitled to receive. The expected value is determined based on unit sales data, contractual terms with customers and third-party payers, historical and expected utilization rates, any new or anticipated changes in programs or regulations that would impact the amount of the actual rebates, customer purchasing patterns, product expiration dates and levels of inventory in the distribution channel. Reserves for prompt payment discounts are recorded as a reduction in accounts receivable. Reserves for returns, distributor fees, rebates and customer co-pay support programs are included within current liabilities in our consolidated balance sheets.

Wholesaler Distribution Fees. Distribution fees are paid to certain wholesalers based on contractually determined rates and units purchased. Since the fee paid to the customer is not for a distinct good or service, the consideration is recognized as a reduction of the transaction price of the goods delivered in accordance with ASC 606. The Company accrues the estimated fee due at the time of sale based on the contracted price and adjusts the accrual at each reporting period, if necessary, to reflect actual experience.

Prompt Pay Discounts. The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. Based on historical experience, customers take advantage of this discount and accordingly the Company accrues 100% of the cash discounts offered by reducing accounts receivable and recognizing the discount as a reduction of revenue in the same period the related sales are made. The accrual is reviewed at each reporting period and adjusted if actual experience differs from estimates.

Chargebacks. The Company provides discounts primarily to authorized users of the Federal Supply Schedule (“FSS”) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs and various organizations under Medicaid contracts and regulations. These entities purchase products from the wholesale distributors at a discounted price, and the wholesale distributors then charge back to the Company the difference between the current wholesale acquisition cost and the price the entity paid for the product. The Company will estimate and accrue chargebacks based on estimated wholesaler inventory levels, current contract prices and historical chargeback activity. Chargebacks are recognized as a reduction of revenue in the same period the related revenue is recognized.

Rebates. The Company participates in certain plan rebate programs, which provide discounted prescriptions to qualified insured patients.  Under these rebate programs, the Company will pay a rebate to the third-party administrator of the program, generally two to three months after the quarter in which prescriptions subject to the rebate are filled. The Company estimates and accrues for these rebates based on current contract prices, historical and estimated future percentages of product sold to qualified patients.  Rebates are recognized as a reduction of revenue in the same period the related revenue is recognized.

Patient Discount Programs. The Company also offers discount cards, co-pay coupons and free trial programs to off-set the cost of prescriptions to patients. The Company estimates the total amount that will be redeemed or utilized based on historical redemption experience and on levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.

Product Returns. Consistent with industry practice, the Company generally offers wholesalers and specialty distributors a limited right to return products, generally within six months prior to and 12 months following the product’s expiration date. The Company’s propriety products generally have expiration dates ranging from 24 to 33 months. Product returns are estimated and recorded at the time of sale based on historical return patterns. Actual returns are tracked by individual production lots and charged against reserves. Returns reserves may be adjusted, if necessary, if actual returns differ from historical estimates. Management also monitors and takes into consideration the amount of estimated product inventory in the distribution channel, product dating and any known or expected changes in the marketplace when establishing the estimated rate of returns.

The following presents changes in reserves for product returns and sales allowances:

				Patient						Wholesaler			Prompt
	Rebates and			Discount						Distribution			Payment
	Chargebacks			Programs			Returns			Fees			Discounts
Balance at December 31, 2017	$	1,315		$	115		$	245		$	465		$	84
Accruals and adjustments		9,586			2,429			1,628			3,519			742
Payments and other reserve reductions		(8,207	)		(1,254	)		(720	)		(3,194	)		(610	)
Balance at December 31, 2018		2,694			1,290			1,153			790			216
Accruals and adjustments		15,383			6,716			2,520			6,393			1,491
Payments and other reserve reductions		(11,769	)		(7,161	)		(3,303	)		(5,500	)		(1,387	)
Balance at December 31, 2019	$	6,308		$	845		$	370		$	1,683		$	320

Partnered Product Sales

The Company is party to several license, development, supply and distribution arrangements with pharmaceutical partners, under which the Company produces and is the exclusive supplier of certain products, devices and/or components. Revenue is recognized when or as control of the goods transfers to the customer as follows:

The Company is the exclusive supplier of the Makena^® subcutaneous auto injector product to AMAG. Because the product is custom manufactured for AMAG with no alternative use and the Company has a contractual right to payment for performance completed to date, control is continuously transferred to the customer as product is produced pursuant to firm purchase orders. Revenue is recognized over time using the output method based on the contractual selling price and number of units produced.  The amount of revenue recognized in excess of the amount shipped/billed to the customer, if any, is recorded as contract assets due to the short-term nature in which the amount is ultimately expected to be billed and collected from the customer.

All other partnered product sales are recognized at the point in time in which control is transferred to the customer, which is typically upon shipment. Sales terms and pricing are governed by the respective supply and distribution agreements, and there is generally no price protection or right of return. Revenue is recognized at the transaction price, which includes the contractual per unit selling price and estimated variable consideration, if any.  For example, the Company sells Sumatriptan Injection USP to Teva at cost and is entitled to receive 50 percent of the net profits from commercial sales made by Teva, payable to the Company within 45 days after the end of the quarter in which the commercial sales are made. The Company recognizes revenue, including the estimated variable consideration it expects to receive for contract margin on future commercial sales, upon shipment of the goods to Teva.  The estimated variable consideration is recognized at an amount the Company believes is not subject to significant reversal based on historical experience, and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.

Licensing and Development Revenue

The Company has entered into several license, development and supply arrangements with pharmaceutical partners under which the Company grants a license to its device technology and know-how and provides research and development services that often involve multiple performance obligations and highly customized deliverables. For such arrangements, the Company identifies each of the promised goods and services within the contract and the distinct performance obligations at inception, and allocates consideration to each performance obligation based on relative standalone selling price, which is generally determined based on the expected cost plus margin.

If the contract includes an enforceable right to payment for performance completed to date and performance obligations are satisfied over time, the Company recognized revenue over the development period using either the input or output method depending on which is most appropriate given the nature of the distinct deliverable. For other contracts that do not contain an enforceable right to payment for performance completed to date, revenue is recognized when control is transferred to the customer.  Factors that may indicate that the transfer of control has occurred include the transfer of legal title, transfer of physical possession, the customer has obtained the significant risks and rewards of ownership of the assets and the Company has a present right to payment.

The Company’s typical payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations. The Company records a liability for cash received in advance of performance, which is presented within deferred revenue on the consolidated balance sheet and recognized as revenue when the associated performance obligations have been satisfied. The Company recognized $1.0 million in licensing and development revenue in connection with contract liabilities that were outstanding as of December 31, 2018 and satisfied during the year ended December 31, 2019.

License fees and milestones received in exchange for the grant of a license to the Company’s functional intellectual property (“IP”) such as patented technology and know-how in connection with a partnered development arrangement are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is not generally distinct from the non-licensed goods or services to be provided under the contract. Milestone payments that are contingent upon the occurrence of future events, are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal will not occur when the associated uncertainty is resolved.

Royalties

The Company earns royalties in connection with licenses granted under license and development arrangements with partners. Royalties are based upon a percentage of commercial sales of partnered products with rates ranging from mid single digit to low double digit and are tiered based on levels of net sales. These sales-based royalties, for which the license was deemed the predominant element to which the royalties relate, are estimated and recognized in the period in which the partners’ commercial sales occur.  The royalties are generally reported and payable to the Company within 45 to 60 days of the end of the period in which the commercial sales are made.  The Company bases its estimates of royalties earned on actual sales information from its partners when available or estimated prescription sales from external sources and estimated net selling price. If actual royalties received are different than amounts estimated, the Company would adjust the royalty revenue in the period in which the adjustment becomes known.

Remaining Performance Obligations

Remaining performance obligations represents the transaction price of firm orders and development contract deliverables for which work has not been completed or orders fulfilled, and excludes potential purchase orders under ordering-type supply contracts with indefinite delivery or quantity.  As of December 31, 2019, the aggregate value of remaining performance obligations, excluding contracts with an original expected length of one year or less, was $7.5 million. The Company expects to recognize revenue on the remaining performance obligations over the next three years, with the majority being recognized in the next twelve months.

Share-Based Compensation

Share-Based Compensation

The Company utilizes share-based compensation in the form of stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”).  The Company records compensation expense associated with share-based awards granted to employees at the fair value of the award on the date of grant.  The Company uses the Black-Scholes option valuation model to determine the fair value of stock options. The fair values of RSU and PSU grants containing service or performance conditions are based on the market value of the Company’s Common Stock on the date of grant.  The fair value of PSUs containing a market condition are estimated using a Monte Carlo simulation. The value of the portion of the award that is ultimately expected to vest is expensed ratably over the requisite service period as compensation expense in the consolidated statements of operations. Forfeitures are recorded as incurred. Assumptions concerning the Company’s stock price volatility and projected employee exercise behavior over the contractual life of the award impact the estimated fair value of the stock option awards.

Research and Development

Research and Development

Research and development expenses include costs directly attributable to the conduct of research and development programs including personnel costs, materials and supplies associated with design work and prototype development, FDA filing fees and the cost of services provided by outside contractors such as expenses related to clinical trials.  All costs associated with research and development activities are expensed as incurred.  

Income Taxes

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Net Loss Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing net income or loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed similar to basic net loss per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options or warrants were exercised and that the proceeds from such exercise were used to acquire shares of common stock at the average market price during the reporting period.  All potentially dilutive common shares were excluded from the calculation because they were anti-dilutive for all annual periods presented.  Potentially dilutive securities excluded from dilutive loss per share were 17,103, 17,147 and 14,761 at December 31, 2019, 2018 and 2017, respectively.

Segment Information

Segment Information

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker currently evaluates the Company’s operations as a whole from a number of different operational perspectives, including but not limited to, on a product-by-product, customer and partner basis. The Company derives all significant revenues from self-administered parenteral pharmaceutical products and technologies, and has a single reportable operating segment of business.

Going Concern

Going Concern

Management is responsible for evaluating, and providing disclosure of uncertainties about, the Company’s ability to continue as a going concern. As of December 31, 2019, the Company had cash, cash equivalents and investments of $45,721. Based on management’s evaluation, management concluded there is no substantial doubt or uncertainty about the Company’s ability to meet its obligations within one year from the date the consolidated financial statements were issued.

XML

Summary of Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019 USD ($) Subsidiary shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares	Jan. 01, 2019 USD ($)
Summary of Significant Accounting Policies [Line Items]
Wholly-owned subsidiaries of Antares Pharma | Subsidiary	2
Right-of-use assets	$ 5,463,000
Lease liability	6,690,000
Cash and cash equivalents, remeasured and reported at fair value	11,153,000	$ 20,569,000
Carrying value of short-term investments	22,520,000	0
Write-offs to bad debt expense	0	0	$ 0
Allowance for doubtful accounts balance	0	0
Inventory reserve	464,000	847,000
Inventory written-off	708,000	255,000
Increase in inventory reserve	325,000	592,000	356,000
Installment received in connection with the sale and transfer	5,000,000
Revenue not yet recognized recorded in contract assets	1,534,000	204,000
Depreciation expense	$ 2,205,000	2,125,000	1,536,000
Finite-lived intangible assets, amortization method	straight-line basis
Patent rights	$ 3,661,000	3,794,000
Accumulated amortization of patents	3,183,000	2,963,000
Aggregate patent amortization expense, 2020	95,000
Aggregate patent amortization expense, 2021	89,000
Aggregate patent amortization expense, 2022	83,000
Aggregate patent amortization expense, 2023	68,000
Aggregate patent amortization expense, 2024	49,000
Amortization expense	352,000	599,000	568,000
Goodwill	1,095,000	1,095,000
Goodwill impairment loss	$ 0	$ 0	$ 0
Cash discount to incentive for prompt payment	2.00%
Cash discounts offered by reducing accounts receivable	100.00%
Remaining performance obligations	$ 7,500,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Explanation	The Company expects to recognize revenue on the remaining performance obligations over the next three years, with the majority being recognized in the next twelve months
Method used for fair value assumption	Black-Scholes option valuation model
Potentially dilutive securities excluded from dilutive loss per share | shares	17,103,000	17,147,000	14,761,000
Cash, cash equivalents and investments	$ 45,721,000
Licensing and Development Revenue [Member]
Summary of Significant Accounting Policies [Line Items]
Revenue recognized	$ 1,000,000.0
Teva [Member]
Summary of Significant Accounting Policies [Line Items]
Future net profits from commercial sales percent	50.00%
Minimum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful lives	3 years
Capitalized cost being amortized over periods	5 years
Royalty payment period	45 days
Maximum [Member]
Summary of Significant Accounting Policies [Line Items]
Estimated useful lives	10 years
Capitalized cost being amortized over periods	15 years
Royalty payment period	60 days
ASU 2016-02 [Member]
Summary of Significant Accounting Policies [Line Items]
Right-of-use assets				$ 1,000,000.0
Lease liability				$ 1,000,000.0

XML

Summary of Significant Accounting Policies - Additional Information (Detail1)	Dec. 31, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01
Summary of Significant Accounting Policies [Line Items]
Remaining performance obligation, expected to recognize, period	3 years

XML

Description of Business

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

1. Description of Business

Antares Pharma, Inc. (“Antares,” “we,” “our,” “us” or the “Company”) is a pharmaceutical technology company focused primarily on the development and commercialization of self-administered parenteral pharmaceutical products and technologies.  We develop, manufacture and commercialize, for ourselves or with partners, novel therapeutic products using advanced drug delivery technology to enhance existing drug compounds and delivery methods. Our injection technology platforms include the VIBEX^® and VIBEX^® QuickShot^® pressure-assisted auto injector systems suitable for branded and generic injectable drugs in unit dose containers and disposable multi-dose pen injectors. We have a portfolio of proprietary and partnered commercial products and ongoing product development programs in various stages of development. We have formed significant strategic alliances with Teva Pharmaceutical Industries, Ltd. (“Teva”), AMAG Pharmaceuticals, Inc. (“AMAG”), Pfizer Inc. (“Pfizer”) and Idorsia Pharmaceuticals Ltd (“Idorsia”).

The Company markets and sells its proprietary product XYOSTED^® (testosterone enanthate) injection in the U.S., which is indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone. XYOSTED^® was approved by the U.S. Food and Drug Administration (“FDA”) on September 28, 2018 and launched for commercial sale in late 2018.

The Company also markets and sells its proprietary product OTREXUP^® (methotrexate) injection in the U.S., which is indicated for adults with severe active rheumatoid arthritis, children with active polyarticular juvenile idiopathic arthritis and adults with severe recalcitrant psoriasis.

Through its commercialization partner Teva, the Company sells Sumatriptan Injection USP, indicated in the U.S. for the acute treatment of migraine and cluster headache in adults.  

In collaboration with AMAG, the Company developed a subcutaneous auto injector for use with AMAG’s progestin hormone drug Makena^® (hydroxyprogesterone caproate injection) under an exclusive license and development agreement. The Makena^® subcutaneous auto injector drug-device combination product, which is a ready-to-administer treatment indicated to reduce the risk of preterm birth in women pregnant with one baby and who spontaneously delivered at least one preterm baby in the past, was approved by the FDA in February 2018 and launched for commercial sale by AMAG in the first quarter of 2018. The Company is the exclusive supplier of the devices and final assembled and packaged commercial product to AMAG.

Through a license, development and supply agreement with Teva, Antares developed and is the exclusive supplier of the device for Teva’s Epinephrine Injection USP, which is indicated for emergency treatment of severe allergic reactions in adults and certain pediatric patients. The product was approved by the FDA in August 2018 and launched for commercial sale in late fourth quarter of 2018.

The Company is also developing two multi-dose pen injector products in collaboration with Teva, a combination drug device rescue pen in collaboration with Pfizer, a combination drug device product with Idorsia, and has other ongoing internal research and development programs.

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Total revenue	$ 123,864	$ 63,554	$ 54,515
Cost of revenue:
Total cost of revenue	50,475	31,065	27,466
Gross profit	73,389	32,489	27,049
Operating expenses:
Research and development	10,624	12,328	11,854
Selling, general and administrative	61,773	36,762	31,646
Total operating expenses	72,397	49,090	43,500
Gain on sale of assets		12,500	860
Operating income (loss)	992	(4,101)	(15,591)
Other income (expense):
Interest expense	(3,549)	(2,675)	(1,423)
Other, net	530	261	271
Total other expense, net	(3,019)	(2,414)	(1,152)
Net loss before income taxes	(2,027)	(6,515)	(16,743)
Net loss	$ (2,027)	$ (6,515)	$ (16,743)
Basic and diluted net loss per common share	$ (0.01)	$ (0.04)	$ (0.11)
Basic and diluted weighted average common shares outstanding	162,574	157,407	156,054
Product sales [Member]
Revenue:
Total revenue	$ 92,103	$ 47,870	$ 41,695
Cost of revenue:
Total cost of revenue	46,267	29,094	22,317
Licensing and Development Revenue [Member]
Revenue:
Total revenue	7,529	6,753	11,171
Royalties [Member]
Revenue:
Total revenue	24,232	8,931	1,649
Cost of development revenue [Member]
Cost of revenue:
Total cost of revenue	$ 4,208	$ 1,971	$ 5,149

XML

Accrued Expenses and Other Liabilities - Schedule of Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Payables And Accruals [Abstract]
Accrued employee compensation and benefits	$ 4,479	$ 3,715
Product returns and sales allowances	9,206	5,927
Other liabilities	2,838	2,355
Accrued expenses and other liabilities	$ 16,523	$ 11,997

XML

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

The Company was subject to taxes in both the U.S. and Switzerland in each of the years in the three-year period ended December 31, 2019. Income (loss) before income taxes was derived from the following jurisdictions:

	2019			2018			2017
U.S.	$	(1,734	)	$	(6,696	)	$	(16,762	)
Switzerland		(293	)		181			19
	$	(2,027	)	$	(6,515	)	$	(16,743	)

Effective tax rates differ from statutory income tax rates in the years ended December 31, 2019, 2018 and 2017 as follows:

	2019			2018			2017
Statutory income tax rate		(21.0	)%		(21.0	)%		(34.0	)%
State income taxes		(14.4	)		(3.8	)		(6.1	)
Valuation allowance increase		59.9			20.8			(102.0	)
Effect of foreign operations		1.0			(0.2	)		—
Change in unused net operating loss and credit carryforwards		(24.7	)		(3.9	)		2.7
Stock-based compensation		(22.3	)		(0.2	)		(3.5	)
162(m) limitation		18.2			2.9			—
Nondeductible items		1.8			3.2			(1.6	)
Impact of Tax Cuts and Jobs Act		1.5			2.2			144.5
		0.0	%		0.0	%		0.0	%

Deferred tax assets (liabilities) as of December 31, 2019 and 2018 consist of the following:

	2019			2018
Gross deferred tax assets:
Net operating loss carryforward – U.S.	$	41,780		$	42,966
Net operating loss carryforward – Switzerland		52			7
Research and development tax credit carryforward		7,559			6,891
Deferred revenue		—			105
Stock-based compensation		1,999			2,324
Inventory reserve		307			440
Compensation accruals		1,154			904
Product reserves		2,329			1,302
Operating lease liabilities		1,763			—
163j interest expense limitation		475			438
Amortization		585			562
Other		61			329
Total deferred tax assets		58,064			56,268
Deferred tax liabilities:
Depreciation		(1,807	)		(1,511	)
Right-of-use asset, operating leases		(1,648	)		—
Installment obligations		—			(1,363	)
Total deferred tax liabilities		(3,455	)		(2,874	)
Net deferred tax asset before valuation allowance		54,609			53,394
Less valuation allowance		(54,609	)		(53,394	)
Net deferred tax asset	$	—		$	—

The valuation allowance for deferred tax assets as of December 31, 2019 and 2018 was $54,609 and $53,394, respectively.  The total valuation allowance increased $1,215 for the year ended December 31, 2019 and increased $1,356 for the year ended December 31, 2018.

At both December 31, 2019 and 2018, the Company had deferred tax assets, net of valuation allowances, of zero.  In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible or in which net operating loss or tax credit carryforwards can be utilized.  After considering both positive and negative evidence with respect to the U.S. deferred tax assets, management determined that as of December 31, 2019, it continues to be more likely than not that the U.S. deferred tax assets will not be realized and has recorded a valuation allowance against all U.S. deferred tax assets.

The Company has a U.S. federal net operating loss carryforward at December 31, 2019 of $166,196, which, subject to limitations of Internal Revenue Code (“IRC”) Section 382, is available to reduce income taxes payable in future years. If not used, the portion of the carryforward generated before 2018 will expire in years 2020 through 2037, and the net operating loss carryforward generated in 2018, 2019 and any future years will carry forward indefinitely. Additionally, the Company has U.S. Research Credit carryforwards of $6,888. These credits expire in years 2020 through 2039.

Utilization of U.S. net operating losses and tax credits of the Company may be subject to annual limitations under IRC Sections 382 and 383, respectively. The Company anticipates net operating losses will be utilized against current year U.S. taxable income. The annual limitations, for tax years other than 2019, if any, have not yet been determined.  When a review is performed and if any annual limitations are determined, then the gross deferred tax assets for the net operating losses and tax credits would be reduced with a reduction in the valuation allowance of a like amount.

The Company also has a Swiss net operating loss carryforward at December 31, 2019, of $365, which is available to reduce income taxes payable in future years. If not used, this carryforward will begin to expire in 2023.

As of December 31, 2019 and 2018, there were no unrecognized tax benefits. Accordingly, a tabular reconciliation from beginning to ending periods is not provided.  The Company will classify any future interest and penalties as a component of income tax expense if incurred.  To date, there have been no interest or penalties charged or accrued in relation to unrecognized tax benefits.

The Company does not anticipate that the total amount of unrecognized tax benefits will change significantly in the next twelve months. The Company is subject to federal and state examinations for the years 2013 and thereafter. There are no tax examinations currently in progress.

XML

Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Stockholders' Equity

6. Stockholders’ Equity

In August 2017, the Company entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) under which the Company could offer and sell, from time to time and at its sole discretion, shares of its common stock having an aggregate offering price of up to $30.0 million through Cowen as the Company’s sales agent and/or as principal. Cowen could sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended (the “ATM Facility”.) The Sales Agreement required the Company to pay a commission of 3.0% of the gross sales proceeds of any common stock sold through Cowen.

During year ended December 31, 2019, the Company sold 2,307 shares of common stock under the ATM Facility, resulting in net offering proceeds to the Company of $7,781. The Company issued 2,137 shares of common stock pursuant to the Offering and Sales Agreement during the year ended December 31, 2018 resulting in net offering proceeds to the Company of $7,114. No sales of common stock were made in the period ended December 31, 2017.

On June 26, 2019, the Company delivered written notice to Cowen that it was terminating the Sales Agreement effective July 6, 2019, and accordingly the ATM Facility is no longer available for use.

XML

Revenues, Significant Customers and Concentrations of Risk - Summary of Revenues Disaggregated by Customer Geographic Location (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation Of Revenue [Line Items]
Total revenues	$ 37,839	$ 34,306	$ 28,433	$ 23,286	$ 18,821	$ 17,868	$ 14,162	$ 12,703	$ 123,864	$ 63,554	$ 54,515
United States of America [Member]
Disaggregation Of Revenue [Line Items]
Total revenues									120,231	57,033	48,924
Europe [Member]
Disaggregation Of Revenue [Line Items]
Total revenues									3,463	6,157	5,061
Other [Member]
Disaggregation Of Revenue [Line Items]
Total revenues									$ 170	$ 364	$ 530

XML

Income Taxes - Schedule of Income (Loss) before Income Tax Domestic and Foreign (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract]
Income (loss) before income taxes, US	$ (1,734)	$ (6,696)	$ (16,762)
Income (loss) before income taxes, Switzerland	(293)	181	19
Net loss before income taxes	$ (2,027)	$ (6,515)	$ (16,743)